Except for the historical information presented in this document, the matters discussed in this Form 10-Q, and specifically in the "Management's Discussion and Analysis or Plan of Operation", or otherwise incorporated by reference into this document contain "forward looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "intends", "should", or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. You should not place undue reliance on forward-looking statements. Forward-looking statements involve risks and uncertainties. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this report on Form 10-Q and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this report.

Overview

Although we currently sell products through infomercials, the goal of our business plan is to use the brand awareness we create in our infomercials so that we can sell the products featured in our infomercials, along with related families of products, under distinct brand names in traditional retail stores. Our goal is to have these families of products sold in the traditional retail environment in shelf-space dedicated to the product category. We are developing the infrastructure to create these brands of products so that we can implement our business plan.

Fluctuations in our revenue are driven by changes in our product mix. Revenues may vary substantially from period-to-period depending on our product line-up. A product that generates revenue in one quarter may not necessarily generate revenues in each quarter of a fiscal year for a variety of reasons, including, seasonal factors, number of infomercials run, the product's stage in its life-cycle, the public's general acceptance of the infomercial and other outside factors, such as the general state of the economy.

Just as fluctuations in our revenues are driven by changes in our product mix, our gross margins from period to period depend on our product mix. Our gross margins vary according to whether the products we are selling are primarily our own products or third-party products. As a general rule, the gross margins for our own products are considerably higher based on proportionately smaller cost of sales. For third-party products, our general experience is that our gross margins are lower, because we record as cost of sales the proportionately higher cost of acquiring the product from the manufacturer. Within each category (i.e., our own products versus third-party products), gross margins still tend to vary based on factors such as market price sensitivity and cost of production.

Many of our expenses for our own products are incurred up-front. Some of our up-front expenditures include infomercial production costs and purchases of media time. If our infomercials are successful, these up-front expenditures produce revenue as consumers purchase the products aired on the infomercials. We do not incur infomercial production costs and media time for our third-party products, because we merely act as the distributor for pre-produced infomercials. It is the responsibility of the international infomercial operators to whom we sell the third-party products to take the pre-produced infomercial, adapt it to their local standards and pay for media time.

Results of Operations

The following discussion compares operations for the three and nine months ended September 30, 2012 with the three and nine months ended September 30, 2011.

Revenues

Our revenues increased to approximately $6,290,000 and $12,781,000 for the three and nine months ended September 30, 2012, up from approximately $744,000 and $1,964,000 recorded during the three and nine months ended September 30, 2011, a 745% and 551% increase respectively. There were two major reasons for the increase in revenue. The first reason relates to continued success of the new DermaWandTM infomercial. During the three and nine months ended September 30, 2012 sales relating to DermaWandTM for direct response television (DRTV) were approximately $4,443,000 and $8,373,000 as compared to approximately $366,000 and $1,284,000 during the three and nine months ended September 30, 2011.

This increase in DRTV revenue was in part due to the launching of a new Spanish language version of the DermaWand show that was launched by The Company in August 2012. The Company has also been successful in building an auto-ship continuity program with its DermaVitalTM skincare line. Currently there are over 9,000 customers in the program, all which pay $29.95 per month to receive the three core products in the line; Pre-Face Beauty Treatment, Hydra Infusion Beauty Treatment, and Skin Mist. The Company is focused on expanding the DermaVital line and building the continuity program.

The second reason for the increase in revenue was an increase in international sales. During the three and nine months ended September 30, 2012, international sales revenue for the DermaWandTM was approximately $855,000 and $2,802,000, as compared to approximately $378,000 and $680,000 during the three and nine months ended September 30, 2011. The increase in sales internationally is primarily due to the new DermaWandTM infomercial running in Europe, Asia, and South America.

Gross Margin

Gross margin percentage was approximately 70% and 66% for the three and nine months ended September 30, 2012, up from approximately 56% and 50% during the three and nine months ended September 30, 2011. The main reason for the increase in gross margin was that the sales generated from the new DermaWandTM infomercial have an average selling price of $145, including shipping and handling, which represented the majority of sales for the three and nine months ended September 30, 2012. In comparison, for the three and nine months ended September 30, 2011, the majority of sales were generated from televised home shopping, which had a selling price of approximately $60 to $100. There were no infomercial sales of DermaWandTM during the three and nine months ended September 30, 2011.

For the three and nine months ended September 30, 2012 we generated approximately $4,384,000 and $8,431,000 in gross margin, compared to approximately $419,000 and $980,000 for the three and nine months ended September 30, 2011.

Operating Expenses

Total operating expenses increased to approximately $4,593,000 and $8,540,000 during the three and nine months ended September 30, 2012, from approximately $375,000 and $1,164,000 during the three and nine months ended September 30, 2011, an increase of approximately $4,218,000, or 1125% and $7,376,000 or 634%. This increase in operating expenses in primarily due to the expenses associated with running the new DermaWandTM infomercial. The largest of these expenses are media expenditures. Total media and production expenses increased to approximately $2,374,000 and $4,348,000 during the three and nine months ended September 30, 2012, from approximately $18,000 and $93,000 during the three and nine months ended September 30, 2011. Other expenses that increased in association with the DermaWandTM infomercial are as follows:

                                                  For the three months
                                                   ended September 30
                                            2012          2011       Increase
            Answering Service             $ 444,000     $  1,000     $ 443,000
            Customization & Duplication      72,000        4,000        68,000
            Merchant Fees                   171,000        5,000       166,000
            Total                         $ 687,000     $ 10,000     $ 677,000




                                                  For the nine months
                                                   ended September 30
                                           2012           2011        Increase
          Answering Service             $   740,000     $  2,000     $   738,000
          Customization & Duplication       153,000        8,000         145,000
          Merchant Fees                     271,000        6,000         265,000
          Total                         $ 1,164,000     $ 16,000     $ 1,148,000

In addition to the increased costs associated with the infomercial; there was also a significant increase in stock based compensation and bad debt expenses. Total stock based compensation expenses increased to approximately $450,000 and $675,000 during the three and nine months ended September 30, 2012, from approximately $29,000 and $51,000 during the three and nine months ended September 30, 2011. Total bad debt expenses increased to approximately $104,000 and $311,000 during the three and nine months ended September 30, 2012, from approximately $3,000 and $9,000 during the three and nine months ended September 30, 2011.

Net Income (Loss)

The Company generated net loss of approximately $217,000 and $126,000 for the three and nine months ended September 30, 2012, compared with a net income of approximately $44,000 and a net loss of approximately $184,000 for the three and nine months ended September 30, 2011. The major reason for the increase in net loss was the additional non-cash stock based compensation expense related to the termination a of consulting arrangement and increase in bad debt expense related to infomercial sales for the three and nine months ended September 30, 2012.

Liquidity and Capital Resources

At September 30, 2012, we had approximately $828,000 in cash (including cash held in escrow), compared to approximately $59,000 at December 31, 2011. We generated positive cash flows from operations of approximately $457,000 in the nine months ended September 30, 2012 compared to a negative cash flow from operations of approximately $226,000 for the same period in 2011. The positive cash flow from operations during the current period was primarily a result of a net loss of approximately $126,000, an increase in accounts receivable of approximately $968,000, an increase in inventory of approximately $324,000, an increase in prepaid expense and other current assets of approximately $168,000, an increase in accounts payable and accrued liabilities of approximately $979,000, a decrease in severance payable of approximately $31,000, an increase in deferred revenue of approximately $84,000, an increase in accrued interest to a shareholder of approximately $14,000, stock based compensation expense of approximately $675,000, bad debt expense of approximately $311,000 and depreciation expense of approximately $11,000.

The Company has a note payable to The Better Blocks Trust ("BB Trust"), a shareholder, in the amount of $590,723. On April 1, 2012 the shareholder note payable was modified. The new terms include interest at the rate of four and three quarters percent (4.75%) per annum and becomes convertible at $0.50 per share. Interest on the unpaid balance of this note shall be paid in arrears as of the end of each calendar quarter, with payment due on the first day of the month following the quarter as to which interest is being paid. The first payment of interest shall be due on January 1, 2013, for the three quarters beginning April 1, 2012 and ending on December 31, 2012. The principal balance of this note shall be due and payable in three equal payments on each of April 1, 2015, April 1, 2016, and April 1 2017. Accrued interest at September 30, 2012 is approximately $14,000. (See Note 5).

In December 2011, the Company entered into a note payable with a Canadian lender in the amount of approximately $98,000 (C$100,000). This loan accrues interest of prime plus 1%. Interest is paid monthly. Principal payments are to be paid in monthly installments of approximately $6,500 (C$6,667), beginning in March 2012 and ending May 2013. On January 24, 2012, the Company entered into a note modification with the Canadian lender, increasing the outstanding balance to approximately $137,000 (C$140,000) as additional borrowings were made by the Company. The principal payments on the additional borrowings of approximately $39,500 (C$40,000) are in two installments of $20,000 (approximates C$) payable on April 15, 2012 and July 15, 2012, respectively. In addition, the interest rate on the note was modified to lender's cost, plus two-percent and the note became convertible into shares of the Company's common stock at a fixed conversion rate of $0.196 (C$0.20) per share. (See Note 6).

On February 17, 2012, the Board authorized the issuance of up to 2,500,000 shares of common stocks to be purchased at $0.15 per share through February 29, 2012. On February 29, 2012, the Board amended the resolution to authorize the issuance of up to 3,000,000 shares of common stock to be purchased at $0.15 per share through March 23, 2012. A total of 2,590,000 shares were purchased through March 23, 2012 for proceeds of $388,500. In addition, for every three shares of common stock purchased, the purchasers received one warrant to purchase common stock at $0.25 per share. The warrants expire three years after their issuance date. The warrants have a weighted average fair value of $0.32. The fair value of the warrant has been estimated on the date of grant using a Black-Scholes Pricing Model. (See Note 7).

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company generated positive cash flows from operating activities during the nine months ended September 30, 2012, of approximately $457,000, but the Company, for the most part, has experienced recurring losses from operations. As of September 30, 2012, the Company had a working capital of approximately $430,000, compared to a negative working capital approximately $1,043,000 at December 31, 2011, and an accumulated deficit of approximately $6,830,000 as of September 30, 2012. Improvement in working capital is mainly due to the modification of debt terms reclassifying the $590,723 shareholder note payable to long-term as of September 30, 2012. (See Note 5).

Although we currently sell our products primarily though infomercials, the goal of our business is to use the brand awareness we create in our infomercials to sell our products (along with additional line extensions) under distinct brand names in traditional retail stores. Our objective is to have these families of products sold in the traditional retail environment in shelf-space dedicated to the product category. We are developing the infrastructure to create these brands of products so that we can implement our business plan.

There is no guarantee that the Company will be successful in bringing our products into the traditional retail environment. If the Company is unsuccessful in achieving this goal, the Company will be required to raise additional capital to meet its working capital needs. If the Company is unsuccessful in completing additional financings, it will not be able to meet its working capital needs or execute its business plan. In such case the Company will assess all available alternatives including a sale of its assets or merger, the suspension of operations and possibly liquidation, auction, bankruptcy, or other measures. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements does not include any adjustment relating to the recoverability of the carrying amount of recorded assets or the amount of liabilities that might result should the Company be unable to continue as a going concern.

There have been no changes to our critical accounting policies and estimates in the nine months ended September 30, 2012. The Securities and Exchange Commission ("SEC") defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our significant accounting policies are described under "Critical Accounting Policies" in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7, as well as in our consolidated financial statements and footnotes thereto for the year ended December 31, 2011, as filed with the Commission with our Annual Report form 10-K filed on March 30, 2012.