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

Exhibit 99.1

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(Unaudited)

	March 31,			December 31,
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	16,856		$	26,433
Accounts receivable, net of allowances of $2,166 in 2012 and $2,070 in 2011		36,374			45,450
Inventories		25,656			29,622
Prepaid expenses and other current assets		5,387			1,593
Deferred income tax assets		5,063			5,132
Total current assets		89,336			108,230
Equity method investment in HzO		4,416			4,879
Property and equipment,net of accumulated depreciation at $2,101 in 2012 and $1,857 in 2011		4,423			4,162
Goodwill		6,925			6,925
Intangible assets, net of accumulated amortization at $6,424 in 2012 and $3,989 in 2011		71,255			73,691
Deferred income tax assets		82			82
Note receivable		1,099			1,349
Other assets		3,051			3,010
Total assets	$	180,587		$	202,328
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	16,637		$	16,013
Income taxes payable		2,223			4,294
Accrued liabilities		2,348			3,886
Accrued wages and wage related expenses		1,420			1,468
Deferred revenue		288			320
Current portion of note payable		-			2,372
Sales returns liability		5,163			5,387
Total current liabilities		28,079			33,740
Revolving line of credit		1,627			23,332
Noncurrent portion of note payable		41,000			42,628
Total liabilities		70,706			99,700
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
30,236  and 29,782 shares issued and outstanding, respectively		30			30
Additional paid-in capital		72,409			70,248
Cumulative translation adjustment		(53	)		(33	)
Note receivable collaterlized by stock		(566	)		(566	)
Retained earnings		38,061			32,949
Total stockholders' equity		109,881			102,628
Total liabilities and stockholders' equity	$	180,587		$	202,328

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ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2012			March 31, 2011
Net sales	$	55,480		$	26,976
Cost of sales		28,547			13,330
Gross profit		26,933			13,646
Operating expenses:
Advertising and marketing		2,441			2,512
Selling, general and administrative		11,842			6,220
Amortization of definite-lived intangibles		2,422			50
Total operating expenses		16,705			8,782
Income from operations		10,228			4,864
Other income (expense):
Interest expense		(1,521	)		(11	)
Loss from equity method investment in HzO		(463	)		-
Interest and other income		(147	)		-
Total other income (expense)		(2,131	)		(11	)
Income before provision for income taxes		8,097			4,853
Income tax provision		(2,985	)		(1,595	)
Net income		5,112			3,258
Net loss attributable to noncontrolling interest		-			52
Net income attributable to stockholders	$	5,112		$	3,310
Earnings per share attributable to stockholders:
Basic earnings per share	$	0.17		$	0.14
Diluted earnings per share	$	0.16		$	0.13

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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 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
				March 31, 2012		March 31, 2011
Net income attributable to stockholders in accordance with GAAP				$	5,112	$	3,310
	Adjustments:
		a.	Stock based compensation expense		1,342		304
		b.	Depreciation and amortization		2,804		176
		c.	Provision for income taxes		2,985		1,595
		d.	Other( income) expense		2,131		11
Adjusted EBITDA				$	14,374	$	5,396
Diluted Adjusted EBITDA per common share				$	0.46	$	0.21
Weighted average number of shares outstanding - diluted					31,417		26,216

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