ZAGG Incorporated (ZAGG)

[deathroll]

I don't hold Zagg stock, but I'm very familiar with Mr. Scott Gordon. He has the voice of an angel, but a rapists' wit. BEWARE!!!!!!

The world of penny stocks is always worth a stroll because no matter what you come across almost every company and its story ultimately follows the same script.
A maker of cellphone and computer accessories from Salt Lake City, Zagg, is trying to buck that trend, and based on this chart, you could think they are pulling it off, managing to emerge from the primordial ooze of a reverse merger and walk upright in the sun.
Think again.
Financially speaking, Zagg seems at first pass to be like many fast-growing companies: Awe-inspiring sales growth parried with cash-flow worries. In the filings, it usually looks something like this-a big jumps in sales beget corresponding increases in Accounts Receivable while working capital expansion burns through cash. Despite the continued growth trajectory in sales, Zagg's Accounts Receivable dropped 8% sequentially to $16.2 million in the first quarter.
Those (apparently) collected receivables aren't being converted to cash quickly enough, however. Zagg used up $5 million in the first quarter and accessed its credit lines for $4 million. This is hardly unheard of, but that cash is going somewhere.

Making an argument for Zagg would be much easier if its chief executive and chief financial officer weren't shot through with so much Salt Lake penny stock vibe that you can virtually smell the copper (Salt Lake City's penny stock culture of hype and promotion makes it essentially Boca Raton West.) CEO Robert Pederson has repeatedly set up ventures with men who have truly run afoul of the law. These aren't guys with a youthful indiscretion in their past, nor are they highly technical violations; they crossed the line and kept hauling as far as they could go before they were caught.

The CEO also invested $3.2 million in something called hZo systems that claimed to have developed a "world class" waterproofing technology. The founder of the company, Scott B. Gordon, however, had been barred from the securities industry in 2008 when it was revealed that he had been using customer funds to pay the operating expenses of a private investment he had set up while a manager of a Lincoln Financial office in Salt Lake City (Gordon paid the capital back with
interest.) A group of 20 investors later sued Lincoln Financial for failing to detect the fact that Gordon was running an independent software venture out of his office and were awarded $4.43 million.
A spokeswoman for Zagg, Amber Roberts of Lane PR, said that the board had not been aware of the FINRA issues when "Gordon was engaged" and that "He does not act in an officer role [nor] is he an employee of Zagg." However, Gordon seems to have represented Zagg at a conference in Utah last year. FI.com called Zagg's headquarters last week and asked to be connected to Gordon and was put right through to his secretary. A voice mail message for Gordon's assistant was not returned. Roberts said she had called Zagg for additional clarification on Gordon's role but had yet to hear back.

http://www.scribd.com/doc/45466615/ZAGG-Presentation-12-14-10-Final-2
Read this summary of the company Zagg and HZo.

So we have ZAGG funding over $3mm into hZo which was in turn supposed to go to NMI, but now it appears that hZo defaulted on its agreement and/or NMI no longer exists. Where did that money really go? The Golden Shellback sounds like The Golden Shell Game.