Why Coca-Cola (KO), Nestle, S.A.

(NSRGY) & PepsiCo (PEP) May Be

Watching This Small, Innovative

Company Very Closely

The exciting new consumer trend that

the big beverage companies simply

cannot afford to ignore

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The Challenges Facing Today's Largest Beverage Companies - Innovation &

Sustainable Growth. Where Will It Come From?

History shows that every once in a while a disruptive technology, product, or service

appears on the horizon that has the potential to create a paradigm shift in consumer

thinking and behavior. At first, most people dismiss it as a fad; thinking that it can't gain

much traction in the marketplace, and that it will never last. Oftentimes, they are correct.

In the case of the food & beverage industry, the landscape is littered with companies

that have attempted to offer innovative new products to consumers, but ultimately

failed. It goes without saying that the odds of success, in developing, manufacturing

and marketing a new beverage brand are not very favorable. But for those companies

that succeed in achieving the improbable, if not impossible, their early investors are

often significantly rewarded as word-of-mouth spreads, brand recognition increases,

sales momentum builds and investor awareness takes hold.

The only thing you have to do is find the right company, at the right time, with the right

product, the right strategic business plan, the right kind of capital structure and funding

mechanism, and the right management team to execute on the plan ---- and, most

importantly, deliver results.

But does such a company exist today?

In recent years, some of the biggest stock market winners have come from the beverage

industry. Just go back and look at the longer term charts of Monster (MNST), Cott

(COT), and Jones Soda (JSDA). Each of these companies, at some point in their history,

experienced a surge in share price. Investors, with lasting memories of the investment

power that underlies a new consumer beverage trend, continue to search for the next

big winner in this sector. Remember, Glaceau the maker of Vitamin Water, which was

purchased by Coca-Cola in 2007 for $4.2 billion dollars in cash? "

http://www.nytimes.com/2007/05/26/business/26drink-web.html?_r=0

Some have opined that Coca-Cola overpaid for ownership of Glaceau's Vitamin Water

brand, which some have called nothing more than filtered water, sweetener, and

vitamins along with some coloring. I only point this out to show that at six times

expected 2007 revenues, Coke paid a pretty penny for a brand with no real proprietary

formula, or intellectual property protection. The brand, while popular, simply quenches

thirst and provides a few vitamins. Coke and Pepsi, the beverage market leaders, are in

a unique position. Because of their size and structure, they find it much easier, cheaper,

and more desirable to purchase small companies that already have proven success in

launching an innovative new product.

As Tom Pirko, president of Bevmark, a consulting firm to the food and beverage

industry, including Coke, says, in the NY Times article above "When you look at what's

happening with Coke, they can't innovate their way out. They have to buy their way

out.” The question then becomes, at what point is a small start-up beverage company

worthy of the attention of the big boys?

Well, in the case of Coca-Cola, their VEB (Venture & Emerging Brands) Team looks for

those "brands that have achieved approximately $10 million in revenue". This $10

million bogey appears to be the critical threshold before any small beverage company

with a new, innovative, product will even begin to merit consideration by Coke's VEB

group. Another criterion that I found interesting was that in evaluating the growth of a

brand, the VEB group in Atlanta, pays particular attention to those company executives

that “understand the value of going deep before going wide by targeting specific

regions, channels, or customer segments, versus trying to be everywhere at once”.

http://www.coca-colacompany.com/stories/the-next-big-thing-howcokes-venturing-

emerging-brands-unit-stays-a-step-ahead-oftomorrows-thirsts

Judging from recent trade magazine articles, it also appears that a big priority for Coca-

Cola, as they move forward, is in the health and wellness area; providing beverages

with ingredients that are natural and good for you. Lower calorie, healthy alternatives

seem to be a logical first step to achieving this newly-formed corporate mandate.

Coke's chief procurement officer Ron Lewis has even gone so far as to say: "We can't

ignore the small, entrepreneurial brands popping up in unconventional outlets --- such

as health and beauty spas, natural food stores, gyms, yoga studios and other places

our red trucks don't visit.”

http://www.beveragedaily.com/Manufacturers/Coca-Cola-A-third-ofbeverage-

industry-growth-could-come-from-disruptive-brands-incategories-that-do-not-

exist-today

http://www.foodnavigator-usa.com/Manufacturers/Coca-Cola-onthinking-like-a-start-up-

open-innovation-and-avoiding-Kodak-moments

The future direction of Coca-Cola (KO) and PepsiCo (PEP), for that matter, seems fairly

obvious. The question becomes, where will they find the next new beverage product

worthy of their attention? I believe the answer lies in Boca Raton, Florida, at a small

company named Celsius Holdings, Inc. (CELH).

Celsius Holdings, Inc. first came to my attention in the summer of

2007 when I read an article by Herb Greenberg, currently of CNBC notoriety, who at the

time was writing a column on the Market Watch web site of the Wall Street Journal.

http://blogs.marketwatch.com/greenberg/2006/10/coke_formally_i/

http://blogs.marketwatch.com/greenberg/2006/10/more_on_cokes_c/

While I was impressed with what Coca-Cola was doing, I was more intrigued with the

fact that Coke was not the first to market with this new innovative product; a company

in Florida called Elite FX already had a calorie-burning beverage named Celsius. Elite

FX even went so far as to conduct a placebo-controlled, double blind cross-over clinical

study, to substantiate its calorie-burning marketing claims. This study validated the

efficacy of Celsius and the "thermogenesis", i.e., the raising of the body's metabolism,

which takes place shortly after drinking the product, and lasts for approximately three

hours.

Those clinical studies, which were done at the request of then CEO Steve Haley, proved

to be instrumental in giving Celsius a distinct scientific advantage over Coca-Cola (KO)

and Nestle's (NSRGY) Enviga product. Mr. Haley’s foresight and vision would provide a

critical step forward in the marketing of his company’s products. For this decision

alone, he deserves much credit and recognition.

The introduction of calorie-burning beverages creates a whole new category in the

industry; one that more than a few beverage company executives and outside

consultants feel is in its early stages of development.

If you think about it, the industry has gone from high-fructose corn syrup products,

where calorie counts typically range from around 140-160 calories, to lower calorie

beverages (light beers for example) and other light beverages, to zero-calorie

beverages. The question then becomes where do we go from here?

Why Stop at Zero Calories? – The Negative-Calorie

Category Comes of Age:

Since the initial study in 2005, Celsius has conducted six additional studies, many at the

prestigious University of Oklahoma Health Sciences Center, under Dr. Jeffrey Stout,

PhD, Director of Metabolic and Body Composition. Many of these studies have been

published by the ISSN (International Society of Sports Nutrition) in the Journal of the

International Society of Sports Nutrition, and the Journal of Strength and Conditioning

Research. Links to the various scientific studies may be found here:

http://www.celsius.com/thermogenic-scientific-studies

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These types of studies have become increasingly important in today's age of scrutiny

by regulators and legislators. In fact, it was because Coca-Cola and Nestle's Enviga

product had no underlying proof for its calorie-burning claims, that they were ultimately

forced into a $650,000 settlement with 27 state attorneys, including Connecticut

Attorney General Richard Blumenthal, and ultimately wound up pulling their product

from the marketplace.

http://www.bevnet.com/news/2009/2-27-2009-enviga

It's important to note that there is a huge difference between conducting a study on the

efficacy of one or two ingredients in a product versus the actual product as delivered to

consumers. Some have attempted to apply the efficacy of a single ingredient (such as

caffeine) to a product consisting of many ingredients. The problem with this approach is

that it is not all-inclusive or comprehensive enough to validate a marketing claim. All of

Celsius' scientific studies were conducted on the actual Celsius product formula, as

delivered in Ready-to-Drink cans, or powders that simply dissolve when added to water.

The Enviga settlement also served to tighten up what could and could not be said with

regard to claims for calorie-burning beverages. This was also part of the approval by

the National Advertising Division (NAD) of The Better Business Bureau, as a

comprehensive review of the marketing claims made by Celsius. Here is a direct quote

from the NAD --- Specifically, "NAD found that the advertiser (Celsius) could support

claims that referenced the taste of Celsius and the product's ingredients, as well as

claims Celsius supplementation results in 'increased metabolism,' 'calorie burning,' 'fat

loss,' 'decrease in body fat,' 'greater endurance performance' and 'greater resistance to

fatigue (increased energy)’." To my knowledge, there is no other brand that has gone

through this kind of exhaustive process to validate their marketing claims.

http://www.cspnet.com/category-management-news-data/beveragesnews-

data/articles/bbb-advertising-division-confirms-celsius

To take things one step further, Celsius was even challenged in the courts regarding

their marketing claims, and the efficacy of their product's calorie-burning properties.

Their victory, pursuant to Judge Terry A. Green's ruling, was a precedent, in my

opinion, for any other potential future challenges to the brand. As Celsius

attorney Joel B. Rothman said "We shut down the plaintiff's class action

litigation by showing that the plaintiff did not have standing to pursue a case

against Celsius," Rothman said. "It's a big win in a state that's known as a haven

for class-action lawsuits.”

http://www.naturalproductsinsider.com/news/2011/10/judge-rules-infavor-of-celsius-

holdings-in-claim.aspx

http://www.arnstein.com/15DCB1/assets/files/documents/

8-11-11_RothmanLaw360_CelsiusArticle.pdf

Okay, so I think that we have established that the Celsius brand is on solid-footing

regarding both the legitimacy of its marketing claims, and the efficacy of those claims

to "burn more calories and provide lasting energy."

So now the question is how does the product resonate with consumers and how will

management go about building the brand? The first question is a relatively easy one.

You need do nothing more that click on over to Amazon.com to see what people who

use the product are saying:

http://www.amazon.com/Celsius-Raspberry-Acai-Green-12-Ounce/ product-

reviews/B007R8XGKY/ref=cm_cr_pr_top_recent?

ie=UTF8&showViewpoints=0&sortBy=bySubmissionDateDescending

Celsius products enjoy an average 4.2 out of 5.0 stars rating, with about 325 people

weighing in with their opinion of the product. Celsius made a decision in the fall of 2013

to stop taking direct orders for Celsius products on their web site, and decided to

contract out to Amazon to be their primary direct on-line retailer.

http://www.celsius.com/live-healthy/celsius-announces-a-new-way-toshop-online

I believe that this was a smart move for a

couple of reasons. First, everybody

knows and trusts Amazon as an on-line

retailer. Their prices are very competitive,

and for those that use Celsius products on a

regular basis, there are even ways to

reduce shipping costs.

Secondly, Celsius management was able to reduce their overall costs (something they

have been focusing on for a while) by eliminating the labor and materials to handle

orders and the shipment of those orders out to customers. The management team at

Celsius has even recently implemented production of Celsius products in Dusseldorf,

Germany as another way to reduce shipping costs to international distributors in the

European Union, Middle East and African regions of the world. They have future plans

to do the same for distribution already announced in China & Brazil.

http://www.marketwatch.com/story/celsiusr-commences-production-indusseldorf-

germany-2014-01-13

It's not just consumers who feel that the products are deserving of strong reviews for

taste, innovation and proven results. The beverage industry has also given Celsius

products numerous accolades. Celsius has garnered thirteen (13) international awards

in the functional beverage category, including "Best New Natural Functional Beverage",

"Best New Fitness and Sports Beverage" and "#1 Food & Beverage Trend”. That last

award, won in 2007, is especially interesting because that same year the highly-

respected international research company Datamonitor named the category of calorie-

burning beverages as the number one food and beverage trend for 2007.

http://www.gizmag.com/go/6831/

While the folks over at Datamonitor might have been a bit ahead of the curve, and

premature on their call, they certainly are not without a good deal of market research,

industry databases, relevant information and expert analysis to arrive at such a

conclusion. In my opinion, their thesis is correct; they just have miscalculated the

timing of the trend.

So who are the people behind Celsius, and can they build this venture into a successful

and profitable company? First and foremost, I believe that one of the keys to how

Celsius got this far has been the result of the personal commitment and capital of Carl

DeSantis.

http://www.celsius.com/live-healthy/calorie-burning-celsius-announcesstrategic-

partnership-with-former-rexall-sundown-chairman-carldesantis

http://www.businesswire.com/news/home/20090406005367/en

http://www.prnewswire.com/news-releases/calorie-burning-celsiusannounces-strategic-

partnership-with-former-rexall-sundownchairman-carl-desantis-64887052.html

http://www.marketwired.com/press-release/carl-desantis-increasesinvestment-to-153-

million-in-celsius-1210014.htm

http://www.marketwired.com/press-release/Celsius-ExpandsMarketing-Through-

Additional-Financing-From-Desantis-NASDAQCELH-1289070.htm

For those who may not be familiar with Mr. DeSantis, he is the founder, and former

Chairman & CEO of Rexall-Sundown, a vitamin and supplement company that was sold

in 2000 to Royal Numico for $1.8 billion

http://www.prnewswire.com/news-releases/royal-numico-to-acquirerexall-sundown-for-

us18-billion-72875007.html

Carl started Sundown, as a mail-order vitamin business out of his house, at a very

young age, working along with his wife. He eventually merged the company with Rexall,

a chain of drugstores mostly located throughout the mid-western part of the United

States, which he purchased, and the rest, as they say is history.

Carl even penned an autobiography titled "Vitamin Enriched", which provides a history

of his entrepreneurial spirit, strong work ethic and determination to succeed. These

attributes ultimately led to the pinnacle of his career; building a multi-billion dollar

business, and selling it to a large international corporation. You can find Mr. DeSantis'

book at Amazon.com. If nothing else, you'll get a sense of Carl DeSantis' resolve and

fortitude in business matters, and his strong moral character.

http://www.amazon.com/Vitamin-Enriched-Prescription-

FounderDeSantis/dp/1890819034/ref=sr_1_2? ie=UTF8&qid=1392335539&sr=8-

2&keywords=vitamin+enriched

+books

Carl has always been an entrepreneur, and his South Florida Company, CDS Ventures,

has multiple holding of various public and private companies. They first started

financing Celsius Holdings when Steve Haley was the CEO, and most recently added

another $2.2 million in funds, this past September, after seeing the progress made by

his newly-appointed management team brought in during late 2011 to replace Steve

Haley, the founding CEO (more about this later).

http://www.marketwatch.com/story/cds-ventures-of-south-florida-llcincreases-stake-in-

celsius-holdings-inc-and-extends-debt-instrumentson-results-2013-09-10

However, don't think that because Carl is wealthy he just decided to invest in Celsius on

a whim. Before making the decision to invest in this company, Carl and his group

performed extensive and thorough due diligence on the product and its claims. This

was to avoid a rather embarrassing situation that occurred with a Rexall-Sundown

product called Cellasene.

http://www.palmbeachpost.com/news/business/delray-beach-basedcompany-dives-into-

crowded-en-1/nL64z/

Celsius During Steve Haley's 7-Year Tenure as CEO. The Brand Experiences

Growing Pains. What Went Wrong & Why?:

Under former CEO Steve Haley, the company conducted its first clinical study of Celsius

in 2005, and afterwards, the company began to slowly market its products through

traditional distribution channels.

As a result of the company receiving unexpected national attention, a false-sense of

grandiosity suddenly appeared in the C-suite and the Board Room. Out of that, the

"build-it-and-they-will-come" mentality grew, and the costly decision to go national with

distribution was made.

Celsius, the calorie-burning beverage, appeared on literally hundreds of local CBS, NBC

and ABC affiliate news channels, as well as appearances on Food Network's

Unwrapped, NBC's Today Show with Matt Lauer and hit-show The Doctors.

http://www.youtube.com/watch?

v=GO5ztWClww4&playnext=1&list=PLA05173E858256AD2&feature=re sults_video

Using a distribution model which required the payment of high-cost slotting fees to

retailers in exchange for shelf space, the company quickly found that the "pay-to-play"

strategy was resulting in excessive and exorbitant marketing costs.

Without having first established the brand, with strong reorders and customer sell-

through, the company quickly found itself burning through cash at an alarming rate.

After the company raised $13 million in capital through an offering of shares in May of

2010, and secured a listing on the NASDAQ after affecting a 1:20 reverse split, the

company embarked on an aggressive marketing campaign and wound up squandering

just about all of the capital raised in the May 2010 stock offering.

http://articles.sun-sentinel.com/2010-05-07/business/fl-desantisdrink-

20100507_1_nasdaq-capital-market-rexall-sundown-carl-desantis

Looking back, it appears that not properly laying the groundwork for the brand resulted

in slower than expected sales, while marketing expenses, in the form of slotting fees,

ballooned. The company found itself in the position of losing huge amounts of money

on a quarterly basis. In addition, almost half of the company's revenues were coming

from Costco Wholesale Clubs, where margins were razor thin, and consumers

had to make a commitment to purchase Costco's only Celsius offering; a 15-pack of

Outrageous Orange or Raspberry-Acai Green Tea flavor.

Carl, in an attempt, to stop the bleeding took steps to remedy the situation by reducing

the salaries of those in the executive suite, and establishing a special board committee

to evaluate strategic alternatives. The company also implemented a new strategic

operating plan aimed at right-sizing the company. Translation: cut all but the most

essential expenses on both the marketing and operation side of the business.

http://www.sec.gov/Archives/edgar/data/

1341766/000121390010005096/f8k120210_celsius.htm

At that point in time, things looked very bleak. However, much to the surprise of many,

sales continued to show resiliency despite the cutting off of all marketing and

advertising by the company. The stock, on the other hand, languished and slowly

drifted lower, from a high of $14, and a market cap of north of $100 million, as investor

expectations were dashed. The last official 10-Q was filed on May 10, 2011. The

Company also announced its intention to deregister as a reporting company under the

Securities Exchange Act of 1934, as amended. The company said in an 8-K Filing "The

Company believes that given its downsized level of operations, it is in the best interests

of its shareholders not to incur the expenses associated with being a reporting

company. It's the company's intention to continue to issue quarterly financial

information. The Company's shares and warrants will continue to trade in the over-the-

counter market following deregistration."

Nine days later the company filed a Form 15-12B effectively withdrawing its requirement

to file reports with the Securities & Exchange Commission. In my opinion, this move

officially ushered in the end of the Steve Haley era, and paved the way for Carl to bring

in a fresh and focused management team with experience in turning around troubled

companies.

In November of 2011 it was announced that Steve Haley was stepping down as the CEO

of Celsius Holdings, Inc. and being replaced by Gerry David, a seasoned executive with

extensive experience in corporate turnarounds, start-up companies and those

companies with fast growth prospects. As part of Steve Haley's exit, Carl DeSantis

agreed to buy a substantial portion of the equity position held by Mr. Haley, thus

increasing his ownership to a majority of 52 percent of the common stock of Celsius

Holdings, Inc.

http://www.bevnet.com/news/2011/changes-roiling-functionalbeverage-category

http://www.bevnet.com/magazine/issue/2012/big-changes-at-o-n-ecelsius-and-

starbucks-buys-evolution-juice

Celsius Redux. The Rebuilding and Rebranding Process Begins Under New

Management:

Gerry David wasted no time in executing a comprehensive strategic business plan to

turn around the struggling fortunes of this once promising little beverage company. One

of Mr. David's first initiatives was to re-brand the Celsius product by changing the

marketing strategy, as well as changing the look and feel of the product.

He also scaled down the number of flavors to a more manageable, SKU-friendly, number

of five. The five flavors that remained were Sparkling Cola, Sparkling Berry, Sparkling

Orange, a non-carbonated Peach-Mango Green Tea, and a non-carbonated Raspberry-

Acai Green Tea flavor. Gone were a non-carbonated Outrageous Orange flavor, non-

carbonated Lemon Iced Tea and non-carbonated Strawberry-Kiwi. Celsius' new

management team felt that having a fresh, exciting and upscale look with enhanced

graphics and a look of continuity across the five flavors was critical to the re-branding

of the product. Focus groups conducted with beverage distributors agreed.

http://www.bevnet.com/news/2012/celsius-gets-a-makeover-andunveils-new-packaging

http://www.healthcarepackaging.com/package-design/structural/ redesigned-can-

energizes-celsius

Many consumers, who remember the old cans, say that their look resembled a

PowerPoint presentation, with too many different fonts, italics and bold type scattered

about everywhere. I've heard it described as being very noisy looking and very

unappealing to the eye; not something desirable when you are on a shelf competing for

the consumer's attention with hundreds of other beverages.

Another key component of Mr. David's new marketing strategy was to move from a

business model of selling four packs of Celsius to new consumers, to one of selling

refrigerated single cans, to allow consumers to sample the product first without having

to make a commitment to purchase volume of something they had never tried before.

As part of this strategy, the company ended its distribution relationship with Costco.

That was a bold move, considering the revenue generated from having a presence in

316 of Costco's signature outlets was hefty.

The decision to drop Costco from the ranks of Celsius' distribution partners, in early

2012, was a difficult choice, but one that ultimately strengthens the company for two

reasons. First, it removes the frightening dependence on a single source for almost

fifty-percent of annual revenues. Second, the very thin margins from the Costco

relationship were a drag; pulling down the overall, blended margins across all

distribution channels.

Looking at the revenue numbers over the past few years, it seems that the broadening

out of the distribution base has stabilized revenues, and created a more predictable

stream of income for the company.

Here is a breakdown of the financial results reported by the company over the past four

years:

However, the new strategic focus didn't end there. Mr. David decided to partner with one

of the country's most aggressive distributors, GBS Smash Brands, to expand

distribution in a new direction which included health clubs, colleges and universities

and other nontraditional distribution outlets.

http://www.bevnet.com/news/2012/celsius-enlists-gbs-smash-brandsto-pump-up-new-

growth-strategy

In addition, Mr. David beefed up the Celsius Ambassador Program, whereby free

samples of Celsius were given out, along with an incentive to buy-one-get-one-free with

the retail purchase of a single can.

Taste is one of the most important consumer criteria in any beverage, and it has been

shown that most people who try Celsius enjoy the taste and will purchase the product.

He also made the Ambassador Program profitable, something that was never done

under Mr. Haley.

Sampling is a big part of getting consumers to try and eventually buy Celsius. The

company has used a number of sampling programs, partnering with subscription box

companies such a Bulu Box and Goodies Co. (a Wal-Mart affiliate), among others.

I mentioned how under Celsius' previous management, thousands of dollars were spent

on slotting fees and marketing expenses, resulting in an unusually high-cost structure

to bring in each new customer. A new, less expensive and creative way to find and

secure new customers was necessary, and Gerry David found it in digital marketing and

social media.

http://www.bevnet.com/news/2013/celsius-growth-led-by-refineddistribution-digital-

marketing

A very important and instrumental part of developing a digital marketing and social

media strategy was to partner with a public relations firm that had all the right

characteristics necessary to launch, manage and monitor an effective PR campaign. For

this extremely important task, Celsius chose 5WPR with offices in New York and Los

Angeles, as their PR Agency of Record.

http://www.prnewswire.com/news-releases/5w-public-relations-namedpr-agency-of-

record-for-celsius-inc-143289876.html

In his most recent commentary on FY 2013 results, CEO Gerry David had this to say: "as

a result of our marketing initiatives we are attracting new daily consumers and industry-

wide brand recognition. Celsius Public Relations efforts have generated over 750

million impressions in 2013 while our digital radio campaign continues to deliver 7.8

million ads each month that are focused in our "Drill Deep" markets."

Perhaps the most important change that was made to the Celsius marketing strategy

was to eliminate the previously held notion that the company needed to take

distribution nationwide, versus concentrating on a few markets where the idea was to

"drill deep"; penetrate and concentrate on establishing a repeat customer base by

achieving product "sell-through".

The use of Pandora has been very instrumental in helping Celsius attract and retain new

customers who are encouraged to visit the company web site where they can purchase

the product and see the results that others are achieving in terms of weight-loss,

increased energy, along with more stamina and endurance when exercising.

Some of the success stories achieved by ordinary people are truly amazing. I'm sure

these personal testimonials convince many who visit the company web site to try the

product. Celsius also has its own team of sponsored athletes who compete in a number

of different sports.

http://www.celsius.com/category/weight-loss-success/

You will remember earlier in my report I quoted executives at CocaCola's VEB unit who

said that the VEB group in Atlanta, pays particular attention to those company

executives “that understand the value of going deep before going wide by targeting

specific regions, channels, or customer segments, versus trying to be everywhere at

once”.

This new multi-layered strategy, of doing just that, appears to be yielding significant

results.

http://www.bevnet.com/news/2014/multi-layered-strategy-catalyzescelsius

While there has certainly been significant progress made by the Csuite at Celsius,

some of the most powerful and influential changes may have recently taken place at

the Board Level. In April of 2013, it was announced that three new individuals had

joined the Celsius Board of Directors; Kevin Harrington, Kathleen M. Dwyer and Nick

Castaldo.

http://www.marketwatch.com/story/celsius-holdings-inc-appointsthree-new-board-

members-2013-04-15

These three individuals have very strong credentials, and each has demonstrated a

track-record of success in their respective careers.

Kevin Harrington's desire to join the Board is based on his ability to recognize growing

consumer trends, and products that meet the needs of the marketplace. He was one of

the original members of the hit television show "Shark Tank", and has successfully

helped launch over 500 new consumer products.

http://upstart.bizjournals.com/entrepreneurs/hot-shots/2013/08/07/ kevin-harrington-

shark-tank-advice.html?page=all

His presence on the Celsius Board has caused some to speculate that "with Kevin

Harrington on board, the competition will heat up, and the big boys (Coke and Pepsi)

will pay close attention”.

http://www.palmbeachlwp.com/news/work/celsius-drinks-addsharrington-to-board/

If, in the case of Coca-Cola, their VEB (Venture & Emerging Brands) Team looks for

those "brands that have achieved approximately $10 million in revenue", the boys in

Atlanta may, in fact, have begun watching this upstart little beverage company very

closely. Most recent Q4 and FY 2103 results show continued strong revenue growth

(topping $10 million for the first time in the company’s history), improving margins,

and double-digit growth in multiple channels, while international expansion plans

are gaining traction.

http://globenewswire.com/news-release/2014/02/06/608019/10067114/en/Celsius-

Holdings-Inc-Reports-Fourth-Quarter-and-Year-End-2013-Results.html

http://globenewswire.com/news-release/2014/02/25/613019/10069679/en/Celsius-R-

Partners-With-Dubai-Franchising-of-UAE-International-Investments-for-Exclusive-

Distribution-in-Middle-East.html

Investors might find the shares of Celsius Holdings, Inc. particularly compelling, given

its potential growth prospects and most recent quarterly results. As of the date of this

report, the company is selling for roughly 0.7x annual revenue, well below the industry

average of 1.5x - 2.0x, and substantially below the 6x number that Coca-Cola paid for

Glaceau in 2007.

Shares of Celsius Holdings, Inc. are very thinly traded as a result of having only

20,179,032 shares outstanding as of 12/31/2013.

Approximately, 52%, or 10,493,096 of the outstanding shares are held by majority

stakeholder, Carl DeSantis, through his corporate entity CDS Ventures of South Florida,

LLC, leaving only approximately 9,685,935 for purchase in the public float.

CDS Ventures of South Florida, LLC also owns debt instruments totaling approximately

$7.6 million, some of which are convertible into shares of Celsius Holdings, Inc.

common stock. Potential investors are strongly encouraged to review the company

filings for details regarding the terms and conditions of these instruments, along with

conversion privileges as they relate to these various debt obligations.

IMPORTANT DISCLAIMERS

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expresses only those opinions of individuals who are affiliated with Altitrade Partners. Altitrade

Partners has not received any form of compensation from Celsius Holdings, Inc., or any other third-

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