Analysts: Kun (Katy) Chen Wenqian (Cathy) Liang Xiaodong (Kyle) Bu Madina Yunossova 2016/4/21 ZAGG Inc.

Agenda  Company Overview  Business Model  Industry Overview  Financial Analysis  Projection & Valuation  Technical Analysis  Recommendation

Company Overview

Company Overview  Established in 2005, went public in 2009  Microcap company, $221.52M market cap, 234 employees  Headquartered in Midvale, Utah, with an international office located in Ireland  Designs, produces, and distributes screen protection, keyboards, audio accessories and mobile power solutions  Started with InvisibleShield screen protection products, aims at broadening focus to other categories, offering a full line of mobile accessories Source: 10K, company website

Business Model

Brand Portfolio Source: 10K Focuses on device protection, from protective film and glass to cases Offers limited lifetime guarantee Films developed originally to protect military helicopters Universal line of full size Bluetooth keyboards compatible with virtually any operating system Power: charges smartphones, tablets, gaming systems and cameras Audio: speakers, earphones Fun, clever, and youthful mobile accessory products Products in audio, cases and power

Leadership position in mobile device accessories market Source: Investor presentation

ZAGG’s Evolution Source: Investor presentation

Sales breakdown by segments Source: 10-K

Recent News  March 28, 2016: ZAGG introduces InvisibleShield Screen Protection and Mobile Keyboard Line for iPhone SE and 9.7-inch iPad Pro  February 2, 2016: ZAGG and mophie announced merger agreement  September 24, 2015: ZAGG launched in India, targeting India’s $1B mobile accessory market as first step into Asia  June 11, 2015: Appointed Bradley J. Holiday as CFO. Mr. Holiday is an accomplished global financial executive with a proven track record of success in the CFO role with leading consumer product companies Source: ZAGG press release

ZAGG & Mophie Merger  Merger forms market share leader in four top accessory categories: battery cases, external batteries, screen protection and tablet keyboards  Enhance long-term enterprise value through revenue growth, strengthened product development and expanded distribution  Transaction structure: ZAGG paid $100M at closing, plus the amount by which 5X Adjusted EBITDA exceeds $100M over a 12-month earn-out period.  Purchase price funded with cash and debt; earn-out financed through cash, debt and common stock  Mophie is the #1 selling battery case manufacturer in the world Source: ZAGG press release

SWOT Analysis Strength: Military standard material, emphasis on quality OnDemand solutions help avoid excess inventory Weakness: Acquisition of mophie increased level of indebtedness significantly Don’t internally develop technology for a number of key products Opportunity: International expansion Partnerships with smartphones and tablets makers Increasing demand for thinner, more delicate products Threat: Don’t own patent for raw materials which is held by exclusive supplier Highly competitive market with numerous competitors

Industry Overview

Revenue drivers Source: Statistica, Yankee Group

Revenue drivers Source: GSMA Intelligence

Porter’s Five Forces Industry Threat of new entrants High Low capital and technology requirement Low differentiation Threat of Substitutes High Low switching cost Improving technology in phone screen Supplier Bargaining Power Moderate Limited number of suppliers Long agreement and good relationship with suppliers Buyer Bargaining Power Moderate Limited brand loyalty Other alternatives Rivalry High Many strong competitors Weak patent protection

Financial Analysis

Financial Analysis: Ratios

DuPont and Greenblatt Analysis

Projection & Valuation

DCF Assumptions Management guidance after the merger Source: ZAGG press release

DCF Assumptions

DCF IS Projections

DCF Discount Rate

DCF Valuation

Comparable Analysis Develops and markets hardware and software products that enable or enhance digital navigation, music and video entertainment, gaming, social networking. Its products include portable wireless Bluetooth speakers, keyboards and covers for tablets and smartphones, as well as other accessories for mobile devices Designs, markets, and distributes audio and gaming products. It offers audio and gaming headphones, earbuds, speakers, sports performance products, women's offerings, and other audio accessories Designs, manufactures, and markets lightweight communications headsets, telephone headset systems, other communication endpoints, and accessories for the business and consumer markets Designs, markets, and distributes carry and protective solutions primarily for hand held electronic devices. The company offers hand held electronic devices that include soft-sided carrying cases, bags, clips, hand straps, protective plates, and other accessories Source: Capital IQ

Comparable Analysis Company NameTickerEV/EBITEV/RevenueForward P/EP/B Market Cap (Millions) Forward Industries Inc.FORD31.61x0.32x19.61x1.61x12.6 Logitech International SALogi17.29x0.97x16.70x3.61x Skullcandy Inc.SKUL8.60x0.29x13.80x0.63x100.8 Plantronics, Inc.PLT10.63x1.62x13.82x4.07x ZAGG Inc.ZAGG8.27x0.77x10.54x1.69x221.5 Ratio Revenue (ZAGG - $ millions) Implied MultiplesImplied Share Price ($) Weights Average P/B x % P/E15.26x8.2730% EV/Revenue0.80x8.5430% EV/EBIT13.96x % Share Price ($)9.36

Technical Analysis

Technical Analysis Source: Yahoo Finance

Technical Analysis Source: Yahoo Finance

Recommendation

Recommendation Keep on the Watch List DCF Analysis $8.31 Current price $8.05 Comparable Analysis $9.36

Takeaways  Constantly visit Watch List on course webpage  Research comprehensively about company before analyzing financials  Acquisition: more opportunities, more uncertainties in projections, higher risk