Company Address:
Lattice Incorporated
7150 N. Park Drive,
Suite 500

Pennsauken, NJ
08109
USA
 Phone:
(856) 910-1166
 Website:
www.latticeincorporated.com
 Ticker:
LTTC
 Exchange:
OTC BB
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7150 N. Park Drive, • Suite 500 • Pennsauken • NJ • 08109 • USA • www.latticeincorporated.com
Investor Contact: Frank N. Hawkins, Jr. or Julie Marshall · Hawk Associates Inc. · (305) 451-1888 · www.hawkassociates.com
Lattice Third Quarter Revenues $3.9 Million. Nine Month Revenues Up 3.2% to $11.9 Million.
Lattice Incorporated is a provider of advanced information and communications technology to the government and commercial markets. The company’s technology services division designs, deploys and manages advanced technological solutions at key government agencies and mid- to large- sized enterprises. Lattice’s technology products division consists of several core proprietary platforms used to develop customized software applications in multiple vertical markets.

Differentiators

TECHNICAL SERVICES

Lattice Inc. has been supplying advanced technological solutions since 1977. The company currently derives the majority of its revenue through technology solutions contracts with the federal government. Lattice Inc.’s expertise in systems architecture is complemented by its ability to manage and integrate advanced customized solutions across the federal sector.

Lattice Inc. designs, develops and implements business management applications, geographic information systems, web services applications and secure geospatial solutions. Consulting services offered to its federal clients include network engineering, architectural guidance, database management and functional area analysis. The company also provides strategic consulting services to support business requirements, change management and financial analysis for several major federal customers.

TECHNICAL PRODUCTS

Lattice Inc. maintains a proprietary Department of Defense (DoD) certified software development platform enabling developers to rapidly create fully compliant, highly secure .NET applications. The company also owns a proprietary transaction processing platform used to develop and enhance a variety of customizable communications platforms.

Lattice Inc. uses its proprietary technologies to develop customized solutions for all levels of the federal government and enterprise-level customers. Using DOD-certified platforms, the company develops low-cost web services — custom programs that use open source-based applications to exchange data over the web — incorporating military grade security.

Lattice Inc.’s products are specifically designed to reduce the time and cost of developing advanced solutions for clients requiring highly secure, extremely reliable communications systems. The company’s expertise in securing web services with military-grade technology enables more powerful IP-based communications in the defense, intelligence and homeland security agencies.

Lattice Inc. was previously nominated for the prestigious Malcolm Baldridge Quality Award. The company is also working with Microsoft on a case study of the benefits of using its proprietary platforms to develop applications in a .NET environment.

GOVERNMENT MARKET

Lattice Inc. competes primarily in a highly competitive and fragmented market servicing the federal government. In addition to its proprietary technologies and long operating history, the company further distinguishes itself via its ties to key government agencies and the possession of a Department of Defense certification on a core development platform.

Lattice Incorporated believes it has significant hidden assets and future revenue streams not currently reflected in its financial statements. Many contracts in the government market are initially awarded on a single-year basis but are effectively multi-year awards, providing the original firm satisfactorily performs that first year. Based on its historical track record of successful execution, the company believes it has a high probability of realizing recurring revenue streams from such contract extensions.

Recent News
Lattice Announces Third Quarter Earnings; Conference Call Today at 2:00 EST
Lattice Sets Q3 Conference Call For Monday, November 23 At 2:00 PM EST
Lattice Announces Second Quarter Gains in Revenue and Gross Profit Reflecting Enhanced Sales and Marketing Efforts
Lattice Incorporated Schedules Conference Call To Discuss Second Quarter 2009 Results
Lattice Incorporated Reports First-Quarter 2009 Results

    Risk Factors
  • Larger, better financed competitors
  • Need for additional financing
  • Highly competitive market
  • Ability to successfully commercialize and derive revenue from products

The Outlook Total revenues for the three months ended September 30, 2009 decreased by $282,083 or 6.7% to $3,922,064 compared to $4,204,147 for the three months ended September 30, 2008. The decrease in the quarter included timing impacts from product sales and service revenues attributable to subcontractors. For the nine months ended September 30, 2009, total revenues increased by $373,505 or 3.2% to $11,896,647 compared to $11,523,142 for the nine months ended September 30, 2008.

Gross profit for the quarter rose 13% to $1.257 million from $1.112 million a year ago. The increase in GP was primarily due to the rate increase on our cost-plus contract vehicles. For the nine months, gross profit was up 15.8% to $3.79 million from $3.27 million in last year’s third quarter.

The three months ended September 30, 2009 showed a net loss of $302,000 compared with net income of $321,000 in the third quarter of 2008. For the first nine months of 2009, the net loss was $877,000 against net income a year earlier of $5.2 million. The large swing in net income to net loss was due to last year’s; non-cash derivative income of $2.7 million, a gain on extinguishment of $2.6 million related to the exchange of Preferred Series C stock for outstanding warrants held by Baron Partners, L.P. and a settlement gain of $970,000 on a contingent earnout liability from the purchase of RTI. Excluding those amounts, the year ago net income would have shown a net loss of $1.1 million.

The company recorded a solid third quarter gain in gross profit of 13% reflecting the initial returns from investments made in the past few quarters in sales and marketing. The company also also noted an improvement in gross margin from government services related to pricing on its cost-plus contract vehicles.

Lattice plans to continue expanding its sales efforts both within the federal government secure software solutions space and commercial accounts. Management said it is building on the company's recent success in these markets by expanding its marketing efforts through its direct sales strategy. The strong contract backlog has provided an opportunity to expand the company's existing revenue base.

LTTC derives substantially all of its revenues from governmental contracts under which LTTC acts as both a prime contractor and indirectly as a subcontractor. Revenues from government contracts accounted for approximately $11.0 million or 93% of the company's overall revenues for the nine months ended September 30, 2009. Of the total government contract revenues, approximately 96% were from prime contract vehicles.

LTTC continues to succeed steadily in achieving organic growth, as LTTC expands contract work with existing government customers.

Management
President and Chief Executive Officer -
Paul Burgess

Chief Financial Officer-
Joel Noto

Vice President of Engineering-
Thomas Spadaro

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