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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED March 31, 2023

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)

 

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, $0.001 par value

CELH

Nasdaq Capital Market

 

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 (§.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 May 2, 2023 was 76,789,201 shares.

 

 


 

TABLE OF CONTENTS

Page

PART I – FINANCIAL INFORMATION

1

Item 1.

Financial Statements.

1

Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (unaudited)

1

Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2023 and 2022 (unaudited)

2

Consolidated Statements of Changes in Stockholders’ Equity and Mezzanine Equity for the three months ended March 31, 2023 (unaudited)

3

Consolidated Statements of Changes in Stockholders’ Equity and Mezzanine Equity for the three months ended March 31, 2022 (unaudited)

4

Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)

5

Notes to Consolidated Financial Statements (unaudited)

6

Item 2.

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

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

29

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

32

 

i


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Celsius Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

March 31,
2023

 

 

December 31,
2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

595,476

 

 

$

614,159

 

Restricted cash

 

 

38,105

 

 

 

38,768

 

Accounts receivable-net

 

 

172,032

 

 

 

63,311

 

Note receivable-current

 

 

3,587

 

 

 

2,979

 

Inventories-net

 

 

154,280

 

 

 

173,289

 

Prepaid expenses and other current assets

 

 

15,507

 

 

 

11,341

 

Deferred other costs-current

 

 

14,124

 

 

 

14,124

 

Total current assets

 

 

993,111

 

 

 

917,971

 

 

 

 

 

 

 

 

Note receivable

 

 

 

 

 

3,574

 

Property and equipment-net

 

 

12,054

 

 

 

10,185

 

Deferred tax asset

 

 

482

 

 

 

501

 

Right of use assets-operating leases

 

 

931

 

 

 

972

 

Right of use assets-finance leases

 

 

191

 

 

 

208

 

Other long-term assets

 

 

263

 

 

 

263

 

Deferred other costs-non-current

 

 

258,931

 

 

 

262,462

 

Intangibles

 

 

12,359

 

 

 

12,254

 

Goodwill

 

 

13,949

 

 

 

13,679

 

Total Assets

 

$

1,292,271

 

 

$

1,222,069

 

 

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

107,112

 

 

$

107,340

 

Accrued distributor termination fees

 

 

1,063

 

 

 

3,986

 

Accrued promotional allowance

 

 

68,225

 

 

 

35,977

 

Lease liability obligation-operating leases

 

 

605

 

 

 

661

 

Lease liability obligation-finance leases

 

 

69

 

 

 

70

 

Deferred revenue-current

 

 

9,563

 

 

 

9,675

 

Other current liabilities

 

 

5,094

 

 

 

3,586

 

Total current liabilities

 

 

191,731

 

 

 

161,295

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Lease liability obligation-operating leases

 

 

336

 

 

 

326

 

Lease liability obligation-finance leases

 

 

156

 

 

 

162

 

Deferred tax liability

 

 

19,250

 

 

 

15,919

 

Deferred revenue-non-current

 

 

175,275

 

 

 

179,788

 

Total Liabilities

 

 

386,748

 

 

 

357,490

 

 

 

 

 

 

 

 

Commitment and contingencies (Note 19)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Equity:

 

 

 

 

 

 

Series A convertible preferred shares, $0.001 par value, 5% cumulative dividends; 1,467 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively, aggregate liquidation preference of $550,000 as of March 31, 2023 and December 31, 2022, respectively

 

 

824,488

 

 

 

824,488

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000 shares authorized, 76,782 and 76,382 shares
issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

77

 

 

 

76

 

Additional paid-in capital

 

 

279,872

 

 

 

280,668

 

Accumulated other comprehensive loss

 

 

(1,287

)

 

 

(1,881

)

Accumulated deficit

 

 

(197,627

)

 

 

(238,772

)

Total Stockholders’ Equity

 

 

81,035

 

 

 

40,091

 

Total Liabilities, Mezzanine Equity and Stockholders’ Equity

 

$

1,292,271

 

 

$

1,222,069

 

 

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

1


 

Celsius Holdings, Inc.

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

 

For the Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

Revenue

 

$

259,939

 

 

$

133,388

 

 

Cost of revenue

 

 

146,121

 

 

 

79,494

 

 

Gross profit

 

 

113,818

 

 

 

53,894

 

 

Selling, general and administrative expenses

 

 

68,905

 

 

 

43,778

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

44,913

 

 

 

10,116

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income on note receivable

 

 

45

 

 

 

78

 

 

Interest income (expense), net

 

 

4,924

 

 

 

(2

)

 

Foreign exchange loss

 

 

(118

)

 

 

(162

)

 

Total other income (expense)

 

 

4,851

 

 

 

(86

)

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

 

49,764

 

 

 

10,030

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(8,537

)

 

 

(3,351

)

 

 

 

 

 

 

 

 

 

Net income

 

$

41,227

 

 

$

6,679

 

 

 

 

 

 

 

 

 

 

Less: dividends on Series A convertible preferred shares

 

$

(6,781

)

 

$

-

 

 

Net income attributable to common stockholders

 

$

34,446

 

 

$

6,679

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

594

 

 

 

(491

)

 

Comprehensive income

 

$

35,040

 

 

$

6,188

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

0.41

 

 

$

0.09

 

 

Dilutive

 

$

0.40

 

 

$

0.09

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

76,673

 

 

 

75,239

 

 

Dilutive

 

 

78,759

 

 

 

78,289

 

 

 

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

2


 

Celsius Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity and Mezzanine Equity

(In thousands)

(Unaudited)

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Equity

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Accumulated
Deficit

 

 

Total Stockholders' Equity

 

 

Preferred Shares

 

 

Amount

 

 Balance at December 31, 2022

 

 

76,382

 

 

$

76

 

 

$

280,668

 

 

$

(1,881

)

 

$

(238,772

)

 

$

40,091

 

 

$

1,467

 

 

$

824,488

 

Adoption of accounting standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(82

)

 

 

(82

)

 

 

 

 

 

 

Share-based expense

 

 

 

 

 

 

 

 

5,507

 

 

 

 

 

 

 

 

 

5,507

 

 

 

 

 

 

 

Issuance of common stock pursuant to exercise of stock options and vested restricted stock units - Cashless

 

 

251

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

Issuance of common stock pursuant to exercise of stock options - Cash

 

 

149

 

 

 

 

 

 

478

 

 

 

 

 

 

 

 

 

478

 

 

 

 

 

 

 

Dividends paid to Series A convertible preferred shares

 

 

 

 

 

 

 

 

(6,781

)

 

 

 

 

 

 

 

 

(6,781

)

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

594

 

 

 

 

 

 

594

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,227

 

 

 

41,227

 

 

 

 

 

 

 

 Balance at March 31, 2023

 

 

76,782

 

 

$

77

 

 

$

279,872

 

 

$

(1,287

)

 

$

(197,627

)

 

$

81,035

 

 

 

1,467

 

 

$

824,488

 

 

 

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

3


 

Celsius Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity and Mezzanine Equity

(In thousands)

(Unaudited)

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Equity

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Accumulated
Deficit

 

 

Total Stockholders' Equity

 

 

Preferred Shares

 

 

Amount

 

 Balance at December 31, 2021

 

 

74,909

 

 

$

75

 

 

$

267,847

 

 

$

614

 

 

$

(51,490

)

 

$

217,046

 

 

$

 

 

$

 

Share-based expense

 

 

 

 

 

 

 

 

4,310

 

 

 

 

 

 

 

 

 

4,310

 

 

 

 

 

 

 

Issuance of common stock pursuant to exercise of stock options - Cashless

 

 

248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to exercise of stock options - Cash

 

 

194

 

 

 

 

 

 

810

 

 

 

 

 

 

 

 

 

810

 

 

 

 

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(491

)

 

 

 

 

 

(491

)

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,679

 

 

 

6,679

 

 

 

 

 

 

 

 Balance at March 31, 2022

 

 

75,351

 

 

$

75

 

 

$

272,967

 

 

$

123

 

 

$

(44,811

)

 

$

228,354

 

 

$

 

 

$

 

 

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

4


 

Celsius Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

For the Three Months Ended March 31,

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

41,227

 

 

$

6,679

 

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

 

 

 

 

 

 

Depreciation

 

 

404

 

 

 

245

 

Amortization

 

 

145

 

 

 

141

 

Allowance for credit losses

 

 

837

 

 

 

455

 

Amortization of deferred other costs

 

 

3,531

 

 

 

 

Inventory excess and obsolescence

 

 

1,672

 

 

 

2,596

 

Share-based payment expense

 

 

5,507

 

 

 

4,310

 

Deferred income taxes

 

 

2,873

 

 

 

2,561

 

Foreign exchange loss

 

 

69

 

 

 

85

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable-net

 

 

(109,639

)

 

 

(34,420

)

Inventory-net

 

 

17,338

 

 

 

4,531

 

Prepaid expenses and other current assets

 

 

(4,166

)

 

 

3,513

 

Accounts payable and accrued expenses

 

 

182

 

 

 

5,552

 

Accrued promotional allowance

 

 

32,248

 

 

 

12,190

 

Accrued distributor termination fees

 

 

(2,923

)

 

 

 

Other current liabilities

 

 

1,508

 

 

 

765

 

Change in right of use and lease obligation-net

 

 

(15

)

 

 

(78

)

Deferred revenue

 

 

(4,625

)

 

 

 

Other assets

 

 

(4

)

 

 

 

Net cash (used in) provided by operating activities

 

 

(13,831

)

 

 

9,125

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from note receivable

 

 

3,233

 

 

 

 

Purchase of property and equipment

 

 

(2,253

)

 

 

(742

)

Net cash provided by (used in) investing activities

 

 

980

 

 

 

(742

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Principal payments on finance lease obligations

 

 

(11

)

 

 

(20

)

Proceeds from exercise of stock options

 

 

478

 

 

 

810

 

Dividends paid on preferred shares

 

 

(6,781

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(6,314

)

 

 

790

 

Effect on exchange rate changes on cash and cash equivalents

 

 

(181

)

 

 

104

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(19,346

)

 

 

9,277

 

Cash, cash equivalents and restricted cash at beginning of the period