Greetings and welcome to the Natural Health Trends Corporation Fourth Quarter and Full Year 2017 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. It is now my pleasure to introduce your host, Kimberly Orlando of ADDO Investor Relations. Thank you. You may begin.

Thank you and welcome to Natural Health Trends fourth quarter and full year 2017 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 materially differ from those anticipated in such forward-looking statements due to result of certain factors, including those set forth in the Company’s filings with the Securities and Exchange Commission. In addition, on this call, we will refer to non-GAAP diluted earnings per share, a non-GAAP measure that when used in combination with GAAP results provides us additional analytical tool to understand our operation. 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 press release, which is issued at approximately 9:00 am Eastern Time. At this time, I would like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Kim, and thanks to everyone for joining us. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. 2017 was a challenging year for our business. Total revenue declined to $197.6 million compared to $287.7 million in 2016. Much of this decrease could be traced to factor beyond our control, including the G20 Summit, 20th Anniversary of Hong Kong’s handover, and China’s Communist Party’s 19th National Congress, which impair our members’ ability to conduct business. That said, the fourth quarter of 2017 marked our first sequential quarterly sales growth since the second quarter of 2016. We believe this was a result of the improvements we made to our commission plans combined with a number of effective incentive trips and training programs. In addition, we introduced products into new markets throughout the year, supporting increased volume. Outside the China, our business in Europe, Southeast Asia and Japan grew net sales over 2016 levels. Despite a year-over-year slowdown in net sales, we worked hard to preserve our strong margin profile through ongoing proactive expense management to align our cost structure with current sales levels. For 2017, our gross profit margin was 80% and operating income margin was 22%, roughly in line with 2016. As I touch on briefly, we refined our incentive programs and bonus and rewards structure in 2017. We saw encouraging results from these changes beginning to manifest in the fourth quarter. In 2018, we will implement additional modifications to narrow the gap between lower rank and mid-level leaders including a onetime cash bonus for new participants in the international recognition program. Our overarching goal is to provide the necessary resources for up and coming members to reignite momentum in Asia. Incentive trips were another driver of the sequential increase in net sales, which…

Thank you, Chris. Total revenue for the fourth quarter was $46.1 million, a 26% decrease compared to $62.3 million in the fourth quarter of 2016 and a 15% increase compared to $40.1 million in the third quarter of 2017. Sales in Hong Kong which accounted for 86% of our fourth quarter revenue, decreased 29% year-over-year to $39.6 million. Outside of Hong Kong, revenue increased 4% year-over-year to $6.5 million. Our active member base declined to approximately 95,700 at December 31st from 99,700 at September 30th, and from 119,000 at December 31 last year. Turning to our cost and operating expenses. Our gross profit margin for the fourth quarter was 79.6% compared to 80.8% in the fourth quarter last year. The reduction was due primarily to training fees earned during the fourth quarter last year and product promotions run in the fourth quarter this year. Commissions expense as a percent of total revenue increased to 43% from 34.5% in the fourth quarter last year. On a full year basis, commissions expense was 42.3% of total revenue, a slight decrease from 43.5% in 2016. Selling, general and administrative expenses for the quarter decreased 8% to $8.1 million versus $8.7 million a year ago. The decrease in SG&A versus the prior year period continues to reflect the proactive cost reduction measures we implemented in the fourth quarter of 2016. Operating income for the quarter totaled $8.7 million, a decrease of 57% compared to $20 million in the fourth quarter last year. Our operating income margin was 18.8% compared to 32.1% in the fourth quarter last year. For the full-year, our operating income margin was 22%, consistent with 2016. As a result of the Tax Cuts and Jobs Act of 2017, we recorded a onetime net charge of $12.5 million or impact of $1.11…

[Operator Instructions] Our first question comes from the line of Golan Kronic [ph] who is a private investor. Please proceed with your question.

I have a few questions related. I wonder how much of your cash balance was offshore. And now with tax overhaul enacted, what is your plan for the cash outside the U.S. and what is your effected tax rate going forward?

Essentially, all of our cash balance is offshore, which is as a result of years of our historic profits that has not yet to be repatriated. And our plan will continue to focus on investing in our business as well as returning capital to our shareholders. And we are very pleased with the tax overhaul that has substantially lower the cost for us to repatriate our oversee profit. And we see more flexibility in moving cash around. So, I think that’s a very good move for us. At this point, we are now ready to comment specifically on our effective tax rate going forward and we need more time to evaluate and more details in the rules continue to be available as we speak. So, we will have a better idea about what the tax rate would be going forward in the coming weeks.

Thank you. Our next question comes from the line of Jeff Lund [ph] who is a Private Investor. Please proceed with your question.

Other network marketing companies have introduced their own preferred customer program. How do you think overall productivity will be impacted, if members focused on smaller but more regular product orders without a negative impact?

Thank you for coming in, Jeff. Good morning to you. We will like to think that offering a preferred customer account to our members is not as drastic of a move, because I would like to highlight a fact that our Company has never imposed an onerous maintenance requirement on our members. By that I mean that we do not require our members to purchase the minimum amount of inventory just to maintain the eligibility of commission payment as many other peer companies in the business would do. But with that said, we’re only making this preferred customer account so far available in the U.S. and Europe. We have a growing business in Europe, we have a very promising business in the U.S., and they are still relatively small in our overall revenue. And we do have the leaders’ support, very strong support to experiment with this preferred customers account. We’re in the phase of evaluating how we do it and we will continue to fine tune it as we grow this out in U.S. in the first quarter. And we’re very long away from making a decision about expanding the preferred customers. We currently will keep you posted as to our progress. Thank you for your question.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session. This concludes today’s teleconference. Thank you for your time and participation. You may disconnect your lines at this time, and have a wonderful day.