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,
	2017			2016
ASSETS
Current assets
Cash and cash equivalents	$	14,330		$	11,604
Accounts receivable, net of allowances of $784 in 2017 and $824 in 2016		72,956			83,835
Inventories		65,376			72,769
Prepaid expenses and other current assets		3,717			3,414
Income tax receivable		1,193			2,814
Total current assets		157,572			174,436
Property and equipment, net of accumulated depreciation of $21,856 in 2017 and $18,371 in 2016		15,631			17,755
Goodwill		12,272			12,272
Intangible assets, net of accumulated amortization of $60,556 in 2017 and $55,298 in 2016		45,327			53,362
Deferred income tax assets		49,331			50,363
Other assets		1,541			2,541
Total assets	$	281,674		$	310,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	62,237		$	85,022
Accrued liabilities		22,798			22,216
Sales returns liability		27,794			28,373
Accrued wages and wage related expenses		5,635			6,169
Deferred revenue		209			273
Line of credit		30,683			31,307
Current portion of long-term debt, net of deferred loan costs of $65 in 2017 and 2016		6,185			10,484
Total current liabilities		155,541			183,844
Noncurrent portion of long-term debt, net of deferred loan costs of $108 in 2017 and $141 in 2016		10,829			9,623
Total liabilities		166,370			193,467
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized; 34,047 and 33,840 shares issued in 2017 and 2016, respectively	$	34		$	34
Additional paid-in capital		94,207			92,782
Accumulated other comprehensive loss		(1,270	)		(2,114	)
Treasury stock, 6,065 and 5,831 common shares in 2017 and 2016 respectively, at cost		(37,637	)		(36,145	)
Retained earnings		59,970			62,705
Total stockholders’ equity		115,304			117,262
Total liabilities and stockholders’ equity	$	281,674		$	310,729

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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, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Net sales	$	115,227		$	99,833		$	208,173		$	162,266
Cost of sales		79,403			68,960			143,743			107,664
Gross profit		35,824			30,873			64,430			54,602
Operating expenses:
Advertising and marketing		2,070			2,275			5,076			5,189
Selling, general and administrative		24,952			24,880			52,006			44,635
Transaction costs		300			305			515			2,322
Impairment of intangible asset		-			-			1,959			-
Amortization of long-lived intangibles		3,005			4,765			6,026			7,511
Total operating expenses		30,327			32,225			65,582			59,657
Income (loss) from operations		5,497			(1,352	)		(1,152	)		(5,055	)
Other income (expense):
Interest expense		(619	)		(604	)		(1,110	)		(792	)
Other income (expense)		67			9			48			(191	)
Total other expense		(552	)		(595	)		(1,062	)		(983	)
Income (loss) before provision for income taxes		4,945			(1,947	)		(2,214	)		(6,038	)
Income tax benefit (provision)		(1,542	)		901			(521	)		1,703
Net income (loss)	$	3,403		$	(1,046	)	$	(2,735	)	$	(4,335	)
Earnings (loss) per share:
Basic earnings (loss) per share	$	0.12		$	(0.04	)	$	0.10		$	(0.16	)
Diluted earnings (loss) per share	$	0.12		$	(0.04	)	$	0.10		$	(0.16	)

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ZAGG INC AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(Unaudited)

Unaudited Supplemental Data

The following is not a financial measure under generally accepted accounting principals (GAAP).  In addition, this 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					Six months ended
	June 30, 2017		June 30, 2016			June 30, 2017			June 30, 2016
Net loss in accordance with GAAP	$	3,403	$	(1,046	)	$	(2,735	)	$	(4,335	)
Adjustments:
a.  Stock based compensation expense		966		957			1,636			2,291
b.  Depreciation and amortization		5,233		7,232			11,022			11,494
c.  Other (income) expense		552		595			1,062			983
d. mophie transaction costs		300		305			515			2,322
e.  mophie fair value inventory write-up related to acquisition		-		2,169			-			3,325
f.  mophie restructuring charges		23		1,062			438			1,062
g.  mophie employee retention bonus		46		200			346			200
h.  Impairment of intangibles asset		-		-			1,959			-
i.  Income tax benefit		1,542		(901	)		521			(1,703	)
Adjusted EBITDA	$	12,065	$	10,573		$	14,764		$	15,639

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