PENNSAUKEN, NJ--(Marketwire - Nov 19, 2012) - Lattice Incorporated (OTCBB: 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 third quarter ended September 30, 2012.

Third Quarter Financial Highlights:

• Revenue increased 7.3% to $2.73 million, compared to $2.55 million for the same period of 2011
• Net loss decreased 88.5% to $0.11 million, compared with a loss of $0.93 million for the same period of 2011

Nine Months Financial Highlights:

• Revenue decreased 4.4% to $8.62 million, compared to $9.01 million for the same period of 2011
• Net income was $0.02 million, compared with a loss of $3.44 million for the same period of 2011

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

Third quarter revenue from the Company's rapidly growing Communications Services segment increased 80.1% year-over-year and 15.4% quarter-on-quarter to $2.12 million, compared to $1.18 million in the third quarter of 2011 and $1.84 million in the second quarter of 2012, respectively. Segment revenue accounted for 77.7% of total company revenues in the third quarter, compared with 46.3% in the third quarter of 2011. Third quarter revenue from recurring services within the segment was up 27.3% to $1.44 million, compared to the same period of 2011, reflecting higher call volumes from correctional facilities and the increased number of facilities on the network.

Government Services revenue in the third quarter decreased to $0.61 million, compared with $1.37 million in the same period of 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. New contract awards and the expansion of funding on existing contracts have been impacted by the stagnation of contract funding in the Federal DoD market.

"We anticipate growing interest in our proprietary technology will drive revenue acceleration in our communications business in the quarters ahead," stated Paul Burgess, CEO of Lattice. "Overall demand for our technology and direct services remains robust, both domestically and internationally."

Mr. Burgess continued, "Cost-cutting efforts aided our ability to improve from a sizable net loss in 2011 to positive net income for the 2012 nine months period. Combined with the growth in our Communications Services segment, we anticipate a continued rebound in the current quarter."

Conference Call

Lattice will host a conference call today, Monday, November 19, 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) 941-1427, or (480) 629-9664 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 November 19, 2012, until 11:59 p.m. ET on December 3, 2012. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4576659. 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
			Three Months Ended September 30,								Nine Months Ended September 30,
			2012				2011				2012				2011
Revenue			$	2,731,599			$	2,545,429			$	8,615,139			$	9,006,867
Cost of Revenue				1,652,778				1,677,232				5,191,893				5,773,103
Gross Profit				1,078,821				868,197				3,423,246				3,233,764
Operating expenses:
	Selling, general and administrative			860,923				1,565,445				2,683,680				4,255,532
	Research and development			160,876				192,930				514,067				513,160
	Impairment loss			-				-				-				1,575,000
	Amortization expense			80,448				104,727				241,344				314,181
	Total operating expenses			1,102,247				1,863,102				3,439,091				6,657,873
Income (loss) from operations				(23,426	)			(994,905	)			(15,845	)			(3,424,109	)
Other income (expense):
	Derivative income (loss)			8,483				82,359				38,733				64,150
	Other income (expense)							-				255,613				-
	Interest expense			(124,773	)			(105,274	)			(354,710	)			(342,397	)
	Total other income			(116,290	)			(22,915	)			(60,364	)			(278,247	)
Noncontrolling interest				-				3,147				-				9,441
Income (Loss) before taxes				(139,716	)			(1,014,673	)			(76,209	)			(3,692,915	)
Income taxes (benefit)				(32,399	)			(85,504	)			(97,191	)			(256,512	)
Net income (loss)				(107,317	)			(929,169	)			20,982				(3,436,403	)
Reconciliation of net income (loss) to income applicable to common shareholders:
	Net income (loss)			(107,317	)			(929,169	)			20,982				(3,436,403	)
	Preferred stock dividends			(6,277	)			(6,277	)			(18,831	)			(18,831	)
Income (loss) applicable to common stockholders				(113,594	)			(935,446	)			2,151				(3,455,234	)
Income (loss) per common share
	Basic		$	(0.00	)		$	(0.03	)		$	0.00			$	(0.13	)
	Diluted		$	(0.00	)		$	(0.03	)		$	0.00			$	(0.13	)
Weighted average shares:
	Basic			30,917,270				29,364,488				30,209,356				25,976,950
	Diluted			30,917,270				29,364,488				73,208,384				25,976,950

LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
			September				December 31,
			2012				2011
			(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents			$	81,105			$	192,286
Accounts receivable				2,666,825				2,700,859
Inventories				7,350				7,350
Other current assets				110,249				142,500
	Total current assets			2,865,529				3,042,995
Property and equipment, net				554,412				612,710
Goodwill				690,871				690,871
Other intangibles, net				1,255,465				1,594,306
Other assets				2,812				2,813
	Total assets		$	5,369,089			$	5,943,695
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	1,817,378			$	1,769,896
Accrued expenses				1,326,914				1,698,617
Deferred revenues				12,500				50,000
Customer advances				360,239				124,266
Notes payable - current				2,152,823				1,869,043
Contingent Consideration				77,700				77,700
Derivative liability				57,634				96,366
	Total current liabilities			5,805,188				5,685,888
Long term liabilities:
Notes Payable - long term				603,155				1,206,283
Deferred tax liabilities				126,581				223,771
	Total long term liabilities			729,736				1,430,054
	Total liabilities			6,534,924				7,115,942
Shareholders' equity
Preferred Stock - .01 par value
	Series A 9,000,000 shares authorized 7,530,681 issued and 7,159,678 outstanding			71,597				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, 31,176,509 and 22,942,437 issued and outstanding respectively				311, 766				298, 516
Additional paid-in capital				43,308,690				43,313,969
Accumulated deficit				(44,441,034	)			(44,443,185	)
				(727,872	)			(734,284	)
Stock held in treasury, at cost				(558,096	)			(558,096	)
Equity Attributable to shareowners of Lattice Incorporated				(1,285,968	)			(1,292,380	)
Equity Attributable to noncontrolling interest				120,133				120,133
Total liabilities and shareholders' equity			$	5,369,089			$	5,943,695

LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				Nine Months Ended September 30,
				2012				2011
Cash flow from operating activities:
Net income (loss)				$	20,982			$	(3,436,403	)
	Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
	Derivative income (expense)				(38,733	)			(64,150	)
	Impairment Loss				-				1,575,000
	Amortization of intangible assets				338,844				411,681
	Deferred income taxes				(97,191	)			(256,512	)
	Minority interest				-				(9,441	)
	Share-based compensation				4,263				194,750
	Depreciation				172,685				119,091
Changes in operating assets and liabilities:									-
(Increase) decrease in:									-
	Accounts receivable				34,034				282,492
	Other current assets				55,251				1,037
Increase (decrease) in:									-
	Accounts payable and accrued liabilities				(343,052	)			(244,097	)
	Deferred revenues				(37,500	)			(17,879	)
	Customer advances				235,973				(78,786	)
Total adjustments					324,574				1,913,186
	Net cash provided by (used for) operating activities				345,556				(1,523,217	)
Cash Used in investing activities:
	Purchase of equipment				(114,387	)			(430,811	)
	Acquired cash - CLR				-				59,518
	Net cash used for investing activities				(114,387	)			(371,293	)
Cash flows from financing activities:
	Revolving credit facility (payments) borrowings, net				(206,139	)			427,411
	Payments on captial lease				(16,718	)			(44,404	)
	Payments on notes payable				(264,055	)			(643,704	)
	Proceeds from the issuance of notes payable				175,000				2,164,733
	Payments on Director Loans				(30,438	)			(24,436	)
	Net cash provided by (used in) financing activities				(342,350	)			1,879,600
	Net increase (decrease) in cash and cash equivalents				(111,181	)			(14,910	)
Cash and cash equivalents - beginning of period					192,286				324,149
Cash and cash equivalents - end of period				$	81,105			$	309,239
Supplemental cash flow information
	Interest paid in cash			$	396,051			$	342,397
		Common Stock			-				1,231
		Derivative liabilities			-				(31,999	)
		Additional paid-in Capital			-				30,768