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Lattice Announces Positive Q1 EBITDA and Surging Communications Sales

Communications Revenue up 106% on Year-Ago Period; Conference Call Today, May 15 at 2:00 p.m. EDT (May 15, 2012)

PENNSAUKEN, NJ -- (Marketwire) -- 05/15/12 -- Lattice Incorporated (OTCBB: LTTC), a provider of advanced information and communications technology solutions to the corrections industry and key government agencies, announced its financial results for the first quarter of 2012.

Q1 Financial Highlights:

  • EBITDA was $263,619, compared to $69,209 for the same period of 2011, an increase of 280%
  • Revenue was $3,395,338 compared to $3,269,867 for the same period of 2011, and increase of 4%
  • Net income was $28,760 compared with a loss of $522,838 for the same period of 2011

The top and bottom line improvements were attributable to major gains in the company's rapidly growing Communications Division, which recorded revenue in the quarter of $2,083,433 compared with revenue of $1,010,925 a year earlier, a 106% improvement. This was partially offset by a drop in revenue in the company's Government Services Division from $2,258,942 a year ago to $1,311,905 in the first quarter.

Lattice CEO Paul Burgess said, "The significant increase in communications revenue reflected higher call volumes from our installed base of correctional facilities and an increased number of facilities utilizing our proprietary Nexus system. This is a clear indication our proprietary technology is being more widely accepted within the corrections industry and bodes well for our market share growth. Our sales pipeline continues to grow, driven by increased interest from correctional facilities, larger service providers and international telecommunication companies."


Lattice will host a conference call today, Tuesday, May 15, with CEO Paul Burgess and CFO Joseph Noto at 2:00 p.m. EDT. To participate in this call, dial 1-877-941-2321 after 1:50 p.m. EDT. International callers should dial 1-480-629-9666. An audio replay of the call will be available at http://www.hawkassociates.com for approximately 90 days after the call.
Financial Tables are attached.

About Lattice Incorporated
Lattice Incorporated is a provider of advanced information and communications technology solutions to the government and commercial markets. The company's Lattice Government Services division designs, deploys and manages advanced technological solutions at key government agencies and for mid- to large-sized enterprises. The company's Lattice Secure Communications division provides core proprietary platforms that develop customized software applications with military grade security for markets including correctional facilities that require highly secure solutions. For more information, visit http://www.latticeinc.com.

Investment profile about Lattice: http://www.hawkassociates.com/lttcprofile.aspx.

An online investor relations kit including copies of press releases, current price quotes, stock charts and information for investors is available at http://www.hawkassociates.com. To receive free e-mail notification of future releases for Lattice, sign up at http://www.hawkassociates.com/about/alert/.

Safe Harbor Statement
Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the risk factors disclosed in the Company's periodic reports filed with the SEC. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk factors disclosed in the company's Forms 10-K previously filed with the SEC.

LATTICE INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATION (Unaudited) Three Months Ended March 31, 2012 2011 ------------- ------------- Revenue $ 3,395,338 $ 3,269,867 Cost of Revenue 2,035,497 2,104,483 ------------- ------------- Gross Profit 1,359,841 1,165,384 40.1% 35.6% Operating expenses: Selling, general and administrative 1,012,241 1,113,914 Research and development 174,583 152,261 Amortization expense 80,448 105,400 ------------- ------------- Total operating expenses 1,267,272 1,371,575 ------------- ------------- Income (loss) from operations 92,569 (206,191) Other income (expense): Derivative income (expense) 11,783 (272,917) Interest expense (107,988) (132,371) ------------- ------------- Total other income (96,205) (405,288) Noncontrolling interest - 3,147 ------------- ------------- (Loss) before taxes (3,636) (608,332) Income taxes (benefit) (32,396) (85,504) ------------- ------------- Net income (loss) 28,760 (522,828) Reconciliation of net income (loss) to income (loss) applicable to common shareholders: Net income (loss) 28,760 (522,828) Preferred stock dividends (6,277) (6,277) ------------- ------------- Income (loss) applicable to common stockholders 22,483 (529,105) Income (loss) per common share Basic $ 0.00 $ (0.02) Diluted $ 0.00 $ (0.02) Weighted average shares: Basic 29,548,522 23,432,084 Diluted 36,606,689 23,432,084 See accompanying notes to the condensed consolidated financial statements. LATTICE INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2012 2011 (unaudited) ------------ ------------ ASSETS: Current assets: Cash and cash equivalents $ 174,066 $ 192,286 Accounts receivable 3,136,440 2,700,859 Inventories 7,350 7,350 Other current assets 138,540 142,500 ------------ ------------ Total current assets 3,456,396 3,042,995 Property and equipment, net 595,357 612,710 Goodwill 690,871 690,871 Other intangibles, net 1,481,359 1,594,306 Other assets 2,813 2,813 ------------ ------------ Total assets $ 6,226,796 $ 5,943,695 ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,836,335 $ 1,769,896 Accrued expenses 1,696,453 1,698,617 Deferred revenues 57,500 50,000 Customer advances 187,447 124,266 Notes payable - current 1,976,695 1,869,043 Contingent Consideration 77,700 77,700 Derivative liability 84,583 96,366 ------------ ------------ Total current liabilities 5,916,713 5,685,888 Long term liabilities: Notes Payable - long term 1,267,050 1,206,283 Deferred tax liabilities 191,375 223,771 ------------ ------------ Total long term liabilities 1,458,425 1,430,054 ------------ ------------ Total liabilities 7,375,138 7,115,942 ------------ ------------ Shareholders' equity Preferred Stock - .01 par value Series A 9,000,000 shares authorized 7,530,681 issued and outstanding 75,307 75,307 Series B 1,000,000 shares authorized 1,000,000 issued and 502,160 outstanding 10,000 10,000 Series C 520,000 shares authorized 520,000 issued and outstanding 5,200 5,200 Series D 636,400 shares authorized 520,000 issued and outstanding 5,909 5,909 Common stock - .01 par value, 200,000,000 authorized, 29,851,509 and 22,942,437 issued and outstanding respectively 298,516 298,516 Additional paid-in capital 43,315,390 43,313,969 Accumulated deficit (44,420,702) (44,443,185) ------------ ------------ (710,380) (734,284) Stock held in treasury, at cost (558,096) (558,096) ------------ ------------ Equity Attributable to shareowners of Lattice Incorporated (1,268,476) (1,292,380) ------------ ------------ Equity Attributable to noncontrolling interest 120,133 120,133 ------------ ------------ Total liabilities and shareholders' equity $ 6,226,796 $ 5,943,695 ============ ============ See accompanying notes to the condensed consolidated financial statements. LATTICE INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, ---------------------------- 2012 2011 ------------- ------------- Cash flow from operating activities: Net Income (loss) $ 28,760 $ (522,826) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Derivative income (11,783) 272,917 Amortization of intangible assets 112,948 137,228 Deferred income taxes (32,396) (85,504) Minority interest - (3,147) Share-based compensation 1,421 119,833 Depreciation 56,681 18,339 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable (435,581) (84,269) Other current assets 3,960 43,734 Increase (decrease) in: Accounts payable and accrued liabilities 57,998 (214,063) Deferred revenues 7,500 (57,879) Customer advances 63,180 (7,132) ------------- ------------- Total adjustments (176,072) 140,057 ------------- ------------- Net cash provided by (used in) operating activities (147,312) (382,769) Cash Used in investing activities: Purchase of equipment (39,328) (95,712) ------------- ------------- Net cash used for investing activities (39,328) (95,712) ------------- ------------- Cash flows from financing activities: Revolving credit facility (payments) borrowings, net 67,093 (27,252) Payments on capital equipment lease (5,426) (12,195) Payments on Notes Payable (56,355) (531,000) Proceeds from the issuance of Securities 175,000 1,436,361 Payments on Director Loans (11,892) (9,610) ------------- ------------- Net cash provided by (used in) financing activities 168,420 856,304 ------------- ------------- Net increase (decrease) in cash and cash equivalents (18,220) 377,823 ------------- ------------- Cash and cash equivalents - beginning of period 192,286 324,149 ------------- ------------- Cash and cash equivalents - end of period $ 174,066 $ 701,972 ============= ============= Supplemental cash flow information Interest paid in cash $ 91,315 $ 113,620 Common Stock - 1,231 Derivative liabilities - (31,999) Additional paid in Capital - 30,768 See accompanying notes to the condensed consolidated financial statements.

Investor Relations contact:
Hawk Associates
Frank Hawkins
305-451-1888
e-mail: lattice@hawkassociates.com


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