Delivering Proven Innovation Celsius Holdings, Inc. (OTCQB: CELH) Information Memorandum April 2011
Highly Differentiated Brand & Proprietary Formula Great Taste Substantiated Claims Multiple Peer Reviewed Clinical Studies Significant Consumer Loyalty with Real Results Aligned with Major Consumer Trends towards Health & Fitness
Disclaimer / Forward Looking Statements Information included in this presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may”, “should”, “expect”, “anticipate”, “estimate”, “believe”, “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. This presentation contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated needs for working capital. These statements may be found under the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of this prospectus relating to this offering, other sections of the prospectus and this presentation generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in our prospectus. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this presentation will in fact occur. There can be no assurance that we have correctly identified and appropriately assessed all factors affecting our business or that the publicly available and other information with respect to these matters is complete and correct. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely impact us. Should any risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations. For these reasons, the reader is cautioned not to place undue reliance on our forward-looking statements.
2
Celsius Company Profile
Company:
Celsius Holdings, Inc. (OTCQB: CELH); Founded in April 2004
Address:
2424 N. Federal Hwy, Suite 208, Boca Raton, Florida 33431
Management:
Stephen Haley, Chairman & CEO; Geary Cotton, CFO
Products:
Fitness Drinks powered by MetaPlus® - proven to increase metabolism for an extended period of time; Packaging includes 9 flavors in cans, shots and on-the-go single packets. Total 24 unit equivalent case volume for the first quarter of 2010 was 138,000 cases.
Markets:
Available in over 18,000 retail outlets; Company utilizes Direct-StoreDoor (DSD), Direct to Retailer as well as e-commerce distribution systems. Food, Drug, Mass, Club, Convenience, Health Foods, Gyms, Military and E-Commerce.
Channels:
Financial Summary: Total net revenues for 2010 = $8.3 million Employees:
15 3
Celsius®, Your Ultimate Fitness Partner®, is a great tasting fitness drink for your healthy, active lifestyle. Helps you get fit and stay fit! Clinically proven and consumer validated to enhance the benefits of exercise – in the gym, on the court or walking your dog. Multiple studies show Celsius burns calories, reduces body fat, energizes metabolism, improves endurance and provides lasting energy. Powered by the unique MetaPlus® formula containing good-for-you ingredients, such as Green Tea with EGCG, Ginger, Calcium, Chromium, B vitamins, Vitamin C and Caffeine, all which work together to raise metabolism, resulting in a sustained calorie burn while keeping you energized through your work out and beyond. A healthier alternative to soda and contains no sugar, artificial preservatives or colors, high fructose corn syrup or aspartame and is very low in sodium and calories.
4
Meet the Celsius Consumer
55% Female / 45% Male
Average Age: 46
Median Income $86 K
Top reasons they first tried Celsius: Burns calories (82%) Energize metabolism (55%) Lasting energy (48%) Reduce body fat (41%) Doesn’t contain sugar (35%) Tastes Great (28%)
69% are 40+ years of age or older Sources of Initial Awareness: Friends and relatives (19%) Television News Coverage (17%) Celsius website (16%) Magazines (10%) In-store signage (8%) Local Events (7%)
They think of themselves as fit, with 75% claiming somewhat fit or better
They work out on average 3.6 days/week, 42% have a gym membership & 5% work out with a fitness trainer
They drink Celsius on average 4.7 days/week
53% of non-users claim “not available where I shop” as the primary barrier to use. This relates to not being able to find Celsius due to various merchandising placements across classes of trade.
43% of Celsius Users have used Celsius 1 year or more 43% drink Celsius before a work out, consumption peaks before lunch to before dinner with 79% of usage occurring during this time.
Source: NMI Celsius Quantitative Research – July 2010 (Preceding Ultimate Fitness Partner Repositioning)
5
Multiple Product Forms Non-Carbonated RTD Lemon Ice Tea new Green Tea Raspberry Acai Green Tea Peach Mango Strawberry Kiwi new Carbonated/Sparkling RTD Cola Orange Ginger Ale Wild Berry Stevia Based Non Carbonated RTD Apple Orchard new On-the-Go Stick Packets Berry new Calorie Burning Energy Shots Calypso Punch new
6
Unique Selling Proposition Innovative – Proprietary formula with widely accepted great taste profile available in multiple delivery systems. Proven Safe & Effective – 7 clinical studies on Celsius (not ingredients alone) confirming efficacy and safety. Consumer Validated – Many consumer testimonials “Real People”, telling their “Real Stories” with “Real Results”.
7
Product Awareness & Consumer Engagement Celebrity & Consumer magazines Consumer engagement – social media, product reviews, Facebook fans, bloggers Trade Magazines Consumer Campaigns (Ultimate Fitness Partner), success stories Trade magazine placement, product reviews, and awards Retailers & Editors - “Buyers’ picks” Engage scientists in media
Celebrity & Consumer Mag.
Bloggers & Fans & Articles
Retail Buyer’s & Editors Pick Ultimate Fitness Partner
Retailers Love Celsius Videos
Scientist on TV
TV Product Stories
Real People – Real Results
Celsius customers are eager to share their stories – authentic , inspirational, credible Media has reported their stories with strong positive coverage for Celsius Third party coverage of Celsius reinforces credibility and increases awareness
Recent Coverage Many more ready and growing daily
60
180
60
120
54
17
25
60
50
36
113
56
Clinical Studies Prove Health Claims Continued Investment in Clinical Research STUDY 7 – study of shots & powders complete, not published yet Broadens Target Markets & Benefits showed same results of MetaPlus in these formats – Miami Research Inst. Published Studies Solidify Claims STUDY 6 – 1 can of Celsius prior to moderate exercise yielded significant body Stronger Regulatory Compliance composition improvements, decreased body fat, increased lean muscle and cardio respiratory improvements than compared to exercise alone. Participants showed: 78% greater fat loss, 79% greater endurance performance, 5.5 lbs fat loss Human Performance Lab - ,Dept of Health & Exercise – Univ of OK – Published Nov/09
STUDY 5 – 1 can of Celsius prior to moderate exercise resulted in increased fat loss, increased muscle mass, increased endurance performance with significant improvements to blood lipid profiles when compared to exercise alone. Participants shows: 46% greater fat loss, 27% greater muscle mass, 35% greater endurance performance. Drinking Celsius with or without exercise showed a significant drop in total cholesterol(5 to 13%) and bad LDL cholesterol (1218%). Exercise alone had no impact on blood lipid levels.- Dept of Health & Exercise of Univ of OK STUDY 4 – 1 can of Celsius prior to moderate exercise showed a 93% greater fat loss, 50% more muscle gain, 62% better cardio fitness, and 32% increased endurance compared to the group drinking a placebo and doing the same standardized exercise regimen. - Applied Biochemistry & Molecular Lab of Univ of OK – Published Sept/08 STUDY 3 -Consuming a single Celsius daily for 28 days showed NO adverse changes to important health markers (cholesterol, blood sugar, blood pressure, etc) and burned on average 100 calories - Applied Biochemistry & Molecular Lab of Univ of OK – Published Oct/08 STUDY 2 -Consuming a single Celsius burns on average of over 100 calories - Applied Biochemistry & Molecular Lab of Univ of OK – Presented June/07 Published Feb/08 STUDY 1 - average increase of metabolism was 12% over a 3 hour period compared to a placebo - Ohio Research Group – Presented June/05 Published Sept/07
Full study detail available at www.celsius.com/studies
10
Substantiated Claims / FDA Compliance NAD – “Celsius studies support its claims” Celsius participated in the National Advertising Division, (“NAD”), of the Better Business Bureau’s voluntary self-regulation process and following the NAD’s review of Celsius’ research with respect to its beverages, the NAD confirms that Celsius substantiates its marketing claims with the multiple clinical studies that have been conducted on Celsius’ products.
Specifically, NAD stated that NAD “found that the advertiser (Celsius) could support claims that referenced that Celsius supplementation results in “increased metabolism,” “calorie burning,” “fat loss,” “decrease in body fat,” “greater endurance performance,” and “greater resistance to fatigue (increased energy)”.
Meets FDA c-GMP Compliance Celsius is c-GMP compliant and has a strong supplier base that has grown with the brand over the years. Celsius and its suppliers work collaboratively to bring new better-for-you products to market that are efficacious and safe. Celsius has brought it’s “dietary supplement expertise” to its beverage producer partners and have developed industry standards and best practices for the production of c-GMP complement supplement drinks. All ingredients and manufacturing processes in the production of Celsius are multi-sourced to avoid stock-outs. Celsius with its suppliers continually refines the production process and packaging materials to reduce impact on the environment.
11
Celsius is a 11 time award winner 2011 –Beverage Innovation Finalist “Best New Natural Functional Beverage”
Celsius has received accolades from all corners of the beverage industry.
2010 –CSP Magazine “Best New Functional Beverage”
Industry Councils Industry Peers Retailer Groups
2009 - BevNET’s Best of 2009 “Best New Powder/Tablet” 2009 –CSP Magazine “Best New Functional Beverage” 2009 - Beverage Innovation Awards “Best New Health Initiative” 2007 - Datamonitor “#1 Food & Beverage Trend” 2007 – Arab Beverage Forum‘s Qatrah Awards “Best Carbonated Beverage” 2007 – CSP Magazine “Retailers Choice – Best New Product” 2007 – Beverage Innovation Awards “Best New Functional Beverage”
2006 – Convenience Store / Petroleum (CSP) Magazine “Retailers Choice – Best New Product Finalist” 2005 – Beverage Industry Magazine “Best New Beverage Award”
12
Success Across Multiple Sales Channels
Food
Publix, Supervalu, Raleys, Ralphs, Hannaford Sweetbay, Winn Dixie, Price Chopper
Drug Club & Mass Convenience Nutrition Stores Health Clubs & Gyms
Walgreens
Military E-Commerce International
AFFES, Nexcom
Costco, Meijers, Shopko, Target, Marsh Casey’s, Hi-Vee, Bosch’s, Gate Vitamin Shoppe, GNC, Hi-Health Lifetime Fitness, 24 Hour Fitness, Europa Sports Distribution
Celsius.Com, Amazon, Vitacost Sweden, Chile, Lebanon, Jordan, Bermuda
Y-T-D Celsius R-T-D Scan Data from Select Retailers
Strong Management Team Experienced in Nutrition, Supplements and Beverages Stephen C. Haley – CEO, President, Chairman and Founder
30+ years in broad business experience including technology, beverage distribution and functional beverages
Former COO of MAPICS (NYSE:MAPS), a former international, publicly held company focused on software for manufacturing operations; 500+ employees and Revenue of $145M in 2003
Former CEO of Pivotpoint, an ERP software firm, backed by a venture capital group including Goldman Sachs, TA Associates and Greylock Partners, which was sold to MAPICS for $55 million
Geary Cotton – Chief Financial Officer
CPA with 30+ years of broad business experience in both public accounting and private industry
Joined Carl DeSantis at RexallSundown as its CFO in 1986; revenues were $12M
Helped take the company public in 1993; became a Nasdaq100 company with $600M revenue
Helped orchestrate sale to Royal Numico for $1.8 billion
Served as CFO of Royal Numico$3B Nutricia division, which included GNC and RexallSundown
Kelly Michols – Senior VP of Sales
20+ years in sales management in the consumer products industry
Executive VP and General Sales Manager of Rexall Sundown, responsible for sales of the sports nutrition operating division, growing sales to $600M
Early career with Proctor & Gamble, holding several sales management positions
Irina Lorenzi – VP of Marketing & Innovation
30+ years in consumer product development, marketing & innovation and regulatory oversight
Former Senior Marketing Executive at both GNC and Rexall Sundown
Early career was spent in the natural foods retail industry 15
Financial Snapshot (as of 4/8/11) Exchange Ticker
OTCQB: CELH
Current Price
$0.40
Volume
48,000
Market Capitalization
$6.6 mm
Shares Outstanding
18.5 mm
Insider Ownership
48%
Zenith International Ltd 16
Capital Sources & Operational Accomplishments 8,300 Public Market $13.1 million
Carl DeSantis - CDS Capital = $14.2 million
Friends, Family & Equity Lines
Capital = $8.1 million
Concept & Research Formulization and Production Commercialization Clinical Studies 1 – 3 Consumer Acceptance
1,300
National Marketing Plan Distribution Expansion Product Extensions Clinical Study 7
5,868
Net Revenue 2,590 1,645 Y over Y Growth
425 2005
Packaging Refinement Retailer Acceptance Channel Expansion Clinical Studies 4 - 6
206%
27%
57%
127%
2006
2007
2008
2009
41%
2010 17
Continued Strong Reorder Volume Growth 250,000
Re-Orders
213,564
Pipeline Fill
Case Equivalent Volumes (24 unit Cases)
200,000 154,691
150,000
138,312 128,568 104,823
100,000
78,183 less Returns
52,308
50,000
0
59,105
R et u r n s
39,719
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Pipeline Fill
4909
9479
10774
63338
34191
62123
12425
1384
923
Re-Orders
34811
42829
48331
41485
94377
151441 142266
76800
137389 18
Balance Sheet Summary Dollars in 000’s
12/31/07
12/31/08
$ 257
$ 1,041
Accounts receivable
277
Inventory
Cash
12/31/09 607
$ 1,321
193
2,125
1,192
579
505
1,650
1,564
2,533
2,203
5,474
4,317
Trade Payables
595
612
1,722
2,771
Long term debt
1,329
1,339
5,771
4,000
Total liabilities
4,138
2,192
8,626
6,835
Common stock
4,516
11,393
15,989
36,121
Retained earnings
(6,121)
(11,382)
(19,141)
(38,639)
Total Shareholder Equity
(1,605)
11
(3,152)
(2,518)
Total Liabilities & Equity
2,533
2,203
5,474
4,317
Total assets
$
12/31/10
19
Income Summary Dollars in 000’s Gross Revenue
Year ended 12/31/07
Year ended 12/31/08
Year ended 12/31/09
Year ended 12/31/10
$ 1,653
$ 2,741
$ 6,608
$ 13,100
(8)
(151)
(740)
(4,787)
Net Revenue
1,645
2,590
5,868
8,313
Cost of Goods Sold
1,034
1,833
3,063
7,218
611
757
2,805
1,095
Sales & Marketing Exp
2,101
3,937
8,002
15,187
Administrative Exp
2,054
1,740
2,257
4,705
(3,544)
(4,920)
(7,454)
(18,798)
182
342
305
700
Net Loss
(3,726)
(5,262)
(7,759)
(19,498)
Loss per share
($ .74)
($ .82)
( $ 1.02)
($ 1.11)
Discounts, Promo
Gross Profit
Operating Loss Financial Exp, Net
20
2011 Operating Strategy
Simplify & stabilize the business
Eliminate or significantly reduce cash burn
Effectively manage/grow key accounts Quantify base business without consumer marketing Identify & rectify customer supply chain issues Eliminate unprofitable accounts Develop grass roots & viral marketing campaign
Qtr ended 3/31/11
Qtr ended 3/31/10
$ 3,078
$ 3,191
Discounts, Promo
(872)
(814)
Net Revenue
2,206
2,377
Cost of Goods Sold
1,399
1,501
Gross Profit
807
836
Sales & Marketing Exp
817
4,755
Administrative Exp
388
1,354
(398)
(5,273)
61
579
(459)
(5,852)
Gross Revenue
Operating Loss Financial Exp, Net Net Loss
The Power and Potential of the MetaPlus™ Technology MetaPlus™ Technology Claim / Function Study
In Process
Future
Refreshing Calorie Burner
Weight Loss Market
Recovery (Exercise)
Burn Calories /Lasting Energy
Weight Loss, Fat Burning,
Muscle Repair, Inflammation reduction
Studies 1,2 & 3 – Extended Metabolic Rise / Prolonged efficacy & Safety Study
Weight Loss Study
Muscle growth or flexibility / Mobility study
Pre-Exercise Fitness Drink
Concentration , Focus & Mental Acuity
Recovery (hang over)
Enhances Benefits of Exercise
Sharp & Extended Focus & Concentration,
Back to Normal quicker, reduced hang over
Studies 4 – 6 – Fat Loss, Lean Muscle gain, Improved Endurance & Time to Exhaustion
Mental Acuity Study
Circulation Study
Healthy Natural Energy
Sport Performance Enhancer
Mood Enhancement
All Natural Fitness Drink
Better Performance / Prof & College sports teams
Positive Outlook, Self Confidence, Better Coping
No Study Needed
Performance Study
Mood Study
Today
Calorie Burning Energy Shot Calorie Burning & all prior claims Study 7 – Effective & Safe
22
Celsius Summary Highly Differentiated Brand & Proprietary Formula Aligned with Major Consumer Trends towards Health & Fitness Significant Consumer Loyalty with Real Results Multiple Peer Reviewed Clinical Studies Substantiated Claims Great Taste 23
