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NOTE RECEIVABLE | 6 Months Ended
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Jun. 30, 2022
Note Receivable |
NOTE RECEIVABLE | 6. NOTE RECEIVABLE Note receivable consists of the following at:
|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Note receivable-current |  | $ | 3,066 |  |  | $ | 2,588 |
Note receivable-non-current |  |  | 3,679 |  |  |  | 7,117 |
Total Note receivable |  | $ | 6,745 |  |  | $ | 9,705 |
Effective January 1, 2019, we restructured our China distribution efforts by entering into two separate economic agreements as it relates to the commercialization of our Celsius products (i.e., license agreement) and a repayment of investment agreement with Qifeng. Under the license agreement, Qifeng was granted the exclusive license rights to manufacture, market and commercialize Celsius® brand products in China. Qifeng will pay a minimum royalty fee of approximately $6.9 million for the five years of the term of the agreement, transitioning to a volume-based royalty fee, thereafter. Under a separate economic agreement, Qifeng Food will repay the marketing investments made by Celsius into the China market through 2018, over the same five-year period. The repayment, which was formalized via a Note Receivable from Qifeng, will need to be serviced even if the licensing agreement is cancelled or terminated. The note receivable is denominated in Chinese-Yuan. Scheduled principal payments plus accrued interest are due annually on March 31 of each year starting in 2020. The note receivable is recorded at amortized cost 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. 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 June 30, 2022 and 2021, interest income was approximately $0.1 million and $0.1 million, respectively. For the six months ended June 30, 2022 and 2021, interest income was approximately $0.1 million and $0.2 million, respectively. 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 agreement, 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 June 30, 2022, the Note was not deemed to be impaired. Payment in-full was received by April 2022 pertaining to the amounts due on March 31, 2022. As collateral for the Note, a stock certificate in Celsius Holdings, Inc., which amounts to 34,830 of shares owned by an affiliate under common control with Qifeng is being held at a brokerage account. These shares were originally issued on April 20, 2015 via a private transaction which involved Risejoy Services Limited an affiliate under the common control of Qifeng, our Chinese licensee. Furthermore, a letter of guarantee was executed with several restrictions regarding these shares. These shares serve only as collateral and is a component of management’s consideration when evaluating impairment indicators.

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