ZAGG (ZAGG) 8-K Results of Operations and Financial Condition

ZAGG INCORPORATED AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended
	March 31, 2010		March 31, 2009
Net sales	$	8,775,559	$	8,090,951
Cost of sales		3,831,857		2,895,143
Gross profit		4,943,702		5,195,808
Operating expenses:
Advertising and marketing		1,061,050		1,454,871
Selling, general and administrative		2,550,860		2,137,045
Total operating expenses		3,611,910		3,591,916
Income from operations		1,331,792		1,603,892
Other income (expense):
Interest expense		(71,529)		(2,442)
Interest and other income		6,710		42,048
Total other (expense) income		(64,819)		39,606
Income before provision for income taxes		1,266,973		1,643,498
Income tax provision		(475,897)		(615,258)
Net income	$	791,076	$	1,028,240
Basic net income per common share	$	0.04	$	0.05
Diluted net income per common share	$	0.03	$	0.05
Weighted average number of shares outstanding - basic		21,719,274		19,185,642
Weighted average number of shares outstanding - diluted		23,370,610		19,869,440

ZAGG INCORPORATED AND SUBSIDIARY

RECONCILIATION OF NON-GAAP FINANCICAL 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 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.
		Three months ended
		March 31, 2010		March 31, 2009
Net income in accordance with GAAP		$	791,076	$	1,028,240
Add/(less):
b.	Stock based compensation expense		242,070		107,634
c.	Depreciation and amortization		73,501		52,246
d.	Provision for income taxes		475,897		615,258
e.	Other expense (income)		64,819		(39,606)
Adjusted EBITDA		$	1,647,363	$	1,763,772
Diluted Adjusted EBITDA per common share		$	0.07	$	0.09
Weighted average number of shares outstanding - diluted			23,370,610		19,869,440

ZAGG INCORPORATED AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2010		December 31, 2009
ASSETS
Current assets
Cash	$	5,133,439	$	4,970,756
Accounts receivable, net		4,615,039		5,450,722
Inventories		4,449,077		3,695,840
Prepaid expenses and other current assets		2,912,604		1,911,355
Convertible bridge loan		1,151,000		1,151,000
Deferred income tax assets		255,653		255,653
Total current assets		18,516,812		17,435,306
Property and equipment, net		878,034		887,705
Deferred income tax assets		446,154		446,154
Deposits and other assets		27,047		9,688
Intangible assets, net		116,521		119,627
Total assets	$	19,984,568	$	18,898,480
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,335,885	$	2,781,425
Accrued liabilities		1,713,564		1,252,461
Accrued wages and wage related expenses		160,754		164,495
Deferred revenue		279,789		262,937
Sales returns liability		517,392		550,201
Total current liabilities		5,007,384		5,011,519
Total liabilities		5,007,384		5,011,519
Stockholders' equity
Common stock, $0.001 par value; 50,000,000 shares authorized; 21,733,279  and 21,711,862 shares issued and outstanding, respectively		21,732		21,712
Additional paid-in capital		9,536,450		9,239,285
Cumulative translation adjustment		(110,076)		(112,039)
Retained earnings		5,529,078		4,738,003
Total stockholders' equity		14,977,184		13,886,961
Total liabilities and stockholders' equity	$	19,984,568	$	18,898,480