Ladies and gentlemen greetings and welcome to the Natural Health Trends Corporation First Quarter 2019 Earnings Conference Call. At this time, all participants will be in listen-only mode. A brief Q&A session will follow the formal presentation. [Operator Instructions] As a reminder this program is being recorded. It is now my pleasure to introduce your host Ariel Papermaster, thank you. You may begin.

Thank you and welcome to Natural Health Trends First Quarter 2019 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 due to 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 Investors section of the Company's corporate website at www.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 9:00 AM Eastern Time. At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Ariel, and thanks to everyone for joining us. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. I'll first walk through our high-level financial results and then comment on our initiative to renew growth, before I turn the floor over to Scott to discuss our financials in greater detail. Beginning with our first quarter results, as we previously disclosed, we voluntarily suspended our member activities during the first quarter of 2019 in response to the Chinese government's announcement of its 100-day campaign in early January. Our deliberate suspension covered more than 90% of the number of days in the quarter, which also included the Chinese New Year holiday. As a direct result, our first quarter total revenue was down 53% to $19.3 million compared to the first quarter of 2018. The 100-day campaign technically expired in late April, so there has been no official conclusion to formally end the program while, our first quarter was severely impacted by this initiative. I would reiterate my comments from our last call that we strongly support the actions taken by the Chinese government to rule out bad products and deceptive practices in order to protect Chinese consumers. I believe our proactive suspension of member activities was the best approach to position our company for long-term success, despite the adverse impact to our financials. The decline in net sales was also maximized by additional factors beyond our control, including increased global trade tensions and a weaker Chinese currency. Without the year-over-year impact of the yuan devaluation of 6% against the Hong Kong dollar which effectively made our products more expensive for our Chinese consumers. Revenue for the first quarter of 2019 would have been $20.2 million. Aside from what has been taking place in China, various positive…

Thank you, Chris. Total revenue for the first quarter was $19.3 million, a 53% decrease compared to $53.4 million in the first quarter of 2018. The sales decline was primarily due to a decrease in Greater China revenue. Our active member base decreased 11% to 87,300 at March 31st, down from 97,800 at December 31st and down 8% from 95,000 at March 31st last year. Turning to our cost and operating expenses. Our gross profit margin for the first quarter was 73% compared to 80.5% in the first quarter of last year. The decline in gross profit margin reflects special product promotions design for the quarter and higher logistics cost. Commissions expense as a percent of total revenue increased to 49.1% from 43.9% in the first quarter last year. The increase as a percent of net sales was largely due to a onetime special incentive in March to help these qualifications status for our members during a extraordinary quarter, which resulted in incremental incentive cost of 5.9% of revenue for the quarter. Selling, general and administrative expenses for the quarter decreased 20% to $7.3 million from $9.1 million a year ago, primarily due to a decrease in both employee-related cost and credit card fees, partially offset by distributor and other event cost. As a result, operating loss for the quarter was $2.7 million compared to operating income of $10 million in the first quarter of last year. Our first quarter operating loss included approximately $2.4 million of marketing, product discounts and legal cost incurred during the quarter that we did not anticipate to be recurring at this elevated level going forward. We recorded income tax benefit of $354,000 for the quarter, due to the current period loss. This compares to an income tax provision of $1.4 million, recognized in the…

Thank you. [Operator Instructions] Our first question comes from the line of Jeff Lund, a Private Investor. Your are now live.

Hi, Chris. So if I heard correctly for the first quarter, if you exclude the special items of spending that you don't believe will be recurring, you guys almost broke even. Is that correct?

Thanks for calling in, Jeff. And mathematically, that's correct. But we do believe that those items – and you're referring to the product discounts, the special incentives and legal and marketing expenses were necessary to manage the extraordinary circumstances of the quarter. We do have a very low fixed overhead base and our spending is tightly managed to be co-measured with the top line. Thank you for the question.

Thank you.

Thank you. Our next question comes from the line of Goran Kolonic, a Private Investor. You are now live.

Hi, Chris. So the 100 day campaign was over in April, are you back to normal trading conditions now? Thank you.

Thank you for calling in, Goran. We mentioned in our disclosure that we didn't see an official conclusion to end the 100 day campaign. And we also learned rather early on in this campaign that according to directors from the central government, the interpretation and the enforcement of the campaign were left to the local government. Therefore, I expect that we will have to work our way through the process, province by province and city by city for some time. And we do regularly communicate with our contacts at various levels of the government, and we will follow due guidance. Thank you for your question.

Thank you. Ladies and gentlemen, that is all the time we have for questions today, and this does conclude our teleconference. You may now disconnect your line at this time. Thank you for your participation, and have a wonderful day.