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RELATED PARTY TRANSACTIONS
 6 Months Ended
Jun. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS RELATED PARTY TRANSACTIONS
Transactions with Pepsi
As further described in Note 14. Mezzanine Equity, on August 1, 2022, the Company issued approximately 1.5 million shares of non-voting Series A to Pepsi. On an as-converted basis, the Series A held by Pepsi accounted for approximately 8.5% of the Company’s outstanding common stock on the date of issuance. Also, as discussed in Note 14, the Purchase Agreement entered into on August 1, 2022 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 year ended 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 concluded that Pepsi represents a related party to the Company. The following transactions were recognized in the Company’s financial statements:
•Net sales to Pepsi amounted to $184.9 million and $341.4 million, respectively, for the three and six months ended June 30, 2023 and are included in revenue on the accompanying consolidated statements of operations and comprehensive income.
•Estimated promotional allowance related to Pepsi was $49.5 million at June 30, 2023 and is included in accrued promotional allowance in the Company's consolidated balance sheets.
•Accounts receivable due from Pepsi on June 30, 2023 and December 31, 2022, were $138.0 million and $31.6 million, respectively, and are included in accounts receivable, net on the Company’s consolidated balance sheets.
•Pepsi paid the Company $227.8 million in cash under the Transition Agreement during the year ended 2022. This amount was used to pay termination fees owed by the Company to terminated distributors; any excess cash received from Pepsi was contractually restricted and due back to Pepsi. The Company recorded deferred revenues (a contract liability) of $181.2 million, which is presented net of $2.3 million and $4.7 million, respectively, of revenue recognized in the consolidated statements of operations for the three and six months ended June 30, 2023. The Company recorded deferred revenues of $189.5 million, net of $4.2 million of revenue recognized as of December 31, 2022. The deferred revenues will be recognized by Celsius ratably over the twenty-year agreement term.
•Amounts due to Pepsi of $34.8 million as of December 31, 2022, representing refund liabilities owed to Pepsi under the Transition Agreement, were recorded to accounts payable and accrued expenses on the accompanying consolidated balance sheets. As of June 30, 2023, payments due to Pepsi were fully refunded, and the Company did not have a refund liability.
•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. Mezzanine Equity for more information.
•The Company recorded a $282.5 million asset as deferred other costs in the consolidated balance sheets, representing the excess of the $832.5 million fair value of the Series A Preferred Stock over the issuance proceeds of $550 million. As of June 30, 2023 amounts representing the unamortized deferred other costs of $14.1 million and $255.4 million, respectively, are presented in deferred other costs-current and deferred other costs-non-current in the consolidated balance sheets. As of December 31, 2022 amounts representing the unamortized deferred other costs of $14.1 million and $262.5 million, respectively, are presented in deferred other costs-current and deferred other costs-non-current in the consolidated balance sheets. Amortization for the three and six months ended June 30, 2023, was $3.6 million and $7.1 million, respectively. This was recorded as an offset of revenue in the consolidated statements of operations and comprehensive income.
See Notes 1. Organization and Description of Business, 2. Basis of Presentation and Summary of Significant Accounting Policies, 4. Revenue, 11. Accounts Payable and Accrued Expenses, and 14. Mezzanine Equity for more information.
Related Party Lease
The Company’s office is leased from a company affiliated with CD Financial, LLC which is controlled by a major stockholder. The lease extends until December 2024 with a monthly rent of $35 thousand.
Additionally, on May 17, 2023, the Company and CD Financial, LLC entered into an amendment to the lease that expands the leased space, commencing July 1, 2023. The expansion space extends until December 2024 with a monthly rent of $8 thousand.