Lattice Incorporated Announces Third Quarter 2007 Financial Results

Total revenues for the third quarter were $4,316,000, an increase of 189%from $1,495,000 reported in the comparable quarter last year. Revenues for thequarter ended September 30, 2007 include $2,034,000 attributable to RicciardiTechnologies, Inc. (RTI), an entity acquired by the company in September 2006.Disregarding the impact of that acquisition, comparable revenues increased$787,000 or 53% from Q3 '06 to Q3 '07 due to the addition of new servicecontracts and the expansion of existing contract vehicles.

For the nine months ended September 30, 2007, total revenues increased168% to $11,213,000, compared to $4,179,000 in the first nine months of 2006.Approximately $5,080,000 of this increase is attributed to the September 2006acquisition of RTI, with additional growth of $1,954,000 from pre-existingoperations.

For the third quarter of 2007, the company reported an operating loss of$70,000 compared to operating income of $92,000 in the third quarter of 2006.Included in the most recent quarter were non-cash amortization expensesrelated to intangible assets totaling $520,000 compared to $57,000 in Q3 '06.

Net income for the quarter was $2,613,000 versus a loss of $17,273,000 inthe comparable quarter last year. Net income in the most recent quarterincluded $2,829,000 of derivative income representing a decrease in fair valueof the company's derivative liabilities. The comparable period in 2006included a non-cash derivative expense of $16,921,000 related to the sameliabilities.

Lattice CEO Paul Burgess said, "We are very pleased with the organicgrowth that we have experienced and with the impact that the acquisition ofRTI has had on our results of operations. In addition to impressive year toyear results, we realized a 16% increase in total revenues on a sequentialbasis from the second quarter of 2007, which followed an increase of 17% fromQ1 to Q2 earlier this year. Service revenues continue to increase as apercentage of our total revenues, representing 92% of the top line in thethird quarter of 2007 compared to 78% a year ago. Although we experienced somedecrease in our gross margin percentage during the most recent quarter becauseof a shift in segment mix and a recently awarded cost reimbursable contract,we continue to see solid growth year to year in the magnitude of our grossmargin contribution. We also are excited about additional potential growthopportunities we see ahead of us in the future."

A copy of the financial statements follows.

About Lattice Incorporated

Lattice Incorporated is a provider of advanced information andcommunications technology solutions to the government and commercial markets.The company's technology services division designs, deploys and managesadvanced technological solutions at key government agencies and for mid- tolarge-sized enterprises. Lattice's technology products division consists ofseveral core proprietary platforms used to develop customized softwareapplications with military grade security in a number of different markets.For more information, visit .

An investment profile about Lattice Incorporated may be found at.

For investor relations information regarding Lattice Incorporated, contactJulie Marshall or Cale Smith, Hawk Associates, at (305) 451-1888, e-mail:. An online investor relations kit including copies ofpress releases, current price quotes, stock charts and other valuableinformation for investors may be found at and. To receive free e-mail notification offuture releases for this company, sign up at.

Safe-Harbor Statement under the Private Securities Litigation Reform Actof 1995: This press release may contain forward-looking information withinthe meaning of Section 21E of the Securities Exchange Act of 1934, as amended,including all statements that are not statements of historical fact regardingthe intent, belief or current expectations of the company, its directors orits officers with respect to, among other things: (i) the company's financingplans; (ii) trends affecting the company's financial condition or results ofoperations; (iii) the company's growth strategy and operating strategy; and(iv) the risk factors disclosed in the Company's periodic reports filed withthe SEC. The words "may," "would," "will," "expect," "estimate," "anticipate,""believe," "intend" and similar expressions and variations thereof areintended to identify forward-looking statements. Investors are cautioned thatany such forward-looking statements are not guarantees of future performanceand involve risks and uncertainties, many of which are beyond the company'sability to control, and that actual results may differ materially from thoseprojected in the forward-looking statements as a result of various factorsincluding the risk factors disclosed in the company's Forms 10-K previouslyfiled with the SEC.

                    LATTICE INCORPORATED AND SUBSIDIARIES                         CONSOLIDATED BALANCE SHEETS                                                September        December                                                30, 2007         31, 2006                                                (Unaudited)      (Restated)    ASSETS    Current assets:       Cash and cash equivalents                $     110,346    $   392,275       Accounts receivable, net                     4,185,881      2,412,164       Inventories                                     53,799         64,442       Other current assets                           189,902        698,514          Total current assets                      4,539,928      3,567,395    Property and equipment, net                        25,644         37,187    Goodwill                                        4,047,866      2,547,866    Other intangibles, net                          5,782,951      7,344,235    Other assets                                       96,502        122,935          Total assets                          $  14,492,891   $ 13,619,618    LIABILITIES AND SHAREHOLDERS' (DEFICIT)    Current liabilities:       Accounts payable                         $   1,754,976    $   892,773       Accrued expenses                             1,002,152      1,736,754       Due to former stockholders        per Sept. 19, 2006 purchase        agreement                                   1,500,000              0       Customer deposits                               14,237         15,000       Deferred revenue                                     -         62,495       Notes payable                                  917,064      1,998,189       Derivative Liability                         8,298,243     19,873,782          Total current liabilities                13,486,672     24,578,993    Deferred tax liabilities                          406,162        406,162    Minority interest                                 323,684        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                  33,701,683     24,850,967       Accumulated deficit                        (33,282,163)   (36,130,657)                                                      674,206    (11,103,265)       Common stock held in treasury,        at cost                                      (397,833)      (397,833)       Shareholders' deficit                          276,373    (11,501,098)       Total liabilities and shareholders'        deficit                                $   14,492,891  $  13,619,618                    LATTICE INCORPORATED AND SUBSIDIARIES                    CONSOLIDATED STATEMENTS OF OPERATIONS                                 (UNAUDITED)                               Nine Months Ended        Three Months Ended                                  September 30,            September 30,                                2007          2006         2007        2006    Sales -- Technology     services              $10,242,162    $3,044,670   $3,976,275  $1,161,995    Sales -- Technology     products                  970,354     1,134,690      339,867     332,804       Total sales          11,212,516     4,179,360    4,316,142   1,494,799    Cost of sales --     Technology services     5,048,465     1,432,116    2,103,352     508,191    Cost of sales --     Technology products       337,991       400,253      125,821     130,433       Total cost of        sales                5,386,456     1,832,369    2,229,173     638,624    Gross profit             5,826,060     2,346,991    2,086,969     856,175    Operating costs and     expenses:       Selling,        general and        administrative       4,094,165     1,546,435    1,527,018     598,619       Research and        development            314,339       327,474      109,041     109,205       Amortization        expense              1,561,284       170,070      520,428      56,690                             5,969,788     2,043,979    2,156,487     764,514    Operating loss            (143,728)      303,012      (69,518)     91,661    Other income    (expense):       Derivative income       (expense)             3,889,788   (16,921,159)   2,828,906 (16,934,604)       Other income                  -        13,505            -          -       Extinguishment        loss                 (157,130)      (158,266)           -    (158,266)       Interest expense      (530,135)      (409,510)     (51,133)   (144,756)       Finance expense        (21,520)      (126,927)      (7,202)   (110,618)         Total other          income (expenses) 3,181,003    (17,602,357)   2,770,571 (17,348,244)    Income (loss) before     minority interest      3,037,275    (17,299,345)   2,701,053 (17,256,583)    Minority interest        (188,781)       (30,238)     (87,602)    (16,217)    Net income (loss)      $2,848,494   $(17,329,583)  $2,613,451$(17,272,800)    Reconciliation of net     income (loss) to     income applicable to     common shareholders:       Net income (loss)   $2,848,494   $(17,329,583)  $2,613,451$(17,272,800)       Preferred stock        dividends             (37,500)             -      (12,500)          -                           $2,810,994   $(17,329,583)  $2,600,951$(17,272,800)    Income (loss) per     common share:         Basic              $    0.17   $      (1.69)  $     0.16  $    (1.44)         Diluted            $   (0.02)  $      (1.69)  $        -  $    (1.44)    Weighted average     shares         Basic             16,642,428     10,242,597   16,642,428  11,962,879         Diluted           47,587,628     10,242,597   47,587,628  11,962,879                    LATTICE INCORPORATED AND SUBSIDIARIES                    CONSOLIDATED STATEMENTS OF CASH FLOWS                                 (UNAUDITED)                                          Nine Months Ended September 30,                                               2007            2006    Cash flows from operating    activities:    Net income (loss)                      $ 2,848,494   $  (17,329,583)      Adjustments to reconcile net income       (loss) to net cash provided by       (used for) operating activities:      Derivative (income) expense           (3,772,263)      16,921,159      Amortization of intangible       assets                                1,561,284          170,070      Amortization of debt discount       (effective method)                      205,809           47,025      Amortization of financing       expense                                  21,520          126,927      Extinguishment loss                      157,130          158,266      Minority interest                        188,781           30,238      Share-based payments                     184,320           44,908      Depreciation                              12,375           35,054    Changes in operating assets and     liabilities:      (Increase) decrease in:      Accounts receivable                   (1,773,718)        (195,291)      Inventories                               10,643           (1,587)       Other current assets                    (16,311)        (323,632)       Other assets                            (16,818)               -    Increase (decrease) in:      Accounts payable and accrued       expenses                                987,600         (375,386)      Customer deposits                           (763)        (135,199)      Deferred revenue                         (62,495)         137,493    Total adjustments                       (2,312,906)      16,640,045      Net cash provided by (used for)       operating activities                    535,588         (689,538)    Cash Used in investing activities:       Investment in RTI                             -       (3,665,000)       Acquired Cash RTI                             -          156,772       Purchase of equipment                      (832)       Net cash used for investing        activities                                (832)      (3,508,228)    Cash flows from financing     activities:       Payments on notes payable              (842,000)        (209,000)       Issuance of convertible debt        net of fees                                  -        4,450,000       Sale of common stock net of fees              -        1,293,906       Payment of convertible debt                   -       (1,000,000)       Revolving credit facility       (payments) borrowings, net               25,315            1,269       Net cash (used in) provided by       financing activities                   (816,685)       4,536,175      Net increase (decrease) in cash       and cash equivalents                   (281,929)         338,409     Cash and cash equivalents -      beginning of period                      392,275           53,997     Cash and cash equivalents -      end of period                        $   110,346     $    392,406    Supplemental cash flow information:       Interest paid in cash               $         -     $          -    Investor Relations Contact:    Hawk Associates, Inc.    Julie Marshall and Cale Smith    Phone: (305) 451-1888    E-mail: