5. Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

As part of the Company’s strategy to focus on its higher growth potential communications business, the Company decided during the quarter to exit the Government services segment which derived its revenues mainly from contracts with federal government Dept of Defense agencies either as prime contractor or as a subcontractor to another prime contractor. On April 2, 2013, we entered an Asset Purchase Agreement (“Purchase Agreement”) with Blackwatch International, Inc. (“Blackwatch”), a Virginia corporation, pursuant to which we primarily sold our government Dept. of Defense (DoD) contract vehicles for approximately $1.2 million. These assets essentially comprised our Government services segment operations. (See subsequent event for a more detailed discussion of the transaction). The Company retained the assets and liabilities of Lattice Government services, Inc. The Company expects to recognize a gain of approximately $400,000 to $500,000 on the sale of these assets during the second quarter of 2013, which represents the excess of the sales price over the book value of the assets sold.

With the Company’s decision to exit the Government services business, the results of operations and cash flows from this business have been classified as discontinued operations.

The following table shows the results of operations of Lattice Governmetnt Services segment for the periods ended March 31, 2013 and 2012 which are included in the earnings from discontinued operations:

	Three Months Ended March 31,
	2013			2012
Revenue	$	631,074		$	1,311,905
Cost of Revenue		324,836			795,426
Gross Profit		306,238			516,479
		48.5%			39.4%
Selling, general and administrative expenses		291,110			439,538
Amortization expense		80,448			80,448
Income (loss) from operations		(65,320	)		(3,507	)
Interest expense		(2,818	)		(5,069	)
Income (Loss) before taxes		(68,138	)		(8,576	)
Income taxes (benefit)		(32,397	)		(32,396	)
Net income (loss) from Discontinued operations		(35,741	)		23,820

As a result of the decision to exit the Government services business, the assets and liabilities to be disposed of are comprised of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
Goodwill		690,871		690,871
Intangible assets, net		152,062		232,510
Note payable		226,104		282,456
Deferred tax liability		61,787		61,787
Non-controlling interest		120,133		120,133