8-K

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

May 14, 2015

Date of Report (Date of earliest event reported)

LATTICE INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Delaware	005-34249	22-2011859
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

7150 N. Park Drive, Suite 500 Pennsauken, New Jersey	08109
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (856) 910-1166

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 1.01     Entry into a Material definitive Agreement

The disclosure contained in Item 2.03 is incorporated by reference in this Item 1.01.

Item 2.02     Results of Operations and Financial Condition

On May 20, 2015, Lattice Incorporated (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1.

Item 2.03     Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On May 14, 2015, Lattice Incorporated (“Company” or “we”) entered into a Loan and Security Agreement (the “Loan Agreement”) with Lattice Funding, LLC (“Funding”), a third party lender, pursuant to which Funding loaned the Company a gross amount of $908,000 (the “Loan”). The Company is also obligated to issue 605,333 shares of its common stock to Funding pursuant to the Loan Agreement, and will pay Funding an annual 2% administration fee while the Loan is outstanding, which would increase to 3% in the event of a default. The Loan is secured by a first priority security interest in the revenues from certain of the Company’s contracts and the equipment associated with such contracts. In connection with the Loan Agreement and the transactions contemplated thereby, the Company:

· issued a promissory note dated May 14, 2015 bearing an interest rate of 8% per year (the “Note”). The Note matures on April 30, 2020 and is convertible into shares of the Company’s common stock at a conversion price of $0.15 per share and may not be prepaid. The Note provides for customary events of default, including the failure to pay any amount due under the Note on the applicable due date (subject to a cure period), any default on any other indebtedness by the Company, the Company becoming insolvent, or the company filing for voluntary bankruptcy. In the event of a default, the interest rate on the Note would increase to 12% per year and $50,000 would be added to the to the principal as a penalty. If the Company fails to make a payment within 10 days of the due date, the Company would be obligated to pay a late charge of 5% of the amount due.

· entered into a Placement Agent Agreement dated May 14, 2015, pursuant to which the Company agreed to pay Cantone Research Inc. (“CRI”), an affiliate of Funding, a fee of 8% of the gross amount of the Loan, a non-accountable expense allowance of 1% of the Loan, and 1,000 shares of shares of common stock for each $1,000 of gross proceeds (a total of 908,000 shares in connection with the Loan). The Company also agreed to pay legal fees equal to 1% of the gross amount of the Loan.

Funding and CRI received piggy-back registration rights in connection with the Loan. Approximately $365,000 of the Loan was used to repay a portion of a Bridge Loan made by Cantone Asset Management, LLC, an affiliate of CRI and Funding.

Item 3.02     Unregistered Sales of Equity Securities

The disclosure contained in Item 2.03 is incorporated by reference in this Item 3.02. The securities (an aggregate of 1,513,333 shares of the Company’s common stock and a Note convertible into shares of the Company’s common stock) were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.

Item 9.01     Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Loan and Security Agreement dated May 14, 2015, between Lattice Funding, LLC and the Company
10.2	Promissory Note dated May 14, 2015 made in favor of Lattice Funding, LLC
10.3	Placement Agent Agreement dated May 14, 2015 between Cantone Research Inc. and the Company
99.1	Press release dated May 20, 2015

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated May 20, 2015

LATTICE INCORPORATED

By: /s/ Joe Noto                         
Name: Joe Noto
Title: Chief Financial Officer

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EX-10.1

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”) made as of the 14th day of May, 2015 by and between LATTICE FUNDING, LLC, a Pennsylvania limited liability company, its successors and assigns (the “Lender”), and LATTICE INCORPORATED, a Delaware corporation, its successors and assigns (the “Borrower”). (The Lender and the Borrower are sometimes referred to collectively in this Agreement as the “Parties” or singly as a “Party.”)

BACKGROUND

At the request of and on behalf of the Borrower, the Lender proposes to extend to the Borrower a loan in the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) (the “Loan”) to be used for commercial purposes, including repayment of short-term debt, purchase of equipment and working capital and secured by the proceeds of Borrower’s services agreements with correctional facilities (existing on this date or entered into during the term of the Loan, along with related equipment (as more specifically defined below, the “Collateral”).

NOW THEREFORE, in consideration of the promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to the legally bound, the Parties agree as follows:

1.            Definitions

The following terms used in this Agreement shall have the meanings set forth below:

(a)            “Agreement” means this Agreement.

(b)            “Business Day” shall mean any day other than a Saturday, a Sunday, a United States federal government legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close in the Commonwealth of Pennsylvania.

(c)            “Collateral” means all of the Borrower’s right, title and interest in the revenues of all of its telecommunications contracts with correctional facilities, existing on this date or entered into during the Term (as defined below), the telecommunications equipment associated with such contracts and the proceeds from such contracts; including all insurance proceeds, and rights to refunds or indemnification whatsoever owing, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods, equipment, which any of the same may represent, and all right, title, security and guaranties with respect to each contract.

(d)            “Conversion Shares” shall have the meaning set forth in Section 2(c), below.

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(e)            “Loan Documents” means this Agreement, the $1,500,000 Note of even date from Borrower to Lender (the “Note”), the UCC-1 Financing Statements naming Borrower as debtor and Lender as secured party to be filed with the New Jersey Department of State and the Commonwealth of Pennsylvania, an affidavit of business use and all other loan documents listed on the Closing Checklist attached as Exhibit A, including all riders, supplements and addenda to such documents.

(f)            “Loan” means the $1,500,000 Loan, as advanced, extended and otherwise made under this Agreement, including any over-allotment up to an additional 10%.

(g)            “Person” shall mean any individual, sole proprietorship, partnership, joint venture, limited liability company, limited liability partnership, trust, incorporated organization, association, corporation, institution, entity, party or government (including any division, agency or department thereof), and, as applicable, the successors, heirs and assigns of each.

(h)            “Principal Amount” initially means the principal amount of the Loan represented by the gross proceeds of subscriptions accepted by the Lender before any deductions, in the maximum aggregate amount of $1,500,000, increased by any exercise of the over-allotment option (up to 10%) and reduced by any payments of principal or conversion of principal into Conversion Shares by Borrower.

(i)            “Taxes” mean any federal, state, local or foreign income sales, use, transfer, payroll, property, occupancy, franchise or other tax, levy, impost, fee, imposition, assessment or similar charge, together with any interest or penalties thereon.

(j)            “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New Jersey and the Commonwealth of Pennsylvania.

2.            Terms of the Loan

(a)            Lender agrees to extend the Loan to Borrower for working capital purposes and for business purposes only. Borrower has executed an affidavit of business purpose of even date. The term of the Loan (the “Term”) shall commence on the date of this Agreement and shall end no later than April 30, 2020 (the “Due Date”), on which date all principal, interest and other amounts due under the Note will be due and payable.

(b)            The Parties acknowledge that the Loan will be funded in two or more tranches, with the first closing (a “Closing”) to be held on or about May 12, 2015 and the final Closing to be held no later than June 30, 2015 (the “Offering Termination Date”).

(c)            Borrower will pay interest on the outstanding Principal Amount at 8% per annum (the “Interest Rate”), accruing upon initial funding until repaid in full. Borrower will pay interest only accrued on the Principal Amount at the Interest Rate quarterly, in arrears, with the first payment due July 30, 2015 and subsequent payments of interest due the 30^th of October, January, April and July thereafter, until the earlier of the Borrower’s payment of all Amounts Due under the Note or the conversion of the Principal Amount into common stock of the Borrower (the “Conversion Shares”) under the conversion provisions of the Note and payment of all other Amounts Due under the Note.

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(d)            Restricted Stock. For each $1,000.00 in gross proceeds accepted at each Closing, the Borrower will issue to the Lender 2,500 shares of the Borrower’s restricted common stock (“Restricted Stock”), for the benefit of its subscribers.

(e)            The Borrower hereby agrees that Lender will have “piggyback” registration rights for all shares of Borrower Restricted Stock issued to the Lender (for itself or for holders of participations) or any of its affiliates, including, but not limited to, Cantone Research, Inc. (the “Placement Agent”), on any registration statement filed by the Borrower with the Securities and Exchange Commission (the “Commission”) except for registration statements on forms S-4 (for merger transactions) or S-8 (for employee plans), subject to customary proportional cutbacks if requested by an underwriter in connection with an underwritten public offering. If the Borrower files such a registration statement, the Borrower undertakes to use commercially reasonable efforts to make the registration statement effective within a reasonable time and to keep such registration statement effective until all of the shares of Restricted Stock are sold.

(f)            The outstanding unpaid Principal Amount of the Loan (to the extent not converted into Conversion Shares) and all accrued but unpaid interest shall be paid in full on the Due Date. The Borrower has no right to prepay the Principal Amount and accrued interest before the Due Date except as specifically provided in the Note. If any Event of Default (as defined in the Note) occurs, then upon such occurrence and continuing until such Event of Default is cured, the interest rate shall increase to 12% per annum (the “Default Rate”) and the Borrower will pay the Lender a penalty of $50,000 as a default penalty and not as interest, which, if not paid immediately in cash will be added to the Principal Amount and accrue interest at the then-applicable rate.

(g)            To evidence the obligation of Borrower to Lender to repay the Loan with interest at the applicable rate in accordance with the provisions of this Agreement, Borrower shall execute and deliver to Lender at Closing the Note, a form of which is attached as Exhibit B.

(h)            To secure the Note, Borrower shall execute and deliver to Lender at Closing and cause to be filed UCC-1 Financing Statements, which grants to Lender a perfected first security interest in the Collateral (the “Financing Statements”), which the Lender will file with the State of New Jersey and the Commonwealth of Pennsylvania.

3.            Fees

(a)            The Borrower will reimburse the Lender for all of its fees and expenses of Cantone Research, Inc. (the “Placement Agent”); including an 8% sales commission, legal fees of 1% and a 1% non-accountable expense allowance, paid at each Closing. Borrower will also issue to the Placement Agent 1,000 shares of Restricted Stock for each $1,000.00 in gross proceeds accepted at each Closing. This Restricted Stock will have the same registration rights as Restricted Stock issued to the Lender for the account of its subscribers.

(b)            Borrower will also pay the Lender an annual administration fee (“Administration Fee”) of 2% of the Principal Amount, payable quarterly in arrears at the same time the Borrower pays interest on the Note. If an Event of Default occurs, the Administration Fee immediately increases to 3%. If the Borrower fails to pay any Administration Fee when due, the amount of any unpaid Administration Fee will be added to the Principal Amount of the Note and accrue interest at the then-applicable rate and payment thereof shall be secured by the Collateral. In addition, as part of the Administration Fee, the Borrower will issue the Lender 1,000,000 shares of Restricted Stock as a one-time issuance within thirty (30) days of the initial Closing.

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4.            Collateral for the Loan

(a)            The Parties agree that the collateral and security for the Loan shall be a first priority security interest in the Collateral, including all revenues and other proceeds thereof.

(b)            The Parties, by an agreement of even date, have agreed as to certain procedures upon a default by the Borrower. Any such election of remedies shall not limit the Lender’s rights under the Note, nor act as a waiver of any of the Lender’s rights under the Note or this Agreement.

5.            Covenants of Borrower. In addition to the covenants and agreements of the Borrower contained in the other Loan Documents, and as long as the Loan is outstanding, the Borrower hereby covenants and agrees as follows:

(a)            Borrower shall promptly give notice in writing to Lender of the occurrence of any material litigation, arbitration or governmental proceeding affecting Borrower, and of any governmental investigation or labor dispute pending or, to the knowledge of Borrower, threatened which could reasonably be expected to interfere substantially with normal operations of the business of Borrower or materially adversely, affect the financial condition of Borrower.

(b)            Borrower shall promptly give notice in writing to Lender of the occurrence of any Event of Default (as defined in the Note) and of any condition, event, act or omission which, with the giving of notice or the lapse of time or both, would constitute an event of default under this Agreement or under the Loan Documents.

(c)            Any and all payments by the Borrower hereunder or under the Note to or for the benefit of Lender shall be made free and clear of and without deduction for any and all present or future Taxes, deductions, charges or withholdings

(d)            The Borrower may not reduce the exercise or conversion price of any options, warrants or convertible securities outstanding on or after May 1, 2015 without prior approval from Lender.

(e)            Except as required by its certificate of incorporation in effect on the date of this Agreement, the Borrower shall not pay or declare any dividends or make any distributions to equity holders (common or preferred) while this Loan is outstanding.

(f)            Unless, and only to the extent, required by law, until after the final Closing, Borrower shall not make any public statements about the contemplated transaction without the prior written consent of the Lender, which shall not be unreasonably withheld.

(g)            Borrower will impose a black-out period (trading restriction) on all of its officers and directors such that they will be precluded from trading in the Borrower’s Common Stock to the same extent as the Placement Agent’s brokers are restricted from trading the Borrower’s Common stock. The Placement Agent shall advise the Borrower of the trading restrictions it imposes on its brokers, from time to time. This restriction shall apply only during periods that it is actively offering the Borrower’s securities and shall not apply beyond June 30, 2015, and shall be in addition to any other black-out period the Borrower imposes on its officers and directors.

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(h)            Borrower will seek approval from Lender before effecting a change in control or acquisition of the Borrower.

6.            Construction of this Agreement

(a)            Time is of the essence in connection with any act, undertaking or matter to be performed under this Agreement.

(b)            This Agreement is intended as a separate agreement between the Parties enforceable in accordance with its terms and is in addition to any other agreements between the Parties including but not limited to the Loan Documents, and this Agreement shall not be deemed to replace, modify, substitute for, be merged with or into or amend or alter the Loan Documents in any way except to the extent expressly provided for herein.

(c)            Unless otherwise specified herein or unless the context otherwise indicates, all capitalized terms used in this Agreement shall have the same definitions and meanings as used in and defined in the Loan Documents.

(d)            Borrower acknowledges that it was represented by legal counsel in connection with this Agreement and the Loan Documents and that it was under no economic duress or other compulsion in entering into this Agreement.

7.            Representations and Warranties of Borrower

(a)            Borrower hereby represents and warrants that:

(i)            Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified and authorized to do business and is in good standing wherever the nature of the business conducted by Borrower makes such qualification necessary.

(ii)           Borrower has the corporate power and authority to own its property and to conduct its business and holds such licenses and certificates as may be applicable and required for the conduct of its business; and Borrower has the corporate power and authority to enter into this Agreement and to consummate all transactions contemplated in this Agreement.

(iii)          This Agreement and the Loan Documents constitute valid, continuing, legal and binding obligations of Borrower and are enforceable against Borrower in accordance with their terms, subject however, to creditors’ rights generally.

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(iv)          The making of this Agreement has been duly authorized by all necessary corporate action on the part of Borrower, including Board of Directors approval, does not require the approval of, or the giving of notice to, any other entity or third person; and will not violate any provision of law or of Borrower’s Articles of Incorporation or Bylaws, or result in the breach of, constitute a default under, contravene any provision of, or result in the creation of any lien, charge, encumbrance or security interest upon any property or assets of Borrower.

(v)            The individual executing this Agreement on behalf of Borrower is a duly authorized officer of Borrower and is authorized to execute this Agreement and to take any and all other actions contemplated or required by this Agreement.

(vi)           There are no suits or proceedings pending or, to the knowledge of Borrower, threatened, in any court or before any regulatory commission (including the Commission or any state securities regulatory body), board or other administrative or governmental agency against Borrower, which if adversely determined would have a material adverse effect on the financial condition of Borrower or the business of Borrower or which if determined adversely to the Borrower would result in the inability of Borrower to perform this Agreement.

(vii)          The Financing Statements constitute valid and enforceable security interests in the Collateral described therein.

(ix)            There are no mortgages, pledges, security interests, liens, charges, leases, encumbrances or claims on or with respect to the Collateral, or any part thereof, or any title interest therein or any proceeds thereof, which have a priority superior to the lien and priority positions of the Lender’s security interest.

(x)             As of the date of this Agreement, Borrower is not insolvent as defined by the United States Bankruptcy Code, the Delaware Fraudulent Conveyances Act, by the insolvency provisions of the Delaware Business Corporation Law or by law or usage of any court of law or equity of the State of Delaware.

(xi)            As of the date of this Agreement, Borrower has complied with all the terms and conditions of this Agreement.

(xii)           The execution, delivery and performance of this Agreement and the Loan Documents will not violate any provisions of any indenture, agreement, or other instrument to which Borrower or any of Borrower’ s properties or assets are bound, and will not be in conflict with, result in a breach of, or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement, or other instrument, or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever upon any of the properties or assets of Borrower.

(xiii)          No authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign is necessary to the valid execution and delivery of this Agreement, the Loan Documents or any other documents evidencing or relating to the Loan.

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(xiv)         The most recent financial statements of Borrower delivered to the Lender represent fairly its financial position as of the date thereof; and the results of its operations for the period indicated; and show all known liabilities, direct or contingent, of Borrower as of the date thereof. Since the date of such financial statements, there has been no material adverse change in the condition, financial or otherwise, of Borrower or in the business and properties of Borrower and, since such date, Borrower has not incurred, other than in the ordinary course of business, any indebtedness, liabilities, obligations or commitments, contingent or otherwise.

(xv)          Neither this Agreement nor any other document, statement, financial statement, or certificate furnished to Lender by or on behalf of Borrower in connection herewith, including, but not limited to, the Borrower’s filings with the Commission, contains an untrue statement of a material fact with respect to the financial condition or properties of Borrower or omits to state a material fact necessary to make the statements contained therein not misleading or, insofar as Borrower can now foresee, may in the future materially adversely affect the financial condition or properties of Borrower which has not been set forth in this Agreement or in a document, statement, financial statement or certificate furnished to Lender in connection herewith.

(xvi)         The Borrower is in compliance with all laws, rules, regulations, judgments, decrees, orders, agreements and requirements which affect in any material way the Borrower, its assets or the operation of its business and has not received, and has no knowledge of, any order or notice of any governmental investigation or of any violation or claim of violation of any law, regulation, judgment, decree, order, agreement, or other governmental requirement. The Borrower is not in material default under any term of any indenture, contract, lease, agreement, instrument or other commitment to which any of them is a party or by which any of them is bound. The Borrower knows of no dispute regarding any indenture, contract, lease, agreement, instrument or other commitment which could reasonably be expected to have a material adverse effect on the Borrower’s financial condition.

(b)            Borrower hereby confirms, represents and warrants that the representations and warranties set out in the Loan Documents are true and correct as of the date of this Agreement.

8.            Further Events of Default - Remedies

(a)            The following events shall be an Event of Default under the Loan and in addition to the Events of Default as defined in the Note; and Lender shall thereupon have the option (which is not intended to diminish, alter or limit Lender’s rights described in this Agreement, the Loan Documents or any related instruments, agreements and documents) to declare Borrower in default under this Agreement and the Loan Documents, and all other agreements with Lender, and declare all existing and future liabilities, indebtedness and obligations accelerated and immediately due and payable, including, but not limited to, interest, principal, expenses, advances to protect Lender’s position and reasonable counsel fees to enforce this Agreement, the Loan Documents, and all related instruments, agreements and documents, and all of Lender’s rights hereunder and thereunder, all without demand, notice, presentment or protest, or further action of any kind, except as specified herein.

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(i)            If Lender shall discover evidence that any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower in connection with this Agreement or otherwise, or to induce Lender to enter into this Agreement, was false or misleading in any material respect when made or furnished.

(ii)           If any action, suit or proceeding is brought in law or in equity or in any bankruptcy or receivership proceeding by Borrower or any of its creditors or any other party to enjoin or set aside this Agreement.

(iii)          If Borrower shall fail to pay any principal, interest, costs and fees when due under the Loan Documents or this Agreement within ten (10) days after the date such payment is due.

(iv)          The dissolution, termination of existence, business failure, appointment of a receiver of, or of any part of the property of, Borrower.

(v)            If Borrower shall fail to observe or perform any obligation or covenant to be observed or performed by Borrower hereunder or under any of the Loan Documents, which are not cured within ten (10) days following written notice from Lender to Borrower.

(vi)           If any financial statement, material representation, warranty, statement or certificate made or furnished to Lender in, or in connection with, this Agreement, or as inducement to Lender to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Lender, shall be materially false, incorrect, or misleading when made;

(vii)          If Borrower shall admit an inability to pay its debts as they mature, or shall make a general assignment for the benefit of its or any of its creditors.

(viii)         If proceedings in bankruptcy, or for reorganization of Borrower, or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced by Borrower, or shall be commenced against Borrower and shall not be dismissed within sixty (60) days of its commencement.

(ix)            If a receiver or trustee shall be appointed for Borrower or for any substantial part of its assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of Borrower, and if such appointment or proceedings are involuntary, such receiver or trustee shall not be discharged within sixty (60) days of appointment, or such proceedings shall not be discharged within sixty (60) days of its commencement, or Borrower shall discontinue its businesses or materially change the nature of its businesses.

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(b)            After any acceleration of the Loan, Lender shall have in addition to the rights and remedies given it by this Agreement and the Loan Documents, all those allowed by all applicable laws including, without limitation, the UCC as enacted in a jurisdiction in which any Collateral may be located.

9.            No Agency, Partnership or Joint Venture

Neither this Agreement nor the Loan Documents nor the exercise by Lender of any of its rights or remedies hereunder or thereunder shall create, or shall be deemed to have created (i) a relationship of principal and agent between Borrower and Lender, or (ii) a partnership or joint venture, as between Lender and Borrower, or (iii) to render Lender in any way responsible for the debts, losses or liabilities of Borrower, or (iv) to render Lender a principal of, an insider in, or in any manner in control of Borrower or its business affairs.

10.            Notices

All notices to be given pursuant to this Agreement shall be given by the parties hereto either by certified mail, postage pre-paid, with return receipt requested or by expedited delivery service or by hand delivery, with a receipt being obtained therefor, at the following addresses, or at such other addresses as to which the parties hereto may be notified in accordance herewith from time to time.

If to the Borrower:	Lattice Incorporated
	7150 N. Park Drive
	Suite 500
	Pennsauken, NJ 08109
	Phone: (856) 910-1166
	Facsimile: (856) 910-1811
With copies to:	Mitchell Nussbaum, Esq.
	Loeb & Loeb, LLP
	345 Park Avenue
	New York, NY 10154
	Telephone: (212) 407-4159
	Facsimile: (212) 504-3013
If to the Lender:	Lattice Funding, LLC
	c/o Cantone Research, Inc.
	766 Shrewsbury Ave.
	Suite E401
	Tinton Falls, NJ 07724
	Telephone: 732-450-3500
	Facsimile: 732-450-3520
	Attention: Anthony Cantone

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With copies to:	Christopher P. Flannery, Esq.
	4 Hillman Drive
	Suite 104
	Chadds Ford, PA 19317
	Telephone: (610) 361-8016
	Facsimile: (610) 558-4882

Notice shall be effective upon receipt.

11.            Remedies Are Cumulative

Lender’s rights and remedies under this Agreement, the Note and any other Loan Documents, are cumulative and not alternative. Neither the failure nor any delay on the part of Lender in exercising any right, power or privilege under any of the Loan Documents or this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No claim or right arising out of this Agreement or the Loan Documents can be discharged by Lender in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by Lender.

12.            Entire Agreement

This Agreement and the Loan Documents are intended by the Parties as a final expression of their agreements with respect to the subject matter thereof, and are intended as a complete and exclusive statement of the terms and conditions of that agreement. This Agreement and the Loan Documents may not be modified, rescinded, or terminated orally, and no modification, rescission, termination or attempted waiver of any of the provisions thereof shall be valid unless in writing, supported by consideration, and signed by the Party against whom the same is sought to be enforced.

13.            Assignments, Successors and No Third Party Rights

This Agreement shall apply to and shall be binding in all respects upon, and shall inure to the benefit of, the successors and assigns of Lender and Borrower. Except as explicitly stated herein, nothing expressed or referred to in this Agreement is intended or shall be construed to give any person or entity other than the Parties any legal or equitable right, remedy or claim under or with respect to this Agreement, or any provision hereof, it being the intention of the Parties that this Agreement, and all of its provisions and conditions, are for the sole and exclusive benefit of the Parties and for the benefit of no other person or entity and are personal to the Parties unless otherwise expressly provided. This Agreement may not be assigned or otherwise transferred by Lender to any person or entity that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.

14.            Action Taken at Closing

The execution and delivery of this Agreement at Closing and all other actions to be taken and transactions to occur in connection with this Agreement at Closing, and the consummation at Closing of certain acts and transactions to which reference is made in this Agreement, are to be and were considered effected simultaneously as part of a number of interrelated transactions, and all deliveries of documents and other acts are to be deemed in escrow until all transactions referred to in, and relating to, this Agreement have been completed.

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15.            Survival of Representation, Warranties and Covenants

The representations, warranties and covenants set forth in this Agreement shall survive the execution and delivery of this Agreement and the Closing.

16.            Section Headings, etc.

The headings of Sections contained in this Agreement are provided for convenience only and form no part of this Agreement, and shall not affect its construction or interpretation. All references to Sections and paragraphs refer to the corresponding Sections and paragraphs in Sections of this Agreement. All words used herein shall be construed to be of such gender or number as the circumstances require. This “Agreement” shall mean this Agreement as a whole and as the same may, from time to time hereafter, be amended, supplemented or modified. The words “herein”, “hereof”, “hereby”, “hereto”, “hereunder, and words of similar import, refer to this Agreement as a whole and not to any particular Section, paragraph, clause or other subdivision hereof, unless otherwise specifically noted.

17.            Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement.

18.            Governing Law

This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania, all rights and remedies being governed by such laws, and any provision hereof which may prove to be unenforceable shall not affect the validity of any other provision of this Agreement.

19.            Amendments

This Agreement may not be amended, revised, altered or terminated except by an Agreement in writing executed by all of the Parties.

20.            Term of Agreement and Reinstatement. This Agreement and the Loan Documents shall remain in full force and effect until all obligations of Borrower under the Loan are paid in full. If any sums paid to Lender on account of the Loan are required to be returned or refunded by Lender, this Agreement and the Loan Documents shall be revived and reinstated as to all such sums, including the liens of the Financing Statements.

[Signatures on following Page]

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement, under seal the day and year first, above written.

SIGNED, SEALED AND	LENDER:
DELIVERED IN THE	LATTICE FUNDING, LLC
PRESENCE OF:
_______________________	By: /s/ Anthony J. Cantone (SEAL)
Witness	Anthony J. Cantone, Managing Member
	BORROWER:
	LATTICE INCORPORATED
	a Delaware corporation
_______________________	By: /s/ Paul Burgess (SEAL)
Witness	Paul Burgess, President
	[CORPORATE SEAL]

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EX-10.2

Exhibit 10.2

THIS 8% SENIOR SECURED PROMISSORY NOTE, AND UNDERLYING COMMON STOCK INTO WHICH IT IS CONVERTIBLE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”), PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION PROVIDED BY SECTION 4(a)(2) OF THE 1933 ACT, OR THE SECURITIES LAWS OF ANY STATE. NEITHER THIS 8% SENIOR SECURED PROMISSORY NOTE NOR THE UNDERLYING COMMON STOCK CAN BE RESOLD UNLESS (A) SUBSEQUENTLY REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) EXEMPTIONS FROM SUCH REGISTRATIONS ARE AVAILABLE.

8% SENIOR SECURED CONVERTIBLE NOTE

Thompson, Pennsylvania

Up To $1,500,000.00 May 14, 2015

1.Obligation. For value received and intending to be legally bound, Lattice Incorporated, a Delaware corporation (“Maker”), hereby promises to pay on or before the Due Date (as defined below) to the order of Lattice Funding, LLC (including its successors and assigns, collectively, the “Payee”), the principal sum of up to ONE MILLION FIVE HUNDRED Thousand Dollars ($1,500,000.00) (the “Principal Sum”), lawful money of the United States of America together with interest thereon in the amount of eight percent annual simple interest (the “Rate”) on the terms and conditions stated in this Note. The Principal Sum will equal the gross proceeds of subscriptions accepted by the Payee for investment in this Note, expected to be in two or more tranches from time to time and may be amended to reflect an up to 10% over-allotment at the option of the Payee. The Principal Sum added to the accrued but unpaid interest (including Default Interest, defined below), fees and penalties (if any) is referred to in this Note as the “Amount Due.” By signing this Note, the Maker acknowledges that proceeds of this Note are to be used for business purposes only. Any term capitalized herein and not defined shall have the same meaning as in the Loan and Security Agreement between the Maker and the Payee of even date.

The payments under this Note shall be made in funds immediately available to Payee at its office at Thompson, Pennsylvania, or at such other location as the Payee shall designate. In the event the due date of any payment under this Note is a Saturday, Sunday or legal holiday in the Commonwealth of Pennsylvania, such payment shall be due on the next succeeding date which is not a Saturday, Sunday or such legal holiday, provided that the principal sum shall continue to accrue interest until paid.

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Interest at the Rate shall accrue beginning May 15, 2015. Interest on the outstanding Principal Sum hereunder shall be paid quarterly in arrears beginning on the 30^th of July, 2015 and on the 30th day of October, January, April and July thereafter for as long as the Amount Due, or any part thereof, remains outstanding. If any payment of interest or principal is not paid when due, interest will accrue at the rate of 12% per annum (the “Default Rate”). Interest payable at the Default Rate shall be known as “Default Interest” under this Note. Also upon the occurrence of a Default (as defined below), there shall be added to the principal sum an additional $50,000.00 as a penalty for such default and not as interest. On the same dates that the Maker pays interest to the Payee, the Maker will also pay Payee an administration fee (“Administration Fee”) of 0.5% on the outstanding principal balance hereunder (2% on an annual basis). If a Default (as defined below) under this Note shall have occurred and then be in existence, such Administration Fee shall be increased to 3% on an annual basis as of the date of occurrence of such Default and shall continue at such increased rate until the Default is cured or otherwise waived by Payee. In the event any Administration Fee is not paid when due, the amount of such unpaid Administration Fee will be added to the Amount Due and will be secured by the collateral on the same basis as unpaid principal or interest.

The Amount Due is due and payable on April 30, 2020 (the “Due Date”).

2.Conversion Rights.

(a)Beginning six months after the issuance of this Note, the Payee, in its sole and absolute discretion, at any time or from time to time, may elect to convert some or all of the outstanding Principal Sum of the Note into common stock of the Maker (the “Conversion Shares”) at the Conversion Price, as defined below, by sending a conversion notice to the Maker (a “Conversion Notice”) in the form attached as Exhibit A. Electronic delivery via facsimile or electronic mail addressed to the Maker’s president shall constitute good delivery of such Conversion Notice.

(b)The initial Conversion Price will be $0.15 per Conversion Share. The Conversion Price shall be proportionally adjusted for any stock splits, reverse stock splits, reorganizations, stock dividends and any other corporate action that has a similar effect.

(c)Forced Conversion. If the Maker’s common stock trades above twice the Conversion Price (as adjusted under Section 2(b)) for twenty consecutive trading days with average daily trading volume greater than 300,000 shares over such period, then Maker has the right to call the Note at face value (plus accrued but unpaid interest, penalties and fees, if any) in order to force conversion into Conversion Shares. The Maker will give the Payee sixty days written notice of a call of the Note under this Section, during which time the Payee may convert some or all of the Principal Sum into Conversion Shares in its discretion. Notwithstanding the foregoing, Maker may not force a conversion unless the underlying Conversion Shares are registered for resale under the Securities Act of 1933, as amended and the Maker can deliver Conversion Shares registered for resale within five business days of the Conversion Notice.

3.No Prepayment. The Maker may not prepay the Amount Due unless the Maker is acquired or engages in a similar transaction, including without limitation in a stock sale, asset sale, merger and/or acquisition (an “Acquisition Transaction”). If the Maker is so acquired, the Maker (or its successor in interest) may prepay this Note either for the 125% of the outstanding Principal Sum plus all accrued but unpaid interest, or on an “as-converted” basis, simultaneously with the closing of the Acquisition Transaction, at the sole option of Payee. For clarity, an “as-converted basis” shall mean that immediately before the Acquisition Transaction, the Payee will calculate the number of Conversion Shares issuable to the Payee on the conversion of the total Amount Due and the Payee will receive the same consideration as received by other stockholders of Maker.

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4.            Application of Payments. All payments on this Note shall be applied first to accrued and unpaid interest at the Rate, then to accrued and unpaid Default Interest, then to all other sums due hereunder, and the balance thereof to principal or, if a Default shall have occurred and be continuing, in such other order as Payee may elect.

5.Late Charge, Warrant Issuance. If any payment of interest or Administrative Fee payable under Section 1, above, is not made within ten days of the date such payment is due, or if the Amount Due is not paid when due under the terms of this Note and remains unpaid ten (10) days after the Due Date, then, in either case, there shall also be immediately due and payable a late charge at the rate of Five Percent (5%) of such delinquent payment. The amount of any such late charge not paid promptly following demand therefor shall be deemed outstanding and payable pursuant to the Note.

6.            Collateral. The payment of the Amount Due on the Due Date shall be secured by a first lien on the revenues and other proceeds of all of the Maker’s service contracts with correctional facilities outstanding on the date of this Note or otherwise entered into during the term of this Note, and the equipment used for such contracts, to be evidenced by a filing on form UCC-1.

7.            Default; Acceleration; Remedies.

(a)Should there occur and exist any Default (as defined below in Section 7 b), then Payee, at its option, may declare immediately due and payable the entire unpaid balance of Amount Due and accrued interest by Maker hereunder, together with interest accrued thereon at the Rate to the date of Default and thereafter at 12% simple annual interest (the “Default Rate”), anything herein to the contrary notwithstanding. Payment of the Amount Due may be enforced and recovered in whole or in part at any time by one or more of the remedies provided Payee in this Note. If Payee employs counsel to enforce this Note by suit or otherwise, Maker will reimburse Payee for all reasonable and documented costs of suit and other reasonable and documented expenses in connection therewith, whether or not suit is actually instituted, together with a reasonable attorney’s fee for collection of Ten Percent (10%) of the total amount then due by Maker to Payee but in no event less than five Thousand Dollars ($5,000.00) together, to the extent permitted by applicable law, with interest on any judgment obtained by Payee at the Default Rate, including interest at the Default Rate from and after the date of execution, judicial or foreclosure sale until actual payment is made to Payee of the full amount due Payee.

(b)As used in this Note, “Default” shall mean the occurrence of any of the following events:

(1)Any default in the payment when due of interest or the Amount Due on the Due Date, or any other sums due, under this Note, which default is not cured within ten (10) business days;

(2)Any default in the performance of any of the provisions of this Note, which is not cured within ten (10) business days;

(3)Any default in any other indebtedness of the Maker, which default is not cured within ten (10) days of the date of such default;

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(4)The making by Maker in writing of any representation to Payee which is false or misleading in any material respects;

(5)The appointment of a committee of Maker’s creditors;

(6)The making by Maker of a general assignment or offer of settlement for the benefit of creditors;

(7)The voluntary or involuntary application for, or appointment of, a receiver, custodian, guardian, trustee, or other personal representative for Maker or its property;

(8)The filing of a voluntary or involuntary (to the extent not dismissed within 30 days) petition under any of the provisions of the Federal Bankruptcy Code or any similar state statute;

(9)The occurrence of any other act of insolvency (however expressed or indicated);

(10)The issuance of a warrant of attachment or for distraint, or the notice of tax lien against Maker’s assets;

(11)An entry of judgments against Maker or its assets;

(12)The failure to pay, withhold, collect or remit any taxes or tax deficiency when assessed or due, unless such taxes are being diligently contested in good faith by appropriate proceedings; or

(13)The general failure of Maker to pay its debts and obligations as the same become due and payable.

8.Remedies Cumulative, Etc.

(a)The remedies of Payee provided in this Note shall be cumulative and concurrent, may be pursued singly, successively, or together at the sole discretion of Payee, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

(b)The recovery of any judgment by Payee shall not affect in any manner or to any extent any rights, remedies or powers of Payee under this Note, but such rights, remedies and powers of Payee shall continue unimpaired as before. The exercise by Payee of its rights and remedies and the entry of any judgment by Payee shall not adversely affect in any way the interest rate payable hereunder on any amounts due to Payee but interest shall continue to accrue on such amounts at the rates specified herein.

(c)Maker agrees that any action or proceeding against it to enforce this Note may be commenced in the Superior Court of any county in the State of New Jersey, or in any federal court in the State of New Jersey. Maker also consents to venue in any federal court having subject matter jurisdiction located in the State of New Jersey. The provisions of this Section shall not limit or otherwise affect the right of Payee to institute and conduct action in any other appropriate manner, jurisdiction or court.

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9.Additional Waivers. Maker hereby waives presentment for payment, demand, demand for payment, notice of demand, notice of nonpayment or dishonor, notice of acceleration, protest and notice of protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of the Note. Maker agrees that its liability shall be unconditional without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee. Maker consents to any and all extensions of time, renewals, waivers or modifications that may be granted by Payee with respect to payment or other provisions of this Note.

10.Costs and Expenses. Maker shall pay upon demand all reasonable and documented costs and expenses incurred by Payee in the exercise of any of its rights, remedies or powers under this Note and any amount thereof not paid within ten (10) business days following demand therefor shall be added to the Principal Sum hereunder and shall bear interest at the Default Rate from the date of such demand until paid in full.

11.Severability. If any provision of this Note is held to be invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Note shall remain in full force and effect and shall be liberally construed in favor of Payee in order to effectuate the provisions of this Note.

12.Limitation of Interest to Maximum Lawful Rate. In no event shall the rate of interest payable hereunder exceed the maximum rate of interest permitted to be charged by applicable law (including choice of law rules) and any interest paid in excess of the permitted rate shall be refunded to Maker. Such refund shall be made by application of the excessive amount of interest paid against any sums outstanding under this Note and shall be applied on such order as Payee may determine. If the excessive amount of interest paid exceeds the sums outstanding under this Note, the portion exceeding the sums outstanding under this Note shall be refunded in cash by Payee. Any such crediting or refund shall not cure or waive any default by Maker hereunder. Maker agrees, however, that in determining whether or not any interest payable under this Note exceeds the highest rate permitted by law, any non-principal payment, including without limitation prepayment fees and late charges, shall be deemed to the extent permitted by law to be an expense, fee, premium or penalty rather than interest.

13.Limitation on Payee’s Waivers. Payee shall not be deemed, by any act or omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by Payee, and then only to the extent specifically set forth in the writing. A waiver as to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

14.No Offset. The obligations of Maker under this Note shall not be subject to any abatement or offset as a consequence of any claim, event or transaction otherwise occurring or arising between Maker, Payee and/or any affiliate of any of them, except as Maker and Payee may otherwise agree.

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15.Applicable Law. This instrument shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania.

16.Captions. The captions or headings of the paragraphs in this Note are for convenience only and shall not control or affect the meaning or construction of any of the terms or provisions of the Note.

17.Pronouns. Pronouns used herein shall be deemed to include the masculine, feminine or neuter, singular or plural, as their contexts may require. The words “Payee” and “Maker” shall be deemed to include the respective heirs, personal representatives, successors and assigns of Payee and Maker.

18.Construction. The language in this Agreement shall be construed as a whole according to its fair meaning, strictly neither for nor against any party, and without implying a presumption that its terms shall be more strictly construed against one party by reason of the rule of construction that a document is to be construed more strictly against the person who drafted it.

19.Computation. The unpaid principal amount of this Note, the unpaid interest accrued thereon, the interest rate or rates applicable to such unpaid principal amount, the duration of such applicability, and all other Amounts Due owing by Maker to Payee pursuant to this Note shall at all times be ascertained from the records of Payee, which shall be conclusive absent manifest error.

20.Assignment. This Note may not be assigned or otherwise transferred by Maker without the prior written consent of Payee. This Note may not be assigned or otherwise transferred by Payee to any person or entity that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.

21.Stamp Taxes. Maker shall pay the cost of any revenue, tax or other stamps now or hereafter required by the laws of the Commonwealth of Pennsylvania or the State of New Jersey (or any of their political subdivisions) or the United States of America to be affixed to this note, and if any taxes are imposed under the laws of the Commonwealth of Pennsylvania or the State of New Jersey (or any of their political subdivisions) or the United States of America with respect to evidences of indebtedness, Maker shall pay or reimburse Payee upon demand the amount of such taxes without credit against any indebtedness evidenced by this Note.

22.Notices. All notices, requests, waivers, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given, made and received when hand delivered against receipt, or on the day after it is sent by United States certified or registered mail, postage prepaid, return receipt requested, by nationally recognized overnight courier service, or by facsimile, to:

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If to Maker:

Lattice Incorporated
7150 N. Park Drive
Suite 500
Pennsauken, NJ 08109
Telephone (856) 910-1166
Facsimile: (856) 910-1811

If to Payee:

Lattice Funding, LLC
766 Shrewsbury Ave, Suite E401
Tinton Falls, NJ 07724
Telephone: 732-450-3500
Facsimile: 732-450-3520
Attention: Anthony Cantone

Or such other address as shall be specified from time to time (in compliance with the requirements of this Section 22 for the giving of notice) by the parties entitled to receive such notices.

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed the day and year first above written.

MAKER:

LATTICE INCORPORATED

By: /s/ Paul Burgess
       Paul Burgess, President

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EXHIBIT A

FORM OF CONVERSION NOTICE

Reference is made to the 8% Senior Secured Convertible Note (the “Note”) issued to the undersigned by Lattice Incorporated (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the amount of the outstanding Principal (as defined in the Note) of the Note indicated below into shares of common stock of the Company (the “Conversion Shares”) of the Company, as of the date specified below. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Note.

1. Date of Conversion: ______________________

2. Amount of outstanding Principal to be converted: ______________________

3. Amount of accrued and unpaid Interest on such outstanding Principal: ______________

4. Total Conversion Amount (Sum of lines 2 and 3): ______________________

5. Please confirm the following information:

Conversion Price: ______________________

Number of Shares to be issued in respect of the Conversion Amount: _______________

6. Please issue the Shares into which the Note is being converted in the following name and to the following address:

Name of Holder:	______________________
Address:	______________________
Facsimile Number:	______________________
Telephone Number:	______________________

By: ____________________________
Name:
Title:

Dated: _________________

Holder Requests Delivery to be made: (check one)

o By Delivery of Physical Certificates to the Above Address

o Through Depository Trust Corporation
(Account ____________________

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EX-10.3

Exhibit 10.3

PLACEMENT AGENT AGREEMENT

May 14, 2015

LATTICE FUNDING, LLC

Suite E-401

766 Shrewsbury Avenue

Tinton Falls, NJ 07724

RE: Placement Agent Agreement for Participations in 8% Secured Convertible Note Issued by Lattice Incorporated

Gentlemen:

This letter confirms our agreement that Lattice Funding, LLC, a Pennsylvania limited liability company (the “Issuer ” or the "Company”) has engaged Cantone Research, Inc. (“CRI” or the “Placement Agent”) to act as the Company’s exclusive Placement Agent in connection with the proposed offering (the “Offering”) of certificates of participation (the “Securities”) in a 8% Senior Secured Convertible Note due April 30, 2020 issued by Lattice Incorporated (the “Note” of “Lattice”), pursuant to the Company’s private offering memorandum dated April 15, 2015 (the “Memorandum”). The terms of the Offering and the proposed uses of the gross proceeds of such Offering are summarized in Exhibit A to this Placement Agent Agreement (the “Agreement”). Lattice is a party to this Agreement. The Offering will be made solely to “accredited investors” (the “Accredited Investors”), as such term is defined in Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an exemption from registration under applicable federal and state securities laws available under Rule 506(b) of Regulation D and in accordance with the terms of this Agreement. The gross proceeds of the Offering will be on a best efforts basis (no minimum) up to an aggregate of $1,500,000 (with a 10% over-allotment option at the Company’s discretion). Any term capitalized in this Agreement, but not defined herein, shall have the same meaning as defined in the Memorandum.

Upon acceptance, (indicated by your signature below), this Agreement will confirm the terms of the engagement between the Placement Agent and the Company.

1.            Appointment.

On the basis of the representations, warranties and covenants contained in this Agreement, and subject to the terms and conditions of this Agreement, the Company hereby retains the Placement Agent, and the Placement Agent hereby agrees to act, as the Company’s exclusive Placement Agent in connection with the Offering. As Placement Agent for the Offering, CRI will advise and assist the Company in identifying, and assisting the Company in issuing, the Securities to selected suitable investors (the “Offerees”) in the Offering under the terms and conditions described in the Memorandum. The Company acknowledges and agrees that the Placement Agent is only required to use its “commercially reasonable best efforts” in connection with the Offering and that this Agreement does not constitute a commitment by the Placement Agent to purchase the Securities or introduce the Company to Offerees. The Company retains the right to determine all of the terms and conditions of the Offering.

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2.            Information.

(a)            The Company recognizes that, in completing its engagement hereunder, the Placement Agent will be using and relying on the Memorandum, publicly available information and on data, material and other information furnished to Placement Agent by the Company, Lattice or the Company’s and Lattice’s affiliates and agents. The Company and Lattice will cooperate with CRI and furnish, and cause to be furnished, to CRI, any and all information and data concerning the Company and Lattice, their subsidiaries (if any) and the Offering that CRI deems appropriate, including, without limitation, Lattice’s acquisition and/or merger plans and plans for raising capital or additional financing that is reasonably requested by CRI (the “Information”), including subscription agreements, and the form of the Note (together with the Memorandum, the “Private Placement Materials”). Any Information and Private Placement Materials forwarded to Offerees will be in form reasonably acceptable to Placement Agent and its counsel. The Company represents and warrants that all Information and Private Placement Materials, including, but not limited to, the Company’s financial statements and all information incorporated by reference therein and the Company’s filings (the “Public Filings”) with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are, or will be, complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading. For its part, Lattice represents and warrants that all Information and Private Placement Materials regarding Lattice and the Collateral will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading, except where such statement or omission does not have a material adverse effect on Lattice, the payment of interest and principal of the Note or the Collateral securing the Note.

(b)            It is further agreed that CRI will conduct a due diligence investigation of the Company and Lattice and the Company and Lattice will reasonably cooperate with such investigation as a condition of CRI’s obligations hereunder. The Company and Lattice recognize and confirm that the Placement Agent: (i) will use and rely primarily on the Information, the Private Placement Materials, the Public Filings and information available from generally recognized public sources in performing the services contemplated by this letter without having independently verified the same; (ii) is authorized as the Placement Agent to transmit to any prospective investors a copy or copies of the Private Placement Materials and any other legal documentation supplied to the Placement Agent for transmission to any prospective investors by or on behalf of the Company or by any of the Company’s officers, representatives or agents, in connection with the performance of the Placement Agent’s services hereunder or any transaction contemplated hereby; (iii) does not assume responsibility for the accuracy or completeness of the Information or the Private Placement Materials and such other information, if any provided to the Offerees; (iv) will not make an appraisal of any assets of the Company or Lattice or the Company generally; and (v) retains the right to continue to perform due diligence of the Company and Lattice, its business and its officers and directors during the course of the engagement.

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(c)            Until the date that is one year from the date hereof, CRI will keep all information obtained from the Company and Lattice confidential except: (i) Information which is otherwise publicly available, or previously known to or obtained by, CRI independently of the Company or Lattice and without breach of any agreement known to CRI with the Company or Lattice; (ii) CRI may disclose such information to its officers, directors, employees, agents, representatives, attorneys, and to its other advisors and financial sources on a need to know basis only and will ensure that all such persons will keep such information strictly confidential. No such obligation of confidentiality shall apply to information that: (i) is in the public domain as of the date hereof or hereafter enters the public domain without a breach by CRI, (ii) was known or became known by CRI prior to the Company’s or Lattice’s disclosure thereof to CRI, (iii) becomes known to CRI from a source other than the Company or Lattice, as applicable, and other than by the breach of an obligation of confidentiality owed to the Company or Lattice, (iv) is disclosed by the Company or Lattice to a third party without restrictions on its disclosure, (v) is independently developed by CRI without the use of Lattice confidential information, or (vi) in the opinion of its counsel, is required to be disclosed by CRI or its officers, directors, employees, agents, attorneys and to its other advisors and financial sources, pursuant to any order of a court of competent jurisdiction or other governmental body or as may otherwise be required by law.

(d)            The Company and Lattice recognize that in order for CRI to perform properly its obligations in a professional manner, the Company and Lattice will keep CRI informed of and, to the extent practicable and as allowed by law, permit CRI to participate in meetings and discussions between the Company or Lattice and any third party relating to the matters covered by the terms of CRI’s engagement. If at any time during the course of CRI’s engagement, the Company or Lattice become aware of any material change in any of the information previously furnished to CRI, it will promptly advise CRI of the change.

(e)            The Offering shall be conditioned upon, among other things, the satisfactory completion by CRI of its due diligence investigation and analysis of the Company and Lattice.

3.            Compensation. As compensation for services rendered and to be rendered hereunder by Placement Agent, the Company agrees to pay Placement Agent the following fees in consideration of the services rendered by the Placement Agent in connection with the Offering, which shall be reimbursed by Lattice at each closing:

(a)            The Company agrees to pay CRI a cash fee payable upon each closing of the transaction contemplated by this Agreement (“Closing”) equal to eight percent (8%) of the gross amount of Securities sold, plus 1,000 shares of restricted common stock of Lattice (the “Restricted Stock”) for each $1,000.00 of gross proceeds of the Offering (the “Placement Fee”).

(b)            The Company agrees to pay CRI a non-accountable expense allowance in cash (the “Non-Accountable Fee”) equal to 1% of the gross amount of Participations sold.

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(c)            The Company will pay CRI’s legal fees of 1% of the Offering.

(d)            If CRI or the Company exercise their piggyback registration rights found in Section 2(e) of the related Loan and Security Agreement of even date, CRI shall assist and cooperate with legal counsel to Lattice in effecting a filing of a Registration Statement with the Securities and Exchange Commission with respect to the public offering of the Conversion Shares into which the Note is convertible and the resale of any restricted securities shares of Lattice common stock issued to CRI or the Company in connection with the Offering (the “SEC Filing”). Lattice will be responsible for the reasonable costs and expenses of CRI and the Company in connection with the SEC Filing, but in no event less than 1% of the offering amount to be sold for the benefit of selling securityholders as disclosed on the cover of the Registration Statement.

(e)            Lattice agrees to reimburse the Company for the Placement Fee, the Non-accountable Fee, legal fees and other expenses of the Offering in cash from the Gross Proceeds of the Offering. In addition, at the Closing or as soon as practicable thereafter, Lattice agrees to issue 1,000,000 shares of Lattice restricted common stock to the Company as part of its administration fee and the shares of Lattice restricted common stock to CRI as part of the Placement Fee, disclosed above.

4.            Term of Engagement.

(a)            This Agreement will remain in effect until June 30, 2015, after which either party shall have the right to terminate it on fifteen (15) days prior written notice to the other. The date of termination of this Agreement is referred to in this Agreement from time to time as the “Termination Date.” The period of time during which this Agreement remains in effect is referred to herein from time to time as the “Term.” In the event, however in the course of CRI’s performance of due diligence it deems it necessary to terminate the engagement, CRI may do so prior to the Termination Date and upon immediate written notice.

(b)            Notwithstanding anything herein to the contrary, the obligation to pay the compensation and expenses described in Section 3, this Section 4, Sections 7 and 9-18 and all of Exhibit A, will survive any termination or expiration of this Agreement. The termination of this Agreement shall not affect the Company’s or Lattice’s obligations to pay fees to the extent provided for in Section 3 above and shall not affect their obligations to reimburse the expenses accruing prior to such termination to the extent provided for in this Agreement. All such fees and reimbursements due shall be paid to the Placement Agent on or before the Termination Date (in the event such fees and reimbursements are earned or owed as of the Termination Date) or upon the closing of the Offering or any applicable portion thereof (in the event such fees are due pursuant to the terms of Section 3 hereof).

5.            Certain Placement Procedures. The Company and the Placement Agent each represents to the other that it has not taken, and the Company and the Placement Agent each agrees with the other that it will not take any action, directly or indirectly, so as to cause the Offering to fail to be entitled to rely upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. In effecting the Offering, the Company and the Placement Agent each agrees to comply in all material respects with applicable provisions of the Securities Act and any regulations thereunder and any applicable state laws and requirements. In order to induce CRI to enter into this Agreement, the Company agrees that CRI may rely upon any representations and warranties made to any Offeree in this Offering (as if fully set forth herein) for its benefit, and that all such representations and warranties shall be true and correct in all material respects, and shall be true and correct in all material respects as of the date of each Closing. The Company agrees that it shall cause any opinion of its counsel delivered to any Offerees in the Offering also to be addressed and delivered to the Placement Agent, or to cause such counsel to deliver to the Placement Agent a letter authorizing it to rely upon such opinion.

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6.            Representations, Warranties and Covenants of CRI.

CRI, its affiliates and any person acting on its or their behalf (the “Placement Agent Parties”) hereby represent and warrant to, and covenant with, the Company that:

(a)            The Securities offered and sold by the Placement Agent have been and will be offered and sold in compliance with all federal and state securities laws and regulations governing the registration and conduct of broker-dealers, and each Placement Agent Party making an offer or sale of Securities was or will be, at the time of any such offer or sale, registered as a broker-dealer pursuant to Section 15(b) of the Exchange Act, and under the laws of each applicable state of the United States (unless exempted from the respective state’s broker-dealer registration requirements), and in good standing with FINRA;

(b)            The Securities offered and sold by the Placement Agent have been and will be offered and sold only to Accredited Investors in accordance with Rule 506(b) of Regulation D and applicable state securities laws; provided, however, the Company shall make all necessary filings under Rule 503 of Regulation D and such similar notice filings under applicable state securities laws. The Placement Agent Parties represent and warrant that they have reasonable grounds to believe and do believe that each person to whom a sale, offer or solicitation of an offer to purchase Securities was or will be made was and is an Accredited Investor. Prior to the sale and delivery of a Company security to any such investor, the Placement Agent Parties will obtain an executed subscription agreement and purchaser questionnaire in the form agreed upon by the Company and the Placement Agent (the “Subscription Documents”).

(c)            (i) Sales of the Securities by the Placement Agent will be made only in such jurisdictions in which: (A) the Placement Agent is a registered broker-dealer; and (B) the Placement Agent has been advised by counsel that the offering and sale of the Securities is registered under, or is exempt from registration under, applicable laws. (ii) offers and sales of the Securities by the Placement Agent will be made in compliance with the provisions of Regulation D and/or Section 4(a)(2) of the Securities Act, and the Placement Agent shall furnish to each Offeree a copy of the Memorandum (including all Schedules and Exhibits thereto) prior to accepting any subscriptions for Securities.

(d)            In connection with the offers and sales of the Securities, the Placement Agent Parties have not and will not:

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i.            Offer or sell, or solicit any offer to buy, any Securities by any form of “general solicitation” or “general advertising”, as such terms are used in Regulation D, or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act;

ii.           Use any written material other than the Memorandum, a copy of which is attached hereto as Exhibit C , and the Subscription Documents, and shall only rely upon and communicate information that is publicly available regarding the Company to any potential investors (without limiting the foregoing, none of the Placement Agent Parties is authorized to make any representation or warranty to any Offeree concerning the Company or an investment in the Securities); or

iii.          Take any action that would constitute a violation of Regulation M under the Exchange Act.

(e)            The Placement Agent will periodically notify the Company of the jurisdictions in which it intends the Securities to be offered by it or will be offered by it pursuant to this Agreement, and will periodically notify the Company of the status of the Offering conducted pursuant to this Agreement.

(f)             The Placement Agent shall cause each affiliate or each party acting on its or their behalf with whom they enter into contractual arrangements relating to the offer and sale of any Securities to agree, for the benefit of the Company, to the same provisions contained in this Agreement.

7.            Indemnification. The Company and Lattice agree to indemnify the Placement Agent in accordance with the indemnification and other provisions attached to the Agreement as Exhibit B (the “Indemnification Provisions”), which provisions are incorporated herein by reference and shall survive the termination or expiration of the Agreement.

8.            Other Activities. Lattice acknowledges that CRI has been, and may in the future be, engaged to provide services as an underwriter, placement agent, finder, advisor and investment banker to other companies in the industry in which Lattice is involved. Subject to the confidentiality provisions of CRI contained in Section 2 hereof, Lattice acknowledges and agrees that nothing contained in this Agreement shall limit or restrict the right of CRI or of any member, manager, officer, employee, agent or representative of CRI, to be a member, manager, partner, officer, director, employee, agent or representative of, investor in, or to engage in, any other business, whether or not of a similar nature to Lattice’s business, nor to limit or restrict the right of CRI to render services of any kind to any other corporation, firm, individual or association; provided that CRI and any of its member, manager, officer, employee, agent or representative shall not use the Information to the detriment of Lattice. CRI may, but shall not be required to, present opportunities to Lattice.

9.            Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement will be governed as to validity, interpretation, construction, effect and in all other respects by the internal law of the Commonwealth of Pennsylvania. The Company, Lattice and CRI each (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the Court of Common Pleas of the Commonwealth of Pennsylvania, County of Delaware, or in the United States District Court for the Eastern District of Pennsylvania sitting in the City of Philadelphia (ii) waives any objection to the venue of any such suit, action or proceeding, and the right to assert that such forum is an inconvenient forum, and (iii) irrevocably consents to the jurisdiction of the Court of Common Pleas of the Commonwealth of Pennsylvania, County of Delaware, or the United States District Court for the Eastern District of Pennsylvania sitting in the City of Philadelphia in any such suit, action or proceeding. Each of the Company, Lattice and CRI further agrees to accept and acknowledge service of any and all process that may be served in any such suit, action or proceeding in the Court of Common Pleas of the Commonwealth of Pennsylvania, County of Delaware, or in the United States District Court for the Eastern District of Pennsylvania and agree that service of process upon it mailed by certified mail to its address shall be deemed in every respect effective service of process in any such suit, action or proceeding. The parties hereby expressly waive all rights to trial by jury in any suit, action or proceeding arising under this Agreement.

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10.          Securities Law Compliance. The Company, at its own expense, will obtain any registration or qualification required to sell any Securities under the Blue Sky laws of any applicable jurisdictions within the applicable required time periods.

11.          Representations and Warranties.

Each of the Company and Lattice severally represent and warrant that:

(a)            it has full right, power and authority to enter into this Agreement and to perform all of its obligations hereunder;

(b)            this Agreement has been duly authorized and executed and constitutes a legal, valid and binding agreement of such party enforceable in accordance with its terms; and

(c)            the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not conflict with or result in a breach of (i) such party’s certificate of incorporation or by-laws or (ii) any agreement to which such party is a party or by which any of its property or assets is bound; except where such condition does not, singly or in the aggregate, have a material adverse effect on Lattice, its business, the Collateral, or its ability to pay interest and principal on the Note.

12.          Parties; Assignment; Independent Contractor. This Agreement has been and is made solely for the benefit of CRI, Lattice and the Company and each of the persons, agents, employees, officers, directors and controlling persons referred to in Exhibit A and their respective heirs, executors, personal representatives, successors and assigns, and nothing contained in this Agreement will confer any rights upon, nor will this Agreement be construed to create any rights in, any person who is not party to such Agreement, other than as set forth in this paragraph. The rights and obligations of any party under this Agreement may not be assigned without the prior written consent of the other parties and any other purported assignment will be null and void. CRI has been retained under this Agreement as an independent contractor, and it is understood and agreed that this Agreement does not create a fiduciary relationship among CRI, Lattice and the Company or their respective Boards of Directors or managers. CRI shall not be considered to be the agent of Lattice or the Company for any purpose whatsoever and CRI is not granted any right or authority to assume or create any obligation or liability, express or implied, on Lattice’s or the Company’s behalf, or to bind Lattice or the Company in any manner whatsoever.

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13.          Validity. This Agreement contains the entire agreement between the parties hereto. No party has made any statement, agreement or representation, either oral or written, in connection herewith, modifying, adding or changing the terms and conditions herein set forth. No present or past dealings between the parties shall be permitted to contradict or modify the terms hereof. No modification of this Agreement shall be binding unless such modification is in writing and signed by the parties hereto. In case any term of this Agreement will be held invalid, illegal or unenforceable, in whole or in part, the validity of any of the other terms of this Agreement will not in any way be affected thereby.

14.          Counterparts. This Agreement may be executed in counterparts and each of such counterparts will for all purposes be deemed to be an original, and such counterparts will together constitute one and the same instrument.

15.          Notices. All notices will be in writing and will be effective when delivered in person or sent via facsimile and confirmed by letter, to the party to whom it is addressed at the following addresses or such other address as such party may advise the other in writing (copies shall not constitute notice):

If to Lattice:	Lattice Incorporated
	7150 N. Park Drive
	Suite 500
	Pennsauken, NJ 08109
	Phone (856) 910-1166
	Fax (856) 910-1811
With copies to:	Mitchell Nussbaum, Esq.
	Loeb & Loeb, LLP
	345 Park Avenue
	New York, NY 10154
	Telephone: (212) 407-4159
	Facsimile: (212) 504-3013
If to the Company:	Lattice Funding, LLC
	C/o Cantone Research, Inc.
	766 Shrewsbury Avenue
	Suite E-401
	Tinton Falls, NJ 07724
	Telephone: 732-450-3500
	Facsimile: 732-450-3520
	Attention: Anthony Cantone, Managing Member

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With copies to:	Christopher P. Flannery, Esq.
	4 Hillman Drive
	Suite 104
	Chadds Ford, PA 19317
	Telephone: (610) 361-8016
	Facsimile: (610) 558-4882
To the Placement Agent:	Cantone Research Inc.
	766 Shrewsbury Ave
	Tinton Falls, NJ 07724
	Telephone: 732-450-3500
	Facsimile: 732-450-3520
	Attention: Anthony Cantone
With copies to:	Christopher P. Flannery, Esq.
	4 Hillman Drive
	Suite 104
	Chadds Ford, PA 19317
	Telephone: (610) 361-8016
	Facsimile:  (610) 558-4882

16.              Best Efforts Engagement. It is expressly understood and acknowledged that CRI’s engagement for the Offering does not constitute any commitment, express or implied, on the part of CRI or of any of its affiliates to purchase or place the Company’s securities or to provide any type of financing and that the Offering will be conducted by CRI on a “best efforts” (no minimum) basis.

17.              Announcements. The Company agrees that CRI shall, upon a successful transaction, have the right to place advertisements in financial and other newspapers and journals at its own expense describing its services to the Company hereunder, provided that CRI shall submit a copy of any such advertisement to the Company and Lattice for their respective approval, such approval not to be unreasonably withheld, conditioned or delayed. The Company further agrees that it shall not issue any press release in connection with the Offering without CRI’s prior written approval of such press release. Lattice further agrees that CRI’s counsel shall have the right to review and comment on any Current Report on Form 8-K regarding the Offering prepared by or on behalf of Lattice before the same is filed with the SEC.

Very truly yours,

CANTONE RESEARCH, INC.

By: ___________________________________

Anthony Cantone, President

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Agreed to and accepted this __th day of May, 2015

LATTICE FUNDING, LLC

By: /s/ Anthony J. Cantone

Anthony J. Cantone, Managing Member

As to the obligations of Lattice Incorporated only,

LATTICE INCORPORATED

By: /s/ Paul Burgess

Paul Burgess, President

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Exhibit A

TERMS OF THE OFFERING

Issuer	Lattice Funding, LLC
Investor Suitability	“Accredited Investors” as defined in Rule 501 of Regulation D and otherwise acceptable to us. See “Investor Suitability Standards.”
Participations Offered	Proportionate interest in the Lattice Note and Restricted Stock
Offering Price	100% of the face value of the Note.
Maximum Offering Amount	Up to $1,500,000 in aggregate principal amount of Participations (with a 10% over-allotment option). The closing of the Offering is not conditioned upon the acceptance of subscriptions for any minimum aggregate principal amount of Participations.
Minimum Investment Per Investor	$10,000.00; provided, however, that we have the right to accept a lesser investment amount from any prospective purchaser in our sole discretion.
Maturity Date	The Participations will be due and payable simultaneously with the Note on its maturity date, which is April 30, 2020.
Interest Rate	Interest on the Note will accrue at a rate of 8% per annum, payable quarterly in arrears. The first interest payment will be due July 30, 2015 and subsequent payments due the 30th day of October, January, April and July thereafter, until the earlier of Lattice’s payment of all principal and accrued interest on the Note, or the principal of the Note is converted and all accrued but unpaid interest is paid.
Conversion Shares	The Company has the right, at any time before maturity of the Note, to convert the principal amount of the Note into Conversion Shares at the Conversion Price of $0.15 (subject to adjustment). Lattice will pay the Company a fee of 2% of the aggregate principal amount of the Note that is converted upon any conversion.
Ranking	The Note will rank equal to Lattice senior debt and ahead of any non-senior debt, except for trade debt.
Use of Proceeds	The Company intends to use the net proceeds from the Offering to purchase the Unit, consisting of the Note and the Restricted Stock. Lattice will use the net proceeds as described in the Memorandum.

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Type of Offering	The Company is offering the Participations on a “best efforts, no minimum” basis, through the Placement Agent. The Company reserves the right to accept or reject any subscription for Participations, in whole or in part, and any subscription for Participations that is not accepted will be returned without interest. A subscriber may not revoke a subscription tendered to purchase any Participations.
Escrow	The cash subscriptions for Participations will be held in a non-interest bearing escrow account established by the Placement Agent.
Offering Period	The Offering will terminate upon the earlier of: (i) the Company’s acceptance of subscriptions for the Maximum Offering Amount at one or more Closings or (ii) the Offering Termination Date.
Offering Termination Date	June 30, 2015.
Placement Agent Compensation	As consideration for acting as Placement Agent, Lattice will: pay to CRI (a) a commission equal to 8% of the aggregate gross cash proceeds received by the Company from each Closing, (b) 1,000 shares of Lattice’s restricted Common Stock for each $1,000 face value of the Note, and (c) a non-accountable expense equal to 1% of the aggregate gross cash proceeds received by the Company from each Closing. Lattice will also reimburse the Company for all of its expenses, including legal fees of 1% of the total gross proceeds accepted at any Closing.
Administration Fee and Stock Grant	The Company will receive an annual administration fee from Lattice of 2% of the Principal balance on the Note, payable at the same time Lattice pays interest. This fee increases to 3% upon a default under the Note. The Company will also receive 1,000,000 shares of restricted Lattice Common Stock (with registration rights)

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EXHIBIT B

INDEMNIFICATION PROVISIONS

Capitalized terms used in this Exhibit shall have the meanings ascribed to such terms in the Agreement to which this Exhibit is attached.

Lattice agrees to indemnify and hold harmless the Placement Agent and each of the other Indemnified Parties (as hereinafter defined) from and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party)) (collectively, “Losses”), directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with, Placement Agent’s acting for Lattice or Funding, including, without limitation, any act or omission by Placement Agent in connection with its acceptance of or the performance or non-performance of its obligations under the Agreement between Lattice and Placement Agent to which these indemnification provisions are attached and form a part, any breach by Lattice of any representation, warranty, covenant or agreement contained in the Agreement or the subscription agreement with the investors (or in any instrument, document or agreement relating thereto, including any agency agreement), or the enforcement by Placement Agent of its rights under the Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification hereunder.

The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to Lattice for or in connection with the engagement of Placement Agent by Lattice or for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct.

These Indemnification Provisions shall extend to the following persons (collectively, the “Indemnified Parties”): Placement Agent, its present and former affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them. These indemnification provisions shall be in addition to any liability, which Lattice may otherwise have to any Indemnified Party.

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If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify Lattice with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify Lattice shall not relieve Lattice from its obligations hereunder, except to the extent that such Indemnified Party’s failure has materially prejudiced the Indemnifying Party’s rights or materially increased its liabilities and obligations hereunder. An Indemnified Party shall have the right to retain counsel of its own choice to represent it at its own expense. Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with Lattice and any counsel designated by Lattice. The Company shall be liable for any settlement of any claim against any Indemnified Party made with Lattice’s written consent. The Company shall not, without the prior written consent of Placement Agent, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.

In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then Lattice shall contribute to the Losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by Lattice and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of Lattice, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by Lattice and its stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Agreement relates relative to the amount of fees actually received by Placement Agent in connection with such transaction or transactions. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by Placement Agent pursuant to the Agreement.

Neither termination nor completion of the Agreement shall affect these Indemnification Provisions which shall remain operative and in full force and effect. The Indemnification Provisions shall be binding upon Lattice and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.

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EX-99.1

Exhibit 99.1

Lattice Announces First Quarter 2015 Financial Results

Conference call today, Wednesday, May 20 at 2:00 p.m. ET

PENNSAUKEN, NJ, May 20, 2015 (Marketwire) -- Lattice Incorporated (OTCQB: LTTC) (“Lattice” or the “Company”), a cloud-solutions provider of inmate management network systems for correction facilities, announced its financial results for the first quarter ended March 31, 2015.

First Quarter Highlights:

· Closed on a $1.0 million software license contract on March 31; revenue to be recognized in forward quarters under deferred payment arrangement

· Direct call provisioning revenue increased 13%

· Cash and cash equivalents increased 31% to $335,000

· Recurring revenues accounted for 79% of total revenue

· Gross margin percentage was 35%, down from 38% in the year-ago period due to timing of revenue tied to technology shipments

“In the first quarter, we introduced a new perpetual licensing agreement to select strategic customers that will enhance our long-term market penetration strategy while reducing sales volatility,” stated Paul Burgess, CEO of Lattice. “We sold our first such license for our call management platform on March 31. In accordance with accounting rules for revenue recognition, this $1.0 million sale will be recorded in line with payment terms in coming quarters. Moving forward, we are looking to expand this model with other key customer accounts in both domestic and international markets.”

Burgess continued, “In 2015 we will be launching our new eMate™ platform which will provide inmates with a wireless communications device that includes a suite of services that incorporates all of the latest communications and media tools, providing multiple ways for inmates to maintain contact with family and friends. The proprietary eMate platform also includes resources for self-improvement, which is expected to lead to an increase in morale while contributing to a reduction in recidivism. We anticipate a number of new applications and services to be offered through eMate throughout 2015, which should accelerate adoption of the technology from mid-2015 and beyond.”

“The quality and accessibility of our service, combined with our evolving and innovative product mix, has been the key driver behind our success both domestically and internationally. In addition to growing market share in the U.S., we currently have customers in the U.K., Canada, Singapore, Japan, and Bermuda, and we’re exploring further opportunities in several additional markets,” concluded Burgess.

Total revenues for the three months ended March 31, 2015 were approximately $1,510,000, down from approximately $2,334,000 for the three months ended March 31, 2014. Recurring service revenue, which breaks down into wholesaled services and direct services, accounted for 79% of total revenue in the current quarter. Direct call provisioning revenue increased 13% as we added customers, which was offset by a decrease in wholesale revenue due to a large contract that ended during 2014.

The Company completed a $1.0 million sale of a software license to a strategic wholesale partner on March 31, 2015. Revenue from the contract will be recognized during forward quarters in line with installments under a deferred payment arrangement. This shift to a licensing model, which includes an up-front perpetual-use license with separate hardware sale, impacted technology product revenues in the first quarter, which declined to $315,000 from $765,000 in the year-ago period.

Gross profit for the three months ended March 31, 2015 was $525,000 compared to $893,000 in the prior year period. Gross margin, as a percentage of revenues, decreased to 35% from 38% for the same period in 2014. The decrease in the overall margin percentage was primarily due to the effects of lower technology shipments during the quarter which is primarily timing related. Gross margin as a percentage of revenues for recurring revenues was slightly higher compared to the prior year at approximately 29%, mainly as a result of lower margin wholesale service revenue ending in 2014. The gross margin percentage on wholesaled technology product revenues was approximately 56%. The gross margin for wholesaled technology products will vary with larger sales orders, but the Company expects the margins to continue to be in the 60% range on average.

Cash and cash equivalents increased 31% to $335,000 at March 31, 2015, up from $256,000 at December 31, 2014.

Additional information may be found in the Company's 10-Q filing with the U.S. Securities and Exchange Commission.

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Conference Call

Lattice will hold a conference call today, May 20, with CEO Paul Burgess and CFO Joseph Noto, at 2:00 p.m. Eastern time (11:00 a.m. Pacific).

To participate in the call, please dial (888) 438-5491, or (719) 325-2308 for international calls, approximately 10 minutes prior to the scheduled start time. Conference ID:  6569306.

A replay of the call will be available for two weeks from 5:00 p.m. ET on May 20, 2015, until 11:59 p.m. ET on June 3, 2015. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 6569306. In addition, a recording of the call will be available at http://www.redchip.com/company/home/LTTC for one year.

About Lattice Incorporated

Lattice is a provider of inmate management and communications solutions that improve efficiency, reduce administrative burden, and deliver recurring revenue opportunities for corrections facilities globally. Lattice’s Integrated Corrections Operating Network (ICON) is a platform of innovative, highly secure solutions including phone systems, prepaid calling options, voicemail, on-site and remote video visitation and arraignment, point-of-sale kiosks, e-mail, text messaging, and social media. ICON’s inmate management module efficiently manages prison processes, including communications monitoring, commissary purchases, account funding and billing, biometrics, booking, incident reporting, and more. For more information, visit http://www.latticeinc.com.

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-Q previously filed with the SEC.

Contact:

Investor Relations
Jon Cunningham
RedChip Companies, Inc.
Tel: +1-800-733-2447, ext. 107
jon@redchip.com
http://www.redchip.com

Corporate

Scott Raskas, Director of Marketing

Lattice Incorporated

Tel: +1-856-910-1166, x2113

sraskas@latticeinc.com

http://www.latticeinc.com  

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