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

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

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☐ ☒ No ☒☐

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

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

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

The number of shares outstanding of the registrant’s common stock, $0.001 par value, as of November ~~8, 2017~~7, 2022 was ~~45,679,093~~76,225,201 shares.

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

Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity and Mezzanine Equity

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

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-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 ~~two subsidiaries~~a subsidiary of the Company.

On February 7, ~~2017,~~2018, the Company established Celsius Asia Holdings Limited, ~~and~~a Hong Kong corporation, as a wholly-owned subsidiary of the Company. On February 7, 2018 Celsius China Holdings Limited, ~~two~~a Hong Kong ~~corporations as~~corporation, became a wholly-owned ~~subsidiaries~~subsidiary of ~~the Company~~Celsius Asia Holdings Limited and on May 9, ~~2017, the Company~~2018, Celsius Asia Holdings Limited established Celsius (Beijing) Beverage Limited, a China corporation, as a wholly-owned subsidiary of Celsius Asia Holdings Limited.

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

~~Since~~On August 1, 2022 (“Effective Date”), the ~~merger,~~Company and PepsiCo Inc. ("Pepsi"), entered into multiple agreements, including a Securities Purchase Agreement (“SPA”), Lock-Up Agreements, Registration Rights Agreement, a distribution agreement (“Distribution Agreement”), and a Channel Transition Agreement ("Transition Agreement"). The Securities Purchase Agreement, Lock-Up Agreements and Registration Rights Agreement pertain to the Company’s issuance of 1,466,666 shares of Series A Convertible Preferred Stock (“Series A” or “Series A Preferred Stock”) in exchange for cash proceeds of $550 million, excluding transaction costs. The Transition Agreement specifies payments to be made by Pepsi to Celsius for transitioning certain existing distribution rights to Pepsi. The Distribution Agreement resulted in Pepsi becoming the Company’s primary distribution supplier for the Company's products in the United States and certain international markets. See Note 13. Related Party Transactions and Note 14. Mezzanine Equity for more information.

In connection with the Distribution Agreement and Transition Agreement, the Company terminated agreements with existing suppliers to transition territory rights to Pepsi. The Company recognized total termination expenses in sales and marketing of $155.4 million and $156.2 million in the three and nine-month periods ended September 30, 2022. These expenses were recognized by the Company upon delivery of termination notices to the other distributors, in accordance with ASC 420, Exit or Disposal Cost Obligations.

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

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 ~~lives~~life of the ~~assets~~asset, generally ranging from three to seven years.

Impairment of Long-Lived Assets— In accordance with ASC Topic 360, “~~Property,~~“Property, Plant, and ~~Equipment~~”Equipment” the Company reviews the carrying value of long-lived assets for impairment ~~at least annually or~~ whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ~~Recoverability of~~An impairment loss is determined regarding a long-lived ~~assets is measured by comparison of~~asset if its carrying amount ~~to the undiscounted cash flows that the asset or asset group~~ is ~~expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any,~~not recoverable and exceeds its fair value. The carrying amount is not recoverable when it exceeds the sum of the undiscounted cash flows expected to result from use of the asset over its remaining useful life and final disposition. The Company did not ~~recognize~~record any impairment ~~expense at~~charges during the nine months ended September 30, ~~2017~~2022 and ~~December 31, 2016.~~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:

September 30,
2022

December 31,
2021

United States

$
5,462

$
3,043

Sweden

1,249

1,050

Finland

383

301

Norway

15

—

Long-lived assets related to foreign operations

1,647

1,351

Total long-lived assets-net

$
7,109

$
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. The Company first assesses qualitative factors such as macro-economic conditions, industry and market conditions, and cost factors as well as other relevant events, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. At September 30, 2022, there were no 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. The addition of the Pepsi distribution network has shifted the Company's focus to the US market and as a consequence it was determined that impairment indicators for the Func Foods Brands indefinite intangible asset were present. The Company no longer anticipates focusing on the expansion of Func Food branded products and the Company plans to focus on Celsius branded products. As a result of the strategic shift, which the Company considered a triggering event, the company quantitatively tested the Func Foods Brand Name for impairment utilizing the relief from royalty method to determine fair value. As a result of the quantitative assessment, the Company recorded an impairment charge of $2.4 million during the three months ended September 30, 2022 and is presented within General and Administrative expenses on the Consolidated Statements of Operations.

Revenue Recognition — ~~Revenue is derived~~The Company recognizes revenue in accordance with ASC Topic 606 “Revenue from Contracts with Customers.” The Company recognizes revenue when performance obligations under the ~~sale~~terms of beverages. Revenue is recognized when persuasive evidence of an agreement exists, the products are delivered, sales price is fixed or determinable, and collectability is reasonably assured. Any discounts, slotting fees, sales incentives or similar arrangementsa contract with the customer are satisfied. Product sales occur once control or title is transferred based on the 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 ~~at time~~based on the expected amount to be provided to the customers and are recognized as a reduction of ~~sale~~revenue. The amount of consideration the Company receives and ~~deducted~~revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. Additionally, for any agreements which are one 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. Sales taxes and other similar taxes are excluded from revenue. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

The Company receives payments from certain distributors in new territories as reimbursement for contract termination costs paid to the prior distributors in those territories. Amounts received pursuant to these new and/or amended distribution agreements entered into with certain distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized ratably over the anticipated life of the respective distribution agreements.

Customer Advances— From time to time the Company requires ~~prepayments for~~ deposits in advance of delivery of products and/or production runs. Such amounts are initially recorded as customer advances liability within deferred revenue. The Company recognizes such revenue as it is earned in accordance with revenue recognition policies.

~~Shipping and Handling Costs~~~~— Shipping and handling costs are reported in cost of revenue in the accompanying consolidated statements of income.~~ The Company ~~incurred shipping and handling costs~~had no customer advances as of ~~$2.4 and $1.5 million during the nine months ended~~ September 30, ~~2017 and 2016,~~2022 or December 31, 2021, respectively. Although our classification is consistent with many companies, our gross margin may not be comparable to many beverage companies that include shipping and handling costs in selling, general and administrative expenses.

Advertising Costs — Advertising costs are expensed as incurred. The Company uses mainly radio, local sampling events, sponsorships, endorsements, and digital advertising. The Company incurred marketing and advertising ~~expense~~expenses of approximately ~~$5.1~~$25.8 million and ~~$3.4~~$11.2 million, ~~during~~for the three months ended September 30, 2022 and 2021 respectively. During the nine months ~~ending~~ended September 30, ~~2017~~2022 and ~~2016,~~2021, the Company incurred marketing and advertising expenses of approximately $55.0 million and $23.8 million, respectively.

Research and Development— Research and development costs are charged to general and administrative ~~expense~~expenses as incurred and consist primarily of consulting fees, raw material usage and test productions of beverages. The Company incurred ~~these~~ expenses of ~~$222,300~~approximately $0.1 million and ~~$66,700~~$0.3 million during the three months ended September 30, 2022 and 2021, respectively. During the nine months ~~ending~~ended September 30, ~~2017~~2022 and ~~2016,~~2021, the Company incurred approximately $0.3 million and $0.7 million, respectively.

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

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

~~The Company did not have any other assets or liabilities measured at fair value at September 30, 2017 and December 31, 2016.~~

Foreign Currency ~~Translation~~Gain/Losses — ~~Generally, foreign~~ Foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S. dollars using current exchange rates. The ~~U.S. dollar results~~foreign subsidiaries perform re-measurements of their assets and liabilities denominated in non-functional currencies on a periodic basis and the gain or losses from these adjustments are included in the Statement of Operations as foreign exchange gains or losses. For three months ended September 30, 2022 exchange losses have amounted to approximately $0.3 million while during the three months ended September 30, 2021, the Company recognized foreign currency losses of approximately $0.3 million mainly related to fluctuations in exchange rates. For the nine months ended September 30, 2022 exchange losses have amounted to approximately $0.9 million while during the nine months ended September 30, 2021, the Company recognized foreign currency losses of approximately $0.5 million mainly related to fluctuations in exchange rates. Translation gains and losses that arise from ~~such~~the translation of net assets from functional currency to the reporting currency, as well as exchange gains and losses on intercompany balances of long-term investment nature, are included in ~~General and administrative expenses.~~Other Comprehensive Income. The Company incurred foreign currency translation ~~expense~~net loss during the three months ended September 30, 2022 of approximately ~~$2,200~~$2.0 million and $0a net gain of approximately $1.3 million during the three months ended September 30, 2021. The Company incurred foreign currency translation net loss during the nine months ~~ending~~ended September 30, ~~2017~~2022 of approximately $4.8 million and ~~2016, respectively.~~a net gain of approximately $1.4 million during the nine months ended September 30, 2021. The Company's operations in different countries required that it transacts in the following currencies:

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

Earnings per Share— —The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share (“ASC 260”), which requires earnings per share ("EPS") for each class of stock (common stock and participating preferred stock) to be calculated using the two-class method. The two-class method is an allocation of earnings (distributed and undistributed) between the holders of common stock and a company’s participating security holders. Under the two-class method, earnings for the reporting period are allocated between common shareholders and other security holders based on their respective participation rights in undistributed earnings.

Basic earnings per common share ~~are calculated~~is computed by dividing ~~net~~ income ~~(loss)~~or loss available to common 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 shares of basic common ~~and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon conversion of convertible debt, exercise of~~ stock ~~options and warrants (calculated using the reverse treasury stock method). As of September 30, 2017, there were options outstanding to purchase 4.6 million shares, which exercise price averaged $1.80,~~outstanding. The Company’s Series CA Convertible Preferred Stock ~~warrants outstanding~~is classified as a participating security in accordance with ASC 260. Net income allocated to ~~convert to 4.6 million common shares at $0.52 price per share and~~the holders of Series DA Convertible Preferred Stock ~~warrants~~will be calculated based on the shareholders’ proportionate share of weighted average shares of common stock outstanding ~~to convert to 4.7 million common shares at $0.86 price per share. There were no other dilutive common shares equivalents, including convertible notes and warrants, as no common share equivalents had~~on an ~~exercise price below the ending closing price of the year. The effects of dilutive instruments have been presented~~if-converted basis. See note 3. Earnings Per Share for the three months ended September 30, 2017 but have not been presented for the three months ended September 30, 2016 and nine months ended September 30, 2017 and 2016, as the effects would be anti-dilutive.more information.

Share-Based Payments—The Company ~~has fully adopted~~follows the provisions of ASC Topic 718~~Compensation~~ “Compensation —Stock ~~Compensation~~Compensation” and related ~~interpretations for employee and non-employee stock based compensation.~~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 Plan"). This 2015 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. The 2015 Plan permits the grant of options and other share based awards for up to 5 million shares. In addition, there is a provision for an annual increase of 15% to the shares included under the plan, with the shares to be added on the first day of each calendar year, beginning on January 1, 2017 (note 18). As of September 30, 2022, total shares available are 4.6 million.

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

Operating Expenses — Operating expenses include selling expenses such as warehousing expenses after manufacture, as well as expenses for advertising, samplings and in-store demonstrations costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees), depreciation and 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 three months ended September 30, 2022 and 2021 was approximately $14.6 million and $8.5 million, respectively. Freight expense on goods shipped for the nine months ended September 30, 2022 and 2021 was approximately $26.3 million. and $18.1 million, respectively.

Recent Accounting Pronouncements

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

In ~~August 2015,~~September 2016, the FASB issued ASU No. ~~2015-15,~~~~Presentation~~2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires the immediate recognition of management’s estimates of current and ~~Subsequent Measurement~~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 ~~Debt Issuance Costs Associated~~Topic 326 for Smaller Reporting Companies to interim and annual periods beginning after December 15, 2022, with ~~Line-of-Credit Arrangements (Amendments~~early adoption permitted. The Company has 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 ~~Paragraphs Pursuant~~paragraph, pursuant to the issuance of SEC Staff ~~Announcement at June 18, 2015 EITF Meeting)~~ (“~~ASU 2015-15~~~~”). ASU 2015-15 allows debt issuance costs related~~Accounting Bulletin No. 119, to ~~line-of-credit agreements to be presented in~~Topic 326. Topic 326 is effective for the ~~balance sheet as an asset. ASU 2015-03 and ASU 2015-15 are effective~~Company for fiscal years and interim reporting periods within those years beginning after December 15, ~~2015.~~2022. The Company ~~has adopted ASU 2015-03 and ASU 2015-15 as~~is currently assessing the impact of ~~December 31, 2016; the~~ adoption ~~did not have a material impact~~of this standard on ~~its~~our consolidated financial ~~position or results~~statements. Adoption of ~~operations.~~

~~In April 2015, the FASB issued ASU No. 2015-03,~~~~Simplifying the Presentation of Debt Issuance Costs~~ (“~~ASU 2015-03~~”). ASU 2015-03 simplifies the presentation of debt issuance costs and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability (consistent with debt discounts).

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” which supersedes previous revenue recognition guidance. ASU No. 2014-09 requires that a company recognize revenue at an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring goods or services to a customer. In applying the new guidance, a company will (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the contract’s performance obligations; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU No. 2014-09 was to be effective for reporting periods beginning after December 15, 2016. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. This new guidancestandard is ~~effective for the Company beginning January 1, 2018.~~

~~All new accounting pronouncements issued but not yet effective are~~ not expected to have a material impact on our results of operations, cash flows or financial position. The Company adopts all applicable, new accounting pronouncements as of the specified effective dates. Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. ~~The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.~~

Liquidity— These financial statements have been prepared assuming the Company will be able to continue as a going concern. At September 30, ~~2017,~~2022, the Company had an accumulated deficit of ~~$54,946,000~~approximately $217.5 million which includes a net loss of approximately $166.1 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, the Company’s net cash provided by operating activities totaled approximately $171 million.As of September 30, 2021, the Company had an accumulated deficit of $63.4 million which includes a net loss available to common stockholders of ~~approximately $1,592,000~~$8 million for the nine months ended September 30, ~~2017. While these~~2021. During the nine months ended September 30, 2021 the Company’s net cash used in operating activities totaled approximately $52.1 million.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

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

Correction of Immaterial Errors — During the third quarter of 2021, the Company performed immaterial corrections to the previously reported consolidated financial statements related to the acquisition of Func Food Group Ovi ("Func Food") in 2019. As of September 30, 2021, goodwill increased by $3.7 million and deferred tax liabilities increased by $3.5 million attributable to tax implications of acquired intangible assets that had not been recorded in the purchase accounting treatment acquisition. The impact on the consolidated statements of operations and comprehensive income for the nine months ended September 30, 2021 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 periods ended June 30, 2021 and September 30, 2021, the Company determined that the calculation 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 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 US GAAP. 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 ~~alone~~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 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, respectively, and included that restated financial information within its annual report for the period ending December 31, 2021.

In connection with the filing of this Quarterly Report, the Company has revised the accompanying financial statements, and the related notes to reflect the correction of 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
	For the three months ended September 30, 2021 (unaudited)								For the nine months ended September 30, 2021 (unaudited)
	As Reported		Adjustment			As Restated			As Reported		Adjustment			As Restated

Revenue	$	94,909	$	—		$	94,909		$	210,017	$	—		$	210,017
Gross Profit		37,693		—			37,693			86,522		—			86,522

General and administrative expenses1		11,140		12,117			23,257			28,066		15,297			43,363
Total operating expense		33,761		12,117			45,878			78,177		15,297			93,474

Income (loss) from operations		3,932		(12,117	)		(8,185	)		8,345		(15,297	)		(6,952	)
Net income (loss) before income taxes		3,580		(12,117	)		(8,537	)		8,125		(15,297	)		(7,172	)

Net income (loss)	$	2,746	$	(12,117	)	$	(9,371	)	$	7,292	$	(15,297	)	$	(8,005	)

Net income (loss) per share
Basic	$	0.04	$	(0.17	)	$	(0.13	)	$	0.10	$	(0.21	)	$	(0.11	)
Diluted	$	0.03	$	-		$	-		$	0.09	$	-		$	-

1 In order to correct previously reported share-based compensation for three months and nine months ended September 30, 2021, the Company is recognizing additional share-based compensation expense of approximately $12.1 million and $15.3 million, respectively.

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

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)


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

Current assets	$	252,562		$	—		$	252,562
Total assets		294,978			—			294,978

Current liabilities	$	93,421		$	—		$	93,421
Total liabilities		97,580			—			97,580

Additional paid-in capital	$	244,294		$	15,297		$	259,591
Accumulated deficit		(48,135	)		(15,297	)		(63,432	)
Total Stockholders' Equity Impact	$	197,398		$	—		$	197,398

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 nine months ended September 30, 2021.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

September 30, December 31,
2017 2016

Finished goods $ 2,941,925 $ 2,142,032
Raw Materials 1,490,200 270,142
Less: Inventory write-down (115,529 ) (200,804 )
Inventories, net $ 4,316,596 $ 2,211,370

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2017~~

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

Prepaid expenses and other current assets total approximately ~~$3,068,000~~$12.1 million and ~~$937,000,~~$13.6 million at September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively, ~~and consist~~consisting mainly of prepaid ~~consulting agreement with D3M Licensing Group,~~advances to co-packers related to inventory production, advertising, prepaid insurance, prepaid slotting fees, value added tax payments and deposits on purchases.

NOTE RECEIVABLE

Note receivable consists of the following at:


	September 30, 2022		December 31, 2021

Note receivable-current	$	2,888	$	2,588
Note receivable-non-current		3,465		7,117
Total Note receivable	$	6,353	$	9,705

Effective January 1, 2019, the Company restructured its China distribution efforts by entering into two separate economic agreements as it relates to the commercialization of its Celsius products (i.e., the license and repayment of investment agreement with Qifeng, as described above). See Note 4 for information regarding the license agreement with Qifeng. Under a separate economic agreement, Qifeng will repay the marketing investments made by Celsius into the China market through 2018, over the same five-year period as the license agreement. The repayment, which was formalized via a note receivable from Qifeng (the "Note"), will need to be serviced even if the licensing agreement is cancelled or terminated. The Note is denominated in Chinese-Yuan.

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

The Company assesses the note receivable for impairment at each reporting period, by evaluating whether it is probable that the Company will be unable to collect all the contractual principal and interest payments as scheduled in the Note, based on historical experience of Qifeng’s ability to pay, the current economic environment and other factors. If the Note is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows under the Note, discounted at the Note’s effective interest rate. At September 30, 2022, the Note was not deemed to be impaired. Payment in-full was received in April 2022 pertaining to the amounts due on March 31, 2022.

As evidence of solvency for the Note, a stock certificate in Celsius Holding's Inc. which amounts to 30,000 of shares owned by an affiliate under common control of Qifeng is being held at a brokerage account. A letter of guarantee was executed with several restrictions regarding their shares. In particular, it was agreed that the stock would not be sold or transferred without the prior written consent from Celsius Holding's, 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 remaining shares. The shares serve as one component of management's consideration when evaluating impairment indicators.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

	September 30,			December 31,
	2017			2016			September 30, 2022			December 31, 2021

Furniture and equipment	$	322,342		$	291,626
Merchandising equipment - coolers							$	5,505		$	3,052
Office Equipment								1,177			891
Vehicles								1,013			304
Less: accumulated depreciation		(272,384	)		(258,093	)		(1,913	)		(1,067	)
Total	$	49,958		$	33,533		$	5,782		$	3,180

Depreciation expense amounted to ~~$14,292~~approximately $0.4 million and ~~$12,346 during~~$0.3 million for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense amounted to approximately $1.0 million and $0.5 million for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

11.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at:

	September 30,		December 31,
	2017		2016		September 30, 2022		December 31, 2021

Accounts payable	$	5,716,824	$	858,131	$	27,595	$	35,821
Due to Pepsi						19,312		—
Promotional allowances						43,250		19,037
Freight						19,547		15,872
Accrued expenses		2,694,161		896,076		30,094		15,311
Unbilled purchases						4,149		5,438
Total	$	8,410,985	$	1,754,207	$	143,947	$	91,479

~~Celsius Holdings, Inc. and Subsidiaries~~

12.

OTHER CURRENT LIABILITIES

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

~~September 30, 2017~~

7.	~~DEFERRED REVENUE AND OTHER CURRENT LIABILITIES~~

~~Deferred revenue and other~~Other current liabilities consist of the following at:

September 30, December 31,
2017 2016

Customer deposits $ 38,106 $ 201,652
State bottle bill liability 14,882 12,960
Total $ 52,988 $ 214,612


	September 30, 2022		December 31, 2021

Short-term
VAT payable	$	267	$	—
State Beverage Container Deposit		2,975		976
Other		25		—
Total	$	3,267	$	976

8.	~~LINE OF CREDIT NOTE PAYABLE - RELATED PARTIES~~

~~Line of credit note payable - related parties consists of the following as of:~~17

September 30, December 31,
2017 2016
Note Payable – line of credit
In July 2010, the Company entered into a line of credit note payable with a related party principle shareholder which carries interest of five percent per annum and is due quarterly. The Company can borrow up to $4,500,000. The Company has pledged all of its assets as security for the line of credit. The notes mature in January 2020, at which time the principal amount is due. During April 2015, the Company issued $4,000,000 of convertible series D preferred series in exchange for cancellation of $4,000,000 of this line. In January 2017, the Company issued 333,333 of common stock at $3.00 per share the offering price in exchange for the cancellation of $1,000,000 of this line.
Long-term portion $ 3,500,000 $ 4,500,000

Celsius Holdings, Inc. ~~and Subsidiaries~~

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2017~~2022

9.	~~PREFERRED STOCK – RELATED PARTY~~

~~On August 26, 2013, the Company entered into a securities purchase agreement (the “~~~~2013 Purchase Agreement~~~~”) with CDS Ventures of South Florida, LLC (“~~~~CDS~~~~”) and CD Financial, LLC (“~~CD~~”). CDS and CD are limited liability companies which are affiliates of Carl DeSantis, the Company’s principal shareholder. The Company issued 2,200 shares of its Series C Preferred Stock (the “~~~~Preferred C Shares~~”)(Tabular dollars in ~~exchange for the conversion of a $550,000 short term loan from CDS and the conversion of $1,650,000 in indebtedness under the Company’s line of credit with CD (the “~~~~CD Line of Credit~~~~”). The Preferred C Shares are convertible into our common stock at the option of the holder thereof at a conversion price of $0.52~~thousands, except per share at any time until December 31, 2018, at which time they will automatically convert into shares of our common stock determined by dividing the liquidation preference of $1,000 per Preferred C Share by the conversion price thenamounts)

13.

RELATED PARTY TRANSACTIONS

Transactions with PepsiCo Inc.

As further described in effect. The conversion price is subject to adjustment in the event of stock dividends, stock splits and similar events. The Preferred C Shares accrue cumulative annual dividends at the rate of 6% per annum, payable by the issuance of additional Preferred C Shares. The holder of Preferred C Shares votesNote 14 Mezzanine Equity, on ~~an “as converted” basis, together with holders of common stock as a single class on all matters presented to shareholders for a vote, except as required by law. In April 2015,~~August 1, 2022, the Company issued ~~180~~1,466,666 shares of non-voting Series A Convertible Preferred ~~C Shares valued at $180,000 in settlement~~stock (“Series A”) to Pepsi. On an as-converted basis the Series A held by Pepsi accounts for approximately 8.5% of ~~$180,000 in accrued preferred C dividends.~~the Company’s outstanding Common Stock, both on the date of issuance and as of September 30, 2022. Also, as discussed Note 14, the Securities Purchase Agreement entered into on August 1, 2022 (the Purchase Agreement”) granted Pepsi the right to designate a nominee for election to the Company’s nine-member board of directors, so long as Pepsi meets certain ownership requirements with respect to the Company’s stock. During the quarter ended September 30, 2022, a Pepsi executive was nominated by Pepsi and elected to the Company’s board of directors.

Based on Pepsi’s contractual representation rights for a seat on the Company’s Board of Directors, the Company has concluded that Pepsi represents a related party to the Company. As of September 30, ~~2017,~~2022, the following transactions were recognized in the Company’s financial statements:

•

Net sales to Pepsi amounted to $58.8 million for the three and ~~December 31, 2016, $424,631 and $302,555 of dividends has been accrued, respectively. The Preferred C Shares mature on December 31, 2018~~nine months ended September 30, 2022 and are ~~redeemable only~~included in ~~exchange for shares~~revenue on the accompanying consolidated statement of ~~Company common stock.~~

~~On April 16, 2015,~~operations.

•

Accounts receivable due from Pepsi on September 30, 2022, were $72.3 million and are included in accounts receivable, net on the Company’s consolidated balance sheet. Pepsi paid the Company ~~entered into an amendment~~$174.7 million in cash in the third quarter under the Transition Agreement. This amount was used to ~~its existing Loan and Security Agreement (the “~~~~Amendmen~~~~t”) with CD, an affiliate~~pay termination fees owed by the Company to terminated distributors. The Company has recorded deferred revenues of ~~CDS Ventures and Mr. DeSantis. Pursuant to the Amendment, the outstanding principal amount of the CD Line of Credit was reduced by $4.0~~$154.1 million, which ~~amount was converted into 4,000 shares~~is presented net of $1.3 million of revenue recognized at September 30, 2022, and a ~~newly-designated Series D Preferred Stock (the “~~~~Preferred D Shares~~~~”). This related party was given a conversion price~~liability payable due to Pepsi of ~~$0.86 per common share, whereas other investors purchased common shares at $0.89~~$19.3 million, representing refund liabilities owed to Pepsi under the Transition Agreement which are included in accounts payable and accrued expenses on the ~~private placement,~~accompanying consolidated balance sheet as discussed in note 12. The difference of $0.03 per share, which resulted in $139,535, was recorded as a dividend in accordance with ASC 470-20-35, subsequent measurement for debt with conversion and other options. The Preferred D Shares are convertible into our common stock at the option of the holder thereof at a conversion price of $0.86 per share until the earlier of the January 2, 2020 due date of our line of credit with CD Financial or such earlier date as the line of credit is satisfied (the “~~Mandatory Redemption Date~~”). The conversion price is subject to adjustment in the event of stock dividends, stock splits and similar events. The Preferred D Shares accrue cumulative annual cash dividends at the rate of 5% per annum, payable quarterly in cash and have a liquidation preference of $1,000 per share. On the Mandatory Redemption Date, the Preferred D Shares automatically convert into shares of our common stock in a number determined by dividing the $1,000 per Preferred D Share liquidation preference plus any accrued but unpaid dividends, by the conversion price then in effect. The Preferred D Shares may also be redeemed by us at any time on or after December 31, 2016, at a redemption price equal to 104% of the liquidation preference. The holder of the Preferred D Shares votes on an “as converted” basis, together with holders of common stock as a single class on all matters presented to shareholders for a vote, except as required by law. As of September 30, ~~2017,~~2022. The $19.3 million represents the excess of payments received from Pepsi less amounts paid and ~~December 31, 2016, $51,111~~expected to be paid to terminated distributors.

•

The issuance of Series A to Pepsi was recorded at fair value, determined to be $832.5 million, on August 1, 2022. Cash proceeds from the issuance of Series A received from Pepsi were $550 million. See Note 14 for more information.

•

The Company has recorded a $282.5 million asset as Deferred Other Costs, representing the excess of the $832.5 million fair value of the Series A Preferred Stock over the issuance proceeds of $550 million. Amounts representing the unamortized deferred other costs of $14.1 million and ~~$51,111~~$266 million are presented in deferred other costs-current and deferred other costs-non-current, respectively, net of ~~dividends has been accrued regarding these shares, respectively.~~

~~Celsius Holdings, Inc. and Subsidiaries~~

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

$2.4 million of accumulated amortization in the accompanying consolidated balance sheet on September 30, ~~2017~~2022.

~~10.~~

~~RELATED PARTY TRANSACTIONS~~

See Notes 1. Organization and Description of Business, 2. Basis of PresentationSignificant Accounting Policies, 11. Accounts Payable and Accrued Expenses, and 14. Mezzanine Equity for more information.

Related Party Leases

The Company’s office is rented from a company affiliated with CD Financial, ~~the line of credit note payable lender,~~LLC which is controlled by ~~Carl DeSantis, a principal shareholder (see note 13). Currently, the~~one of our major shareholders. The current lease expires on ~~October 2020~~December 2024 with monthly base rent of ~~$8,809. The rental fee~~approximately $35 thousand, which is ~~commensurate with other properties available~~included in general and administrative on the accompanying consolidated statement of operations and in the ~~market.~~operating leases in consolidated balance sheet.

14.

MEZZANINE EQUITY

Series A Convertible Preferred Stock

In April 2015, the Company entered into a strategic marketing and advisory services agreement with All Def Digital. Tim Leissner, a former director and current shareholder of the Company is also a director and shareholder in All Def Digital.

As of September 30, ~~2017,~~2022, Company has designated and ~~since inception,~~authorized 1,466,666 shares of Series A Convertible Preferred Stock with a par value of $0.001 per share and a stated value of $375 per share. The stated value per share may be increased from time-to-time in the event dividends on the Series A are paid-in-kind (“PIK dividends”) pursuant to the Series A Certification of Designation (the “Series A Certificate”). On August 1, 2022, pursuant to the Purchase Agreement, the Company issued 1,466,666 shares of Series A, representing 100% of the authorized Series A shares, to Pepsi for stated cash consideration aggregating $550 million, excluding issuance costs. The Series A was issued concurrently with the execution of Distribution Agreement and the Transition Agreement. The Company determined that the aggregate fair value of the Series A on the issuance date was $832.5 million, or approximately $568 per share. Accordingly, the Series A Convertible Preferred Stock was recorded at that amount, net of issuance costs of $8.0 million, in the Company’s consolidated balance sheet and statement of stockholders’ equity.

Mezzanine Classification

The Series A Convertible Preferred Stock is redeemable in the event of a change in control as defined in the Series A Certificate. S99-3A(2) of the SEC's Accounting Series Release No. 268 ("ASR 268") requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. Preferred securities that are mandatorily redeemable are required to be classified by the issuer as liabilities whereas under ASR 268 guidance an issuer should classify a preferred security whose

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

redemption is contingent on an event not entirely in control of the issuer as mezzanine equity. The Series A is not mandatorily redeemable, however, a change in control is not solely in control of the Company, accordingly, the Company determined that mezzanine treatment is appropriate for the Series A and has ~~paid All Def Digital $440,395,~~presented it as such in our consolidated balance sheet and consolidated statement of changes in stockholders' equity as of and for ~~services relating~~the period ending September 30, 2022. The Series A is not considered mandatorily redeemable.

Pursuant to the ~~strategic marketing~~Purchase Agreement, Pepsi, together with its affiliates, has certain rights and ~~advisory services agreement. For~~is also subject to various restrict percentage of the Company’s outstanding common shares on an as-converted basis through purchases of the Company’s Common Stock in the open market and the accumulation of PIK dividends. Additionally, pursuant to the Purchase Agreement, Pepsi has the right to designate one nominee for election to Company’s board of directors, for so long as Pepsi (together with its affiliates) beneficially owns at least 3,666,665 shares of the Company’s outstanding Common Stock on an as-converted basis. In August of 2022, the Company expanded the number of seats from eight to nine in connection with the election of a Pepsi representative to the Company’s board of directors.

Liquidation Preference

The Series A 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, and (iii) junior to any class or series of capital stock of the Company expressly designated as ranking senior to the Series A. The aggregate liquidation preference of the Series A is $550 million on September 30, 2022.

Voting

The Series A confers no voting rights, 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 or provided for its benefit, or would result in securities that would be senior to or pari passu with the Series A. As described above, Pepsi does have a contractual right to representation on the Company’s Board of Directors, subject to certain share holdings thresholds.

Dividends

The Series A entitles the holder to cumulative dividends, which are payable quarterly in arrears either in cash, in-kind, or a combination thereof, at the Company’s election (“Regular Dividends”). Regular Dividends accrue on each share Series A at the rate of 5.00% per annum, subject to adjustment as set forth in the Series A Certificate. In addition to such quarterly Regular Dividends, shares of Series A also entitle the holder participate in any dividends paid on the Company’s Common Stock on an as-converted basis. During the quarter ended September 30, 2022, the Company declared and paid $4.6 million in Regular Dividends on the Series A, which amounted to $3.13 per share of Series A. There are no cumulative undeclared dividends on the Series A at September 30, 2022. In addition, there were no dividends issued to common shareholders as of the nine months ~~ending~~ended September 30, ~~2017, services were performed~~2022 and 2021

Redemption

Pursuant to certain conditions set forth in the Series A Certificate, Series A may be redeemed at a price per share of Series A equal to the sum of (i) the stated value of such share of Series A as of the applicable Redemption Date, plus (ii) without duplication, all accrued and unpaid dividends previously added to the stated value of such share of Series A, all accrued and unpaid dividends per share of Series A through such Redemption Date (the “Redemption Price”).

Company’s Optional Redemption

At any time from and after the earlier of (i) August 1, 2029, if the ten-day volume weighted average price of the Company’s Common Stock ( the “Ten-Day VWAP”) does not exceed the conversion price on the date immediately prior to the date the Company delivers a redemption notice to the holders, and (ii) the cancellation of the Distribution Agreement by ~~All Def Digital totaling $50,000 respectively.~~the Company, if the Ten-Day VWAP does not exceed the Conversion Price on the date immediately prior to the date the Company delivers a redemption notice to the holders, the Company shall have the right to redeem all (and not less than all) of the then-outstanding shares of Series A, at the Redemption Price. In the event of a Company optional redemption, the Company shall effect such redemption by paying the entire Redemption Price on or before the date that is thirty days after the delivery of the Company’s redemption notice and by redeeming all the shares of Series A on such date.

~~Other~~Change in Control Redemption

In the event of (i) a sale or transfer, directly or indirectly, of all or substantially all of the assets of the Company in any transaction or series of related ~~party~~ transactions (other than sales in the ordinary course of business); or (ii) any merger, consolidation or reorganization of the Company with or into any other entity or entities as a result of which the holders of the Company’s outstanding capital stock (on a fully-diluted basis) immediately prior to the merger, consolidation or reorganization no longer represent at least a majority of the voting power of the surviving or resulting Company or other entity; or (iii) any sale or series of sales, directly or indirectly, beneficially or of record, of shares of the Company’s capital stock by the holders thereof which results in any Person or group of Affiliated Persons owning capital stock holding more than 50% of the voting power of the Company (a “Change in Control”) the Company (or its successor) shall redeem all (and not less than all) of the then-issued and outstanding shares

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

of Series A. Upon such redemption, the Company will pay or deliver, as applicable, to each holder in respect of each share of Series A held by such holder, an amount equal to the greater of (A) cash in an 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 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 such Change of Control as a holder of shares of Common Stock (such greater amount, the “Change of Control Redemption Price”). If, in connection with a transaction resulting in a Change of Control, the Company or its successor shall not have sufficient funds legally available under the Nevada law governing distributions to stockholders to redeem all outstanding shares of Series A, then the Company shall (A) redeem, pro rata among the holders, a number of shares of Series A equal to the number of shares of Series A that can be redeemed with the maximum amount legally available for the redemption of such shares of Series A under the Nevada law governing distributions to stockholders, and (B) redeem all remaining shares of Series A not redeemed because of the foregoing limitations at the applicable Change of Control Redemption Price as soon as practicable after the Company (or its successor) is able to make such redemption out of assets legally available for the purchase of such share of Series A. The inability of the Company (or its successor) to make a redemption payment for any reason shall not relieve the Company (or its successor) from its obligation to effect any required redemption when, as and if permitted by applicable law.

Holder Right to Request Redemption

On each of August 1, 2029, August 1, 2032, and the August 1, 2035, the majority holders shall have the right, upon no less than six months prior written notice to the Company, to request that the Company redeem all (and not less than all) of the then-outstanding shares of Series A, at the Redemption Price.

In the event of a holder optional redemption, the Redemption Price shall be payable, and the shares of Series A redeemed by the Company, in three equal installments, commencing on August 1, 2029, August 1, 2032, or August 1, 2035, as applicable, and in each case on the fifteenth- and thirtieth-month anniversary thereafter (each a "Redemption Date”). On each Redemption Date for a holder optional redemption, the Company shall redeem, on a pro rata basis in accordance with the number of shares of Series A owned by each holder, that number of outstanding shares of Series A determined by dividing (i) the total number of shares of Series A outstanding immediately prior to such Redemption Date by (ii) the number of remaining Redemption Dates (including the Redemption Date to which such calculation applies). If, on any Redemption Date, Nevada law governing distributions to stockholders or the terms of any indebtedness of the Company to banks and other financial institutions engaged in the business of lending money prevent the Company from redeeming all share of Series A to be redeemed, the Company shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.

If any shares of Series A scheduled for redemption on a Redemption Date are ~~discussed~~not redeemed for any reason on such Redemption Date, (x) from such Redemption Date until the fifteen-month anniversary of such Redemption Date, the dividend rate with respect to such unredeemed share of Series A shall automatically increase to 8% per annum, (y) from such fifteenth-month anniversary of such Redemption Date until the thirtieth-month anniversary of such Redemption Date, the dividend rate with respect to such unredeemed share of Series A shall automatically increase to 10% per annum and (z) from and after such thirtieth-month anniversary of such Redemption Date, the dividend rate with respect to any such unredeemed share of Series A shall automatically increase to 12% per annum, in ~~notes 8 and 9.~~each case until such share is duly redeemed or converted.

~~11.~~

~~STOCKHOLDERS’ EQUITY~~

Conversion

~~Issuance~~

The shares of ~~common stock~~Series A may be converted into shares of the Company’s Common Stock pursuant to ~~services performed~~

~~In January 2017,~~the Series A Certificate either at the option of the Company or subject to an automatic conversion as discussed below. The Series A was issued ~~47,126~~with a conversion price of $75 which is potentially subject to adjustment pursuant to the Series A Certificate. The Conversion Ratio is calculated as the quotient of (a) the sum of (x) the stated value of such share of Series A as of the applicable conversion date, plus (y) of all accrued and unpaid dividends previously added to the stated value of such share of Series A, and without duplication, all accrued and unpaid dividends per share of Series A through the applicable conversion date; divided by (b) the conversion Price as of the conversion date. As of September 30, 2022, the conversion ratio of the Series A into common was 1 to 5. At September 30, 2022, 7,333,330 shares of “~~restricted~~~~” stock to each William H. Milmoe and Thomas E. Lynch in consideration for services previously rendered to Celsius. Total shares issued were 94,252 at a fair value~~the Company’s Common Stock are issuable upon conversion of ~~$328,000, or $3.48 per share representing~~ the ~~closing stock price on that date.~~Series A Convertible Preferred Stock.

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

~~Between January 1, 2017 and March 2017, the Company issued a total of 3,333,329 shares of common stock at $3.00~~earnings per share for ~~net proceeds~~all periods presented herein during which the Series A was outstanding do not treat conversion of ~~approximately $10 million~~the Series A as if it had occurred, as the effect of conversion would be anti-dilutive.

Company Optional Conversion

At any time from and after August 1, 2029, provided the Ten-Day VWAP immediately prior to ~~12 accredited investors.~~

~~In January 2017,~~the date the Company ~~issued 333,333 unregistered common~~delivers a conversion notice to the holders of Series A exceeds the Conversion Price, the Company may elect to convert all, but not less than all, of the outstanding shares of Series A into shares of the Company’s Common Stock.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

Automatic Conversion

The Series A will convert automatically into shares of the Company’s Common Stock upon the ~~conversion~~occurrence of ~~$1,000,000~~any of the ~~line~~following, each, an “Automatic Conversion Event”:

•

Any date from and after the valid termination of ~~credit~~the Distribution Agreement by the Company or Pepsi, if the Ten-Day VWAP immediately preceding such date exceeds the Conversion Price of such share as of such date.

•

Any date from and after August 1, 2028, on which (x) the Company’s products meet a market share requirement during a specified period (as defined in the Distribution Agreement) and (y) the Ten-Day VWAP immediately prior to such date exceeds the Conversion Price of such share as of such date. In the case of an automatic conversion, each share of Series A 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 automatic conversion date. The occurrence of an Automatic Conversion Event will terminate any right of the holder to receive a redemption at their request even if such request has already been submitted, provided that the Series A shares have not ~~payable~~already been redeemed

Other Accounting Matters

FASB ASC 815 generally requires an analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. However, in order to perform this analysis, the Company was first required to evaluate the economic risks and characteristics of each series of the Series A in its entirety as being either akin to equity or akin to debt, ~~valued~~using the “whole instrument” approach. The Company’s evaluation concluded that the Series A was more akin to an equity-like contract largely due to the fact the financial instrument is not mandatorily redeemable for cash, participates in common dividends, and has a redemption feature that is out-of-the money at ~~$3.00 per share.~~issuance by approximately $282.5 million, when the redemption value of the instrument is compared to its estimated fair value. Other features of the Preferred Stock that operate like equity, such as the conversion features, afforded more evidence, in the Company’s view, that the instrument is more akin to equity. As a result, the embedded conversion features are clearly and closely related to their equity host instruments. Therefore, the embedded conversion features do not require bifurcation and classification as derivative liabilities. The Company identified certain embedded redemption features which it also evaluated for bifurcation. The Company considered whether these features met the definition of a derivative according to ASC 815, which is a condition which must be met for bifurcation to occur. It was concluded that these features did not provide for net settlement, as the preferred stock host instrument was more akin to equity and not readily convertible to cash, and therefore did not meet the definition of a derivative under ASC 815. Accordingly, no bifurcation of these redemption features was required or performed.

15.

STOCKHOLDERS’ EQUITY

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

During the nine months ended September 30, ~~2017,~~2022, the Company issued an aggregate of ~~1,918,395~~1,307,539 shares of its common stock pursuant to the exercise of stock options granted under the Company’s 2015 Plan and the 2006 Incentive Stock Plan (collectively, the "Stock Incentive ~~Plan.~~Plans"). The Company received aggregate proceeds of ~~$934,000~~approximately $3.1 million for901,675 options exercised for cash, with the balance of the options having been exercised on a “cashless” basis.During the nine months ended September 30, 2021, the Company issued an aggregate of 1,349,142 shares of its common stock pursuant to the exercise of stock options granted under the Company’s Stock Incentive Plans. The Company received aggregate proceeds of approximately $3.2 million for 826,994 options exercised for cash, with the balance of the options having been exercised on a “cashless” basis.

June 2021 Public Offering

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

16.

FAIR VALUE MEASUREMENTS

Celsius Holdings, Inc. ~~and Subsidiaries~~

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2017~~2022

(Tabular dollars in thousands, except per share amounts)

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.

The Company engaged a third-party valuation expert to assist in determining the fair value of the 1,466,666 shares of Series A Convertible Preferred Stock issued on August 1, 2022. The Series A Convertible Preferred Stock is classified in mezzanine equity, see Note 14, Mezzanine Equity, and the valuation of the Series A Convertible Preferred Stock represents a non-recurring fair value measurement. We used a Monte Carlo simulation model to determine the fair value of the Series A Convertible Preferred Stock on August 1, 2022. The Monte Carlo simulation utilized multiple input variables to determine the value of the Series A Convertible Preferred Stock including a volatility rate of 45%, risk free interest rate of 2.69%, 5.0% dividend rate, the closing price of the Company’s common stock on the issuance date of $98.87, a debt discount rate of 12.5% and a discount for lack of marketability attributed to the registration period of the underlying stock. The selected historical volatility was based on Celsius and a certain peer group. The risk-free interest rate was based on the US STRIPS Rate with a corresponding term as of issuance date. The 5.0% dividend rate is consistent with the provisions of the Series A Convertible Preferred Stock and with the Company’s past payments made in cash. The debt discount rate was based on estimated credit analysis and corresponding market yields as of the issuance date. The Company applied a nominal discount for lack of marketability with respect to the assumed registration period of the underlying shares.

The Company used the relief from royalty method model to determine the fair value of the Brand Name on September 30, 2022. The fundamental concept underlying this method is that in lieu of ownership, the acquirer can obtain comparable rights to use the subject asset via a license from a hypothetical third-party owner. The Relief from Royalty method utilized multiple input variables to determine the value of the Brand Name including forecasted sales, discount rate, and royalty rates. The selected royalty rate was based on comparable brands. The debt discount rate was based an expected debt and equity rate of return as of September 30, 2022.

The following is a tabular presentation of the non-recurring fair value measurement along with the level within the fair value hierarchy:

~~12.~~

~~STOCK-BASED COMPENSATION~~


	For the nine months ended September 30, 2022
	Level 1		Level 2		Level 3
Mezzanine equity:
Series A convertible preferred shares	$	—	$	—	$	824,488
Indefinite-lived intangible assets:
Brands		—		408		—
Total	$	-	$	408	$	824,488

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

17.

INCOME TAXES

In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation and state and local income taxes.

The effective income tax rate for the nine months ended September 30, 2022 was (33.5%). The effective income tax rate for the nine months ended September 30, 2022 differed from the statutory federal income tax rate of 21% primarily due to the tax impact of the $282.5 million Series A Preferred Stock fair value adjustment which is recorded as "Deferred Other Costs" and will be amortized over twenty years for book purposes. As this expense is non-deductible for tax purposes, the Company recorded a $71.4 million deferred tax liability in the third quarter deferred tax expense as a discrete item. The effective income tax rate for the nine months ended September 30, 2022 was also impacted by disallowed stock-based compensation expense, state and local income taxes and the release of certain state income tax reserves.

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

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

18.

STOCK-BASED COMPENSATION

The Company adopted anthe 2006 Incentive Stock Plan on January 18, 2007. This plan was intended to provide incentives to 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. While the plan terminated 10 years after the adoption date, issued awards have their own schedule of terminations. As such, the Company is no longer granting awards under this plan and there are no unvested awards as of September 30, 2022.

The Company adopted the 2015 Plan on April 30, 2015. The 2015 Plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. While the plan terminates 10 years after the adoption date, issued options have their own schedule of termination. During 2013 the majority of the shareholders approved to increase the total available shares in the plan from 2.5 million to 3.5 million shares of common stock. During May 2014, the majority of the shareholders approved to increase the total available shares in the plan from 3.5 million to 4.25 million shares of common stock, during February 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.25 million to 4.6 million shares of common stock and during April 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.6 million to 5.1 million shares of common stock. Until 2017, 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 Awardsawards issued. The 2015 Plan permits the grant of options and shares for up to ~~5,147,000~~5 million shares. In addition, there is a provision in the 2015 Plan for an annual increase to the maximum number of ~~15% of the issued~~ shares authorized under the ~~plan to the shares included under the plan, with the shares to~~2015 Plan, which increase shall be added on the first day of ~~each~~the calendar year beginning on January 1, ~~2016. On January 1, 2017,~~2016, equal to 15% of the ~~permitted~~ number of ~~available option grants increased to 5,999,968 shares.~~ shares outstanding as of such date (note 15). As of September 30, ~~2017 there were 3,488,136~~2022, approximately 4.6 million shares are available for issuance under the 2015 Plan.

Cumulatively since inception of the 2015 Stock Incentive Plan, the Company has issued options to purchase 2,622,500 common shares. For the nine months ended September 30, 2017 and 2016, the Company recognized an expense of $1,963,455 and $495,108, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of September 30, 2017, the Company had approximately $4,195,191 of unrecognized pre-tax non-cash compensation expense related to non-vested option-based compensation arrangements under the Plan. The Company ~~expects to recognize this expense~~determines the fair value of restricted stock-based awards based on ~~a weighted-average period~~the market price on the date of ~~3 years. The Company uses straight-line amortization of compensation expense over the two to three year requisite service or vesting period of the~~ grant.

~~There are options to purchase approximately 3.1 million shares that have vested as of September 30, 2017.~~

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2017~~

~~12.~~

~~STOCK-BASED COMPENSATION (CONTINUED)~~

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant ~~issuances. The calculation~~issuances and recognizes forfeitures as they occur.

For the nine months ended September 30, 2022 and 2021, the Company recognized an expense of approximately $14.8 million and $28.7 million, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying consolidated statement of operations).

Stock Options

Under the 2015 Plan, the Company has issued stock options to purchase approximately $2.6 million shares at an average price of $8.92 with a fair value of $213.8 million. For the ~~awards using~~nine months ended September 30, 2021, the ~~Black - Scholes option-pricing model is affected~~Company issued stock options to purchase 304,750 shares. No options were issued during the nine months ended September 30, 2022. Upon exercise, shares of new common stock are issued by the ~~Company’s stock price on the date of grant as well as assumptions regarding the following:~~Company.

Nine months ended September 30,
2017 2016
Expected volatility 133% - 140% 368% - 390%
Expected term 4 Years 4 Years
Risk-free interest rate 1.33% - 1.84% 1.36% - 1.61%
Forfeiture Rate 0.00% 0.00%
Expected dividend yield 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, ~~2017~~2022 and changes during the ~~period~~periods ending on that date is as follows:


				Weighted Average		Aggregate		Average					Weighted Average						Weighted
				Exercise		Intrinsic		Remaining		Shares			Exercise		Grant Date Fair		Aggregate Intrinsic		Average Remaining
	Shares (000’s)			Price		Value		Term (Yrs)		(000’s)			Price		Value		Value (000’s)		Term (Yrs)
Options
Balance at December 31, 2016		5,636		$	1.04	$	14,847		5.06
At December 31,2021											3,600		$	7.47			$	241,515		6.37
Granted		1,170		$	3.80						—			—				—
Exercised		(1,985	)	$	0.83						(979	)	$	3.53	$	79.17	$	74,001
Forfeiture and cancelled		(217	)	$	1.77						(61	)	$	5.05				—
At September 30, 2017		4,605		$	1.80	$	9,444,762		5.26

Exercisable at September 30, 2017		3,066		$	1.15
At September 30,2022											2,560		$	8.92			$	213,831		6.37
Exercisable September 30,2022											1,920		$	6.48			$	161,633		5.49

~~Celsius Holdings, Inc. and Subsidiaries~~

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

~~September 30, 2017~~

~~12.~~

~~STOCK-BASED COMPENSATION (CONTINUED)~~

The following table summarizes information about employee stock options outstanding at September 30, ~~2017:~~2022:

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 2017 (000’s) Life Price 2017 (000’s) Price Life
$0.20 - $0.53 1,155 3.98 $ 0.26 1,155 $ 0.26 3.98
$0.65 - $1.80 1,063 2.86 $ 0.86 984 $ 0.84 2.74
$1.83 - $2.84 1,229 5.04 $ 2.07 695 $ 2.10 4.77
$3.20 - $6.20 1,150 7.07 $ 3.88 224 3.84 6.13
$7.20 - $22.00 8 1.88 $ 10.36 8 $ 10.36 1.88
Outstanding options 4,605 4.77 $ 1.80 3,066 $ 1.15 3.90

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

Outstanding Options

Vested Options

Number

Number

Outstanding

Weighted

Weighted

Exercisable

Weighted

Weighted

Range of

at

Averaged

Averaged

at

Averaged

Averaged

Exercise

September 30,
2022

Remaining

Exercise

September 30,
2022

Remaining

Exercise

Price

Life

Price

Life

Price

$0.34 - $1.05

30

1.69

$
0.58

30

1.69

$
0.58

$1.97 - $2.955

5

3.27

$
1.97

5

3.27

$
1.97

$3.23 - $4.845

1,736

5.84

$
3.83

1,400

5.58

$
3.93

$5.59 - $8.385

409

3.95

$
5.70

340

3.24

$
5.72

$14.53 - $21.795

61

7.84

$
14.53

40

7.84

$
14.53

$21.80 - $32.70

18

8.08

$
21.80

5

8.08

$
21.80

$42.64 - $63.96

301

8.26

$
42.67

100

8.26

$
42.67

Outstanding options

2,560

5.83

$
8.92

1,920

5.30

$
6.48

As of September 30, 2022, the Company had approximately $4.4 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 1.2 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 stock options to purchase approximately 1.9 million shares that have vested as of September 30, 2022.

Restricted Stock Awards

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

A summary of the Company’s restricted stock award activity for the nine months ended September 30, 2022 and 2021 is presented in the following table:


	For the nine months ended September 30,
	2022					2021
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares (000's)			Fair Value		Shares (000's)			Fair Value
Unvested at beginning of period		0.3		$	14.72		66		$	14.78
Transfers to restricted stock units		—			—		(46	)	$	34.02
Granted		—			—		—			—
Vested		—			—		(19	)	$	22.30
Forfeiture and cancelled		(0.3	)	$	14.72		(1	)	$	34.02
Unvested at end of period		—		$	—		—		$	-

There were no shares vested during the nine months ended September 30, 2022. There are no outstanding restricted stock awards as of September 30, 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 stockholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The value of restricted stock units that vest over time is established by the market price on the date of its grant. A summary of the Company’s restricted stock unit activity for the nine months endedSeptember 30, ~~2017~~2022 and ~~2016~~2021 is presented in the following table:

For the nine months ended
September 30, 2017 September 30, 2016
Weighted Weighted
Average Average
Grant Date Grant Date
Shares Fair Value Shares Fair Value
Unvested at beginning of period — $ — — —
Granted 100,000 3.64 — —
Vested (16,667) — — —
Unvested at end of period 83,333 $ 3.64 — —

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)


	For the nine months ended September 30,
	2022					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		—		$	—
Transfers from restricted stock awards		—			—		46		$	34.02
Granted		207			81.74		546		$	51.03
Vested		(183	)		56.33		(1	)		—
Forfeited and cancelled		(47	)		64.37		(15	)	$	50.67
Unvested at end of period		543		$	63.93		576		$	50.82

The total fair value of shares vested during the nine months ended September 30, 2022 was approximately $9.7 million. Unrecognized compensation expense related to outstanding restricted stock ~~awards~~units to employees and directors as ofSeptember 30, ~~2017~~2022 and 2021 was ~~$293,148~~$29.3 million and approximately $36.1 million, respectively, and is expected to be ~~recognized~~expensed over the next 2.0 years.

Performance-based Stock Awards

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. Some of the PSU performance vesting conditions are linked to the consultants obtaining specified incremental earnings for the Company in a ~~weighted average~~given year over the performance vesting period, typically five years and some of ~~2.42~~the awards are linked to employees of the Company and have specific performance-based metrics to be met in year one and year two of the issuance. 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.

In the third quarter of 2022, the Human Resources and Compensation Committee of the Board of Directors approved the issuance of “Performance-based RSUs” to certain employees which represented restricted share units with performance-based vesting. The aggregate grant date fair value of $7.5 million included an immediate vesting of 20% of the shares as well as specific performance-based metrics to be met in year one and year two of the issuance. The Company believes the performance-based metrics are probable of being achieved and will recognize expense each tranche of the awards separately using the accelerated attribution method according to ASC 718.

A summary of the Company’s PSU activity for the nine months ended September 30, 2022 and 2021 is presented in the following table:


	For the nine months ended September 30,
	2022					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		—	$	—
Granted		76		$	102.92		—		—
Vested		(18	)	$	96.47		—		—
Forfeited and cancelled		—			—		—		—
Unvested at end of period		73		$	96.47		—	$	—

The total fair value of awards vested during the nine months ended September 30, 2022 was approximately $2.3 million. Unrecognized compensation expense related to outstanding PSUs issued to employees and non-employee consultants as of September 30, 2022 was approximately $6.8 million and is expected to be expensed over the next 2.2 years.

Modifications

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 nine months ended September 30, 2022. Modifications during the three-and nine-month period ended September 30, 2021 resulted

Celsius Holdings, Inc. ~~and Subsidiaries~~

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2017~~2022

~~13.~~

~~COMMITMENTS AND CONTINGENCIES~~

(Tabular dollars in thousands, except per share amounts)

in additional stock-based compensation expense of $12.1 million and $15.3 million, respectively. See note 2. Basis of PresentationSignificant Accounting Policies for more information.

19.

COMMITMENTS AND CONTINGENCIES

Legal

In November of 2020, McGovern Capital, Inc. and Kevin McGovern (collectively “McGovern”) filed a claim in arbitration related to its Representative Agreement with the Company as amended by the first amendment dated August 6, 2016. Pursuant to the Representative Agreement, McGovern is entitled to receive a fee of three percent (3%) of “Net Revenues” received by the Company from sales of the Company’s products 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 intended to pay McGovern its percentage of the annual royalty payment, but McGovern had objected claiming that McGovern is entitled to be paid commissions on the entire royalty payment and the amount of the loan to Qifeng. During the three months ended September 30, 2022, a confidential settlement agreement was signed for an amount included in the consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2022 that is not material to the financial results of the Company.

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, 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. No fact discovery was conducted on the merits. On October 12, 2022, the Company and Mr. Prescod notified the courts that an agreement in principle to settle had been reached to resolve the case for an aggregate amount of $7.8 million. The Company and Mr. Prescod will submit the settlement agreement to the court for judicial approval and await final judgement and entry in the coming weeks. As of September 30, 2022, $7.8 million was accrued and included in accounts payable and accrued expenses in the consolidated balance sheet.

On January 8, 2021, the Company 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. Subsequent to January 8, 2021, the Company received subpoenas for production of documents in connection with the matter. The investigation and requests from the SEC do not represent that the SEC has concluded that the Company or anyone else has violated the federal securities laws. The Company has cooperated and will continue to cooperate with the SEC staff in its investigation and requests. At this time, however, the Company 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 the Company's 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 and as a result, class members 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 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. The Company does not believe it has 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.

Commitments

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~~accrued, and an expense is recorded within operating expenses during the period in which termination was initiated.

As of September 30, ~~2017.~~2022, we have contingent commitment to third parties of $17 million. Our guarantees are primarily related to third party suppliers and have arisen through the normal course of business. The guarantees may have various terms, and none are individually significant.

Additionally, our business and results of operations may be adversely affected by the business and economic uncertainty resulting from the pandemic and public health crises related to the COVID-19 outbreak, which is affecting the macro-economic environment.

Celsius Holdings, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2022

(Tabular dollars in thousands, except per share amounts)

20.

SUBSEQUENT EVENTS

The Company ~~entered into an office lease with a related party (see~~evaluates subsequent events and transactions that occur after the balance sheet date up to the date the consolidated financial statements are issued. Except for the matters discussed in note ~~10) effective October 2015. The monthly rent amounts to $8,809 per month~~19, there were no other subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

Item 2. Management’s Discussion and ~~the lease terminates in October 2020. Future annual minimum payments required under operating lease obligations at September 30, 2017 are as follows:~~Analysis of Financial Condition and Results of Operations.

~~Future Minimum Lease Payments~~

Year ending December 31,
2017 $ 26,427
2018 113,461
2019 116,720
2020 120,078
Total $ 376,686

~~14.~~

~~SUBSEQUENT EVENTS~~

~~In October 2017, the Company issued 383 Preferred C Shares valued at $383,000 in settlement of $383,000 in accrued unpaid Preferred C dividends.~~

~~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~~,“anticipate,” “~~assume~~,“assume,” “~~believe~~,“believe,” “~~estimate~~,“estimate,” “~~expect~~,“expect,” “~~will~~,“will,” “~~intend~~,“intend,” “~~may~~,“may,” “~~plan~~,“plan,” “~~project~~,“project,” “~~should~~,“should,” “~~could~~,“could,” “~~seek~~,“seek,” “~~designed~~,“designed,” “~~potential~~,“potential,” “~~forecast~~,“forecast,” “~~target~~,“target,” “~~objective~~,“objective,”~~“goal~~, “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.

Our forward-looking statements may include, but are not limited to, statements about:

•

our expectations relating to expansion into additional geographic markets and product lines;

•

our expectations relating to revenue, operating costs and profitability;

•

our expectations regarding our strategy and investments;

•

our expectations regarding our business, including market opportunity, consumer demand and our competitive advantage;

•

our expectations regarding supply chains and distribution networks;

•

the impact of future and existing food and drug laws and regulations on our business;

•

our expectations regarding cost and availability of materials and ingredients;

•

our expectations regarding our future growth prospects and our ability manage our growth and hire capable personnel to support our growth;

•

the potential ongoing impact of the continuing COVID-19 pandemic on us directly, or on our distributors or suppliers;

•

expected competition from the functional energy drink and supplement industries and other sources;

•

our expectations relating to marketing and advertising expense;

•

the timing of our receipt and recognition of revenues and other payments;

•

our expectations about our trademarks and trade secrets;

•

our expectations relating to macroeconomic conditions;

•

general economic and business conditions in particular industries, markets or geographic regions, as well the potential for a significant economic slowdown, stagflation or economic recession;

•

political unrest and military actions in foreign countries, particularly the armed conflict in Ukraine, as well as the impact on world markets and energy supplies resulting therefrom;

•

our critical accounting policies and related estimates or changes in accounting practices;

•

our liquidity and capital needs;

•

political, legislative, regulatory and legal challenges;

•

the merits or potential impact of any lawsuits filed against us or disputes we may be party to; and

•

other statements regarding our future operations, financial condition, prospects and business strategies.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including but not limited to: our ability to successfully make and integrate acquisitions; the impact on our operations of public health crises, including of the current coronavirus outbreak; and the performance, reliability and availability of our ecommerce platform and underlying network infrastructure.

Business Overview

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

Our core offerings include pre- and post-workout functional energy drinks, as well as protein bars. Our flagship functional energy drink and liquid supplement brands are backed by science, being clinically proven to deliver health benefits by six self-funded studies published in various journals

including the ~~Celsius® brand name. According to multiple clinical~~Journal of the International Society of Sports Nutrition, the Journal of the American College of Nutrition, and the Journal of Strength and Conditioning Research. These studies ~~we funded,~~have concluded that a single serving of ~~Celsius®~~Celsius burns ~~100 to 140~~100-140 calories by(by increasing a consumer’s resting metabolism an average of 12% ~~and~~, while providing sustained energy for up to three hours).

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

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

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

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

Results of Operations

Three months ended September 30, ~~2017~~2022 compared to three months ended September 30, ~~2016~~2021

Revenue

For the three months ended September 30, ~~2017,~~2022, revenue was approximately ~~$10.79~~$188.2 million, an increase of ~~$4.13~~$93.3 million or ~~62%~~98% from ~~$6.66~~$94.9 million for the three months ended September 30, 2021. Approximately 102% of this growth was as a result of increased revenues from North America, where third quarter 2022 revenues were $179.5 million, an increase of $95.1 million or 112% from the same period in 2021. The balance of the ~~prior year. The revenue~~revenues for the three months ended September 30, 2022 quarter were mainly attributable to European revenues of $7.5 million, which decreased by $2.0 million from the same period in 2021 due to foreign exchange rates and timing of new product launches and continuing supply chain challenges. Asian revenues (which include royalty revenues from our China licensee) contributed an additional approximately $1.0 million, an increase of ~~62% was attributable~~37% from approximately $0.7 million for the same period in ~~large part to 73% growth~~2021, which include increases in royalties payable under our licensing agreement. Other international ~~revenue, mainly~~markets generated approximately $0.2 million in revenues during the three months ended September 30, 2022 , an increase of 3% from ~~our Swedish and Asian distribution partners, and a 54% growth~~$0.2 million for the same period in ~~domestic revenues associated with blended growth rates of 47% in retail accounts (mainly from existing accounts), 67% in health and fitness accounts and 59% in internet retailer accounts.~~ 2021.

The total increase in revenue ~~from the 2016 period to the 2017 period~~ was ~~primarily~~largely attributable to increases in sales volume, as opposed to increases in product pricing. The primary factors behind the increase in North American sales volume were related to continued strong triple-digit growth in traditional distribution channels, combined with an increase in and optimization of our products’ presence in world class retailers (e.g., additional SKUs). Additionally, revenues increased as a result of building inventories at Pepsi warehouses and distribution centers in anticipation of the transition to the Pepsi distribution network resulting in delivery of approximately five million raw cases. These revenues were offset by the prior distribution network which reduced their inventory balances at both their distribution centers and within their network as a majority of the prior distribution system was terminated as of September 30, 2022.

The following table sets forth the amount of revenues by category and changes therein for the three months ended September 30, ~~2017~~2022 and ~~2016:~~ 2021 (dollars in thousands):

Three months ended September 30,
Revenue Source 2017 2016 Change

Total Revenue $ 10,785,796 $ 6,657,700 62 %

International Revenue $ 4,866,641 $ 2,808,777 73 %

Domestic Revenue $ 5,919,155 $ 3,848,923 54 %

Retail accounts $ 3,529,790 $ 2,397,750 47 %

Health & Fitness accounts $ 1,677,376 $ 1,002,682 67 %

Internet Retailer accounts $ 711,989 $ 448,491 59 %


	For the three months ended September 30,
Revenue Source	2022		2021		Change
Total Revenue	$	188,233	$	94,909		98.3	%

North American Revenue	$	179,541	$	84,490		112.5	%

European Revenue	$	7,546	$	9,536		(20.9	)%

Asian Revenue	$	964	$	706		36.5	%

Other	$	182	$	177		2.8	%

Gross profit

For the three months ended September 30, ~~2017,~~2022, gross profit increased by approximately ~~$1.79~~$41.0 million or ~~62%~~109% to ~~$4.68~~$78.7 million, from ~~$2.89~~approximately $37.7 million ~~for the same period in 2016. Gross profit margins remained consistent at 43.3%~~ for the three months ended September 30, ~~2017 and~~2021. Gross profit margins reflected an increase to 41.8% for the three months ended September 30, ~~2016.~~2022 from 39.7% for the same period in 2021 reflecting a 210 basis point improvement. Efficiencies in outbound freight, which were partially offset by volatility in fuel prices, generated 130 basis points of improvement, while average case costs drove improvements in raw material costs.

Sales and marketing expenses

Sales and marketing expenses for the three months ended September 30, ~~2017~~2022 were approximately ~~$4.70~~$198.8 million, an increase of ~~$2.97~~approximately $176.1 million or ~~171%~~779% from ~~$1.74~~approximately $22.6 million for the three months ended September 30, 2021. This increase was primarily attributable to expense for termination fees paid to prior distributors, which resulted in an increase of $155.4 million when compared to the prior year quarter. Additionally, employee costs increased by approximately $1.1 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. Marketing costs also increased by approximately $14.6 million as we expanded our footprint in stores across the United States. Lastly, storage and distribution expenses as well as broker costs accounted for the remainder of the increase in this area in the ~~same period in 2016. The increase is due primarily to increases in marketing programs, investments in human resources and warehousing costs, particularly with respect~~amount of $4.4 million from the 2021 quarter to the ~~launch of our products in China and Hong Kong, where we expended approximately $2.1 million during the 2017~~2022 quarter.

General and administrative expenses

General and administrative expenses for the three months ended September 30, ~~2017~~2022 were approximately ~~$1.56~~$27.5 million, an increase of ~~$478,000,~~$4.2 million or ~~44%~~18%, from ~~$1.08~~$23.3 million for the three months ended September 30, ~~2016. The increase was primarily due to increases in option expense of $294,000, investments in human resources of $83,000, office related~~2021. Employee costs ~~of $21,000 and research and development costs of $79,000.~~

~~Other expense~~

~~Total other expense decreased to approximately $35,700 for three months ended September 30, 2017 from $57,500 for the same period in 2016, as a result of a decrease in interest expense.~~

~~Net Income (Loss)~~

~~As a result of all of the above,~~ for the three months ended September 30, ~~2017, Celsius had~~2022 reflect an increase of $0.9 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. Depreciation, amortization and impairment expenses increased by approximately $2.4 million when compared to the prior year quarter. These increases were offset by a $11.7 million decrease in stock-based compensation expense, which amounted to $6.3 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. Administration expenses also increased by $12.3 million primarily due to a litigation settlement in the amount of $7.8 million as well as increased costs associated with third party service providers including audit fees, internal control and Sox compliance, and other litigation. Lastly, all other administrative expenses which were mainly composed of research, development and quality control testing, increased by approximately $0.3 million from to the second quarter of 2021.

Other income/(expense)

Total net other expense for the three months ended September 30, 2022 is mainly related to foreign currency exchange which is offset by interest and non-operating income.

Net Loss

Net loss ~~of approximately $1.62 million, and after giving effect to preferred stock dividends of $92,250, a net loss available~~attributable to common ~~stockholders of $1.72~~shareholders for the three months ended September 30, 2022 was $186.5 million or ~~$0.04~~$2.46 per share based on a weighted average of ~~45,487,908~~approximately 75,796,000 shares outstanding. The dilutive impact share-based awards of 10,185,781 shares, were excluded from the calculations due to the net loss position of the Company. In comparison, for the three months ended September 30, ~~2016 we~~2021, the Company had a net ~~income~~loss of ~~$9,950, and after giving effect to preferred stock dividends of $102,958, a net loss available to common stockholders of $93,000~~approximately $9.4 million or ~~$0.00~~$0.13 per share, based on a weighted average of ~~38,666,451~~74,609,000 shares outstanding.

Nine months ended September 30, ~~2017~~2022 compared to nine months ended September 30, ~~2016~~2021

Revenue

For the nine months ended September 30, ~~2017,~~2022, revenue was approximately ~~$27.02~~$475.6 million, an increase of ~~$10.52~~$265.6 million or ~~64%~~126% from ~~$16.51~~$210.0 million for the nine months ended September 30, 2021. Approximately 102% of this growth was as a result of increased revenues from North America, where the first nine months of 2022 revenues were $448.1 million, an increase of $271.0 million or 153% from the 2021 first nine months. The balance of the revenues for the nine months ended September 30, 2022 were mainly attributable to European revenues of $23.5 million, which decreased by $7.2 million from the prior year nine months primarily due to foreign exchange rates and timing of new product launches and continuing supply chain challenges. Asian revenues (which include royalty revenues from our China licensee) contributed an additional approximately $2.9 million, an increase of 54% from approximately $1.9 million for the prior year, which include increases in royalties payable under our licensing agreement. Other international markets generated approximately $1.1 million in ~~revenue for~~revenues during the nine months ~~ending~~ended September 30, ~~2016. This increase e revenue~~2022, an increase of ~~64% was attributable in large part to a 60% growth in international revenue, mainly~~$0.7 million or 200.3% from $0.4 million for the Company’s Swedish and Asian distribution partners and a 66% growth in domestic revenues associated with blended growth rates of 42% in retail accounts (mainly from existing accounts, 136% in health and fitness accounts and 86% in internet retailer accounts, from the same period in 2016. prior year.

The following table sets forth the amount of revenues by category and changes therein for the nine months ended September 30, ~~2017~~2022 and ~~2016:~~ 2021 (dollars in thousands):

Nine months Ended September 30,
Revenue Source 2017 2016 Change

Total Revenue $ 27,023,123 $ 16,508,097 64 %

International Revenue $ 9,667,042 $ 6,050,830 60 %

Domestic Revenue $ 17,356,081 $ 10,457,267 66 %

Retail accounts $ 10,013,276 $ 7,076,139 42 %

Health & Fitness accounts $ 4,994,440 $ 2,115,221 136 %

Internet Retailer accounts $ 2,348,365 $ 1,265,907 86 %


	For the nine months ended September 30,
Revenue Source	2022		2021		Change
Total Revenue	$	475,640	$	210,017		126.5	%

North American Revenue	$	448,141	$	177,094		153.1	%

European Revenue	$	23,540	$	30,695		(23.3	)%

Asian Revenue	$	2,857	$	1,861		53.5	%

Other	$	1,102	$	367		200.3	%

Gross profit

For the nine months ended September 30, ~~2017,~~2022, gross profit increased by approximately ~~$4.46~~$105.3 million or ~~62%~~122% to ~~$11.62~~$191.9 million, ~~compared to $7.17~~from $86.5 million for ~~2016. Gross profit margins decreased 0.4% to 43.0% in~~ the nine months ended September 30, ~~2017 from the same period in 2016. The increases in gross profit and the decrease in gross~~2021. Gross profit margins reflected a decrease to 40.3% for the nine months ended September 30, 2022 from ~~2016 to 2017 are primarily attributable to~~41.2% for the ~~increases~~nine months ended September 30, 2021, reflecting a 90 basis point reduction. Efficiencies in ~~revenue~~outbound freight, which were partially offset by volatility in fuel prices, generated 310 basis points of improved margin, which was more than offset by higher raw material costs including aluminum cans, ocean freight costs and ~~a reduction in the cost of raw materials, off-set by increases in promotional allowances.~~packing costs.

Sales and marketing expenses

Sales and marketing expenses for the nine months ended September 30, ~~2017~~2022 were approximately ~~$9.27~~$262.8 million, an increase of ~~$2.56~~approximately $212.7 million or ~~38.0%~~424% from ~~$6.71~~approximately $50.1 million for the nine months ended September 30, 2021. This increase was partially attributable to higher marketing investment activities, which resulted in an increase of $31.2 million when compared to the prior year. Additionally, employee costs increased by approximately $5.9 million from the prior year as we continue to invest in this area in order to have the proper infrastructure to support our growth. Costs related to expense for termination fees to prior distributors, resulted in an increase of $156.2 million when compared to the prior year. Lastly, storage and distribution expenses as well as broker costs accounted for the remainder of the increase in this area in the ~~same period in 2016. The increase is due primarily to increases in marketing programs, investments in human resources and warehousing costs, particularly with respect to~~amount of $19.4 million from the ~~launch of our products in China and Hong Kong, where we expended approximately $2.1 million during the third quarter of 2017.~~nine months ended September 30, 2021.

General and administrative expenses

General and administrative expenses for the nine months ended September 30, ~~2017~~2022 were approximately ~~$5.26~~$54.1 million, an increase of ~~$2.33~~$10.8 million or ~~79.2%~~25%, from ~~$2.94~~$43.4 million for the nine months ended September 30, ~~2016. The~~2021. This increase was primarily ~~due~~attributable to ~~increases in option expense of $834,000, human resources of $162,000, professional fees of $115,000, research and development~~employee costs of $155,000, and employment recruiter costs $100,000, as well as one-time charges of $328,000 related to issuance of restricted stock to two board members in consideration for services previously rendered, $423,000 associated with CEO retirement compensation and office related costs of $79,000, offset by savings in travel of $65,000.

~~Other expense~~

~~Total other expense decreased to approximately $122,200 for nine months ended September 30, 2017 from $171,300 for the same period in 2016, as a result of $27,300 in savings in interest expense.~~

~~Net Loss~~

~~As a result of all of the above,~~ for the nine months ended September 30, ~~2017, Celsius had~~2022 which reflect an increase of $3.1 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. Depreciation, amortization, and impairment expenses increased by approximately $2.7 million when compared to the prior year quarter. These increases were offset by a $13.6 million decrease in stock-based compensation expense which amounted to $14.8 million for the nine months ended September 30, 2022, compared to $28.7 million in 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. Administrative expense also increased by $18.9 million primarily due to a litigation settlement in the amount of $7.8 million as well as increased costs associated with third party service providers including audit fees, internal control and Sox compliance and other litigation. Lastly, all other administrative expenses which were mainly composed of research, development and quality control testing, decreased by approximately $0.3 million during the nine months ended September 30, 2021.

Other income/(expense)

Total net other expense for the nine months ended September 30, 2022 is mainly related to foreign currency exchange which is offset by interest and non-operating income.

Net Loss

Net loss ~~of $3.03 million, and after giving effect to preferred stock dividends of $274,000, a net loss available~~attributable to common ~~stockholders of $3.31~~shareholders for the nine months ended September 30, 2022 was $170.7 million or ~~$0.07~~$2.26 per share based on a weighted average of ~~43,990,367~~approximately 75,625,000 shares outstanding. The dilutive impact share-based awards of 10,229,657 shares, were excluded from the calculation due to the net loss position of the Company. In comparison, for the nine months ended September 30, ~~2016 we~~2021, the Company had a net loss of ~~$2.65 million, and after giving effect to preferred stock dividends of $276,000, a net loss available to common stockholders of $2.92~~approximately $8 million or ~~$0.08~~$0.11 per share, based on a weighted average of ~~38,530,195~~approximately 73,759,000 shares outstanding.

Liquidity and Capital Resources

As of September 30, ~~2017,~~2022, and December 31, ~~2016,~~2021, we had cash of approximately ~~$19.4~~$727 million (including restricted cash of $135 million) and ~~$11.8~~$16.3 million, respectively, and working capital of approximately ~~$24.9~~$755.7 million and ~~$15.4~~$169.2 million, respectively. Cash used in operations during the nine months ended September 30, 2017 and the year ended December 31, 2016, totaled approximately $3.23 million and $2.36 million, respectively, reflecting capital investments in sales and marketing programs and human resources initiatives.

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 in June 2021 and ~~our credit facility with CD Financial, LLC (“~~~~CD Financial~~~~”), an affiliate~~a private placement of ~~Carl DeSantis, a principal shareholder~~1,466,666 Series A convertible shares as part of ~~the Company.~~

~~We originally entered into a loan and security~~our agreement with ~~CD Financial~~Pepsi at a price of $375 per share, completed in ~~July 2010, which provided us with a line~~August of credit to fund operations. As amended in connection with an April 2015 private investment and related transactions, the loan and security agreement provides Celsius with a revolving line of credit pursuant to which Celsius can borrow up to an aggregate maximum of $4.5 million from time to time until maturity in January 2020. The credit facility requires quarterly cash payments of interest only at the rate of five percent (5%) per annum until maturity and is secured by a pledge of substantially all the Company’s assets. As of September 30, 2017, the principal amount outstanding under the credit facility with CD Financial was $3.5 million.2022.

Our current operating plan for the next twelve (12) months ~~plans on a~~reflects sufficient financial ~~condition~~resources.

Cash flows provided by operating activities

Cash flows provided by operating activities totaled approximately $171.0 million for the nine months ended September 30, 2022, which compares to $52.1 million net cash used in operating activities for the nine months ended September 30, 2021. The approximately $223.0 million increase in cash generation was driven by the timing of cash receipts and payments associated with the Pepsi transition as well as continued growth in the operations of the Company.

Cash flows used in investing activities

Cash flows used in investing activities totaled approximately $0.9 million for the nine months ended September 30, 2022, which compares to cash used in investing activities of $0.5 million for the nine months ended September 30, 2021. The increase in the cash used in investing activities when compared to the 2021 period was primarily due to an increase of capital expenditures to $3.5 million offset by payment on our note receivable, as we ~~do not contemplate obtaining additional financing. However, if~~received payment on our ~~sales volumes do not meet our projections, expenses exceed our expectations, or our plans change, we may be unable~~note receivable of approximately $2.6 million in April 2022.

Cash flows provided by financing activities

Cash flows provided by financing activities totaled approximately $540.5 million for the nine months ended September 30, 2022, which compares to ~~generate enough~~ cash ~~flow~~provided by financing activities of $70.9 million for the nine months ended September 30, 2021. Cash provided by financing activities is mainly related to the net proceeds of $542 million from ~~operations~~issuances of Series A convertible preferred shares related to cover our working capital requirements. In such case, we may be required to adjust our business plan, by reducing marketing and other expenses or seek additional financing. There can be no assurance that such financing, if required, will be available on commercially reasonable terms if at all.Pepsi, net of issuance costs. Net proceeds were received from a public offering in June 2021 for approximately $67.8 million.

Off Balance Sheet Arrangements

As of September 30, ~~2017,~~2022 and December 31, ~~2016,~~2021, we had no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with US GAAP, which requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. There have been no material changes to our critical accounting policies or estimates from the information provided in “Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 8 – Financial Statements and Supplementary Data – Note 2”, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Item 3. Quantitative Disclosures About Market ~~Risks.~~Risk.

AsIn the normal course of business our financial position is routinely subject to a “~~smaller reporting company,~~”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 ~~required~~limited to, ~~provide~~increases in the ~~information required~~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 ~~this Item.~~the competitive environment in which we operate.

We do not use derivative financial instruments to protect ourselves from fluctuations in interest rates and generally do not hedge against fluctuations in commodity prices.

Item 4. Controls and ~~Procedures.~~Procedures

Management’s Report on Disclosure Controls and Procedures

Our ~~Interim~~ Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange Act, ~~of 1934 (the “~~~~Exchange Act~~~~”), as amended,~~ as of September 30, ~~2017~~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 ~~Securities and Exchange Commission (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 ~~Interim~~ Chief Executive Officer and our Chief Financial Officer, ~~(as our principal execute, financial and accounting officer),~~ or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. ~~Based on that evaluation, our Interim~~

Our Chief Executive Officer and ~~Chief Financial Officer concluded that as of September 30, 2017,~~ our ~~disclosure controls and procedures were effective.~~

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

~~Changes in Internal Controls Over Financial Reporting~~

~~There were no changes~~We identified material weaknesses as of December 31, 2021 in our internal controls over financial reporting, which were not fully remedied as of September 30, 2022. A material weakness is a deficiency or combination of deficiencies, in internal control over financial reporting, such that ~~occurred during~~there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. As a result of these material weaknesses, we concluded that internal controls over the ~~period covered~~following areas were not effective as of December 31, 2021 and were not fully remedied as of September 30, 2022.

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

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

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

To address the issues associated with our material weaknesses as described above, management is ~~reasonably likely~~re-assessing the design of controls and modifying processes designed to ~~materially affect,~~improve our internal control over financial reporting 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 September 30, 2022, the identified material weaknesses were not fully remedied.

Changes in Internal Controls Over Financial Reporting

During the nine months ended September 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 September 30, 2022. We will not be able to conclude whether the material weaknesses have been eliminated until the completion of the December 31, 2022 annual report on Form 10-K.

PART II - OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1. Legal Proceedings.

~~We know~~

The information required by this Item is incorporated herein by reference to note 19 to the consolidated financial statements, Commitments and Contingencies, in Part I, Item 1, of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.this Quarterly Report on Form 10-Q.

~~Item 1.A.~~

~~Risk Factors.~~

~~See “~~Item 1.A. Risk ~~Factors.~~”Factors

We face a variety of risks that are inherent in our business and our industry, including operational, legal, regulatory and product risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations and historical trends. Information about our most recent risk factors is disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K ~~filed with~~for the ~~SEC on March~~year ended December 31, 2021. At September 30, ~~2017.~~2022, there have been no material changes to the information.

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

Not Applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

	~~Item 2.~~	~~Unregistered Sales~~
3.1		Articles of ~~Equity Securities~~Incorporation of Celsius Holdings, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on August 9, 2022).

3.2		Amended and ~~Use~~Restated Bylaws of ~~Proceeds.~~Celsius Holdings, Inc.(incorporated by reference to Exhibit 3.2 to the Company’s Form 10-Q filed on August 9, 2022).

31.1		Section 302 Certification of Chief Executive Officer*

31.2		Section 302 Certification of Chief Financial Officer*

32.1		Section 906 Certification of Chief Executive Officer**

32.2		Section 906 Certification of Chief Financial Officer**

101.INS		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

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline iXBRL and contained in Exhibit 101

~~None.~~

	~~Item 3.~~
*	~~Defaults Upon Senior Securities.~~ Filed herewith
**	Furnished herewith

~~None.~~SIGNATURES

~~Item 4.~~

~~Mine Safety Disclosures.~~

~~Not applicable.~~

~~Item 5.~~

~~Other Information.~~

~~None.~~

~~Item 6.~~

~~Exhibits.~~

~~Exhibit No.~~		~~Description of Exhibit~~

~~31.1~~		~~Section 302 Certification~~

~~32.1~~		~~Section 906 Certification~~

~~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 ~~8, 2017~~9, 2022	By:	/s/ John Fieldly
		John Fieldly, ~~Interim President and~~ Chief Executive ~~Officer;~~ Officer (Principal Executive Officer)

Dated: November 9, 2022	By:	/s/ Jarrod Langhans
		Jarrod Langhans, Chief Financial Officer
		(Principal ~~Executive,~~ Financial and Accounting Officer)

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	CELH	Nasdaq Capital Market

		~~Page~~
		Page

PART I – FINANCIAL INFORMATION		2 1

Item 1.	Financial Statements.	2 1

	Consolidated Balance Sheets as of September 30, ~~2017~~2022 (unaudited) and December 31, ~~2016~~2021	2 1

	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)	3 2
	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 (unaudited)	3
	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)	4 5

	Notes to Consolidated Financial Statements (unaudited)	5 6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20 28

Item 3.	Quantitative Disclosures About Market ~~Risks.~~Risk.	23 32

Item 4.	Controls and Procedures.	24 32

PART II -– OTHER INFORMATION		25 33

Item 1.	Legal Proceedings.	25 33

Item 1A.	Risk Factors.	25 33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25 33

Item 3.	Defaults Upon Senior Securities.	25 33

Item 4.	Mine Safety Disclosures.	25 33

Item 5.	Other ~~information.~~Information.	25 34

Item 6.	Exhibits.	25 35

SIGNATURES			26 35

	September 30, 2017 (Unaudited)			December 31, 2016 (1)
ASSETS

Current assets:
Cash	$	19,418,583		$	11,747,138
Accounts receivable, net		7,071,888			2,787,732
Inventories		4,316,596			2,211,370
Prepaid expenses and other current assets		3,068,290			937,349
Total current assets		33,875,357			17,683,589

Property and equipment, net		49,958			33,533
Total Assets	$	33,925,315		$	17,717,122
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	8,410,985		$	1,754,207
Accrued preferred dividends		475,742			353,666
Deferred revenue and other current liabilities		52,988			214,612
Total current liabilities		8,939,715			2,322,485

Long-term liabilities:
Line of credit note payable-related party		3,500,000			4,500,000
Total Liabilities		12,439,715			6,822,485

Stockholders’ Equity:
Preferred Stock, $0.001 par value; 2,500,000 shares authorized, 6,380 shares issued and outstanding at September 30, 2017 and December 31, 2016		6			6
Common stock, $0.001 par value; 75,000,000 shares authorized, 45,679,093 and 39,999,784 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		45,679			40,000
Additional paid-in capital		78,100,761			64,208,963
Accumulated deficit		(56,660,846	)		(53,354,332	)
Total Stockholders’ Equity		21,485,600			10,894,637
Total Liabilities and Stockholders’ Equity	$	33,925,315		$	17,717,122


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash	$	592,134		$	16,255
Restricted cash		134,838			—
Accounts receivable-net (note 2)		117,003			38,741
Note receivable-current (note 7)		2,888			2,588
Inventories-net (note 5)		153,933			191,222
Prepaid expenses and other current assets (note 6)		12,096			13,555
Deferred other costs-current (note 13)		14,124			—
Total current assets		1,027,016			262,361

Note receivable (note 7)		3,465			7,117
Property and equipment-net (note 9)		5,782			3,180
Deferred tax asset (note 17)		—			9,019
Right of use assets-operating leases (note 8)		1,105			1,128
Right of use assets-finance leases (note 8)		222			86
Other long-term assets		242			300
Deferred other costs-non-current (note 13)		265,993			—
Intangibles (note 10)		11,322			16,301
Goodwill (note 10)		12,502			14,527
Total Assets	$	1,327,649		$	314,019

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 11 & 13)	$	143,947		$	91,479
Accrued distributor termination fees (note 2 & 13)		115,551			—
Lease liability obligation-operating leases (note 8)		663			512
Lease liability obligation-finance leases (note 8)		95			157
Deferred revenue-current (note 2 & 13)		7,770			—
Other current liabilities (note 12)		3,267			976
Total current liabilities		271,293			93,124

Long-term liabilities:
Lease liability obligation-operating leases (note 8)		462			658
Lease liability obligation-finance leases (note 8)		167			45
Deferred tax liability (note 17)		25,457			3,146
Deferred revenue-non-current (note 2 & 13)		146,333			—
Total Liabilities		443,712			96,973

Mezzanine Equity:
Series A convertible preferred shares, $0.001 par value, 5% cumulative dividends; 1,467 and 0 shares issued and outstanding at September 30, 2022 and December 31,2021, respectively, aggregate liquidation preference of $550,000 and $0 as of September 30, 2022 and December 31, 2021, respectively (note 14)		824,488			—

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000 shares authorized, 76,216 and 74,909 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (note 15)		76			75
Additional paid-in capital		281,133			267,847
Accumulated other comprehensive income (loss)		(4,211	)		614
Accumulated deficit		(217,549	)		(51,490	)
Total Stockholders’ Equity		59,449			217,046
Total Liabilities, Mezzanine Equity and Stockholders’ Equity	$	1,327,649		$	314,019


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

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
Revenue	$	10,785,796		$	6,657,700		$	27,023,123		$	16,508,097
Cost of revenue		6,110,898			3,772,948			15,398,798			9,339,302
Gross profit		4,674,898			2,884,752			11,624,325			7,168,795

Selling and marketing expenses		4,702,308			1,736,029			9,273,207			6,709,345
General and administrative expenses		1,559,173			1,081,273			5,261,694			2,936,273
Total operating expenses		6,261,481			2,817,302			14,534,901			9,645,618

Income (Loss) from operations		(1,586,583	)		67,450			(2,910,576	)		(2,476,823	)

Other Income (Expense):
Interest expense		(35,661	)		(57,500	)		(122,195	)		(171,250	)
Total Other Income (Expense)		(35,661	)		(57,500	)		(122,195	)		(171,250	)

Net Income (Loss)		(1,622,244	)		9,950			(3,032,771	)		(2,648,073	)
Preferred stock dividend		(92,250	)		(102,958	)		(273,743	)		(276,264	)
Net income (Loss) available to common stockholders	$	(1,714,494	)	$	(93,008	)	$	(3,306,514	)	$	(2,924,337	)

Income (Loss) per share:
Basic	$	(0.04	)	$	(0.00	)	$	(0.08	)	$	(0.08	)
Diluted	$	(0.04	)	$	(0.00	)	$	(0.08	)	$	(0.08	)
Weighted average shares outstanding:
Basic		45,487,908			38,666,451			43,990,367			38,530,195
Diluted		45,487,908			38,666,451			43,990,367			38,530,195

	For the nine months ended
	September 30, 2017			September 30, 2016
Cash flows from operating activities:
Net Loss	$	(3,032,771	)	$	(2,648,073	)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Depreciation and amortization		14,292			12,346
Stock-based compensation expense for services		327,997			—
Stock-based option compensation expense		1,635,458			1,361,398
Changes in operating assets and liabilities:
Accounts receivable, net		(4,284,156	)		(1,275,212	)
Inventories net		(2,105,226	)		216,575
Prepaid expenses and other current assets		(2,130,941	)		(271,267	)
Accounts payable and accrued expenses		6,656,778			(95,427	)
Accrued preferred dividends		(151,667	)		(152,197	)
Deferred revenue and other current liabilities		(161,624	)		511,479
Net cash provided by (used in) in operating activities		(3,231,860	)		(2,340,378	)

Cash flows from investing activities:
Purchase of property and equipment		(30,716	)		(27,535	)

Net cash (used in) investing activities		(30,716	)		(27,535	)

Cash flows from financing activities:
Net proceeds from issuance of common stock		9,999,948			—
Proceeds from exercise of stock options		934,073			5,300
Net cash provided by financing activities		10,934,021			5,300
Net increase (decrease) increase in cash		7,671,445			(2,362,613	)
Cash at beginning of the period		11,747,138			10,128,320
Cash at end of the period	$	19,418,583		$	7,765,707
Supplemental disclosures:
Cash paid during period for:
Interest	$	137,014		$	113,750
Income Taxes	$	—		$	—
Non-cash investing and financing activities:
Accrued preferred dividends	$	273,743		$	276,238
Conversion of convertible note to common stock, related-party		1,000,000			—



	Common Stock				Mezzanine Equity				Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit
	Shares		Amount		Preferred Shares		Amount											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		—		—		—		449			—			—			449
Foreign currency fluctuations		—		—		—		—		—			(2,296	)		—			(2,296	)
Net income		—		—		—		—		—			—			9,158			9,158
Balance at June 30, 2022		75,622	$	75		—	$	—	$	277,623		$	(2,173	)	$	(35,653	)	$	239,872
Share-based payment expense		—		—		—		—		6,263			—			—			6,263
Issuance of common stock pursuant to stock incentive plan - cashless		58		—		—		—		—			—			—			—
Issuance of common stock pursuant to stock incentive plan - cash		536		1		—		—		1,843			—			—			1,844
Issuance of Series A convertible preferred shares - net of issuance costs		—		—		1,467		824,488		—			—			—			824,488
Dividends paid to Series A convertible preferred shares		—		—		—		—		(4,596	)		—			—			(4,596	)
Foreign currency fluctuations		—		—		—		—		—			(2,038	)		—			(2,038	)
Net loss		—		—		—		—		—			—			(181,896	)		(181,896	)
Balance at September 30, 2022		76,216	$	76		1,467	$	824,488	$	281,133		$	(4,211	)	$	(217,549	)	$	883,937


							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
Share-based payment expense		—		—		17,920		—			—			17,920
Issuance of common stock pursuant to stock incentive plan - cashless		118		—		—		—			—			—
Issuance of common stock pursuant to stock incentive plan - cash		157		1		727		—			—			728
Foreign currency fluctuations		—		—		—		1,283			—			1,283
Net loss		—		—		—		—			(9,371	)		(9,371	)
Balance at September 30, 2021		74,746	$	75	$	259,591	$	1,165		$	(63,433	)	$	197,398

	2017			2016
A*		32.9	%		35.0	%
B		7.9	%		11.1	%
All other		59.2	%		53.9	%
Total		100.0	%		100.0	%

	2017			2016
A*		57.5	%		53.8	%
B		4.3	%		11.5	%
All other		38.2	%		27.0	%
Total		100.0	%		100.0	%


	September 30, 2022		December 31, 2021

United States	$	5,462	$	3,043

Sweden		1,249		1,050
Finland		383		301
Norway		15		—
Long-lived assets related to foreign operations		1,647		1,351
Total long-lived assets-net	$	7,109	$	4,394

	~~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.~~


	Three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021
Net loss attributed to common shareholders
Net loss	$	(181,896	)	$	(9,371	)	$	(166,059	)	$	(8,005	)
Less: dividends paid to Series A convertible preferred shareholders		(4,596	)		-			(4,596	)		-
Net loss attributed to common shareholders	$	(186,492	)	$	(9,371	)	$	(170,655	)	$	(8,005	)
Net loss per common share:
Basic and dilutive	$	(2.46	)	$	(0.13	)	$	(2.26	)	$	(0.11	)
Weighted average common shares outstanding:
Basic and dilutive		75,796			74,609			75,625			73,759


As of September 30, 2022:
2022	$	123
2023		491
2024		491
2025		491
2026		491
Thereafter		8,827
Total	$	10,914


	September 30, 2022			December 31, 2021

Finished goods	$	97,878		$	123,594
Raw Materials		60,078			70,201
Less: Inventory allowance for excess and obsolete products		(4,023	)		(2,573	)
Inventories	$	153,933		$	191,222


	Operating				Finance
Future minimum lease payments	Leases				Leases			Total
2022	$	180			$	31		$	211
2023		681		��		91			772
2024		319				36			355
2025		6				61			67
2026		—				58			58
Total future minimum lease payments		1,186				277			1,463
Less: Amount representing interest		(61	)			(15	)		(76	)
Present value of lease liabilities		1,125				262			1,387
Less: current portion		(663	)			(95	)		(758	)
Long-term portion	$	462			$	167		$	629


	September 30, 2022			December 31, 2021

Definite-lived intangible assets
Customer relationships	$	12,263		$	14,248
Less: accumulated amortization		(1,349	)		(1,140	)
Definite-lived intangible assets, net	$	10,914		$	13,108

Indefinite-lived intangible assets
Brands	$	2,984		$	3,193
Less: impairment		(2,576	)		—
Indefinite-lived intangible assets, net	$	408		$	3,193
Total Intangibles	$	11,322		$	16,301

	Nine months ended September 30,
	2017		2016
Expected volatility		133% - 140%		368% - 390%
Expected term		4 Years		4 Years
Risk-free interest rate		1.33% - 1.84%		1.36% - 1.61%
Forfeiture Rate		0.00%		0.00%
Expected dividend yield		0.00%		0.00%

	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	2017 (000’s)		Life		Price		2017 (000’s)		Price		Life
$0.20 - $0.53		1,155		3.98	$	0.26		1,155	$	0.26		3.98
$0.65 - $1.80		1,063		2.86	$	0.86		984	$	0.84		2.74
$1.83 - $2.84		1,229		5.04	$	2.07		695	$	2.10		4.77
$3.20 - $6.20		1,150		7.07	$	3.88		224		3.84		6.13
$7.20 - $22.00		8		1.88	$	10.36		8	$	10.36		1.88
Outstanding options		4,605		4.77	$	1.80		3,066	$	1.15		3.90

	For the nine months ended
	September 30, 2017				September 30, 2016
			Weighted				Weighted
			Average				Average
			Grant Date				Grant Date
	Shares		Fair Value		Shares		Fair Value
Unvested at beginning of period		—	$	—		—		—
Granted		100,000		3.64		—		—
Vested		(16,667)		—		—		—
Unvested at end of period		83,333	$	3.64		—		—

Year ending December 31,
2017	$	26,427
2018		113,461
2019		116,720
2020		120,078
Total	$	376,686