ZAGG (ZAGG) 8-K Results of Operations and Financial Condition

Exhibit 99.1

ZAGG INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	June 30,			December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	13,452,879		$	2,373,293
Accounts receivable, net of allowances of $1,299,097 in 2011 and $904,296 in 2010		26,564,894			17,668,612
Inventories		33,491,829			17,946,948
Prepaid expenses and other current assets		1,219,158			2,620,308
Related party other asset		-			3,899,910
Income tax receivable		1,824,730			-
Deferred income tax assets		2,672,992			2,195,687
Total current assets		79,226,482			46,704,758
Property and equipment, net of accumulated depreciation at $1,108,890 in 2011 and $852,018 in 2010		3,769,572			1,496,532
Goodwill		6,704,489			-
Intangible assets		83,517,039			9,167,466
Related party note receivable		3,899,910			-
Other assets		3,394,239			63,310
Total assets	$	180,511,731		$	57,432,066
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	15,195,235		$	12,122,011
Income taxes payable		-			8,030,719
Accrued liabilities		934,724			240,454
Accrued wages and wage related expenses		2,583,814			302,965
Deferred revenue		1,032,512			294,931
Current portion of note payable		3,808,821			30,923
Sales returns liability		2,873,922			2,067,671
Total current liabilities		26,429,028			23,089,674
Deferred income tax liability		1,309,758			1,561,465
Revolving line of credit		21,001,200			-
Noncurrent portion of note payable		41,191,179			-
Total liabilities		89,931,165			24,651,139
Equity
Stockholders' equity
Common stock, $0.001 par value; 100,000,000 shares authorized;
29,271,762  and 23,925,763 shares issued and outstanding, respectively		29,316			23,926
Additional paid-in capital		67,447,197			15,494,836
Cumulative translation adjustment		(74,609	)		(59,802	)
Retained earnings		20,754,516			14,701,074
Total stockholders' equity		88,156,420			30,160,034
Noncontrolling interest		2,424,146			2,620,893
Total equity		90,580,566			32,780,927
Total liabilities and equity	$	180,511,731		$	57,432,066

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ZAGG INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Net sales	$	38,788,465		$	15,058,783		$	65,764,785		$	23,822,402
Cost of sales		21,027,434			7,539,580			34,357,174			11,360,839
Gross profit		17,761,031			7,519,203			31,407,611			12,461,563
Operating expenses:
Advertising and marketing		2,615,702			1,016,660			5,127,518			2,077,623
Selling, general and administrative		10,899,351			3,278,265			17,169,829			5,827,870
Total operating expenses		13,515,053			4,294,925			22,297,347			7,905,493
Income from operations		4,245,978			3,224,278			9,110,264			4,556,070
Other (expense) income:
Interest expense		(159,147	)		(171,088	)		(170,488	)		(242,617	)
Interest and other income		7,950			6,853			8,032			13,563
Total other expense		(151,197	)		(164,235	)		(162,456	)		(229,054	)
Income before provision for income taxes		4,094,781			3,060,043			8,947,808			4,327,016
Income tax provision		(1,496,540	)		(1,149,003	)		(3,091,113	)		(1,624,900	)
Net income		2,598,241			1,911,040			5,856,695			2,702,116
Net loss attributable to noncontrolling interest		144,820			-			196,747			-
Net income attributable to stockholders	$	2,743,061		$	1,911,040		$	6,053,442		$	2,702,116
Earnings per share attributable to stockholders:
Basic earnings per share	$	0.11		$	0.09		$	0.25		$	0.12
Diluted earnings per share	$	0.10		$	0.08		$	0.23		$	0.11

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ZAGG INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(Unaudited)

Unaudited Supplemental Data

The following information is not a financial measure under generally accepted accounting principals (GAAP).  In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that it fails to address.  We present this financialinformation because we believe that it is helpful to some investors as one measure of our operations.  We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies.

Adjusted EBITDA Reconciliation				Three months ended					Six months ended
				June 30, 2011			June 30, 2010		June 30, 2011			June 30, 2010
Net income attributable to stockholders in accordance with GAAP				$	2,743,061		$	1,911,040	$	6,053,442		$	2,702,116
	Adjustments:
		a.	Stock based compensation expense		1,962,069			238,174		2,268,387			480,244
		b.	Depreciation and amortization		878,547			76,687		1,054,753			150,687
		c.	iFrogz acquisition expenses		1,816,075			-		1,825,089			-
		d.	iFrogz inventory fair value step up		578,824			-		578,824			-
		e.	Provision for income taxes		1,496,540			1,149,003		3,091,113			1,624,900
		f.	Other expense		151,197			164,235		162,456			229,054
		g.	Noncontrolling interest		(144,820	)		-		(196,747	)		-
Adjusted EBITDA				$	9,481,493		$	3,539,139	$	14,837,317		$	5,187,001
Diluted Adjusted EBITDA per common share				$	0.35		$	0.15	$	0.55		$	0.22
Non-GAAP Reconciliation				Three months ended					Six months ended
				June 30, 2011			June 30, 2010		June 30, 2011			June 30, 2010
Net income attributable to stockholders in accordance with GAAP				$	2,743,061		$	1,911,040	$	6,053,442		$	2,702,116
	Adjustments:
		a.	Modification of stock option		1,560,443			-		1,560,443			-
		b.	iFrogz acquisition expenses		1,816,075			-		1,825,089			-
		d.	iFrogz inventory fair value step up		578,824			-		578,824			-
		e.	Income tax effects		(1,512,918	)		-		(1,516,366	)		-
Non-GAAP net income attributable to stockholders				$	5,185,485		$	1,911,040	$	8,501,432		$	2,702,116
Non-GAAP EPS attributable to stockholders				$	0.19		$	0.08	$	0.32		$	0.11
Weighted average number of shares outstanding - diluted					27,278,895			23,536,603		26,749,233			23,600,957

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