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NOTE RECEIVABLE

3 Months Ended

Mar. 31, 2019

NOTE RECEIVABLE

Note receivable consists of the following at:

	March 31,		December 31,
	2019		2018

Note Receivable-Current	$	1,224,529	$	-
Note Receivable-Non-Current		11,020,766		-
Total Note Receivable	$	12,245,295	$	-

On January 1, 2019, the Company entered into a license and repayment of investment agreement with Qifeng Food Technology (Beijing) Co., Ltd (“Qifeng”). Under the agreement, Qifeng will repay the market investment Celsius has made into China to date, over a five-year period, under an unsecured, interest-bearing note receivable (“Note”). The initial outstanding principal under the Note was approximately $12.2 million, which was recorded as Other Income on the Consolidated Statements of Operations for the three months ended March 31, 2019. The amount recognized considered the net of the balances of the accounts receivable, accounts payable and accrued expenses, as well as the marketing investments that were performed in the China market.

Scheduled principal payments plus accrued interest are due annually on March 31 of each year starting in 2020. The Note is recorded at amortized cost basis and accrues interest at a rate per annum equal to the weighted average of 5% of the outstanding principal up to $5 million and 2% of the outstanding principal above $5 million. For the three months ended March 31, 2019, the weighted average interest rate was 3.21% and interest income was $96,000.

The Company assesses the Note for impairment periodically by evaluating whether it is probable that the Company will be unable to collect all the contractual interest and principal payments as scheduled in the Note agreement, based on historical experience about 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 March 31, 2019, the Note was not deemed to be impaired.