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)

	March 31,			December 31,
	2014			2013
ASSETS
Current assets
Cash and cash equivalents	$	6,511		$	15,031
Accounts receivable, net of allowances of $2,553 in 2014 and $2,540 in 2013		36,573			46,591
Inventories		39,079			44,539
Prepaid expenses and other current assets		1,499			2,403
Deferred income tax assets		8,009			7,917
Total current assets		91,671			116,481
Property and equipment,net of accumulated depreciation at $6,345 in 2014 and $5,778 in 2013		4,897			5,004
Intangible assets, net of accumulated amortization at $25,878 in 2014 and $23,431 in 2013		38,772			41,219
Deferred income tax assets		11,377			11,377
Note receivable		801			801
Other assets		541			588
Total assets	$	148,059		$	175,470
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	13,893		$	15,207
Income taxes payable		1,710			6,359
Accrued liabilities		2,067			2,608
Accrued wages and wage related expenses		1,046			891
Deferred revenue		78			159
Sales returns liability		5,442			7,872
Total current liabilities		24,236			33,096
Revolving line of credit		-			17,543
Total liabilities		24,236			50,639
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
32,560 and 32,331 shares issued in 2014 and 2013, respectively		33			32
Additional paid-in capital		83,408			82,807
Accumulated other comprehensive income (loss)		(17	)		93
Note receivable collateralized by stock		(348	)		(348	)
Treasury stock, 2,312 and 1,756 common shares in 2014 and 2013 respectively, at cost		(12,485	)		(9,997	)
Retained earnings		53,232			52,244
Total stockholders' equity		123,823			124,831
Total liabilities and stockholders' equity	$	148,059		$	175,470

1

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2014			March 31, 2013
Net sales	$	49,003		$	51,471
Cost of sales		31,225			32,472
Gross profit		17,778			18,999
Operating expenses:
Advertising and marketing		2,008			2,338
Selling, general and administrative		11,403			12,280
Amortization of definite-lived intangibles		2,427			2,374
Total operating expenses		15,838			16,992
Income from operations		1,940			2,007
Other income (expense):
Interest expense		(44	)		(227	)
Loss from equity method investment in HzO		-			(607	)
Other income and (expense)		90			(20	)
Total other expense		46			(854	)
Income before provision for income taxes		1,986			1,153
Income tax provision		(998	)		(277	)
Net income	$	988		$	876
Earnings per share:
Basic earnings per share	$	0.03		$	0.03
Diluted earnings per share	$	0.03		$	0.03

2

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
				March 31, 2014			March 31, 2013
Net income in accordance with GAAP				$	988		$	876
	Adjustments:
		a.	Stock based compensation expense		520			1,038
		b.	Depreciation and amortization		3,020			3,094
		c.	Other (income) expense		(46	)		854
		d.	Provision for income taxes		998			277
Adjusted EBITDA				$	5,480		$	6,139
Pro forma Net Income Reconciliation - Three Months Ended March 31, 2014 and 2013				Three months ended
				March 31, 2014			March 31, 2013
Net income in accordance with GAAP				$	988		$	876
	Adjustments:
		a.	Stock based compensation expense		520			1,038
		b.	Amortization of intangibles		2,447			2,388
		c.	Other expense excluding cash interest expense and loss on equity method investment		(73	)		50
		d.	Loss on equity method investment		-			607
		e.	Income tax effects		(1,107	)  *		(1,330	)*
Pro forma net income				$	2,775		$	3,629
Pro forma diluted EPS				$	0.09		$	0.11
Weighted average number of shares outstanding - diluted					30,864			31,726
* For comparative purposes, we applied an annualized statutory tax rate of 38.25%

3