EX-99.1 2 v149265_ex99-1.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@latticeincorporated.com
  
Email: crocker.coulson@ccgir.com
   
Ed Job, CFA
   
Phone: +(1) 646-213-1914
   
Email: ed.job@ccgir.com


Lattice Incorporated Reports First-Quarter 2009 Results

PENNSAUKEN, N.J., May 11, 2009 - 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 results for the first quarter ended March 31, 2009.
 
First-Quarter 2009 Highlights
 
·
Total revenues were $3.8 million, up 6.0% from approximately $3.6 million in the first quarter of 2008
·
Gross margin was 32.9%, slightly up from 31.6% in the first quarter of 2008
·
“Adjusted” Operating Income was $108,000 versus a $73,000 loss in the year ago period
 
“Despite uncertainties related to the economy and the ultimate spending roadmap of the new administration, we continue to succeed steadily in achieving organic growth, as we expand contract work with our existing government customers,” said Paul Burgess, Lattice’s Chief Executive Officer. “Simultaneously, we continue to emphasize cost-cutting as we focus on consolidating our businesses under the Lattice brand.”
 
First-Quarter 2009 Results
 
Lattice’s total revenue in the first quarter of 2009 was $3.8 million, up 6.0% from approximately $3.6 million in the same period last year.  The year-over-year increase in quarterly total revenues was attributable to an increase in rates on the Company’s cost-plus contracts in its Government services unit and higher sales in the Company’s technology product segment.
 
Cost of revenues increased to approximately $2.6 million from approximately $2.5 million in the same period of 2008. Gross profit in the 2009 first quarter was approximately $1.3 million compared to $1.1 million in the comparable period of 2008. As a percent of revenues, gross profit was 32.9% in the first quarter of 2009, up from 31.6% in the first quarter of 2008.  The year-over-year increase in gross profit was primarily due to a higher percentage of overall revenues attributable to higher-margin technology products, an increase in government services margins due to the rate increase on the Company’s cost plus contracts, partially offset by increased use of subcontractors in supporting the Government service revenues .
 
 
 
 
 
Operating expenses for the first quarter of 2009 totaled $1.6 million, approximately even with the comparable period of 2008. Selling, general and administrative expenses in the 2009 first quarter were $1.1 million, approximately even with SG&A recorded for the first quarter of 2008. Amortization expense was down 19.8% to $299,248 compared to $372,057 recorded in the corresponding period of 2008, as some of the Company’s intangibles have been fully amortized.
 
The Company posted an “Adjusted” operating income of $108,000 compared to a loss for the 2008 first quarter of $73,000. The Company uses “Adjusted” operating income, a non-GAAP measure, as an internal gauge on the Company’s operating performance. Below is a reconciliation of “Adjusted” operating income to reported operating loss.
 
Reconciliation of Operating Loss reported to "Ajusted" Operating Income
 
   
31-Mar-09
    
31-Mar-08
  
             
Operating Loss - reported
   $ (317,331 )   $ (458,390 )
                 
Add-back non-cash items:
                
                 
Depreciation & Amortization
     300,085       375,733  
                 
Share-based compensation
     125,631       9,833  
                 
"Adjusted" Operating Income
     108,385       (72,824 )
 
Other expense in the first quarter of 2009 totaled $254,500, compared to other income of $128,394 recorded in the first quarter of 2008. Included in other expense for the first quarter of 2009 was $172,000 non-cash derivative expense which compared to derivative income of $179,000 in the comparable quarter in 2008.
 
Net loss applicable to common shareholders for the 2009 first quarter was $409,358, or $0.02 per fully diluted share, compared to a $140,836 and $0.01, respectively in the first quarter of 2008.
 
Conference Call
 
The Company will host a conference call at 5:00 p.m. ET on May 11, 2009, to discuss first-quarter 2009 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) 800-8648. The conference ID for the call is 83148794.
 
If you are unable to participate in the call at this time, a replay will be available on May 11 at 7:00 p.m. ET for seven days. To access the replay, dial +1(888)286-8010 or +1(617)801-6888; the conference ID is 41548873.
 
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 STATEMENTS OF OPERATIONS
(UNAUDITED)

   
Three Months Ended
  
   
March 31,
  
   
2009
    
2008
  
             
Revenue - Technology Services
   $ 3,506,525     $ 3,354,013  
Revenue - Technology Products
     301,358       236,893  
Total Revenue
     3,807,883       3,590,906  
                 
Cost of Revenue - Technology Services
     2,439,757       2,369,326  
Cost of Revenue - Technology Products
     115,407       88,538  
Total cost of revenue
     2,555,164       2,457,864  
                       
Gross Profit
     1,252,719       1,133,042  
                 
Operating expenses:
                
Selling, general and administrative
     1,118,308       1,069,640  
Research and development
     152,494       149,735  
Amortization expense
     299,248       372,057  
Total operating expenses
     1,570,050       1,591,432  
                       
Loss from operations
     (317,331 )     (458,390 )
                 
Other income (expense):
                
Derivative income (expense)
     (172,443 )     179,667  
Other expense
     (4,840 )     -  
Interest expense
     (76,191 )     (50,821 )
Finance expense
     (1,026 )     (452 )
Total other income (expense)
     (254,500 )     128,394  
                 
Minority Interest
     5,395       27,422  
                     
Loss before taxes
     (566,436 )     (302,574 )
                 
Income taxes (benefit)
     (163,355 )     (174,208 )
                 
Net loss
   $ (403,081 )   $ (128,366 )
                 
Reconciliation of net loss
                
Loss  applicable to common shareholders:
                
Net loss
   $ (403,081 )   $ (128,336 )
Series B Preferred stock dividend
     (6,277 )     (12,500 )
Loss applicable to common stockholders
   $ (409,358 )   $ (140,836 )
                 
Loss per common share
                
Basic
   $ (0.02 )   $ (0.01 )
Diluted
   $ (0.02 )   $ (0.01 )
                 
Weighted average shares:
                
Basic
     16,700,554       16,828,428  
Diluted
     16,700,554       16,828,428  
 
 
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LATTICE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

   
March 31
    
December 31,
  
   
2009
    
2008
  
   
(Unaudited)
    
(Audited)
  
ASSETS:
            
Current assets:
            
Cash and cash equivalents
   $ 376,664     $ 1,363,130  
Accounts receivable, net
     3,238,027       3,560,690  
Inventories
     30,704       30,704  
Other current assets
     112,870       51,008  
Total current assets
     3,758,265       5,005,532  
                 
Property and equipment, net
     20,253       21,090  
Goodwill
     3,599,386       3,599,386  
Other intangibles, net
     2,110,500       2,409,748  
Other assetes
     54,427       54,459  
Total assets
   $ 9,542,831     $ 11,090,215  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
   $ 1,450,409     $ 1,698,551  
Accrued expenses
     2,170,036       1,726,891  
Customer deposits
     15,000       15,000  
Notes payable
     487,416       1,766,098  
Derivative liability
     373,049       200,606  
Total current liabilities
     4,495,910       5,407,146  
Long term liabilities:
                
Long Term Debt
     482,841       666,515  
Deferred tax liabilities
     1,036,928       1,200,283  
Total long term liabilities
     1,519,769       1,866,798  
Total liabilities
     6,015,679       7,273,944  
Minority interest
     187,885       193,280  
                 
Shareholders' equity
                
Preferred Stock - .01 par value
                
Preferred Stock series A 9,000,000 shares authorized, 7,810,686 and  7,838,686 issued
     78,107       78,387  
Preferred Stock series B 1,000,000 shares authorized  1,000 000 issued
     10,000       10,000  
Preferred Stock series C 575,000 shares authorized 520,000 issued
     5,200       5,200  
Common stock - .01 par value, 200,000,000 authorized,
                
16,942,428 and 16,842,428 issued, and 16,639,441 and 16,539,441 outstanding respectively
     169,425       168,425  
Additional paid-in capital
     38,543,809       38,418,897  
Accumulated deficit
     (34,909,178 )     (34,499,822 )
      3,897,363       4,181,087  
Common stock held in treasury, at cost
     (558,096 )     (558,096 )
Shareholders' equity
     3,339,267       3,622,991  
Total liabilities and shareholders' equity
   $ 9,542,831     $ 11,090,215  

See accompanying notes to condensed consolidated financial statements
 
 
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LATTICE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

   
Three Months ended
  
   
March 31,
  
   
2009
    
2008
  
             
Cash flow from operating activities:
            
Net loss before preferred dividends
   $ (403,081 )   $ (128,336 )
                 
Adjustments to reconcile net loss to net used for operating activities:
          
Derivative (income) expense
     172,443       (179,667 )
Amortization of intangible assets
     299,248       372,057  
Deferred income taxes
     (163,355 )     (174,208 )
Minority interest
     (5,395 )     (27,422 )
Share-based compensation
     125,631       9,833  
Depreciation
     837       3,676  
Changes in operating assets and liabilities:
                
(Increase) decrease in:
                
Accounts receivable
     (359,568 )     850,650  
Other current assets
     (61,862 )     41,721  
Other assets
     32       17,524  
Increase (decrease) in:
                
Accounts payable and accrued liabilities
     205,554       (1,057,349 )
Deferred revenue
     -       15,000  
Total adjustments
     213,565       (128,185 )
Net cash provided by ( used in) operating activities
     (189,516 )     (256,521 )
Cash flows from investing activities:
                
Purchase of equipment
     -       (16,594 )
Net cash used in investing activities
     -       (16,594 )
Cash flows from financing activities:
                
Payments on notes payable
     (21,000 )     (66,000 )
Bank line-of-credit borrowings (payments), net
     (775,950 )     637,407  
Net cash provided by (used in) by financing activities
     (796,950 )     571,407  
Net increase (decrease) in cash and cash equivalents
     (986,466 )     298,292  
Cash and cash equivalents - beginning of period
     1,363,130       769,915  
Cash and cash equivalents - end of period
   $ 376,664     $ 1,068,207  
                 
Supplemental cash flow information
                
Interest paid in cash
   $ 57,289     $ 19,302  
Taxes paid
   $ 4,805     $ 2,080  
                 
Supplemental Disclosures of Non-Cash Financing Activities
                
                 
Proceeds from Factoring agreement paid directly
                
to Private Bank Facility
   $ 682,232     $ -  
Preferred stock dividends
   $ 6,277     $ 12,500  
Conversion of 28,000 preferred share into 100,000 of common
   $ (280 )   $ -  
Conversion of 28,000 preferred share into 100,000 of common
   $ 1,000     $ -  
Additional paid in capital
   $ (720 )   $ -  
 
# # #

 
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