Greetings and welcome to the Mannatech Incorporated Fourth Quarter 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. Now I’d like to introduce our moderator for the call today, Mr. Mark Nicholls, Chief Financial Officer. Mr. Nicholls, you may begin.

Thank you. Good morning, everyone. This is Mark Nicholls, and welcome to Mannatech’s fourth quarter 2011 earnings call. Today, you will hear from both me and Mannatech’s CEO and Chief Science Officer, Dr. Rob Sinnott. Before we begin the call, I will first read the Safe Harbor statement. During this conference call, we may make forward-looking statements, which can involve future events or future financial performance. Forward-looking statements generally can be identified by the use of phrases or terminologies such as will, continue, may, believe, intend, expects, potential, should, and plan or other similar words or the negative of such terminology. We caution listeners that such forward-looking statements are subject to certain events, risks, uncertainties, and other factors and speak only as of today. We also refer our listeners to review our SEC submissions. Our operating results for year-end 2011 represented a number of challenges and success milestones. At the consolidated level, our net loss is $20.7 million, on net sales of $200.7 million. Clearly both our net loss and continued decline in net sales are issues, but as we will discuss later the activities undertaken in earlier quarters are showing positive results. At this time, I’d like to make a few comments concerning the fourth quarter. The net loss for the quarter was $7 million as compared to a net loss of $3.7 million for the third quarter. A significant portion of the difference between quarters is attributed to expenses associated with litigation. During March 2012 we were able to resolve all outstanding litigation. The fourth quarter net sales were $47.9 million, a 5% decrease from the third quarter net sales of $50.5 million due to lower pack and product volumes. For the quarter the cost of sales expense category increased and the gross profit decreased by 2.5% compared…

Thank you, Mark and welcome onboard as the CFO of the Company. So to summarize for our investors, some of the key strategic moves of 2011, Mannatech increased its global footprint by opening five new countries, including Mexico. This gives our independent associates access to more than a 110 million previously inaccessible people. This large population containing many new potential customers for our products is being developed by Mannatech Associates both on the ground in these countries and operating remotely using the global seamless down lines. For example recruiting in Mexico is being accomplished not only by Mexican nationals, but also by Mannatech Associates from Canada, South Africa, the United States, the EU and other countries that have business and personal relationships with Mexico. In 2011, we launched sales and marketing initiatives designed to support our associates as they work to grow their businesses. Initiatives such as the Real Switch Challenge were revealed at our annual MannaQuest event in Seattle, and were rolled out to selected test markets during the fourth quarter. Three of these programs associates have the ability to earn an iPad, trips, and cash bonuses by meeting milestones over the course of 18 months. In the North American test market, this longer term incentive will replace short-term travel incentives with the goal of achieving steady, consistent business growth. From December 2011 to the present we are seeing favorable recruiting trends in our U.S. and Canadian markets that we believe are attributable to this program. We will continue to monitor the progress of this incentive program, hone it for optimal effects and then roll it out to additional markets during 2012. Also related to North American activities, we continue to support the accelerating growth of our business among ethnic markets, particularly, the Chinese and Korean ethnic markets in…

Thank you. (Operator Instructions) And your first audio question is from the line of Bill Smith. You may proceed.

Hi. Good morning. Could you talk a little bit about inventory obsolescence and what causes that and I mean, is there a lack of marketing research, maybe you could just help us little bit understand what – how that comes about and what – how you’re focused on that going forward?

Sure. This is Mark Nicholls. Generally, we sell dietary supplements and being dietary supplements, they’ve a defined life. One of the things that we do is, as we approach the term of that life, we proactively before expiration start to take that off the shelf for sale. So, the first part of the answer is that through inventory control measures, we’re proactively taking stuff off the shelf prior to expiration. So that’s the first cause. But the second cause is as we’ve been working through this multi-year inventory build up, part of what keeps ticking away is time and the inventory turns for the older product have slowed down. So, the chief cause is the prior-year over-ordering for the future demand versus the current sales trend. We’re constantly improving our processes though. One of the things that over the last few years we’ve been working on is forecasting. We proactively take into work with our manufacturers to decrease the order sizes, the minimum order quantity sizes that we must make in manufacturing the products. And finally, the other thing that we’re proactively doing is we’re harmonizing products as we can across the various countries. Being in several different countries, not all countries accept the same formulations, so we’re faced with the challenge of harmonizing as much as we can and still meet the – our associates and consumer demands for our products. So, this is a continual work in process, but we’re happy that inventories are coming down to levels that will reflect our sales level. Thank you for your question.

And could you talk a little bit about what the shelf life has been on those products?

Well, generally, shelf life varies product-to-product. And it’s a much bigger question, but I mean you can have products that on average have an 18-months shelf life. Some are going to be – have a lower shelf life, some will have a higher shelf life. So we’ve many different products, so it’s a hard question to concisely answer, but generally those are the timeframes that we’re looking at.

And then also on the settlement of the litigation, could you talk about what those costs were in terms of the settlement?

Well, as we discussed in the press release, the settlement for the contractual was $2.6 million. And that’s really what I can address at this time.

Okay. Thank you. I didn’t see that. Thank you.

Thank you.

And this concludes the question-and-answer session. Ladies and gentlemen, your conference call has come to a close. You may now disconnect, and have a good day.