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

Exhibit 99.1

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)

	December 31,			December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	26,433		$	2,373
Accounts receivable, net of allowances of $2,070 in 2011 and $904 in 2010		45,450			17,669
Inventories		29,622			17,947
Prepaid expenses and other current assets		1,593			2,620
Related party other asset		-			3,900
Deferred income tax assets		5,018			2,196
Total current assets		108,116			46,705
Investment in HzO		4,879			-
Property and equipment,net of accumulated depreciation at $1,801 in 2011 and $852 in 2010		4,162			1,497
Goodwill		6,925			-
Intangible assets, net of accumulated amortization at $3,989 in 2011 and $28 in 2010		73,691			9,167
Note receivable		1,349			-
Other assets		3,010			63
Total assets	$	202,132		$	57,432
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	16,013		$	12,122
Income taxes payable		3,998			8,031
Accrued liabilities		3,886			240
Accrued wages and wage related expenses		1,468			303
Deferred revenue		320			295
Current portion of note payable		2,372			31
Sales returns liability		5,387			2,068
Total current liabilities		33,444			23,090
Deferred income tax liability		100			1,561
Revolving line of credit		23,332			-
Noncurrent portion of note payable		42,628			-
Total liabilities		99,504			24,651
Redeemable noncontrolling interest		-			-
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
29,782  and 23,925 shares issued and outstanding, respectively		30			24
Additional paid-in capital		70,248			15,495
Cumulative translation adjustment		(33	)		(60	)
Note receivable collateralized by stock		(566	)		-
Retained earnings		32,949			14,701
Total stockholders' equity		102,628			30,160
Noncontrolling interest		-			2,621
Total equity		102,628			32,781
Total liabilities and equity	$	202,132		$	57,432

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ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Net sales	$	67,492		$	29,253		$	179,125		$	76,135
Cost of sales		36,122			15,898			97,201			38,738
Gross profit		31,370			13,355			81,924			37,397
Operating expenses:
Advertising and marketing		2,367			1,509			10,246			5,067
Selling, general and administrative		14,624			5,742			43,541			15,516
Total operating expenses		16,991			7,251			53,787			20,583
Income from operations		14,379			6,104			28,137			16,814
Other income (expense):
Interest expense		(1,452	)		-			(3,022	)		(243	)
Gain on deconsolidation of HzO		1,906			-			1,906			-
Interest and other income		(123	)		(11	)		(19	)		7
Total other income (expense)		331			(11	)		(1,135	)		(236	)
Income before provision for income taxes		14,710			6,093			27,002			16,578
Income tax provision		(5,083	)		(2,726	)		(9,418	)		(6,650	)
Net income		9,627			3,367			17,584			9,928
Net loss attributable to noncontrolling interest		319			35			664			35
Net income attributable to stockholders	$	9,946		$	3,402		$	18,248		$	9,963
Earnings per share attributable to stockholders:
Basic earnings per share	$	0.34		$	0.14		$	0.67		$	0.44
Diluted earnings per share	$	0.32		$	0.13		$	0.63		$	0.41

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ZAGG INC AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(in thousands, except per share amounts)

(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 financial information 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						Twelve Months Ended
		December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Net income attributable to stockholders in accordance with GAAP		$	9,946		$	3,402		$	18,248		$	9,963
Adjustments:
a.	Stock based compensation expense		584			317			3,258			993
b.	Depreciation and amortization		2,463			109			5,926			348
c.	iFrogz acquisition expenses		-			-			1,947			-
d.	iFrogz inventory fair value write up		864			-			4,506			-
e.	Provision for income taxes		5,083			2,726			9,418			6,650
f.	Impairment of note receivable		418			-			1,489			-
g.	Other( income) expense		(331	)		11			1,135			236
h.	Noncontrolling interest		(319	)		(35	)		(664	)		(35	)
Adjusted EBITDA		$	18,708		$	6,530		$	45,263		$	18,155
Diluted Adjusted EBITDA per common share		$	0.60		$	0.27		$	1.56		$	0.75
Non-GAAP Reconciliation		Three Months Ended						Twelve Months Ended
		December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Net income attributable to stockholders in accordance with GAAP		$	9,946		$	3,402		$	18,248		$	9,963
Adjustments:
a.	Modification of stock option		-			-			1,560			-
b.	iFrogz acquisition expenses		-			-			1,947			-
c.	iFrogz inventory fair value write up		864			-			4,506			-
d.	Impairment of note receivable		418			-			1,489			-
e.	Gain on deconsolidation of HzO		(1,906	)		-			(1,906	)		-
f.	Income tax effects		(755	)		-			(3,576	)		-
Non-GAAP net income attributable to stockholders		$	8,567		$	3,402		$	22,268		$	9,963
Non-GAAP EPS attributable to stockholders		$	0.27		$	0.14		$	0.77		$	0.41
Weighted average number of shares outstanding - diluted			31,378			24,585			29,082			24,262

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