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(Nasdaq: ZAGG)


Faruqi & Faruqi, LLP is Investigating ZAGG, Inc. on Behalf of its Shareholders  (ZAGG)

Faruqi & Faruqi, LLP, a national law firm concentrating on investor rights, consumer rights and the enforcement of federal antitrust laws, is investigating potential wrongdoing at ZAGG, Inc. (“ZAGG” or the “Company”) (Nasdaq: ZAGG).  The investigation focuses on whether certain executive officers and directors of ZAGG breached their fiduciary duties in connection with, among other things, certain related party transactions.  Specifically, the investigation concerns a related party transaction in which the Company pursued a transaction with Teleportall, LLC (“Teleportall”) for the development of a consumer electronics product known as the ZAGGbox.

In June 2008, Lorence Harmer became a member of ZAGG’s Board of Directors (“Board”) and in December 2009 the chairman of the Audit Committee.  In 2009, Mr. Harmer introduced the Company to Teleportall, the owner of the technology used in the ZAGGbox.  The Company consequently determined that it wished to obtain certain rights for the sale and development of ZAGGbox, and entered into a purchase agreement with Teleportall and advanced more than $1.1 million in partial payment.

Contrary to expectations, Teleportall did not deliver the product in time for the 2009 Christmas selling season, and during a December 1, 2009 meeting of the Board, Mr. Harmer disclosed to the other members of the Board that he owned an interest in Teleportall.  Mr. Harmer told the Board he was willing to divest himself of any ownership in Teleportall and the Board assumed thereafter that Mr. Harmer had completed his divestiture.

By the 2010 Christmas season, Teleportall had still failed to deliver ZAGGbox and ZAGG had made additional payments to Teleportall exceeding $2.7 million.  Moreover, in January 2011, the Board learned that Mr. Harmer had not, in fact, divested himself of his interest in Teleportall, but instead retained an indirect ownership interest of 25% in Teleportall as well as other entities potentially affiliated with the ZAGGbox.

As a result of the foregoing, in March 2011 the Board terminated the purchase agreement and allowed Mr. Harmer and Teleportall to sign a promissory note for the repayment of more than $4.1 million to ZAGG.  The note, however, was secured by real estate with collateral value insufficient to cover the principal, and unsurprisingly, Mr. Harmer defaulted on the note in September 2011.  To date, Mr. Harmer has failed to cure the default on the note which has a total unpaid principle balance of $4 million, and the Company has never received the ZAGGbox product. 

If you have hold ZAGG shares and you would like to discuss your legal rights, contact us by calling Beth Keller toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to bkeller@faruqilaw.com.

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Faruqi & Faruqi, LLP
685 Third Avenue 26th Floor
New York, NY 10017
Tel: (212) 983-9330


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