CAUTIONARY DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

Our disclosure and analysis in this report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate", "intends", "estimate", "expect", "believe", "will likely result", "outlook", "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all forward-looking statements whenever they appear in this report. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act. In addition to the information in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and risks and uncertainties included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2011 and other periodic reports filed with the United States Securities and Exchange Commission.

OVERVIEW

The Company had, for the three month period ended August 31, 2012, net income of $428,747 as compared to $399,294 for the three months ended August 31, 2011. Net sales for the third quarter of fiscal 2012 were $13,775,461 as compared to $12,113,942 for the same period in 2011. The Company had, for the nine month period ended August 31, 2012, net income of $818,381 as compared to net income of $495,131 for the nine months ended August 31, 2011. Net sales for the nine months ended August 31, 2012 were $41,903,431 as compared to $37,322,630 for the same period in fiscal 2011. As of August 31, 2012 the Company had $32,937,655 in current assets and $9,980,947 in current liabilities. The Company does not have any loan or line of credit bank debt.

OPERATING RESULTS FOR THE THREE MONTHS ENDED AUGUST 31, 2012

For the three-month period ended August 31, 2012, the Company had total revenues of $14,003,207 and net income of $428,747 after provision for income taxes of $277,369. For the same three month period in 2011, total revenues were $12,228,988 and net income was $399,294 after a provision for income taxes of $298,562. Basic and fully diluted earnings per share were $0.06 for both the third quarter of fiscal 2012 and the third quarter of fiscal 2011. In accordance with ASC Topic 605-10-S99, "Revenue Recognition", the Company has accounted for certain sales incentives offered to customers by charging them directly to sales as opposed to advertising and promotional expenses. Net sales for the third quarter of fiscal 2012 were reduced by $1,637,894 and offset by an equal reduction of trade promotional expenses, which were included in the Company's advertising expense. In the same period of the prior year, net sales were reduced by $1,432,992 and trade promotion was offset by an equal reduction of that amount. These accounting adjustments under ASC Topic 605-10-S99 do not affect net income.

The Company's net sales increased $1,661,519 to $13,775,461 for the three month period ended August 31, 2012 from $12,113,942 for the three month period ended August 31, 2011, an increase of 13.7%. Sales returns and allowances, not including sales incentives, were 7.4% of gross sales for the three month period ended August 31, 2012 as compared to 11.4% for the same period last year. Sales incentives consist of co-operative advertising with the Company's retail partners and coupons. The amount of co-operative advertising included in sales incentives increased by $45,905 to $1,226,521 in the third quarter of 2012 as compared to $1,180,616 in the same period in 2011. The cost of the coupons issued by the Company was $411,373 for the third quarter of 2012 as compared to $252,376 for the same period in 2011. The Company uses a national clearing house for the receipt and processing of coupons from our retail partners. The national clearing house renders invoices to the Company on a weekly basis for coupons that they have processed which are recorded as an expense in the period for which the invoice is dated. The Company also records an expense accrual at the end of each period equal to the prior six weeks of invoices rendered based on information from the national clearing house that there is an average lag time of six weeks between the time that the retailer receives the coupon and when the Company receives the invoice. The amount recorded as an expense or an accrual includes the retailer cost of the coupon in addition to any processing charges by the national coupon clearing house. Coupons are issued by the Company to be used with the purchase of specific products, with an expiration date noted on the coupon.

The Company's net sales by category for the third quarter of fiscal 2012 as compared to the third quarter of fiscal 2011 were:

                                 Three Months Ended            Three Months Ended
                                  August 31, 2012               August 31, 2011
         Catergory             Net Sales                     Net Sales
         Skin Care            $  4,466,461        32.4 %    $  4,406,285        36.4 %
         Nail Care               3,796,394        27.6 %       1,816,115        15.0 %
         Oral Care               2,461,303        17.9 %       2,059,618        17.0 %
         Dietary Supplement      2,316,339        16.8 %       2,951,022        24.4 %
         Miscellaneous             490,135         3.5 %         115,809         0.9 %
         Fragrance                 153,788         1.1 %         577,376         4.8 %
         Analgesic                  91,041         0.7 %         187,717         1.5 %

                              $ 13,775,461       100.0 %    $ 12,113,942       100.0 %

The following were factors that affected net sales for the three months ended August 31, 2012:

• Net sales of nail care products increased $1,980,279 for the three months ended August 31, 2012, as compared to the same period in fiscal 2011, due to the continued success of Gel Perfect. The Company introduced Gel Perfect, a UV free gel color nail polish, at the end of the third quarter of fiscal 2011. The Company anticipates continued growth and expanded distribution with this brand into fiscal 2013.

• Net sales of Plus White, the Company's oral care brand were $401,685 higher in the third quarter of fiscal 2012, as compared to the third quarter of fiscal 2011 due to lower returns.

• Net sales of the Company's diet products decreased 21.5% in the third quarter of 2012 as compared to the third quarter of 2011. The decrease in net sales of diet products was due to lower gross sales and higher returns as a result of decreased distribution of certain items and decreased promotional activity, reflective of the continued overall industry category decline. The Company is increasing its marketing efforts with the introduction of new diet products in order to effectuate a positive impact on future sales.

                                                        Three Months Ending
                                                             August 31,
                                                       2012              2011
   Sales of health and beauty aid products - Net   $ 13,775,461      $ 12,113,942
   Cost of Sales                                      5,736,175         5,130,071

   Gross Margin                                    $  8,039,286      $  6,983,871
                                                           58.4 %            57.7 %

The gross margin percentage for the third quarter of fiscal 2012 increased to 58.4%, as compared to 57.7% for the third quarter of fiscal 2011. The gross margin percentage increased primarily due to lower returns and allowances in the third quarter of fiscal 2012 as compared to the third quarter of fiscal 2011. The cost of goods as a percentage of gross sales increased 0.9% due to the change in product mix, with increased sales in the nail care category. The Gel Perfect nail polish product was introduced at the end of the third quarter of fiscal 2011. Gel Perfect has a higher cost of goods than most of the Company's other product lines, affecting the overall cost of goods as a percentage of sales. The Company has also experienced increases in labor, plastics, corrugate and chemical costs for some of its other brands, as well as the effect of the increases in oil prices. It is possible that the Company will experience further increases if the cost of oil continues to rise.

Selling, general and administrative expenses increased to $5,614,922 for the three months ended August 31, 2012 as compared to $4,980,756 for the same period in 2011, or an increase of $634,166. The increase was due in part to higher shipping and personnel costs. Shipping costs increased to 4.8% of gross sales in the third quarter of fiscal 2012 as compared to 3.8% of gross sales in the same period in fiscal 2011, due to higher fuel costs. Personnel costs increased $177,012 due to the addition of sales, marketing and product development personnel. Royalty expense increased $68,975 due to increased sales of Gel Perfect nail polish. In addition, there were higher costs in some ordinary expenses.

Advertising expense was $1,769,423 for the quarter ended August 31, 2012 as compared to $1,322,522 for the quarter ended August 31, 2011, or an increase of $446,901. The increase was due to an increase in media advertising during the third quarter of 2012 and the cost of developing new commercials. The Company's advertising expense changes from quarter to quarter based on the timing of the Company's promotions.

Income before provision for income taxes was $706,116 for the quarter ended August 31, 2012 as compared to a pre-tax income of $697,856 for the quarter ended August 31, 2011. The effective tax rate for the third quarter of fiscal 2012 was 39.3% versus 42.8% for the third quarter of fiscal 2011. The provision for income taxes of $277,369 for the third quarter of 2012 included a current tax expense of $25,761 as a result of an under accrual of income taxes from fiscal 2011. The federal and state income tax expense is based on an estimate of the tax rates that the Company will be paying for fiscal 2012. The deferred tax is primarily due to changes in the Company's deferred tax assets. The deferred tax assets are a result of timing differences between when expenses are deductible on the Company's books and when they are deductible on the Company's tax returns.

OPERATING RESULTS FOR THE NINE MONTHS ENDED AUGUST 31, 2012

For the nine month period ended August 31, 2012, the Company had total revenues of $42,401,926 and net income of $818,381 after provision for income taxes of $543,932. For the same nine month period in 2011, total revenues were $37,685,408 and net income of $495,131 after a provision for income taxes of $346,304. Basic and fully diluted earnings per share were $0.12 for the nine months ended August 31, 2012 as compared to basic and fully diluted earnings per share of $0.07 for the same period in fiscal 2011. In accordance with ASC Topic 605-10-S99, "Revenue Recognition", the Company has accounted for certain sales incentives offered to customers by charging them directly to sales as opposed to advertising and promotional expenses. Net sales for the first nine months of 2012 were reduced by $5,285,972 and offset by an equal reduction of trade promotional expenses, which were included in the Company's advertising expense budget. In the same period of the prior year, net sales were reduced by $4,066,545 and trade promotion was credited by that amount. These accounting adjustments under ASC Topic 605-10-S99 do not affect net income.

The Company's net sales increased $4,580,801 to $41,903,431 for the nine month period ended August 31, 2012 from $37,322,630 for the nine month period ended August 31, 2011, an increase of 12.3%. Sales returns and allowances, not including sales incentives, were 7.5% of gross sales for the nine month period ended August 31, 2012 as compared to 9.1% for the same period last year. Sales incentives consist of co-operative advertising with the Company's retail partners and coupons. The amount of co-operative advertising included in sales incentives increased by $730,878 to $4,120,474 for the first nine months of 2012 as compared to $3,389,596 for the same period in 2011. The cost of the coupons issued by the Company was $1,165,498 for the first nine months of 2012 as compared to $676,949 for the same period in 2011.

The following table is the Company's net sales by category for the first nine months of 2012 as compared to the first nine months of 2011:

                                 Nine Months Ended             Nine Months Ended
                                  August 31, 2012               August 31, 2011
         Catergory             Net Sales                     Net Sales
         Skin Care            $ 13,522,068        32.3 %    $ 12,798,883        34.3 %
         Nail Care              11,298,837        27.0 %       3,914,507        10.5 %
         Dietary Supplement      7,952,172        19.0 %      11,370,454        30.5 %
         Oral Care               7,861,894        18.8 %       7,378,265        19.8 %
         Fragrance                 595,070         1.4 %       1,116,636         3.0 %
         Miscellaneous             450,227         1.1 %         322,925         0.9 %
         Analgesic                 223,163         0.4 %         420,960         1.0 %

                              $ 41,903,431       100.0 %    $ 37,322,630       100.0 %

The following were factors that affected net sales for the nine months ended August 31, 2012:

• Net sales of nail care products increased $7,384,130 for the nine months ended August 31, 2012, as compared to the same period in fiscal 2011, due to the success of Gel Perfect. The Company introduced Gel Perfect, a UV free gel color nail polish, at the end of the third quarter of fiscal 2011. The Company anticipates increased distribution into fiscal 2013.

• Net sales of the Company's diet products decreased 30.1% in the nine months of 2012 as compared to the nine months of 2011. The decrease in net sales of diet products was due to lower gross sales as a result of decreased distribution of certain items and decreased promotional activity, reflective of the continued overall industry category decline. The Company is increasing its marketing efforts with the introduction of new diet products in order to effectuate a positive impact on future sales.

• Net sales of skin care products increased 5.7% for the nine months ended August 31, 2012 as compared to the same period in fiscal 2011. The increase was a result of higher gross sales from increased distribution together with lower product returns.

• Net sales of Plus White, the Company's oral care brand were $483,629 higher in the nine months of fiscal 2012, as compared to the nine months of fiscal 2011 due to higher gross sales and lower returns. Returns were higher in the first nine months of fiscal 2011 due to the voluntary recall of the Company's Plus White oral care whitening product.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS




                                                         Nine Months Ending
                                                             August 31,
                                                       2012              2011
   Sales of health and beauty aid products - Net   $ 41,903,431      $ 37,322,630
   Cost of Sales                                     18,063,630        14,849,258

   Gross Margin                                    $ 23,839,801      $ 22,473,372
                                                           56.9 %            60.2 %

The gross margin percentage for the nine months of fiscal 2012 decreased to 56.9%, as compared to 60.2% for the nine months of fiscal 2011. The increase in gross margin was due to an increase in the cost of goods and sales incentives, partially offset by a decrease in returns and allowances. The cost of goods increased, in part, due to the change in product mix, with increased sales in the nail care category. The cost of goods as a percentage of gross sales was 35.4% for the nine months ended August 31, 2012 as compared to 32.6% for the same period in fiscal 2011. The Gel Perfect product was introduced at the end of the third quarter of fiscal 2011. Gel Perfect has a higher cost of goods than most of the Company's other product lines, affecting the overall cost of goods as a percentage of sales. The Company has also experienced increases in labor, plastics, corrugate and chemical costs for some of its other brands, as well as the effect of the increases in oil prices. It is possible that the Company will experience further increases if the cost of oil continues to rise. Sales incentives and coupons were $1,219,428 higher in the nine months ended August 31, 2012 as compared to the same period in fiscal 2011, which contributed to the decrease in the gross margin. Sales returns and allowances decreased to 7.5% for the nine months ended August 31, 2012 from 9.1% for the same period in fiscal 2011. Returns were higher in fiscal 2011 due the voluntary recall of the Plus White oral care whitening product.

Selling, general and administrative expenses decreased $185,299 to $16,593,998 for the nine months ended August 31, 2012 as compared to $16,779,297 for the same period in fiscal 2011. Expenses were lower in part due to the Company recording an expense in the nine months of fiscal 2011 in the amount of $600,000 to settle the Alleghany Pharmacal Corporation claim that was recorded in the second quarter of 2011 (see the 10K for fiscal 2011, Part I, Item 1(f)(i) for further information regarding the settlement). Charges for shipping to our customers increased to 4.7% for the nine months ended August 31, 2012 as compared to 4.5% for the same period in fiscal 2011. The Company could experience further increases in the future as a result of changes in the price of fuel. The Company also had higher personnel costs due to the addition of marketing, sales and product development personnel.

Advertising expense was $5,845,845 for the nine months ended August 31, 2012 as compared to $4,771,316 for the nine months ended August 31, 2011, an increase of $1,074,529. Of this amount, $236,744 was due to higher co-operative advertising that is classified as a selling expense and the balance due to higher media commercial costs. The Company's advertising expense changes from quarter to quarter based on the timing of the Company's promotions.

Income before the provision for income taxes was $1,362,313 for the nine months ended August 31, 2012 as compared to $841,435 for the same period in 2011. The effective tax rate for the nine months ended August 31, 2012 was 39.9% versus 41.2% for the nine months ended August 31, 2011. The provision for income taxes of $543,932 for the nine months ended August 31, 2012 included a current tax expense of $422,383 and an expense of $121,549 for deferred tax. Included in the current tax expense is $25,761 due to an under accrual of taxes for fiscal 2011. The federal and state income tax expense is based on an estimate of the tax rates that the Company will be paying for fiscal 2012. The deferred tax assets are a result of timing differences between when expenses are deductible on the Company's books and when they are deductible on the Company's tax returns.

FINANCIAL POSITION AS OF AUGUST 31, 2012

The Company's financial position as of August 31, 2012 consisted of current assets of $32,937,655 and current liabilities of $9,980,947, or a current ratio of 3.3 to 1. The Company's cash and cash equivalents were $10,611,495 as of August 31, 2012, an increase of $2,911,880 from November 30, 2011. Included in this increase was net cash provided by operating activities of $395,983, and net cash provided by investing activities of $4,001,749 offset by net cash used in financing activities of $1,485,852. Included in the net cash used in financing activities was $1,481,433 of dividends paid.

Accounts receivable increased to $8,953,362 as of August 31, 2012 from $7,743,601 as of November 30, 2011. The increase was due to gross sales volume which was $1,626,511 higher in July and August 2012 as compared to gross sales in October and November 2011. There has been no significant change in the accounts receivable aging and days outstanding.

The reserve for returns and allowances is based on the historical returns as a percentage of sales in the five preceding months, adjusting for returns that can be put back into inventory, and a specific reserve based on customer circumstances. This allowance increased to $2,085,249 as of August 31, 2012, from $2,014,303 as of November 30, 2011. Of this amount, allowances and reserves in the amount of $850,575, which are anticipated to be deducted from future invoices, were included in accrued liabilities as of August 31, 2012 as compared to $1,069,661 as of November 30, 2011. The balance of the reserve for returns and allowances that was reflected as a reduction of net accounts receivable as of August 31, 2012 was $1,234,674 as compared to $944,642 as of November 30, 2011. Gross receivables were further reduced by $1,151,550, which were reclassified from accrued liabilities, as an estimate of the co-operative advertising that will be taken as a credit against payments. In addition, accrued liabilities include $3,284,552, which is an estimate of co-operative advertising expense relating to fiscal 2012 sales which are anticipated to be deducted from future invoices rather than against the current accounts receivable. The allowance for doubtful accounts decreased to $17,041 as of August 31, 2012 as compared to $53,191 as of November 30, 2011. The Company had no material overdue accounts receivable balances as of August 31, 2012.

Inventory increased to $10,283,016 as of August 31, 2012 from $9,460,408 as of November 30, 2011. The inventory increased in order to support the sales of Gel Perfect as well as the promotional sales to take place in the fourth quarter of fiscal 2012. In addition, inventory purchases of certain items were increased in order to take advantage of quantity cost savings. The inventory obsolescence reserve decreased to $548,322 as of August 31, 2012 from $892,226 as of November 30, 2011 as a result of scrapping obsolete inventory.

Prepaid and refundable income taxes decreased to $338,722 as of August 31, 2012 from $718,828 as of November 30, 2011. The decrease was due to the estimate of income taxes due as of August 31, 2012, as well as an adjustment of $7,857 due to an under accrual of taxes for fiscal 2011.

The deferred income tax asset decreased to $1,402,328 as of August 31, 2012 from $1,738,949 as of November 30, 2011. The decrease was due to the deferred tax expense of $18,695 on the unrealized gain on investments as of August 31, 2012, as compared to the deferred tax benefit of $77,594 on the unrealized loss as of November 30, 2011, a decrease in the inventory obsolescence reserve, the partial utilization of the charitable contributions carry forward from fiscal 2011 and the reclassification of $130,883 from short-term deferred to long-term deferred. The reclassification is based on an estimate of the amount of the charitable contributions deferred tax asset that will be realized in periods greater than twelve months from August 31, 2012. The deferred tax assets were reduced by a deferred tax liability of $18,695 related to the Company's unrealized gain of $46,855 on its investments as of August 31, 2012. The unrealized gains reported on the balance sheet were $28,160 which is net of the deferred tax expense. The deferred tax liability decreased to $63,556 at August 31, 2012 as compared to $182,339 as of November 30, 2011. The decrease was due to the reclassification of $130,883 from short-term deferred to long-term deferred, which reduced the long-term liability. Included in the liability is $194,439 as of August 31, 2012 due to the difference in depreciation between the Company's books and income tax returns.

Accounts payable and accrued liabilities increased to $9,470,381 as of August 31, 2012 from $8,566,544 as of November 30, 2011. The increase was due to an increase in the normal course of business. There has been no significant change in the aging of the accounts payable.

Shareholders' equity decreased to $25,087,629 as of August 31, 2012 from $25,608,051 as of November 30, 2011. The decrease was due to the net income of $818,381 and unrealized gains, net of deferred income tax, on marketable securities of $142,630, offset by dividends declared of $1,481,433 during the nine months ended August 31, 2012. Unrealized holding gains or losses are recorded as other comprehensive income.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is defined as the ability to generate adequate amounts of cash to meet short-term and long-term business needs. We assess our liquidity in terms of our total cash flow and the amounts of cash, short-term and long-term marketable securities on hand. Significant factors that could affect our liquidity include the following:

• Cash flow generated or used by operating activities;

• Dividend payments;

• Capital expenditures;

• Acquisitions.