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)

	September 30,			December 31,
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	16,344		$	26,433
Accounts receivable, net of allowances of $3,074 in 2012 and $2,070 in 2011		44,995			45,450
Inventories		34,445			29,622
Prepaid expenses and other current assets		4,264			1,593
Income tax receivable		1,888			-
Deferred income tax assets		6,728			5,132
Total current assets		108,664			108,230
Investment in HzO		3,398			4,879
Property and equipment,net of accumulated depreciation at $2,708 in 2012 and $1,857 in 2011		4,955			4,162
Goodwill		6,925			6,925
Intangible assets, net of accumulated amortization at $11,351 in 2012 and $3,989 in 2011		66,400			73,691
Deferred income tax assets		82			82
Note receivable		583			1,349
Other assets		3,014			3,010
Total assets	$	194,021		$	202,328
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	16,019		$	16,013
Income taxes payable		-			4,294
Accrued liabilities		3,908			3,886
Accrued wages and wage related expenses		1,500			1,468
Deferred revenue		287			320
Current portion of note payable		-			2,372
Sales returns liability		4,995			5,387
Total current liabilities		26,709			33,740
Revolving line of credit		3,534			23,332
Noncurrent portion of note payable		41,000			42,628
Total liabilities		71,243			99,700
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
30,401 and 29,782 shares issued and outstanding, respectively		30			30
Additional paid-in capital		76,247			70,248
Accumulated other comprehensive income		(193	)		(33	)
Note receivable collateralized by stock		(566	)		(566	)
Retained earnings		47,260			32,949
Total stockholders' equity		122,778			102,628
Total liabilities and stockholders' equity	$	194,021		$	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						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Net sales	$	59,828		$	45,887		$	176,943		$	111,565
Cost of sales		33,203			26,414			94,980			61,043
Gross profit		26,625			19,473			81,963			50,522
Operating expenses:
Advertising and marketing		3,378			2,763			8,181			7,880
Selling, general and administrative		13,707			10,305			38,237			26,719
Amortization of definite-lived intangibles		2,422			1,791			7,313			2,198
Total operating expenses		19,507			14,859			53,731			36,797
Income from operations		7,118			4,614			28,232			13,725
Other income (expense):
Interest expense		(1,012	)		(1,399	)		(3,519	)		(1,570	)
Loss from equity method investment in HzO		(545	)		-			(1,481	)		-
Other income and (expense)		(215	)		126			(237	)		137
Total other expense		(1,772	)		(1,273	)		(5,237	)		(1,433	)
Income before provision for income taxes		5,346			3,341			22,995			12,292
Income tax provision		(1,958	)		(1,241	)		(8,684	)		(4,335	)
Net income		3,388			2,100			14,311			7,957
Net loss attributable to noncontrolling interest		-			148			-			345
Net income attributable to stockholders	$	3,388		$	2,248		$	14,311		$	8,302
Earnings per share attributable to stockholders:
Basic earnings per share	$	0.11		$	0.07		$	0.47		$	0.31
Diluted earnings per share	$	0.11		$	0.07		$	0.45		$	0.29

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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 a 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						Nine months ended
				September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Net income attributable to stockholders in accordance with GAAP				$	3,388		$	2,248		$	14,311		$	8,302
	Adjustments:
		a.	Stock based compensation expense		2,087			406			4,922			2,674
		b.	Depreciation and amortization		2,823			2,400			8,506			3,463
		c.	iFrogz acquisition expenses		-			119			-			1,947
		d.	iFrogz inventory fair value write up		-			3,063			-			3,642
		e.	Provision for income taxes		1,958			1,241			8,684			4,335
		f.	Impairment of note receivable		-			1,071			-			1,071
		g.	Other expense		1,772			1,273			5,237			1,433
		h.	Noncontrolling interest		-			(148	)		-			(345	)
Adjusted EBITDA				$	12,028		$	11,673		$	41,660		$	26,522
Non-GAAP Reconciliation				Three months ended						Nine months ended
				September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Net income attributable to stockholders in accordance with GAAP				$	3,388		$	2,248		$	14,311		$	8,302
	Adjustments:
		a.	Stock based compensation expense		2,087			406			4,922			2,674
		c.	Depreciation and amortization		2,823			2,400			8,506			3,463
		d.	iFrogz acquisition expenses		-			119			-			1,947
		e.	iFrogz inventory fair value write up		-			3,063			-			3,642
		f.	Impairment of note receivable		-			1,071			-			1,071
		g.	Other expense		1,772			1,273			5,237			1,433
		h.	Noncontrolling interest		-			(148	)		-			(345	)
		i.	CEO departure expense		910			-			910			-
		j.	Income tax effects		(2,781	)		(3,122	)		(7,392	)		(5,332	)
Non-GAAP net income attributable to stockholders				$	8,199		$	7,310		$	26,494		$	16,855
Non-GAAP EPS attributable to stockholders				$	0.26		$	0.23		$	0.84		$	0.60
Weighted average number of shares outstanding - diluted					31,734			31,375			31,647			28,308
Non-GAAP Reconciliation				Three months ended
				June 30, 2012
Net income attributable to stockholders in accordance with GAAP				$	5,812
	Adjustments:
		a.	Stock based compensation expense		1,494
		b.	Depreciation and amortization		2,862
		c.	Other expense		1,235
		d.	Income tax effects		(2,189	)
Non-GAAP net income attributable to stockholders				$	9,214
Non-GAAP EPS attributable to stockholders				$	0.29
Weighted average number of shares outstanding - diluted					31,738

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