Natural Health Trends Corp.

and welcome to the Natural Health Trends Corp. Second Quarter 2020 Inning Conference Hall. This time, all participants are in a listen-only mode. If you should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Orlando. Please go ahead.

Thank you and welcome to Natural Health Trends' second quarter 2020 earnings conference call. During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance, or achievements could differ materially from those anticipated in such forward-looking statements through the result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that today's call will be webcast live and can be found on the investor section of the company's website at naturalhealthtrendscorp.com. Instructions can be found for accessing the archived version of the conference call in today's financial results press release, which was issued at approximately 9 a.m. Eastern Time. At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Kim, and thanks to everyone for joining us this morning to discuss our second quarter 2020 financial results. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. The second quarter marked a continuation of the challenging macroeconomic climate we experienced during the first quarter of 2020. COVID-19 pandemic persisted into the summer months. That said, we were very pleased with the stability and resilience of our field leadership, which helped us generate a 10% increase in total revenue over the prior quarter to $16.4 million. I'd like to sincerely thank our leaders, members, and preferred customers for their support of NHG Global through this unprecedented time. COVID-19 has shown us that the world is truly interconnected. Despite the immense challenges this pandemic has presented on a global scale, we have enjoyed positively contributing our wealth of knowledge on health and wellness-related products with our loyal consumer base. In addition, our aggressive cost reduction measures enable us to return to profitability during the second quarter. with positive operating income of $183,000 compared to an operating loss of $1.4 million in the first quarter of 2020. As previously announced, we put a program in place in the second half of 2019 to position us for increased operating efficiencies in several areas, including reduced headcount and promotional spending. Through this program, we made significant progress in reducing our SG&A expenses, During the second quarter, through reductions of nearly 20% versus the first quarter of 2020 and more than one-third versus the prior year period. Since we last spoke in May, our main markets have begun to slowly resume economic activity, though various forms of government-mandated travel restrictions have remained in place. While there has been some relaxation in personal mobility, company-sponsored in-person activities still remain highly limited. Though we are cautiously optimistic, the operating environment will continue to improve as we move forward. We are well aware of the challenges our leaders continue to face without being fully able to support their groups in person. By nature of our business model, we operate as an e-commerce platform, which does not require much physical contact. This has served us well through the pandemic. But our leaders, who are crucial to our success and effectively operate as our sales force and marketing team in the field, have been limited in their ability to support their geographically diverse groups. Fortunately, since we made the decision to suspend member activities in early 2019, we have successfully transitioned our business to function as a digital operation, which has allowed us to continue sharing information about our high-quality products across various different markets and channels. We do this through informative product webinars and virtual events with online trainings being held regularly to help promote improved immunity, healthy diet, lifestyle, and beauty care tips. Through mostly online activities, we were able to slightly improve order volume over the first quarter of 2020. Further, given our efforts earlier this year to mitigate any potential supply chain disruptions, we have been able to fulfill orders by working closely with our vendors and planning for ample product availability. In addition, given international travel restrictions, we have also extended qualification periods and certain incentive trips from the first half of 2020 into the second half of 2020 and next year. You may recall We had to cancel our major first half event in the first quarter due to COVID-19. We will continue to make modifications as necessary, though we remain hopeful we'll be able to conduct more in-person events in the coming months. Now turning to our geographical expansion priorities. While we remain focused on further diversifying our operations into new and emerging markets, COVID-19 has delayed our progress in this regard. as a result of government-mandated shelter-in-place orders. However, we did make some positive strides during the quarter. In China, we launched additional products to be sold on our e-commerce site, including our new water purifier, which became available on the platform in June, along with mycelium, cleansing water, and Allura Lux, which launched in late July. We prefaced the introduction of our water purifier product with our first product roll show in 18 months, which was very well received. In Peru, our operations continue to be adversely impacted by COVID-19. However, since we have been able to resume shipping into the larger Peruvian cities in Lake U1, we successfully introduced some new products, including AccuFocus. We also unveiled new products in India, including Trioteam, and Michelle Sharng, Timothy Scott Davidson. Positive growth in total revenue, gross profit, operating income, and net income for the second quarter compared to the first quarter of 2020. I'd like to once again thank all of our leaders who have proven themselves time and time again in navigating difficult and complex operating environments such as this one. We remain cautiously optimistic the macroeconomic situation will continue to improve in the second half of 2020. I would like to conclude by reiterating that the health and safety of our members, employees, and customers serves as the foundation of our success. We thank them for their dedication and commitment to NHG Global and wish good health to all. With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our second quarter 2020 financials in detail.