EX-99.1 2 v111268_99-1.htm

 
 
For Immediate Release

Contact:
Lattice Incorporated 
CCG Elite Investor Relations
Paul Burgess, CEO
Crocker Coulson, President
Phone: +(1) 856-910-1166 x.2111
Phone: +(1) 646-213-1915
Email: pburgess@sysmanagement.com
Email: crocker.coulson@ccgir.com
 
Ed Job, CFA
 
Phone: +(1) 646-213-1914
 
Email: ed.job@ccgir.com


Lattice Incorporated Reports Solid 2007 Results

PENNSAUKEN, N.J., April 15, 2008 - Lattice Incorporated (OTC: LTTC) (“Lattice” or the “Company”), a provider of advanced information and communications technology solutions to key government agencies and enterprise customers, today announced record 2007 year end results.
 
Fiscal Year 2007 Highlights
 
 
·
Total revenues increased 103% year-over-year to $15.2 million
·
Gross profit increased 64% year-over-year to $6.8 million
·
Net income applicable to common shares was $722 thousand
·
Earnings per fully diluted share was $0.01
·
Peace Corps selected Aquifer 6.5 to deploy its Vida 2.0 Database Application
·
Backlog of contract wins reached a record $84.0 million
 
“We are extremely pleased with our results for the year. During 2007 we delivered strong top line performance and increased our Total Contract Backlog to $84.0 million, positioning the business for future growth,” said Paul Burgess, Lattice’s Chief Executive Officer.
 
Fiscal Year 2007 Results
 
Lattice’s total revenues in 2007 were $15.2 million, an increase of 103% over 2006. Revenue growth was driven by the acquisition of RTI in September of 2006 as well as organic growth of 32% attributable to new and expanded contract vehicles in the Company’s technology services business. Services and solutions to the Federal government accounted for 91% of the Company’s revenues in 2007, up from 77% in 2006.
 


 
Gross profit in 2007 was $6.8 million, an increase of 64% over 2006. Gross margin was 44.6% in 2007, down from 55.2% in the 2006. The year-over-year reduction in the gross profit percentage was primarily due to increased use of sub-contractors in support of the delivery of the Company’s government contract vehicles primarily its JPMIS Seaport-e contract which was awarded in the third quarter of 2007.
 
The Company posted an operating loss for 2007 of $1.8 million which compared to operating income of $456 thousand in 2006. The operating loss for 2007 included non-cash amortization expense of $2.0 million related to intangible assets associated with the acquisition of RTI in 2006 and SMEI in 2005, compared to a non-cash amortization expense of $739 thousand in 2006. Also included in operating results were non-cash share-based compensation of $245,000 and 90,000 for 2007 and 2006 respectively.
 
Net income applicable to common shares was $722 thousand, or $0.01 per fully diluted share, compared to a loss of $15.6 million, or $1.31 per diluted share in the year ago period.
 
Recent Events
 
On December 26, 2007 the Company disclosed that its backlog of contract wins had reached a record $84.0 million as of November 30, 2007
 
On January 28, 2008 the Company announced that Peace Corps selected Aquifer version 6.5 to develop and deploy its Volunteer Information Database Application (VIDA 2.0), with worldwide release scheduled for the first quarter of 2008.
 
On February 26, 2008 the Company announced that the Joint Program Manager Information Systems (JPM IS) has exercised and partially funded an optional $2.35M Contract Line Item in its ongoing SeaPort-e Task Order. If all options and award terms are exercised this contract could generate revenue over five years of up to approximately $55 million to Lattice.

On March 4, 2008 the Company announced that it had been recognized in the prestigious “Deloitte 2007 Technology Fast 500” program as one of the 500 fastest growing technology companies in North America.

On March 31, 2008 the Company announced that the Private Bank of the Peninsula reached a participation agreement with Montage Capital LLC under which it can expand Lattice’s line of credit from $2,400,000 up to $4,000,000.
 
Conference Call
 
The Company will host a conference call at 5:30 p.m. ET on April 15, 2008, to discuss 2007 year end results. Joining Paul Burgess, Lattice’s Chief Executive Officer, will be Joe Noto, Chief Financial Officer. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1(866) 864-4336. The conference ID for the call is 43157367.
 
If you are unable to participate in the call at this time, a replay will be available on April 15, at 7:30 p.m. ET, through May 22, 2008. To access the replay, dial +1(800)642-1687 international callers should dial +1(706)645-9291 and enter the conference ID 43157367.
 
About Lattice Incorporated

Lattice Incorporated is a provider of advanced information and communications technology solutions to the government and commercial markets. The company's technology services division designs, deploys and manages advanced technological solutions at key government agencies and for mid- to large-sized enterprises. Lattice's technology products division consists of several core proprietary platforms used to develop customized software applications with military grade security in a number of different markets. For more information, visit http://www.latticeincorporated.com.

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


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 LATTICE INCORPORATED AND SUBSIDIARIES
  
 CONSOLIDATED INCOME STATEMENT
  
   
 
  
 
  
 
  
   
 
  
2007
  
2006
  
   
 
  
 
  
 
  
Revenue - Technology Services
        
$
13,853,580
  
$
5,802,836
  
Revenue - Technology Products
          
1,364,247
   
1,692,052
 
Total Revenue
        
15,217,827
   
7,494,888
 
               
Cost of Revenue - Technology Services
          
7,892,257
   
2,801,085
 
Cost of Revenue - Technology Products
          
530,833
   
554,136
 
Total cost of revenue
        
8,423,090
   
3,355,221
 
                     
Gross Profit
          
6,794,737
   
4,139,667
 
               
Operating expenses:
                
Selling, general and administrative
        
6,113,338
   
2,508,559
 
Research and development
        
432,069
   
435,768
 
Amortization expense
        
1,990,164
   
739,454
 
Total operating expenses
        
8,535,571
   
3,683,781
 
                     
Income (Loss) from operations
          
(1,740,834
)
  
455,886
 
               
Other income (expense):
                
Derivative income (expense)
        
4,970,932
   
(13,753,295
)
Extinguishment loss
        
(157,130
)
  
(158,266
)
Finance expense
        
(99,279
)
  
(1,334,335
)
Total other income (expense)
        
4,714,523
   
(15,245,896
)
               
Net interest expense
          
(494,414
)
  
(704,178
)
               
Minority Interest
          
(79,038
)
  
(57,245
)
                      
Income (loss) before taxes
          
2,400,237
   
(15,551,433
)
               
Income taxes (benefit)
         
(1,325,976
)
  
-
 
                     
Net income (loss)
          
3,726,213
   
(15,551,433
)
               
Reconciliation of net income (loss) to
                
income applicable to common shareholders:
                
Net income (loss)
        
3,726,213
   
(15,551,433
)
Series A Preferred stock dividend
        
(2,954,507
)
    
Series BPreferred stock dividend
        
(50,000
)
  
(8,333
)
Income applicable to common stockholders
          
721,706
   
(15,559,766
)
               
Income (loss) per common share
                
Basic
      
$
0.04
  
$
(1.31
)
Diluted
      
$
0.01
  
$
(1.31
)
               
Weighted average shares:
                
Basic
        
16,658,343
   
11,888,458
 
Diluted
        
57,542,816
   
11,888,458
 

 

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LATTICE INCORPORATED AND SUBSIDIARIES
     
CONSOLIDATED BALANCE SHEETS
      
       
   
December 31,
  
   
2007
  
ASSETS:
      
Current assets:
      
Cash and cash equivalents
  
$
769,915
  
Accounts receivable, net
    
3,839,744
 
Inventories
    
65,846
 
Other current assets
    
127,801
 
Total current assets
    
4,803,306
 
         
Property and equipmen, net
    
27,530
 
Goodwill
    
7,629,632
 
Other intangibles, net
    
5,354,071
 
Other assetes
    
118,623
 
Total assets
  
$
17,933,162
  
         
LIABILITIES AND SHAREHOLDERS' EQUITY
        
Current liabilities:
        
Accounts payable
  
$
2,716,411
  
Accrued expenses
    
1,252,916
 
Due to former Stockholder's per Sept 19, 2006 purchase agreement
    
1,500,000
 
Customer deposits
    
15,000
 
Deferred revenue
    
-
 
Notes payable
    
1,050,254
 
Derivative liability
    
7,217,099
 
Total current liabilities
    
13,751,680
 
         
Deferred tax liabilities
    
2,661,954
 
Minority interest
    
214,599
 
         
Shareholders' equity
       
Preferred Stock - .01 par value
    
88,387
 
Common stock - .01 par value, 200,000,000 authorized,
    
168,425
 
16,842,428 and 16,642,428 issued, 16,829,428 and 16,629,848 outstanding respectively
Additional paid-in capital
    
36,854,901
 
Accumulated deficit
    
(35,408,951
)
     
1,702,762
 
Common stock held in treasury, at cost
    
(397,833
)
Shareholders' equity
   
1,304,929
 
Total liabilities and shareholders' equity
 
$
17,933,162
  


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 LATTICE INCORPORATED AND SUBSIDIARIES
  
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  
               
               
       
Year Ended December 31,
  
       
2007
  
2006
  
               
Cash flow from operating activities:
          
Net Income (Loss) before preferred dividends
$
3,726,213
  
$
(15,551,433
)
                     
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
    
Derivative (income) expense
          
(4,970,932
)
  
13,753,295
 
Amortization of intangible assets
          
1,990,164
   
739,454
 
Providion for income taxes
          
(1,325,976
)
  
-
 
Amortization of debt discount (effective method)
          
205,809
   
371,753
 
Amortization of deferred financing
         
26,119
   
1,334,335
 
Stock issued for services
          
40,000
       
Financing expenses paid in stock
          
65,470
       
Extinguishment loss
          
157,130
   
158,266
 
Minority interest
          
79,038
   
57,245
 
Interest derivative
          
110,618
       
Share-based compensation
          
245,760
   
90,612
 
Depreciation
          
34,573
   
40,831
 
Changes in operating assets and liabilities:
            
(Increase) decrease in:
                    
Accounts receivable
          
(1,427,580
)
  
(818,847
)
Inventories
          
(1,404
)
  
23,150
 
Other current assets
         
(105,040
)
  
(69,472
)
Other assets
          
4,313
   
1,649
 
Increase (decrease) in:
                    
Accounts payable and accrued liabilities
          
2,294,270
   
(270,269
)
Customer deposits
          
-
   
(135,199
)
Deferred revenue
          
(62,495
)
  
62,495
 
Total adjustments
          
(2,640,163
)
  
15,339,298
 
Net cash provided by (used for) operating activities
          
1,086,050
   
(212,135
)
Cash Used in investing activities:
                    
Investment in "RTI"
          
-
   
(3,665,638
)
Acquired Cash RTI
          
-
   
156,772
 
Purchase of equipment
          
(24,916
)
  
(39,837
)
Net cash used for investing activities
          
(24,916
)
  
(3,548,703
)
Cash flows from financing activities:
                    
Issuance of common stock, net
          
-
   
1,293,906
 
Repayments of convertible notes (Laurus)
          
-
   
(1,000,000
)
Issuance of convertible debt, net of fees
          
-
   
4,450,000
 
Financing fees in connection with Barron financing and Revolving Line of Credit
          
149,506
   
(553,059
)
Revolving credit facility (payments) borrowings, net
          
-
   
137,898
 
Short term notes paid
          
(833,000
)
  
(234,000
)
Loans from Stockholders' & Officers
          
-
   
250,000
 
Loans paid Stockholders' & Officers
          
-
   
(245,629
)
Net cash (used) provided by financing activities
          
(683,494
)
  
4,099,116
 
Net increase (decrease) in cash and cash equivalents
          
377,640
   
338,278
 
Cash and cash equivalents - beginning of period
          
392,275
   
53,997
 
Cash and cash equivalents - end of period
        
$
769,915
  
$
392,275
  
                     
Supplemental cash flow information
                    
Interest paid in cash
        
$
177,987
  
$
315,470
  
Non-cash
                   
RTI earn out
        
$
1,500,000
        
Prepaid finance cost reclassified as equity
        
$
442,474
        
Accued expenses setteled with stock warrants
        
$
874,000
        

###

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