☒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, 2021~~August 9, 2022 was ~~74,815,090~~75,640,924 shares.

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

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 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 Form 10-K filed for December 31, ~~2020.~~2021. 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.

Consolidation Policy — The accompanying consolidated financial statements include the accounts of Celsius Holdings, Inc. and its subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Significant Estimates — The preparation of consolidated financial statements and accompanying disclosures 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~~Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results ~~could~~may differ from those estimates. Significant estimates include the allowance for doubtful accounts, allowance for inventory obsolescence, promotional allowance, 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 operations and comprehensive income have been reclassified for consistency with the current year presentation. A reclassification has been made to present amortization of intangible assets and amortization of finance lease right-of-use assets in general and administrative expenses, rather than in other expenses. These reclassifications had no effect on previously reported 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)~~("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 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.

~~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)~~

Concentrations of Risk— Substantially all of the Company’s revenue derives from the sale of ~~Celsius ® beverages.~~Celsius® functional energy drinks and liquid supplements.

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~~a supplier 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~~June 30, ~~2021,~~2022, the Company had approximately ~~$9.3~~$60.0 million in excess of the ~~insurance protection provided by financial institutions.~~Federal Deposit Insurance Corporation limit.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

For the ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020,~~2022, the Company had one customer which accounted for revenue concentrations more than 10 percent. Costco accounted for approximately 16.6% of our revenue for the ~~following~~six months ended June 30, 2022. For the six months ended June 30, 2021, the company had one customer which accounted for a revenue concentration more than 10%. Amazon accounted for 10.0% of revenue for the six months ended June 30, 2021. At June 30, 2022, Amazon represented the only customer with a 10 percent or greater ~~concentrations~~concentration of ~~revenue with its customers. The following customers met or exceeded 10%~~accounts receivable representing 10.0% 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
2021 2020
Amazon 10.0 % 16.6 %
Costco 11.3 % 2.6 %
All other 78.7 % 80.8 %
Total 100.0 % 100.0 %

accounts receivable balance. At ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, the ~~Company~~company had ~~the following~~two customers with a 10 percent or greater ~~concentrations~~concentration of accounts receivable. Amazon and Publix accounted for approximately 22.7% and 10.3% of our accounts receivable ~~with its customers:~~balance, respectively, at December 31, 2021.

2021 2020
Amazon 12.6 % 11.4 %
Costco 11.4 % 6.6 %
All other 76.0 % 82.0 %
Total 100.0 % 100.0 %

Cash Equivalents — The Company considers all highly liquid instruments with original maturities of three months or less when purchased to be cash equivalents. At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did not have any investments with original maturities of three months or less.

~~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)~~

Accounts Receivable — Accounts receivable are reported at 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~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was an allowance for doubtful accounts of approximately $~~342,312~~1.2 million and $~~549,573~~0.8, million, 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~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was an inventory allowance for excess and obsolete products of $~~1,625,289~~2.9 million and $~~1,613,000~~2.6, million, 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~~Topic 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~~An impairment loss is determined regarding a long-lived ~~assets is measured by comparison of~~asset if its carrying amount tois not recoverable and exceeds its fair value. The carrying amount is not recoverable when it exceeds the sum of the undiscounted cash flows ~~that~~expected to result from use of 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, exceedsover its ~~fair value.~~remaining useful life and final disposition. The Company did not record any impairment charges during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

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		June 30,		December 31,
					2022		2021
United States	$	2,338,295	$	694,697	$	4,633	$	3,043

Sweden		776,420		431,959		1,267		1,050
Finland		335,785		450,878		369		301
Long-lived assets related to foreign operations		1,112,205		882,837		1,636		1,351
Total long-lived assets-net	$	3,450,500	$	1,577,534	$	6,269	$	4,394

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 as of October 1st, 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 such as macro-economic conditions, industry and market conditions, cost factors as well as other relevant events, 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~~June 30, ~~2021,~~2022, there were no0 indicators of impairment.

Intangible assets – — Intangible assets are comprised of customer relationships and brands acquired in a business combination. The Company amortizes intangible assets with a definitive life over their respective useful lives. ~~Intangibles~~Assets with indefinite lives are tested for impairment on an annual basis as of October 1st or more frequently if the Company believes indicators of impairment exist. 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 carrying value over its fair value. At June 30, 2022, there were no indicators of impairment.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

Revenue 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 or title is transferred ~~upon delivery to~~based on the ~~customer.~~commercial terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts and allowances. Such provisions are calculated using historical averages and adjusted for any expected changes due to current business conditions. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent that there is a distinct good or service, in which case the expense is classified as selling or marketing expense. Provisions for customer volume rebates are based on achieving a certain level of purchases and other performance criteria that are established on a situation basis. These rebates are estimated based on the expected amount to be provided to the customers and are recognized as a reduction of revenue. 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. ~~The Company elected to apply~~Additionally, for any agreements which are 1 year or less, the practical expedient under ASC 340-40-25-4 is applied to expense contract acquisition costs aswhen incurred ~~where~~if the ~~expected~~amortization period of ~~benefit is~~the contract asset would have otherwise been recognized in one year or less. Sales taxes and other similar taxes are excluded from revenue. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

The Company receives payments from certain distributors in new territories as reimbursement for contract termination costs paid to the prior distributors in those territories. Amounts received pursuant to these new and/or amended distribution agreements entered into with certain distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized ratably over the anticipated life of the respective distribution agreements. Termination charges related to certain of the Company’s prior distributors are included in operating expenses upon termination. The Company recognized termination expenses of $0.8 million and $0.8 million for the three and six month periods ended June 30, 2022. Termination expenses was immaterial for the three and six month periods ended June 30, 2021.

Deferred Revenue — Amounts received from certain distributors at inception of their distribution contracts are accounted for as deferred revenue. As of June 30, 2022, the Company had $0.6 million of deferred revenue, which is included in other current and long-term liabilities within the consolidated balance sheets. As of December 31, 2021, the Company did 0t have any deferred revenue related to contract liabilities. During the three and six months ended June 30, 2022, an immaterial amount of deferred revenue was recognized in net sales. There was 0 deferred revenue recognized in net sales during 2021.

~~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 deposits in advance of delivery of products and/or production runs. Such amounts are initially recorded as customer 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~~June 30, ~~2021~~2022 or December 31, ~~2020~~2021, 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 expenses of approximately $~~23.8~~29.3 million and $~~9.6~~12.6 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, 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 $~~0.7~~0.2 million and $~~0.3~~0.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Foreign Currency 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 foreign subsidiaries perform ~~remeasurements~~re-measurements 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~~three months ended ~~September~~June 30, ~~2021~~2022 exchange losses have amounted to approximately $~~451,000~~0.5 million while during the ~~nine~~three months ended ~~September~~June 30, ~~2020,~~2021, we recognized foreign currency gains of approximately $~~647,000~~0.2 million mainly related to fluctuations in exchange rates. For the six months ended June 30, 2022 exchange losses have amounted to approximately $0.7 million while during the six months ended June 30, 2021, we recognized foreign currency losses of approximately $0.1 million mainly related to fluctuations in exchange rates. Translation gain and losses that arise from the translation of net assets, as well as exchange gains and losses on intercompany balances of long-term investment nature, are included in Other Comprehensive Income. The Company incurred foreign currency translation net ~~gain~~loss during the ~~nine~~three months ended ~~September~~June 30, ~~2021~~2022 of approximately $~~1,367,000~~2.3 million and a net ~~loss~~gain of approximately $~~113,000~~0.3 million during the ~~nine~~three months ended ~~September~~June 30, ~~2020.~~2021. The Company incurred foreign currency translation net loss during the six months ended June 30, 2022 of approximately $2.8 million and a net gain of approximately $0.1 million n during the six months ended June 30, 2021. Our operations in different countries required that we transact in the following currencies:

Chinese-Yuan

Norwegian-Krone

Swedish-Krona

Finland-Euro

~~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)~~

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

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

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~~those noted previously, the Company did not have any other assets or liabilities measured at fair value at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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~~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 ~~2015~~2018 through 2020 remain subject to potential examination by the taxing authorities.

~~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)~~

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. ~~Please refer~~Refer to the below table for additional ~~details:~~details (tabular dollars in thousands except per share amounts):


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Net income	$	9,158	$	780	$	15,838	$	1,366

Income per share:
Basic	$	0.12	$	0.01	$	0.21	$	0.02
Diluted	$	0.12	$	0.01	$	0.20	$	0.02
Weighted average shares outstanding:
Basic		75,451		73,159		75,472		73,655
Effect of dilutive shared based awards		2,921		4,079		2,925		4,003
Diluted		78,372		77,238		78,397		77,658

Celsius Holdings, Inc.

Schedule of anti-dilutive shares
For the three months
ended September 30, For the nine months
ended September 30,
2021 2020 2021 2020
Net income $ 2,745,791 $ 4,753,603 $ 7,291,559 $ 6,857,988

Income per share:
Basic $ 0.04 $ 0.07 $ 0.10 $ 0.10
Diluted $ 0.03 $ 0.06 $ 0.09 $ 0.09
Weighted average shares outstanding:
Basic 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 78,473,866 74,848,239 77,782,459 73,524,209

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

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.~~stock. The 2015 Plan permits the grant of options and ~~shares~~other share based awards for up to ~~5,000,000~~5 million shares. In addition, there is a provision for an annual increase of ~~15%~~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 (note ~~14)~~15). As of ~~September~~June 30, ~~2021,~~2022, total shares available are ~~4.1~~4.4 million.

Cost of Sales— Cost of sales consists of the cost of concentrates and or ~~beverage~~liquid 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~~three months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ was approximately $~~18.1~~8.5 million and $~~6.5~~5.5 million, respectively. Freight expense on goods shipped for the six months ended June 30, 2022 and 2021 was approximately $11.4 million and $9.7 million, respectively.

~~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)~~

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. We have elected the relief provided. 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.

~~In December 2019, the Financial Accounting Standards Board (“FASB”) issued~~We have commenced 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 aspectsinitial analysis of the ~~accounting for income taxes. The Company adopted this standard effective January 1, 2021. The~~ adoption of this ~~standard did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.~~

~~Except for the updates previously disclosed above, all new accounting pronouncements issued but not yet effective are not expected to have a material impact~~ASU on our results of operations, cash flows or financial ~~position.~~

position and we are not able to estimate the effect the adoption of the new standard will have on our financial statements.

Liquidity— These financial statements have been prepared assuming the Company will be able to continue as a going concern. At ~~September~~June 30, 2022, the Company had an accumulated deficit of approximately $35.7 million which includes a net income available to common stockholders of approximately $15.8 million for the six months ended June 30, 2022. During the six months ended June 30, 2022, the Company’s net cash provided by operating activities totaled approximately $42.3 million.As of June 30, 2021, the Company had an accumulated deficit of $~~48,135,273~~54.1 million which includes a net income available to common stockholders of $~~7,291,559~~1.4 million for the ~~nine~~six months ended ~~September~~June 30, 2021. During the ~~nine~~six months ended ~~September~~June 30, 2021 the ~~Company had~~Company’s net cash used byin operating activities oftotaled approximately $~~52,063,949~~30.3. million.

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.

Correction of Immaterial Errors— ~~The~~During the third quarter of 2021, the company performed immaterial corrections to the previously reported consolidated financial statements related to the Func Foods acquisition in 2019. ~~As of September 30, 2021, goodwill~~Goodwill increased by ~~$3.7~~$3.7 million and deferred tax liabilities increased by ~~$3.5~~$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 resulted in a $0.2 million deferred tax benefit.

Correction of previously issued financial statements — Subsequent to filing the Company’s Quarterly Reports on Form 10-Q for the ~~nine~~periods ended June 30, 2021, and September 30, 2021, the Company determined that the calculation of expense of share based compensation related to grants of stock options and restricted stock units (“RSUs”) issued to former employees and retired directors was materially understated during the three-and

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

six-month periods ended June 30, 2021 and three- and nine-month periods ended September 30, 2021 (the “Affected Periods”), based on the application of U.S. generally accepted accounting principles. During the Affected Periods, the stock options and RSUs were modified and the expense should have been calculated and recognized using the fair market value of the awards as of the date of modification and recognized over the remaining service period.

In accordance with Staff Accounting Bulletin ("SAB") No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the misstatements and based on an analysis of quantitative and qualitative factors determined that the impact of the misstatement to its interim reporting periods ending June 30, 2021, and September 30, 2021, was material. Accordingly, the Company has restated its interim consolidated financial statements for the three- and six-months ended June 30, 2021, and three- and nine- months ended September 30, 2021, ~~resulted in a $0.2 million deferred tax benefit.~~respectively, and included that restated financial information within our annual report for the period ending December 31, 2021.

In connection with the filing of this Quarterly Report, the Company as revised the accompanying financial statements, and the related notes to revise those misstatements that impacted such periods.

The effects of the adjustments to the Company's previously reported unaudited 2021 quarterly consolidated statements of operations and comprehensive income (loss) on a standalone quarter basis are as follows:

Consolidated Statement of Operations and Comprehensive Income

Consolidated Statement of Operations and Comprehensive Income

Three months ended June 30, 2021 (unaudited)

Six months ended June 30, 2021 (unaudited)

As Reported

Adjustment

As Restated

As Reported

Adjustment

As Restated

Revenue
$
65,073

$
0

$
65,073

$
115,108

$
0

$
115,108

Gross Profit

28,249

0

28,249

48,828

0

48,828

General and administrative expenses1

9,120

3,180

12,300

16,926

3,180

20,106

Total operating expense

24,651

3,180

27,831

44,416

3,180

47,596

Income (loss) from operations

3,598

(3,180
)

418

4,412

(3,180
)

1,232

Net income (loss) before income taxes

3,960

(3,180
)

780

4,546

(3,180
)

1,366

Net income (loss)
$
3,960

$
(3,180
)

$
780

$
4,546

$
(3,180
)

$
1,366

Net income (loss) per share

Basic
$
0.05

$
(0.04
)

$
0.01

$
0.06

$
(0.04
)

$
0.02

Diluted
$
0.05

$
(0.04
)

$
0.01

$
0.06

$
(0.04
)

$
0.02

1 In order to correct previously reported share-based compensation for three-months and six-months ended June 30, 2021, the Company is recognizing additional share-based compensation expense of $3.2 million, respectively.

The effects of the adjustments to the Company's previously reported unaudited 2021 quarterly consolidated balance sheet is as follows:

Consolidated Balance Sheet (unaudited)

June 30, 2021

As Reported

Adjustment

As Restated

Current assets
$
205,306

$
0

$
0

Total assets

241,548

0

0

Current liabilities
$
54,257

$
0

$
0

Total liabilities

54,709

0

0

Additional paid-in capital
$
237,764

$
3,180

$
240,944

Accumulated deficit

(50,881
)

(3,180
)

(54,061
)
Total Stockholders' Equity
$
186,839

$
0

$
186,839

These corrections had no effect on the Company's previously reported net cash flows from operating activities, investing activities or financing activities for the three and six months ended June 30, 2021.

Celsius Holdings, Inc. ~~and Subsidiaries~~

Notes to Consolidated Financial Statements (unaudited)

~~September~~June 30, ~~2021~~2022

(Tabular dollars in thousands, except per share amounts)

3.	~~REVENUE~~

REVENUE

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~~based on the ~~customer.~~commercial terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Product sales are recorded net of variable consideration, such as provisions for returns, discounts and allowances. Such provisions are calculated using historical averages and adjusted for any expected changes due to current business conditions. Consideration given to customers for cooperative advertising is recognized as a reduction of revenue except to the extent that there is a distinct good or service, in which case the expense is classified as selling or marketing expense. Provisions for customer volume rebates are based on achieving a certain level of purchases and other performance criteria that are established on a situation basis. These rebates are estimated based on the expected amount to be provided to the customers and are recognized as a reduction of revenue. 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~~Additionally, for any agreements which are ~~excluded from revenue.~~1 year or less, the practical expedient under ASC 340-40-25-4 is applied to expense contract acquisition costs when incurred if the amortization period of the contract asset would have otherwise been recognized in one year or less.

Information about the Company’s net sales by geographical location for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 is as follows:

Schedule of net sales by reporting segment

	For the nine months ended				For the three months ended				For the six months ended
	September 30,		September 30,		June 30,		June 30,		June 30,		June 30,
	2021		2020		2022		2021		2022		2021
North America	$	177,093,834	$	67,083,888	$	145,409	$	53,601	$	268,882	$	92,604
Europe		30,695,477		26,799,756		7,280		10,792		15,775		21,160
Asia		1,861,130		868,915		883		619		1,849		1,155
Other		366,861		308,706		448		61		902		189
Net sales	$	210,017,302	$	95,061,265	$	154,020	$	65,073	$	287,408	$	115,108

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~~Total foreign revenues ofare approximately $~~32.9~~8.6 million and $~~28.0~~11.5 million for the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, respectively. Total foreign revenues are approximately $18.5 million and ~~2020,~~$22.5 million for the six months ended June 30, 2022 and 2021, respectively. Sweden represented the largest foreign portion of total consolidated revenue ~~with total revenues~~ of approximately $~~21.1~~5.1 million and $~~19.2~~7.9 million for the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, respectively and ~~2020,~~$10.8 million and $14.6 million for the six months ended June 30, 2022 and 2021, respectively. ~~Revenues are attributed to countries based on the location of the customer.~~

License Agreement

~~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~~6.9 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 of its ongoing efforts in providing the exclusive license rights including providing continuous access, updates and ~~ongoing support occur on a generally even basis throughout the year.~~support. Total revenue recognized under the agreement was approximately ~~$1.2~~$0.5 million and $0.5 million for the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, respectively and approximately $1.0 million and $~~570,000~~0.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2022 and 2021, respectively, which ~~are~~is reflected in the ~~Company’s Asia reporting geography.~~revenues from Asia.

INVENTORIES

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2021~~

4.	~~INVENTORIES~~

Inventories consist of the following at:

Schedule of inventories
September 30, December 31,
2021 2020
Finished goods $ 81,377,525 $ 15,334,386
Raw Materials 42,559,209 4,682,291
Less: Inventory allowance for excess and obsolete products (1,625,289 ) (1,613,055 )
Inventories $ 122,311,445 $ 18,403,622

5.	~~PREPAID EXPENSES AND OTHER CURRENT ASSETS~~

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)


	June 30,			December 31,
	2022			2021
Finished goods	$	107,883		$	123,594
Raw Materials		57,159			70,201
Less: Inventory allowance for excess and obsolete products		(2,904	)		(2,573	)
Inventories	$	162,138		$	191,222

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets total approximately ~~$22.8~~$12.3 million ~~22,829,510~~and ~~$14.6~~$13.6 million ~~14,626,922~~at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, consist mainly of prepaid advances to co-packers related to inventory production, advertising, prepaid insurance, prepaid slotting fees, value added tax payments and 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.~~

NOTE RECEIVABLE

6.	~~NOTE RECEIVABLE~~

Note receivable consists of the following at:

Schedule of note receivable

	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
Note receivable-current	$	2,543,225	$	1,885,887	$	3,066	$	2,588
Note receivable-non-current		6,993,869		9,429,437		3,679		7,117
Total Note receivable	$	9,537,094	$	11,315,324	$	6,745	$	9,705

Effective January 1, 2019, we restructured our China distribution efforts by entering into two separate economic agreements as it relates to the commercialization of our Celsius products (i.e., license agreement) and a repayment of investment agreement with 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~~6.9 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 through 2018, over the same five-year period. The repayment, which was formalized via a Note Receivable from Qifeng, will need to be serviced even if the licensing agreement is cancelled or terminated. The note receivable is denominated in Chinese-Yuan.

Scheduled principal payments plus accrued interest are due annually on March 31 of each year starting in 2020. The ~~Note~~note receivable is recorded at amortized cost ~~basis~~ and accrues interest at a rate per annum equal to the weighted average of 5%5% of the outstanding principal up to $5$5 million and 2%2% of the outstanding principal above $5$5 million. On ~~September~~June 12, 2020, it was agreed to fix the interest rate at 3.21% which reflected the weighted average interest rate for the 5-year period of the Note. For the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, interest income was approximately $~~240,000~~0.1. million and $0.1 million, respectively. For the six months ended June 30, 2022 and 2021, interest income was approximately $0.1 million and $0.2 million, respectively.

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2021~~

6.	~~NOTE RECEIVABLE (Continued)~~

The Company assesses the ~~Note~~note receivable for impairment at each reporting period, by evaluating whether it is probable that the Company will be unable to collect all the contractual ~~interest~~principal and ~~principal~~interest payments as scheduled in the Note agreement, based on historical experience ~~about~~of 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~~June 30, ~~2021,~~2022, the Note was not deemed to be impaired. ~~As of September 30, 2021, Qifeng is current on all~~Payment in-full was received by April 2022 pertaining to the amounts due ~~under the Note and the license agreement.~~on March 31, 2022.

As collateral for the Note, a stock certificate in Celsius Holdings, Inc., which amounts to ~~272,830~~ 34,830of shares owned by an affiliate under common control with Qifeng is being held at a brokerage account. These shares were originally issued on April 20, 2015 via a private transaction which involved Risejoy Services Limited an affiliate under the common control of Qifeng, our Chinese licensee. ~~Payment in-full was received timely pertaining to the 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 agreements, which include that a Statement of Account will be provided to 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 evaluating impairment indicators.

7.	~~LEASES~~

LEASES

The Company’s leasing activities include an operating lease of its corporate office space from a related party (see note 12) and 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.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

Leases are classified as either finance leases or operating leases based on criteria in ASC Topic 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.~~term and is included in general and administrative expenses. 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, 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
September 30,
2021 September 30,
2020
Operating Finance Operating Finance
Leases Leases Leases Leases
Lease cost in general and administrative expenses:
Operating lease expense $ 124,885 $ - $ 104,380 $ -
Amortization of finance lease ROU assets - 34,129 - 49,713
Total lease cost in general and administrative expenses 124,885 34,129 104,380 49,713

Lease cost in other expense:
Interest on finance lease liabilities - 2,397 - 21,530
Total lease cost in other expense - 2,397 - 21,530
Total lease cost $ 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

~~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
September 30,
2021 2020
Leasing activity in cash flows from operating activities:
Payments under operating leases (363,600 ) (185,388 )
Interest payments on finance lease liabilities (5,365 ) (27,585 )
Total leasing activity in cash flows from operating activities (368,965 ) (212,973 )

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

~~The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases at September 30, 2021 and December 31, 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~~

~~LEASES (Continued)~~

The future annual minimum lease payments required under the Company’s operating and finance lease liabilities as of ~~September~~June 30, ~~2021~~2022 are as follows:


	Operating			Finance
Future minimum lease payments	Leases			Leases			Total
2022	$	296		$	79		$	375
2023		548			68			616
2024		174			21			195
2025		6			78			84
2026		0			5			5
Total future minimum lease payments		1,024			251			1,275
Less: Amount representing interest		(48	)		(12	)		(60	)
Present value of lease liabilities		976			239			1,215
Less: current portion		(556	)		(101	)		(657	)
Long-term portion	$	420		$	138		$	558

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

PROPERTY AND EQUIPMENT

8.	~~PROPERTY AND EQUIPMENT~~

Property and equipment consist of the following at:

Schedule of property and equipment
	September 30,			December 31,
	2021			2020			June 30,			December 31,
Property and equipment	$	3,498,603		$	1,103,301
							2022			2021
Merchandising equipment - coolers							$	4,944		$	3,052
Office Equipment								996			891
Vehicles								739			304
Less: accumulated depreciation		(1,043,689	)		(523,924	)		(1,544	)		(1,067	)
Total	$	2,454,914		$	579,377		$	5,135		$	3,180

Depreciation expense amounted to approximately $~~519,765~~0.4 million and $~~82,180~~0.1 million for the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, respectively. Depreciation expense amounted to approximately $0.6 million and ~~2020,~~$0.2 million for the six months ended June 30, 2022 and 2021, respectively.

GOODWILL AND INTANGIBLES

~~Celsius Holdings, Inc.~~At June 30, 2022 and ~~Subsidiaries~~

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

~~September 30,~~December 31, 2021,

9.	~~GOODWILL AND INTANGIBLES~~

~~Goodwill~~ goodwill consists of approximately $~~14,851,635~~ 13.3 million and $14.5 million, respectively resulting from the excess of the consideration paid ~~and~~over the fair value of net tangible and intangible assets acquired from the Func Food ~~Acquisition, including an immaterial correction further detailed in Note 2 above.~~

Acquisition.

Intangible assets consist of acquired customer relationships and brands from the Func Food Acquisition. The ~~following table reflects our indefinite-lived~~gross carrying amount and accumulated amortization of intangible assets ~~and our definite-lived intangible assets and related accumulated amortization~~ as of ~~September~~ June 30, ~~2021~~2022 and December 31, ~~2020, respectively:~~2021, respectively, were as follows:

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

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)


	June 30,			December 31,
	2022			2021
Definite-lived intangible assets
Customer relationships	$	13,068		$	14,248
Less: accumulated amortization		(1,307	)		(1,140	)
Definite-lived intangible assets, net	$	11,761		$	13,108

Indefinite-lived intangible assets
Brands	$	2,928		$	3,193
Total Intangibles	$	14,689		$	16,301

Customer relationships are amortized over an estimated useful life of 25 years ~~years~~ and brands have an indefinite life. Amortization expense for the ~~nine~~three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 was approximately $~~445,000~~0.1 million and $~~429,000~~0.2~~, respectively~~ million, respectively. Amortization expense for the six months ended June 30, 2022 and 2021 was approximately $0.3 million and $0.4 million, respectively. Amortization expense is ~~being~~ reflected in ~~the~~ 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

As of June 30, 2022:
2022			562,000		$	261
2023			562,000			523
2024			562,000			523
2025			562,000			523
2026						523
Thereafter			11,182,466			9,408
Total	Total		$	13,547,466	$	11,761

10.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2021~~

~~10.~~

~~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,
2021 2020
Accounts payable $ 41,097,808 $ 11,854,421
Accrued expenses 29,056,893 7,997,269
Accrued promotional allowances 21,776,892 5,561,063
Total $ 91,931,593 $ 25,412,753

~~11.~~

~~OTHER CURRENT LIABILITIES~~


	June 30,		December 31,
	2022		2021
Accounts payable	$	25,235	$	35,821
Promotional allowances		36,549		19,037
Freight		18,638		15,872
Accrued expenses		20,244		15,311
Unbilled purchases		1,750		5,438
Total	$	102,416	$	91,479

11.

OTHER CURRENT AND LONG-TERM LIABILITIES

Other current liabilities consist of the following at:

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


	June 30,		December 31,
	2022		2021
Short-term
Deferred revenue, short-term	$	151	$	—
VAT payable		198		—
State Beverage Container Deposit		2,412		976
Total short-term		2,761		976

Long-term
Deferred revenue, long-term		487		—

Total	$	3,248	$	976

~~12.~~

~~RELATED PARTY TRANSACTIONS~~

12.

RELATED PARTY TRANSACTIONS

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

The Company’s office is rented from a company affiliated with CD Financial, LLC which is controlled by one of our major shareholders. The current lease expires on ~~January~~December 2024 with monthly base rent of approximately $~~17,295~~35. thousand.

13.

STOCKHOLDERS’ EQUITY

~~13.~~

~~STOCKHOLDERS’ EQUITY~~

Issuance of common stock pursuant to exercise of stock options and other awards

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company issued an aggregate of ~~1,349,142~~712,944 shares of its common stock pursuant to the exercise of ~~stock options granted~~grants under the Company’s ~~2015~~ Stock Incentive ~~Plan.~~Plans. The Company received aggregate proceeds of approximately $~~3,242,073~~1.3 million for ~~826,994~~365,730 options exercised for cash, with the balance of the options having been exercised on a “cashless” basis.During the six months ended June 30, 2021, the Company issued an aggregate of 1,073,757 shares of its common stock pursuant to the exercise of grants under the Company’s Stock Incentive Plans. The Company received aggregate proceeds of approximately $2.5 million for 669,532 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, 2020, the Company issued an aggregate of~~ ~~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 $2,296,343~~ ~~for~~ ~~875,576~~ ~~options exercised for cash, with the balance of the options having been exercised on a “cashless” 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~~"Selling Stockholders”) entered into an underwriting agreement (the ~~“Underwriting~~"Underwriting Agreement”) with UBS Securities LLC and Jefferies LLC, as representatives (the ~~“Representatives”~~"Representatives”) of the several underwriters (the ~~“Underwriters”~~"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”~~"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~~1,133,953 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~~"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.

14.

INCOME TAXES

~~Issuance of common stock pursuant to private placement~~

~~On August 25, 2020~~In general, the Company ~~issued~~ ~~1,437,909~~ ~~shares~~uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of ~~its common stock~~variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and ~~obtained approximately $22,000,000~~non-recurring factors including the geographical mix of ~~cash as part of a private placement.~~

~~14.~~

~~INCOME TAXES~~

earnings, enacted tax legislation and state and local income taxes.

The effective income tax rate ~~was~~ ~~10.2~~% for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 was 28.0%. The effective income tax rate for the six months ended June 30, 2022 differed from the statutory federal income tax rate of 21% primarily due to the impact of disallowed stock based compensation expense, state income tax ~~reserves for states in which~~expense and the release of certain state income tax reserves.

The Company ~~has nexus~~is subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. The Company recognizes those tax positions that meet the ~~net operating loss carryforwards.~~more-likely-than-not recognition threshold and establishes tax reserves for uncertain tax positions that do not meet this threshold. Interest and penalties associates with income tax matters are included in the provision for income taxes in the consolidated statements of operations.

~~15.~~

~~STOCK-BASED COMPENSATION~~

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

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

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.~~stock. While the plan ~~terminates~~ terminated 10 years ~~years~~ after the adoption date, issued ~~options~~awards have their own schedule of ~~termination. During 2013,~~terminations. As such, the ~~majority~~Company is no longer granting awards under this plan and there are 0 unvested awards as of ~~the shareholders approved to increase the total available shares in the plan from~~ June 30, 2022.~~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~~5 million shares. In addition, there is a provision for an annual increase of 15% of the shares pertaining to the 2015 plan that are outstanding as of the last day of the prior year. As of ~~September~~June 30, ~~2021,~~2022, approximately ~~4.1~~4.4 million shares are available.

The Company determines the fair value of restricted stock-based awards based on the market price on the date of grant. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances and recognizes forfeitures as they occur.

~~Celsius Holdings, Inc.~~

For the six months ended June 30, 2022 and ~~Subsidiaries~~2021, the Company recognized an expense of approximately $8.5 million and $10.8 million, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations).

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

Stock Options

~~September 30, 2021~~

~~15.~~

~~STOCK-BASED COMPENSATION (Continued)~~

Under the 2015 Stock Incentive Plan, the Company has issued options to purchase approximately ~~4.0~~3.2 million shares at an average price of $~~7.13~~7.98 with a fair value of ~~approximately~~ $~~3.29~~ 182.1million. For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company issued options to purchase 0 and 304,750 ~~and~~ ~~495,274~~ shares, respectively. Upon exercise, shares of new common stock are issued by the Company.

A summary of the status of the Company’s outstanding stock options as of June 30, 2022 and changes during the periods ending on that date is as follows:

~~For the nine months ended September~~


				Weighted Average						Weighted
	Shares			Exercise		Grant Date Fair		Aggregate Intrinsic		Average Remaining
	(000’s)			Price		Value		Value (000’s)		Term (Yrs)
Options
At December 31, 2021		3,600		$	7.47			$	241,515		6.37
Granted		0		$	0	$	0
Exercised		(401	)	$	3.57	$	50.93	$	21,636
Forfeiture and cancelled		(19	)	$	6.43
At June 30, 2022		3,180		$	7.98			$	182,105		6.07
Exercisable at June 30, 2022		2,383		$	5.80			$	141,688		5.58

The following table summarizes information about employee stock options outstanding at June 30, ~~2021 and 2020, the Company recognized approximately $~~2022:

~~13.4~~ ~~million and $~~


	Outstanding Options						Vested Options
	Number						Number
	Outstanding		Weighted		Weighted		Exercisable		Weighted		Weighted
Range of	at		Averaged		Averaged		at		Averaged		Averaged
Exercise	June 30,		Remaining		Exercise		June 30,		Exercise		Remaining
Price	2022 (000’s)		Life		Price		2022 (000’s)		Price		Life
$0.20 - $0.53		20		1.59	$	0.34		20	$	0.34		1.59
$0.65 - $1.80		10		2.66	$	1.05		10	$	1.05		2.66
$1.83 - $2.84		105		3.52	$	1.97		105	$	1.97		3.52
$3.20 - $6.20		2,665		5.88	$	4.14		2,123	$	4.20		5.57
$7.20-$60.00		380		8.44	$	37.16		125	$	37.30		8.44
Outstanding options		3,180		6.07	$	7.98		2,383	$	5.80		5.58

~~4.7~~ million, respectively, of non-cash compensation expense (included in general and administrative expense in the accompanying consolidated statements of operations and comprehensive income) determined by application of a Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility.

As of ~~September~~June 30, ~~2021,~~2022, the Company had approximately $~~9.1~~5.5 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 ~~2.1~~1.4 years. The Company used straight-line amortization of compensation expense over the two to three-year requisite service or vesting period of the grant. The maximum contractual term of the Company's stock options is 10 years. The Company recognizes forfeitures as they occur. There are options to purchase approximately ~~2.27~~2.4 million shares that have vested as of ~~September~~June 30, ~~2021.~~ 2022.

Restricted Stock Awards

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 option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following: 17

Schedule of black - scholes option-pricing model valuation assumption
Nine months ended
September 30,
2021 2020
Expected volatility 69.18%-81.11 % 69.18%-81.11 %
Expected term 4.49-5.00 Years 4.84-5.00 Years
Risk-free interest rate 0.32-1.39 % 0.23% - 1.39 %
Forfeiture Rate 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, 2021 and changes during the period ending on that date is as follows:~~

Schedule of outstanding stock options
Weighted Average Weighted
Shares Exercise Grant Date Fair Aggregate
Intrinsic Average
Remaining
(000’s) Price Value Value (000’s) Term (Yrs)
Options
At December 31, 2020 5,198 $ 4.23 $ 240,866 6.89
Granted 305 $ 42.37 $ 30.32
Exercised (1,292 ) $ 3.84 $ 73.91 $ 72,192
Forfeiture and cancelled (242 ) $ 6.71
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~~June 30, ~~2021~~2022

~~15.~~

~~STOCK-BASED COMPENSATION (Continued)~~

(Tabular dollars in thousands, except per share amounts)

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

Schedule of employee stock options outstanding
Outstanding Options Vested Options
Number Number
Outstanding Weighted Weighted Exercisable Weighted Weighted
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 20 2.33 $ 0.34 20 $ 0.34 2.33
$0.65 - $1.80 100 3.41 $ 1.05 100 $ 1.05 3.41
$1.83 - $2.84 112 4.27 $ 1.97 112 $ 1.97 4.27
$3.20 - $6.20 3,354 6.17 $ 4.10 2.019 4.29 5.13
$7.20-$60.00 383 9.18 37.04 20 14.53 8.84
Outstanding options 3,969 6.32 $ 7.13 2.271 $ 4.09 5.02

As of September 30, 2021, the Company had approximately $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 2.1 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 holders of a restricted stock award are generally entitled after the release to transact and obtain 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 is established by the market price on the date of its grant. A summary of the Company’s restricted stock award activity for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 is presented in the following table:


	For the six months ended
	June 30, 2022					June 30, 2021
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares (000's)			Fair Value		Shares (000's)			Fair Value
Unvested at beginning of period		0.2		$	14.72		66		$	14.78
Transfers to restricted stock units		0			0		(46	)		34.02
Granted		0			0		0			0
Vested		0			0		0			22.30
Forfeiture and cancelled		(0.2	)		14.72		0			34
Unvested at end of period		0		$	0		20		$	14.72

Schedule of restricted stock activity
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 66,229 $ 28.11 90,000 $ 3.23
Transfers to restricted stock units (45,871 ) 34.02 - -
Granted 92,444 14.72
Vested (19,429 ) 14.79 (18,582 ) 14.72
Forfeiture and cancelled (671 ) 14.72 - -
Unvested at end of period 258 $ 14.72 163,862 $ 8.41

There were

~~The total fair value of~~ shares vested during the ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020 was $~~2022. There are ~~1.3~~0 ~~million and $0.5~~ ~~million, respectively. Unrecognized compensation expense related to~~ outstanding restricted stock awards ~~to employees and directors~~ as of ~~September~~June 30, ~~2021 was $1,600~~ ~~and is expected to be expensed over the next ten~~10 ~~months.~~ 2022.

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~~stockholders 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~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 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 - $ -


	For the six months ended
	June 30, 2022					June 30, 2021
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares (000's)			Fair Value		Shares (000's)			Fair Value
Unvested at beginning of period		566		$	52.66		—		$	0
Transfers from restricted stock awards		—			0		46			34.02
Granted		202			73.33		510			51.03
Vested		(145	)		51.08		—			0
Forfeited and cancelled		(42	)		61.17		(15	)		50.67
Unvested at end of period		581		$	59.62	$	541		$	49.59

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2021~~

~~15.~~

~~STOCK-BASED COMPENSATION (Continued)~~

The total fair value of shares vested during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was $~~90,000~~7.4. million. Unrecognized compensation expense related to outstanding restricted stock units to employees and directors as of ~~September~~June 30, 2022 and 2021 was $~~20.8~~25.8 million and $22.5 million, respectively, and is expected to be expensed over the next 2.2 years.

Stock-based Awards Issued to Non-employee Consultants

The Company issues stock-based awards to third-party consultants for providing marketing, sales, and general business development services related to Celsius products. The stock-based awards are in the form of restricted stock units with performance vesting conditions (“performance stock units” or “PSUs”). The holders of unvested PSUs do not have the same rights as stockholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The PSU performance vesting conditions are linked to the consultants obtaining specified incremental earnings for the Company in a given year over the performance vesting period, typically five years. The fair value of PSUs is based on the market price of the underlying stock on the grant date. The Company recognizes compensation cost for performance stock awards issued to non-employees in the same manner and periods as though cash had been paid for services received. A summary of the Company’s PSU activity for the six months ended June 30, 2022 and 2021 is presented in the following table:

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)


	For the six months ended
	June 30, 2022				June 30, 2021
			Weighted				Weighted
			Average				Average
			Grant Date				Grant Date
	Shares (000's)		Fair Value		Shares (000's)		Fair Value
Unvested at beginning of period		15	$	64.65		0	$	0
Granted		0		0		0		0
Vested		0		0		0		0
Forfeited and cancelled		0		0		0		0
Unvested at end of period		15	$	64.65	$	0	$	0

The total fair value of awards vested during the six months ended June 30, 2022 was $0.1 million. Unrecognized compensation expense related to outstanding PSUs issued to non-employee consultants as of June 30, 2022 was approximately $0.8 million and is expected to be expensed over the next ~~2.6~~4.1 years.

Modifications

~~16.~~

~~COMMITMENTS AND CONTINGENCIES~~

There were certain Board of Directors members and employees whose service was terminated during 2021. In connection with their terminations, the vesting conditions of the previously granted awards were modified to accelerate the vesting of specified un-vested awards pursuant to Board resolutions or severance agreements. Pursuant ASC 718, these were Type III modifications requiring re-valuation of un-vested awards to modification date fair value with recognition of compensation expense over the remaining service period. There have been no modifications in the three and six months ended June 30, 2022. Modifications during the three and six month period ended June 30, 2021 resulted in additional stock based compensation expense of $3.2 million for both periods.

16.

COMMITMENTS AND CONTINGENCIES

In November of 2020, McGovern Capital, Inc. and Kevin McGovern (collectively “McGovern”) 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 from sales of the Company’s ~~Products~~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~~intended to pay McGovern its percentage of the annual royalty payment, but McGovern ~~has~~had 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 intends~~During the quarter, a confidential settlement agreement was signed for an amount included in our Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2022 that is not material to ~~defend against McGovern’s claims vigorously and has filed a counterclaim related to McGovern’s failure to comply with~~ the ~~covenant~~financial results of ~~good faith and fair dealing in the Representative Agreement. This matter is still in its early stages and~~ 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,~~Subsequent to January 8, 2021, ~~the SEC issued a subpoena~~we received subpoenas for production of documents in connection with the matter. ~~Neither~~The investigation and requests from the ~~January 8, 2021~~ SEC ~~letter nor the August 20, 2021 subpoena means~~do not represent 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.~~investigation and requests. 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.

On March 16, 2022, Christian McCallion filed a putative class action lawsuit against the Company in the United States District Court for the Southern District of Florida. Plaintiff McCallion asserts that because of Celsius’ delay in filing its Annual Report on Form 10-K for the year ended December 31, 2021, there was a decline in the market value of the Company’s securities Plaintiff and as a result, Class members have suffered significant losses and damages. On June 6, 2022 Judge Middlebrooks appointed a lead class plaintiff and the Company filed its Motion to Dismiss

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

on August 5, 2022. As the Company has previously disclosed in its periodic reports filed with the SEC, prior to filing an application for an automatic fifteen (15) day extension of the original filing date, the Company experienced staffing limitations, unanticipated delays and identified material errors in previous filings. Celsius has not committed any federal securities violations or made false and/or misleading statements and/or material omissions as alleged in the complaint. The Company intends to contest the claims vigorously on the merits.

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. ItIf management makes the decision to terminate an agreement without cause, an estimate of expected damages is ~~management’s belief that no such agreement has created any liability as of September 30, 2021.~~accrued and an expense is recorded within operating expenses during the period in which termination was initiated.

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.

~~17.~~

~~SUBSEQUENT EVENTS~~

17.

SUBSEQUENT EVENTS

~~None~~

Securities Purchase Agreement

On August 1, 2022, the Company entered into a securities purchase agreement (the "Purchase Agreement”) with PepsiCo, Inc., a North Carolina corporation (the "Purchaser”), pursuant to which the Company agreed to sell to the Purchaser, in a private placement exempt from registration under the Securities Act of 1933, as amended (the "Securities Act”), and Rule 506 of Regulation D promulgated thereunder, 1,466,666 shares of a newly created series of the Company’s preferred stock, par value $0.001 per share, designated as "Series A Convertible Preferred Stock” (the "Series A Preferred Stock”), for an aggregate purchase price of $550,000,000 and a price per share, on an as-converted to Common Stock (as hereinafter defined) basis, equal to $75.00.

Pursuant to the Purchase Agreement, the Purchaser, together with its affiliates, will have certain rights and be subject to various restrictions with respect to its equity ownership in the Company, including the right to increase its ownership to up to a specified percentage of the Company’s outstanding shares, with restrictions on new purchases above a specified percentage for so long as the Purchaser owns any shares of Series A Preferred Stock or Common Stock (subject to certain exceptions). Additionally, the Company has agreed to permit the Purchaser to designate one nominee (the "Purchaser Designee”) to the board of directors of the Company (the "Board”) for so long as the Purchaser (together with its affiliates) beneficially owns at least 3,666,665 shares of the Company’s outstanding Common Stock on an as-converted basis. Effective as of the closing of the transaction (the "Closing”), the size of the Board has been increased to nine members, with James Lee elected to the Board as the initial Purchaser Designee to serve for a term expiring at the 2023 annual meeting of the Company’s stockholders.

Pursuant to the Purchase Agreement and in connection with the Closing, the Company adopted or entered into, as applicable: (i) the Certificate of Designation of Series A Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada, setting forth the rights, preferences, privileges and restrictions applicable to the Series A Preferred Stock (the "Series A Certificate”); (ii) a registration rights agreement between the Company and the Purchaser (the "Registration Rights Agreement”); (iii) a lock-up agreement between the Company and each of the Company’s directors (other than Mr. Lee), chief executive officer and chief financial officer (the "Lock-Up Agreements”); (iv) a distribution agreement (the "Distribution Agreement”) between the Company and the Purchaser; and (v) a channel transition agreement between the Company and the Purchaser (the "Channel Transition Agreement”).

Series A Preferred Stock

The Series A Certificate authorizes 1,466,666 shares of Series A Preferred Stock, all of which were issued and sold to Purchaser under the Purchase Agreement and are convertible at the rate of 5 shares of the Company’s common stock, par value $0.001 per share (the "Common Stock”) for each share of Series A Preferred Stock based on the conversion conditions noted below. The Series A Preferred Stock ranks, with respect to distribution rights and rights on liquidation, winding-up and dissolution, (i) senior and in priority of payment to the Company’s Common Stock, (ii) on parity with any class or series of capital stock of the Company expressly designated as ranking on parity with the Series A Preferred Stock, and (iii) junior to any class or series of capital stock of the Company expressly designated as ranking senior to the Series A Preferred Stock.

Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (but excluding any change of control), each holder of Series A Preferred Stock will be entitled to receive an amount per share of Series A Preferred Stock equal to the Liquidation Preference, as defined in the Series A Certificate. Holders of shares of Series A Preferred Stock will be entitled to cumulative dividends, which will be payable quarterly in arrears either in cash, in-kind, or a combination thereof. Dividends will accrue on each share of Series A Preferred Stock at the rate of 5.00% per annum, as set forth in the Series A Certificate. In addition to such quarterly regular dividends, such shares of Series A Preferred Stock are entitled to participate in dividends paid to holders of Common Stock.

The shares of Series A Preferred Stock are convertible into shares of Common Stock at the then-applicable conversion ratio automatically or at the option of the Company at certain times and subject to the terms and conditions set forth in the Series A Certificate. Each share of Series A

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

Preferred Stock shall automatically convert into shares of Common Stock at any date from and after the sixth anniversary date on which a) the triggering condition is satisfied in accordance with the distribution agreement and the 10-day volume weighted average price ("VWAP") immediately prior to such date exceeds the conversion price of such share as of such date and b) any date from and after the occurrence of a corporation termination event, if the 10-day VWAP immediately preceding such date exceeds the conversion price of such share as of such date and c) any date from and after the occurrence of an investor termination event, if the 10-day VWAP immediately preceding such date exceeds the conversion price of such share as of such date. Conversion at the option of the company can occur at any time from and after the seventh anniversary date, provided that the 10-day VWAP immediately prior to the date the company delivers a mandatory conversion notice to the holders of the preferred shares exceeds the conversion price, the company may elect to convert all, but not less than all, of the outstanding shares of Series A Preferred Stock into shares of Common Stock. In the case of a Mandatory Conversion, each share of Series A Preferred Stock then outstanding shall be converted into the number of shares of Common Stock equal to the conversion ratio of such share in effect as of the mandatory conversion date.

In addition, the shares of Series A Preferred Stock are redeemable at the option of the Company or the holders of a majority of the outstanding shares of Series A Preferred Stock at certain times and subject to the terms and conditions set forth in the Series A Certificate. At any time from and after the earlier of a) the seventh anniversary date, if the 10-day VWAP does not exceed the conversion price on the date immediately prior to the date the company delivers a corporation optional redemption notice to the holders and b) the occurrence of a corporation termination event, if the 10-day VWAP does not exceed the conversion price on the date immediately prior to the date the company delivers a corporation optional redemption notice to the holders, the company shall have the right upon written notice to the holders to redeem all (and not less than all) of the then-outstanding shares of Series A Preferred Stock. On each of the seventh anniversary date, the tenth anniversary date and the thirteenth anniversary date, the majority holders shall have the right upon no less than six months prior written notice to the company, to require the company to redeem in cash all (an not less than all) of the then-outstanding shares of Series A Preferred Stock.

In the event of a transaction resulting in a change of control, the company (or its successor) shall redeem all (and not less than all) of the then-issued and outstanding shares of Series A Preferred Stock. Upon such redemption, the company will pay or deliver, as applicable, to each holder in respect of each share of Series A Preferred Stock held by such holder, an amount equal to the greater of a) cash in the amount equal to the redemption price and b) the amount of cash and/or other assets (including securities) such holder would have received had each share of Series A Preferred Stock held by such holder as of the close of business on the business day immediately prior to the effective date of such transaction resulting in a change of control, converted into a number of shares of common stock equal to the then-applicable conversion ratio and participated in such transaction resulting in a change of control as a holder of shares of common stock.

The conversion ratio for each share of Series A Preferred Stock shall mean the quotient of a) the sum of (x) the stated value of such share of Series A Preferred Stock as of the applicable conversion date, plus (y) without duplication of all accrued and unpaid dividends previously added to the stated value of such shares of Series A Preferred Stock, all accrued and unpaid dividends per share of Series A Preferred Stock through the applicable conversion date; divided by b) the conversion price as of the conversion date. The conversion price shall mean $75.00, as adjusted in accordance with the terms and conditions of the agreement.

The Series A Preferred Stock confers no voting rights on holders, except as otherwise required by applicable law, and with respect to matters that adversely change the powers, preferences, privileges, rights or restrictions given to the Series A Preferred Stock or provided for its benefit, or would result in securities that would be senior to or pari passu with the Series A Preferred Stock.

Registration Rights Agreement

In connection with the Purchase Agreement, the Company entered into the Registration Rights Agreement with the Purchaser relating to the registered resale of the Common Stock issuable upon exercise of the Series A Preferred Stock (the "Registrable Securities”) pursuant to a registration statement to be filed with the Securities and Exchange Commission. The Company agreed to use commercially reasonable efforts to file a registration statement on Form S-3 or such other form under the Securities Act then available to the Company with respect to the resale of the Registrable Securities, and to use commercially reasonable efforts to cause such registration statement to be declared effective under the Securities Act as soon as practicable thereafter. In certain circumstances, the holders party to the Registration Rights Agreement will have piggyback registration rights and rights to request an underwritten offering as described in the Registration Rights Agreement. The resale registration rights under the Purchase Agreement are only transferrable to affiliates of the Purchaser, subject to the terms and conditions set forth in the Registration Rights Agreement.

Lock-Up Agreements

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

As a condition to the transaction, the Company’s chief executive officer, chief financial officer, and all of the directors of the Company (other than Mr. Lee) entered into Lock-Up Agreements pursuant to which they agreed not to sell, pledge, hypothecate or otherwise transfer their shares for a period of 12 months commencing on the date of the Closing, subject to certain exceptions.

Distribution Agreement

Simultaneously with the execution and delivery of the Purchase Agreement, the Company entered into the Distribution Agreement with the Purchaser relating to the sale and distribution of certain of the Company’s beverage products in existing channels and distribution methods in the United States, excluding Puerto Rico and the US Virgin Islands (the "Territory”).

Under the Distribution Agreement, the Company has granted the Purchaser the right to sell and distribute its existing beverage products in existing channels and distribution methods and future beverage products that are added from time to time as licensed products under the Distribution Agreement (the "Products”) in the Territory. The Distribution Agreement does not have a specified term. Instead, it may be terminated in accordance with the terms of the Distribution Agreement by either party "with cause” (including by the Purchaser if the Company undergoes a change of control involving a competitor), by the Company, if the Company undergoes a change of control, and by either party without cause in the nineteenth year of the term (i.e., 2041), the twenty-ninth year of the term (i.e., 2051) and each ten (10) year period thereafter (i.e., 2061, 2071, etc.) by providing twelve (12) months’ written notice on August 1st of each such year to the other party. Except for a termination by the Company "with cause” and the Purchaser without cause, the Company is required to pay the Purchaser certain compensation upon a termination as specified in the Distribution Agreement.

The Company agreed to provide the Purchaser a right of first offer in the event the Company intends to (i) manufacture, distribute or sell Products in certain additional countries as specified in the Distribution Agreement or (ii) distribute or sell Products in any future channels and distribution methods during the term of the Agreement. Additionally, pursuant to the Distribution Agreement, the Company and the Purchaser agreed to use commercially reasonable efforts to negotiate and execute with the Purchaser a distribution agreement reasonably consistent with the Distribution Agreement for the sale and distribution of the Products in Canada, and the Purchaser agreed to meet and confer in good faith with the Company regarding the terms and conditions upon which the Purchaser may be willing to sell or distribute the Products, either directly or through a local sub-distributor in certain other additional countries. The Distribution Agreement includes other customary provisions, including non-competition covenants in favor of the Company, representations and warranties, indemnification provisions, insurance provisions and confidentiality provisions.

Channel Transition Agreement

In connection with the Distribution Agreement, the Company entered into the Channel Transition Agreement with the Purchaser relating to the Company’s transition of certain existing distribution rights in the Territory to the Purchaser.

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~~“the Company,,” “~~Celsius~~,“Celsius,” “we,“we,” “us”“us” and “~~our~~”“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

~~Business Overview~~

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 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 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 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 have concluded that a single serving of Celsius burns 100-140 calories (by increasing a consumer’s resting metabolism an average of 12%, while providing sustained energy for up to three ~~hours.~~hours).

Our flagship asset, Celsius, is a 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 products are currently offered in major retail channels in the US including conventional grocery, natural, convenience, fitness, mass market, vitamin specialty and e-commerce.

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 MetaPlus formulation in our portfolio, a blend of ginger root, guarana seed extract, chromium, vitamins, and green tea extract.

Corporate Information

~~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 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® and MetaPlus® are registered trademarks of the Company in the United States. This Quarterly Report on Form 10-Q also contains other registered and unregistered trademarks of the Company.

Results of Operations

Three months ended ~~September~~June 30, ~~2021~~2022 compared to three months ended ~~September~~June 30, ~~2020~~2021

Revenue

~~Revenue~~

For the three months ended ~~September~~June 30, ~~2021,~~2022, revenue was approximately ~~$94.9~~$154.0 million, an increase of ~~$58.1~~$88.9 million or ~~158.0%~~137% from ~~$36.8~~$65.1 million for the three months ended ~~September~~June 30, ~~2020.~~2021. Approximately ~~99%~~103% of this growth was as a result of increased revenues from North America, where ~~third~~second quarter ~~2021~~2022 revenues were ~~$84.5~~$145.4 million, an increase of ~~$57.6~~$91.8 million or ~~214%~~171% from the ~~2020~~2021 quarter. The balance of the revenues for the ~~2021~~2022 quarter were mainly attributable to European revenues of ~~$9.5~~$7.3 million, which ~~were basically unchanged~~decreased by $3.5 million from the prior year ~~quarter.~~quarter primarily due to foreign exchange rates and timing. Asian revenues (which include royalty revenues from our China licensee) contributed an additional approximately ~~$706,000,~~$0.9 million, an increase of ~~157%~~43% from approximately ~~$275,000~~$0.6 million for the prior year quarter, which include increases in royalties payable under our licensing agreement. Other international markets generated approximately ~~$177,000~~$0.4 million in revenues during the ~~three months ended September 30, 2021,~~2022 quarter, an increase of ~~$32,000~~$0.4 million or ~~22%~~634% from ~~$145,000~~$0.1 million for the prior year quarter.

The total increase in revenue was 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~~”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 category and changes therein for the three months ended ~~September~~June 30, 2022 and 2021 ~~and September 30, 2020:~~(dollars in thousands):

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

North American Revenue $ 84,490,062 $ 26,891,527 214.2 %

European Revenue $ 9,535,886 $ 9,527,676 0.1 %

Asian Revenue $ 705,697 $ 274,532 157.1 %

Other $ 177,455 $ 145,415 22.0 %


	Three months ended June 30,
Revenue Source	2022		2021		Change
Total Revenue	$	154,020	$	65,073		136.7	%

North American Revenue	$	145,409	$	53,601		171.3	%

European Revenue	$	7,280	$	10,792		(32.5	)%

Asian Revenue	$	883	$	619		42.6	%

Other	$	448	$	61		634.4	%

Gross profit

~~Gross profit~~

For the three months ended ~~September~~June 30, ~~2021,~~2022, gross profit increased by approximately ~~$20.2~~$31.1 million or ~~115%~~110% to ~~$37.7~~$59.3 million, from ~~$17.5~~$28.2 million for the three months ended ~~September~~June 30, ~~2020.~~2021. Gross profit margins reflected ~~an erosion~~a decrease to ~~40.0%~~38.5% for the three months ended ~~September~~June 30, ~~2021~~2022 from ~~47.6%~~43.4% for the ~~2020~~2021 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 gross profit dollars of approximately ~~$20.2~~$31.1 million from the ~~2020~~2021 quarter to the ~~2021~~2022 quarter, included ~~$27.6~~$40.7 million related to volume increases, as well as an unfavorable cost impact of approximately ~~$7.4~~$7.5 million and ~~favorable~~unfavorable currency impact of ~~$31,000.~~$2.1 million.

Sales and marketing expenses

Sales and marketing expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were approximately ~~$22.6~~$32.5 million, an increase of approximately ~~$14.4~~$16.9 million or ~~173.6%~~109% from approximately ~~$8.3~~$15.5 million for the three months ended ~~September~~June 30, ~~2020.~~2021. This increase was primarily attributable to higher marketing investment activities, which resulted in an increase of ~~$7.7~~$8.4 million when compared to the prior year quarter. Additionally, employee costs increased by approximately ~~$2.6~~$2.8 million from the year ago quarter as we continue to invest in this area in order to have the 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, we experienced increases in other sales and marketing expenses in the amount of approximately $400,000, mainly related to trade-marketing activities to support our ongoing DSD network expansion.growth. Lastly, storage and distribution expenses as well as broker costs accounted for the remainder of the increase in this area in the amount of ~~$3.7~~$5.8 million from the ~~2020~~2021 quarter to the ~~2021.~~

2022 quarter.

General and administrative expenses

General and administrative expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were approximately ~~$11.1~~$14.4 million, an increase of ~~$6.4~~$2.1 million or ~~134%~~17%, from ~~$4.8~~$12.3 million for the three months ended ~~September~~June 30, ~~2020. This increase was primarily attributable to stock option expense which amounted to $5.8 million~~2021. Employee costs for the three months ended ~~September~~June 30, ~~2021,~~2022 reflect an increase of ~~$3.7~~$1.0 million ~~which accounts for 50.0%~~as investments in this area are also required to properly support our higher business volume and the commercial and operational areas of the ~~total~~business, as well as travel expenses are now being incurred. Administrative expenses amounted to $6.8 million or an increase of $4.1 million when compared to the prior year quarter. Depreciation and amortization increased by approximately $0.2 million when compared to the prior year quarter. These increases were offset by a $3.0 million decrease in ~~this area~~stock-based compensation expense, which amounted to $4.2 million in the current quarter, 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~~decreased by approximately ~~$235,000~~$0.2 million from to the ~~third~~second quarter of ~~2020.~~2021.

Other income/(expense)

~~Other income/(expense)~~

Total net other expense for the three months ended ~~September~~June 30, ~~2021 amounted~~2022 is mainly related 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,~~which is offset by 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.~~non-operating income.

Net Income

~~Net Income~~

Net income for the three months ended ~~September~~June 30, ~~2021~~2022 was ~~$2.7~~$9.2 million or ~~$0.04~~$0.12 per share based on a weighted average of ~~74,609,195~~75,451,165 shares outstanding and dilutive earnings per share of ~~$0.03~~$0.12 based on a fully-dilutive weighted average of ~~78,473,866~~78,371,705 shares outstanding, which includes the dilutive impact share-based awards of ~~outstanding stock options to purchase 3,864,671~~2,920,540 shares. In comparison, for the three months ended ~~September~~June 30, ~~2020,~~2021, the Company had net income of approximately ~~$4.8~~$0.8 million or ~~$0.07~~$0.01 per share, based on a weighted average of ~~70,473,351~~73,158,836 shares outstanding and a dilutive earnings per share of ~~$0.06~~$0.01 based on a fully-dilutive weighted average of ~~74,848,239~~77,238,389 shares outstanding.

Six months ended June 30, 2022 compared to six months ended June 30, 2021

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

Revenue

~~Revenue~~24

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, revenue was approximately ~~$210.0~~$287.4 million, an increase of ~~$115.9~~$172.3 million or ~~121%~~150% from ~~$95.1~~$115.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. Approximately ~~96%~~102% of this growth was as a result of increased revenues from North America, where ~~2021 period~~first six months of 2022 revenues were ~~$177.1~~$268.9 million, an increase of ~~$110.0~~$176.3 million or ~~164%~~190% from the ~~2020 period.~~2021 first six months. The balance of the ~~increase was largely~~revenues for the six months ended June 30, 2022 were mainly attributable to ~~a 14.5% growth in~~ European revenues of $15.8 million, which decreased by $5.4 million from the prior year six months primarily due to ~~$30.7 million in the 2021 period, from $26.8 million in the 2020 period.~~foreign exchange rates and timing. Asian revenues (which include royalty revenues from our China licensee) ~~for the nine months ended September 30, 2021 were $1.9~~contributed an additional approximately $1.8 million, an increase of ~~114.2%~~60% from ~~$869,000~~approximately $1.2 million for the prior year, ~~period.~~which include increases in royalties payable under our licensing agreement. Other international markets generated ~~$367,000~~approximately $0.9 million in revenues during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, an increase of ~~$58,000~~$0.7 million or 377.2% from ~~$309,000~~$0.2 million for the ~~2020 period.~~prior year.

The total increase in revenue was 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.~~retailers (e.g., additional SKUs). Additionally, the continued expansion of ~~DSD~~our Direct Store Delivery (“DSD”) network resulted in significant growth ~~of our~~in 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.

quarter.

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~~six months ended ~~September~~June 30, 2022 and 2021 ~~and September 30, 2020:~~(dollars in thousands):

Nine months ended
September 30,
Revenue Source 2021 2020 Change
Total Revenue $ 210,017,302 $ 95,061,265 120.9 %

North American Revenue $ 177,093,832 $ 67,083,888 164.0 %

European Revenue $ 30,695,477 $ 26,799,756 14.5 %

Asian Revenue $ 1,861,130 $ 868,915 114.2 %

Other $ 366,863 $ 308,706 18.8 %


	Six months ended June 30,
Revenue Source	2022		2021		Change
Total Revenue	$	287,408	$	115,108		149.7	%

North American Revenue	$	268,882	$	92,604	��	190.4	%

European Revenue	$	15,775	$	21,160		(25.4	)%

Asian Revenue	$	1,849	$	1,155		60.1	%

Other	$	902	$	189		377.2	%

Gross profit

~~Gross profit~~

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, gross profit increased by approximately ~~$43.0~~$64.4 million or ~~98.7%~~132% to ~~$86.5~~$113.2 million, from ~~$43.5~~$48.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. Gross profit margins ~~decreased~~reflected a decrease to ~~41.2%~~39.4% for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 from ~~45.8%~~42.4% for the ~~prior year period.~~six months ended June 30, 2021. The increase in gross profit dollars 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~~higher raw material costs ~~(primarily~~(particularly aluminum cans), ocean freight costs, ~~distribution costs, repackaging~~transportation costs and ~~processing~~repackaging 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~~$64.4 million from the ~~nine~~six months ended ~~September 30, 2020 to the nine months ended September~~June 30, 2021, ~~includes approximately $52.0~~included $75.4 million related to volume increases, as well as ~~a favorable~~an unfavorable cost impact of approximately $8.7 million and unfavorable currency impact of ~~$631,000, which was offset in part by unfavorable increases in costs of approximately $9.6~~$2.3 million.

Sales and marketing expenses

Sales and marketing expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were approximately ~~$50.1~~$64.1 million, an increase of approximately ~~$26.5~~$36.6 million or ~~112.0%~~133% from approximately ~~$23.6~~$27.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. This increase was ~~largely a result of incremental~~primarily attributable to higher marketing investment activities, which resulted in an increase of ~~$14.3~~$17.5 million ~~from~~when compared to the ~~2020 period.~~prior year. Additionally, employee costs increased by approximately $4.1 million from the prior year ~~ago period~~ as we ~~continued~~continue 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.growth. Lastly, storage and distribution expenses as well as broker costs accounted for the remainder of the increase in this area in the amount of ~~$6.3~~$14.9 million from the six months ended June 30, 2021.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2022 were approximately $26.6 million, an increase of $6.5 million or 32%, from $20.1 million for the six months ended June 30, 2021. This increase was primarily attributable to employee costs for the six months ended June 30, 2022 which reflect an increase of $2.2 million, 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 $11.4 million, an increase of $6.6 million, when compared to the prior year ~~period, mainly related~~quarter. Depreciation and amortization increased by approximately $0.3 million when compared to the ~~increase~~prior year quarter. These increases were offset by a decrease in ~~business volume.~~

~~General and administrative expenses~~

General and administrative expenses for the nine months ended September 30, 2021 were approximately $28.1 million, an increase of $14.9 million or 112.8% from $13.2 million for the nine months ended September 30, 2020. This increase was primarily attributable to stock optionstock-based compensation expense which amounted to ~~$13.4~~$8.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021, an increase of $8.7~~2022, compared to $10.8 million ~~from~~in the prior year ~~period.~~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 nine months ended September 30, 2021 reflect an increase of $2.3 million or 78.5%, as investments in this were 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 $7.5 million or an increase of $3.3 million or 76.8%, when compared to the 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. Depreciation and amortization had an increase of approximately $164, 000 when compared to the prior year due to investments in operational equipment (e.g., coolers). AllLastly, all other administrative expenses which were mainly composed of research, development and quality control testing, ~~increased~~decreased by approximately ~~$442,000~~$0.3 million from to the ~~2020 period.~~first six months of 2021.

Other income/(expense)

~~Other income/(expense)~~

Total net other expense for the ~~nine~~six months ended ~~September~~June 30, ~~2021 was $219,000, which reflects an increase of $348,000 when compared~~2022 is mainly related to ~~net total other income of $129,000 for the nine months ended September 30, 2020. The net other expense of $219,000 is composed of~~ foreign currency ~~exchanges losses of $451,000,~~exchange which is offset by interest income of $240,000 related to the note receivable from our China licensee, which are offset in part by miscellaneous interest expense of $7,500. 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.~~non-operating income.

Net Income

~~Net Income~~

Net income for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$7.3~~$15.8 million or ~~$0.10~~$0.21 per share based on a weighted average of ~~73,758,731~~75,472,158 shares outstanding and dilutive earnings per share of ~~$0.09~~$0.20 based on a fully-dilutive weighted average of ~~77,782,459~~78,396,950 shares outstanding, which includes the dilutive impact share-based awards of ~~outstanding stock options to purchase 4,023,728~~2,924,792 shares. In comparison, for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company had net income of approximately ~~$6.8~~$1.4 million or ~~$0.10~~$0.02 per share, based on a weighted average of ~~70,184,071~~73,655,125 shares outstanding and a dilutive earnings per share of ~~$0.09~~$0.02 based on a fully-dilutive weighted average of ~~73,524,209~~77,658,318 shares outstanding.

Liquidity and Capital Resources

As of ~~September~~June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, we had cash of approximately ~~$61.4~~$60.0 million and ~~$43.2~~$16.3 million, respectively, and working capital of approximately ~~$156.6~~$197.9 million and ~~$64.9~~$169.2 million, respectively.

In addition to cash flow from operations, our primary sources of working capital have been private placements and public offerings of our securities, 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.

Our current operating plan for the next twelve (12) months reflects sufficient financial resources, notwithstanding the potential effects of the 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~~

Cash flows provided by operating activities totaled approximately $42.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2022, which compares to $30.3 million net cash used in operating activities for the six months ended June 30, 2021. The ~~use of~~approximately $72.6 million increase in cash generation was ~~primarily~~ driven by ~~higher~~an increase in net income and improvements in working capital. Working capital improvements were driven primarily by the stabilization of our inventory as we have established optimal levels ~~in order~~ to ~~properly~~ service the demand ~~for~~of our ~~products. Additionally,~~product as well as timing of accounts payable, offset in part by increases of accounts receivable driven by the significant ~~increase in business volume or revenue resulted in an increase~~growth 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.business.

~~Cash flows used in investing activities~~

Cash flows used in investing activities

Cash flows provided by investing activities totaled approximately ~~$0.5~~$0.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, which compares to cash provided by investing activities of ~~$0.9~~$0.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The decrease in the cash ~~provided by~~used in investing activities when compared to the ~~2020~~2021 period was primarily due to ~~the fact that we invested approximately $2.4~~an increase of capital expenditures to $2.5 million ~~mainly pertaining to operational equipment which was partially~~ offset by payment on our note receivable, ~~payments from~~as we received payment on our ~~China licensee~~note receivable of approximately ~~$1.9 million.~~$2.6 million in April 2022.

Cash flows provided by financing activities

Cash flows provided by financing activities totaled approximately ~~$70.9~~$1.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021, representing a $46.9 million increase from $24.0~~2022, which compares to cash provided by financing activities of $70.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020. The increase of cash~~2021. Cash provided by financing activities is mainly related to the net proceeds of ~~$67.8~~$1.3 million from ~~our~~stock exercises. Net proceeds were received from a public offering in June 2021 ~~public offering and proceeds from stock option exercises of $3.2 million, which was offset in part by payments of~~for approximately ~~$72,400 pertaining to financial leases.~~$67.8 million.

Off Balance Sheet Arrangements

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

●

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.

●

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.

●

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.

●

~~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.~~

●

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.

In the normal course of business our financial position is routinely subject to a variety of risks. The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are fluctuations in commodity and other input prices affecting the costs of our raw materials (including, but not limited to, increases in the costs of the price of aluminum cans, sucralose and other sweeteners, as well as other raw materials contained within our products). We generally do not use hedging agreements or alternative instruments to manage the risks associated with securing sufficient ingredients or raw materials. We are also subject to market risks with respect to the cost of commodities and other inputs because our ability to recover increased costs through higher pricing is limited by the competitive environment in which we operate.

~~As a “~~~~smaller reporting company~~~~,” we are~~

We do not ~~required~~use derivative financial instruments to ~~provide the information required by this Item.~~protect ourselves from fluctuations in interest rates and generally do not hedge against fluctuations in commodity prices.

Item 4. Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

Our ~~President and~~ Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting 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~~June 30, ~~2021,~~2022, 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, 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~~Chief 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~~We identified material weaknesses as of December 31, 2021 in our internal controls over financial reporting, which were not fully remedied as of June 30, 2022. A material weakness is a deficiency or combination of deficiencies, in internal control over financial reporting, such that ~~occurred during~~there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. As a result of these material weaknesses, we concluded that internal controls over the ~~period covered~~following areas were not effective as of December 31, 2021 and were not fully remedied as of June 30, 2022.

Management failed to design effective controls related to the application of U.S. GAAP guidance in their evaluation of modifications to share-based payment arrangements, resulting in the correction of errors in previously issued interim financial statements relating to the recognition of compensation expense;

For a substantial portion of the year, management did not design and maintain effective controls over information technology general controls (ITGCs) for information systems and applications that are relevant to the preparation of the consolidated financial statements. Specifically, management did not design and maintain: sufficient user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel; program change management controls to ensure that information technology (IT) program and data changes affecting financial information technology applications and underlying accounting records are authorized, tested, and implemented appropriately. As a result, business process controls (automated and it-dependent manual controls) that are dependent on the ineffective ITGCs, or that use data produced from systems impacted by ~~this report~~the ineffective ITGCs were deemed ineffective at December 31 2021; and

Management did not have an adequate process in place to monitor and provide oversight over the completion of its testing and assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner. As such, we determined that ~~has materially affected, or~~management failed to fully implement components of the COSO framework, including elements of the control environment, information and communication, control activities and monitoring activities components, relating to: (i) providing sufficient and timely management oversight and ownership over the internal control evaluation process; (ii) hiring and training sufficient personnel to timely support the Company’s internal control objectives; (iii) performing timely monitoring and oversight to ascertain whether the components of internal control are present and functioning effectively.

To address the issues associated with our material weaknesses as described above, management is ~~reasonably likely~~re-assessing the design of controls and modifying processes designed to ~~materially affect,~~improve our internal control over financial ~~reporting.~~

reporting and remediate the control deficiencies that led to the material weaknesses, including but not limited to, (a) enhancing monitoring and oversight controls in the application of U.S. GAAP guidance pertaining to modifications of share-based payments, (b) hiring additional accounting and IT personnel with appropriate technical skillsets, (c) improving consistency in change management supported by standard operating procedures to govern the authorization, testing and approval of changes to information technology systems supporting all of the Company’s internal control processes, (d) enhancing design and implementation of our control environment, including the expansion of formal accounting and IT policies and procedures and financial reporting controls, and (e) implementing appropriate timely review and oversight responsibilities within the accounting and financial reporting functions. However, as of June 30, 2022, the identified material weaknesses were not fully remedied.

Changes in Internal Controls Over Financial Reporting

During the six months ended June 30, 2022, we have been implementing and will aggressively continue to implement changes that are both organizational and process-focused to improve the control environment. We anticipate the actions to be taken, and resulting process improvements, to generally strengthen our internal controls over financial reporting, information technology general controls as well as our controls around share-based payments, and over time, will address the material weaknesses noted as of December 31, 2021. These remedial measures were considered changes to our internal control environment which had a material effect on internal control over financial reporting. However, because certain of the remedial actions have only recently been undertaken and others will occur over the next several months, we have concluded that our controls and procedures in the areas listed above were not effective as of June 30, 2022. We will not be able to conclude that the material weaknesses have been eliminated until the completion of the December 31, 2022 annual report on form 10-K.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

InOn March ~~2019, Daniel Prescod~~16, 2022, Christian McCallion filed a putative class action lawsuit against the Company in the ~~Superior~~United States District Court for the ~~State~~Southern District of ~~California, County~~Florida. Plaintiff McCallion asserts that because of ~~Los Angeles (the “~~~~Prescod Litigation~~~~”). The plaintiff asserted that~~Celsius’ delay in filing its Annual Report on Form 10-K for the year ended December 31, 2021, there was a decline in the market value of the Company’s ~~use of citric acid~~securities Plaintiff and as a result, Class members have suffered significant losses and damages. . On June 6, 2022, Judge Middlebrooks appointed a lead class plaintiff and the Company filed its Motion to Dismiss on August 5, 2022. As the Company has previously disclosed in its ~~products while simultaneously claiming “~~~~no preservatives~~~~” violates~~periodic reports filed with 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~~SEC, prior to ~~certify~~filing an application for an automatic fifteen (15) day extension of 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~~original filing date, the Company experienced staffing limitations, unanticipated delays 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~~identified material errors in previous filings. Celsius has not ~~issued a decision. No fact discovery has been conducted on~~committed any federal securities violations or made false and/or misleading statements and/or material omissions as alleged in the ~~merits and this matter is still in its initial stages.~~complaint. The Company intends to contest the claims vigorously on the merits.

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 other 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

See “~~Item~~“Item 1.A. Risk Factors.” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the SEC.

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.

On June 2, 2022, the Company’s Board of Directors (the “Board”) amended and restated the Company’s bylaws to clarify and establish certain corporate procedures and make certain other enhancements and technical changes. The changes effected by the amendment and restatement of the Company’s bylaws (as so amended and restated, the “Amended and Restated Bylaws”) include, without limitation, the following:

•

implementing a majority vote standard for the election of directors in uncontested director elections, with a plurality vote standard applying to contested director elections

•

increasing the number of directors to nine;

•

clarifying that director nominations and proposals of other business may only be made by a stockholder who is a stockholder of record;

•

establishing procedures and disclosure requirements for stockholders to make director nomination and proposals of other business for consideration at meetings of stockholders, including among other things, establishing that a stockholder’s advance notice of director nominations and proposals of other business must be received between 120 days and 90 days prior to the anniversary of the immediately preceding annual meeting;

•

clarifying that meetings of stockholders may, in addition to or instead of a physical meeting, be held by means of remote communication (including virtually) as provided under the Nevada Revised Statutes;

•

clarifying the power of the Board to postpone, reschedule or cancel any annual or special meeting of stockholders previously scheduled by the Board;

•

clarifying the powers of (x) the Board and the chair of a stockholder meeting to establish rules for the conduct of any meeting of stockholders and (y) the chair of a stockholder meeting to regulate conduct at any such meeting;

•

selecting the [Eighth Judicial District Court of Clark County of the State of Nevada][1] as the sole and exclusive forum for certain types of litigation;

•

selecting the federal district courts of the United States as the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended;

•

adopting gender-neutral language, including the adoption of the title Chair in place of Chairman; and

•

making certain administrative, modernizing, clarifying and confirming changes.

The Amended and Restated Bylaws are effective June 2, 2022. The foregoing description of the Amended and Restated Bylaws is qualified in its entirety by the full text of the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.1 hereto and is incorporated by reference herein.

~~None.~~

STOCKHOLDER PROPOSALS AND NOMINATIONS

The Company’s definitive proxy statement for the 2022annual meeting of stockholders of the Company, which was filed with the SEC on April 21, 2022, contained typographical errors in the section entitled “General Information About The Annual Meeting—When are stockholder proposals due for next year’s annual meeting?” concerning the deadline, under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for stockholders to submit proposals to be considered for inclusion in the proxy materials for the Company’s 2023 annual meeting. The corrected deadline for submitting Rule 14a-8 shareholder proposals is December 23, 2022, as set forth below.

In addition, the deadline for stockholder to submit director nominations and proposals of business (other than pursuant other than shareholder proposals in accordance with Rule 14a-8) for action at the 2023 Annual Meeting is also set forth below.

Shareholder Proposals under Rule 14a-8

Pursuant to the various rules promulgated by the U.S. Securities and Exchange Commission, stockholders interested in submitting a proposal to be considered for inclusion in our proxy materials and for presentation at the 2023 Annual Meeting may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. In general, to be eligible for inclusion in our proxy materials, Rule 14a-8 shareholder proposals must be received by the Company’s Corporate Secretary at the Company’s principal executive officers (located at Celsius Holdings, Inc., 2424 N Federal Highway, Suite 208, Boca Raton, Florida 33431) no later than December 23, 2022.

Stockholder Nominations for Director Candidates and Proposals

Any stockholder of record of the Company who desires to nominate one or more director candidates at the 2023 Annual Meeting or submit a proposal of business (other than shareholder proposals in accordance with Rule 14a-8) for action at the 2023 Annual Meeting, must deliver written notice of an intent to make such director nomination and/or make such proposal of business to the Company’s Corporate Secretary at c/o Corporate Secretary, Celsius Holdings, Inc., 2424 N Federal Highway, Suite 208, Boca Raton, Florida 33431 no earlier than the close of business on February 2, 2023, and no later than the close of business on March 4, 2023. However, if the date of the 2023 Annual Meeting is more than 30 days before or more than 70 days after the anniversary of the date of the prior year’s annual meeting, then such notice must be delivered to the Company’s Secretary at c/o Corporate Secretary, Celsius Holdings, Inc., 2424 N Federal Highway, Suite 208, Boca Raton, Florida 33431 no later than the earlier of (x) the close of business of the 10th day following the day the public announcement of the date of the 2023 Annual Meeting is first made by the Company and (y) the close of business on the date which is 90 days prior to the date of the 2023 Annual Meeting. Any such notice must also comply with the timing, disclosure, procedural and other requirements as set forth in the Amended and Restated Bylaws.

In addition to satisfying the requirements under the Amended and Restated Bylaws described in the immediately preceding paragraph, to comply with the universal proxy rules under the Exchange Act, any stockholder who intends to solicit proxies in support of director nominees other than the Board’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act [no later than April 3, 2023. However, if the date of the 2023 Annual Meeting is more than 30 days before or after the anniversary of the date of the prior year’s annual meeting, then such notice must be delivered by the later of (x) the 10th day following the day the public announcement of the date of the 2023 Annual Meeting is first made by the Company and (y) the date which is 60 days prior to the date of the 2023 Annual Meeting.

Item 6. Exhibits.

~~Item 6. Exhibits.~~


Exhibit No.		Description of Exhibit
3.1		Articles of Incorporation of Celsius Holdings, Inc., as amended.*

3.2		Celsius Holdings, Inc. Bylaws, as amended.*

10.1		Securities Purchase Agreement, dated August 1, 2022, between PepsiCo, Inc. and Celsius Holdings, Inc.*

10.2		Form of Lock-Up Agreement.*

10.3		Registration Rights Agreement, dated August 1, 2022, between PepsiCo, Inc. and Celsius Holdings, Inc.*

10.4		Distribution Agreement, dated August 1, 2022, between PepsiCo, Inc. and Celsius Holdings, Inc.*#

10.5		Channel Transition Agreement, dated August 1, 2022, between PepsiCo, Inc. and Celsius Holdings, Inc. *#

10.6		Employment Agreement between Celsius and Jarrod Langhans, effective April 18, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on April 18, 2022).

31.1		Section 302 Certification of Chief Executive ~~Officer~~Officer*

31.2		Section 302 Certification of Chief Financial ~~Officer~~Officer*

32.1		Section 906 Certification of Chief Executive ~~Officer~~Officer**

32.2		Section 906 Certification of Chief Financial ~~Officer~~Officer**

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

	32
*	Filed herewith
**	Furnished herewith
#	Portions of this exhibit, marked by brackets and asterisks, have been omitted pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act of 1933, as amended, because they are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. The registrant undertakes to promptly provide an unredacted copy of the exhibit on a supplemental basis, if requested by the Commission or its staff

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, 2021~~August 9, 2022	By:	/s/ John Fieldly
		John Fieldly, Chief Executive Officer (Principal Executive Officer)

Dated: ~~November 12, 2021~~August 9, 2022	By:	/s/ ~~Edwin Negron-Carballo~~Jarrod Langhans
		~~Edwin Negron-Carballo,~~	Jarrod Langhans, Chief Financial Officer (Principal Financial and Accounting Officer)

~~Nevada~~		~~20-2745790~~
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~~
		Page

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements.	1
	Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 (unaudited) and December 31, ~~2020 (unaudited)~~2021	1
	Consolidated Statements of Operations and Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020 (unaudited)~~	2
	~~Consolidated Statements of Changes in Stockholders’ Equity for three and nine months ended September 30,~~ 2021 (unaudited)	32
	Consolidated Statements of Changes in Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2022 (unaudited)	43
	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2021 (unaudited)	4
	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2423

Item 3.	Quantitative Disclosures About Market Risks.	3026

Item 4.	Controls and Procedures.	3026

PART II – OTHER INFORMATION		3128

Item 1.	Legal Proceedings.	3128

Item 1A.	Risk Factors.	3128

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3128

Item 3.	Defaults Upon Senior Securities.	3128

Item 4.	Mine Safety Disclosures.	3128

Item 5.	Other Information.	3128

Item 6.	Exhibits.	3230

SIGNATURES		3330


	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


	June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash	$	60,031		$	16,255
Accounts receivable-net (note 2)		66,195			38,741
Note receivable-current (note 6)		3,066			2,588
Inventories-net (note 4)		162,138			191,222
Prepaid expenses and other current assets (note 5)		12,298			13,555
Total current assets		303,728			262,361

Note receivable (note 6)		3,679			7,117
Property and equipment-net (note 8)		5,135			3,180
Deferred tax asset (note 14)		7,686			9,019
Right of use assets-operating leases (note 7)		954			1,128
Right of use assets-finance leases (note 7)		180			86
Other long-term assets		264			300
Intangibles (note 9)		14,689			16,301
Goodwill (note 9)		13,323			14,527
Total Assets	$	349,638		$	314,019

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 10)	$	102,416		$	91,479
Lease liability obligation-operating leases (note 7)		556			512
Lease liability obligation-finance leases (note 7)		101			157
Other current liabilities (note 11)		2,761			976
Total current liabilities		105,834			93,124

Long-term liabilities:
Lease liability obligation-operating leases (note 7)		420			658
Lease liability obligation-finance leases (note 7)		138			45
Deferred tax liability		2,886			3,146
Other long-term liabilities		487			—
Total Liabilities		109,765			96,973

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000 shares authorized, 75,622 and 74,909 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively (note 13)		76			75
Additional paid-in capital		277,623			267,847
Accumulated other comprehensive income (loss)		(2,173	)		614
Accumulated deficit		(35,653	)		(51,490	)
Total Stockholders’ Equity		239,873			217,046
Total Liabilities and Stockholders’ Equity	$	349,638		$	314,019


	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020
Revenue (note 3)	$	94,909,100		$	36,839,149		$	210,017,302		$	95,061,265
Cost of revenue (note 2)		57,215,728			19,305,416			123,495,466			51,512,534
Gross profit		37,693,372			17,533,733			86,521,836			43,548,731

Selling and marketing expenses		22,621,062			8,267,996			50,111,103			23,640,914
General and administrative expenses		11,140,030			4,752,428			28,066,228			13,178,593
Total operating expenses		33,761,092			13,020,424			78,177,331			36,819,507

Income from operations		3,932,280			4,513,309			8,344,505			6,729,224

Other income (expense):
Interest income on note receivable (note 6)		76,473			78,690			239,586			268,709
Interest expense on bonds		-			(144,021	)		-			(391,458	)
Interest on other obligations		(4,524	)		(3,419	)		(7,496	)		(13,400	)
Amortization of discount on bonds payable		-			(178,649	)		-			(506,100	)
Other miscellaneous income/(expense)		(97,038	)		(62,817	)		-			(27,614	)
Gain on lease cancellations		-			-			-			152,112
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 before income taxes		3,579,610			4,753,603			8,125,378			6,857,988

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		4,028,474			4,863,630			8,658,728			6,744,844

Income per share:
Basic	$	0.04		$	0.07		$	0.10		$	0.10
Diluted	$	0.03		$	0.06		$	0.09		$	0.09
Weighted average shares outstanding:
Basic		74,609,195			70,473,351			73,758,731			70,184,071
Diluted ¹		78,473,866			74,848,239			77,782,459			73,524,209


								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


	For the nine months ended
	September 30, 2021			September 30, 2020
Cash flows from operating activities:
Net income	$	7,291,559		$	6,857,988
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Depreciation		519,765			82,180
Amortization		550,800			1,224,684
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		13,400,581			4,718,699
Gain on China transaction		-			(384,493	)
Gain on lease cancellations		(14,669	)		(152,112	)
Changes in operating assets and liabilities:
Accounts receivable-net		(28,307,104	)		(9,031,438	)
Inventory-net		(103,920,057	)		(598,665	)
Prepaid expenses and other current assets		(8,202,588	)		(561,752	)
Accounts payable and accrued expenses		66,694,568			824,964
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		1,885,724			1,331,011
Purchase of property and equipment		(2,395,302	)		(416,671	)
Net cash (used in)/provided by investing activities		(509,578	)		914,340

Cash flows from financing activities:
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		3,242,073			2,296,343
Net cash provided by financing activities		70,939,073			24,020,228
Effect on exchange rate changes on cash and cash equivalents		(236,365	)		289,338
Net increase in cash and cash equivalents		18,129,181			29,067,416
Cash and cash equivalents at beginning of the period		43,248,021			23,090,682

Cash and cash equivalents at end of the period	$	61,377,202		$	52,158,098
Supplemental disclosures:
Cash paid during period for:
Interest	$	5,364		$	299,394
Taxes		398,326			-
Non-cash investing and financing activities:
European Acquisition Adjustment:
Goodwill	$	-		$	395,515
Other liabilities		-			(395,515	)

	2021			2020
Amazon		12.6	%		11.4	%
Costco		11.4	%		6.6	%
All other		76.0	%		82.0	%
Total		100.0	%		100.0	%

Schedule of anti-dilutive shares
	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Net income	$	2,745,791	$	4,753,603	$	7,291,559	$	6,857,988

Income per share:
Basic	$	0.04	$	0.07	$	0.10	$	0.10
Diluted	$	0.03	$	0.06	$	0.09	$	0.09
Weighted average shares outstanding:
Basic		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		78,473,866		74,848,239		77,782,459		73,524,209


	Consolidated Statement of Operations and Comprehensive Income							Consolidated Statement of Operations and Comprehensive Income
	Three months ended June 30, 2021 (unaudited)							Six months ended June 30, 2021 (unaudited)
	As Reported		Adjustment			As Restated		As Reported		Adjustment			As Restated

Revenue	$	65,073	$	0		$	65,073	$	115,108	$	0		$	115,108
Gross Profit		28,249		0			28,249		48,828		0			48,828

General and administrative expenses1		9,120		3,180			12,300		16,926		3,180			20,106
Total operating expense		24,651		3,180			27,831		44,416		3,180			47,596

Income (loss) from operations		3,598		(3,180	)		418		4,412		(3,180	)		1,232
Net income (loss) before income taxes		3,960		(3,180	)		780		4,546		(3,180	)		1,366

Net income (loss)	$	3,960	$	(3,180	)	$	780	$	4,546	$	(3,180	)	$	1,366

Net income (loss) per share
Basic	$	0.05	$	(0.04	)	$	0.01	$	0.06	$	(0.04	)	$	0.02
Diluted	$	0.05	$	(0.04	)	$	0.01	$	0.06	$	(0.04	)	$	0.02


	Consolidated Balance Sheet (unaudited)
	June 30, 2021
	As Reported			Adjustment			As Restated

Current assets	$	205,306		$	0		$	0
Total assets		241,548			0			0

Current liabilities	$	54,257		$	0		$	0
Total liabilities		54,709			0			0

Additional paid-in capital	$	237,764		$	3,180		$	240,944
Accumulated deficit		(50,881	)		(3,180	)		(54,061	)
Total Stockholders' Equity	$	186,839		$	0		$	186,839

Schedule of inventories
	September 30,			December 31,
	2021			2020
Finished goods	$	81,377,525		$	15,334,386
Raw Materials		42,559,209			4,682,291
Less: Inventory allowance for excess and obsolete products		(1,625,289	)		(1,613,055	)
Inventories	$	122,311,445		$	18,403,622

Schedule of components of lease costs
	Three months ended				Three 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	$	124,885	$	-	$	104,380	$	-
Amortization of finance lease ROU assets		-		34,129		-		49,713
Total lease cost in general and administrative expenses		124,885		34,129		104,380		49,713

Lease cost in other expense:
Interest on finance lease liabilities		-		2,397		-		21,530
Total lease cost in other expense		-		2,397		-		21,530
Total lease cost	$	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

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

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

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

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

Schedule of outstanding stock options
				Weighted Average						Weighted
	Shares			Exercise		Grant Date Fair		Aggregate Intrinsic		Average Remaining
	(000’s)			Price		Value		Value (000’s)		Term (Yrs)
Options
At December 31, 2020		5,198		$	4.23			$	240,866		6.89
Granted		305		$	42.37	$	30.32
Exercised		(1,292	)	$	3.84	$	73.91	$	72,192
Forfeiture and cancelled		(242	)	$	6.71
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

Schedule of restricted stock activity
	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		66,229		$	28.11		90,000		$	3.23
Transfers to restricted stock units		(45,871	)		34.02		-			-
Granted							92,444			14.72
Vested		(19,429	)		14.79		(18,582	)		14.72
Forfeiture and cancelled		(671	)		14.72		-			-
Unvested at end of period		258		$	14.72		163,862		$	8.41

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

North American Revenue	$	84,490,062	$	26,891,527		214.2	%

European Revenue	$	9,535,886	$	9,527,676		0.1	%

Asian Revenue	$	705,697	$	274,532		157.1	%

Other	$	177,455	$	145,415		22.0	%