Overview

The Company is engaged in the manufacturing, marketing, sale and distribution of high-tech, innovative hearing and audio enhancement and protection products, as well as professional quality hair and skin care products. The Company has two reportable segments: hair care and skin care, and hearing enhancement and protection.

Through the hearing enhancement and protection segment, the Company designs, innovates, engineers, manufactures, markets and services specialized systems in hearing enhancement, hearing protection, wireless audio, and communication. The hair care and skin care segment involves the manufacturing, marketing, sale, and distribution of professional quality hair and skin care products.

The Company’s overall business strategy is to establish market awareness of its products through direct-to-consumer campaigns. The focus is on driving growth by expanding market share within existing channels and developing new ones through both online and traditional platforms. The Company is also exploring options for its hair care and skin care business, which could result in the divestiture of that segment.

Business Update

In response to recent changes in U.S. trade policy, including the imposition of elevated tariffs on certain imported goods, the Company has accelerated its supply chain transition strategy. This includes relocating senior manufacturing leadership to the United States and establishing domestic manufacturing capabilities to reduce exposure to geopolitical volatility. While the Company anticipates some near-term increases in product costs, it believes these actions will enhance its resilience and competitiveness in the medium and long term.

Results of Operations

The Company’s financial performance is summarized in the tables below:

The Company also reports non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to provide additional insight into its performance.

For the Three Months Ended February 28, 2025 Compared to the Three Months Ended February 29, 2024

Net sales increased by 7.0% to $6,922,367, primarily due to growth in direct-to-consumer sales and strengthened distribution channels. Gross profit margin remained relatively stable at 71.7%.

Operating expenses decreased by 7.3% to $4,383,319, driven by lower advertising costs. Income from operations improved to $583,109 compared to a loss of $103,879 in the prior year period.

Adjusted EBITDA increased significantly to $890,546 (12.9% of net sales) from a loss of $11,052 in the prior year period.

For the Nine Months Ended February 28, 2025 Compared to the Nine Months Ended February 29, 2024

Net sales decreased by 2.3% to $20,506,213, primarily due to reduced advertising expenditure in the first and second quarters, partially offset by strong third quarter performance.

Gross profit margin decreased to 71.3% from 74.0%, due to an increase in cost of sales as a percentage of revenue and higher discounts.

Operating expenses decreased by 4.9% to $13,502,845, driven by a net decrease in advertising expenses and a forgiveness of accounts payable, partially offset by an increase in stock-based compensation and consulting fees.

Income from operations decreased by 16.4% to $1,115,278, primarily due to the increase in non-cash stock-based compensation.

Adjusted EBITDA increased by 23.8% to $2,076,821 (10.1% of net sales), driven by the strong third quarter performance, the forgiveness of accounts payable, and decreased advertising expenses.

Liquidity and Capital Resources

The Company currently expects to earn net income and positive cash flows from operations during the current fiscal year. Management believes the Company’s current cash balances and anticipated cash flow from operations will be sufficient to meet its working capital requirements for at least one year.

The Company’s cash flows are summarized as follows:

• Operating Activities: Net cash provided by operating activities was $1,734,230 for the nine months ended February 28, 2025, compared to $339,323 in the prior year period. The improvement was primarily due to increased inventory levels, the forgiveness of accounts payable, and timing of changes in other operating assets and liabilities.

• Investing Activities: Net cash used in investing activities was $255,778 for the nine months ended February 28, 2025, compared to $80,192 in the prior year period, primarily for the purchase of intangibles and property and equipment.

• Financing Activities: Net cash provided by financing activities was $11,142 for the nine months ended February 28, 2025, compared to net cash used of $204,246 in the prior year period, primarily due to advances from a related party and repayments of notes payable.

The Company does not have any off-balance sheet arrangements and believes its critical accounting policies related to revenue recognition, impairment, inventory, stock compensation, and contingencies are appropriate.