Attached files
file | filename |
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EX-31.2 - Lattice INC | v167330_ex31-2.htm |
EX-32.1 - Lattice INC | v167330_ex32-1.htm |
EX-32.2 - Lattice INC | v167330_ex32-2.htm |
EX-31.1 - Lattice INC | v167330_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
COMMISSION
FILE NUMBER 000-10690
LATTICE
INCORPORATED
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
22-2011859
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
7150
N. Park Drive, Pennsauken, New Jersey
|
08109
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
Issuer's
telephone number: (856) 910-1166
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING
THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes o No o
APPLICABLE
ONLY TO CORPORATE ISSUERS
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of November 20, 2009, there were
16,929,953 outstanding shares of the Registrant's Common Stock, $.01 par
value.
LATTICE
INCORPORATED
SEPTEMBER
30, 2009 QUARTERLY REPORT ON FORM 10-Q
TABLE
OF CONTENTS
Page
|
|
PART
I - FINANCIAL INFORMATION
|
|
Item
1. Financial Statements
|
3
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
11
|
Item
3. Quantitative and Qualitative Disclosure About Market
Risks
|
14
|
Item
4T. Controls and Procedures
|
15
|
PART
II - OTHER INFORMATION
|
|
Item
1. Legal Proceedings
|
15
|
Item
1A. Risk Factors
|
15
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
15
|
Item
3. Defaults Upon Senior Securities
|
15
|
Item
4. Submission of Matters to a Vote of Security Holders
|
15
|
Item
5. Other Information
|
15
|
Item
6. Exhibits
|
16
|
SIGNATURES
|
17
|
2
Lattice
Incorporated and Subsidaries
Consolidated
Balance sheets
September-09
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS:
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 342,717 | $ | 1,363,130 | ||||
Accounts
receivable, net
|
3,840,719 | 3,560,690 | ||||||
Inventories
|
41,684 | 30,704 | ||||||
Other
current assets
|
185,175 | 51,008 | ||||||
Total
current assets
|
4,410,295 | 5,005,532 | ||||||
Property
and equipment, net
|
212,075 | 21,090 | ||||||
Goodwill
|
3,599,386 | 3,599,386 | ||||||
Other
intangibles, net
|
1,512,004 | 2,409,748 | ||||||
Other
assetes
|
54,141 | 54,459 | ||||||
Total
assets
|
$ | 9,787,901 | $ | 11,090,215 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 1,952,353 | $ | 1,698,551 | ||||
Accrued
expenses
|
1,578,420 | 1,726,891 | ||||||
Customer
advances
|
87,625 | 15,000 | ||||||
Notes
payable
|
1,713,574 | 1,766,098 | ||||||
Derivative
liability
|
257,178 | 200,606 | ||||||
Total
current liabilities
|
5,589,150 | 5,407,146 | ||||||
Long
term liabilities:
|
||||||||
Long
Term Debt
|
203,951 | 666,515 | ||||||
Deferred
tax liabilities
|
710,218 | 1,200,283 | ||||||
Total
long term liabilities
|
914,169 | 1,866,798 | ||||||
Total
liabilities
|
6,503,319 | 7,273,944 | ||||||
Minority
interest
|
175,180 | 193,280 | ||||||
Shareholders'
equity
|
||||||||
Preferred
Stock - .01 par value
|
||||||||
Preferred
Stock series A 9,000,000 shares authorized, 7,810,686 and 7,838,686
issued
|
78,107 | 78,387 | ||||||
Preferred
Stock series B 1,000,000 shares authorized 1,000 000
issued
|
10,000 | 10,000 | ||||||
Preferred
Stock series C 575,000 shares authorized 520,000 issued
|
5,200 | 5,200 | ||||||
Common
stock - .01 par value, 200,000,000 authorized,
|
||||||||
16,942,428
and 16,842,428 issued, and 16,639,441 and 16,539,441 outstanding
respectively
|
169,425 | 168,425 | ||||||
Additional
paid-in capital
|
38,800,717 | 38,418,897 | ||||||
Accumulated
deficit
|
(35,395,951 | ) | (34,499,822 | ) | ||||
3,667,498 | 4,181,087 | |||||||
Common
stock held in treasury, at cost
|
(558,096 | ) | (558,096 | ) | ||||
Shareholders'
equity
|
3,109,402 | 3,622,991 | ||||||
Total
liabilities and shareholders' equity
|
$ | 9,787,901 | $ | 11,090,215 |
See
Accompanying notes to Condensed Consolidated Finanical
Statements
3
Lattice
Incorporated and Subsidaries
Consolidated
Statements of Operations
Nine
Months Ended
September 30,
|
Three Months Ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue
- Technology Services
|
$ | 11,000,359 | $ | 10,656,897 | $ | 3,632,911 | $ | 3,775,213 | ||||||||
Revenue
- Technology Products
|
896,288 | 866,245 | 289,153 | 428,934 | ||||||||||||
Total
Revenue
|
11,896,647 | 11,523,142 | 3,922,064 | 4,204,147 | ||||||||||||
Cost
of Revenue - Technology Services
|
7,763,288 | 7,916,610 | 2,545,333 | 2,924,049 | ||||||||||||
Cost
of Revenue - Technology Products
|
342,455 | 335,386 | 119,400 | 167,370 | ||||||||||||
Total
cost of revenue
|
8,105,743 | 8,251,996 | 2,664,733 | 3,091,419 | ||||||||||||
Gross
Profit
|
3,790,904 | 3,271,146 | 1,257,331 | 1,112,728 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general and administrative
|
3,628,756 | 3,359,768 | 1,247,510 | 1,024,628 | ||||||||||||
Research
and development
|
409,141 | 384,692 | 132,917 | 123,720 | ||||||||||||
Amortization
expense
|
897,744 | 1,116,171 | 299,248 | 372,057 | ||||||||||||
Total
operating expenses
|
4,935,641 | 4,860,631 | 1,679,675 | 1,520,405 | ||||||||||||
Loss
from operations
|
(1,144,737 | ) | (1,589,485 | ) | (422,344 | ) | (407,677 | ) | ||||||||
Other
income (expense):
|
||||||||||||||||
Derivative
income (expense)
|
(56,572 | ) | 2,750,199 | 7,498 | 195,609 | |||||||||||
Extinguishment
gain (loss)
|
- | 2,607,525 | 0 | - | ||||||||||||
Other
expense
|
- | 970,150 | 0 | 370,150 | ||||||||||||
Interest
expense
|
(181,066 | ) | (140,910 | ) | (56,754 | ) | (32,703 | ) | ||||||||
Finance
expense
|
(3,092 | ) | (2,636 | ) | (1,289 | ) | (1,170 | ) | ||||||||
Total
other income (expense)
|
(240,730 | ) | 6,184,328 | (50,545 | ) | 531,886 | ||||||||||
Minority
Interest income
|
18,100 | 79,119 | 7,653 | 23,700 | ||||||||||||
Net
income (loss) before taxes
|
(1,367,367 | ) | 4,673,962 | (465,236 | ) | 147,909 | ||||||||||
Income
taxes (benefit)
|
(490,065 | ) | (521,171 | ) | (163,355 | ) | (172,755 | ) | ||||||||
Net
Income (loss)
|
$ | (877,302 | ) | $ | 5,195,133 | $ | (301,881 | ) | $ | 320,664 | ||||||
Net
income (Loss) applicable to common
shareholders:
|
||||||||||||||||
Net
income (loss)
|
$ | (877,302 | ) | $ | 5,195,133 | $ | (301,881 | ) | $ | 320,664 | ||||||
Series
B Preferred stock dividend
|
(18,831 | ) | (37,500 | ) | (6,277 | ) | (12,500 | ) | ||||||||
Income
(Loss) applicable to common stockholders
|
$ | (896,133 | ) | $ | 5,157,633 | $ | (308,158 | ) | $ | 308,164 | ||||||
Income
(Loss) per common share
|
||||||||||||||||
Basic
|
$ | (0.05 | ) | $ | 0.24 | $ | (0.02 | ) | $ | 0.25 | ||||||
Diluted
|
$ | (0.05 | ) | $ | 0.03 | $ | (0.02 | ) | $ | 0.03 | ||||||
Weighted
average shares:
|
||||||||||||||||
Basic
|
16,727,592 | 16,829,428 | 16,739,444 | 16,829,428 | ||||||||||||
Diluted
|
16,727,592 | 56,172,092 | 16,739,444 | 53,592,883 |
See
Accompanying notes to condensed Consolidated Financial
Statements
4
Lattice
Incorporated and Subsidaries
Consolidated
Statements of Cash Flows
Nine Months ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flow from operating activities:
|
||||||||
Net
loss before preferred dividends
|
$ | (877,301 | ) | $ | 5,195,133 | |||
Adjustments
to reconcile net loss to net used for operating
activities:
|
||||||||
Derivative
(income) expense
|
56,572 | (2,750,199 | ) | |||||
Amortization
of intangible assets
|
897,744 | 1,116,171 | ||||||
Settlement
of contingent liability - former RTI shareholders
|
- | (1,057,650 | ) | |||||
Extinguishment
(gain)
|
- | (2,607,525 | ) | |||||
Deferred
income taxes
|
(490,065 | ) | (521,171 | ) | ||||
Minority
interest
|
(18,100 | ) | (79,119 | ) | ||||
Share-based
compensation
|
382,541 | 156,635 | ||||||
Depreciation
|
9,500 | 21,079 | ||||||
Changes
in operating assets and liabilities:
|
- | |||||||
(Increase)
decrease in:
|
||||||||
Accounts
receivable
|
(965,461 | ) | 564,478 | |||||
Inventories
|
(10,980 | ) | 19,439 | |||||
Other
current assets
|
(130,461 | ) | (6,998 | ) | ||||
Customer
advances
|
72,625 | |||||||
Other
assets
|
318 | 65,734 | ||||||
Increase
(decrease) in:
|
||||||||
Accounts
payable and accrued liabilities
|
102,256 | (677,530 | ) | |||||
- | ||||||||
Total
adjustments
|
(93,511 | ) | (5,756,656 | ) | ||||
Net
cash provided by ( used in) operating activities
|
(970,812 | ) | (561,523 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchase
of equipment
|
(89,608 | ) | (32,844 | ) | ||||
Net
cash used in investing activities
|
(89,608 | ) | (32,844 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Payments
on notes payable
|
(34,453 | ) | (131,000 | ) | ||||
Payment
on capital equipment lease
|
(7,994 | ) | ||||||
Bank
line-of-credit borrowings (payments), net
|
82,454 | 687,717 | ||||||
Net
cash provided by (used in) by financing activities
|
40,007 | 556,717 | ||||||
Net
increase (decrease) in cash and cash equivalents
|
(1,020,413 | ) | (37,650 | ) | ||||
Cash
and cash equivalents - beginning of period
|
1,363,130 | 769,915 | ||||||
Cash
and cash equivalents - end of period
|
$ | 342,717 | $ | 732,265 | ||||
Supplemental
cash flow information
|
||||||||
Interest
paid in cash
|
$ | 181,066 | $ | 81,397 | ||||
Supplemental
Disclosures of Non-Cash Financing Activities
|
||||||||
Purchase
of Equipment
|
$ | 110,879 | $ | - | ||||
Capital
lease
|
$ | (110,879 | ) | $ | - | |||
Preferred
stock - Series B
|
$ | - | $ | (4,978 | ) | |||
Preferred
stock - Series C
|
$ | - | $ | 5,200 | ||||
Common
Stock
|
$ | - | $ | (2,905 | ) | |||
Additional
Paid in capital
|
$ | (720 | ) | $ | 1,257,883 | |||
Derivative
Liability
|
$ | - | $ | (1,261,010 | ) | |||
$ | $ | |||||||
Refinancing
of credit facility
|
$ | 682,232 | $ | - | ||||
Preferred
stock dividends
|
$ | 18,831 | $ | 37,500 | ||||
Conversion
of 28,000 preferred share into 100,000 of common
|
$ | (280 | ) | $ | - | |||
Conversion
of 28,000 preferred share into 100,000 of common
|
$ | 1,000 | $ | - |
See
Accompanying Notes to Condensed Consolidated Financial
Statements
5
Lattice
Incorporated and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
September
30, 2009 (Unaudited)
Note
1 - Organization and summary of significant accounting policies:
a)
Organization
Lattice
Incorporated (the "Company") was incorporated in the State of Delaware May 1973
and commenced operations in July 1977. The Company began as a provider of
specialized solutions to the telecom industry. Throughout its history Lattice
has adapted to the changes in this industry by reinventing itself to be more
responsive and open to the dynamic pace of change experienced in the broader
converged communications industry of today. Currently Lattice provides advanced
solutions for several vertical markets. The greatest change in operations is in
the shift from being a component manufacturer to a solution provider focused on
developing applications through software on its core platform technology. To
further its strategy of becoming a solutions provider, the Company acquired a
majority interest in “SMEI” in February 2005. In September 2006 the Company
purchased all of the issued and outstanding shares of the common stock of
Ricciardi Technologies Inc. (“RTI”). RTI was founded in 1992 and provides
software consulting and development services for the command and control of
biological sensors and other Department of Defense requirements to United States
federal governmental agencies either directly or through prime contractors of
such governmental agencies. RTI’s proprietary products include SensorView, which
provides clients with the capability to command, control and monitor multiple
distributed chemical, biological, nuclear, explosive and hazardous material
sensors. With the SMEI and the RTI acquisitions, approximately 92% of the
Company’s revenues are derived from solution services provided to government
Dept of Defense (‘DoD”) agencies pursuant to muti-year contract vehicles . In
January 2007, we changed our name from Science Dynamics Corporation to Lattice
Incorporated.
b)
Basis of Presentation going concern
At
September 30, 2009 the Company has a working capital deficiency of $1,179,000
including non-cash derivative liabilities of approximately
$257,000. For the nine months ended September 30, 2009, the Company
had a loss from operations of approximately $1,145,000 of which $1,281,000 was
from non-cash items made up of $898,000 in amortization of intangibles and
$383,000 from non-cash share based compensation. This condition taken
in conjunction with the Company’s history of operating losses raises doubt
regarding the Company’s ability to continue as a going concern. The Company’s
ability to continue as a going concern is highly dependent upon management’s
ability to increase near-term operating cashflows, continued availability on its
line of credit and the ability to obtain alternative financing to fund capital
requirements and/or debt repayments. The accompanying financial statements do
not include any adjustments that may result from the outcome of this
uncertainty.
c) Interim
Condensed Consolidated Financial Statements
The
condensed consolidated financial statements as of September 30, 2009 and for
the nine and three months ended September 30, 2009 and 2008 are
unaudited. In the opinion of management, such condensed
consolidated financial statements include all adjustments (consisting of normal
recurring accruals) necessary for the fair representation of the consolidated
financial position and the consolidated results of
operations. The consolidated results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year. The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements for the year end December 31, 2008 appearing in Form 10K filed on
April 13, 2009.
d) Principles of
consolidation:
The
consolidated financial statements included the accounts of the Company and all
of its subsidiaries in which a controlling interest is maintained. All
significant inter-company accounts and transactions have been eliminated in
consolidation. For those consolidated subsidiaries where Company ownership is
less than 100%, the outside stockholders' interests are shown as minority
interests. Investments in affiliates over which the Company has significant
influence but not a controlling interest are carried on the equity
basis.
e) Use of
estimates:
The
preparation of these financial statements in accordance with accounting
principles generally accepted in the United States (US GAAP) requires management
to make estimates and assumptions that affect the reported amounts in the
financial statements and accompanying notes. These estimates form the basis for
judgments made about the carrying values of assets and liabilities that are not
readily apparent from other sources. Estimates and judgments are based on
historical experience and on various other assumptions that the Company believes
are reasonable under the circumstances. However, future events are subject to
change and the best estimates and judgments routinely require adjustment. US
GAAP requires estimates and judgments in several areas, including those related
to impairment of goodwill and equity investments, revenue recognition,
recoverability of inventory and receivables, the useful lives long lived assets
such as property and equipment, the future realization of deferred income tax
benefits and the recording of various accruals. The ultimate outcome and actual
results could differ from the estimates and assumptions used.
f)
Share-based payments
On
January 1, 2006, the Company adopted the fair value recognition provisions of
Financial Accounting Standards Board Accounting Standards
Condification 718-10, Accounting for Share-based
payments , to account for compensation costs under its stock option plans
and other share-based arrangements. ASC 718 requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the financial statements based on their fair values. For
purposes of estimating fair value of stock options, we use the
Black-Scholes-Merton valuation technique. At September 30, 2009, there was
approximately $790,000 of total unrecognized compensation cost related to
unvested share-based compensation awards granted. The $790,000 will be charged
to operations over the weighted average remaining service period. For the nine
months ended September 30, 2009 share-based compensation was $382,541compared
to$166,468 in the year ago period and $131,275 and 100,594 for three months
ended September 30,2009 and 2008 respectively.
6
g)
Recent accounting pronouncements
In the
opinion of management, there are no recent accounting pronouncements that will
have a material effect on the company’s consolidated financial
statements.
Note
2- Segment reporting
Management views its business as
one reportable segment: Government services. The Company evaluates performance
based on profit or loss before intercompany charges.
Nine Months Ended
|
Three Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Goverment
Services
|
$ | 11,000,359 | $ | 10,656,897 | $ | 3,632,911 | $ | 3,775,213 | ||||||||
Other
|
896,288 | 866,245 | 289,153 | 428,934 | ||||||||||||
Total
Consolidated Revenues
|
$ | 11,896,647 | $ | 11,523,142 | $ | 3,922,064 | $ | 4,204,147 | ||||||||
Gross
Profit:
|
||||||||||||||||
Government
Services
|
$ | 3,237,071 | $ | 2,740,287 | $ | 1,087,578 | $ | 851,164 | ||||||||
Corporate
and other
|
553,833 | 530,859 | 169,753 | 261,564 | ||||||||||||
Total
Consolidated
|
$ | 3,790,904 | $ | 3,271,146 | $ | 1,257,331 | $ | 1,112,728 |
September
30
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Total
Assets:
|
||||||||
Goverment
Services
|
$ | 9,151,950 | $ | 10,127,333 | ||||
Corporate
and Other
|
635,951 | 962,882 | ||||||
Total
Consolidated Assets
|
$ | 9,787,901 | $ | 11,090,215 |
7
Note 3
- Notes payable
Notes
payable consists of the following as of September 30, 2009 and
December 31, 2008:
September
30,
2009
|
December 31,
2008
|
|||||||
Bank
line-of-credit (a)
|
$ | 858,404 | $ | 1,458,183 | ||||
Note
Payble – former RTI owners (b)
|
750,000 | 750,000 | ||||||
Notes
payable to Stockholders/director (c )
|
206,237 | 224,430 | ||||||
Capital
lease payable (d)
|
102,884 | - | ||||||
Total
notes payable
|
1,917,525 | 2,432,613 | ||||||
Less
current maturities
|
(1,713,574 | ) | (1,766,098 | ) | ||||
Long-term
debt
|
$ | 203,951 | $ | 666,515 |
(a)
Bank line-of-credit:
On July
17, 2009, the Company and its wholly-owned subsidiary, Ricciardi Technologies,
Inc. (“RTI”), entered into a Financing and Security Agreement (the “Action
Agreement”) with Action Capital Corporation (“Action
Capital”).
Pursuant
to the terms of the Action Agreement, Action Capital agreed to provide the
Company with advances of up to 90% of the net amount of certain acceptable
account receivables of the Company (the “Acceptable Accounts”). The
maximum amount eligible to be advanced to the Company by Action Capital under
the Action Agreement is $3,000,000. The Company will pay Action
Capital interest on the advances outstanding under the Action Agreement equal to
the prime rate of Wachovia Bank, N.A. in effect on the last business day of the
prior month plus 1%. In addition, the Company will pay a monthly fee
to Action Capital equal to 0.75% of the total outstanding balance at the end of
each month.
In
addition, pursuant to the Action Agreement, the Company granted Action Capital a
security interest in certain assets of the Company including all, accounts
receivable, contract rights, rebates and books and records pertaining to the
foregoing.
The
outstanding balance owed on the line at September 30, 2009 was
$858,404.
(b)
Note payable - former RTI owners:
In
accordance with the Settlement Agreement with Michael Ricciardi as owner
representative of the former RTI shareholders the Company issued a 24 month
promissory note to the former RTI shareholders. The promissory bears interest at
a rate of 10%. Commencing in October 2008, the Company is required to make
payments consisting solely of interest for the initial 12 months that the
promissory note is outstanding. Commencing in October 2009, the Company is
required to make monthly payments of principal of $62,500 plus interest. A total
of $750,000 of this note is due within the next twelve months and classified as
current with monthly payments of $62,500 starting October 2009.
8
(c)
Notes payable stockholders/officers:
The
Company owed a balance at September 30, 2009 and December 31, 2008 of $0 and
$8,000 respectively to a former officer/ stockholder of the
Company.
At
September 30, 2009 and December 31, 2008 the Company had a balance owing on a
term note payable of $206,237 and $216,430 respectively, with a director of the
Company. The note bears interest at 21.5% per annum and is payable monthly in
amounts ranging from $6,000 to $10,000 with any residual balance maturing
December 2011.
(d)
Capital Lease Payable:
On June
16, 2009 Lattice entered an equipment lease financing agreement with Royal Bank
America Leasing to purchase approximately $130,000 in equipment for
our communication services. The terms of which included monthly payments of
$5,196 per month over 32 months and a $1.00 buy-out at end of the
lease term. As of September 30, 2009, the outstanding balance was
$102,884.
Payments
due
|
$ | 138,970 | ||
Less
interest
|
36,086 | |||
102,884 | ||||
Current
portion
|
38,128 | |||
Long
term portion
|
$ | (64,756 | ) |
Note
4 - Derivative financial instruments:
The
balance sheet caption derivative liabilities consist of Warrants, issued in
connection with the 2005 Laurus Financing Arrangement, the 2006 Omnibus
Amendment and Waiver Agreement with Laurus, and the 2006 Barron Financing
Arrangement. These derivative financial instruments are indexed to an aggregate
of 4,313,465 shares of the Company’s common stock as of
September 30, 2009 and December 31, 2008 and are carried at fair
value.
9
The
valuation of the derivative warrant liabilities is determined using a Black
Scholes Merton Model. Freestanding derivative instruments, consisting of
warrants and options that arose from the Laurus and Barron financing are valued
using the Black-Scholes-Merton valuation methodology because that model embodies
all of the relevant assumptions that address the features underlying these
instruments. Significant assumptions used in the Black Scholes models as of
September 30, 2009 included conversion or strike prices ranging from $0.10 -
$1.10; historical volatility factors ranging from 122.18% - 185.64% based upon
forward terms of instruments; terms-remaining term for all instruments; and a
risk free rate ranging from 0.98% - 3.53%.
Note
5 - Major Customers and Concentrations
Our
government service segment’s primary "end-user" customer is the U.S.
Department of Defense (DoD) which accounted for approximately 93% of
our total revenues for nine months ended September 30, 2009 and 2008. For the
three months ended September 30, 2009 and 2008 they accounted for 93% and 90%
respectively, of our total revenue. Accounts receivable for these contracts
totaled at September 30, 2009 and December 31, 2008 was $3,678,391 and
$3,335,667 respectively.
Included
in the government segment are two contract vehicles with the Navy Space and
Navel Warfare Command (SPAWAR) in San Diego that account for 74% and 65% of its
revenues in the nine months ended September 30, 2009 and 2008 respectively and
74% and 67% of its sales in the three months ended September 30, 2009 and 2008
respectively Accounts receivable for these contracts totaled at September 30,
2009 and 2008 was $2,051,672 and $2,133,087 respectively.
Note
6 – Earnings per share
Nine Months
|
Three Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Income
(loss) applicable to common shareholders
|
$ | (896,133 | ) | $ | 5,157,633 | $ | (308,158 | ) | $ | 308,164 | ||||||
Reconciliation
to numerator for diluted earnings per share
|
||||||||||||||||
Income
on derivative warrants
|
(2,750,199 | ) | (195,609 | ) | ||||||||||||
Preferred
stock dividends
|
37,500 | 12,500 | ||||||||||||||
Numerator
for diluted earnings per share
|
$ | (896,133 | ) | $ | 2,444,934 | $ | (308,158 | ) | $ | 125,055 | ||||||
Weighted
average shares
|
16,727,592 | 16,829,428 | 16,739,444 | 16,829,428 | ||||||||||||
Reconciliation
to denominator for diluted earnings per share
|
||||||||||||||||
Dilutive
derivative warrants
|
- | 5,379,707 | - | 5,739,670 | ||||||||||||
Shares
indexed to convertible preferred stock
|
- | 34,110,568 | - | 34,110,568 | ||||||||||||
Dilutive
employee options
|
- | (147,615 | ) | - | (3,086,784 | ) | ||||||||||
Denominator
for diluted earnings per share
|
16,727,592 | 56,172,088 | 16,739,444 | 53,592,882 | ||||||||||||
Earnings
per common share:
|
||||||||||||||||
Basic
|
(0.05 | ) | 0.31 | (0.02 | ) | 0.02 | ||||||||||
Diluted
|
(0.05 | ) | 0.04 | (0.02 | ) | 0.00 |
Note
7 - Modification of Employee Options:
At the
Board meeting held July 15, 2009, the Board of Directors of the Company approved
the re-pricing of outstanding employee options to current market. Under the
modification, outstanding options were re-priced at current market (
$0.08 per share at July 15 close) and extend the vesting period an additional
year. The Company currently has 7,680,000 employee options
outstanding issued under its 2002 and 2008 stock options plans ranging in strike
price from $0.33 to $1.80. The Company recorded additional stock base
compensation expense of $25,365.
Note 8 –
Commitments and Contingencies
In
October, Securus Technologies, Inc. and its subsidiary Evercom Systems Inc.
filed suit against Lattice Incorporated in the State District Court in Dallas
County, Texas. The dispute arose out of a series of transactions that
included inter alia, an Asset Purchase Agreement (“APA”) between Lattice and
Evercom that was signed in December 2003.
From time
to time, lawsuits are threatened or filed against us in the ordinary course of
business. Such lawsuits typically involve claims from customers, former or
current employees, and vendors related to issues common to our industry. A
number of such claims may exist at any given time. Although there can be no
assurance as to the ultimate disposition of these matters, it is our
management's opinion, based upon the information available at this time, that
the expected outcome of these matters, individually and in the aggregate, will
not have a material adverse effect on the results of operations, liquidity or
financial condition of our company.
Note 9 –
Subsequent events
Pursuant
to Financial Accounting Standards Board Accounting Standards Codification
855-10, we have evaluated all events or transactions that occurred from
September 30, 2009 through November 23, 2009, the date our condensed
consolidated financial statements were issued. We did not have any material
recognizable subsequent events during this period.
10
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
information in this report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. This Act
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information about themselves so long as they identify
these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements other than statements of historical fact made
in this report are forward looking. In particular, the statements herein
regarding industry prospects and future results of operations or financial
position are forward-looking statements. Forward-looking statements reflect
management's current expectations and are inherently uncertain. Our actual
results may differ significantly from management's expectations.
The
following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere in this report and
with our annual report on Form 10-K for the fiscal year ended December 31, 2008.
This discussion should not be construed to imply that the results discussed
herein will necessarily continue into the future, or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of our
management.
GENERAL
OVERVIEW
Lattice
Incorporated was incorporated in the State of Delaware in May 1973 and commenced
operations in July 1977. We have been developing and delivering secure
technologically advanced communication solutions for over twenty-five years and
recently expanded our product offering to include IT solutions with the
acquisition of 86% of Systems Management Engineering, Inc. ("SMEI") on February
14, 2005. In September 2006, pursuant to a Stock Purchase Agreement, dated as of
September 12, 2006 (the "RTI Agreement"), the Company purchased all of the
issued and outstanding shares of the common stock of Ricciardi Technologies Inc.
("RTI"). RTI was founded in 1992 and provides software consulting and
development services for the command and control of biological sensors and other
Department of Defense requirements to United States federal governmental
agencies either directly or though prime contractors of such governmental
agencies RTI's proprietary products include SensorView, which provides clients
with the capability to command, control and monitor multiple distributed
chemical, biological, nuclear, explosive and hazardous material sensors. RTI is
headquartered in Manassas, Virginia. The purchase of RTI's common stock was
completed on September 19, 2006.
We intend
to continue the expansion of our sales efforts both within the federal
government secure software solutions space and commercial accounts. We continue
to build upon our recent success in these markets by expanding our marketing
efforts through our direct sales strategy. Our strong contract backlog has given
us an opportunity to expand our existing revenue base. With regards to our
acquisition strategy, we will continue to pursue profitable companies with
proprietary products and services we can sell to our existing customers and
which have synergies with our existing business.
We derive
substantially all of our revenues from governmental contracts under which we act
as both a prime contractor and indirectly as a subcontractor. Revenues from
government contracts accounted for approximately $11,000,359 or 93% of our
overall revenues for the nine months ended September 30, 2009. Of our total
government contract revenues, approximately 96% were from two Prime contract
vehicles.
RESULTS
OF OPERATIONS
THREE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30,
2008
REVENUES:
Total
revenues for the three months ended September 30, 2009 decreased by $282,083 or
6.7% to $3,922,064 compared to $4,204,147 for the three months ended September
30, 2008. Our Goverment Services segment which represents revenues from
professional engineering services to Federal government Dept of Defense (DoD)
agencies accounted for 93% of total revenues. The decrease was mainly
attributable to a decrease in billable hours of technical staff in our
technology services segment combined with a decrease in revenues resulting from
timing of product shipments compared to 2008 from technology products. The
overall decrease was partially offset by an increase in rates on our cost plus
contracts, which is based on our projected indirect overhead costs relative to
the level of projected direct labor costs. Cost plus contracts accounted for
approximately 80% of our government service revenues for the three months ended
September 30, 2009, which compared to 75% in the year ago
period.
11
GROSS
MARGIN:
Gross
margin for the three months ended September 30, 2009 was $1,257,331, an increase
of $144,603 or 13% compared to the $1,112,728 for three months ended September
30, 2008. Gross margin, as a percentage of revenues, increased to 32.06% from
26.5% for the same period in 2008. The increase was primarily due to an increase
in gross margin from Government services related to the increase in rates on our
cost-plus contract vehicles compared to prior year levels. The rate increase is
based on the level of projected indirect overhead costs relative to projected
direct labor costs.
RESEARCH
AND DEVELOPMENT EXPENSES:
Research
and development expenses consist primarily of salaries and related personnel
costs, and consulting fees associated with product development in our Technology
Products segment. For the three months ended September 30,
2009, research and development expenses increased to $132,917 as compared to
$123,720 for the three months ended September 30, 2008. The increase
was primarily due to salary increases for technical staff. Management believes
that continual enhancements of the Company's existing products are required to
enable the Company to maintain its current competitive
position.
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES:
Selling,
General and administrative ("SG&A") expenses consist primarily of expenses
for management, fringe benefits, indirect overhead, labor costs of billable
technical staff not charged to a project or contract, finance, administrative
personnel, legal, accounting, consulting fees, sales commissions, marketing,
facilities costs, corporate overhead and depreciation expense. For
the three months ended September 30, 2009, SG&A expenses increased to
$1,247,510 from $1,024,628 in the comparable period prior year. As a
percentage of revenues, SG&A was 31.8% for the three months ended September
30, 2009 versus 24.4% in the comparable period a year ago. The increase in
expense was mainly attributable to nonrecurring legal fees incurred in the
current quarter combined with an increase in marketing expenses for our
government services segment.
AMORTIZATION
EXPENSES:
Non-cash
amortization expenses related to intangible assets acquired in the acquisitions
of RTI and SMEI are stated separately in our statement of operations..
Amortization expense for the three months ended September 30, 2009 was $299,248
compared to $372,057 for the three months ended September 30, 2008. The decrease
is attributed to certain intangibles being fully amortized in 2008 and an
impairment charge to the carrying value of intangibles taken in the 4th quarter
of 2008.
INTEREST
EXPENSE:
Interest
Expense increased to $56,754 for the three months ended September 30, 2009
compared to $32,703 for the three months ended September 30,
2008. Interest expense in 2009 was comprised primarily of interest
charges on its revolving line-of-credit and short term notes. The increase was
mainly attributable to the interest expense incurred on the $750,000 note with
the former owners of RTI not present in the year ago period.
NET
INCOME / (LOSS):
The
Company's net loss for the three months ended September 30, 2009 was $301,881
compared to net income of $320,664 for the three months ended September 30,
2008. Net income for the three months ended September 30, 2008 was
comprised of non-cash derivative income of $195,609 and other income of $370,150
related to a settlement gain regarding escrow and contingent liabilities to the
former owners of RTI. Excluding these amounts, the year ago net
income adjusts to a net loss of $245,075.
NINE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30,
2008
REVENUES:
Total
revenues for the nine months ended September 30, 2009 increased by $373,505 or
3.2% to $11,896,647 compared to $11,523,142 for the nine months ended September
30, 2008. Our Government Services segment which represents revenues from
professional engineering services to Federal government Dept of Defense (DoD)
agencies accounted for 93% of total revenues. The increase was mainly
attributable to a rate increase on our cost plus contracts, which is based on
our projected indirect overhead costs relative to projected direct labor
costs. This was partially offset by a decrease in the level of
billable hours of billable staff. Cost plus contracts accounted for
approximately 80% of our government service revenues for the nine months ended
September 30, 2009 versus 70% in the year ago period.
GROSS
MARGIN:
Gross
margin for the nine months ended September 30, 2009 was $3,790,904, an increase
of $519,758 or 15.88% compared to the $3,271,146 for nine months ended September
30, 2008. Gross margin, as a percentage of revenues, increased to 31.9% from
28.4% for the same period in 2008. The increase was primarily due to an increase
in gross margin from Government services related to a rate increase on our
cost-plus contract vehicles compared to prior year levels. This was partially
offset by an increase in lower margin revenues handled by subcontractors
relative to total revenues.
12
RESEARCH
AND DEVELOPMENT EXPENSES:
Research
and development expenses consist primarily of salaries and related personnel
costs, and consulting fees associated with product development in our Technology
Products segment. For the nine months ended September 30, 2009,
research and development expenses increased to $409,141 as compared to $384,692
for the nine months ended September 30, 2008. The increase was mostly
due to increases in salaries for technical staff. Management believes
that continual enhancements of the Company's existing products are required to
enable the Company to maintain its current competitive
position.
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES:
Selling,
General and administrative ("SG&A") expenses consist primarily of expenses
for management, fringe benefits, indirect overhead, labor costs of billable
technical staff not charged to a project or contract, finance, administrative
personnel, legal, accounting, consulting fees, sales commissions, marketing,
facilities costs, corporate overhead and depreciation expense. For
the nine months ended September 30, 2009, SG&A expenses increased to
$3,628,756 from $3,359,768 in the comparable period prior year. As a
percentage of revenues, SG&A was 30.5% for the nine months ended September
30, 2009 versus 29.2% in the comparable period a year ago. The increase in
expense was mainly attributable to nonrecurring legal fees incurred
in the current quarter combined with an increase in marketing expenses for our
technology services segment and an increase in stock base compensation from
option awarded issued in the third quarter of 2008.
AMORTIZATION
EXPENSES:
Non-cash
amortization expenses related to intangible assets acquired in the acquisitions
of RTI and SMEI are stated separately in our statement of operations..
Amortization expense for the nine months ended September 30, 2009 was $897,744
compared to $1,116,171 for the nine months ended September 30, 2008. The
decrease is attributed to certain intangibles being fully amortized in 2008 and
an impairment charge to the carrying value of intangibles taken in the 4th quarter
of 2008.
INTEREST
EXPENSE:
Interest
Expense increased to $181,066 for the nine months ended September 30, 2009
compared to $140,910 for the nine months ended September 30,
2008. Interest expense in 2009 was comprised primarily of interest
charges on its revolving line-of-credit and short term notes. The increase is
attributed to interest expense incurred on the $750,000 note with the former
owners of RTI.
NET
INCOME / (LOSS):
The
Company's net loss for the nine months ended September 30, 2009 was $877,302
compared to net income of $5,195,133 for the nine months ended September 30,
2008. Net income for the nine months ended September 30, 2008 included non-cash
derivative income of $2,750,199, a gain on extinguishment of free standing
warrants accounted for as derivatives exchanged for preferred Series C Stock
held by Barrons Partners L.P. of $2,607,525, and other income from the
settlement of escrow, earn-out and other contingent liability with the former
owners of RTI of $970,150. Excluding these amounts, the year ago net income
adjusts to a net loss of $1,132,741.
LIQUIDITY
AND CAPITAL RESOURCES
Going
concern considerations:
The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The going concern basis was due to the
Company’s historical negative operating cash flow and losses. For the nine
months ended September 30, 2009 we had negative cash flows from operations of
$970,812 and the Company’s working capital deficiency at September 30, 2009 was
$1,178,855 including non-cash derivative liabilities of $257,178. These
conditions raise doubt regarding the Company’s ability to continue as a going
concern. The Company’s ability to continue as a going concern is highly
dependent upon its ability to increase near term operating cashflows over
current levels and continued availability under its line of credit financing. In
the event the Company does not grow operating cashflows, it will need to raise
alternative financing and/or restructure existing debt, , in a difficult credit
environment.
On July
17, 2009, the Company terminated its factoring arrangement with Republic Capital
Access (“RCA”) and entered into a financing and security agreement with Action
Capital. There are no outstanding balances owed to RCA as of September 30, 2009
nor was any amounts owed as of the July 17th
termination date.
13
On July
17, 2009, the Company and its wholly-owned subsidiary, Ricciardi Technologies,
Inc. (“RTI”), entered into a Financing and Security Agreement (the “Action
Agreement”) with Action Capital Corporation (“Action
Capital”).
Pursuant
to the terms of the Action Agreement, Action Capital agreed to provide the
Company with advances of up to 90% of the net amount of certain acceptable
account receivables of the Company (the “Acceptable Accounts”). An
acceptable receivable is one that is approved by Action Capital and less than 90
days old. The maximum amount eligible to be advanced to the Company by
Action Capital under the Action Agreement is $3,000,000. The Company
shall pay Action Capital interest on the advances outstanding under the Action
Agreement equal to the prime rate of Wachovia Bank, N.A. in effect on the last
business day of the prior month plus 1%. In addition, the Company
shall pay a monthly fee to Action Capital equal to 0.75% of the outstanding
balance at the end of the month.
Pursuant
to the Action Agreement, the Company granted Action Capital a security interest
in certain assets of the Company including all accounts, accounts receivable,
contract rights, rebates and books and records pertaining to the foregoing. At
September 30, 2009 the Company had $858,404 outstanding on its credit facility
with Action Capital.
Working
capital and other activities:
The
Company’s working capital deficiency as of September 30, 2009 amounts to
$1,178,855 compared to a deficiency of $401,614 as of December 31, 2008.
Included in the deficiency was $257,178 and $200,606 of non-cash derivative
liabilities respectively. Excluding non-cash derivative liabilities, at
September 30, 2009 current assets of $4,410,295 compared to current liabilities
of $5,331,972.
For the
nine month period ended September 30, 2009, cash and cash equivalents decreased
to $342,717 from $1,363,130 at December 31, 2008 primarily due to the repayment
of approximately $1,458,000 debt outstanding on the Private Bank line of credit
facility.
Net cash
used in operating activities was $970,812 for the nine months ended September
30, 2009 compared to net cash used for operating activities of $561,523 in the
corresponding nine month period ended September 30, 2008.
Due to an
increase in our transaction based sale contracts in our Telecom business we
entered into a capital lease agreement to purchase approximately $130,000 in
equipment. The payments terms are $5,196 per month for 32 months and
a $1.00 buy-out at the end of the lease term. The outstanding balance
at September 30, 2009 on this equipment line was $102,884.
Net cash
provided by financing activities was $40,007 for the nine months ended September
30, 2009 compared to net cash provided by financing of $556,717 in the
corresponding nine months ended September 30, 2008.
Non-current
liabilities at September 30, 2009 totaled $914,169 compared to $1,866,798 at
December 31, 2008. The decrease is primarily due to an increase in the current
maturities of $562,500 on the $750,000 note due to the former owners of
Ricciardi Technologies combined with a decrease in deferred tax liabilities
of $490,065 from $1,200,000 to $710,218
We have
principal payment coming due in the next twelve months totaling $750,000 on the
note with the former RTI owners. Monthly principal payments of $62,500 per month
began in October 2009. Additionally, we have payments totalling
approximately $120,000 coming due on short term notes. The Company is highly
dependent on increasing its operating cash flows from current levels over the
next twelve months and maintaining availability on its line of credit facility
to satisfy these payments and to cover the interest costs on its
debt.
The
following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere in this report and
with our annual report on Form 10-K for the fiscal year ended December 31, 2008.
This discussion should not be construed to imply that the results discussed
herein will necessarily continue into the future, or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of our
management.
OFF
BALANCE SHEET ARRANGEMENTS:
We do not
have any off balance sheet arrangements that are reasonably likely to have a
current or future effect on our financial condition, revenue, results
of operations, liquidity or capital expenditures.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
N/A.
14
ITEM
4T. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial, we evaluated the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934 (the “Exchange Act”) as of the end of the period covered by
this Quarterly Report on Form 10-Q. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures as of the end of the period covered by this
report were not effective such that the information required to be disclosed by
us in reports filed under the Securities Exchange Act of 1934 is
(i) recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms and (ii) accumulated and
communicated to our management to allow timely decisions regarding disclosure. A
controls system cannot provide absolute assurance, however, that the objectives
of the controls system are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud if any, within
a company have been detected.
Management
has determined that, as of September 30, 2009, there were material weaknesses in
both the design and effectiveness of our internal control over financial
reporting. Management has assessed these deficiencies and determined
that there were weaknesses in the Company’s internal control over financial
reporting. As a result of our assessment that material weaknesses in
our internal control over financial reporting existed as of September 30, 2009,
management has concluded that our internal control over financial reporting was
not effective as of September 30, 2009. A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis.
The
deficiencies in our internal controls over financial reporting and our
disclosure controls and procedures are related to the limited financial
backgrounds of our management and a lack of segregation of duties due to
the size of our accounting department. When our financial position improves, we
intend to hire additional personnel to remedy such deficiencies.
Changes
in internal control
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, performed an evaluation as to whether any change in our
internal controls over financial reporting occurred during the 2009 Quarter
ended September 30, 2009. Based on that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that no change occurred in the Company’s
internal controls over financial reporting during the 2009 Quarter ended
September 30, 2009 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal controls over financial
reporting.
PART
II
OTHER INFORMATION
ITEM
1 - LEGAL PROCEEDINGS
In
October, Securus Technologies, Inc. and its subsidiary Evercom Systems Inc.
filed suit against Lattice Incorporated in the State District Court in Dallas
County, Texas. The dispute arose out of a series of transactions that
included inter alia, an Asset Purchase Agreement (“APA”) between Lattice and
Evercom that was signed in December 2003.
ITEM
1A. RISK FACTORS
There
have been no material changes from the Risk Factors described in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM
5 - OTHER INFORMATION
None.
15
Item
6. Exhibits
Exhibit
Number
|
Description
|
|
31.1
|
Certification
by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
of the Exchange Act
|
|
31.2
|
Certification
by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a)
of the Exchange Act
|
|
32.1
|
Certification
by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
United States Code
|
|
32.2
|
Certification
by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b)
of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the
United States Code
|
16
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
DATE:
November 23, 2009
LATTICE
INCORPORATED
|
|
BY:
|
/s/
Paul Burgess
|
PAUL
BURGESS
|
|
CHIEF
EXECUTIVE OFFICER
(PRINCIPAL
EXECUTIVE
OFFICER),
SECRETARY AND
DIRECTOR
|
BY:
|
/s/
Joe Noto
|
JOE
NOTO
|
|
CHIEF
FINANCIAL OFFICER
(PRINCIPAL
ACCOUNTING
OFFICER)
AND DIRECTOR
|
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