PENNSAUKEN, NJ--(Marketwire - Aug 14, 2012) -  Lattice Incorporated (OTCBB: LTTC), a provider of advanced information and communications technology solutions to the corrections industry and key government agencies, announced its financial results for the second quarter ended June 30,2012 and the first six months of 2012.

Q2 Financial Highlights:

• Revenue was $2,488,203 compared to $3,194,686 for the same period of 2011.
• Net income was $99,541 compared with a loss of ($1,965,852) for the same period of 2011

Six Months Financial Highlights:

• Revenue was $5,883,684 compared to $6,461,437 for the same period of 2011.
• Net income was $128,301 compared with a loss of ($2,507,234) 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 (SEC).

Revenues from the company's rapidly growing Communications Services in the second quarter rose 54% to $1,839,000, accounting for 74% of total company revenues compared with 37% in the second quarter of 2011. Revenues from recurring services within the Communications segment were up 90% to $1,554,000 reflecting higher call volumes from correctional facilities and the increased number of facilities on the network.

Government Services revenue in the second quarter decreased to $649,000 compared with $1,997,000 in the second quarter a year earlier. The decrease in revenue in this segment was primarily attributable to SPAWAR contracts ending in 2011 and 2012 and the stagnation of contract funding in the Federal DoD market. The ending of the SPAWAR contracts accounted for approximately $747,000 of the decrease from the prior year.

Lattice CEO Paul Burgess said, "We continue to see strong growth in our communications business as demand for our technology and direct services remain robust. With an increase in sales both domestically and internationally, it is a clear indication our proprietary technology is being more widely accepted within the corrections industry and bodes well for our market share growth. With recent contract awards for our Government Services division we anticipate earnings growth within the division to rebound in the second half of the year."

Lattice will host a conference call today, Tuesday, August 14, with CEO Paul Burgess and CFO Joseph Noto at 2:00 p.m. EDT. To participate in this call, dial 1-877-941-1429 after 1:50 p.m. EDT. International callers should dial 1-480-629-9809. An audio replay of the call will be available at http://www.hawkassociates.com/lttcprofile.aspx for approximately 90 days after the call.

Financial Tables are attached.

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. 

Investment profile about Lattice: http://www.hawkassociates.com/lttcprofile.aspx.

An online investor relations kit including copies of press releases, current price quotes, stock charts and information for investors is available at http://www.hawkassociates.com. To receive free e-mail notification of future releases for Lattice, 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
			Three Months Ended June 30,								Six Months Ended June 30,
			2012				2011				2012				2011
Revenue			$	2,488,203			$	3,194,686			$	5,883,684			$	6,461,437
Cost of Revenue				1,503,618				1,994,506				3,541,806				4,095,874
Gross Profit				984,585				1,200,180				2,341,878				2,365,563
				39.6	%			37.6	%			39.8	%			36.6	%
Operating expenses:
	Selling, general and administrative			810,516				1,563,005				1,820,182				2,690,087
	Research and development			178,608				167,969				353,190				320,230
	Impairment loss			-				1,575,000				-				1,575,000
Amortization expense				80,448				104,728				160,896				209,455
Total operating expenses				1,069,572				3,410,702				2,334,268				4,794,772
Income (loss) from operations				(84,987	)			(2,210,522	)			7,610				(2,429,209	)
Other income (expense):
	Derivative income (loss)			18,467				254,708				30,250				(18,209	)
	Other income (expense)			255,613				-				255,613				-
Interest expense				(121,949	)			(98,689	)			(229,958	)			(237,118	)
	Total other income			152,131				156,019				55,905				(255,327	)
Noncontrolling interest				-				3,147				-				6,294
Income (Loss) before taxes				67,144				(2,051,356	)			63,516				(2,678,242	)
Income taxes (benefit)				(32,397	)			(85,504	)			(64,786	)			(171,008	)
Net income (loss)				99,541				(1,965,852	)			128,301				(2,507,234	)
Reconciliation of net income (loss) to income applicable to common shareholders:
	Net income (loss)			99,541				(1,965,852	)			128,301				(2,507,234	)
Preferred stock dividends				(6,277	)			(6,277	)			(12,554	)			(12,554	)
Income (loss) applicable to common stockholders				93,264				(1,972,129	)			115,747				(2,519,788	)
Income (loss) per common share
	Basic		$	0.00			$	(0.08	)		$	0.00			$	(0.10	)
	Diluted		$	0.00			$	(0.08	)		$	0.00			$	(0.10	)
Weighted average shares:
	Basic			29,548,522				25,459,225				29,548,522				24,211,686
	Diluted			74,708,287				25,459,225				74,292,934				24,211,686

LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
			June 30, 2012 (unaudited)				December 31, 2011
ASSETS:
Current assets:
Cash and cash equivalents			$	165,117			$	192,286
Accounts receivable				2,509,196				2,700,859
Inventories				7,350				7,350
Other current assets				165,850				142,500
	Total current assets			2,847,513				3,042,995
Property and equipment, net				605,756				612,710
Goodwill				690,871				690,871
Other intangibles, net				1,368,412				1,594,306
Other assets				2,812				2,813
Total assets			$	5,515,364			$	5,943,695
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	1,854,605			$	1,769,896
Accrued expenses				1,194,550				1,698,617
Deferred revenues				25,000				50,000
Customer advances				209,785				124,266
Notes payable - current				2,043,162				1,869,043
Contingent Consideration				77,700				77,700
Derivative liability				66,117				96,366
Total current liabilities				5,470,919				5,685,888
	Long term liabilities:
Notes Payable - long term				939,125				1,206,283
Deferred tax liabilities				158,978				223,771
Total long term liabilities				1,098,103				1,430,054
Total liabilities				6,569,022				7,115,942
Shareholders' equity
Preferred Stock - .01 par value
	Series A 9,000,000 shares authorized 7,530,681 issued and outstanding			75,307				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, 29,851,509 and 22,942,437 issued and outstanding respectively				298,516				298,516
Additional paid-in capital				43,316,811				43,313,969
Accumulated deficit				(44,327,438	)			(44,443,185	)
				(615,695	)			(734,284	)
Stock held in treasury, at cost				(558,096	)			(558,096	)
Equity Attributable to shareowners of Lattice Incorporated				(1,173,791	)			(1,292,380	)
Equity Attributable to noncontrolling interest				120,133				120,133
Total liabilities and shareholders' equity			$	5,515,364			$	5,943,695

LATTICE INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				Six Months Ended June 30,
				2012				2011
Cash flow from operating activities:
Net income (loss)				$	128,301			$	(2,507,234	)
	Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
	Derivative income				(30,250	)			18,209
	Impairment Loss				-				1,575,000
	Amortization of intangible assets				225,896				274,456
	Deferred income taxes				(64,786	)			(171,008	)
	Minority interest				-				(6,294	)
	Share-based compensation				2,842				194,750
	Depreciation				116,004				72,554
Changes in operating assets and liabilities:					-
(Increase) decrease in:					-
	Accounts receivable				191,664				158,657
	Other current assets				(23,350	)			7,172
Increase (decrease) in:					-
	Accounts payable and accrued liabilities				(408,919	)			(603,452	)
	Deferred revenues				(25,000	)			(67,879	)
Customer advances					85,519				125,267
Total adjustments					69,619				1,577,432
	Net cash provided by (used for) operating activities				197,920				(929,802	)
Cash Used in investing activities:
	Purchase of equipment				(109,049	)			(263,582	)
Acquired cash - CLR					-				59,518
Net cash used for investing activities					(109,049	)			(204,064	)
Cash flows from financing activities:
	Revolving credit facility (payments) borrowings, net				(67,721	)			(103,612	)
	Payments on capital lease				(10,998	)			(25,658	)
	Payments on notes payable				(192,707	)			(589,275	)
	Proceeds from the issuance of notes payable				175,000				1,937,461
Payments on Director Loans					(19,614	)			(13,746	)
Net cash provided by (used in) financing activities					(116,040	)			1,205,170
Net increase (decrease) in cash and cash equivalents					(27,169	)			71,304
Cash and cash equivalents - beginning of period					192,286				324,149
Cash and cash equivalents - end of period				$	165,117			$	395,453
Supplemental cash flow information
	Interest paid in cash			$	220,959			$	218,618
		Common Stock			-				1,231
		Derivative liabilities			-				(31,999	)
		Additional paid-in Capital			-				30,768