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)

	June 30,			December 31,
	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	13,557		$	20,177
Accounts receivable, net of allowances of $3,154 in 2013 and $2,974 in 2012		31,285			54,561
Inventories		46,835			39,988
Prepaid expenses and other current assets		5,336			9,547
Deferred income tax assets		7,510			6,912
Total current assets		104,523			131,185
Investment in HzO		789			2,013
Property and equipment,net of accumulated depreciation at $4,751 in 2013 and $3,317 in 2012		4,291			4,862
Goodwill		1,484			1,484
Intangible assets, net of accumulated amortization at $18,511 in 2013 and $13,790 in 2012		53,123			57,905
Deferred income tax assets		6,596			6,596
Note receivable		720			583
Other assets		767			1,457
Total assets	$	172,293		$	206,085
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	12,305		$	19,027
Income taxes payable		2,030			3,062
Accrued liabilities		2,309			3,754
Accrued wages and wage related expenses		921			2,554
Deferred revenue		186			722
Current portion of note payable		8,000			6,000
Sales returns liability		3,862			6,697
Total current liabilities		29,613			41,816
Revolving line of credit		4,648			22,173
Noncurrent portion of note payable		14,000			18,000
Total liabilities		48,261			81,989
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
31,574 and 31,215 shares issued in 2013 and 2012, respectively		32			31
Additional paid-in capital		79,659			77,234
Accumulated other comprehensive income		(337	)		(57	)
Note receivable collateralized by stock		(428	)		(566	)
Treasury stock, 797 and 0 common shares in 2013 and 2012 respectively, at cost		(5,999	)		-
Retained earnings		51,105			47,454
Total stockholders' equity		124,032			124,096
Total liabilities and stockholders' equity	$	172,293		$	206,085

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ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Net sales	$	51,198		$	61,636		$	102,669		$	117,115
Cost of sales		29,663			33,231			62,135			61,777
Gross profit		21,535			28,405			40,534			55,338
Operating expenses:
Advertising and marketing		1,914			2,301			4,253			4,743
Selling, general and administrative		11,831			12,848			24,110			24,590
Amortization of definite-lived intangibles		2,374			2,469			4,748			4,891
Total operating expenses		16,119			17,618			33,111			34,224
Income from operations		5,416			10,787			7,423			21,114
Other income (expense):
Interest expense		(144	)		(986	)		(371	)		(2,507	)
Loss from equity method investment in HzO		(617	)		(473	)		(1,224	)		(936	)
Other income and (expense)		(27	)		224			(47	)		(22	)
Total other expense		(788	)		(1,235	)		(1,642	)		(3,465	)
Income before provision for income taxes		4,628			9,552			5,781			17,649
Income tax provision		(1,854	)		(3,740	)		(2,130	)		(6,726	)
Net income		2,774			5,812			3,651			10,923
Earnings per share:
Basic earnings per share	$	0.09		$	0.19		$	0.12		$	0.36
Diluted earnings per share	$	0.09		$	0.18		$	0.12		$	0.35

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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						Six Months Ended
				June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Net income attributable to stockholders in accordance with GAAP				$	2,774		$	5,812		$	3,651		$	10,923
	Adjustments:
		a.	Stock based compensation expense		1,331			1,494			2,368			2,836
		b.	Depreciation and amortization		3,120			2,862			6,214			5,679
		c.	Impairment of investment in private company		591			-			591			-
		d.	Provision for income taxes		1,854			3,740			2,130			6,726
		e.	Other (income) expense		788			1,235			1,642			3,465
Adjusted EBITDA				$	10,458		$	15,143		$	16,596		$	29,629
Pro forma Net Income Reconciliation				Three Months Ended						Six Months Ended
				June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Net income in accordance with GAAP				$	2,774		$	5,812		$	3,651		$	10,923
	Adjustments:
		a.	Stock based compensation expense		1,331			1,494			2,368			2,836
		b.	Amortization of intangibles		2,394			2,488			4,782			4,923
		c.	Other (income) expense excluding cash interest expense and loss on equity method investment		57			(224	)		107			22
		d.	Loss on equity method investement		617			473			1,224			936
		e.	Impairment of investment in private company		591			-			591			-
		f.	Income tax effects		(1,447	)  *		(1,437	)		(2,776	)  *		(2,976	)
Pro forma net income				$	6,317		$	8,606		$	9,947		$	16,664
Pro forma EPS				$	0.20		$	0.27		$	0.32		$	0.53
Weighted average number of shares outstanding - diluted					31,218			31,738			31,471			31,577

* For comparative purposes, we applied an annualized statutory tax rate of 38.25%

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