SOURCE: Lattice Incorporated

Lattice Incorporated

April 01, 2013 08:45 ET

Lattice Announces Financial Results for Fiscal 2012

Communication Services Segment Revenue up 64.7% YoY; Conference Call Today, April 1 at 2 p.m. ET

PENNSAUKEN, NJ--(Marketwire - Apr 1, 2013) - Lattice Incorporated (OTCQB: LTTC) ("Lattice" or the "Company"), a provider of advanced information and communications technology solutions to the corrections industry and key government agencies, announced its financial results for the fiscal year ended December 31, 2012.

Fiscal Year Financial Highlights:

  • Communications segment revenue increased 64.7% to $7.53 million, compared to $4.57 million in 2011.
  • Loss applicable to common stockholders decreased 91.7% to $595,880, compared to a loss of $7.15 million in 2011.

Additional information may be found in the Company's 10-K filing with the U.S. Securities and Exchange Commission.

Fiscal year revenue from the Company's rapidly growing communications segment increased 64.7% year-over-year to $7.53 million, compared to $4.57 million in fiscal year 2011. Segment revenue accounted for 69.9% of total Company revenues for the year, compared with 39.9% in the previous fiscal year. Included in the overall increase was an increase in direct service revenue of $1.80 million or 46% combined with a 175% increase in wholesaled technology revenues of $1.16 million. 

Government services revenue for the fiscal year decreased to $3.24 million, compared with $6.88 million in fiscal year 2011. The decrease in revenue in this segment was primarily attributable to the termination of contracts in 2011 and 2012, mainly the SPAWAR contracts which ended in May 2011.

"The focus we've placed on our communications business continues to generate impressive growth," stated Paul Burgess, CEO of Lattice. "Our industry-leading proprietary technology, combined with a growing base of customers and partners, both domestically and internationally, has given us solid footing for continued performance improvement."

Mr. Burgess continued, "Moving forward, the strength of our communication services segment should reflect more strongly in both our top-line and bottom-line results. Together with previously announced cost-cutting efforts, we believe Lattice is well-positioned for a strong 2013."

Conference Call

Lattice will host a conference call today, Monday, April 1, with CEO Paul Burgess and CFO Joseph Noto at 2:00 p.m. Eastern time (11 a.m. Pacific time). To participate in the call, please dial (877) 941-1428, or (480) 629-9665 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found via the Company's website at http://www.latticeincorporated.com, or alternately at http://ViaVid.net.

A replay of the call will be available for two weeks from 5:00 p.m. ET on April 1, 2013, until 11:59 p.m. ET on April 15, 2013. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4610838. In addition, a recording of the call will be available via the Company's website at http://www.latticeincorporated.com for one year.

About Lattice Incorporated

Lattice Incorporated is a provider of advanced information and communications technology solutions to the government and commercial markets. The company's Lattice Government Services division designs, deploys and manages advanced technological solutions at key government agencies and for mid- to large-sized enterprises. The company's Lattice Secure Communications division provides core proprietary platforms that develop customized software applications with military grade security for markets including correctional facilities that require highly secure solutions. For more information, visit http://www.latticeinc.com.

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 STATEMENTS OF OPERATION  
For the years ended December 31,  
             
    2012     2011  
                 
Revenue   $ 10,773,593     $ 11,447,136  
                 
Cost of Revenue     6,995,623       7,558,156  
                 
Gross Profit     3,777,970       3,888,980  
      35.1 %     34.0 %
Operating expenses:                
  Selling, general and administrative     3,358,426       5,259,286  
  Research and development     659,787       692,445  
  Impairment loss (see Note 8)     -       3,396,941  
  Amortization expense     321,792       623,607  
  Total operating expenses     4,340,005       9,972,279  
                 
Income (loss) from operations     (562,035 )     (6,083,299 )
                 
Other income (expense):                
  Derivative income     38,733       131,742  
  Extinguishment income ( loss)     -       -  
  Other income (expense)     255,613       -  
  Interest expense     (432,671 )     (457,362 )
  Total other income     (138,325 )     (325,620 )
                 
Noncontrolling interest     -       9,441  
                 
(Loss) before taxes     (700,360 )     (6,399,478 )
                 
Income taxes (benefit) (Note 15)     (129,588 )     (338,390 )
                 
Net income (loss)     (570,772 )     (6,061,088 )
                 
                 
Reconciliation of net income (loss) to income applicable to common shareholders:                
  Net income (loss)     (570,772 )     (6,061,088 )
  Deemed dividend related to beneficial conversion feature of convertible preferred stock     -       (1,063,636 )
  Preferred stock dividends     (25,108 )     (25,108 )
Income (loss) applicable to common stockholders     (595,880 )     (7,149,832 )
                 
Income (loss) per common share                
  Basic   $ (0.02 )   $ (0.27 )
  Diluted   $ (0.02 )   $ (0.27 )
                 
Weighted average shares:                
  Basic     30,633,941       26,578,839  
  Diluted     30,633,941       26,578,839  
                 
See accompany notes to the consolidated financial statements  
   
   
LATTICE INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
             
    December 31,     December 31,  
    2012     2011  
ASSETS:                
Current assets:                
Cash and cash equivalents   $ 30,368     $ 192,286  
Accounts receivable, net     2,420,737       2,700,859  
Inventories     -       7,350  
Other current assets     134,340       142,500  
  Total current assets     2,585,445       3,042,995  
                 
Property and equipment, net     518,444       612,710  
Goodwill     690,871       690,871  
Other intangibles, net     1,142,518       1,594,306  
Other assets     2,812       2,813  
  Total assets   $ 4,940,090     $ 5,943,695  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 1,854,009     $ 1,769,896  
Accrued expenses     1,499,526       1,698,617  
Deferred revenues     -       50,000  
Customer advances     456,930       124,266  
Notes payable - current     2,277,900       1,869,043  
Contingent Consideration     -       77,700  
Derivative liability     57,634       96,366  
  Total current liabilities     6,145,999       5,685,888  
Long term liabilities:                
Notes Payable - long term     422,350       1,206,283  
Deferred tax liabilities     94,184       223,771  
  Total long term liabilities     516,534       1,430,054  
  Total liabilities     6,662,533       7,115,942  
                 
                 
Shareholders' equity                
Preferred Stock - .01 par value                
  Series A 9,000,000 shares authorized 6,895,815 and 7,530,681 issued and outstanding, respectively     68,958       75,307  
  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 and outstanding     5,200       5,200  
  Series D 636,400 shares authorized 520,000 issued and outstanding     5,909       5,909  
Common stock - .01 par value, 200,000,000 authorized, 32,616,509 and 29,851,509 issued and 32,313,522 and 29,548,522 outstanding respectively     326,166       298,516  
Additional paid-in capital     43,338,352       43,313,969  
Accumulated deficit     (45,039,065 )     (44,443,185 )
      (1,284,480 )     (734,284 )
Stock held in treasury, at cost     (558,096 )     (558,096 )
Equity Attributable to shareowners of Lattice Incorporated     (1,842,576 )     (1,292,380 )
Equity Attributable to noncontrolling interest     120,133       120,133  
Total liabilities and shareholders' equity   $ 4,940,090     $ 5,943,695  
                 
 See accompany notes to the consolidated financial statements       
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE YEARS ENDED DECEMBER 31,  
   
    2012     2011  
                 
Cash flow from operating activities:                
Net income (loss)   $ (570,772 )   $ (6,061,088 )
                 
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
  Derivative expense     (38,733 )     (131,742 )
  Impairment Loss     -       3,396,941  
  Amortization of intangible assets     451,788       753,607  
  Stock issued for service     40,000       -  
  Revaluation of contingent consideration     (77,700 )     (89,600 )
  Deferred income taxes     (129,588 )     (338,390 )
  Minority interest     -       (9,441 )
  Share-based compensation     5,684       233,868  
  Depreciation     254,522       177,982  
Changes in operating assets and liabilities:     -          
(Increase) decrease in:     -          
  Accounts receivable     280,122       767,544  
  Other current assets     8,160       110,325  
  Inventory     7,350          
  Other assets     -       43,700  
Increase (decrease) in:     -          
  Accounts payable and accrued liabilities     (117,083 )     (229,549 )
  Deferred revenues     (50,000 )     (17,879 )
  Customer advances     332,664       20,398  
Total adjustments     967,186       4,687,764  
  Net cash provided by (used for) operating activities     396,414       (1,373,324 )
Cash Used in investing activities:                
  Purchase of equipment     (160,255 )     (587,670 )
  Acquired cash - CLR     -       59,518  
  Net cash used for investing activities     (160,255 )     (528,152 )
Cash flows from financing activities:                
  Revolving credit facility (payments) borrowings, net     (179,966 )     152,944  
  Payments on capital equipment lease     (21,675 )     (63,497 )
  Payments on Notes Payable     (318,338 )     (700,056 )
  Proceeds from the issuance of Securities - notes payable     175,000       2,415,933  
  Payments on Director Loans     (53,098 )     (35,711 )
  Net cash provided by (used in) financing activities     (398,077 )     1,769,613  
  Net increase (decrease) in cash and cash equivalents     (161,918 )     (131,863 )
Cash and cash equivalents - beginning of period     192,286       324,149  
Cash and cash equivalents - end of period   $ 30,368     $ 192,286  
                 
Supplemental cash flow information                
  Interest paid in cash   $ 399,796     $ 415,772  
  Taxes Paid     -       -  
Supplemental disclosure of non-cash Investing & Financing activities     -       -  
  Capital lease     58,122          
  Additional paid in Capital     (16,301 )     -  
  Conversion of preferred shares into common     (6,349 )     -  
  Conversion of preferred shares into common     22,650       -  
  Deemed dividend related to beneficial conversion feature of preferred stock C             1,063,636  
  Common stock issues for purchase of CLR subsidiary             25,000  
                 
See accompany notes to the consolidated financial statements  

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