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Lattice Inc.
October 22, 2015
Ticker Symbol: LTTC
© 2011, Lattice Incorporated. All Rights Reserved.
Safe Harbor Statement
Management’s prepared remarks contain forward-looking
statements which are subject to risks and uncertainties and
management may make additional forward-looking statements in
response to your questions. Therefore, the company claims the
protection of the Safe Harbor for forward-looking statements that
is contained in the Private Securities Litigation Reform Act of 1995.
Actual results may differ from those discussed today, and therefore
we refer you to a more detailed discussion of the risks and
uncertainties in the company’s filings with the Securities and
Exchange Commission.
The Company
• Lattice has been developing and providing secure
communications and information technology since 1973.
• Our focus on innovation is the source of our longevity
through market ups and downs.
• Lattice starts
selling directly
to prison
facilities
2009
• Lattice turns
up first facility
in Oklahoma
2010
• Lattice
launches sales
and marketing
strategy in 8
new markets
2015
• Lattice
acquires video
visitation
technology
2013
• Lattice gains
50% of target
market in
Oklahoma
2014
The Company
 Technology leader in the $5 Billion correctional
facilities market. Approximately 75% of
facilities are small and fit in our target market.
 Provides a suite of cloud based services
enabling smaller facilities access to technology
traditionally only available to large facilities.
 Investing in new technology via development
and acquisitions to grow share of wallet with
existing customers and take share from slower
moving competitors.
 800% revenue growth from 2009 to 2014(ttm).
Rapid Cloud Innovation
Secure
ICON
Application
Management
COMMISSARY ORDERING
SCHEDULING SERVICES
LEGAL COUNSEL
INMATE E DEVICE
EMAIL
INTEGRATION SERVICES
MUSIC DOWNLOAD
EDUCATION
INVESTIGATION
SOCIAL MEDIA
DEDICATED INMATE STATION
HOME PC
Lattice’s cloud platform enables rapid service innovation, seamless
acquisition integration and the ability to serve customers more cost
effectively regardless of size or location
VOICE MAIL
TEXT MESSAGING
VIDEO VISITATION
 Encompasses Inmate Account Management, Products and Services, and
facility/inmate Support solutions:
Corrections Operating Platform (COP)
6
Taking Inmate Communications
To the Next Level!
7
Confidential: For Internal Presentation Use Only
 Grow facility revenue by providing new ways for inmates to
communicate with family/friends and access entertainment/educational
content
 Drive recurring Lattice revenue through continuous phone call and text
messaging usage
 Deliver increased facility efficiency via a smartphone-sized device
encompassing multiple apps/functionality
 Enable inmates to connect with family and friends, remain productive,
improve their morale, and reduce recidivism
CellMate™ Mobile
8
Confidential: For Internal Presentation Use Only
Product Overview
9Confidential: For Internal Presentation Use Only
 Phone and Voicemail
 Text Messaging
 Electronic Messaging
 Manage Commissary and
Phone Accounts
 Inmate Messaging for
Medical, Grievances
 Entertainment
 Music
 eBooks
 Games
 Educational and Legal
 Rehabilitation Videos
 Online Courses
 Law Library
Communications Content
Business Model
 Revenue Sharing Eases Facility Budget
Constraints
 Sticky recurring revenue streams
 Lattice Leading Features & Products
Benefit both the Facilities and Inmates
 Ability for family members to credit
inmate’s call account increases revenue
 Video Visitation reduces costs for the
facility and the inmate’s family
 Kiosk for cash management and value
added services for unbanked inmates
 Lattice social media and tablets increase
revenues, decrease disruptive inmate
behavior, and reduce recidivism
Problems Solved
 Lattice serves the advanced communications
needs of small to medium sized prisons which are
poorly served by our competitors
 Small Regional Service Providers
 Unsophisticated players which cater exclusively to
very small or small facilities
 Lattice technology will often enable their solution
 Large National Service Providers
 Focus on larger facilities
 Provide inconsistent service to smaller facilities
 Serving small facilities is often not cost effective
for these players
Competitive Landscape
Target Facility Size
SmallLarge
ProductStrength
WeakStrong
• Smaller providers
typically have a
limited product set to
serve small/medium
facilities
• Cloud platform
enables Lattice to
serve existing
customers and win
new ones
Differentiation
 Improved Revenue Generation per Facility
 Top Notch Tech Support & Customer Service for
Inmates and Families
 Industry Leading Reliability
 Prison Communications Experts with a Complete
Cloud Based Communications Solution
 $5.0B+ Market total in Federal, State, and
County
 $650 - $850 Telecom Revenue/inmate
 2.3 Million Inmates today, steadily growing at
3% annually
 Communications revenues are split with the
prison and are an important source of cash to
augment traditionally stretched county and
state budgets
 Strong recurring revenue base which is highly
sticky
 Trend to see communications between
inmates and their families as a benefit to the
facility, the inmate, and the community
U.S. Market Overview
U.S. Market – Correctional
Facilities
Lattice Target
Markets
474
239
2,826
250
88
373
165
33 36 15 34 38 79 34 20
-
500
1,000
1,500
2,000
2,500
3,000
LargeState
LargeLocal
SmallLocal
MediumState
Federal
SmallState
MediumLocal
LargePrivate
MediumPrivate
Territories
INS
SmallPrivate
Tribal
Military-Main
Military-Ancillary
2005/2006Facilities
Growth Opportunities
Products/services Increase Share New Markets
 Drive increased
usage of existing
services by
improving ease of
use
 Grow revenue by
adding innovative
new products and
services such as a
Phablet
 Win share from
competitors
 Buy smaller players
 License technology
to other providers
 Partner with
specialists in private
prisons
 Enter new domestic
markets by adding
experienced direct
sales
 Partner with
established Systems
Integrators to
expand further
internationally
Proof Points
 Domestic Success
 In four years, expanded market share in Oklahoma
from low teens to fifty percent
 Winning footholds in new states and expanding
regionally
 International Success
 Canada: awarded four installations under
partnerships with Telus Canada and Wymactel
 Singapore: ICON pilot project successful, currently
rolling out an expanded program
 UK: First site operational in Gibraltar, successful
trials in 400 bed UK facility
Investment Highlights
 Cloud based service delivery allows us to
drive higher revenue, lower costs and
gives us the ability to more cost-
effectively address new markets
 Proven track record of growth both
domestically and internationally
 Ability to leverage new technologies from
one market to another
 Recurring revenue model with 800%
revenue growth over the last 5 years.
Financials
$1.10
$3.60
$4.60
$7.50 $8.30 $8.90
-0.46
-2.34
-3.24
-5.09 -5.46 -5.34
-1.1
-1.3
-2.12
-1.98
-2.77
-4.2
-$15.0
-$10.0
-$5.0
$0.0
$5.0
$10.0
Millions
Revenue COGS SGA
20132010 2011 20122009 2014
2015 Update
 Core Revenue increased 24% in 2014.
 Implemented new sales and marketing strategy for 2015
to replicate our success in Oklahoma:
 Increased sales force to cover new territories.
 Focused on 9 target markets.
 Won 11 new facilities, installs scheduled for 2015.
 Will add ~$1,250,000 in annual recurring revenue.
Oklahoma 50% of target market will increase to 60% by
the end of Q2 2015.
Innovisit integration completed, added ~$1,750,000 in
revenue in 2014.
Q&A

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Lattice Incorporated - Investor Presentation

  • 1. Lattice Inc. October 22, 2015 Ticker Symbol: LTTC © 2011, Lattice Incorporated. All Rights Reserved.
  • 2. Safe Harbor Statement Management’s prepared remarks contain forward-looking statements which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore we refer you to a more detailed discussion of the risks and uncertainties in the company’s filings with the Securities and Exchange Commission.
  • 3. The Company • Lattice has been developing and providing secure communications and information technology since 1973. • Our focus on innovation is the source of our longevity through market ups and downs. • Lattice starts selling directly to prison facilities 2009 • Lattice turns up first facility in Oklahoma 2010 • Lattice launches sales and marketing strategy in 8 new markets 2015 • Lattice acquires video visitation technology 2013 • Lattice gains 50% of target market in Oklahoma 2014
  • 4. The Company  Technology leader in the $5 Billion correctional facilities market. Approximately 75% of facilities are small and fit in our target market.  Provides a suite of cloud based services enabling smaller facilities access to technology traditionally only available to large facilities.  Investing in new technology via development and acquisitions to grow share of wallet with existing customers and take share from slower moving competitors.  800% revenue growth from 2009 to 2014(ttm).
  • 5. Rapid Cloud Innovation Secure ICON Application Management COMMISSARY ORDERING SCHEDULING SERVICES LEGAL COUNSEL INMATE E DEVICE EMAIL INTEGRATION SERVICES MUSIC DOWNLOAD EDUCATION INVESTIGATION SOCIAL MEDIA DEDICATED INMATE STATION HOME PC Lattice’s cloud platform enables rapid service innovation, seamless acquisition integration and the ability to serve customers more cost effectively regardless of size or location VOICE MAIL TEXT MESSAGING VIDEO VISITATION
  • 6.  Encompasses Inmate Account Management, Products and Services, and facility/inmate Support solutions: Corrections Operating Platform (COP) 6
  • 7. Taking Inmate Communications To the Next Level! 7 Confidential: For Internal Presentation Use Only
  • 8.  Grow facility revenue by providing new ways for inmates to communicate with family/friends and access entertainment/educational content  Drive recurring Lattice revenue through continuous phone call and text messaging usage  Deliver increased facility efficiency via a smartphone-sized device encompassing multiple apps/functionality  Enable inmates to connect with family and friends, remain productive, improve their morale, and reduce recidivism CellMate™ Mobile 8 Confidential: For Internal Presentation Use Only
  • 9. Product Overview 9Confidential: For Internal Presentation Use Only  Phone and Voicemail  Text Messaging  Electronic Messaging  Manage Commissary and Phone Accounts  Inmate Messaging for Medical, Grievances  Entertainment  Music  eBooks  Games  Educational and Legal  Rehabilitation Videos  Online Courses  Law Library Communications Content
  • 10. Business Model  Revenue Sharing Eases Facility Budget Constraints  Sticky recurring revenue streams  Lattice Leading Features & Products Benefit both the Facilities and Inmates  Ability for family members to credit inmate’s call account increases revenue  Video Visitation reduces costs for the facility and the inmate’s family  Kiosk for cash management and value added services for unbanked inmates  Lattice social media and tablets increase revenues, decrease disruptive inmate behavior, and reduce recidivism
  • 11. Problems Solved  Lattice serves the advanced communications needs of small to medium sized prisons which are poorly served by our competitors  Small Regional Service Providers  Unsophisticated players which cater exclusively to very small or small facilities  Lattice technology will often enable their solution  Large National Service Providers  Focus on larger facilities  Provide inconsistent service to smaller facilities  Serving small facilities is often not cost effective for these players
  • 12. Competitive Landscape Target Facility Size SmallLarge ProductStrength WeakStrong • Smaller providers typically have a limited product set to serve small/medium facilities • Cloud platform enables Lattice to serve existing customers and win new ones
  • 13. Differentiation  Improved Revenue Generation per Facility  Top Notch Tech Support & Customer Service for Inmates and Families  Industry Leading Reliability  Prison Communications Experts with a Complete Cloud Based Communications Solution
  • 14.  $5.0B+ Market total in Federal, State, and County  $650 - $850 Telecom Revenue/inmate  2.3 Million Inmates today, steadily growing at 3% annually  Communications revenues are split with the prison and are an important source of cash to augment traditionally stretched county and state budgets  Strong recurring revenue base which is highly sticky  Trend to see communications between inmates and their families as a benefit to the facility, the inmate, and the community U.S. Market Overview
  • 15. U.S. Market – Correctional Facilities Lattice Target Markets 474 239 2,826 250 88 373 165 33 36 15 34 38 79 34 20 - 500 1,000 1,500 2,000 2,500 3,000 LargeState LargeLocal SmallLocal MediumState Federal SmallState MediumLocal LargePrivate MediumPrivate Territories INS SmallPrivate Tribal Military-Main Military-Ancillary 2005/2006Facilities
  • 16. Growth Opportunities Products/services Increase Share New Markets  Drive increased usage of existing services by improving ease of use  Grow revenue by adding innovative new products and services such as a Phablet  Win share from competitors  Buy smaller players  License technology to other providers  Partner with specialists in private prisons  Enter new domestic markets by adding experienced direct sales  Partner with established Systems Integrators to expand further internationally
  • 17. Proof Points  Domestic Success  In four years, expanded market share in Oklahoma from low teens to fifty percent  Winning footholds in new states and expanding regionally  International Success  Canada: awarded four installations under partnerships with Telus Canada and Wymactel  Singapore: ICON pilot project successful, currently rolling out an expanded program  UK: First site operational in Gibraltar, successful trials in 400 bed UK facility
  • 18. Investment Highlights  Cloud based service delivery allows us to drive higher revenue, lower costs and gives us the ability to more cost- effectively address new markets  Proven track record of growth both domestically and internationally  Ability to leverage new technologies from one market to another  Recurring revenue model with 800% revenue growth over the last 5 years.
  • 19. Financials $1.10 $3.60 $4.60 $7.50 $8.30 $8.90 -0.46 -2.34 -3.24 -5.09 -5.46 -5.34 -1.1 -1.3 -2.12 -1.98 -2.77 -4.2 -$15.0 -$10.0 -$5.0 $0.0 $5.0 $10.0 Millions Revenue COGS SGA 20132010 2011 20122009 2014
  • 20. 2015 Update  Core Revenue increased 24% in 2014.  Implemented new sales and marketing strategy for 2015 to replicate our success in Oklahoma:  Increased sales force to cover new territories.  Focused on 9 target markets.  Won 11 new facilities, installs scheduled for 2015.  Will add ~$1,250,000 in annual recurring revenue. Oklahoma 50% of target market will increase to 60% by the end of Q2 2015. Innovisit integration completed, added ~$1,750,000 in revenue in 2014.
  • 21. Q&A