Lattice Announces Fiscal Year 2013 Financial Results

Conference Call Today, March 31 at 2:00 p.m. ET

PENNSAUKEN, NJ--(Marketwired - Mar 31, 2014) - Lattice Incorporated (OTCQB: LTTC) ("Lattice" or the "Company"), a cloud-solutions provider of inmate management network systems for correction facilities, announced its financial results for the fiscal year ended December 31, 2013.

Fiscal Year 2013 Financial Highlights:

Total revenue increased 10% to $8.3 million
Recurring revenues accounted for 72% of total revenue
Gross margin percentage improved to 34%
Company had positive adjusted operating income for fiscal 2013

"We're pleased to report that we exceeded our top-line growth objective for fiscal 2013 with revenue increasing 10% to $8.3 million," stated Paul Burgess, CEO of Lattice. "By divesting our government services segment in the second quarter, we were able to focus resources on our expanding communications business, which addresses a $1.5 billion per year market in the U.S. alone, resulting in positive adjusted operating income for fiscal 2013 and setting the stage for our move toward profitability in 2014. We've also begun to accelerate our expansion into international markets and will continue to partner with established companies to implement our next generation cloud based services and technology to take advantage of these growing opportunities."

Burgess continued, "We launched the first version of our Integrated Corrections Operations Network ("ICON") in the second quarter of 2013 and we anticipate subsequent releases to continue this year. ICON is a true state-of-the-art platform that includes a full suite of services and products, available in modules that enable service providers and correctional facilities to choose from a variety of services that best fits their needs. To further improve our service offering, we also launched a new in-house call center to better serve our growing customer base. As of year-end 2013, we were operating in 11 states and the number of inmates using our service domestically surpassed 50,000. We are also currently operating internationally in Canada, the U.K., Asia, and the Caribbean."

Total revenue for fiscal 2013 increased 10% year-over-year to $8.3 million, compared to $7.5 million in 2012, while recurring revenues increased 5% year-over-year to 72% of total revenue.

Gross margin, as a percentage of revenues, increased to 34% in 2013 from 32% in 2012. Gross margin for the Company's technology sales remained consistent in the 60% to 65% range and are anticipated to remain stable at these levels. Gross margin from recurring revenues was also consistent with prior year results at approximately 25%.

Adjusted operating income for the fiscal year was $44,000 compared to an adjusted operating loss of $92,000 for the fiscal year 2012.

Cash and cash equivalents increased to $313,000 at December 31, 2013, up from $30,000 at December 31, 2012. Net cash provided by operating activities increased 45% to $575,000 for fiscal 2013, up from $396,000 in fiscal 2012.

"With the Company turning back to positive adjusted operating income in 2013 and continuing growth of our communications business, we can now work to improve our balance sheet," continued Burgess. "We believe the many accomplishments of 2013 and the growing demand for our products and services sets the stage for ongoing financial improvements in 2014 that will lead to a significant in shareholder value."

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

Conference Call

Lattice will host a conference call today, Monday, March 31, with CEO Paul Burgess and CFO Joseph Noto at 2:00 p.m. Eastern time (11:00 a.m. Pacific). To participate in the call, please dial (888) 846-5003, or (480) 629-9856 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.latticeinc.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 March 31, 2014, until 11:59 p.m. ET on April 14, 2014. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4676799. In addition, a recording of the call will be available via the Company's website at http://www.latticeinc.com for one year.

About Lattice Incorporated

Lattice Incorporated provides advanced information and communications technology solutions to corrections facilities globally. The Company's innovative, cost-effective solutions leverage its proprietary Nexus platform, a real-time transaction processing engine, to develop and deliver customized cloud-based software applications with military-grade security for 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-Q previously filed with the SEC.


Adjusted Operating Income (non-GAAP) Reconciliation
	2013			2012

Loss from operations, as reported	$	(619,393	)	$	(474,059	)
add back non-cash and non-recurring items:
depreciation and amortization	$	426,487		$	376,511
share based comp	$	163,027		$	5,684
AR Reserve allowances	$	73,965			-
Adjusted operating income	$	44,086		$	(91,864	)