UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20212022

Commission file number: 001-34611

CELSIUS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada20-2745790

Nevada

20-2745790

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

2424 N Federal Highway, Suite 208, Boca Raton, Florida33431

(Address of Principal Executive Offices)

((561)561) 276-2239

(Registrant’s telephone number, including area code)

__________________________________________________________________

(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 ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $.001 par value

CELH

Nasdaq Capital Market

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:

Large Accelerated Filer

Accelerated Filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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, 2021August 9, 2022 was 74,815,09075,640,924 shares.


TABLE OF CONTENTS

Page

Page

PART I – FINANCIAL INFORMATION

1

Item 1.

Financial Statements.

1

Consolidated Balance Sheets as of SeptemberJune 30, 20212022 (unaudited) and December 31, 2020 (unaudited)2021

1

Consolidated Statements of Operations and Comprehensive Income for the three and ninesix months ended SeptemberJune 30, 20212022 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 ninesix months ended SeptemberJune 30, 20202022 (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 ninesix months ended SeptemberJune 30, 20212022 and 20202021 (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

i

i


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Celsius Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

         
  September 30,
2021
  December 31,
2020
 
ASSETS        
Current assets:        
Cash and cash equivalents $61,377,202  $43,248,021 
Accounts receivable-net (note 2)  43,500,578   14,986,213 
Note receivable-current (note 6)  2,543,225   1,885,887 
Inventories-net (note 4)  122,311,445   18,403,622 
Prepaid expenses and other current assets (note 5)  22,829,510   14,626,922 
Total current assets  252,561,960   93,150,665 
         
Note receivable (note 6)  6,993,869   9,429,437 
Property and equipment-net (note 8)  2,454,914   579,377 
Right-of-use asset-operating leases  888,911   836,038 
Right-of-use asset-finance leases  106,675   162,119 
Long-term security deposits  308,449   122,733 
Intangibles (note 9)  16,811,762   16,590,083 
Goodwill (note 9)  14,851,635   10,419,321 
Total Assets $294,978,175  $131,289,773 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current liabilities:        
Accounts payable and accrued expenses (note 10) $91,931,593  $25,412,753 
Lease liability-operating leases (note 7)  376,602   321,283 
Lease liability-finance leases (note 7)  155,508   205,824 
Other current liabilities (note 11)  957,627   425,232 
Total current liabilities  93,421,330   26,365,092 
         
Long-term liabilities:        
Lease liability-operating leases (note 7)  550,547   514,948 
Lease liability-finance leases (note 7)  88,649   82,290 
Deferred tax liability  3,497,240   - 
Other long-term liabilities  22,198   - 
Total Liabilities  97,579,964   26,962,330 
         
Commitments and contingences (note 15)        
         
Stockholders’ Equity:        
Common stock, $0.001 par value; 100,000,000 shares authorized, 74,745,924 and 72,262,829 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (note 13)  74,746   72,263 
Additional paid-in capital  244,293,710   159,884,154 
Accumulated other comprehensive income/(loss)  1,165,027   (202,142)
Accumulated deficit  (48,135,273)  (55,426,832)
Total Stockholders’ Equity  197,398,211   104,327,443 
Total Liabilities and Stockholders’ Equity $294,978,175  $131,289,773 

 

Celsius Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

 

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

 

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

1


1

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)(In thousands, except per share amounts)

                 
  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 

(1)Please refer to Earnings Per Share section for further details.

(Unaudited)

 

 

For the three months
ended June 30,

 

 

For the six months
ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue (note 3)

 

$

154,020

 

 

$

65,073

 

 

$

287,408

 

 

$

115,108

 

Cost of revenue (note 2)

 

 

94,701

 

 

 

36,824

 

 

 

174,195

 

 

 

66,280

 

Gross profit

 

 

59,319

 

 

 

28,249

 

 

 

113,213

 

 

 

48,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

32,475

 

 

 

15,531

 

 

 

64,072

 

 

 

27,490

 

General and administrative expenses

 

 

14,414

 

 

 

12,300

 

 

 

26,595

 

 

 

20,106

 

Total operating expenses

 

 

46,889

 

 

 

27,831

 

 

 

90,667

 

 

 

47,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

12,430

 

 

$

418

 

 

$

22,546

 

 

$

1,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income on note receivable (note 6)

 

 

55

 

 

 

76

 

 

 

133

 

 

 

163

 

Interest on other obligations

 

 

(3

)

 

 

(1

)

 

 

(4

)

 

 

(3

)

Other miscellaneous income

 

 

0

 

 

 

109

 

 

 

0

 

 

 

97

 

Foreign exchange gain/(loss)

 

 

(514

)

 

 

178

 

 

 

(676

)

 

 

(123

)

Total other income (expense)

 

 

(462

)

 

 

362

 

 

 

(547

)

 

 

134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

$

11,968

 

 

$

780

 

 

$

21,999

 

 

$

1,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (Note 14)

 

 

2,810

 

 

 

0

 

 

 

6,161

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

9,158

 

 

$

780

 

 

$

15,838

 

 

$

1,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain/(loss)

 

 

(2,296

)

 

 

277

 

 

 

(2,787

)

 

 

84

 

Comprehensive Income

 

$

6,862

 

 

$

1,057

 

 

$

13,051

 

 

$

1,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Diluted1

 

 

78,372

 

 

 

77,238

 

 

 

78,397

 

 

 

77,658

 

(1)
Refer to Earnings Per Share section for further details.

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

2

2


Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2021(In thousands)

(Unaudited)

                         
        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 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Other
Comprehensive

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Total

 

Balance at December 31, 2021

 

 

74,909

 

 

$

75

 

 

$

267,847

 

 

$

614

 

 

$

(51,490

)

 

$

217,046

 

Share-based payment expense

 

 

 

 

 

 

 

 

4,310

 

 

 

 

 

 

 

 

 

4,310

 

Issuance of common stock pursuant to stock incentive plan - cashless

 

 

248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to stock incentive plan - cash

 

 

194

 

 

 

 

 

 

810

 

 

 

 

 

 

 

 

 

810

 

Foreign currency fluctuations

 

 

 

 

 

 

 

 

 

 

 

(491

)

 

 

 

 

 

(491

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,679

 

 

 

6,679

 

Balance at March 31, 2022

 

 

75,351

 

 

$

75

 

 

$

272,967

 

 

$

123

 

 

$

(44,811

)

 

$

228,354

 

Share-based payment expense

 

 

 

 

 

 

 

 

4,207

 

 

 

 

 

 

 

 

 

4,207

 

Issuance of common stock pursuant to stock incentive plan - cashless

 

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to stock incentive plan - cash

 

 

172

 

 

 

1

 

 

 

449

 

 

 

 

 

 

 

 

 

450

 

Foreign currency fluctuations

 

 

 

 

 

 

 

 

 

 

 

(2,296

)

 

 

 

 

 

(2,296

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,158

 

 

 

9,158

 

Balance at June 30, 2022

 

 

75,622

 

 

$

76

 

 

$

277,623

 

 

$

(2,173

)

 

$

(35,653

)

 

$

239,873

 

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

3


3

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2020(In thousands)

(Unaudited)

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

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Other
Comprehensive

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Total

 

Balance at December 31, 2020

 

 

72,263

 

 

$

72

 

 

$

159,884

 

 

$

(202

)

 

$

(55,427

)

 

$

104,327

 

Share-based payment expense

 

 

 

 

 

 

 

 

3,575

 

 

 

 

 

 

 

 

 

3,575

 

Issuance of common stock pursuant to stock incentive plan - cashless

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to stock incentive plan - cash

 

 

235

 

 

 

1

 

 

 

716

 

 

 

 

 

 

 

 

 

717

 

Foreign currency fluctuations

 

 

 

 

 

 

 

 

 

 

 

(193

)

 

 

 

 

 

(193

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

585

 

 

 

585

 

Balance at March 31, 2021

 

 

72,586

 

 

$

73

 

 

$

164,175

 

 

$

(395

)

 

$

(54,842

)

 

$

109,011

 

Share-based payment expense

 

 

 

 

 

 

 

 

7,202

 

 

 

 

 

 

 

 

 

7,202

 

Issuance of common stock pursuant to stock incentive plan - cashless

 

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to stock incentive plan - cash

 

 

435

 

 

 

 

 

 

1,799

 

 

 

 

 

 

 

 

 

1,799

 

Issuance of common stock from capital raise

 

 

1,134

 

 

 

1

 

 

 

67,768

 

 

 

 

 

 

 

 

 

67,769

 

Foreign currency fluctuations

 

 

 

 

 

 

 

 

 

 

 

277

 

 

 

 

 

 

277

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780

 

 

 

780

 

Balance at June 30, 2021

 

 

74,471

 

 

$

74

 

 

$

240,944

 

 

$

(118

)

 

$

(54,062

)

 

$

186,838

 

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

4


4

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)(In thousands)

         
  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)

(Unaudited)

 

 

For the six months ended

 

 

 

June 30,
2022

 

 

June 30,
2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

15,838

 

 

$

1,366

 

Adjustments to reconcile net income to net cash /provided/(used in) by operating activities:

 

 

 

 

 

 

Depreciation

 

 

556

 

 

 

178

 

Amortization

 

 

275

 

 

 

375

 

Bad debt expense

 

 

466

 

 

 

855

 

Inventory excess and obsolescence

 

 

331

 

 

 

1,260

 

Stock-based compensation expense

 

 

8,517

 

 

 

10,777

 

Un-realized exchange loss

 

 

602

 

 

 

0

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable-net

 

 

(27,920

)

 

 

(18,267

)

Inventories-net

 

 

28,753

 

 

 

(46,683

)

Prepaid expenses and other current assets

 

 

1,257

 

 

 

(8,118

)

Accounts payable and accrued expenses

 

 

10,336

 

 

 

27,579

 

Deferred tax-net

 

 

1,072

 

 

 

 

Other current liabilities

 

 

1,820

 

 

 

340

 

Change in right of use assets and lease obligation-net

 

 

(95

)

 

 

8

 

Other long-term liabilities

 

 

488

 

 

 

 

Net cash provided by/(used in) operating activities

 

 

42,296

 

 

 

(30,330

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from note receivable

 

 

2,592

 

 

 

1,876

 

Purchase of property and equipment

 

 

(2,456

)

 

 

(1,216

)

Net cash provided by investing activities

 

 

136

 

 

 

660

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Principal payments on finance lease obligations

 

 

(37

)

 

 

(50

)

Proceeds from capital raise

 

 

0

 

 

 

67,769

 

Proceeds from exercise of stock options

 

 

1,260

 

 

 

2,515

 

Net cash provided by financing activities

 

 

1,223

 

 

 

70,234

 

Effect on exchange rate changes on cash

 

 

121

 

 

 

(24

)

Net increase in cash

 

 

43,776

 

 

 

40,540

 

Cash at beginning of the period

 

 

16,255

 

 

 

43,248

 

 

 

 

 

 

 

 

Cash at end of the period

 

$

60,031

 

 

$

83,788

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid during period for:

 

 

 

 

 

 

Taxes

 

$

2,100

 

 

$

 

Interest

 

$

0

 

 

$

0

 

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

5

5


Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

SeptemberJune 30, 20212022

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

(Tabular dollars in thousands, except per share amounts)

1.
ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

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

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

2.
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 ConsolidationThe 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. ActualAlthough these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results couldmay 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.

6

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 suppliersa 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 SeptemberJune 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.

6


Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

(Tabular dollars in thousands, except per share amounts)

For the ninesix months ended SeptemberJune 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 followingsix 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 concentrationsconcentration 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 Companycompany had the followingtwo customers with a 10 percent or greater concentrationsconcentration 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company did not have any investments with original maturities of three months or less.

7

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 SeptemberJune 30, 20212022 and December 31, 2020,2021, there was an allowance for doubtful accounts of approximately $342,3121.2 million and $549,5730.8, 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 SeptemberJune 30, 20212022 and December 31, 2020,2021, there was an inventory allowance for excess and obsolete products of $1,625,2892.9 million and $1,613,0002.6, 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” andTopic 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 ofAn impairment loss is determined regarding a long-lived assets is measured by comparison ofasset 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 thatexpected 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 ninesix months ended SeptemberJune 30, 20212022 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 SeptemberJune 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. IntangiblesAssets 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.

7


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 tobased 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 applyAdditionally, 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 whereif the expectedamortization period of benefit isthe 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.

8

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 SeptemberJune 30, 20212022 or December 31, 20202021, 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 $23.829.3 million and $9.612.6 million, during the ninesix months ended SeptemberJune 30, 20212022 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 $0.70.2 million and $0.30.4 million during the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.

Foreign Currency Gain/LossesForeign 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 remeasurementsre-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 ninethree months ended SeptemberJune 30, 20212022 exchange losses have amounted to approximately $451,0000.5 million while during the ninethree months ended SeptemberJune 30, 2020,2021, we recognized foreign currency gains of approximately $647,0000.2 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 gainloss during the ninethree months ended SeptemberJune 30, 20212022 of approximately $1,367,0002.3 million and a net lossgain of approximately $113,0000.3 million during the ninethree months ended SeptemberJune 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

9

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 approximatesapproximate fair value due to their relative short-term maturity and market interest rates.

8


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 thesethose noted previously, the Company did not have any other assets or liabilities measured at fair value at SeptemberJune 30, 20212022 and December 31, 2020.2021.

Income TaxesThe 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 -10740-10 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 20152018 through 2020 remain subject to potential examination by the taxing authorities.

10

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 referRefer 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

 

9


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 sharesother share based awards for up to 5,000,0005 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 SeptemberJune 30, 2021,2022, total shares available are 4.14.4 million.

Cost of Sales— Cost of sales consists of the cost of concentrates and or beverageliquid 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 ninethree months ended SeptemberJune 30, 2022 and 2021 and 2020 was approximately $18.18.5 million and $6.55.5 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.

11

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”) issuedWe 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 impactASU 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 SeptemberJune 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 $48,135,27354.1 million which includes a net income available to common stockholders of $7,291,5591.4 million for the ninesix months ended SeptemberJune 30, 2021. During the ninesix months ended SeptemberJune 30, 2021 the Company hadCompany’s net cash used byin operating activities oftotaled approximately $52,063,94930.3. 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 ErrorsTheDuring 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, goodwillGoodwill 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 nineperiods 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

10


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.

12

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.

11


Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

SeptemberJune 30, 20212022

(Tabular dollars in thousands, except per share amounts)

3.REVENUE

3.
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 tobased 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 taxesAdditionally, 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 ninethree and six months ended SeptemberJune 30, 20212022 and 20202021 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 totalTotal foreign revenues ofare approximately $32.98.6 million and $28.011.5 million for the ninethree months ended SeptemberJune 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 $21.15.1 million and $19.27.9 million for the ninethree months ended SeptemberJune 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 $6.66.9 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 ninethree months ended SeptemberJune 30, 2022 and 2021, respectively and approximately $1.0 million and $570,0000.8 million for the ninesix months ended SeptemberJune 30, 2020,2022 and 2021, respectively, which areis reflected in the Company’s Asia reporting geography.revenues from Asia.

13

4.
INVENTORIES

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

4.INVENTORIES

Inventories consist of the following at:

12

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

 

5.
PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets total approximately $22.8$12.3 million 22,829,510and $14.6$13.6 million 14,626,922at SeptemberJune 30, 20212022 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.

6.
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 $6.66.9 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 Notenote 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 SeptemberJune 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 ninethree months ended SeptemberJune 30, 2022 and 2021, interest income was approximately $240,0000.1. 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.

14

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

6.NOTE RECEIVABLE (Continued)

The Company assesses the Notenote receivable for impairment at each reporting period, by evaluating whether it is probable that the Company will be unable to collect all the contractual interestprincipal and principalinterest payments as scheduled in the Note agreement, based on historical experience aboutof 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 SeptemberJune 30, 2021,2022, the Note was not deemed to be impaired. As of September 30, 2021, Qifeng is current on allPayment 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
7.
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.

13


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.

15

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%

16

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

7.LEASES (Continued)

The future annual minimum lease payments required under the Company’s operating and finance lease liabilities as of SeptemberJune 30, 20212022 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 
8.
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 $519,7650.4 million and $82,1800.1 million for the ninethree months ended SeptemberJune 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.

17

9.
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 andover 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-livedgross carrying amount and accumulated amortization of intangible assets and our definite-lived intangible assets and related accumulated amortization as of September June 30, 20212022 and December 31, 2020, respectively:2021, respectively, were as follows:

14

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 ninethree months ended SeptemberJune 30, 20212022 and 20202021 was approximately $445,0000.1 million and $429,0000.2, 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

 

TotalTotal$13,547,466

 

$

11,761

 

18

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

15


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 JanuaryDecember 2024 with monthly base rent of approximately $17,29535. thousand.

13.
STOCKHOLDERS’ EQUITY

13.STOCKHOLDERS’ EQUITY

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

During the ninesix months ended SeptemberJune 30, 2021,2022, the Company issued an aggregate of 1,349,142712,944 shares of its common stock pursuant to the exercise of stock options grantedgrants under the Company’s 2015 Stock Incentive Plan.Plans. The Company received aggregate proceeds of approximately $3,242,0731.3 million for 826,994365,730 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.

19

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; 133,9531,133,953 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, 2020In general, the Company issued 1,437,909 sharesuses 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 stockvariability 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 $22,000,000non-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 ninesix months ended SeptemberJune 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 whichexpense and the release of certain state income tax reserves.



The
Company has nexusis 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

16


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 optionsawards have their own schedule of termination. During 2013,terminations. As such, the majorityCompany 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 5,000,0005 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 SeptemberJune 30, 2021,2022, approximately 4.14.4 million shares are available.

20

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 Subsidiaries2021, 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 4.03.2 million shares at an average price of $7.137.98 with a fair value of approximately $3.29 182.1million. For the ninesix months ended SeptemberJune 30, 20212022 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 SeptemberJune 30, 2021,2022, the Company had approximately $9.15.5 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 2.11.4 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 2.272.4 million shares that have vested as of SeptemberJune 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 

21

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

SeptemberJune 30, 20212022

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 ninesix months ended SeptemberJune 30, 20212022 and 20202021 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

0

The total fair value of shares vested during the ninesix months ended SeptemberJune 30, 2021 and 2020 was $2022. There are 1.30 million and $0.5 million, respectively. Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of SeptemberJune 30, 2021 was $1,600 and is expected to be expensed over the next ten10 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 shareholdersstockholders 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 ninesix months ended SeptemberJune 30, 20212022 and 20202021 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   -  $- 

22

 

 

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 ninesix months ended SeptemberJune 30, 20212022 was $90,0007.4. million. Unrecognized compensation expense related to outstanding restricted stock units to employees and directors as of SeptemberJune 30, 2022 and 2021 was $20.825.8 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:

18


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 2.64.1 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 Productsproducts 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 intendsintended to pay McGovern its percentage of the annual royalty payment, but McGovern hashad 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 intendsDuring 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 covenantfinancial 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 subpoenawe received subpoenas for production of documents in connection with the matter. NeitherThe investigation and requests from the January 8, 2021 SEC letter nor the August 20, 2021 subpoena meansdo 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

19


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

23

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

20


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

21


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.

 

22


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.

24

Results of Operations

Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 20202021

Revenue

Revenue

For the three months ended SeptemberJune 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 SeptemberJune 30, 2020.2021. Approximately 99%103% of this growth was as a result of increased revenues from North America, where thirdsecond quarter 20212022 revenues were $84.5$145.4 million, an increase of $57.6$91.8 million or 214%171% from the 20202021 quarter. The balance of the revenues for the 20212022 quarter were mainly attributable to European revenues of $9.5$7.3 million, which were basically unchangeddecreased 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 (“DSDDSD”) 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.

23


The following table sets forth the amount of revenues by category and changes therein for the three months ended SeptemberJune 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 SeptemberJune 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 SeptemberJune 30, 2020.2021. Gross profit margins reflected an erosiona decrease to 40.0%38.5% for the three months ended SeptemberJune 30, 20212022 from 47.6%43.4% for the 20202021 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 20202021 quarter to the 20212022 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 favorableunfavorable currency impact of $31,000.$2.1 million.

Sales and marketing expenses

Sales and marketing expenses for the three months ended SeptemberJune 30, 20212022 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 SeptemberJune 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 20202021 quarter to the 2021.

25

2022 quarter.

General and administrative expenses

General and administrative expenses for the three months ended SeptemberJune 30, 20212022 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 SeptemberJune 30, 2020. This increase was primarily attributable to stock option expense which amounted to $5.8 million2021. Employee costs for the three months ended SeptemberJune 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 totalbusiness, 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 areastock-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, increaseddecreased by approximately $235,000$0.2 million from to the thirdsecond quarter of 2020.2021.

Other income/(expense)

Other income/(expense)

Total net other expense for the three months ended SeptemberJune 30, 2021 amounted2022 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 SeptemberJune 30, 20212022 was $2.7$9.2 million or $0.04$0.12 per share based on a weighted average of 74,609,19575,451,165 shares outstanding and dilutive earnings per share of $0.03$0.12 based on a fully-dilutive weighted average of 78,473,86678,371,705 shares outstanding, which includes the dilutive impact share-based awards of outstanding stock options to purchase 3,864,6712,920,540 shares. In comparison, for the three months ended SeptemberJune 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 70,473,35173,158,836 shares outstanding and a dilutive earnings per share of $0.06$0.01 based on a fully-dilutive weighted average of 74,848,23977,238,389 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

Revenue24


For the ninesix months ended SeptemberJune 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 ninesix months ended SeptemberJune 30, 2020.2021. Approximately 96%102% of this growth was as a result of increased revenues from North America, where 2021 periodfirst 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 largelyrevenues 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 $1.9contributed an additional approximately $1.8 million, an increase of 114.2%60% from $869,000approximately $1.2 million for the prior year, period.which include increases in royalties payable under our licensing agreement. Other international markets generated $367,000approximately $0.9 million in revenues during the ninesix months ended SeptemberJune 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 DSDour Direct Store Delivery (“DSD”) network resulted in significant growth of ourin 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.

26

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 ninesix months ended SeptemberJune 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 ninesix months ended SeptemberJune 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 ninesix months ended SeptemberJune 30, 2020.2021. Gross profit margins decreasedreflected a decrease to 41.2%39.4% for the ninesix months ended SeptemberJune 30, 20212022 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 inhigher raw material costs (primarily(particularly aluminum cans), ocean freight costs, distribution costs, repackagingtransportation costs and processingrepackaging 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 ninesix months ended September 30, 2020 to the nine months ended SeptemberJune 30, 2021, includes approximately $52.0included $75.4 million related to volume increases, as well as a favorablean 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 ninesix months ended SeptemberJune 30, 20212022 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 ninesix months ended SeptemberJune 30, 2020.2021. This increase was largely a result of incrementalprimarily attributable to higher marketing investment activities, which resulted in an increase of $14.3$17.5 million fromwhen compared to the 2020 period.prior year. Additionally, employee costs increased by approximately $4.1 million from the prior year ago period as we continuedcontinue 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 relatedquarter. Depreciation and amortization increased by approximately $0.3 million when compared to the increaseprior 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 ninesix months ended SeptemberJune 30, 2021, an increase of $8.72022, compared to $10.8 million fromin 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, increaseddecreased by approximately $442,000$0.3 million from to the 2020 period.first six months of 2021.

Other income/(expense)

Other income/(expense)

25


Total net other expense for the ninesix months ended SeptemberJune 30, 2021 was $219,000, which reflects an increase of $348,000 when compared2022 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

27

Net Income

Net income for the ninesix months ended SeptemberJune 30, 20212022 was $7.3$15.8 million or $0.10$0.21 per share based on a weighted average of 73,758,73175,472,158 shares outstanding and dilutive earnings per share of $0.09$0.20 based on a fully-dilutive weighted average of 77,782,45978,396,950 shares outstanding, which includes the dilutive impact share-based awards of outstanding stock options to purchase 4,023,7282,924,792 shares. In comparison, for the ninesix months ended SeptemberJune 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 70,184,07173,655,125 shares outstanding and a dilutive earnings per share of $0.09$0.02 based on a fully-dilutive weighted average of 73,524,20977,658,318 shares outstanding.

Liquidity and Capital Resources

As of SeptemberJune 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 ninesix months ended SeptemberJune 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 ofapproximately $72.6 million increase in cash generation was primarily driven by higheran 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 forof 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 increasegrowth 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 ninesix months ended SeptemberJune 30, 2021,2022, which compares to cash provided by investing activities of $0.9$0.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. The decrease in the cash provided byused in investing activities when compared to the 20202021 period was primarily due to the fact that we invested approximately $2.4an increase of capital expenditures to $2.5 million mainly pertaining to operational equipment which was partially offset by payment on our note receivable, payments fromas we received payment on our China licenseenote 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 ninesix months ended SeptemberJune 30, 2021, representing a $46.9 million increase from $24.02022, which compares to cash provided by financing activities of $70.2 million for the ninesix months ended SeptemberJune 30, 2020. The increase of cash2021. Cash provided by financing activities is mainly related to the net proceeds of $67.8$1.3 million from ourstock 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 offor approximately $72,400 pertaining to financial leases.$67.8 million.

Off Balance Sheet Arrangements

As of SeptemberJune 30, 20212022 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.

28

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.

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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 requireduse 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)

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under the Exchange Act, as of SeptemberJune 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 officerChief 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 changesWe 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 duringthere 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 coveredfollowing areas were not effective as of December 31, 2021 and were not fully remedied as of June 30, 2022.

a)
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;
b)
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 reportthe ineffective ITGCs were deemed ineffective at December 31 2021; and
c)
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, ormanagement 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 likelyre-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.

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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.

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PART II - OTHER INFORMATION

InOn March 2019, Daniel Prescod16, 2022, Christian McCallion filed a putative class action lawsuit against the Company in the SuperiorUnited States District Court for the StateSouthern District of California, CountyFlorida. Plaintiff McCallion asserts that because of Los Angeles (the “Prescod Litigation”). The plaintiff asserted thatCelsius’ 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 acidsecurities 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” violatesperiodic 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 motionSEC, prior to certifyfiling 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 byoriginal 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, whichidentified material errors in previous filings. Celsius has not issued a decision. No fact discovery has been conducted oncommitted 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.

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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.

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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.

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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 OfficerOfficer*

31.2

Section 302 Certification of Chief Financial OfficerOfficer*

32.1

Section 906 Certification of Chief Executive OfficerOfficer**

32.2

Section 906 Certification of Chief Financial OfficerOfficer**

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, 2021August 9, 2022

By:

/s/ John Fieldly

John Fieldly,

Chief Executive Officer

(Principal Executive Officer)

Dated: November 12, 2021August 9, 2022

By:

/s/ Edwin Negron-CarballoJarrod Langhans

Edwin Negron-Carballo,

Jarrod Langhans,
Chief Financial Officer

(Principal Financial and Accounting Officer)

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33