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Lattice Announces Positive Q2 Net Income, Growing Communications Sales and Improved Outlook for Government Services

Y-T-D Communications Revenue up 77% Over Year-Ago Period


08/14/12

Pennsauken, N.J. – August 14, 2012 -- Lattice Incorporated (OTC Bulletin Board: LTTC), a provider of advanced information and communications technology solutions to the corrections industry and key government agencies, announced its financial results for the second quarter ended June 30,2012 and the first six months of 2012.

Q2 Financial Highlights:
• Revenue was $2,488,203 compared to $3,194,686 for the same period of 2011.
• Net income was $99,541 compared with a loss of ($1,965,852) for the same period of 2011

Six Months Financial Highlights:
• Revenue was $5,883,684 compared to $6,461,437 for the same period of 2011.
• Net income was $128,301 compared with a loss of ($2,507,234) for the same period of 2011

Additional information may be found in the company’s 10-q filing with the U.S. Securities and Exchange Commission (SEC).

Revenues from the company’s rapidly growing Communications Services in the second quarter rose 54% to $1,839,000, accounting for 74% of total company revenues compared with 37% in the second quarter of 2011. Revenues from recurring services within the Communications segment were up 90% to $1,554,000 reflecting higher call volumes from correctional facilities and the increased number of facilities on the network.

Government Services revenue in the second quarter decreased to $649,000 compared with $1,997,000 in the second quarter a year earlier. The decrease in revenue in this segment was primarily attributable to SPAWAR contracts ending in 2011 and 2012 and the stagnation of contract funding in the Federal DoD market. The ending of the SPAWAR contracts accounted for approximately $747,000 of the decrease from the prior year.

Lattice CEO Paul Burgess said, “We continue to see strong growth in our communications business as demand for our technology and direct services remain robust. With an increase in sales both domestically and internationally, it is a clear indication our proprietary technology is being more widely accepted within the corrections industry and bodes well for our market share growth. With recent contract awards for our Government Services division we anticipate earnings growth within the division to rebound in the second half of the year.”

Lattice will host a conference call today, Tuesday, August 14, with CEO Paul Burgess and CFO Joseph Noto at 2:00 p.m. EDT. To participate in this call, dial 1-877-941-1429 after 1:50 p.m. EDT. International callers should dial 1-480-629-9809. An audio replay of the call will be available at http://www.hawkassociates.com/lttcprofile.aspx. 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.

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



LATTICE INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2012

2011

2012

2011

Revenue

$

2,488,203

$

3,194,686

$

5,883,684

$

6,461,437

Cost of Revenue

1,503,618

1,994,506

3,541,806

4,095,874

Gross Profit

984,585

1,200,180

2,341,878

2,365,563

39.6

%

37.6

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