Our product and operations teams work closely with suppliers from initial product development and throughout the manufacturing process to ensure that (1) the supplier understands and will build according to product specifications, (2) appropriate quality is maintained for the finished goods and for all sub-components, and (3) the supplier can meet our supply needs.

We own utility and design patents in the U.S. and in various foreign countries which correspond to a number of our products, including patents with claims focused on certain features of ZAGG’sour InvisibleShield screen protection for electronic devices. ZAGG continuesAlthough we develop a portion of our IP through internal innovation, IP is also obtained through strategic acquisitions. We continue to actively pursue further protectionadditional IP for itsour developing product portfolio, including patents and applications for our InvisibleShield screen protection and associated methods in the United StatesU.S. and in foreign countries, having filedby filing patent applications for (i) both wet and dry application processes for securing protective filmsInvisibleShield film products to consumer electronic devices; (ii) dry-application protective films;InvisibleShield film products; and (iii) on-demand production of electronic device accessories, including films.InvisibleShield film products. In addition, ZAGG haswe have filed applications, and in some instances secured patents, for a variety of itsour battery cases, mobile power, wireless charging, keyboard, audio and protective case products. ZAGG hasWe have additional patents pending in the U.S. and internationally for a variety of current and expected products.

We own thousands of InvisibleShield protective filmFilm designs for protecting a variety of consumer electronic devices. New designs are routinely added to ZAGG’sour portfolio to accommodate the newest electronic devices on the market. Additionally, ZAGG iswe are the owner of numerous trademarks for use in connection with itsour goods and services. ZAGG hasWe have acquired many trademarks through our strategic acquisitions, have filed formal applications for a variety of trademarks, and hashave further secured trademark registrations for many of itsour trademarks in both the U.S. and in foreign countries.

ZAGG hasWe have strategically developed relationships, and in some cases, exclusive agreements, with a number of third partythird-party vendors and suppliers. ZAGG’sOur long-standing relationshiprelationships with its raw material suppliers and its manufacturers expandsexpand the scope of potential intellectual property (“IP”)IP protection available to ZAGG,us, including development of innovative solutions for protective films.films and glass. These relationships also provide ZAGGus with a reasonable expectation that itwe will be able to supply customers with products long into the future.

Our InvisibleShield film, supplier retainsVisionGuard, and D3O suppliers retain the patents and IP rights for products it developsdeveloped on our behalf, though hasthese suppliers have contractually agreed to not sell the raw materials to any of our competitors. The IP protection held by the Companyus varies in effectiveness in preventing certain aspects of competition. Although the Company believes thewe believe IP protection of IP is an important factor in itsour business and that itsour success does depend in part on the ownership thereof, the Company viewsor exclusive rights thereto, we view the following as our keys to past and future success: (1) our distribution relationships with customers, (2) the speed with which we can bring a product to market, and (3) our ability to effectively launch a product into market to generate maximum sales. Additionally, weWe also believe ZAGG’sour success is also based upon creative product solutions, establishing the preferred brand among both retailers and consumers, and targeted global distribution.distribution and operational excellence.

Protection of IP is important to the Companyus and we protect IP when appropriate,appropriate; however, we do not view IP in our industry as the key barrier to entry because of theour rapidly changing industry that we operate in. Very often,industry. Often, by the time we receive patent or other IP protection on a product that would serve as a barrier to entry, the market has moved on to new technologies or products. Given this, we are very selective in whatthe IP we decide to protect,pursue, measuring the cost to protect certain aspects of IP against the potential benefit.

Due to our close partnership with global suppliers, in Asia, our third-party logistics partner, and the manufacturer of the raw film used in our InvisibleShield and ISOD products, our product development teams work directly with these partners in the development of products. OurWe enter into contractual agreements with some of our global suppliers to leverage IP technology and patents of these partners and suppliers. For the other key global suppliers, in Asiawe have contractually agreed that the Companywe will retain all patents and IP rights to products that arise through our relationship, including design changes and innovations regardless of who instigates the product development change.

As of December 31, 2017,2019, we had 543628 full-time and part-time employees, including our management team. 457479 of our employees are located in the United StatesU.S. and support our domestic operations, while 86149 employees are located in international locationsoutside the U.S. to support our international operations. No employee is represented by a labor union, and we have never suffered an interruption of business caused bydue to labor disputes. We believe our relationship with our employees is good.good and have made efforts to ensure fair compensation, competitive benefits, and a positive working environment.

ZAGG and its subsidiariesWe are innovation leaders in mobile tech accessories for smartphones, tablets, smartwatches, and tablets.other mobile technology. For over 10 years, ZAGG haswe have developed creative product solutions that enhance and protect mobile devices for consumers around the world. The Company hasWe have an award-winning product portfolio that includes screen protection, power cases, power management, wireless charging, personal audio, mobile keyboards, protective cases, and social techother mobile accessories sold under the ZAGG, InvisibleShield, mophie, IFROGZ, BRAVEN, Gear4, and IFROGZHALO brands.

In June 2011, ZAGGwe acquired IFROGZ, an audio and protective case company, which expanded the ZAGGour product lines beyond screen protection and keyboards.

In March 2016, ZAGGwe acquired mophie, a leader in the power management and power case categories. This acquisition further diversified the ZAGGour product lines into key growth product categories. The results of operations of mophie are included in the Company'sour results of operations beginning on March 3, 2016.

The Company hasWe have historically been positively impacted near the time of major device launches by Apple, Samsung, and Samsung,other device manufacturers, particularly when there is a change in form factor. We expect major device launches to continue to positively impact our operations during 20182020 and beyond. Further, as our products are sold through traditional retail, online, and through home shopping channels, we experience a natural uplift during the fourth quarter due to the holidays.

Because of the following factors, as well as other factors affecting the Company’sour financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

The Company maintains aOn April 12, 2018, we entered into an amended and restated credit and security agreement (the "2018 Credit and Security AgreementAgreement") with KeyBank National Association (“KeyBank”), as administrative agent, Swing Line Lender and Issuing Lender, KeyBanc Capital Markets Inc., ZB, N.A., dba Zions First National Bank, as sole lead arranger and JPMorgan Chase, N.A. (“sole book runner, and other members of the lender group, which was subsequently amended by a first amendment agreement dated as of November 28, 2018, a second amendment agreement dated as of August 30, 2019, and a third amendment agreement dated December 4, 2019 (as amended, the “2018 Credit and Security Agreement”).The. The 2018 Credit and Security Agreement provides an $110,000a $125,000 ( “Maximum Revolver Amount” ) revolving credit commitment (“(the “2018 Revolver”) from January 1,which is not subject to borrowing base limitations. The third amendment agreement temporarily increased the Maximum Revolver Amount to $144,300 through February 28, 2020. In addition, at our option, (i) up to $40,000 of the 2018 to May 31,Revolver may be made available for the issuance of letters of credit, and (ii) we may obtain a term loan or increase the Maximum Revolver Amount of the 2018 which reduces toRevolver by another $25,000 within a $100,000 Revolver from June 1,specified period defined in the 2018 forward.Credit and Security Agreement. Borrowings and repayments under the 2018 Revolver may occur from time to time in the Company’sour ordinary course of business through the maturity date of March 2, 2021,April 11, 2023, at which time any amounts outstanding are to be paid in full (60-month term). All borrowings under the Revolver are subject to a borrowing base limit, which is calculated from outstanding accounts receivable and inventory on hand, and is reported to the administrative agent monthly. Interest on the 2018 Revolver will accrueaccrues either at the base rate plus a margin of 0.250% to 1.375% or Eurodollar rate plus a margin of 1.250% to 2.375%, in each case, based on the Leverage Ratio (as defined in the 2018 Credit and Security Agreement) plus 0.5% or LIBOR plus 1.5%. The Revolver is subject to an unused line fee calculated as 0.2% multiplied by the average unused amount of the Revolver.

The 2018 Credit and Security Agreement contains a number of financial and non-financial debt covenants, and the amount available under the Revolver is limited to the borrowing base calculated on at least a monthly basis.covenants. If we are not compliant with the covenants or have a reduction infail to fulfill our borrowing base,payment obligations, our ability to access the 2018 Revolver will be limited and the outstanding borrowings under the Term Loan may be declared immediately due and payable.limited. In such event, our short-term cash requirements may exceed available cash on hand resulting in material adverse consequences to our business. If we need to obtain additional funds as a result of the termination of the 2018 Credit and Security Agreement or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. Our failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, we would be forced to drastically curtail operations, dispose of assets, or cease operations altogether.

Our obligations under the 2018 Credit and Security Agreement are secured by substantially all of the assets of the Company.our assets. Under the 2018 Credit and Security Agreement, we are subject to specified affirmative covenants customary for loans of this type. We are also subject to certainand negative covenants customary for loans of this type.

Failure to comply with the restrictive covenants could accelerate the repayment of any debt outstanding under the 2018 Credit and Security Agreement. Additionally, asIn addition, restrictive covenants under the 2018 Credit and Security Agreement prohibit the repurchase of ZAGG Inc common stock or the issuance of dividends if over $100,000 has been drawn on the line of credit. Until our current borrowings are paid down below $100,000, we will not be able to take advantage of potential opportunities to repurchase ZAGG Inc common stock or issue dividends.

As a result of these restrictive covenants, we may be at a disadvantage compared to our competitors that have greater operating and financing flexibility than we do.

The 2018 Credit and Security Agreement requires us to pay a variable rate of interest, which will increase or decrease based on variations in LIBOR.interest rates. Additionally, fluctuations in interest rates can significantly decrease our profits. We do not have any hedge or similar contracts that would protect us against changes in interest rates.

The amount of our indebtedness could have important consequences for us, including the following:

We may not generate sufficient cash flows from operations to service and repay our debt and related obligations and have sufficient remaining funds to achieve or sustain profitability in our operations, meet our working capital and capital expenditure needs or compete successfully in our industry, which would have a material adverse effect on our operations.

As of December 31, 2017,2019, we had approximately $37,538$107,140 of debt outstanding which was subject to variable interest rates. This variable rate debt had a total weighted average interest rate of approximately 3.33%4.64% per annum as of December 31, 2017.2019. Increases in interest rates on this variable rate debt would increase our interest expense, which could harm our cash flow.flows.

The consumer and mobile electronics accessory industries are subject to constant and rapidly changing consumer preferences based on performance features and industry trends. We generate all of our sales from our consumer and mobile electronics accessories business. We cannot assure our stakeholders that we will be able to grow the revenues of our business or maintain profitability. Our consumer accessories business depends, to a large extent, on the introduction and availability of innovative products and technologies. We believe that our future success depends, in large part, upon our ability to enhance our existing products and to develop, introduce, and market new products and improvements to our existing products.

However, if we are not able to continually innovate and introduce new products that achieve consumer acceptance, our sales and profit margins may decline. Our revenues and profitability will depend on our ability to maintain existing and generate additional customers and develop new products. A reduction in demand for our existing products would have a material adverse effect on our business. The sustainability of current levels of our business and the future growth of such revenues, if any, depends on, among other factors:

We cannot provide assurance that we will maintain or increase our current level of revenues or profits in future periods.

While we are pursuing and will continue to pursue product development opportunities, there can be no assurance that such products will come to fruition or become successful. Furthermore, while a number of those products are being tested, we cannot provide any definite date by which they will be commercially available or financially viable. We may experience operational problems with such products after commercial introduction that could delay or defeat the ability of such products to generate revenue or operating profits. Future operational problems could increase our costs, delay our plans, or adversely affect our reputation or our sales of other products which, in turn, could have a material adverse effect on our success and our ability to satisfy our obligations. We cannot predict which of the many possible future products will meet evolving industry standards and consumer demands. We cannot provide assurance that we will be able to adapt to such technological changes, offer such products on a timely basis or establish or maintain a competitive position.

Part of our current business model includes indirectly selling our products through third-party retailers. These third-party retailers operate physical brick-and-mortar locations to sell our productproducts to our end customers. The current shift in purchasing demographics due to the changing preferences of customers who are moving from in-store purchases of goods to the convenience of online purchases creates additional risks of current revenue streams being impacted negatively and an overall decrease of market share.

Our market is highly competitive with numerous competitors. Some of our competitors may have substantially greater financial, technical, marketing, and other resources than we possess, which may afford them competitive advantages over us. As a result, our competitors may introduce products that have advantages over our products in terms of features, functionality, ease of use, and revenue producing potential. They may also have more fully developed sales channels for consumer sales including large retail seller arrangements and international distribution capabilities.

In addition, new companies may enter the markets in which we compete, further increasing competition in the consumer electronics accessories industry. Increased competition may result in price reductions, reduced profit margins, loss of market share, and an inability to generate cash flows that are sufficient to maintain or expand our development and marketing of new products, which would adversely impact our financial performance.

The Company doesWe do not manufacture any of our products,products; rather, employswe employ various third partythird-party manufacturing partners to perform these services on our behalf. The services employed by these third partiesthird-parties include the selection of sub-suppliers that provide raw materials and other components used in the manufacturing process. Our manufacturing partners acquire substantially all of the raw materials that we use in our products from a variety of suppliers. We can give no assurance that:

Our inability to procure sufficient quality and quantities of products that are in demand could reduce our profitability and have a negative effect on our relationships with our customers. If any of our supplier relationships are terminated or interrupted, we could experience an immediate or long-term supply shortage, which would have a negative effect on our business.

Although protection of IP is important to the Companyus and we protect IP when appropriate, we do not view IP in our industry as an effective barrier to entry because of the rapidly changing industry in which we operate. Very often, by the time we receive patent or other IP protection on a product that would serve as a barrier to entry, the market has moved on to new technologies or products. Given this, we are very selective in what we decide to protect, measuring the cost to protect certain aspects of IP against the potential benefit.

Due to our close partnership with suppliers in Asia, our third-party logistics partner,partners, and the manufacturer of the raw film used in our InvisibleShield Film and ISOD products, alongside our partnerships for D3O and VisionGuard raw materials, our product development teams work directly with these partners in the development of products. Our key suppliers in Asia have contractually agreed that the Companywe will retain all patents and IP rights to products that arise through our relationship, including design changes and innovations regardless of who instigates the product development change. Our film supplier retainsThese suppliers retain the patents and IP rights for products it develops on our behalf, though has contractually agreed to not sell the raw materials to any of our competitors. As we do not own the IP for raw materials, including the InvisibleShield filmFilm, D3O, VisionGuard, and glassanti-microbial products, we cannot provide assurance that we will be able to source technologically advanced products in the future in order to remain competitive. Furthermore, the introduction or expected introduction of new products or technologies may depress sales of existing products and technologies. This may result in declining profit margins and inventory obsolescence. Because we maintain a substantial investment in product inventory, declining prices and inventory obsolescence could have a material adverse effect on our business and financial results.

Although we do not own the patent for the film, D3O, VisionGuard, and anti-microbial raw materials, which is held by our exclusive supplier, this supplier hassuppliers, these suppliers have contractually agreed to not sell the raw materials to any of our competitors. We believe that our relationship with the manufacturer of the raw material is on excellent terms and anticipate no interruption in our ability to acquire adequate supplies of raw materials and produce products. The Company has not entered into any material agreements to license technology included in our other products.

Our estimates of excess and obsolete inventory may prove to be inaccurate, in which case the net realizable value for excess and obsolete inventory may be understated or overstated. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demandtechnology or technological developmentsdemand could have a significant impact on the value of our inventory and operating results.

Although we anticipate expanding into additional complementary product categories to provide support to our strategy to provide creative product solutions to mobile device users, there can be no guarantee that we will be successful in innovating and expanding into additional product categories. Numerous factors, including market acceptance, finding and retaining contract partners that are acceptable to ZAGG,us, and general market and economic conditions, could prevent us from participating in these complementary product categories, which could limit our ability to implement our business strategystrategy.

Similarly, although we intend to continue to configure the screen protection, keyboards, audio, battery cases, power management, wireless charging, cases, and other product categories for new products and devices, there can be no guarantee that we will be able to either match the current demand for our products as new devices and products are introduced, or that purchasers of such devices and products will want to purchase our products for use in connection with them. Any limitation in our ability to match demand or gain market acceptance of our products in connection with new devices and products could have a material adverse effect on our business.

Our business requires that the Companywe use and store customer, employee and business partner personally identifiable information (“PII”), which may include, among other information, names, addresses, phone numbers, email addresses, contact preferences, tax identification numbers, and payment account information. The Company requiresWe require user names and passwords in order to access itsour information technology systems. The CompanyWe also usesuse encryption and authentication technologies designed to secure the transmission and storage of data and prevent access to Companyour data or accounts. As with all companies, theseThese security measures are subject to the risk of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularities. For example, third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access our information technology systems. To help protect customerscustomer and the Company, the Company monitorsvendor information and our own information, we monitor accounts and systems for unusual activity and may freeze accounts under suspicious circumstances, which may result in the delay or loss of customer orders.

We devote significant resources to network security, data encryption and other security measures to protect itsour systems and data, but these security measures cannot provide absolute security. To the extent the Company waswe were to experience a breach of itsour systems and waswere unable to protect sensitive data, such a breach could materially damage business partner and customer relationships, and curtail or otherwise adversely impact access to online stores and services. Moreover, if a computer security breach affects the Company’sour systems or results in the unauthorized release of PII, the Company’sour reputation and brand could be materially damaged, use of the Company’sour products and services could decrease, and the Companywe could be exposed to a riskrisks of loss or litigation and possible liability. While the Company maintainswe maintain insurance coverage that, subject to policy terms and conditions and subject to a significant self-insured retention, is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually evolving area of cyber risk.

We produce our key products prior to the time we receive customers’ purchase orders. We do this to minimize purchasing costs, the time necessary to fill customer orders, and the risk of non-delivery. However, we may be unable to sell the products we have produced in advance. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have a material adverse effect on our operating results and financial condition. Conversely, if we underestimate demand for our products or if we fail to produce the quality products that we require at the time we need them, we may experience inventory shortages. Inventory shortages might delay shipments to customers, negatively impact distributor relationships, and diminish brand loyalty.

Mobile electronic devices typically have relatively short life cycles. We may be left with obsolete inventory if we do not accurately project the life cycle of different mobile electronic devices. The charges associated with reserving slow-moving or obsolete inventory as a result of not accurately estimating the useful life of mobile electronics could negatively impact the value of our inventory and operating results.

The Company looksWe seek to continue itsour expansion into new markets, including internationally.additional international markets. As the Company expandswe expand into new international markets through distributors, new indirect customers, and existing relationships with current indirect customers, it is possible that this expansion will adversely impact our consolidated gross profit margins. Accordingly, there is no assurance that we will continue to recognize similar gross profit margins in the future to those currently being realized.

We anticipate expanding into additional complementary product categories or in expanding our footprint in current product categories to support our strategies to provide creative product solutions to mobile device users and to diversify our product portfolio. However, there can be no guarantee that this expansion will occur at or above the gross profit margins we have historically realized. Accordingly, there is no assurance that we will continue to recognize similar gross profit margins in the future to those currently being realized.

Our success depends on the skills, experience and performance of key members of our management team including Chris Ahern, our CEO; Brian Stech,chief executive officer (“CEO”), Taylor D. Smith, our President;chief financial officer (“CFO”), and Bradley J. Holiday,Jim Kearns, our CFO.chief operating officer (“COO”). Although we have employment agreements with these individuals, were we to unexpectedly lose one or more of these key executive officers, we could be forced to expend significant time and money in the pursuit of a replacement, which could result in both a delay in the implementation of our business plan and the diversion of working capital. Thus, the Boardour board of directors has implemented succession plans for each of these roles, and systematically monitors the development and progression of each employeesemployee who has been identified as a possible future candidate for such roles.

For the year ended December 31, 2017, Superior Communications, Inc. ("Superior"2019, Verizon Wireless (“Verizon”) was our largest customer and accounted for greater than 10% of net sales. For the years ended December 31, 2016 and 2015, Superior, Best Buy Co., Inc. (“Best Buy”), exceeded 10% of net sales. For the year ended December 31, 2018, Superior Communications, Inc. (“Superior”) and GENCO Distribution Systems, Inc.(“GENCO”) were our largest customers.Best Buy exceeded 10% of net sales. For the year ended December 31, 2017, Superior exceeded 10% of net sales. The amount of net sales for each of these customers is outlinedwas as follows:

During 2017, 2016, and 2015,Other than the customers noted in the table above, no other customers accounted for 10% or greater than 10% of net sales.sales during the years ended December 31, 2019, 2018, and 2017.

Although we have contracts in place governing our relationships with customers, the contracts are not long-term and all of our retailers generally purchase from us on a purchase order basis. As a result, these retailers generally may, with little or no notice or penalty, cease ordering and selling our products, or materially reduce their orders. If any of these retailers cease selling our products, slow their rate of purchase of our products, or decrease the number of products they purchase, our results of operations could be adversely affected.

If the Company loseswe lose one or more of itsour significant customers, it would have a material adverse effect on the Company’sour financial condition, results of operations, and cash flows.

Some of our retailers and distributors have experienced financial difficulties in the past. A retailer or distributor experiencing such difficulties will generally not purchase and sell as many of our products as it would under normal circumstances and may cancel orders. In addition, a retailer or distributor experiencing financial difficulties generally increases our exposure to uncollectible receivables. We extend credit to our retailers and distributors based on our assessment of their financial condition, without requiring collateral. While such credit losses have historically been within our estimated reserves for allowances for bad debts, we cannot assure that this will continue to be the case. Financial difficulties on the part of our retailers or distributors could have a material adverse effect on our results of operations and financial condition.

As of December 31, 2017, the balance2019, Verizon and Best Buy exceeded 10% of our accounts receivable. As of December 31, 2018, Superior and Best Buy exceeded 10% of our accounts receivable. The amount of accounts receivable from two separatefor each of these customers exceeded 10%: Superior and Best Buy. At December 31, 2016,is was as follows:

Other than the balance of accounts receivable from three separate customers exceeded 10%: Superior, Best Buy, and GENCO.

Our success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. Failure to attract and retain necessary technical personnel, sales and marketing personnel, and skilled management could adversely affect our business. If we fail to attract, train, and retain sufficient numbers of these highly qualified people, our prospects, business, financial condition, and results of operations willmay be materially and adversely affected.

Some of our products may contain undetected defects due to imperfections in the underlying base materials used in production or manufacturing defects. The occurrence of defects or malfunctions could result in financial losses for our customers and in turn increase warranty claims from our customers and diversion of our resources. Any of these occurrences could also result in the loss of or delay in market acceptance of our products due to damaged brand reputation and may result in the loss of sales.

Our quarterly results may fluctuate quarter to quarter as a result of market acceptance of our products, the sales mix, changes in pricing, the timing of inventory write downs, changes in the cost of materials, the use of airfreight to transport products, the impact of global health issues such as the impact of the recent coronavirus outbreak, and incurring other operating costs and factors beyond our control, such as general economic conditions and actions of competitors. We are also affected by seasonal buying cycles of consumers, such as the holiday season, and the introduction of popular consumer electronics, such as a new introduction of products from Apple, Samsung, Microsoft, HTC, Blackberry,Google, and others. Accordingly, the results of operations in any quarter will not necessarily be indicative of the results that may be achieved for a full fiscal year or any future quarter.

We do not own proprietary rights with respect to the film we use in our InvisibleShield products.products and the VisionGuard, and D3O technology. However, we have protected key proprietary design and utility elements of other products through patents. In addition, we own and keep confidential the design configurations of the InvisibleShield film and the product cut designs which are our copyrights. We seek to protect our IP rights through confidentiality agreements with our employees, consultants and partners, and domestic and foreign patent prosecution and similar means. However, no assurance can be given that such measures will be sufficient to protect our IP rights or that the IP rights that we have are sufficient to protect other persons from creating and marketing substantially similar products. If we cannot protect our rights, we may lose our competitive advantage. Moreover, if it is determined that our products infringe on the IP rights of third parties,third-parties, we may be prevented from marketing our products.

Claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result in costly litigation, divert management’s attention and resources, or require us to either enter into royalty or license agreements which are not advantageous to us or pay material amounts of damages. In addition, parties making these claims may be able to obtain an injunction, which could prevent us from selling our products.

Consumer spending patterns, especially discretionary spending for products such as mobile, consumer, and accessory electronics, are affected by, among other things, prevailing economic conditions, energy costs, raw material costs, wage rates, inflation, interest rates, consumer debt, consumer confidence, global health concerns, including the current coronavirus outbreak, and consumer perception of economic conditions. A general slowdown in the U.S. and certain international economies, or an uncertain economic outlook or market volatility could have a material adverse effect on our sales and operating results.

The disruptions in the national and international economies due to market volatility and uncertainty could depress consumer confidence and spending. If such conditions persist, consumer spending will likely decline further and this would have an adverse effect on our business and our results of operations.

We intend to grow our business through strategic acquisitions and organically by expanding our sales and product development organizations. Any growth in or expansion of our business is likely to place a strain on our management and administrative resources, infrastructure, and information systems. As with other growing businesses, we expect that we will need to refine and expand our business development capabilities, our systems and processes, and our access to financing sources. We also will need to hire, train, supervise, and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We provide no assurance that we will be able to:

We depend heavily on the expertise of our product development team. If any of our competitors copy or otherwise gains access to similar products independently, we might not be able to compete as effectively. The measures we take to protect our designs may not be adequate to prevent their unauthorized use. Further, the laws of foreign countries may provide inadequate protection of such IP rights. We have brought and in the future may need to bring legal claims to enforce or protect such IP rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversions of resources.

Our facilities could be subject to a catastrophic loss from fire, flood, earthquake, or terrorist activity. Our corporate activities, including sales and marketing, customer service, finance, and other critical business operations are in twoa limited number of primary locations. Our manufacturing and logistics activities are conducted at other facilities separate from our corporate headquarters. Any catastrophic loss at these facilities could disrupt our operations, delay production and revenue, and result in large expenses to repair or replace the facility.facilities. While we have obtainedmaintain insurance to cover most potential losses, we cannot provide assurance that our existing insurance coverage will be adequate against all other possible losses.

We are required to establish and maintain adequate internal control over financial reporting that provides reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements in accordance with United StatesU.S. generally accepted accounting principles (“U.S. GAAP”). We are likewise required, on an annual basis, to evaluate the effectiveness of our internal controls and to disclose on a quarterly basis any material changes in those internal controls.

Any failure to maintain and continue to improve our internal controls could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and Thethe Nasdaq Global Market, we could face severe consequences from those authorities. In either case, it could result in a material adverse effect on our business or have a negative effect on the trading price of our common stock.

On February 28, 2018,March 13, 2020, there were approximately 2044 registered holders or persons otherwise entitled to hold our common shares pursuant to a shareholders’ list provided by our transfer agent, Empire Stock Transfer. The number of registered shareholders excludes any estimate by us of the number of beneficial owners of common shares held in street name.

There are no restrictions inNeither our articlescertificate of incorporation ornor our bylaws that restrict us from declaring dividends. The Delaware General Corporation Law and applicable case law, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

We have not declared or paid cash dividends on our common stock since our inception, and our board of directors currently intends to not declare or issue cash dividends for the foreseeable future. Any future payment of dividends to holders of common stock will depend upon our results of operations, financial condition, cash requirements, and other factors deemed relevant by our board of directors.

In January 2013, the Company’sour board of directors adopted and in June 2013, the Company’sour shareholders approved the ZAGG Inc 2013 Equity Incentive Award Plan (the “2013 Plan”), a new equity incentive plan intended to replace the 2007 Plan.. In April 2017, the compensation committee of the Company’sour board of directors adopted, and in June 2017, the Company’sour shareholders approved an amendment and restatement of the 2013 Plan (the “Amended Plan”). The Amended Plan is an “omnibus plan” under which stock options, stock appreciation rights, performance share awards, restricted stock, and restricted stock units can be awarded. The Amended Plan’s initial share reservation is 5,000 shares. The term of the plan is for 10 years from the date of original adoption of the 2013 Plan. As of December 31, 2017,2019, there were approximately 2,4981,943 shares available for grant under the Amended Plan.

We did not issue anyExcept as set forth on our Current Report on 8-K filed on January 8, 2019, there were no other unregistered sales of securities during the yearsyear ended December 31, 2017 and 2016.2019.

The graph below compares the cumulative 5-Year total return provided shareholders on the Company'sour common stock relative to the cumulative total returns of the Russell 2000 index, Russell MicrocapMicroCap and a customized peer group of teneight companies, whose individual companies are listed in footnote 1 below. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in each of the peer groups on December 31, 20122014, and its relative performance is tracked through December 31, 2017.