Safe Harbor StatementManagement’s prepared remarks contain forward-lookingstatements which are subject to risks and uncertainties andmanagement may make additional forward-looking statements inresponse to your questions. Therefore, the company claims theprotection of the Safe Harbor for forward-looking statements thatis contained in the Private Securities Litigation Reform Act of 1995.Actual results may differ from those discussed today, and thereforewe refer you to a more detailed discussion of the risks anduncertainties in the company’s filings with the Securities andExchange Commission.
The CompanyLattice has been providing secure communicationsand information technology since 1973. Provides communications technology for high securityinstallations such as correctional facilities. Provides a suite of cloud based services enablingsmaller facilities access to technology traditionally onlyavailable to large facilities.
U.S. Market Overview 2.3M Inmates Growing at 3% per annum Telecom funding source Federal, State, and County $650 - $750 Telecom Revenue/inmate $2.0B + Market 2.0B from Telecom revenues only Additional revenue from other value addedservices
Competitive Landscape Small Regional Service Providers Solid regional relationships Inferior Technology Lattice Resells to some providers Large National Service Providers Focusing on 500+ bed facilities Technology and service is inconsistent Losing smaller facilities as customers
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) Introducing Secure Corrections Cloud (2013)
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 andState bids For out of direct sales region Builds Lattice footprint and brand recognition
Foreign Market Overview Competitive Landscape Incumbent Telcos primary competition Legacy payphone model (collect calling) New technology yet to be introducedLattice has Unique Technology Advantage Lattice technology provides cost reductions Lattice Model provides enhanced revenue streams Lattice technology provides enhanced security andinvestigative tools
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 with Sodexo Justice Services 90,000+ inmate potential in UK
SecureSecure Communication LayerICON will consist of five majorcomponents:• Products and Services management• Customer Information Database• Payment Processing• Accounting/Billing• Customer CareICON CoreAll communication between payments andservices will utilize ICON’s SecureCommunication Layer. Outside developmentfirms will have standard interfaces to utilizeIntegrated Corrections Operations Networks (ICON)CommunicationICONApplicationManagementICON will provide centralized databasemanagement and payment capability.Utilizing the a central core engine willallow multiple software applicationsto reuse software processes savingdevelopment time and producing farmore efficient business practices.Jail ManagementSystem
SecureThe ICON JMS includes thefollowing features:•Reporting•Scheduling•Multi-Facility/Multi AgencyIntegration•Special Diet/Meal Count•Workflow•Biometrics•Booking•Trust Accounting/General Ledger•Medical Records•Incident Reporting•NCIC Background screeningCommunicationICONApplicationManagementThe ICON Jail Management System(JMS) is a key component to the ICONcore. The JMS stores and managescorrectional facility processes, inmatebooking, inmate information, andtrust accountingJail ManagementSystemICON Jail Management System
SecureProducts and Services managed andaccounted for by ICONCommunicationPIN Debit and PPCPhone AccountsICONApplicationManagementJail ManagementSystem
SecureCentralized Customer DatabaseCommunicationA centralized customer database willfacilitate account management across allservices and payment methods. It willprovide simple methods to manage allcustomer information to take payments anddeduct funds for services provided. The webportal will aloow friends and families tomanage account information and transferfunds between accounts.Payment methods that will access thecustomer database:• Call Center Software/Reps• Kiosks• Web Payment Portal• IVRProducts & Services accessing the customerdatabase:• Commissary• Inmate E-device• PIN Debit calls• PPC calls• Debit Card Calls• Voicemail• Email• Video VisitationICONApplicationManagementJail ManagementSystem
SecureCentralized Payment ProcessingCommunicationA centralized payment processing solutionwill eliminate the need to reproducepayment methods for new products andservices. All payments will come into theICON core, process through Authorize.netand then be distributed to the appropriateaccounts for use. Centralized paymentprocessing greatly reduces the risk of fraudand simplify’s accounting processes.ICON’s inbound payment methods:• Call Center Software/Reps• Kiosks• Web Payment Portal• IVRProducts & Services accessing ICON’spayment outputs:• Commissary• PIN Debit calls• PPC calls• Debit Card Calls• Voicemail• Email• Video VisitationICONApplicationManagementJail ManagementSystem
SecureICON Customer CareCommunicationICON’s customer care module will be builton a web based 3-tiered user access model.Based on usernICON and password, thesystem will provide support for CSR’s, Jailcustomers or friends and families to report,track, and resolve any trouble related to ourproducts and services. The ICON IVR willprovide automated phone support forfriends and families as well as inmates toaccess 24X7X365Friends and Family problem resolution:• Dropped Calls• PPC Account balances• Payment disputesJail customer problem resolution:• Loss of service• Inmate kites• Billing/Commission InquiriesInmate problem resolution• PIN Debit/Commissary Accoutn balances• Dropped Calls• Payment Inquiry’sICONApplicationManagementJail ManagementSystem
SecureICON AccountingCommunicationAggregation of all customer and paymenttransactions will provide a single interfaceallaccounting functions. ICON accounting willintegrate seamlessly into most standardacounting/business software packages suchas quickbooks. Automated and accuratereporting capability will be provided in aflexible and user friendly interface. TheICON accounting module will be responsiblefor all of the following accounting functions:• Facility commissions• Revenue Reports• Profitability Reports• Revenue assurance• Taxation• Rates/Prices• Refunds• Cost trackingICONApplicationManagementJail ManagementSystem
Investment Highlights Rapid expansion of the Company’s service and technologysales to drive overall growth and margin improvement. Lattice offers industry leading proprietary technology totraditionally underserved area of the market—small andmidsized correctional facilities. International expansion with key partnerships growing salesand margin growth while increasing the Company’sfootprint. CAGR of 90% over the last 4 years. Early stages of growthpotential.