In October, Celsius introduced two new flavours in its CELSIUS ESSENTIALS line, including Watermelon Ice and Grape Slush. Credit: MDV Edwards/Shutterstock.

Fitness beverage company Celsius Holdings has agreed to pay a $3m fine to settle charges from the US Securities and Exchange Commission (SEC) over improper accounting for stock-based awards.  

The SEC highlighted issues in Celsius’ 2021 financial statements for the second and third quarters, which were deemed “materially inaccurate” due to mishandled stock-based compensation expenses. 

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Nasdaq-listed Celsius must pay the civil penalty to the SEC within ten days of the order dated 17 January, with the funds going to the US Treasury. 

The company, based in Boca Raton, Florida, neither admitted nor denied any wrongdoing in agreeing to settle, according to the SEC’s “cease-and-desist proceedings” document.

Celsius had not responded to Just-Drinks’ request for comment at the time of writing.

According to the regulator, Celsius “improperly accounted for stock-based compensation expenses” after altering the terms of stock awards for six employees who were leaving the company, and retiring board members. 

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Celsius’ Q2 and Q3 2021 reports, along with “certain current reports”, contained “materially inaccurate and misleading” financial statements, which “understated general and administrative expenses” and failed to follow generally accepted accounting principles, the SEC said.  

In 2022, Celsius corrected its financial information for Q2 and Q3 of 2021 to align with generally accepted accounting principles.  

This adjustment turned the previously reported net income into a net loss for the three- and nine-month periods ended 30 September 2021, according to the SEC. 

The regulator’s investigation also revealed that Celsius failed to maintain necessary “disclosure controls and procedures” from at least September 2019 to August 2023. 

Celsius reported its most recent financial results in November, for the third quarter to 30 September.

Revenue fell 31% to $265.7m from the same period in 2023.  

Gross profit declined 37% to $122.2m, while the gross margin dropped 440 basis points to 46%. 

Net income plummeted 92% to $6.4m, resulting in the business posting diluted EPS of zero compared to 30 US cents a year earlier.

Celsius also expanded through M&A last year by acquiring Big Beverages Contract Manufacturing in November, adding a 170,000 square-foot “modern” manufacturing and warehouse facility to its operations.