Lattice Announces Third Quarter Earnings.

Conference Call Today at 2:00 EST

Pennsauken, N.J. – November 23, 2009 -- Lattice Incorporated (OTC Bulletin Board: LTTC), a provider of advanced technological solutions to key government agencies and enterprise customers, announced today the company’s financial results for the third quarter ended September 30, 2009.

Total revenues for the three months ended September 30, 2009 decreased by $282,083 or 6.7% to $3,922,064 compared to $4,204,147 for the three months ended September 30, 2008. The decrease in the quarter included timing impacts from product sales and service revenues attributable to subcontractors.  For the nine months ended September 30, 2009, total revenues increased by $373,505 or 3.2% to $11,896,647 compared to $11,523,142 for the nine months ended September 30, 2008.

Gross profit for the quarter rose 13% to $1.257 million from $1.112 million in the same quarter a year ago. The increase in gross profit was primarily due to the rate increase on the company’s cost-plus contract vehicles. For the nine months, gross profit was up 15.8% to $3.79 million from $3.27 million in last year’s third quarter.

The three months ended September 30, 2009 showed a net loss of $302,000 compared with net income of $321,000 in the third quarter of 2008. For the first nine months of 2009, the net loss was $877,000 against net income a year earlier of $5.2 million. The large swing in net income to net loss was due to last year’s non-cash derivative income of $2.7 million, gain on extinguishment of $2.6 million related to the exchange of Preferred Series C stock for outstanding warrants held by Baron Partners, L.P. and a settlement gain of $970,000 on a contingent earnout liability from the purchase of RTI. Excluding those amounts, the year ago net income would have shown a net loss of $1.1 million.

CEO Paul Burgess said, “We recorded a solid third quarter gain in gross profit of 13% reflecting the initial returns from the investments we have made in the past few quarters in sales and marketing and an improvement in gross margin from government services related to pricing on our cost-plus contract vehicles.

Revenues from government contracts accounted for approximately $11.0 million or 93% of our overall revenues for the nine months ended September 30, 2009. Of our total government contract revenues, approximately 96% were from prime contract vehicles.

“During 2009 we expanded our direct sales force in both our Government Services group and our Technology group. This has resulted in an increased sales pipeline in both divisions of the company.  We anticipate further expansion in both of these areas and more importantly, we anticipate being able to capitalize on our expanded pipeline in the coming months,” Burgess said.

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The company will host a conference call with CEO Paul Burgess and CFO Joseph Noto today, November 23 at 2:00 p.m. Eastern. To participate in this call, dial 1-877-941-4775 any time after 1:50 p.m. ET.  International callers should dial 1-480-629-9761.

An audio replay of the call will be available at http://www.hawkassociates.com for approximately 90 days after the call.

Financial tables are attached.

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.

An investment profile about Lattice Incorporated may be found at http://www.hawkassociates.com/lttcprofile.aspx.

An online investor relations kit including copies of press releases, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com.  To receive free e-mail notification of future releases for this company, sign up at http://www.hawkassociates.com/about/alert/.

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.

Investor Relations contact:

Hawk Associates

Frank Hawkins

305-451-1888

e-mail: lattice@hawkassociates.com.

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Lattice Incorporated And Subsidiaries

Consolidated Balance Sheets

	September 30,			December 31,
	2009			2008
	(Unaudited)			(Audited)
ASSETS:
Current assets:
Cash and cash equivalents	$	342,717		$	1,363,130
Accounts receivable, net		3,840,719			3,560,690
Inventories		41,684			30,704
Other current assets		185,175			51,008
Total current assets		4,410,295			5,005,532
Property and equipment, net		212,075			21,090
Goodwill		3,599,386			3,599,386
Other intangibles, net		1,512,004			2,409,748
Other assetes		54,141			54,459
Total assets	$	9,787,901		$	11,090,215
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,952,353		$	1,698,551
Accrued expenses		1,578,420			1,726,891
Customer advances		87,625			15,000
Notes payable		1,713,574			1,766,098
Derivative liability		257,178			200,606
Total current liabilities		5,589,150			5,407,146
Long term liabilities:
Long Term Debt		203,951			666,515
Deferred tax liabilities		710,218			1,200,283
Total long term liabilities		914,169			1,866,798
Total liabilities		6,503,319			7,273,944
Minority interest		175,180			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		38,800,717			38,418,897
Accumulated deficit		(35,395,951	)		(34,499,822	)
		3,667,498			4,181,087
Common stock held in treasury, at cost		(558,096	)		(558,096	)
Shareholders' equity		3,109,402			3,622,991
Total liabilities and shareholders' equity	$	9,787,901		$	11,090,215

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Lattice Incorporated And Subsidiaries

Consolidated Statements Of Operations

(Unaudited)

	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Revenue - Technology Services	$	11,000,359		$	10,656,897		$	3,632,911		$	3,775,213
Revenue - Technology Products		896,288			866,245			289,153			428,934
Total Revenue		11,896,647			11,523,142			3,922,064			4,204,147
Cost of Revenue - Technology Services		7,763,288			7,916,610			2,545,333			2,924,049
Cost of Revenue - Technology Products		342,455			335,386			119,400			167,370
Total cost of revenue		8,105,743			8,251,996			2,664,733			3,091,419
Gross Profit		3,790,904			3,271,146			1,257,331			1,112,728
Operating expenses:
Selling, general and administrative		3,628,756			3,359,768			1,247,510			1,024,628
Research and development		409,141			384,692			132,917			123,720
Amortization expense		897,744			1,116,171			299,248			372,057
Total operating expenses		4,935,641			4,860,631			1,679,675			1,520,405
Loss from operations		(1,144,737	)		(1,589,485	)		(422,344	)		(407,677	)
Other income (expense):
Derivative income (expense)		(56,572	)		2,750,199			7,498			195,609
Extinguishment gain (loss)		-			2,607,525			0			-
Other expense		-			970,150			0			370,150
Interest expense		(181,066	)		(140,910	)		(56,754	)		(32,703	)
Finance expense		(3,092	)		(2,636	)		(1,289	)		(1,170	)
Total other income (expense)		(240,730	)		6,184,328			(50,545	)		531,886
Minority Interest income		18,100			79,119			7,653			23,700
Net income (loss) before taxes		(1,367,367	)		4,673,962			(465,236	)		147,909
Income taxes (benefit)		(490,065	)		(521,171	)		(163,355	)		(172,755	)
Net Income (loss)	$	(877,302	)	$	5,195,133		$	(301,881	)	$	320,664
Net income (Loss)  applicable to common shareholders:
Net income (loss)	$	(877,302	)	$	5,195,133		$	(301,881	)	$	320,664
Series B Preferred stock dividend		(18,831	)		(37,500	)		(6,277	)		(12,500	)
Income (Loss) applicable to common stockholders	$	(896,133	)	$	5,157,633		$	(308,158	)	$	308,164
Income (Loss) per common share
Basic	$	(0.05	)	$	0.24		$	(0.02	)	$	0.25
Diluted	$	(0.05	)	$	0.03		$	(0.02	)	$	0.03
Weighted average shares:
Basic		16,727,592			16,829,428			16,739,444			16,829,428
Diluted		16,727,592			56,172,092			16,739,444			53,592,883

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