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,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	11,394		$	11,604
Accounts receivable, net of allowances of $1,221 in 2017 and $824 in 2016		96,830			83,835
Inventories		72,005			72,769
Prepaid expenses and other current assets		3,531			3,414
Income tax receivable		138			2,814
Total current assets		183,898			174,436
Property and equipment, net of accumulated depreciation of $20,950 in 2017 and $18,371 in 2016		15,066			17,755
Goodwill		12,272			12,272
Intangible assets, net of accumulated amortization of $63,596 in 2017 and $55,298 in 2016		42,286			53,362
Deferred income tax assets		44,652			50,363
Other assets		1,635			2,541
Total assets	$	299,809		$	310,729
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	82,742		$	85,022
Accrued liabilities		23,825			22,216
Sales returns liability		29,342			28,373
Accrued wages and wage related expenses		5,649			6,169
Deferred revenue		214			273
Line of credit		16,264			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		164,221			183,844
Noncurrent portion of long-term debt, net of deferred loan costs of $92 in 2017 and $141 in 2016		9,283			9,623
Total liabilities		173,504			193,467
Stockholders' equity:
Common stock, $0.001 par value; 100,000 shares authorized; 34,057 and 33,840 shares issued in 2017 and 2016, respectively	$	34		$	34
Additional paid-in capital		95,106			92,782
Accumulated other comprehensive loss		(944	)		(2,114	)
Treasury stock, 6,065 and 5,831 common shares in 2017 and 2016 respectively, at cost		(37,636	)		(36,145	)
Retained earnings		69,745			62,705
Total stockholders' equity		126,305			117,262
Total liabilities and stockholders' equity	$	299,809		$	310,729

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2017			2016			2017			2016
Net sales	$	134,398		$	124,662		$	342,571		$	286,928
Cost of sales		86,006			81,516			229,749			189,180
Gross profit		48,392			43,146			112,822			97,748
Operating expenses:
Advertising and marketing		2,627			3,389			7,703			8,578
Selling, general and administrative		26,720			25,607			78,727			70,243
Loss on disputed mophie purchase price		-			24,317			-			24,317
Transaction costs		96			145			611			2,467
Impairment of intangible asset		-			-			1,959			-
Amortization of long-lived intangibles		3,014			2,398			9,040			9,909
Total operating expenses		32,457			55,856			98,040			115,514
Income (loss) from operations		15,935			(12,710	)		14,782			(17,766	)
Other income (expense):
Interest expense		(417	)		(575	)		(1,527	)		(1,367	)
Other income (expense)		18			(81	)		67			(272	)
Total other expense		(399	)		(656	)		(1,460	)		(1,639	)
Income (loss) before provision for income taxes		15,536			(13,366	)		13,322			(19,405	)
Income tax (provision) benefit		(5,760	)		6,261			(6,281	)		7,963
Net income (loss)	$	9,776		$	(7,105	)	$	7,041		$	(11,442	)
Earnings (Loss) per share:
Basic earnings (loss) per share	$	0.35		$	(0.25	)	$	0.25		$	(0.41	)
Diluted earnings (loss) per share	$	0.34		$	(0.25	)	$	0.25		$	(0.41	)

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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					Nine months ended
		September 30,		September 30,			September 30,		September 30,
		2017		2016			2017		2016
Net income (loss) in accordance with GAAP		$	9,776	$	(7,105	)	$	7,041	$	(11,442	)
Adjustments:
a.	Stock based compensation expense		899		1,386			2,535		3,679
b.	Depreciation and amortization		5,486		4,989			16,505		16,484
c.	Other (income) expense		399		656			1,460		1,639
d.	Impairment of intangible asset		-		-			1,959		-
e.	mophie transaction costs		96		145			611		2,467
f.	mophie fair value inventory write-up related to acquisition		-		(739	)		-		2,586
g.	mophie restructuring charges		-		138			437		1,201
h.	mophie employee retention bonus		-		300			346		500
i.	Loss on disputed mophie purchase price		-		24,317			-		24,317
j.	Income tax benefit		5,760		(6,261	)		6,281		(7,963	)
Adjusted EBITDA		$	22,416	$	17,826		$	37,175	$	33,468

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