UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

☐

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

Commission file number: 001-34611

CELSIUS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

2424 N Federal Highway, Suite 208, Boca Raton, Florida 33431

(Address of Principal Executive Offices)

(561) 276-2239

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

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

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

TABLE OF CONTENTS

		Page

PART I – FINANCIAL INFORMATION		1

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

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	24

Item 3.	Quantitative Disclosures About Market Risks.	30

Item 4.	Controls and Procedures.	30

PART II – OTHER INFORMATION		31

Item 1.	Legal Proceedings.	31

Item 1A.	Risk Factors.	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	31

Item 3.	Defaults Upon Senior Securities.	31

Item 4.	Mine Safety Disclosures.	31

Item 5.	Other Information.	31

Item 6.	Exhibits.	32

SIGNATURES		33

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Celsius Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


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

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

LIABILITIES AND STOCKHOLDERS’ EQUITY

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

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

Commitments and contingences (note 15)

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

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

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


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

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

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

Other income (expense):
Interest income on note receivable (note 6)		76,473			78,690			239,586			268,709
Interest expense on bonds		-			(144,021	)		-			(391,458	)
Interest on other obligations		(4,524	)		(3,419	)		(7,496	)		(13,400	)
Amortization of discount on bonds payable		-			(178,649	)		-			(506,100	)
Other miscellaneous income/(expense)		(97,038	)		(62,817	)		-			(27,614	)
Gain on lease cancellations		-			-			-			152,112
Foreign exchange gain/(loss)		(327,581	)		550,510			(451,217	)		646,515
Total other income/(expense)		(352,670	)		240,294			(219,127	)		128,764

Net income before income taxes		3,579,610			4,753,603			8,125,378			6,857,988

Income tax expense		833,819			-			833,819			-

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

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

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

⁽¹⁾

Please refer to Earnings Per Share section for further details.

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

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2021

(Unaudited)


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

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

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

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2020

(Unaudited)

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

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

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

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


	For the nine months ended
	September 30, 2021			September 30, 2020
Cash flows from operating activities:
Net income	$	7,291,559		$	6,857,988
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Depreciation		519,765			82,180
Amortization		550,800			1,224,684
Unrealized currency gain		(76,765	)		-
Bad debt expense		(207,261	)		244,685
Inventory excess and obsolescence expense		12,234			211,822
Stock-based compensation expense		13,400,581			4,718,699
Gain on China transaction		-			(384,493	)
Gain on lease cancellations		(14,669	)		(152,112	)
Changes in operating assets and liabilities:
Accounts receivable-net		(28,307,104	)		(9,031,438	)
Inventory-net		(103,920,057	)		(598,665	)
Prepaid expenses and other current assets		(8,202,588	)		(561,752	)
Accounts payable and accrued expenses		66,694,568			824,964
Other assets		(185,716	)		43,259
Other liabilities		532,395			213,764
Deferred Tax Liability-net		(182,156	)		-
Change in right-of-use asset and lease liability-net		30,465			149,925
Net cash (used in)/provided by operating activities		(52,063,949	)		3,843,510

Cash flows from investing activities:
Proceeds from note receivable		1,885,724			1,331,011
Purchase of property and equipment		(2,395,302	)		(416,671	)
Net cash (used in)/provided by investing activities		(509,578	)		914,340

Cash flows from financing activities:
Principal payments on finance lease obligations		(72,386	)		(259,231	)
Proceeds from capital raise		67,769,386			21,983,116
Proceeds from exercise of stock options		3,242,073			2,296,343
Net cash provided by financing activities		70,939,073			24,020,228
Effect on exchange rate changes on cash and cash equivalents		(236,365	)		289,338
Net increase in cash and cash equivalents		18,129,181			29,067,416
Cash and cash equivalents at beginning of the period		43,248,021			23,090,682

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

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

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

1.	ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

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

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

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Reclassification of Prior Year Presentation – Certain prior year amounts in the consolidated statements of operations and comprehensive income have been reclassified for consistency with the current year presentation. A reclassification has been made to present amortization of intangible assets and amortization of finance lease right-of-use assets in general and administrative expenses, rather than in other expenses. These reclassifications had no effect on previously reported net income and comprehensive income and did not have a material effect to the financial statements.

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

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

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

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

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

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

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


	2021			2020
Amazon		10.0	%		16.6	%
Costco		11.3	%		2.6	%
All other		78.7	%		80.8	%
Total		100.0	%		100.0	%

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

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

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

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

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

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

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

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

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

Long-lived Asset Geographic Data

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


	September 30,		December 31,
	2021		2020

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

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

Goodwill — The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. We assess goodwill at the reporting unit level on an annual basis as of December 31, or more frequently if events or changes in circumstances suggest that goodwill may not be recoverable. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. At September 30, 2021, 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. Intangibles with indefinite lives are tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist.

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

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

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

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

SEC Form 10-Q filed by Celsius Holdings, Inc.