Investor Relations Contact: Hawk Associates, Inc. Julie Marshall and Cale Smith Phone: (305) 451-1888 E-mail: info@hawkassociates.com http://www.hawkassociates.com | |||
Lattice Incorporated 7150 N. Park Dr. Suite 500 Pennsauken, NJ 08109 Phone: (856) 910-1166 Fax: (856) 910-1811 | News Release: FOR IMMEDIATE RELEASE |
Lattice Incorporated Announces Second Quarter Fiscal 2007 Financial Results
- Generated $3.7 Million of Revenue for Quarter -
PENNSAUKEN, N.J. - August 21, 2007 -- 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 second fiscal quarter ended June 30, 2007.
Revenues for the quarter were $3,720,000 compared to $1,343,000 in the second quarter of 2006, an increase of $2,377,000. Revenues for the quarter ended June 30, 2007 include $1,577,000 in revenues attributable to Ricciardi Technologies, Inc., an entity acquired by the company in September 2006. Disregarding the impact of the addition of Ricciardi Technologies, comparable sales increased $800,000 or 60% from $1,343,000 in the quarter ended June 30, 2006 to $2,143,000 in the quarter ended June 30, 2007.
Revenues in the services segment increased by $2,394,000 for the quarter to $3,379,000 from $965,000 in the second quarter of 2006. Such increase included Ricciardi Technologies service revenues of $1,577,000. Non-Riciardi Technologies service revenues increased by $817,000 or 85% from $965,000 in the second quarter of 2006 to $1,782,000 in the second quarter if 2007. Revenues from technology products decreased slightly for the quarter to $341,000 from $378,000 in the comparable quarter of 2006. The company reported an operating loss for the quarter of $20,000 versus an operating income of $116,000 in the comparable quarter of 2006. Included in the current quarter were non-cash amortization expenses related to intangible assets totaling $520,000 versus $57,000 in the year ago quarter.
For the second quarter of 2007, the company reported net income of $1,730,000 compared to a net loss of $7,000 a year earlier. Included in net income for the most recent quarter was $1,906,000 of derivative income representing a decrease in the fair value of the company’s derivative liabilities.
Lattice CEO Paul Burgess said, “We are pleased to report our continued growth in the second quarter. By continuing to augment our existing contracts and add new agreements, we anticipate further organic growth and cost efficiencies as we look ahead. We will strive to improve margins in our services segment as we focus our product development resources on accelerating the market launch of innovative, high margin solutions.
“We plan on continuing to expand our sales efforts both within the federal government secure software solutions space and commercial accounts. Our strong contract backlog has given us an opportunity to further expand our existing revenue base across both markets. During the quarter we also continued to investigate potential acquisitions of profitable companies with proprietary products and services which will mesh well with our existing customers and business.”
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A copy of the financial statements follows.
A podcast of the company’s second quarter conference call will be archived for approximately 90 days from today at http://viavid.net/mp3/000042F2.mp3.
About Lattice Incorporated
Lattice Incorporated is a provider of advanced information and communications technology to the government and commercial markets. The company’s technology services division designs, deploys and manages advanced technological solutions at key government agencies and 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 multiple vertical 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.
For investor relations information regarding Lattice Incorporated, contact Julie Marshall or Cale Smith, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com. 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 and http://www.americanmicrocaps.com. To receive free e-mail notification of future releases for this company, sign up at http://www.hawkassociates.com/email.aspx.
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 (the Exchange Act), 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; (iv) the declaration and payment of dividends; and (v) 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 and 10-Q filed with the SEC.
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LATTICE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2007 | December 31, 2006 | ||||||
(Unaudited) | (Restated) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 272,174 | $ | 392,275 | |||
Accounts receivable, net | 3,974,858 | 2,412,164 | |||||
Inventories | 86,329 | 64,442 | |||||
Other current assets | 102,000 | 698,514 | |||||
Total current assets | 4,435,361 | 3,567,395 | |||||
Property and equipment, net | 28,937 | 37,187 | |||||
Goodwill | 2,547,866 | 2,547,866 | |||||
Other intangibles, net | 6,303,379 | 7,344,235 | |||||
Other assets | 96,556 | 122,935 | |||||
Total assets | $ | 13,412,099 | $ | 13,619,618 | |||
LIABILITIES AND SHAREHOLDERS' (DEFICIT) | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,558,601 | $ | 892,773 | |||
Accrued expenses | 800,122 | 1,736,754 | |||||
Customer deposits | 15,000 | $ | 15,000 | ||||
Deferred revenue | - | 62,495 | |||||
Notes payable | 1,654,192 | 1,998,189 | |||||
Derivative Liability | 11,141,149 | 19,873,782 | |||||
Total current liabilities | 15,169,064 | 24,578,993 | |||||
Deferred tax liabilities | 406,162 | 406,162 | |||||
Minority interest | 236,740 | 135,561 | |||||
Shareholders' equity (deficit): | |||||||
Preferred stock - .01 par value | |||||||
10,000,000 shares authorized 8,826,087 and 1,000,000 issued | 88,261 | 10,000 | |||||
Common stock - .01 par value, 200,000,000 shares authorized, | |||||||
16,642,428 and 16,629,848 issued and outstanding | |||||||
in 2007 and 2006, respectively | 166,425 | 166,425 | |||||
Additional paid-in capital | 33,638,894 | 24,850,967 | |||||
Accumulated deficit | (35,895,614 | ) | (36,130,657 | ) | |||
(2,002,034 | ) | (11,103,265 | ) | ||||
Common stock held in treasury, at cost | (397,833 | ) | (397,833 | ) | |||
Shareholders' deficit | (2,399,867 | ) | (11,501,098 | ) | |||
Total liabilities and shareholders' deficit | $ | 13,412,099 | $ | 13,619,618 |
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LATTICE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(UNAUDITED)
Six Months Ended June 30, | Three Months Ended June 30, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Sales -- Technology services | $ | 6,265,887 | $ | 1,882,675 | $ | 3,378,808 | $ | 964,758 | |||||
Sales -- Technology products | 630,487 | 801,886 | 341,085 | 377,996 | |||||||||
Total sales | 6,896,374 | 2,684,561 | 3,719,893 | 1,342,754 | |||||||||
Cost of sales -- Technology services | 2,945,113 | 923,924 | 1,561,851 | 445,676 | |||||||||
Cost of sales -- Technology products | 212,170 | 269,820 | 122,978 | 115,700 | |||||||||
Total cost of sales | 3,157,283 | 1,193,744 | 1,684,829 | 561,376 | |||||||||
Gross profit | 3,739,091 | 1,490,817 | 2,035,064 | 781,378 | |||||||||
Operating costs and expenses: | |||||||||||||
Selling, general and administrative | 3,608,003 | 1,061,197 | 1,958,852 | 556,590 | |||||||||
Research and development | 205,298 | 218,269 | 96,257 | 109,135 | |||||||||
3,813,301 | 1,279,466 | 2,055,109 | 665,725 | ||||||||||
Operating loss | (74,210 | ) | 211,351 | (20,045 | ) | 115,653 | |||||||
Other income (expense): | |||||||||||||
Derivative income (expense) | 1,060,882 | 13,445 | 1,906,247 | 13,445 | |||||||||
Other income | - | 13,505 | - | 13,505 | |||||||||
Extinguishment loss | (157,130 | ) | - | - | - | ||||||||
Interest expense | (479,002 | ) | (264,753 | ) | (93,198 | ) | (134,864 | ) | |||||
Finance expense | (14,318 | ) | (16,309 | ) | (9,318 | ) | (8,266 | ||||||
Total other income (expenses) | 410,432 | (254,112 | ) | 1,803,731 | (116,180 | ) | |||||||
Income (loss) before minority interest | 336,222 | (42,761 | ) | 1,783,686 | (527 | ) | |||||||
Minority interest | (101,179 | ) | (14,021 | ) | (54,136 | ) | (6,579 | ) | |||||
Net income (loss) | $ | 235,043 | $ | (56,782 | ) | $ | 1,729,550 | $ | (7,106 | ) | |||
Reconciliation of net income (loss) to income applicable to common shareholders: | |||||||||||||
Net income (loss) | $ | 235,043 | $ | (56,782 | ) | $ | 1,729,550 | $ | (7,106 | ) | |||
Preferred stock dividends | (25,000 | ) | - | (12,500 | ) | - | |||||||
$ | 210,043 | $ | (56,782 | ) | $ | 1,717,050 | $ | (7,106 | ) | ||||
Income (loss) per common share: | |||||||||||||
Basic | $ | 0.01 | $ | (0.01 | ) | $ | 0.10 | $ | (0.00 | ) | |||
Diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |
Weighted average shares: | |||||||||||||
Basic | 16,642,428 | 9,371,901 | 16,642,428 | 9,759,652 | |||||||||
Diluted | 64,230,056 | 9,499,330 | 64,230,056 | 9,887,081 |
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LATTICE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30, | |||||||
2007 | 2006 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 235,043 | $ | (56,782 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||
Derivative (income) expense | (1,060,882 | ) | (13,445 | ||||
Amortization of intangible assets | 1,040,856 | 113,380 | |||||
Amortization of debt discount (effective method) | 205,809 | 79,332 | |||||
Amortization of financing expense | 127,525 | 16,309 | |||||
Extinguishment loss | 157,130 | - | |||||
Minority interest | 101,179 | 14,021 | |||||
Share-based payments | 122,880 | - | |||||
Depreciation | 8,250 | 35,279 | |||||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in: | |||||||
Accounts receivable | (1,559,695 | ) | (169,650 | ) | |||
Inventories | (21,887 | ) | 4,106 | ||||
Other current assets | 36,167 | - | |||||
Other assets | 26,380 | (57,905 | ) | ||||
Increase (decrease) in: | |||||||
Accounts payable and accrued expenses | 603,196 | (252,328 | ) | ||||
Customer deposits | - | (135,199 | ) | ||||
Deferred revenue | (62,495 | ) | - | ||||
Total adjustments | (275,587 | ) | (366,100 | ) | |||
Net cash provided by (used for) operating activities | (40,544 | ) | (422,882 | ) | |||
Cash flows from financing activities: | |||||||
Payments on notes payable | (68,000 | ) | (209,000 | ) | |||
Sale of common stock, net | - | 1,291,906 | |||||
Revolving credit facility (payments) borrowings, net | (11,557 | ) | 99,875 | ||||
Net cash (used in) provided by financing activities | (79,557 | ) | 1,182,781 | ||||
Net increase (decrease) in cash and cash equivalents | (120,101 | ) | 759,899 | ||||
Cash and cash equivalents - beginning of period | 392,275 | 53,996 | |||||
Cash and cash equivalents - end of period | $ | 272,174 | 813,895 | ||||
Supplemental cash flow information: | |||||||
Interest paid in cash | $ | 215,685 | - |
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LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED SEGMENT DATA
Six Months Ended | Six Months Ended | Three Months Ended | Three Months Ended | ||||||||||
30-June-07 | 30-June-06 | 30-June-07 | 30-June-06 | ||||||||||
Revenue | |||||||||||||
Technology Products | $ | 630,487 | $ | 801,886 | $ | 341,085 | $ | 377,996 | |||||
Technology Services | 6,265,887 | 1,882,675 | 3,378,808 | 964,758 | |||||||||
Total Consolidated Revenue | $ | 6,896,374 | $ | 2,684,561 | $ | 3,719,893 | $ | 1,342,754 | |||||
Gross Profit | |||||||||||||
Technology Products | $ | 418,317 | $ | 532,066 | $ | 218,107 | $ | 262,296 | |||||
Technology Services | 3,320,774 | 958,751 | 1,816,957 | 519,082 | |||||||||
Total Gross Profit | $ | 3,739,091 | $ | 1,490,817 | $ | 2,035,064 | $ | 781,378 |
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