SOURCE: Lattice Incorporated

Lattice Incorporated

August 20, 2010 09:49 ET

Lattice Announces Second Quarter 2010 Earnings

Communication Services Revenue Up 179%

PENNSAUKEN, NJ--(Marketwire - August 20, 2010) -  Lattice Incorporated (OTCBB: LTTC), a provider of advanced technological solutions to key government agencies and enterprise customers, announced today the company's financial results for the second quarter ended June 30, 2010.

Total revenue for the quarter ended June 30, 2010 was $3.4 million compared to $4.2 million for the quarter ended June 30, 2009. Net loss was ($65,000) or EPS of ($0.00) compared with net loss of ($178,000) or EPS of ($0.01) in the same quarter of 2009.

Gross profit for the quarter was $1.39 million compared to $1.28 million a year ago. Gross margin for the second quarter was 41.3% compared to 30.8% for the same quarter of 2009.

Total operating expense for the quarter was $1.4 million, a decrease of 16.3% from $1.68 million in the comparable period a year ago. As a percentage of sales, operating expenses slightly increased to 41.7% from 40.4% for 2009.

CEO Paul Burgess said, "We continued to see the successful results of our transition from dependence on government services to a more balanced income stream. Our Communication Services segment revenue increased 179% to $855,000 and comprised 25.3% of our total revenues in Q2 '10 compared to $306,000 or just 7.3% of total revenues in the prior year quarter. Of the total revenues reported for the communications segment in the second quarter of 2010, $487,602 or 57% was attributable to our new direct services product offering. We are highly encouraged by the success of our growing communications services business. 

"Our Government Services segment which represents revenues from professional engineering services to Federal government Dept of Defense (DoD) agencies accounted for 74.7% of total revenues compared to 92.7% in the year ago quarter. Based on our bid pipeline and teaming arrangements, we continue to anticipate wins in new agencies and expansion on existing contracts in the second half of the year. The majority of the bids we currently have and are awaiting on awards are with new agencies or new contracts that add to our current contract base. In addition, we have entered into a number of teaming agreements with other government contractors enabling us to provide services on current contracts that they have been awarded. We anticipate these awards to begin in the second half of this year. The addition of new contracts will also decrease the concentration risk of revenues within this segment."

The company will host a conference call with CEO Paul Burgess and CFO Joseph Noto today, August 20 at 11:00 a.m. Eastern time. To participate in this call, dial 1-877-941-1427 any time after 10:50 a.m. ET. International callers should dial 1-480-629-9664. The conference ID number is 4353276.

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

Financial tables are below.

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.

LATTICE INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
   
    June 30,     December 31,  
    2010     2009  
    unaudited     audited  
ASSETS:              
Current assets:              
Cash and cash equivalents $ 835,737     $ 212,616  
Accounts receivable   3,090,778       3,560,293  
Inventories   29,402       29,402  
Other current assets   297,822       133,405  
  Total current assets   4,253,739       3,935,716  
                 
Property and equipment, net   265,691       264,753  
Goodwill   3,599,386       3,599,386  
Other intangibles, net   1,933,184       977,455  
Other assets   47,262       54,259  
  Total assets $ 10,099,262     $ 8,831,569  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
Accounts payable $ 2,032,352     $ 1,780,143  
Accrued expenses   1,426,323       1,719,831  
Customer deposits   249,179       94,954  
Notes payable - current   1,503,742       1,503,742  
Derivative liability   183,458       161,570  
  Total current liabilities   5,395,054       5,260,240  
Long term liabilities:              
Notes Payable - long term   1,324,143       188,466  
Deferred tax liabilities   317,952       440,832  
  Total long term liabilities   1,642,095       629,298  
  Total liabilities   7,037,149       5,889,538  
                 
                 
Shareholders' equity              
Preferred Stock - .01 par value              
  Series A 9,000,000 shares authorized 7,530,681 and 7,567,685 issued respectively   75,307       75,677  
  Series B 1,000,000 shares authorized 1,000,000 issued and 502,160 outstanding   10,000       10,000  
  Series C 520,000 shares authorized 520,000 issued   5,200       5,200  
Common stock - .01 par value, 200,000,000 authorized,   229,425       178,104  
22,942,437 and 17,810,281 issued, 22,639,450 and 17,507,294 outstanding respectively              
Additional paid-in capital   39,605,182       38,925,743  
Accumulated deficit   (36,455,906 )     (35,851,892 )
      3,469,208       3,342,832  
Stock held in treasury, at cost   (558,096 )     (558,096 )
Equity Attributable to shareowners of Lattice Incorporated   2,911,112       2,784,736  
Equity Attributable to non-controlling interest   151,001       157,295  
Total liabilities and shareholders' equity $ 10,099,262     $ 8,831,569  
LATTICE INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
   
  Three Months Ended June 30,   Six Months Ended June 30,  
  2010   2009   2010   2009  
                         
Revenue $ 3,373,737   $ 4,166,700   $ 7,114,794   $ 7,974,583  
                         
Cost of Revenue   1,981,885     2,884,506     4,549,436     5,441,009  
                         
                         
Gross Profit   1,391,852     1,282,194     2,565,358     2,533,574  
                         
Operating expenses:                        
  Selling, general and administrative   1,090,745     1,239,801     2,288,822     2,361,793  
  Research and development   144,799     143,182     300,330     295,677  
  Amortization expense and depreciation expense   172,136     299,248     281,272     598,496  
  Total operating expenses   1,407,680     1,682,231     2,870,424     3,255,966  
                         
Loss from operations   (15,828 )   (400,037 )   (305,066 )   (722,392 )
                         
Other income (expense):                        
  Derivative expense   (13,726 )   108,373     (109,673 )   (64,070 )
  Extinguishment (loss)   -     -     (130,055 )   -  
  Other income   -     -     -     -  
  Interest expense   (94,069 )   (48,897 )   (175,840 )   (126,114 )
  Total other income   (107,795 )   59,476     (415,568 )   (190,184 )
                         
Minority Interest   3,147     5,052     6,294     10,447  
                         
Income before taxes   (120,476 )   (335,509 )   (714,340 )   (902,129 )
                         
Income taxes (benefit)   (61,440 )   (163,355 )   (122,880 )   (326,710 )
                         
Net loss   (59,036 )   (172,154 )   (591,460 )   (575,419 )
                         
Reconciliation of net loss to                        
Loss applicable to common shareholders:                        
  Net loss   (59,036 )   (172,154 )   (591,460 )   (575,419 )
  Preferred stock dividends   (6,277 )   (6,277 )   (12,554 )   (12,554 )
Loss applicable to common stockholders   (65,313 )   (178,431 )   (604,014 )   (587,973 )
                         
Loss per common share                        
  Basic $ (0.00 ) $ (0.01 ) $ (0.03 ) $ (0.04 )
  Diluted $ (0.00 ) $ (0.01 ) $ (0.03 ) $ (0.04 )
                         
Weighted average shares:                        
  Basic   22,639,450     16,739,444     21,631,755     16,720,555  
  Diluted   22,639,450     16,739,444     21,631,755     16,720,555  

 

LATTICE INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
         
      Six Months ended June 30,  
      2010     2009  
                   
Cash flow from operating activities:                
Net loss   $ (591,459 )   $ (575,419 )
                   
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
  Derivative income     109,673       64,070  
  Amortization of intangible assets     344,272       598,496  
  Deferred income taxes     (122,880 )     (326,710 )
  Extinguishment loss     130,055       -  
  Minority interest     (6,294 )     (10,447 )
  Share-based compensation     262,550       251,266  
  Depreciation     29,489       -  
Changes in operating assets and liabilities:     -          
(Increase) decrease in:                
  Accounts receivable     469,515       (1,184,897 )
  Other current assets     16,582       (155,601 )
  Other assets     6,997       (1,275 )
Increase (decrease) in:             -  
  Accounts payable and accrued liabilities     (53,854 )     971,355  
  Customer advances     154,225       -  
Total adjustments     1,340,330       206,257  
  Net cash provided by (used for) operating activities     748,871       (369,162 )
Cash Used in investing activities:                
  Purchase of intangibles     (1,300,000 )     -  
  Purchase of equipment     (30,427 )     (32,773 )
  Net cash used for investing activities     (1,330,427 )     (32,773 )
Cash flows from financing activities:                
  Revolving credit facility (payments) borrowings, net     (45,714 )     (775,950 )
  Payments on capital equipment lease     (19,169 )     -  
  Proceeds from the issuance of Note     1,100,000          
  Proceeds from issuance of Series A preferred stock     250,000       -  
  Loans paid director     (80,441 )     (14,000 )
  Net cash provided by (used in) financing activities     1,204,676       (789,950 )
  Net increase (decrease) in cash and cash equivalents     623,120       (1,191,885 )
Cash and cash equivalents - beginning of period     212,616       1,363,130  
Cash and cash equivalents - end of period   $ 835,736     $ 171,245  
                   
Supplemental cash flow information                
  Interest paid in cash   $ 172,168     $ 100,769  
  Taxes paid     2,850       4,805  
Supplemental disclosures of Non-Cash Investing & Financing Activities                
  Sale of accts receivable by factor proceeds paid directly to Private Bank             682,232  
  Proceeds from Factoring agreement paid directly to Private Bank Facility             6,277  
  Preferred stock dividends             -  
  Conversion of preferred shares into common     (14,370 )     (280 )
  Conversion of preferred shares into common     51,322       1,000  
  Additional paid in capital     (36,951 )     (720 )
  Exchange of warrants for preferred series A                
    Derivative liabilities     87,785          
    Additional paid in Capital     453,840          
  Deferred financing fees     150,000          
 
 
LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED SEGMENT DATA
(unaudited)
 
    Three Months Ended   Six Months Ended
June 30,   June 30,
    2010   2009   2010   2009
                         
Revenues:                        
Government Services   $ 2,519,118   $ 3,860,923   $ 5,430,953   $ 7,367,448
Communication Services     854,620     305,777     1,683,842     607,135
Total Consolidated Revenues   $ 3,373,738   $ 4,166,700   $ 7,114,795   $ 7,974,583
                         
Gross Profit:                        
Government Services   $ 1,137,065   $ 1,084,064   $ 2,104,242   $ 2,149,493
Communication Services     301,030     198,130     553,604     384,081
Total Consolidated   $ 1,438,095   $ 1,282,194   $ 2,657,846   $ 2,533,574
                         
                         
      June 30, 2010     December 31, 2009            
Total Assets:                        
Government Services   $ 7,821,000   $ 8,270,589            
Communication Services     2,278,000     560,980            
Total Consolidated Assets   $ 10,099,000   $ 8,831,569            

Contact Information

  • Investor Relations contact:
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    Frank Hawkins
    305-451-1888
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