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)

	March 31,			December 31,
	2017			2016
ASSETS
Current assets
Cash and cash equivalents	$	4,303		$	11,604
Accounts receivable, net of allowances of $455 in 2017 and $824 in 2016		60,181			83,835
Inventories		75,701			72,769
Prepaid expenses and other current assets		3,266			3,414
Income tax receivable		3,672			2,814
Total current assets		147,123			174,436
Property and equipment, net of accumulated depreciation of $19,793 in 2017 and $18,371 in 2016		16,740			17,755
Goodwill		12,272			12,272
Intangible assets, net of accumulated amortization of $57,514 in 2017 and $55,298 in 2016		48,368			53,362
Deferred income tax assets		50,603			50,363
Other assets		1,476			2,541
Total assets	$	276,582		$	310,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	51,810		$	85,022
Accrued liabilities		22,876			22,216
Sales returns liability		25,672			28,373
Accrued wages and wage related expenses		6,457			6,169
Deferred revenue		226			273
Line of credit		40,631			31,307
Current portion of long-term debt, net of deferred loan costs of $65 in 2017 and 2016		10,484			10,484
Total current liabilities		158,156			183,844
Noncurrent portion of long-term debt, net of deferred loan costs of $125 in 2017 and $141 in 2016		8,076			9,623
Total liabilities		166,232			193,467
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized; 34,044 and 33,840 shares issued in 2017 and 2016, respectively	$	34		$	34
Additional paid-in capital		93,212			92,782
Accumulated other comprehensive loss		(1,826	)		(2,114	)
Treasury stock, 6,065 and 5,831 common shares in 2017 and 2016 respectively, at cost		(37,637	)		(36,145	)
Retained earnings		56,567			62,705
Total stockholders’ equity		110,350			117,262
Total liabilities and stockholders’ equity	$	276,582		$	310,729

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2017			March 31, 2016
Net sales	$	92,946		$	62,432
Cost of sales		64,340			38,703
Gross profit		28,606			23,729
Operating expenses:
Advertising and marketing		3,006			2,914
Selling, general and administrative		27,054			19,755
Transaction costs		215			2,017
Impairment of intangible asset		1,959			-
Amortization of long-lived intangibles		3,021			2,746
Total operating expenses		35,255			27,432
Loss from operations		(6,649	)		(3,703	)
Other expense:
Interest expense		(490	)		(188	)
Other expense		(20	)		(200	)
Total other expense		(510	)		(388	)
Loss before provision for income taxes		(7,159	)		(4,091	)
Income tax benefit		1,021			801
Net loss	$	(6,138	)	$	(3,290	)
Loss per share:
Basic loss per share	$	(0.22	)	$	(0.12	)
Diluted loss per share	$	(0.22	)	$	(0.12	)

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ZAGG INC AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(Unaudited)

Unaudited Supplemental Data

The following are not financial measures under generally accepted accounting principals (GAAP). In addition, these should not be construed as alternatives 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, 2017			March 31, 2016
Net loss in accordance with GAAP	$	(6,138	)	$	(3,290	)
Adjustments:
a.   Stock based compensation expense		670			1,336
b.   Depreciation and amortization		5,781			4,263
c.   Other (income) expense		510			388
d.   mophie transaction costs		215			2,017
e.   mophie fair value inventory write-up related to acquisition		-			1,156
f.    mophie restructuring charges		414			-
g.   mophie employee retention bonus		300			-
h.   Impairment of intangibles asset		1,959			-
i.    Income tax benefit		(1,021	)		(801	)
Adjusted EBITDA	$	2,690		$	5,069

Adjusted Net Income (Loss) Reconciliation - Three Months Ended March 31, 2017 and 2016	Three months ended
	March 31, 2017			March 31, 2016
Net loss in accordance with GAAP	$	(6,138	)	$	(3,290	)
Adjustments:
a.   Amortization of mophie acquired intangibles		1,694			819
b.   mophie transaction costs		215			2,017
c.   mophie fair value inventory write-up related to acquisition		-			1,156
d.   mophie restructuring charges		414			-
c.   mophie employee retention bonus		300			-
d.   Impairment of intangibles asset		1,959			-
c.   Income tax effects		(1,753	)*		(1,527	)
Adjusted net income (loss)	$	(3,309	)	$	(825	)
Adjusted diluted (loss) per share	$	(0.12	)	$	(0.03	)
Weighted average number of shares outstanding - diluted		28,059			27,710

*For comparative purposes, we applied an annualized statutory tax rate of 38.25% in 2017.

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