SC 13G/A 1 v138511_sc13ga.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13G UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 3) LATTICE INCORPORATED -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE -------------------------------------------------------------------------------- (Title of Class of Securities) 518414107 -------------------------------------------------------------------------------- (CUSIP Number) DECEMBER 31, 2008 -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule 13G is filed: |_| Rule 13d-1(b) |X| Rule 13d-1(c) |_| Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Master Fund, Ltd. (In Liquidation)* S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0337673 -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-4150669 -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: PSource Structured Debt Limited S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Guernsey -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Calliope Capital Corporation S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 57-1237865 -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Valens Offshore SPV I, Ltd. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0539781 -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Valens Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 20-8903345 -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: David Grin -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Israel -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. -------------------------------------------------------------------------------- CUSIP No. 518414107 -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Eugene Grin -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| -------------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 1,681,312 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 1,681,312 shares of Common Stock.* -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,681,312 shares of Common Stock. -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |X| -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 9.99% -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN -------------------------------------------------------------------------------- * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. Item 1(a). Name of Issuer: LATTICE INCORPORATED Item 1(b). Address of Issuer's Principal Executive Offices: 7150 N. Park Drive Suite 500 Pennsauken, NJ 08109 Item 2(a). Name of Person Filing: Laurus Master Fund, Ltd.(In Liquidation) This Schedule 13G, as amended, is also filed on behalf of Laurus Capital Management, LLC, a Delaware limited liability company, Calliope Capital Corporation, a Delaware corporation, PSource Structured Debt Limited, a closed ended company incorporated with limited liability in Guernsey, Valens Offshore SPV I, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, Valens Capital Management, LLC, a Delaware limited liability company, Eugene Grin and David Grin. Calliope is a wholly owned subsidiary of Laurus Master Fund Ltd. (In Liquidation). Laurus Master Fund, Ltd. (In Liquidation) is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC, acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to Laurus Master Fund, Ltd. (In Liqudiation) and its two feeder funds concerning their respective assets, including securities owned by Calliope Capital Corporation reported in this Schedule 13G, as amended, subject to the oversight of JVLs and Laurus Capital Management, LLC's obligations to Laurus Master Fund, Ltd. (In Liquidation) under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource Structured Debt Limited is managed by Laurus Capital Management, LLC. Valens Offshore SPV I, Ltd. is managed by Valens Capital Management, LLC. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and Valens Capital Management, LLC and share sole voting and investment power over the shares owned by PSource Structured Debt Limited and Valens Offshore SPV I, Ltd. reported in this Schedule 13G, as amended. Information related to each of Laurus Capital Management, LLC, Calliope Capital Corporation, PSource Structured Debt Limited, Valens Offshore SPV I, Ltd., Valens Capital Management, LLC, Eugene Grin and David Grin is set forth on Appendix A hereto. Item 2(b). Address of Principal Business Office or if none, Residence: c/o Laurus Capital Management, LLC, 335 Madison Avenue, 10th Floor, New York, NY 10017 Item 2(c). Citizenship: Cayman Islands Item 2(d). Title of Class of Securities: Common Stock Item 2(e). CUSIP Number: 518414107 Item 3. Not Applicable Item 4. Ownership: (a) Amount Beneficially Owned: 1,681,312 shares of Common Stock * (b) Percent of Class: 9.99%* (c) Number of shares as to which such person has: (i) sole power to vote or to direct the vote: 0 shares of Common Stock * (ii) shared power to vote or to direct the vote: 1,681,312 shares of Common Stock * (iii) sole power to dispose or to direct the disposition of: 0 shares of Common Stock * (iv) shared power to dispose or to direct the disposition of: 1,681,312 shares of Common Stock * Item 5. Ownership of Five Percent or Less of a Class: Not applicable Item 6. Ownership of More than Five Percent on Behalf of Another Person: Not applicable Item 7. Identification and Classification of Subsidiary Which Acquired the Securities: Not applicable Item 8. Identification and Classification of Members of the Group: Not applicable Item 9. Notice of Dissolution of Group: Not applicable Item 10. Certification: By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. ------------ * Based upon 16,829,950 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 14, 2008, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2008. As of December 31, 2008, PSource Structured Debt Limited("PSource"),Calliope Capital Corporation ("Calliope") and Valens Offshore SPV I, Ltd. ("Valens Offshore I" and together with PSource and Calliope, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant"), (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"); (iv) warrants to purchase 25,000 Shares, exercisable as follows: 12,500 Shares at an exercise price of $0.99 per Share; 7,500 Shares at an exercise price of $1.07 per Share; and 5,000 Shares at an exercise price of $1.24 per Share, each subject to certain adjustments (the "Fourth Warrant", and together with the First Warrant and the Third Warrant, the "Older Warrants"), and (v) 100,000 Shares. The number of Shares underlying all warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrant, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in voluntary liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Voluntary Liquidators ("JVLs") are Chris Johnson and Russell Smith of Chris Johnson Associates Ltd. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides investment management services to the Fund and its two feeder funds concerning their respective assets, including securities owned by Calliope reported in this Schedule 13G, as amended, subject to the oversight of the JVLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented from time to time. PSource is managed by LCM. Valens Offshore I is managed by Valens Capital Management, LLC ("VCM"). Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and VCM and share sole voting and investment power over the securities owned by PSource and Valens Offshore I reported in this Schedule 13G, as amended. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 10, 2009 ------------------------------- Date LAURUS MASTER FUND, LTD. (In Liquidation) By:Laurus Capital Management,LLC its investment manager /s/ David Grin ------------------------------- David Grin Principal APPENDIX A A. Name: Laurus Capital Management, LLC, a Delaware limited liability company Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware B. Name: Calliope Capital Corporation, a Delaware corporation Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware C. Name: PSource Structured Debt Limited, closed ended company incorporated with limited liability in Guernsey Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Guernsey D. Name: Valens Offshore SPV I, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands Business Address: c/o Valens Capital Management, LLC 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Cayman Islands E. Name: Valens Capital Management, LLC, a Delaware limited liability company Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Place of Organization: Delaware F. Name: Eugene Grin Business Address: 335 Madison, 10th Floor New York, New York 10022 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: United States G. Name: David Grin Business Address: 335 Madison Avenue, 10th Floor New York, New York 10017 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: Israel Each of Laurus Capital Management, LLC, Calliope Capital Corporation, PSource Structured Debt Limited, Valens Offshore SPV, Ltd., Valens Capital Management, LLC, David Grin and Eugene Grin hereby agrees, by their execution below, that the Schedule 13G, as amended, to which this Appendix A is attached is filed on behalf of each of them, respectively. Calliope Capital Corporation PSource Structured Debt Limited Laurus Capital Management, LLC By: Laurus Capital Management, LLC Individually and as investment manager /s/ David Grin ------------------------------- David Grin Principal February 10, 2009 Valens Offshore SPV I, Ltd. Valens Capital Management, LLC By: Valens Capital Management, LLC Individually and as investment manager /s/ David Grin ------------------------------- David Grin Principal February 10, 2009 /s/ David Grin ------------------------------- David Grin, on his individual behalf February 10, 2009 /s/ Eugene Grin ------------------------------- Eugene Grin, on his individual behalf February 10, 2009