**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 
 
 (Mark
        one)
 
 [X]
              Quarterly
                  Report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the quarterly period ended March 31, 2007,
                  or
 
 [ 
                   ]
              Transition
                  Report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the transition period from ______________ to
                  _____________.
 
 Commission
        File No. 000-52211
 **ZAGG
        INCORPORATED**
 (Exact
        name of registrant as specified in its charter)
 
 **Nevada**
              **20-2559624**(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)
 
 **3855
        South 500 West, Suite J**
 **Salt
        Lake City, Utah 84115**
 (Address
        of principal executive offices with zip code)
 
 **(801)
        263-0699**
 (Registrant's
        telephone number, including area code)
 
 Check
        whether the issuer (1) has filed all reports required to be filed by Section
        13
        or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or for such shorter period that the registrant was required to file such
        reports), and (2) has been subject to such filing requirements for the past
        90
        days: **Yes
        [X]  No [  ].**
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-25 of the Exchange Act).
 **Yes
        [  ] No [X]**
 
 State
        the
        number of shares outstanding of each of the issuer’s classes of common equity,
        as of the latest practicable date: **15,168,998
        common shares as of May 14, 2007.**
 
 
 
 
 
 
 
 
  
 
 
 **ZAGG
        INCORPORATED**
 **FORM
        10-QSB**
 
 
 **TABLE
        OF CONTENTS**
 
 **PART
                  I - FINANCIAL INFORMATION****Page**Item
                  1.
              Financial
                  Statements (Unaudited)Condensed
                  Balance Sheets - As of March 31, 2007, and December 31,
                  2006
              3Condensed
                  Statements of Operations for the Three Months Ended March 31, 2007
                  and
                  2006
              4Condensed
                  Statements of Cash Flows for the Three Months Ended March 31, 2006
                  and
                  2005
              5Notes
                  to Condensed Financial Statements
              7Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              13Item
                  3.
              Controls
                  and Procedures
              17**PART
                  II - OTHER INFORMATION**Item
                  1.
              Legal
                  Proceedings
              18Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              18Item
                  3.
              Defaults
                  Upon Senior Securities
              18Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              18Item
                  5.
              Other
                  Information
              18Item
                  6.
              Exhibits
              18
 
 
 
 
 
  2
  **ZAGG
        INCORPORATED**
 **CONDENSED
        BALANCE SHEETS**
 **(Unaudited)**
 
 **March
                  31,**
              
              **December
                  31,****2007**
              
              **2006****ASSETS****Current
                  assets**Cash
              
              $
              241,097
              
              $
              468,382Accounts
                  receivable, net
              
              
              65,030
              
              
              121,149Inventories
              
              
              115,123
              
              
              102,522Prepaid
                  income taxes
              
              
              44,361
              
              
              44,361Prepaid
                  expenses and other current assets
              
              
              14,009
              
              
              31,724Deferred
                  income tax assets
              
              
              16,796
              
              
              19,468Due
                  from employees
              
              
              4,270
              
              
              3,714**Total
                  current assets**
              
              
              500,686
              
              
              791,320**Property
                  and equipment, net**
              
              
              219,776
              
              
              221,474**Deposits
                  and other assets**
              
              
              37,119
              
              
              12,119**Intangible
                  assets**
              
              
              50,054
              
              
              2,340**Total
                  assets**
              
              $
              807,635
              
              $
              1,027,253**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities**Convertible
                  note payable
              
              $
              -
              
              $
              250,000Convertible
                  note payable - officer
              
              
              -
              
              
              100,000Accounts
                  payable
              
              
              217,332
              
              
              246,691Accrued
                  liabilities
              
              
              12,171
              
              
              33,573Accrued
                  wages and wage related expenses
              
              
              60,584
              
              
              121,728Deferred
                  licensing revenue
              
              
              78,468
              
              
              86,801Sales
                  returns liability
              
              
              24,838
              
              
              32,000**Total
                  current liabilities**
              
              
              393,393
              
              
              870,793**Long-term
                  liabilities**Non-current
                  deferred income tax liablility, net
              
              
              12,363
              
              
              12,087**Total
                  liabilities**
              
              
              405,756
              
              
              882,880**Stockholders'
                  equity**Common
                  stock, $0.001 par value; 50,000,000 shares authorized; 15,168,995
                  and
                  10,175,000 shares issued and outstanding, respectively
              
              
              15,170
              
              
              10,175Additional
                  paid-in capital
              
              
              640,158
              
              
              117,075Retained
                  (deficit) earnings
              
              
              (253,449
              )
              
              17,123**Total
                  stockholders' equity**
              
              
              401,879
              
              
              144,373**Total
                  liabilities and stockholders' equity**
              
              $
              807,635
              
              $
              1,027,253
 
 See
        accompanying notes to condensed financial statements.
 
  3
  **ZAGG
        INCORPORATED**
 **CONDENSED
        STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 
 **Three
                  Months Ended**
              
              **Three
                  Months Ended****March
                  31, 2007**
              
              **March
                  31, 2006****Net
                  sales**
              
              $
              792,849
              
              $
              524,258**Cost
                  of sales**
              
              
              187,159
              
              
              161,599**Gross
                  profit**
              
              
              605,690
              
              
              362,659**Operating
                  expenses:**Salaries
                  and related taxes
              
              
              308,408
              
              
              182,736Consulting
              
              
              36,500
              
              
              73,750Advertising
                  and marketing
              
              
              161,135
              
              
              87,541Other
                  selling, general and administrative
              
              
              361,748
              
              
              69,252**Total
                  operating expenses**
              
              
              867,791
              
              
              413,279**Loss
                  from operations**
              
              
              (262,101
              )
              
              (50,620
              )**Other
                  income (expense):**Interest
                  expense
              
              
              (5,868
              )
              
              -Interest
                  and other income
              
              
              115
              
              
              141**Total
                  other income (expense)**
              
              
              (5,753
              )
              
              141**Income
                  before provision for income taxes**
              
              
              (267,854
              )
              
              (50,479
              )**Income
                  tax benefit (expense)**
              
              
              (2,718
              )
              
              -**Net
                  loss**
              
              
              (270,572
              )
              
              (50,479
              )**Basic
                  and diluted net loss per common share**
              
              $
              (0.02
              )
              $
              (0.01
              )**Weighted
                  average number of shares outstanding - basic and
                  diluted**
              
              
              12,695,638
              
              
              10,000,000
 
 See
        accompanying notes to condensed financial statements.
 
  4
  **ZAGG
        INCORPORATED**
 **CONDENSED
        STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 
 **Three
                  Months Ended**
              
              **Three
                  Months Ended****March
                  31, 2007**
              
              **March
                  31, 2006****Cash
                  flows from operating activities**Net
                  loss
              
              $
              (270,572
              )
              $
              (50,479
              )Adjustments
                  to reconcile net loss to net cash used in operating activities:Depreciation
              
              
              17,965
              
              
              1,000Deferred
                  income tax (benefit ) expense
              
              
              2,948
              
              
              70,798Changes
                  in assets and liabilitiesAccounts
                  receivable
              
              
              56,119
              
              
              73,533Inventory
              
              
              (12,601
              )
              
              (34,142
              )Due
                  from employees
              
              
              (556
              )
              
              (21,575
              )Prepaid
                  expenses and other current assets
              
              
              17,715
              
              
              -Other
                  assets
              
              
              (25,000
              )
              
              (28,965
              )Accounts
                  payable
              
              
              (76,609
              )
              
              (28,982
              )Accrued
                  liabilities
              
              
              (21,124
              )
              
              110,100Accrued
                  wages and wage related expenses
              
              
              (61,144
              )
              
              -Deferred
                  licensing revenues
              
              
              (8,333
              )
              
              -Sales
                  return liability
              
              
              (7,162
              )
              
              -Net
                  cash (used in) provided by operating activities
              
              
              (388,354
              )
              
              91,288**Cash
                  flows from investing activities**Payments
                  for intangible assets
              
              
              (47,714
              )
              
              (26,294
              )Purchase
                  of property and equipment
              
              
              (16,267
              )
              
              -Net
                  cash used in investing activities
              
              
              (63,981
              )
              
              (26,294
              )**Cash
                  flows from financing activities**Repayments
                  on equipment financing payable
              
              
              -
              
              
              (1,396
              )Payments
                  on convertible note payable - officer
              
              
              (50,000
              )
              
              -Capital
                  contribution
              
              
              -
              
              
              25,000Proceeds
                  from sale of common stock
              
              
              275,050
              
              
              -Net
                  cash provided by financing activities
              
              
              225,050
              
              
              23,604**Net
                  (decrease) increase in cash and cash equivalents**
              
              
              (227,285
              )
              
              88,598**Cash
                  and cash equivalents at beginning of the period**
              
              
              468,382
              
              
              25,661**Cash
                  and cash equivalents at end of the period**
              
              $
              241,097
              
              $
              114,259**Supplemental
                  disclosure of cash flow information**Cash
                  paid during the period for interest
              
              $
              7,288
              
              $
              -Cash
                  paid during the period for income taxes
              
              $
              -
              
              $
              8,796
  
 See
        accompanying notes to condensed financial statements.
  5
  **ZAGG
        INCORPORATED**
 **CONDENSED
        STATEMENTS OF CASH FLOWS (Continued)**
 **(Unaudited)**
 
 
 **Supplemental
        schedule of noncash investing and financing activities**
 
 **For
        the Three Months Ended March 31, 2007:**
 
 Issued
        714,286 shares of common stock in conversion of convertible note
        payable.
 
 Issued
        147,853 shares of common stock in conversion of convertible note payable
        -
        officer and accrued interest.
 
 **For
        the Three Months Ended March 31, 2006:**
 
 Capital
        contribution of $25,000.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
        accompanying notes to condensed financial statements.
  6
  **ZAGG
        INCORPORATED**
 **Notes
        to Condensed Financial Statements**
 
 
 **1.
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***Basis
        of Presentation*** - The
        accompanying unaudited condensed financial statements of ** Zagg
        Incorporated (collectively, the “Company” or “Zagg”) have been prepared by the
        Company pursuant to the rules and regulations of the Securities and Exchange
        Commission (the “SEC”). Certain information and footnote disclosures normally
        included in financial statements prepared in accordance with accounting
        principles generally accepted in the United States of America have been
        condensed or omitted pursuant to such rules and regulations, although the
        Company believes that the following disclosures are adequate to make the
        information presented not misleading. The Company suggests that these condensed
        financial statements be read in conjunction with the financial statements
        and
        the notes thereto included in the Company’s 2006 Annual Report on Form
        10-KSB.
 
 These
        condensed financial statements reflect all adjustments (consisting only of
        normal recurring adjustments) that, in the opinion of management, are necessary
        to present fairly the financial position and results of operations of the
        Company for the periods presented.
 
 Operating
        results for the three months ended March 31, 2007, are not necessarily
        indicative of the results that may be expected for the year ending December
        31,
        2007.
 
 ***Nature
        of Operations*** **-** ****** Zagg
        Incorporated was incorporated in the State of Utah on March 24, 2005 as
        Protective Solutions, Inc.  On January 30, 2006, the Company amended its
        articles of incorporation and changed its name to ShieldZone Corporation. 
On February 8, 2007 we were acquired by an inactive publicly held company,
        Amerasia Khan Enterprises Ltd. in a transaction accounted for as a
        recapitalization of the Company.  On March 1, 2007, we redomesticated our
        operating subsidiary by reincorporating it in the State of Nevada and on
        that
        same date we merged that subsidiary into Amerasia Khan Enterprises Ltd, the
        parent, who was the surviving entity.  In connection with the merger we
        changed the name of Amerasia Khan Enterprises Ltd. to Zagg Incorporated. 
The Company continues to operate the historical business of ShieldZone
        Corporation and may use the ShieldZone name as a trade name.
 
 The
        Company has developed and sells, through the Internet and wholesale distribution
        channels, patent-pending protective shields under the name of the *invisible* SHIELDTM
        for electronic devices.
 
 ***Business
        Condition*** **** -
        For the
        three months ended March 31, 2007 and 2006, the Company generated revenues
        of
        $792,849 and $524,258, respectively; incurred net losses of ($270,572) and
        ($50,479), respectively; and had negative cash flow from operating activities
        of
        ($388,354) in 2007 and positive cash flow from operating activities of $91,288
        for the three months ended March 31, 2006. As of March 31, 2007, the Company
        had
        stockholders’ equity of $401,879, an accumulated deficit of ($253,449), positive
        working capital of $107,293, accounts payable of $217,332, deferred licensing
        revenue of $78,468, accrued wages of $60,584, sales returns liability of
        $24,838
        and accrued liabilities of $12,171. On May 8, 2007, the Company obtained
        an
        unsecured $200,000 short-term loan from an independent third party. Management
        believes that existing cash, along with cash generated from the collection
        of
        accounts receivable, the sale of products and proceeds from the short-term
        financing will be sufficient to meet the Company’s cash requirements during the
        next twelve months.
 
 ***Revenue
        recognition***
 
 The
        Company follows the guidance of the Securities and Exchange Commission’s Staff
        Accounting Bulletin 104 for revenue recognition.  In general, the Company
        records revenue when persuasive evidence of an arrangement exists or product
        delivery has occurred, the sales price to the customer is fixed or determinable,
        and collectability is reasonably assured.  The Company’s revenue
        is derived from sales of its products to retailers, resellers and end consumers
        and from the sale of distributor license fees. For sales of product, the
        Company
        records revenue when the product is shipped, net of estimated returns and
        discounts. For license fees, the Company recognizes revenue on a prorated
        basis
        over the life of the distribution contract.
 
  7
  The
        Company follows the guidance of Emerging Issues Task Force (EITF) Issue 01-9
        ``Accounting for Consideration Given by a Vendor to a Customer'' and (EITF)
        Issue 02-16 ``Accounting by a Customer (Including a Reseller) for Certain
        Considerations Received from Vendors.'' Accordingly, any incentives received
        from vendors are recognized as a reduction of the cost of products. Promotional
        products given to customers or potential customers are recognized as a cost
        of
        sales. Cash incentives provided to our customers are recognized as a reduction
        of the related sale price, and, therefore, are a reduction in
        sales.
 
 ***Reserve
        for Sales Returns and Warranty Liability***
 
 Our
        return policy generally allows our end users and retailers to return purchased
        products for refund or in exchange for new products within 30 days of end
        user
        purchase. The Company estimates a reserve for sales returns and records that
        reserve amount as a reduction of sales and as a sales return reserve
        liability. At March
        31, 2007 the sales return liability was $24,838.
 
 The
        Company generally provides the ultimate consumer a warranty with each product
        and accrues warranty expense at the time of the sale based on the Company’s
        prior claims history. Actual warranty costs incurred are charged against
        the
        accrual when paid. During the three months ended March 31, 2007 and 2006,
        warranty expense and the reserve for warranty liability, respectively, was
        not
        material.
 
 ** ***Shipping
        and Handling Costs***
 
 Amounts
        invoiced to customers for shipping and handlings are included in sales and
        were
        $64,767 for the three months ended March 31, 2007 and $63,740 for the three
        months ended March 31, 2006. Actual shipping and handling costs to ship products
        to our customers are included in cost of sales and were $85,787 for the three
        months ended March 31, 2007 and $56,234 for the three months ended March
        31,
        2006.
 
 ***Stock-based
        compensation***
 
 Effective
        January 1, 2006, the Company adopted Statement of Financial Accounting Standards
        No. 123 (revised 2004), *Share
        Based Payment* (“SFAS
        No. 123R”). SFAS No. 123R establishes the financial accounting and reporting
        standards for stock-based compensation plans. As required by SFAS No. 123R,
        the
        Company recognizes the cost resulting from all stock-based payment transactions
        including shares issued under its stock option plans in the financial statements
        based upon the fair value of such equity instruments granted. As there were
        no
        common stock options granted or outstanding in 2007 or 2006, there was no
        financial effect to the Company upon implementation of SFAS No.
        123R.
 
 Prior
        to
        January 1, 2006, the Company accounted for stock-based employee compensation
        plans (including shares issued under its stock option plans) in accordance
        with
        APB Opinion No. 25 and followed the pro forma net income, pro forma income
        per
        share, and stock-based compensation plan disclosure requirements set forth
        in
        the Statement of Financial Accounting Standards No. 123, *Accounting
        for Stock-Based Compensation* (“SFAS
        No. 123”).
 
 ***Advertising***
 
 Advertising
        is expensed as incurred. Advertising expenses for the three months ended
        March
        31, 2007 were $161,135 and for the three months ended March 31, 2006 were
        $87,541.
 
 ***Reclassifications***
 
 Certain
        amounts in the 2006 financial statements have been reclassified to conform
        to
        the 2007 presentation.
 
 ***Recent
        accounting pronouncements*** ****
 
 In
        February, 2007, the FASB issued SFAS No. 159, *“The
        Fair Value Option for Financial Assets and Financial Liabilities”* (“SFAS
        No. 159”). This Statement provides companies with an option to report selected
        measurement attributes for different assets and liabilities that can create
        artificial volatility in earnings. The Statement’s objective is to reduce both
        complexity in accounting for financial instruments and the volatility in
        earnings caused by measuring related assets and liabilities differently.
        SFAS
        No. 159 is effective for the Company beginning January 1, 2009. The Company
        is
        currently evaluating the impact of this standard.
 
  8
  The
        Company has reviewed all other recently issued, but not yet adopted, accounting
        standards in order to determine their effects, if any, on its results of
        operation, financial position or cash flows. Based on that review, the Company
        believes that none of these pronouncements will have a significant material
        effect on its current or future earnings or operations.
 
 ***Net
        (Loss) Income Per Common Share*** ****
 
 Basic
        net
        (loss) income per share is computed by dividing net (loss) income by weighted
        average number of shares of common stock outstanding during each period.
        Diluted
        net (loss) income per share is computed by dividing net (loss) income by
        the
        weighted average number of shares of common stock, common stock equivalents
        and
        potentially dilutive securities outstanding during each period. As of March
        31,
        2007 and 2006, the Company did not have any dilutive securities.
 
 The
        following is a reconciliation of the numerator and denominator used to calculate
        Basic and Diluted EPS:
  **Net
                  Loss**
              
              **Weighted**
                **Average**
                **Shares**
              
              **Per Share**
                **Amount**Three
                  months ended March 31, 2007:Basic
                  EPS
              
              $
              (270,572
              )
              
              12,695,638
              
              $
              (0.02
              )Effect
                  of common stock equivalents
              
              
              —
              
              
              —Diluted
                  EPS
              
              $
              (270,572
              )
              
              12,695,638
              
              $
              (0.02
              )Three
                  months ended March 31, 2006:Basic
                  EPS
              
              $
              (50,479
              )
              
              10,000,000
              
              $
              (0.01
              )Effect
                  of common stock equivalents
              
              
              —
              
              
              —Diluted
                  EPS
              
              $
              (50,479
              )
              
              10,000,000
              
              $
              (0.01
              )
 
 The
        calculation above for the three months ended March 31, 2007, excludes the
        exercise of the 52,500 outstanding warrants as the exercise of these warrants
        would have an anti-dilutive effect on earnings per share. There were no
        anti-dilutive instruments outstanding for the three months ended March 31,
        2006.
 
 **NOTE
        2 - RECAPITALIZATION**
 
 On
        February 8, 2007 (the “recapitalization date”), we executed an Agreement and
        Plan of Merger (the “Merger Agreement”) by and between Amerasia Khan Enterprises
        Ltd. (a public shell), now known as Zagg Incorporated, and its wholly-owned
        subsidiary, SZC Acquisition Inc., a Nevada corporation (“Subsidiary”) on the one
        hand and ShieldZone Corporation, (“ShieldZone”) a Utah corporation, on the other
        hand. Pursuant to the Merger Agreement, Subsidiary was merged into ShieldZone
        with ShieldZone surviving the merger. In consideration, the stockholders
        of
        ShieldZone received 10,175,000 shares of Amerasia Khan Enterprises Ltd.,
        now
        known as Zagg Incorporated, common stock which was approximately 69% of the
        total common shares outstanding just subsequent to the merger but before
        the
        simultaneous sale of 785,856 common shares for $275,000 ($0.35 per share)
        and
        conversion of a $250,000 convertible promissory note for 714,286 common shares.
        The Company also issued warrants in conjunction with the sale of the 785,856
        common shares and the raise and conversion of the $250,000 convertible
        promissory note. The Company issued warrants as a fee to purchase 52,500
        shares
        of our common stock at an exercise price of $0.35. These warrants may be
        exercised until March 18, 2012, at which time they will expire if not exercised.
        The warrant holders also have piggyback registration rights. In connection
        with
        the merger/recapitalization, the Company is deemed to have issued 4,600,000
        common shares to the original stockholders’ of Amerasia Khan Enterprises Ltd.
        Subsequent to the merger/recapitalization, 1,254,000 shares owned by certain
        original shareholders of Amerasia Khan Enterprises Ltd. were cancelled.
 
 The
        merger was accounted for as a recapitalization of ShieldZone, a Utah corporation
        because on a post-merger basis, the former stockholders of ShieldZone
        Corporation held a majority of the outstanding common stock on a voting and
        fully-diluted basis and had Board and management control. As a result,
        ShieldZone is deemed to be the acquirer for accounting purposes. In March
        2007,
        ShieldZone Corporation was merged into its parent, Amerasia Khan Enterprises
        Ltd., now known as Zagg Incorporated, and the name of the surviving entity,
        Amerasia Khan Enterprises Ltd., was changed to Zagg Incorporated.
 
  9
  Accordingly
        the balance sheets just subsequent to the recapitalization date consists
        of the
        balance sheets of both companies at historical cost and the statement of
        operations consists of the historical operations of ShieldZone and the
        operations of Amerasia Khan Enterprises Ltd., now known as Zagg Incorporated,
        from the recapitalization date.
 
 All
        share
        and per share data in the accompanying financial statements have been
        retroactively changed to reflect the effect of the merger and
        recapitalization.
 
 **NOTE
        3** **-** **ACCOUNTS RECEIVABLE, NET**
 
 Accounts
        Receivable at March 31, 2007 and December 31, 2006 was as follows:
 
 **March
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Accounts
                  receivable
              
              $
              85,223
              
              $
              141,342Less:
                  Allowance for doubtful accounts
              
              
              (20,193
              )
              
              (20,193
              )Accounts
                  Receivable, net
              
              $
              65,030
              
              $
              121,149
 
 Bad
        debt
        expense for the three months ended March 31, 2007 was $0.
 
 **NOTE
        4** **-** **INVENTORIES**
 
 At
        March
        31, 2007 and December 31, 2006 inventories consisted of the
        following:
 
 **March
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Finished
                  Goods
              
              $
              44,796
              
              $
              67,257Raw
                  Materials
              
              
              70,327
              
              
              35,265$
              115,123
              
              $
              102,522
 **NOTE
          5 - PROPERTY AND EQUIPMENT**
 
 At
          March
          31, 2007 and December 31, 2006, property and equipment consisted of the
          following:
 **Useful**
                **Lives**
              
              **March
                  31,**
                **2007**
              
              **December
                  31, 2006**Computer
                  Equipment and Software
              
              3
                  to 5 years
              
              $
              68,512
              
              $
              58,790Office
                  Equipment
              
              3
                  to7 years
              
              
              58,407
              
              
              58,407Furniture
                  and Fixtures
              
              7
                  years
              
              
              15,950
              
              
              9,405Automobiles
              
              5
                  years
              
              
              47,063
              
              
              47,063Leasehold
                  improvements
              
              1
                  to 3.13 years
              
              
              91,637
              
              
              91,637281,569
              
              
              265,302Less
                  Accumulated Depreciation
              
              
              
              
              
              (61,793
              )
              
              (43,828
              )$
              219,776
              
              $
              221,474
  Depreciation
        expense was $17,965 for the three months ended March 31, 2007 and $1,000
        for the
        three months ended March 31, 2006.
   10
  **NOTE
        6 - INTANGIBLE ASSETS**
 
 At
        March
        31, 2007, intangible assets consist of legal fees paid in connection with
        the
        Company’s patent application of $7,935 and the purchase of the Company’s website
        address of $42,119. As of March 31, 2007, the patent had not been granted.
        Accordingly, the Company has not begun to amortize the patent costs and will
        begin amortizing the patent over the legal life of the patent, when the patent
        is granted. The Company has determined that the intangible asset related
        to the
        website address is an indefinite lived intangible and no amortization has
        been
        recognized.
 
 **NOTE
        7 - STOCKHOLDERS’ EQUITY**
 
 During
        the three months ended March 31, 2007, the Company issued 785,856 shares
        of its
        common stock in a private placement wherein the Company received $275,050
        and
        paid fees of $47,250.
 
 The
        Company currently does not have any outstanding stock options, a stock option
        plan or an incentive plan. The Board of Directors has reserved 725,000 shares
        of
        common stock for use in such a plan to be established in 2007.
 
 **NOTE
        8 - CONVERTIBLE NOTE PAYABLE - OFFICER**
 
 In
        November 2006, the Company entered into a convertible note with an affiliate
        of
        the Company’s Chief Executive Officer in the original principal amount of
        $100,000. The note was convertible at the holder's option any time up to
        maturity at a conversion price equal to $0.35 per common share. The note
        was due
        on May 15, 2007, bore interest at 20% per year and was unsecured. The common
        shares underlying the note have piggy back registration rights. During the
        three
        months ended March 31, 2007 the Company repaid $50,000 of the principal balance
        of the note. In addition, the remaining $50,000 of principal plus accrued
        interest of $1,749 was converted into 147,853 shares of the Company’s common
        stock.
 
 The
        note
        was a conventional convertible instrument and the Company evaluated the
        conversion feature and determined that there was not a separate derivative
        instrument associated with the note and no derivative liability was recognized.
        The Company determined that there was no beneficial conversion feature
        associated with the note as the conversion price was equal to the deemed
        market
        value on the date of grant.
 
 **NOTE
        9 - CONVERTIBLE NOTE PAYABLE**
 
 On
        December 27, 2006, the Company entered into a Secured Convertible Note Purchase
        Agreement (the “Convertible Note Agreement”). Pursuant to the Convertible Note
        Agreement, the Company issued a convertible note to an unrelated investor
        in the
        original principal amount of $250,000. The note was convertible at the holder's
        option any time up to maturity at a conversion price equal to $0.35 per common
        share. The note was due on March 1, 2007, bore interest at 4% per year, and
        was
        secured by substantially all of the assets of the Company. Interest was payable
        at maturity and was computed on the basis of a 360-day year. In February
        2007,
        the note holder converted the principal balance of the note into 714,286
        shares
        of the Company’s common stock.
 
 The
        note
        was a conventional convertible instrument and the Company evaluated the
        conversion feature and determined that there was not a separate derivative
        instrument associated with the note and no derivative liability was recognized.
        The Company determined that there was no beneficial conversion feature
        associated with the note as the conversion price was equal to the deemed
        market
        value on the date of grant.
 
 The
        weighted average interest rate for the two notes discussed above was
        8.57%.
 
 **NOTE
        10 - COMMITMENTS AND CONTINGENCIES**
 
 From
        time
        to time we may become subject to proceedings, lawsuits and other claims in
        the
        ordinary course of business, including proceedings related to environmental
        and
        other matters. Such matters are subject to many uncertainties, and outcomes
        are
        not predictable with assurance.
 
  11
  **NOTE
        11 - SUBSEQUENT EVENTS**
 
 On
        May 8,
        2007, the Company entered into a promissory note agreement with an unrelated
        third party in the amount of $200,000. The note bears interest at an annual
        percentage rate of 18% and is due and payable on August 15, 2007. The Company
        is
        required to make interest only payments on the first of each month beginning
        June 1, 2007. The Company also issued 100,000 warrants with an exercise price
        of
        $0.50. The warrants expire on May 30, 2012 and are exercisable any time at
        the
        option of the warrant holder.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  12
  **ITEM
                  2.**
              **MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS**
  ***Certain
        statements, other than purely historical information, including estimates,
        projections, statements relating to our business plans, objectives, and expected
        operating results, and the assumptions upon which those statements are based,
        are “forward-looking statements” within the meaning of the Private Securities
        Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
        and Section 21E of the Securities Exchange Act of 1934. These
        forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
        similar expressions.*** ***We
        intend such forward-looking statements to be covered by the safe-harbor
        provisions for forward-looking statements contained in the Private Securities
        Litigation Reform Act of 1995, and are including this statement for purposes
        of
        complying with those safe-harbor provisions.*** ***Forward-looking
        statements are based on current expectations and assumptions that are subject
        to
        risks and uncertainties which may cause actual results to differ materially
        from
        the forward-looking statements.*** ***Our
        ability to predict results or the actual effect of future plans or strategies
        is
        inherently uncertain. Factors which could have a material adverse affect
        on our
        operations and future prospects include, but are not limited to: changes
        in
        economic conditions, legislative/regulatory changes, availability of capital,
        interest rates, competition, and generally accepted accounting principles.
        These
        risks and uncertainties should also be considered in evaluating forward-looking
        statements and undue reliance should not be placed on such statements.*** ***We
        undertake no obligation to update or revise publicly any forward-looking
        statements, whether as a result of new information, future events or otherwise.*** ***Further
        information concerning our business, including additional factors that could
        materially affect our financial results, is included herein and in our other
        filings with the SEC*** .
  **Overview**
  **Recent
        Merger Transactions**
 
 On
        February 8, 2007, Amerasia Khan Enterprises Ltd. (“AKE”) a Nevada corporation
        (the “Registrant”) (nka Zagg Incorporated) executed an Agreement and Plan of
        Merger (the “Merger Agreement”) by and between the Registrant and its wholly
        owned subsidiary, SZC Acquisition, Inc., a Nevada corporation (“Subsidiary”) on
        the one hand and ShieldZone Corporation, a Utah corporation (“ShieldZone” or
“Target”) on the other hand. Pursuant to the Merger Agreement, ShieldZone merged
        with Subsidiary, with ShieldZone surviving the merger and Subsidiary ceasing
        to
        exist (the “Merger”).
 
 Following
        the Merger, ShieldZone was reincorporated in Nevada as a subsidiary of AKE.
        On
        March 7, 2007, ShieldZone was merged up and into AKE. At that time AKE changed
        its name to Zagg Incorporated, and the operations of the surviving entity
        (Zagg
        Incorporated) are solely that of ShieldZone. As a result of these transactions,
        the historical financial statements of Zagg Incorporated are the historical
        financial statements of ShieldZone. The fiscal year end of the Company is
        December 31.
 
 For
        purposes of the following discussion and analysis, references to ‘‘we’’,
‘‘our’’, ‘‘us’’ refers to Zagg
        Incorporated.
 
 **Our
        Business**
 
 We
        custom-design, market and sell a form of protective covering for consumer
        electronic and hand held devices. Our key product “ *invisible* SHIELD”TM
        is made from a protective, film-like covering that was developed originally
        to
        protect the leading edges of rotary blades of military helicopters. We
        determined that this same film product could be configured to fit onto the
        surface of electronic devices and marketed to consumers for use in protecting
        such devices from everyday wear and tear including scratches, scrapes, debris
        and other surface blemishes. The film also permits touch sensitivity, meaning
        it
        can be used on devices that have a touch-screen interface. The *invisible* SHIELD
        film material is highly reliable and durable since it was originally developed
        for use in a high friction, high velocity, aerospace context. The film provides
        long lasting protection for the surface of electronic devices subject to
        normal
        wear and tear. The film is a form of polyurethane substance, akin to a very
        thin, pliable, flexible and durable clear plastic that adheres to the surface
        and shape of the object it is applied to.
 
  13
  ***Critical
        Accounting Policies***
 
 The
        discussion and analysis of our financial condition and results of operations
        are
        based on our financial statements, which have been prepared in accordance
        with
        accounting principles generally accepted in the United States (U.S. GAAP).
        The
        preparation of these financial statements requires us to make estimates and
        judgments that affect the reported amounts of assets, liabilities, revenues
        and
        expenses, and related disclosure of contingent assets and liabilities. On
        an
        on-going basis, we evaluate our estimates based on historical experience
        and on
        various other assumptions that are believed to be reasonable under the
        circumstances, the results of which form the basis for making judgments about
        the carrying values of assets and liabilities that are not readily apparent
        from
        other sources. Actual results may differ from these estimates under different
        assumptions or conditions. Significant estimates include the allowance for
        doubtful accounts, inventory valuation allowances, sales returns and warranty
        liability, the useful life of property and equipment and the valuation allowance
        on deferred tax assets.
 
 ***Revenue
        recognition***
 
 We
        follow
        the guidance of the Securities and Exchange Commission’s Staff Accounting
        Bulletin 104 for revenue recognition. In general, we record revenue when
        persuasive evidence of an arrangement exists or product delivery has occurred,
        the sales price to the customer is fixed or determinable, and collectability
        is
        reasonably assured. Our revenue
        is derived from sales of our products to retailers, resellers and end consumers
        and from the sale of distributor license fees. For sales of product, we record
        revenue when the product is shipped, net of estimated returns and discounts.
        For
        license fees, we recognize revenue on a prorated basis over the life of the
        distribution contract.
 
 The
        Company follows the guidance of Emerging Issues Task Force (EITF) Issue 01-9
        ``Accounting for Consideration Given by a Vendor to a Customer'' and (EITF)
        Issue 02-16 ``Accounting by a Customer (Including a Reseller) for Certain
        Considerations Received from Vendors.'' Accordingly, any incentives received
        from vendors are recognized as a reduction of the cost of products. Promotional
        products given to customers or potential customers are recognized as a cost
        of
        sales. Cash incentives provided to our customers are recognized as a reduction
        of the related sale price, and, therefore, are a reduction in
        sales.
 
 ***Reserve
        for Sales Returns and Warranty Liability***
 
 Our
        return policy generally allows our end users and retailers to return purchased
        products for refund or in exchange for new products within 30 days of end
        user
        purchase. We estimate a reserve for sales returns and record that reserve
        amount
        as a reduction of sales and as a sales return reserve liability.
 
 We
        generally provide the ultimate consumer a warranty with each product and
        accrue
        warranty expense at the time of the sale based on our prior claims history.
        Actual warranty costs incurred are charged against the accrual when paid.
 
 ***Recently
        Issued Accounting Pronouncements***
 
 In
        February, 2007, the FASB issued SFAS No. 159, *“The
        Fair Value Option for Financial Assets and Financial Liabilities”* (“SFAS
        No. 159”). This Statement provides companies with an option to report selected
        measurement attributes for different assets and liabilities that can create
        artificial volatility in earnings. The Statement’s objective is to reduce both
        complexity in accounting for financial instruments and the volatility in
        earnings caused by measuring related assets and liabilities differently.
        SFAS
        No. 159 is effective for us beginning January 1, 2009. We are currently
        evaluating the impact of this standard.
 
 We
        have
        reviewed all other recently issued, but not yet adopted, accounting standards
        in
        order to determine their effects, if any, on our results of operation, financial
        position or cash flows. Based on that review, we believe that none of these
        pronouncements will have a significant material effect on our current or
        future
        earnings or operations.
 
  14
  **Results
        of Operations**
 
 **THREE
        MONTHS ENDED MARCH 31, 2007 AND 2006**
 
 ***Net
        sales***
 
 Net
        sales
        for the quarter ended March 31, 2007 were $792,849 as compared to net sales
        of
        $524,258 for the quarter ended March 31, 2006, an increase of $268,591 or
        51%.
 
 The
        significant increase in product sales is mainly attributed to continued strong
        sales of our *invisible* SHIELD
        product with approximately 60% of our product being sold through our website
        to
        retail customers, 18% being sold through mall carts, 14% to wholesale
        distributors and 8% from shipping and handling charges.
 
 ***Cost
        of sales***
 
 Cost
        of
        sales includes raw materials, packing materials and shipping costs. For the
        quarter ended March 31, 2007, cost of sales amounted to $187,159 or
        approximately 24% of net sales as compared to cost of sales of $161,599 or
        30%
        of net sales for quarter ended March 31, 206. The decrease in cost of sales
        as a
        percentage of net revenues for the quarter ended March 31, 2007 as compared
        to
        the quarter ended March 31, 2006 is attributable to better overall pricing
        on
        raw materials purchases.
 
 ***Gross
        profit***
 
 Gross
        profit for the quarter ended March 31, 2007 was $605,690 or approximately
        76% of
        net sales as compared to $362,659 or approximately 69% of net sales for the
        quarter ended March 31, 2006. The increase in gross profit percentage was
        attributable to decreased costs associated with raw materials and changes
        in
        sales mix from distributor sales to retail and cart sales. There are no
        assurances that we will continue to recognize similar gross profit margin
        in the
        future.
 
 ***Operating
        expenses***
 
 Total
        operating expenses for the quarter ended March 31, 2007 were $867,791, an
        increase of $454,512 from total operating expenses for the quarter ended
        March
        31, 2006 of $413,279. The increases are primarily attributable to the
        following:
 
 ·
              For
                  the quarter ended March 31, 2007, salaries and related taxes increased
                  by
                  $125,672 to $308,408 from $182,736 for the quarter ended March
                  31, 2006
                  due to the hiring of staff to implement our business
                  plan.
 
 ·
              For
                  the quarter ended March 31, 2007, consulting expense was $36,500,
                  a
                  decrease of $37,250 from the expense recognized for the quarter
                  ended
                  March 31, 2006 of $73,500. The decrease is primarily due to approximately
                  $63,000 that was paid to a consultant who then became our president
                  in
                  2006, partially offset by expenses incurred related to the hiring
                  of key
                  personnel during the quarter ended March 31, 2007 of $24,000 and
                  payments
                  to a consulting firm for website optimization of
                  $10,000.
 
 ·
              For
                  the quarter ended March 31, 2007, marketing, advertising and promotion
                  expenses were $161,135, an increase of $73,594 as compared to $87,541
                  for
                  the quarter ended March 31, 2007. This increase is attributable
                  to an
                  increase in our marketing efforts as we roll out product and implement
                  our
                  business plan. We expect our marketing and advertising expenses
                  to
                  increase as our revenues increase and expect to spend increased
                  funds on
                  adverting and promotion of our products as well as sales training.
                  During
                  fiscal 2007, we intend to significantly expand our marketing efforts
                  related to our products.
 
 ·
              For
                  the quarter ended March 31, 2007, other selling, general and
                  administrative expenses were $361,748 as compared to $69,252 for
                  the
                  quarter ended March 31, 2006. The increase was attributable to
                  the
                  increase in operations as we implement our business plan and is
                  summarized
                  below:
  15
 2007
                
                2006Professional
                    fees
                
                $
                210,192
                
                $
                1,375Contract
                    labor
                
                
                20,498
                
                
                --Insurance
                
                
                12,975
                
                
                3,533Depreciation
                
                
                17,965
                
                
                1,000Rent
                
                
                21,120
                
                
                10,444Travel
                    and entertainment
                
                
                16,152
                
                
                7,071Telephone
                    and utilities
                
                
                12,847
                
                
                7,422Printing
                    expenses
                
                
                9,699
                
                
                5,755Office
                    supplies
                
                
                14,018
                
                
                8,194Credit
                    card and bank fees
                
                
                15,690
                
                
                14,991Other
                
                
                10,592
                
                
                9,467Total
                
                $
                361,748
                
                $
                69,252
 ***(Loss)
        income from operations***
 
 We
        reported loss from operations of ($262,101) for the quarter ended March 31,
        2007
        as compared to loss from operations of ($50,620) for the quarter ended March
        31,
        2006, a decrease of $211,481. The decreased loss from operations in for the
        quarter ended March 31, 2007 as compared to the quarter ended March 31, 2006
        is
        primarily attributable to overall cost increases associated with executing
        our
        business plan and professional fees incurred as a result of the recapitalization
        transaction of $210,192.
 
 ***Other
        income (expense)***
 
 For
        the
        quarter ended March 31, 2007, total other expense was $5,753 compared to
        other
        income of $141 for the quarter ended March 31, 2006. The decrease is primarily
        attributed to interest expense related to the convertible debt of
        $5,868.
 
 ***Net
        (loss) income***
 
 As
        a
        result of these factors, we reported a net loss of ($270,572) or ($0.02)
        per
        share for the quarter ended March 31, 2007 as compared to a net loss of
        ($50,479) or ($0.01) per share for the quarter ended March 31, 2006.
 
 **Liquidity
        and Capital Resources**
 
 Liquidity
        is the ability of a company to generate funds to support its current and
        future
        operations, satisfy its liabilities and otherwise operate on an ongoing basis.
 
 At
        March
        31, 2007, we had a cash balance of $241,097.
 
 Our
        working capital position increased by $187,266 to working capital of $107,293
        at
        March 31, 2007 from a working capital deficit of ($79,473) at December 31,
        2006.
        This increase in working capital is primarily attributable to the overall
        decreases in current liabilities including decreased convertible notes payable
        of $250,000, decreased convertible note payable - officer of $100,000 and
        decreased wages payable of $61,144, partially offset by decreased cash balance
        of $227,285 and decreased accounts receivable balance of $56,119.
 
 Net
        cash
        used in operating activities for the quarter ended March 31, 2007 was ($388,354)
        as compared to cash provided by operating activities of $91,288 for the quarter
        ended March 31, 2006. For the quarter ended March 31, 2007, net cash used
        in
        operating activities was attributable primarily to our net loss of ($270,572),
        decreased accounts payable of $76,609, decreased accrued wages and wage related
        expenses of $61,144, increased other assets of $25,000, increased inventory
        of
        $12,601, decreased deferred licensing revenues of $8,333 and decreased sales
        returns liability of $7,162, partially offset by collection of accounts
        receivable of $56,119, decreased prepaid expenses of $17,715 and non-cash
        depreciation expense of $17,965
 
  16
  Net
        cash
        used in investing activities for the three months ended March 31, 2007 was
        ($63,981) attributable to the purchase of property and equipment of $16,267
        and
        payments for intangible assets of $47,714
 
 Net
        cash
        provided by financing activities was $225,050 for the quarter ended March
        31,
        2007 was attributable to proceeds from the sale of common stock of $275,050
        partially offset by repayments of convertible debt - officer of
        $50,000.
 
 We
        reported a net decrease in cash for the quarter ended March 31, 2007 of
        $227,285.
 
 We
        currently have no material commitments for capital expenditures. Other than
        working capital and loans, we presently have no other alternative source
        of
        working capital. We want to build an additional manufacturing line and upgrade
        our manufacturing facilities and technologies, in order to expand our products.
        We do not have sufficient working capital to fund the additional line and
        upgrade our manufacturing facilities and technologies as well as providing
        working capital necessary for our ongoing operations and obligations. We
        will
        need to raise additional working capital to complete this project. We may
        seek
        to raise additional capital through the sale of equity securities. No assurances
        can be given that we will be successful in obtaining additional capital,
        or that
        such capital will be available in terms acceptable to our company.
 
 On
        May 8,
        2007, we entered into a promissory note agreement with an unrelated third
        party
        in the amount of $200,000. The note bears interest at an annual percentage
        rate
        of 18% and is due and payable on August 15, 2007. We are required to make
        interest only payments on the first of each month beginning June 1, 2007.
        We
        also issued 100,000 warrants with an exercise price of $0.50. These warrants
        are
        exercisable at the warrant holder’s option any time up through May 30,
        2012.
 
 **Off
        Balance Sheet Arrangements**
 
 As
        of
        March 31, 2007, there were no off balance sheet arrangements.
 
 **Item
                  3.**
              **Controls
                  and Procedures**
 
 We
        carried out an evaluation of the effectiveness of the design and operation
        of
        our disclosure controls and procedures (as defined in Exchange Act Rules
        13a-15(e) and 15d-15(e)) as of March 31, 2007. This evaluation was carried
        out
        under the supervision and with the participation of our Chief Executive Officer,
        Mr. Robert G. Pedersen II, and Chief Financial Officer, Mr. Brandon T. O’Brien.
        Based upon that evaluation, our Chief Executive Officer and Chief Financial
        Officer concluded that, as of March 31, 2007, our disclosure controls and
        procedures are effective. There have been no changes in our internal controls
        over financial reporting during the quarter ended March 31, 2007.
 
 Disclosure
        controls and procedures are controls and other procedures that are designed
        to
        ensure that information required to be disclosed in our reports filed or
        submitted under the Exchange Act are recorded, processed, summarized and
        reported, within the time periods specified in the SEC's rules and forms.
        Disclosure controls and procedures include, without limitation, controls
        and
        procedures designed to ensure that information required to be disclosed in
        our
        reports filed under the Exchange Act is accumulated and communicated to
        management, including our Chief Executive Officer and Chief Financial Officer,
        to allow timely decisions regarding required disclosure.
 
 Limitations
        on the Effectiveness of Internal Controls
 
 Our
        management does not expect that our disclosure controls and procedures or
        our
        internal control over financial reporting will necessarily prevent all fraud
        and
        material error. Our disclosure controls and procedures are designed to provide
        reasonable assurance of achieving our objectives and our Chief Executive
        Officer
        and Chief Financial Officer concluded that our disclosure controls and
        procedures are effective at that reasonable assurance level. Further, the
        design
        of a control system must reflect the fact that there are resource constraints,
        and the benefits of controls must be considered relative to their costs.
        Because
        of the inherent limitations in all control systems, no evaluation of controls
        can provide absolute assurance that all control issues and instances of fraud,
        if any, within the Company have been detected. These inherent limitations
        include the realities that judgments in decision-making can be faulty, and
        that
        breakdowns can occur because of simple error or mistake. Additionally, controls
        can be circumvented by the individual acts of some persons, by collusion
        of two
        or more people, or by management override of the internal control. The design
        of
        any system of controls also is based in part upon certain assumptions about
        the
        likelihood of future events, and there can be no assurance that any design
        will
        succeed in achieving its stated goals under all potential future conditions.
        Over time, control may become inadequate because of changes in conditions,
        or
        the degree of compliance with the policies or procedures may deteriorate.
 
  17
  **PART
        II - OTHER INFORMATION**
 
 **Item
                  1.**
              **Legal
                  Proceedings**
 
 The
        Company is not presently party to any legal proceedings. We are not aware
        of any
        pending legal proceeding to which any of our officers, directors, or any
        beneficial holders of 5% or more of our voting securities are adverse to
        us or
        have a material interest adverse to us.
 
 **Item
                  2.**
              **Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds**
  On
          February 8, 2007, the Company issued and sold 785,856 shares of Common
          Stock to
          accredited investors. The shares were sold at a price per share of $0.35
          for
          aggregate proceeds of $275,050 less fees paid to Empire Financial Group
          to
          facilitate the placement. The Company also issued warrants exercisable
          until
          March 18, 2012 to purchase 53,500 shares of the Common Stock at an exercise
          price of $0.35 per share. These securities have piggy back registration
          rights.
          The shares were issued pursuant to an exemption from registration provided
          by
          Rule 506 of Regulation D, as they were issued without any form of general
          solicitation or general advertising and the purchases qualified as accredited
          investors and accepted the shares for their personal accounts and not with
          a
          view towards distribution.
 
 On
          February 8, 2007, the Company and Amerasia Khan Enterprises Ltd. a Nevada
          corporation (“AKE”) (nka Zagg Incorporated), a publicly held entity, executed an
          Agreement and Plan of Merger (the “Merger Agreement”) by and between AKE and its
          wholly owned subsidiary, SZC Acquisition Corp., a Nevada corporation
          (“Subsidiary”) on the one hand and ShieldZone Corporation, a Utah corporation on
          the other hand. Pursuant to the Merger Agreement ShieldZone merged with
          the
          Subsidiary, with ShieldZone Corporation surviving the merger (the “Merger”). In
          consideration, the shareholders of ShieldZone were issued 10,175,000 shares
          of
          the common stock of AKE. The issuance of the shares in connection with
          the
          Merger was made pursuant to an exemption form registration provided by
          Rule 506
          of Regulation D, as they were issued without any form of general solicitation
          or
          general advertising and the purchasers qualified as accredited investors
          and
          accepted the shares for their personal accounts and not with a view towards
          distribution.
 
 During
          the current reporting period, the Company repaid $50,000 of the principal
          balance of a $100,000 note issued in November 2006 to an affiliate of the
          Company’s Chief Executive Officer, and the remaining $50,000 of principal plus
          accrued interest of $1,749 was converted into 147,853 shares of Common
          Stock. A
          third party also converted a $250,000 note into 714,286 shares of Common
          Stock
          during the current reporting period.
 **Item
                  3.**
              **Defaults
                  Upon Senior Securities**
 
 None.
 
 **Item
                  4.**
              **Submission
                  of Matters to a Vote of Security
                  Holders**
 
 No
        matters have been submitted to our security holders for a vote, through the
        solicitation of proxies or otherwise, during the quarter ended March 31,
        2007.
 
 **Item
                  5.**
              **Other
                  Information**
 
 None.
 
 **Item
                  6.**
              **Exhibits**
 
 a.
              Exhibits:
                  The following Exhibits are filed with this Form 10-QSB 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 to Section 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 to Section 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 to Section 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 to Section 906 of the Sarbanes-Oxley Act of
                  2002.
 
  18
  **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the Registrant
        has
        duly caused this report to be signed on its behalf by the undersigned hereunto
        duly authorized.
 
 
 **ZAGG
                  INCORPORATED**Date:
                  May 15, 2007
              **/s/
                  ROBERT G. PEDERSEN
                  II**Robert
                  G. Pedersen II,President
                  and Chief Executive OfficerDate:
                  May 15, 2007
              **/s/
                  BRANDON T.
                  O’BRIEN**Brandon
                  T. O’Brien,Chief
                  Financial Officer(Principal
                  financial officer)
 
                    19