Lattice: RedChip's Global Online CEO Conference


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Lattice Incorporated (“Lattice” or the “Company”), founded in 1973, provides secure communications and information technology, specializing in deploying advanced technology and services to create innovative, cost - effective solutions for the Company’s global customers. The Company provides both wholesale and direct services to correctional facilities and their service providers in the U.S., Canada and Europe. Expansion of Lattice’s direct and wholesale services, including increased techno logy equipment and software sales to wholesale customers, is expected to drive revenue growth and increased margins in the quarters ahead

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Lattice: RedChip's Global Online CEO Conference

  1. 1. Lattice Inc. RedChip Conference July 17, 2014 Ticker Symbol: LTTC © 2011, Lattice Incorporated. All Rights Reserved.
  2. 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. 3. The Company  Technology leader in the correctional facilities market.  700% revenue growth from 2009 to 2013.  Provides a suite of cloud based services enabling smaller facilities access to technology traditionally only available to large facilities.  Providing secure communications and information technology since 1973.
  4. 4. Financials 2009 2010 2011 2012 2013 Revenue 1,096 3,554 4,572 7,530 8,270 COGS 464 2,343 3,243 5,094 5,461 GP 632 1,211 1,329 2,436 2,809 SGA 1,104 1,299 2,116 1,982 2,769 EBITDA * (472) 104 (483) 830 44 * Excludes Government services Division and associated corporate expenses
  5. 5. Correctional Technology Market Overview  $5.0B+ Market total in Federal, State, and County  Additional revenue from other non- communication based services  2.3 Million Inmates  Strong recurring revenue base  Prison population steadily growing at 3% annually, capturing market share.  Communications revenues are split with prison, alleviating pressure on state and county budgets.
  6. 6. Innovisit Acquisition  Industry Leader in Video Visitation Technology  Integrated with Lattice ICON Platform in 2013  Implemented first installation in Q1 2013  Acquired Company Q4 2014  Adds 15 new states  Currently serving 90 correctional facilities  Will add $1.5 - $2.0M additional revenue in 2014
  7. 7. Competitive Landscape  Small Regional Service Providers  Solid regional relationships with smaller facilities  Outdated Technology generating lower revenues per inmate  Large National Service Providers  Focusing on larger facilities  Multiple technology platforms through acquisition making service inconsistent to smaller facilities.  Losing smaller facilities as customers
  8. 8. Business Model – US Market  Exclusive Rights to Facility  Revenue sharing with Facility  Provides extra revenue for strapped state budgets  Range from 20-60%  Up-sell Leading Features & Products Provides customer stickiness  Ability for family members to credit inmate’s call account  Video Visitation  Kiosk for cash management and value added services  Integrated jail management software solution (difficult to replace)
  9. 9. Sales and Marketing  Direct Sales to Facilities  Local sales presence  Expand upon established local concentration  Referrals important for winning county customers  Indirect Wholesale & Technology License Sales  Utilized by channel partners for larger facilities and State bids  For out of direct sales region  Builds Lattice footprint and brand recognition
  10. 10. Foreign Market Overview  Competitive Landscape  Incumbent Telcos primary competition  Legacy payphone model (collect calling)  New technology yet to be introduced  Lattice has Unique Technology Advantage  Lattice technology provides cost reductions  Lattice Model provides enhanced revenue streams  Lattice technology provides enhanced security and investigative tools
  11. 11. Foreign Market Overview  Business Model  Technology sales/license revenue  Transaction revenue  Services revenue  Current Foreign Sales Pipeline Asia Canada Israel Mexico U.K. India Belgium Caribbean
  12. 12. Foreign Market Overview  Canadian Market  Awarded four installations  All 4 being implemented in 2013  Partnered with Telus Canada for larger provinces  Smaller facilities partnering with Wymactel  U.K. Market  First site operational in Gibraltar (2011)  Successful trial completed in 400 bed facility. Currently responding to RFPs for multiple facilities  90,000+ inmate potential in UK
  13. 13. Foreign Market Opportunity  Retained Communication Media Advisors to Accelerate International Expansion:  Identify most attractive markets for expansion.  Identify potential partners and licensees that best enable Lattice to successfully win new business in these markets.  Phase I of the project will be completed in Q2 of this year.
  15. 15. Secure Secure Communication Layer ICON will consist of five major components: • Products and Services management • Customer Information Database • Payment Processing • Accounting/Billing • Customer Care ICON Core All communication between payments and services will utilize ICON’s Secure Communication Layer. Outside development firms will have standard interfaces to utilize Integrated Corrections Operations Networks (ICON) Communication ICON Application Management ICON will provide centralized database management and payment capability. Utilizing the a central core engine will allow multiple software applications to reuse software processes saving development time and producing far more efficient business practices. Jail Management System
  16. 16. Secure Products and Services managed and accounted for by ICON Communication PIN Debit and PPC Phone Accounts ICON Application Management Jail Management System
  17. 17. Secure The ICON JMS includes the following features: •Reporting •Scheduling •Multi-Facility/Multi Agency Integration •Special Diet/Meal Count •Workflow •Biometrics •Booking •Trust Accounting/General Ledger •Medical Records •Incident Reporting •NCIC Background screening Communication ICON Application Management The ICON Jail Management System (JMS) is a key component to the ICON core. The JMS stores and manages correctional facility processes, inmate booking, inmate information, and trust accounting Jail Management System ICON Jail Management System
  18. 18. Investment Highlights  Rapid expansion of the Company’s service and technology sales to drive overall growth and margin improvement.  Lattice offers industry leading proprietary technology to traditionally underserved area of the market—small and midsized correctional facilities.  International expansion with key partnerships growing sales and margin growth while increasing the Company’s footprint.  700% revenue growth over the last 4 years. Early stages of growth potential.
  19. 19. Q&A Contact: Jon Cunningham RedChip Companies, Inc. 1.800.REDCHIP x107 | 407.644.4256 x107 Paul Burgess CEO 856-910-1166 ext 2111