| [X] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2010, or |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| [   ] | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______________ to _____________. |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Nevada                                               |  20-2559624                           |
|----------------------------------------------------------------------|--------------------------------------------|
|  (State or other jurisdiction of incorporation or organization) |  (I.R.S. Employer Identification No.) |
|                                                                 |                                       |

----

|  Item 1.        | Financial Statements (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  Page |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|                 | Condensed Consolidated Balance Sheets – As of March 31, 2010 and December 31, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  3    |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|                 | Condensed Consolidated Statements of Operations for the Three Months Ended  March 31, 2010 and 2009                                                                          |  4    |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|                 | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009                                                                                                                                                                                                                                                                                                                                                                                                                                              |  5    |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|                 | Notes to Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  7    |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 2.        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  13   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 3.        | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  17   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 4T.       | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  17   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|                 |  PART II - OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 1         | Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 1A.  | Risk Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 2.        | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 3.        | Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 4.   | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 5.   | Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  18   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |
|  Item 6.        | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  19   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       |

----

|                                                                             |   |      |       |   |         |   |
|----------------------------------------------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                                                             |   |      |       |   |         |   |
|                                                                             |   | March 31, |       |   | December 31, |   |
|                                                                             |   | 2010      |       |   | 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 |   |
|                                                                             |   |      |       |   |         |   |   |   |
|                                                                             |   |      |       |   |         |   |   |   |

----

|                                                    |   |                         |       |   |   |   |
|---------------------------------------------------------|--------|------------------------------|------------|--------|--------|--------|
|                                                    |   |                         |       |   |   |   |
|                                                    |   | Three Months Ended March 31, |       |
|                                                    |   | 2010                         |       |   | 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 (expense) income:                                 |   |                         |       |   |   |   |   |   |
| 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 |   |
|                                                    |   |                         |       |   |   |   |   |   |

----

|                                                 |   |                                 |       |   |   |   |
|------------------------------------------------------|--------|--------------------------------------|------------|--------|--------|--------|
|                                                 |   | For the Three Months Ended March 31, |       |
|                                                 |   | 2010                                 |       |   | 2009   |   |
| Cash flows from operating activities                 |   |                                 |       |   |   |   |
| Net income                                           |   | $                                    | 791,076    |   |   | $      | 1,028,240 |   |
| Adjustments to reconcile net income to net cash      |   |                                 |       |   |   |   |   |   |
| provided by (used in) operating activities:          |   |                                 |       |   |   |   |   |   |
| Non-cash expense related to stock-based compensation |   |                                 | 242,070    |   |   |   | 126,985 |   |
| Depreciation and amortization                        |   |                                 | 73,210     |   |   |   | 52,246 |   |
| Expense related to issuance of warrants              |   |                                 | 30,548     |   |   |   | - |   |
| Bad debt expense                                     |   |                                 | -          |   |   |   | 60,421 |   |
| Foreign currency translation adjustment              |   |                                 | 1,963      |   |   |   | (709 | ) |
| Changes in assets and liabilities                    |   |                                 |       |   |   |   |   |   |
| Accounts receivable                                  |   |                                 | 835,683    |   |   |   | (734,203 | ) |
| Inventories                                          |   |                                 | (753,237   | )      |   |   | (1,215,418 | ) |
| Prepaid expenses and other current assets            |   |                                 | (1,001,269 | )      |   |   | (760,911 | ) |
| Accounts payable                                     |   |                                 | (445,541   | )      |   |   | 674,860 |   |
| Accrued liabilities                                  |   |                                 | 461,103    |   |   |   | (28,368 | ) |
| Accrued wages and wage related expenses              |   |                                 | (3,741     | )      |   |   | 312 |   |
| Deferred revenues                                    |   |                                 | 16,852     |   |   |   | (183,936 | ) |
| Deferred tax liabilities                             |   |                                 | -          |   |   |   | 615,234 |   |
| Sales return liability                               |   |                                 | (32,809    | )      |   |   | 241,898 |   |
|                                                 |   |                                 |       |   |   |   |   |   |
| Net cash provided by (used in) operating activities  |   |                                 | 198,549    |   |   |   | (123,349 | ) |
|                                                 |   |                                 |       |   |   |   |   |   |
| Cash flows from investing activities                 |   |                                 |       |   |   |   |   |   |
| Purchase of property and equipment                   |   |                                 | (60,433    | )      |   |   | (136,480 | ) |
|                                                 |   |                                 |       |   |   |   |   |   |
| Net cash used in investing activities                |   |                                 | (60,433    | )      |   |   | (136,480 | ) |
|                                                 |   |                                 |       |   |   |   |   |   |
| Cash flows from financing activities                 |   |                                 |       |   |   |   |   |   |
| Payments on debt                                     |   |                                 | -          |   |   |   | (5,942 | ) |
| Proceeds from exercise of warrants and options       |   |                                 | 24,567     |   |   |   | - |   |
| Proceeds from issuance of common stock and warrants  |   |                                 | -          |   |   |   | 228,666 |   |
|                                                 |   |                                 |       |   |   |   |   |   |
| Net cash provided by financing activities            |   |                                 | 24,567     |   |   |   | 222,724 |   |
|                                                 |   |                                 |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents |   |                                 | 162,683    |   |   |   | (37,105 | ) |
|                                                 |   |                                 |       |   |   |   |   |   |
| Cash and cash equivalents at beginning of the period |   |                                 | 4,970,756  |   |   |   | 1,065,652 |   |
|                                                 |   |                                 |       |   |   |   |   |   |
| Cash and cash equivalents at end of the period       |   | $                                    | 5,133,439  |   |   | $      | 1,028,547 |   |
|                                                 |   |                                 |       |   |   |   |   |   |
| Supplemental disclosure of cash flow information     |   |                                 |       |   |   |   |   |   |
| Cash paid during the period for interest             |   | $                                    | 71,529     |   |   | $      | 2,442 |   |
| Cash paid during the period for taxes                |   |                                 | 205,000    |   |   |   | - |   |
|                                                 |   |                                 |       |   |   |   |   |   |

----

----

----

|                               |   |  Net Income |      |   | Weighted Average Shares |   |       | Per Share Amount |   |
|------------------------------------|--------|------------------|-----------|--------|-------------------------|--------|------------|------------------|--------|
| Three months ended March 31, 2010: |   |             |      |   |                    |   |       |             |   |
| Basic EPS                          |   | $                | 791,076   |   |                    |   | 21,719,274 |             |   | $ | 0.04 |   |
| Effect of common stock equivalents |   |             | —   |   |                    |   | 1,651,336  |             |   |   |   |   |
| Diluted EPS                        |   | $                | 791,076   |   |                    |   | 23,370,610 |             |   | $ | 0.03 |   |
| Three months ended March 31, 2009: |   |             |      |   |                    |   |       |             |   |   |   |   |
| Basic EPS                          |   | $                | 1,028,240 |   |                    |   | 19,185,642 |             |   | $ | 0.05 |   |
| Effect of common stock equivalents |   |             | —   |   |                    |   | 683,798    |             |   |   |   |   |
| Diluted EPS                        |   | $                | 1,028,240 |   |                    |   | 19,869,440 |             |   | $ | 0.05 |   |

----

| ·   | Separately disclose the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe reasons for the transfers. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Present separately information about purchases, sales, issuances and settlements, on a gross basis, rather than on one net number, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide fair value measurement disclosures for ea ch class of assets and liabilities. |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or level 3. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   |           |      |   |              |   |
|---------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
|                                  |   | March 31, 2010 |      |   | December 31, 2009 |   |
|                                  |   |           |      |   |              |   |
| Accounts receivable                   |   | $              | 5,300,194 |   |              | $      | 6,135,877 |   |
| Less: Allowance for doubtful accounts |   |           | (685,155  | )      |              |   | (685,155 | ) |
| Accounts receivable, net              |   | $              | 4,615,039 |   |              | $      | 5,450,722 |   |

----

|            |   | March 31, 2010 |      |   | December 31, 2009 |   |
|-----------------|--------|----------------|-----------|--------|-------------------|--------|
|            |   |           |      |   |              |   |
| Finished goods  |   | $              | 926,906   |   |              | $      | 778,871 |   |
| Raw materials   |   |           | 3,522,171 |   |              |   | 2,916,969 |   |
| Total inventory |   | $              | 4,449,077 |   |              | $      | 3,695,840 |   |

|                              | Useful Lives    |   | March 31, 2010 |      |   | December 31, 2009 |   |
|-----------------------------------|-----------------|--------|----------------|-----------|--------|-------------------|--------|
| Computer equipment and software   | 3 to 5 years    |   | $              | 451,461   |   |              | $      | 431,923 |   |
| Equipment                         | 3 to7 years     |   |           | 504,253   |   |              |   | 452,473 |   |
| Furniture and fixtures            | 7 years         |   |           | 85,703    |   |              |   | 109,392 |   |
| Automobiles                       | 5 years         |   |           | 93,002    |   |              |   | 93,002 |   |
| Leasehold improvements            | 1 to 2.75 years |   |           | 330,983   |   |              |   | 318,180 |   |
|                              |            |   |           |      |   |              |   |   |   |
| Total property and equipment      |            |   |           | 1,465,402 |   |              |   | 1,404,970 |   |
| Less: accumulated depreciation    |            |   |           | (587,368  | )      |              |   | (517,265 | ) |
|                              |            |   |           |      |   |              |   |   |   |
| Total property and equipment, net |            |   | $              | 878,034   |   |              | $      | 887,705 |   |

|   March 31, 2010 |   | GrossCarryingAmount |    |   | AccumulatedAmortization |   |    | NetCarryingAmount |   |
|----------------------------|--------|---------------------|---------|--------|-------------------------|--------|---------|-------------------|--------|
|                       |   |                |    |   |                    |   |    |              |   |
| Internet addresses         |   | $                   | 124,234 |   |                    | $      | (18,752 | )                 |   | $ | 105,482 |   |

----

|                                            |   | March 31, 2010 |      |   | December 31, 2009 |   |
|-------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
|                                            |   |           |      |   |              |   |
| Interest and other receivables                  |   | $              | 144,459   |   |              | $      | 144,459 |   |
| Inventory deposits                              |   |           | 2,272,495 |   |              |   | 1,438,135 |   |
| Other                                           |   |           | 495,650   |   |              |   | 328,741 |   |
| Total prepaid expenses and other current assets |   | $              | 2,912,604 |   |              | $      | 1,911,355 |   |

| Options Granted                                                                                                                     | Exercise Price | Price at Grant Date | Expected Life | Volatility* | Discount Rate | Value    |
|-------------------------------------------------------------------------------------------------------------------------------------|----------------|---------------------|---------------|-------------|---------------|----------|
| 771,500                                                                                                                             | 2.53           | 2.53                | 2.5 years     | 73%         | 0.03%         | $923,980 |
|                                                                                                                                |
| * Volatility is calculated using historical volatility to provide an implied volatility as the Company’s options do not trade |

----

----

| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------|

----

| ·   | Separately disclose the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe reasons for the transfers. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Present separately information about purchases, sales, issuances and settlements, on a gross basis, rather than on one net number, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide fair value measurement disclosures for each class of assets and liabilities. |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for fair value measurements that fall in either Level 2 or level 3. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ● | For the quarter ended March 31, 2010, salaries and related taxes increased by $532,227 to $1,369,829 from $837,602 for the quarter ended March 31, 2009.  The increase is due to the increase in our staff as we continue to build the people infrastructure to meet the demand for our product and continue to develop new products and offerings, and non-cash compensation expense related to our stock based compensation plan of $242,070. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●      | For the quarter ended March 31, 2010, marketing, advertising and promotion expenses were $1,061,050, a decrease of $393,821 as compared to $1,454,871 for the quarter ended March 31, 2009.  We continue to invest heavily in the development of the invisibleSHIELD brand through internet key word advertising and through traditional print media, television and radio advertising and through the use of coupons.  We expect our marketing and advertising expenses to continue to be a significant expenditure as our revenues increase and expect to spend increased funds on advertising and promotion of our products as well as sales training.  During the fiscal year 2010, we intend to continue to expand our marketing efforts related to our products. |
|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | For the quarter ended March 31, 2010, other selling, general and administrative expenses, net of salaries and related taxes described above, were $1,181,031 as compared to $1,299,443 for the quarter ended March 31, 2009.  The changes by category are summarized in the table below: |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Three MonthsEndedMarch 31, 2010 |      |   | Three MonthsEndedMarch 31, 2009 |   |
|---------------------------|--------|---------------------------------|-----------|--------|---------------------------------|--------|
| Professional fees         |   | $                               | 62,409    |   |                            | $      | 70,066 |   |
| Rent                      |   |                            | 146,796   |   |                            |   | 97,620 |   |
| Credit card and bank fees |   |                            | 156,325   |   |                            |   | 176,532 |   |
| Commissions               |   |                            | 208,395   |   |                            |   | 250,177 |   |
| Other                     |   |                            | 607,106   |   |                            |   | 750,048 |   |
| Total                     |   | $                               | 1,181,031 |   |                            | $      | 1,299,443 |   |

----

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| ▪  | stock options for 771,500 common shares exercisable at $2.53 per share expiring in 5 years and vesting 33% at 12 months, 33% at 24 months and 33% at 36 months.  The options were valued at $923,980 or $1.20 per option using the Black-Scholes option pricing method with the following assumptions: stock price $2.53, expected life of 2.5 years, volatility of 73% (using historical volatility to provide an implied volatility as the Company’s options do not trade) and a discount rate of 0.03%; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪  | warrants for consulting services for 100,000 common shares exercisable at $2.58 per share expiring in 5 years and vesting equally over 1 year.  The warrants were valued at $30,548 using the Black-Scholes method with the following assumptions: stock price $2.58, expected life of .2 years; volatility of 67% (using historical volatility to provide an implied volatility as the Company’s options do not trade) and a discount rate of 0.02%. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ▪  | 15,167 shares of common stock in exercise of options to purchase 15,167 shares.  We received proceeds of $16,622 related to the exercise of the options.  We also issued 6,250 shares of common stock in exercise of warrants to purchase 6,250 shares.  We received proceeds of $8,125 related to the exercise of the warrants. |
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| a. | Exhibits: The following Exhibits are filed with this Form 10-Q pursuant to Item 601(a) of Regulation S-K: |
|----|-----------------------------------------------------------------------------------------------------------|

| Exhibit No. | Description of Exhibit |
|-------------|------------------------|

| 31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.  |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.  |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. |

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|               | ZAGG INCORPORATED  |                                  |
|--------------------|-------------------------|---------------------------------------|
|               |                    |                                  |   |
| Date: May 10, 2010 | By:                     | /s/ ROBERT G. PEDERSEN II        |   |
|               |                    | Robert G. Pedersen II,                |   |
|               |                    | President and Chief Executive Officer |   |
|               |                    |                                  |   |

|               |   |                              |
|--------------------|--------|-----------------------------------|
|               |   |                              |   |
| Date: May 10, 2010 | By:    | /s/ BRANDON T. O’BRIEN |   |
|               |   | Brandon T. O’Brien,         |   |
|               |   | Chief Financial Officer           |   |
|               |   | (Principal financial officer)     |   |