Good morning. My name is Henry and I will be your conference operator today. At this time, I would like to welcome everyone to the NewAge Beverages Corporation 2020 First Quarter Earnings Call. At this time, all lines have been placed on mute to prevent any background noise. There will be a question-and-answer session. [Operator Instructions].Now, I would like to turn the call over to our first presenter, Mr. Scott Van Winkle. You may begin the conference.

Good morning, and thank you for joining NewAge Beverages Corporation's 2020 first quarter financial results investor conference call. On today's call, we will have Brent Willis, Chief Executive Officer; Julie Garlikov, Chief Marketing Officer; and Greg Gould, Chief Financial Officer.I'd like to remind everyone that this conference call may contain certain forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties.Factors that could cause these results to differ materially are set forth in our annual report on Form 10-K and our quarterly report on Form 10-Q filed with the SEC.Any forward-looking statements we make on this call are based on assumption as of today, and we undertake no obligation to update these statements as a result of new information or future events.During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is available on our website at newage.com.The transcript of today's conference call will be available on the company's website within the Investors section at www.newage.com.I'd now like to turn the call over to Brent Willis, Chief Executive Officer. Brent?

Thank you, everyone, for joining us on the call. I'd like to start off today by thanking all of our associates at NewAge in more than 60 countries around the world for their decisive actions and responsiveness that led to an excellent first quarter.Their leadership, personal choice to step up to drive change and take action significantly contributed to our performance, a performance that we believe compares very favorably versus our peer group.But even with that performance at the same time, like a lot of other folks, we have been significantly affected by COVID-19. Just a subset of those impacts include sales and distribution to on-premise and foodservice outlets in North America. They're down more than 70%. Many retailers have curtailed any new product initiatives. In-store merchandising has been virtually impossible.And in our Noni by NewAge segment, our ability to hold in-person or group conferences and conduct a peer-to-peer selling as we did for literally the past 20 years has been dramatically changed.But despite those negative impacts, the organization has responded decisively in response to the new operating environment, by driving incremental sales of our immunity strengthening products, such as 'NHANCED Cell Defense and Tahitian noni juice, rapidly expanding of our ecommerce and social selling tools and other initiatives resulting in overall excellent growth worldwide.As you might imagine, in my role, I'm lucky enough to talk with a lot of other CEOs and also get the counsel of a pretty incredible and highly diligent board of directors at NewAge.Here's my take. Most of my fellow CEOs' companies are really struggling. But in that context, all seem to be more short-term focused, all are cutting expenses and all are guarding cash. Many of them expect to continue to struggle because of their business models or sectors to which they're exposed. They've just been fundamentally impacted, at least in the short term and quite possibly in the long term.Gary Burnison, who's the CEO of a Korn Ferry, put it well, I thought, when he said in a matter of days, organizations have had to make [indiscernible 0

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09] survive everywhere. The circuit breakers have been tripped.Now, it's the big reset. To thrive, all companies will need to think and act like startups by reimagining their future. If they don't, their competition will. Why? Because in the next two years, we will see more change than we've seen in the last 20.What a great opportunity for NewAge. We are a startup at less than four years old. A scaled startup, but a startup, nonetheless. And my take is the fast will eat the big, and speed and maneuverability on the battlefield will be of tantamount importance for those companies that will be successful going forward.At NewAge, we're using our speed and agility to think and act like the startup we are, and position ourselves to succeed in this uncertain market. But let's face it, we were prepared [indiscernible 0

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23] and we built what we call our platform for growth. That platform is, number one, a portfolio of healthy functional brands driven through, number two, an omnichannel route to market. As a result, we now have 80% of our revenue ordered and fulfilled online and 80% delivered direct to consumers' home.Through that system, we drive our healthy products portfolio, including two products – our Tahitian noni and 'NHANCED Cell Defense – that directly strengthen consumers' immunity. I can't envision a better business system, sales and distribution model and brand and product portfolio to address the challenges of today's business environment, an environment that will likely pervade our lives for at least the next couple of years.Now, on top of that business model, we've invested in and built the leadership team and sales and marketing teams to execute the model. 75% of our leadership team is new in about the past 12 months and virtually 100% of the sales and marketing team is new in the past three to four months.We believe it is because of the people, coupled with the processes we have in place, the systems we have implemented and the visibility information and dashboards that we now see daily, and the metric-driven, performance-oriented culture that is in process.These are the reasons that we are seeing the results on the business. No one sees this work behind the scenes. But it is that work. It is that work behind the scenes that is key to superior, sustainable, and profitable organic growth.Look, we have the right business model with our direct-to-consumer approach for the period now and in front of us; the right products, especially our immunity ones; and the [indiscernible 0

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29] approach with speed and maneuverability that frankly puts NewAge in a competitively advantaged position.And on top of that, we now have the team and the execution capabilities to drive our platform. I cannot envision a better position to be in than the one we're in right now. And it is working.And to talk about how it has worked so far in the first quarter, let me please pass it over to Greg. Greg?

Thank you, Brent. And good morning to everyone. For the first quarter ended March 31, 2020, net revenues reached $63.7 million compared to $58.3 million in the first quarter of 2019, an increase of $5.4 million or 9.2%.Typically, our first and fourth quarters are the smallest seasonally and are similar in size. So, the fact that we were also $4.5 million ahead of Q4 is [indiscernible 0

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35] principally China, Japan and Europe in our Noni by NewAge direct selling and DSD system also has had their best first quarter in its history with double-digit growth.From a brand standpoint, our sales of Noni, Te Mana and 'NHANCED Cell Defense contributed to growth. We significantly increased our immunity benefits messaging and launched some key new products within our core brand franchises. And those are proving to be effective, as Julie will reference a bit later on the call.As Brent mentioned, we'd have had even better results had it not been for the impact of COVID-19. We have felt the impacts around the world in all aspects of the business. Like most other companies, we expect these impacts in disruptions to continue.Gross profit was $41.5 million or 65.2% of net sales. In Q1 2019, we hit $66.2 million; but in Q2, that went down to 62.7%; and Q3, 57.7%; and Q4 to 54.3%. We are pleased by the 11 percentage point improvement in gross margin versus Q4 2019. It is a welcome step in the right direction, which was driven by product mix improvements, channel mix improvements and geography mix improvements.SG&A in the first quarter of 2020 as a percentage of sales increased 200 basis points compared to the first quarter of 2019 as a result of a number of investments made to upgrade and build out our platform, including upgrading external auditors to Deloitte, strengthening the quality of our insurance programs and insurance providers, upgrading legal support to Faegre Drinker and Greenberg Traurig and important investments in the board of directors and leadership team, as Brent mentioned in his initial comments.Net loss was $11.6 million or $0.14 per share. The increase in net loss was significantly impacted by a gain on sale of property in the first quarter of last year, as well as increased as SG&A as previously discussed.Adjusted EBITDA was negative $7.1 million compared to a gain of $3.9 million in Q1 of last year, reflective of those investments in the impact of the gain on the sale of property in Q1 2019.Importantly, though, as referenced in our 10-Q, at the end of the quarter, we took a number of actions to reduce SG&A that are expected to positively impact our bottom line between $5 million and $7 million on a full-year basis.Shifting to the balance sheet, we continued to have this strong financial position and a clean capital structure. We ended the first quarter of 2020 with $27.5 million in cash after satisfying important tax obligations of $14.1 million in Japan, repaying $10.1 million against the East West Bank credit facility and putting $15.1 million in restricted cash.As of March 31, 2020, we had working capital of $17 million and have now met all the covenant obligations of our credit facility with East West Bank through December 31, 2020.I would like also to briefly discuss the impacts and challenges associated with COVID-19 and touch on some of the actions that we've taken and some of the actions we expect to undertake.During the first quarter, we had a significant negative impact on our food services sales in North America, and were contained in providing in-store merchandising support and overall selling into retail partners.In our Noni by NewAge segment, we were significantly disrupted in our ability to do peer to peer selling or conduct business meetings around the world as we have done since the inception of the business. Many of the regions and countries in which we operate, like Latin America and Indonesia, for example, had been growing double digits during 2019, but had declines in Q1, directly as a result of the lockdown in their respective territories.In total, across the business, we estimate the negative impact from COVID-19 to be as much as 10% of total revenue. We offset these negatives by all the activities we implemented to result in a positive 9.2% growth for the quarter. Also, without the current challenging situation, our results most likely would have even been better.The support we got from the US government in April was timely and very helpful to partially offset the impact of COVID-19 and maintain our workforce. Without it, I believe that we would have had a significant reduction in our workforce.The Payroll Protection Program funds directly save jobs, and lots of them. We received $6.9 million under the Payroll Protection Program. And here are the facts. Number one, we met all the requirements of the SBA PPP loan program. Number two, we applied quickly, accurately, and were granted the funds. And number three, we did not circumvent, skirt, quibble or do anything even remotely tricky or untoward to receive the funds. We qualified, we were granted the funds and we used the funds as intended, and it has saved jobs.Now, looking forward into Q2, we see a similar negative impact relate to COVID-19. China is almost back to normal operations, but Japan, Taiwan, Korea, Indonesia, Vietnam, virtually all of Latin America and the US across all divisions are still challenged in conducting normal operations.Despite the negatives, I agree with Brent that our business model, our route to market, our healthy product portfolio, our specific immunity products and our direct sales to consumers and direct delivery to consumer homes couldn't be more opportune. We have seen strong trends in the business and continue to see them in the month of April.So, with that, we have a positive outlook on Q2. I will now turn the call over to Julie, our Chief Marketing Officer. Julie?

Thanks, Greg. Good morning, everybody. So, I have a little more than 100 days in with the firm, and I want to share a few perspectives and talk about what's driving our growth in the midst of one of the greatest marketing and leadership opportunities I have ever experienced in my career.I've worked with some of the world's best companies – from Procter and Gamble to Johnson and Johnson to PepsiCo to Rodan + Fields. Let me tell you, this is a company that moves fast, and even that is an understatement.Since I love to move at speed, it's a great speed. But even for me, it's taken some getting used to. I joined because of our omnichannel strategy, which I have a lot of experience in, one that I personally like as it's a highly differentiating strategy. And I wanted to make NewAge the best in the world at it.Within this type of system, our brands are highly underdeveloped, underleveraged and untapped in their potential, as this is what I do. And I've been given the freedom to build out the entire marketing team to develop and drive those brands. And let me tell you, the team we have assembled is world class.I see this current pandemic, the effects of which may be with us for some period of time, as an incredible marketing and communication challenge. In this contest, we have significantly accelerated our social and digital engagement, and focus our messaging on the immunity system strengthening properties and efficacy of two of our products – Tahitian Noni and 'NHANCED Cell Defense.As many of you know, these two products have a combination of patents, science, research studies and human trials behind them. So, frankly, all we're doing is getting the word out on their facts and scientific [indiscernible 0

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54].We've also expanded the distribution of Cell Defense to Amazon, including Amazon Prime. Greg shared, our overall numbers are up 9.2% in Q1, which, as he mentioned, is like 19% in this current environment with the negative impacts on our revenue.Driving our growth has been our focus on core product and immunity focused messaging, which is really resonating with consumers. But the other driver has been the launch of some of our new products in key geographies, the expansion of Noni+Collagen, the launch of Noni+CBD in Japan, the launch of Te Mana Shape, our intermittent fasting program, and the further expansion to new markets of our full Te Mana skincare line are collectively having a tremendous effect.Not only are these product innovations connecting with new consumers, but they're attracting new leaders to our network of independent product consultants, and importantly, attracting new younger leaders to the NewAge opportunity.And as you might expect, we are just getting started. Just the launch and expansion of the initiatives I mentioned provide us a lot of confidence on our Q2 outlook. And as Brent mentioned, we have daily visibility on all the other drivers of our revenue. So, our perspectives on our growth and expected performance are informed by the facts and the correlated drivers of that performance.But we are not stopping there. Building on our immunity focus, we are expanding our immunity messaging. And we are launching Immunity Shots, which are also [indiscernible 0

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38] in traditional retail channels, e-tail and our own e-commerce sites. These get tested in a key market pilot in June, so we get the toolkit right before launching globally thereafter.The feedback we've received from consumers and leaders on this product is unlike anything we've seen before, giving us confidence on their impact in the second part of the year.Beyond products, we're also upgrading – or more like overhauling and transforming all of our social and digital properties and execution. You've probably seen the new NoniNewAge.com website that was just launched globally. It is infinitely more consumer friendly than before. We've overhauled our social presence on Instagram and other relevant sites, and are arming our leaders with social assets and training like they've never had before. And we're just getting started on this.Our improved social media presence, coupled with significant expansion of internal social selling training, and new tools and apps for our sales associates and independent product consultants underpin all of the new products initiatives we're executing. They'll give our sales leaders the ability to work in this digitally powered, anytime, anywhere mobile world we all live in, and to work virtually no matter where the COVID virus impacts us.We're building our brands and category platforms for long-term success and sustainability. So, I will probably stop there before I share too many of the insights into what's coming.But I'd summarize with this. So far, so good. A little more than 100 days in. The current initiatives on immunity are working and resonating and very timely. The new social and digital selling tools we're providing are leading teams and transforming our ability. And the new products we're launching worldwide are just icing on the cake.Back to you, Brent.

Thank you, Julie. And great job honestly and keep up the great work between you and all of your team. It's a joy to be working with them and keep up the speed and keep putting the foot on the gas on all of the initiatives.I'd like to share for final points before we open it up to questions. First, please understand what we are intending to communicate. The effects of COVID-19 are real and pervasive. They have dramatically negatively affected us in North America and worldwide.We're just taking quick and decisive actions and choosing to lead and find opportunities. And pivoting quickly while others are lamenting how tough or difficult or hard the situation is. That doesn't help.And I would say it's not just at the top. It's at every single level in our company, in every division, in every corner of the globe where individuals at all levels of the company are stepping up to lead.Points two. Please also know that, first and foremost, we have worked with very hard to ensure the safety of our associates, the continuity of production and our supply chain and the uninterrupted superior service to our customers.Safety is our top priority at this time and it is the driving force behind every decision. We are protecting our associates with not only safety measures in our facilities and operations, but supporting them with free supplies of our noni juice and 'NHANCED Cell Defense.We have canceled all in-person meetings and accelerated our virtual efforts and online tools. We do Zoom and teams calls all day and all night, starting with Europe in the morning, the Americas midday and Asia markets at night – all day, every day.We have moved all non-production employees to working from home and have implemented social distancing and increased safety measures in all production facilities and distribution operations in all operations around the world.Point three. We don't talk about it because we're not here for the credit or for the clapping hands, but I'm also very proud of so many of our markets around the world that have donated Cell Defense and Noni to hospitals and frontline workers and first responders.Our donations continue, not because we want the credit, but because our immunity products really work and we want to make a difference. It is our associates' continued dedication to our mission to inspire and educate the planet to live healthy that, frankly, inspires me, drives our business forward as they dedicate themselves and sacrifice to provide the healthy products that the world needs now more than never.I want to genuinely thank each and every one of them and their families for their selfless commitment and support of our mission and for choosing to make a difference for their fellow man at a time when it is needed the most.And point four. Greg talked about the SG&A and expense reduction actions that we have already taken. Additionally, we made the commitment that we would divest some of our older, smaller brands that we started with. And we are following through on that commitment. We have formally begun that divestment process and have engaged the support of one of the leading investment banking groups in the country to support the process.We like the brands. We just have too many other bigger, more profitable opportunities in front of us to give those brands the support and investment that they need and deserve.So, all those actions are in keeping with what some of the best-in-class firms are doing – reducing any non-contributing expenses, focusing on shorter-term profitable revenue driving activities, and protecting cash.So, in closing, operationally, I'm very pleased with our fast start to the year, especially in the context of the global business disruption and equally pleased with how April has performed and how Q2 looks so far.None of the results are an accident and they shouldn't be a surprise to anyone. As I mentioned at the outset of my comments, we've built the platform. And frankly, it has taken time and a lot of hard work and, frankly, some errors from some smaller retail investors that just don't understand or haven't done the work to understand what is in progress here.Our institutional investors really understand that they've done the work, which is broadly why they have been increasing their positions. But now, it is just about leveraging this platform and driving more growth, which will have the effect of lower SG&A as a percent of revenue on the income statement.We have the brand portfolio, the immunity-specific products, the distribution system, and a one-of-one unique omnichannel route to market. As of this morning, we had a team of 277,370 dedicated independent product consultants that, frankly, they need the income in this challenging environment that develops us now and they are all fully dedicated and committed to growing together with the company.We have been building NewAge to become a major scale company in the future. And that's why we have made the investments and the support partners with Deloitte, Marsh, Faegre Drinker, Greenberg Traurig and others that are – simply put – best in the world.We've made the investments and the leadership and commercial teams, and one, I think, can't help but appreciate the strength and quality of colleagues like Dave Vanderveen, our COO, who was on the last investor call, or Julie, who you heard from today and a whole list of others. They are impressive.And they're here and joined to create something special. They are the reason we are up 9.2% over and above a negative 10% impact from COVID. And because of them and the leadership focus of all of our associates worldwide why Q2 looks equally as strong.And with that, I'd like to pass it back to the operator and open it up to questions. operator?

[Operator Instructions]. We have a question in here. Mr. Aaron Grey, your line is now open.

Good morning and congrats on the quarter. It's great to see the momentum both on the top line and the margin profile for the company sequentially. So, it was great to hear the call out of China as a market of strength during the quarter in your prepared remarks. Can you talk about some of the underlying drivers there as we come off 2019 where the market faced some regulatory hurdles? And we also saw a lot of volatility in that market last year. So, just curious if you've seen these trends continue in the quarter and whether or not you feel like there's been a rebase where you feel like the market is going to be able to rebound now and the long term. Thank you.

Yeah, great question, Aaron. Yes, China is critical to our future and we see the drivers of our growth with new people joining our system, greater revenue per person. And strengthening at different levels, people doing more or people that are involved with our system doing more and being much more active. And last year, there was plenty of disruption. A lot of companies we talked to in China in direct selling and other industries are still very disrupted. But in that context, you can say, 'boy, it's really complicated' or whatever, or you can take action. So, I'm really pleased with the organization there. And we probably have 150 people in China across operations in 10 major cities, but sales to over 300 cities around the country. So, we're pretty pervasive across all provinces. And the discipline that we're taking on the entire company is now translating to the same disciplines with which we operate in China.So, not only are we seeing new people join the system in the context of others struggling, we're kind of creating that olive branch and holding it out to others for us to thrive in the context when others aren't. So, that was kind of one piece.But we're also expanding the portfolio there. We launched Te Mana, our skincare line, which is really popular these days here in China and Asia-Pacific overall. So, that was really the first time we had expanded the portfolio ever in China. And to come in terms of new products and new packaging formats going forward.We've also significantly increased our WeChat communication and WeChat activities, which if you're not playing in online and e-commerce and social these days between WeChat, Tmall and others, the whole business is moving in that direction. So, that's kind of the first reason, short term, we're seeing the results in China.But long term, if you think about the next – I hate to put it, kind of 10 years, the level of consumer spending in China as a percentage of GDP is about half of that of North America or Western Europe. And so, you're going to see a lot of investments from the Chinese government within the country to promote consumerism and consumer spending. So, for those reasons, coupled with those macroeconomic reasons, coupled with the people and the team and the organization and the portfolio we have now and are building, and the evolution to be much more social and ecommerce driven, those things give us a lot of confidence for China for the year. And unlike last year, that was out of our circle of control, a lot fewer disruptions.

Great. Thanks for that color. It's super helpful. And then, you made a couple of comments just in terms of how you're pleased with April and 2Q quarter-to-date. Just any incremental color you could provide in terms of relative – what you're seeing? It was nice sequential growth we saw 1Q relative to 4Q. But, obviously, there's still a lot of uncertainty around COVID. So, [indiscernible 0

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18] help benchmark in terms of how best to think about 2Q on the revenue trends going forward. Thank you.

I think it would be imprudent to kind of provide any real specific guidance on a full-year basis because there's just too many unknowns out there. And when we talk about the disruptions that we've had heretofore, we just don't know how the external situation outside of our control is going to affect us. We saw a very good April and we see very good trends in May and June.And what's different about the company now – I talked about doing all this hard work behind the scenes that typically goes unnoticed that entrepreneurial companies never really do. But I see on a day-to-day basis – we all see, the leadership team sees, everybody sees – the correlated drivers of performance. We see the revenue throughput, the amount of purchases by person, the number of people that have purchased within the past month, 3 months, 6 months, 12 months, new people joining the system, subscriber levels, we have data like crazy now in every single market around the world. And the information in the kind of executive dashboards and visibility, so we know what to do with that and we can take action and provide influence or incremental focus where we need to. And so, because of those things, we have the visibility. It's almost like putting a manufacturing line in statistical control. We've got the results in more statistical control, which sounds really bizarre. But that's how – our belief is you run a world class multinational.So, we've got those things in place that gives us the visibility and ultimately the execution on the sales initiatives, the new products that Julie talked about, and then just the building out of our system and the, frankly, evolving of the system with a much more virtual and social selling model. We're trying to lead the overall industry in that. And because others have kind of done things in a certain way for 20 plus years, we haven't. We are new. So, we can adapt those new approaches and use speed as a competitive advantage.

Thanks. I appreciate that. And certainly, appreciate why it's difficult long term to see where sales are going. But good to see the near-term momentum. Just one more question on my side, and then I'll pass it on.Just in terms of gross margins, saw a nice uptick sequentially. So, how best to think about the gross margin profile in the next couple of quarters. And then, just in terms of the timing of the $5 million to $7 million and the restructuring program, when that flows through the P&L. Thank you.

This is Greg. For the gross margin, we're very pleased with where we came in this quarter. And basically, we see this trend continuing, being right around the same level. And the biggest drivers to that will be the amount of business we get through our Noni by NewAge segment because that does have a much higher gross margin than our retail brand segment. So, basically, so far through April, things seem to be strong there. And we think that should continue through the rest of this year.And then, with the cost savings, this was something we implemented here in early April, but typically you don't really see a lot of the cost savings for a couple months. So then, we'd really see it being more evident once you get out to the second half of 2020. That's when you'll start to see the full effect of this.

All right. Great, thanks. Congrats here on the quarter and best of luck.

Thanks, Aaron.

Your next question comes from David Bain. Your line is now open.

Hello. Dave Bain. Okay. Thank you. Hope you guys are well. Hi. First, Brent or Greg, can you bifurcate segmented EBITDA generation in 1Q? I guess I'm particularly interested if Noni by NewAge, the gross margins there, was it close to breakeven as a standalone? Trying to understand that element.

With the gross margin, you'll see with the Noni by NewAge, we generated $39.6 million in gross profit from that division, which is definitely our largest division, doing almost little bit above $50 million in total sales, compared to the NewAge segment that did about $13.6 million in sales and generated gross profit of almost $2 million – or $1.9 million.

If you translate that, Dave, on to EBITDA, last year without the investments that we made in the brands, we would have delivered $5 million in EBITDA, okay? So, that is a good correlated number on EBITDA for just the Noni by NewAge division. And I think in the first quarter, you'd see very similar to that on Noni by NewAge offset by the investments in the brands division. And like I said, we've made the commitment to divest that. We've already started the process. And that should help when you don't bifurcate the numbers because we'll have a lot less of that brand stuff that negligibly impacts us on the revenue side because it's not a big piece of the revenue, but it is a big negative piece on the EBITDA. So, you'll continue to see positive from the Noni by NewAge segment at the EBITDA level like we did last year, with a lot less offsets because you're just not going to be investing in those smaller brands to the level like you did before.

Correct.

Okay, perfect. Maybe, Julia, you spoke to the drivers around the positive IBC growth in 1Q? Can we get a sense as to what kind of growth was seen year-over-year? Was it driven by region? Was it driven by China or was it broad based?And then, Brent, you had mentioned revenue per IBC. That was up. And I'm just trying to – if there's any sort of growth data points around that, that'd be great as well.

What I would say is, in spite of the very challenging environment across all of our regions during this period, as a lot of areas outside the United States were hit first or harder, we had very measured results and growth across a wide array of our markets. I was particularly encouraged by the growth in North America as well as the growth in our European markets and some of the smaller Asian markets before COVID had too great of an impact. So, it's very broad based across many parts of the company right now.

Okay.

If I can throw in there, with the China, we saw it being up more than 14% for the first quarter of 2020 compared to the first quarter of 2019. And with North America, we also saw some pretty good growth there as well. And with Japan, it grew for the first time since we have owned the Noni by NewAge business. And we've really taken that trend and really started to turn it around. It grew just slightly, but it still grew. And since that was the first time we've seen that, we were very pleased with that.

I was just going to give you more color. More details, Dave. I'm looking at our dashboard right now. So, I think I mentioned we had 270-something-thousand as of this morning. So, as of right now, 6

48 am here in Denver, we have 277,469, which is about 20,000 – take China out of the mix, but it's about 20,000 or roughly 8% above prior year. And as of this month versus the prior month, the number of people that are really making a bunch of money in our system has increased 8.25%, but that number of people is up about 30% year-to-date. So, in terms of May, first 11 days in May versus April, up another 8.25%. And I can get that on any single country. And our average order size is $221.17 for each one of these subscribers.So, you can see we've got the data and we can see it and cut it any way we want. It gives us just that confidence and visibility on the business every single day.

That's fantastic. Okay. And then, just last one, if I could, just to follow up on the 2Q guidance question. I understand you're not offering full-year guide, but it sounds like you have some visibility through June. And Greg spoke – you spoke to, I believe, 2Q guidance as for like a positive outlook. Were you speaking to net revenue versus 1Q versus the year before? Or any way we should read into that comment or was it just sort of, like, trends are good?

Trends are good. And basically, we do see positive through April for both the prior year, as well as compared to Q1.

And we're speaking to net revenue, correct?

Correct.

Awesome. Okay. Thank you so much.

Thanks, Dave.

Your next question comes from Sir Mike Grondahl. Sir, your line is now open.

Yeah. Thank you, guys. And congrats on the progress, especially on the marketing side. Two quick questions. Could you kind of highlight the $5 million to $7 million in cost savings? Kind of what that was driven by?Secondly, Greg, it sounded like in your prepared remarks, you had said that you had satisfied everything for East West. So, is the ATM issuance kind of off the table now for the rest of the year? Or what's an update on what you need to do there?

First, with the $5 million to $7 million, we really looked throughout the entire world to see which of our markets were operating the most effectively. We did have a few markets outside of the US that we looked at and said, long term, it just doesn't make sense for us to stay in these markets. So then we've pulled out there because they were basically loss leaders.

Like Russia, for example. It just doesn't make sense to continue to invest to the level we were in Russia or like a couple markets in Latin America are just completely on lockdown and we can service, let's say, Venezuela and Colombia out of sister or adjacent markets versus having the full infrastructures in those kinds of places like we've had before. So, we looked at that across the broad markets, brands, et cetera, for every single penny, every single investment to make sure it was working for us versus different ways to manage and handle those countries.

Correct. And then, besides that, we also looked at all of our external use of consultants in in different firms and really tried to cut that back, and make sure we're just really doing the things that are going to create revenue here during the near term and focus on that.And then, throughout the entire world, we did make some reduction, especially in some of our foreign offices of certain personnel where we felt like we could do things more efficiently going forward. And that's the $5 million to $7 million number on an annualized basis. So, that's that.On the East West Bank loan, we did have a covenant where we needed to generate at least $15 million of equity funding by June 30. And we have met that covenant. And the next covenant does not come up until December 31. So, then we will analyze during the next basically eight, nine months exactly the best way to erase those funds. But just like Brent said, we're going to continue to move fast and find different opportunities. And by doing that, I think we will be able to meet that covenant very easily.

Got it. Good. And then, maybe just lastly, any timeline on the sale of the selected brands? Kind of what's the expectation?

We went out and we've hired a banker. And basically, things are moving forward. But, right now, probably the best timeline that I could give you would be sometime during the summer. So, we're focused on getting it done quickly, but want to do it at the best possible benefit to our current shareholders.

And you could tell, Mike – it's Brent here – that that will positively, and that may be an understatement, impact he P&L. Those are conscious choices to make those investments before. But now we just – like I said, we've just got too many good other and very high profitable opportunities in front of us. And so, consistent with what I see a lot of my colleagues in other companies doing is you've got to guard your cash, you've got to – which hopefully everybody can see we're doing, and you need to focus on those things that are really more delivering in the short term and, unfortunately, not take such a long-term perspective to the business. And unfortunately, that has the effect on those brands. But, fortunately, for investors in the short term, that will have the very positive effect on the company's bottom line.

Great, thank you.

Thank you, Mike.

We have reached the end of the question-and-answer session. Mr. Brent Willis, please continue.

Thank you, everybody, for joining the call. We've got a lot of – hopefully, you can see – good people now driving a very opportune business model, good products, dedicated people around the world. And, frankly, we're seeing people – maybe because they need the income or unemployment has affected so many places around the world that we're a nice option for them. And against that context, we're providing free social media and other online social training to anybody that wants it, whether they become part of our system or not.So, we're excited about all aspects of the business. Certain bright spots in the retail side of the business in North America. A lot of bright spots in our direct store distribution business has really been negatively impacted by COVID in North America and around the world. Just people stepping up and choosing to lead. But we like what we see in Q2 and thereafter and we're going to keep at it.Thanks, everybody for joining the call today.

This concludes today's conference call. Thank you all for joining. You may now disconnect.