-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E8M0CAQCaGLSax28+t2WUISrfQcwyzaqAWYe2tlQn1UxJZYto5NZHUnGrp1ebvcb HAza7edOPg8ZRTdho2srbg== 0001144204-11-007661.txt : 20110211 0001144204-11-007661.hdr.sgml : 20110211 20110211134714 ACCESSION NUMBER: 0001144204-11-007661 CONFORMED SUBMISSION TYPE: SC 13G/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20110211 DATE AS OF CHANGE: 20110211 GROUP MEMBERS: CALLIOPE CAPITAL CORPORATION GROUP MEMBERS: CHRIS JOHNSON GROUP MEMBERS: DAVID GRIN GROUP MEMBERS: EUGENE GRIN GROUP MEMBERS: LAURUS CAPITAL MANAGEMENT, LLC GROUP MEMBERS: PSOURCE STRUCTURED DEBT LIMITED GROUP MEMBERS: RUSSELL SMITH FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LAURUS MASTER FUND LTD CENTRAL INDEX KEY: 0001189294 IRS NUMBER: 980337673 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13G/A BUSINESS ADDRESS: STREET 1: 152 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125415800 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Lattice INC CENTRAL INDEX KEY: 0000350644 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 222011859 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13G/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-34249 FILM NUMBER: 11597233 BUSINESS ADDRESS: STREET 1: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 BUSINESS PHONE: 8564240068 MAIL ADDRESS: STREET 1: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 FORMER COMPANY: FORMER CONFORMED NAME: SCIENCE DYNAMICS CORP DATE OF NAME CHANGE: 19920703 SC 13G/A 1 v209902_sc13ga.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13G UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 5) LATTICE INCORPORATED - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 518414107 - -------------------------------------------------------------------------------- (CUSIP Number) December 31, 2010 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) Check the appropriate box to designate the rule pursuant to which this Schedule 13G is filed: |_| Rule 13d-1(b) |X| Rule 13d-1(c) |_| Rule 13d-1(d) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Master Fund, Ltd. (In Liquidation)* S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 98-0337673 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Laurus Capital Management, LLC S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-4150669 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: PSource Structured Debt Limited S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Guernsey - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Calliope Capital Corporation S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 57-1237865 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. CUSIP No. 518414107 - ---------- --------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Chris Johnson - ---------- --------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - ---------- --------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------- ---------- ------------------------------------------------ NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock. * SHARES ---- -------------------------------------------------------------- BENEFICIALLY 6 SHARED VOTING POWER: 2,078,333 shares of Common Stock. * OWNED BY ---- -------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. * REPORTING ---- -------------------------------------------------------------- PERSON 8 SHARES DISPOSITIVE POWER: 2,078,333 shares of Common Stock. * - --------- ---------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock - --------- ---------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - --------- ---------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 8.41 % - --------- ---------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - --------- ---------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. CUSIP No. 518414107 - --------- ---------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Russell Smith - --------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - --------- ---------------------------------------------------------------------- 3 SEC USE ONLY - --------- ---------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - ------------------- ---------- ------------------------------------------------- NUMBER OF 5 SOLE VOTING POWER: 0 shares of Common Stock.* SHARES ---- -------------------------------------------------------------- BENEFICIALLY 6 SHARED VOTING POWER: 2,078,333 shares of Common Stock. * OWNED BY ---- -------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER: 0 shares of Common Stock. * REPORTING ---- -------------------------------------------------------------- PERSON 8 SHARES DISPOSITIVE POWER: 2,078,333 shares of Common Stock. * - --------- ---------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock - --------- ---------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - --------- ---------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 8.41 % - --------- ---------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - --------- ---------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: David Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States and Israel - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. - -------------------------------------------------------------------------------- CUSIP No. 518414107 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Eugene Grin - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 5 SOLE VOTING POWER 0 shares of Common Stock.* ----------------------------------------------------------------- NUMBER OF 6 SHARED VOTING POWER SHARES BENEFICIALLY 2,078,333 shares of Common Stock.* OWNED BY ----------------------------------------------------------------- EACH 7 SOLE DISPOSITIVE POWER REPORTING PERSON 0 shares of Common Stock.* WITH ----------------------------------------------------------------- 8 SHARED DISPOSITIVE POWER 2,078,333 shares of Common Stock.* - -------------------------------------------------------------------------------- 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,078,333 shares of Common Stock. - -------------------------------------------------------------------------------- 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 8.41% - -------------------------------------------------------------------------------- 12 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. Item 1(a). Name of Issuer: LATTICE INCORPORATED Item 1(b). Address of Issuer's Principal Executive Offices: 7150 N. Park Drive Suite 500 Pennsauken, NJ 08109 Item 2(a). Name of Person Filing: Laurus Master Fund, Ltd.(In Liquidation)* This Schedule 13G, as amended, is also filed on behalf of Laurus Capital Management, LLC, a Delaware limited liability company, Calliope Capital Corporation, a Delaware Corporation, PSource Structured Debt Limited, a closed-ended company incorporated with limited liability in Guernsey, Chris Johnson, Russell Smith, Eugene Grin and David Grin. Calliope Capital Corporation is a wholly owned subsidiary of Laurus Master Fund, Ltd. (in Liquidation). Laurus Master Fund, Ltd. (in Liquidation) is in official liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The Joint Official Liquidators have discretion over the management of Laurus Master Fund, Ltd. (in Liquidation) and the disposition of its assets, including the securities owned by Laurus Master Fund, Ltd. (in Liquidation) and its subsidiaries reported in this Schedule 13G, as amended. Laurus Capital Management, LLC, acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to Laurus Master Fund, Ltd. (in Liquidation) and its two feeder funds concerning their respective assets, including the securities owned by Calliope Capital Corporation, reported in this Schedule 13G, as amended, subject to the oversight and preapproval rights of the Joint Official Liquidators and LCM's obligations to Laurus Master Fund, Ltd. (in Liquidation) under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007, as amended, restated, modified and/or supplemented); all of the foregoing subject to specific directions otherwise given by the Joint Official Liquidators at their discretion. PSource Structured Debt Limited is managed by Laurus Capital Management, LLC, subject to certain preapproval rights of the board of directors of PSource Structured Debt Limited. Eugene Grin and David Grin, through other entities, are the controlling principals of Laurus Capital Management, LLC and share voting and investment power over the shares owned by Calliope Capital Corporation (subject to the oversight and preapproval rights of the Joint Official Liquidators) and PSource Structured Debt Limited, reported in this Schedule 13G, as amended. The Joint Official Liquidators share voting and investment power over the securities owned by Calliope. Information related to each of Laurus Capital Management, LLC, PSource Structured Debt Limited, Calliope Capital Corporation, Chris Johnson, Russell Smith, Eugene Grin and David Grin is set forth on Appendix A hereto. Item 2(b). Address of Principal Business Office or if none, Residence: c/o Laurus Capital Management, LLC, 875 Third Avenue, 3rd Floor, New York, NY 10022 Item 2(c). Citizenship: Cayman Islands Item 2(d). Title of Class of Securities: Common Stock Item 2(e). CUSIP Number: 518414107 Item 3. Not Applicable Item 4. Ownership: (a) Amount Beneficially Owned: 2,078,333 shares of Common Stock * (b) Percent of Class: 8.41%* (c) Number of shares as to which such person has: (i) sole power to vote or to direct the vote: 0 shares of Common Stock * (ii) shared power to vote or to direct the vote: 2,078,333 shares of Common Stock * (iii) sole power to dispose or to direct the disposition of: 0 shares of Common Stock * (iv) shared power to dispose or to direct the disposition of: 2,078,333 shares of Common Stock * Item 5. Ownership of Five Percent or Less of a Class: Not applicable Item 6. Ownership of More than Five Percent on Behalf of Another Person: Not applicable Item 7. Identification and Classification of Subsidiary Which Acquired the Securities: Not applicable Item 8. Identification and Classification of Members of the Group: Not applicable Item 9. Notice of Dissolution of Group: Not applicable Item 10. Certification: By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. - ------------ * Based upon 22,639,551 shares of the common stock, par value $.01 per share (the "Shares") of Lattice Incorporated, a Delaware corporation (the "Company") as of November 19, 2010, as disclosed in the Company's Quarterly Report on Form 10Q for the quarterly period ending September 30, 2010. As of December 31, 2010, PSource Structured Debt Limited("PSource")and Calliope Capital Corporation ("Calliope" and together with PSource, the "Investors") held (i) warrants, as amended, to purchase up to 600,000 Shares at an exercise price of $1.10 per share, subject to certain adjustments (the "First Warrant"), (ii) warrants to purchase 1,458,333 Shares at an exercise price of $0.10 per Share, subject to certain adjustments (the "Second Warrant" and together with the First Warrant, the "Older Warrants"), and (iii) warrants to purchase 20,000 Shares at an exercise price of $0.52 per Share, subject to certain adjustments (the "Third Warrant"). The number of Shares underlying all Warrants described herein have been adjusted to take into account a 10:1 split of the Company's Shares that occurred on February 4, 2007. Each of the Older Warrants contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 4.99% of the Shares then issued and outstanding (the "4.99 Issuance Limitation"). The Second Warrant contains an issuance limitation prohibiting the Investors from converting those securities to the extent that such conversion would result in beneficial ownership by the Investors of more than 9.99% of the Shares then issued and outstanding (the "9.99 Issuance Limitation" and, together with the 4.99 Issuance Limitation, the "Issuance Limitations"). The Issuance Limitations may be waived by Investors upon at least 75 days prior notice to the Company. In addition, with respect to the Second Warrant, the Issuance Limitation shall also automatically become null and void upon notice to the holder of the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). In addition, with respect to the Older Warrants, the Issuance Limitation shall also automatically become null and void upon the occurrence and/or continuance of an event of default (as defined in and pursuant to the terms of the applicable instrument). Calliope is a wholly owned subsidiary of Laurus Master Fund, Ltd. (In Liquidation) (the "Fund"). The Fund is in liquidation under the supervision of the Grand Court of the Cayman Islands. The Joint Official Liquidators ("JOLs") are Chris Johnson and Russell Smith of Johnson Smith Associates Ltd. The JOLs have discretion over the management of the Fund and the disposition of its assets, including the securities owned by the Fund and its subsidiaries reported in this Schedule 13G, as amended. Calliope is a wholly-owned subsidiary of the Fund. Laurus Capital Management, LLC ("LCM"), acting through its controlling principals, Eugene Grin and David Grin, provides day to day investment management services to the Fund and its two feeder funds concerning their respective assets, including the securities owned by Calliope reported in this Schedule 13G, as amended, subject to certain oversight and preapproval rights of the JOLs and LCM's obligations to the Fund under the Seventh Amended and Restated Investment Management Agreement of April 26, 2007 (as amended, restated, modified and/or supplemented from time to time); all of the foregoing subject to specific directions otherwise given by the JOLs at their discretion. PSource is managed by LCM, subject to certain preapproval rights of the board of directors of PSource. Eugene Grin and David Grin, through other entities, are the controlling principals of LCM and share voting and investment power over the securities owned by Calliope (subject to the oversight and preapproval rights of the JOLs) and PSource reported in this Schedule 13G, as amended. The JOLs share voting and investment power over the securities owned by Calliope. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 11, 2011 ------------------------------- Date Laurus Master Fund, Ltd. (in Liquidation) By: /s/ Russell Smith ----------------------------------------- Russell Smith Joint Official Liquidator (for the account of Laurus Master Fund, Ltd. and with no personal liability) APPENDIX A A. Name: Laurus Capital Management, LLC, a Delaware limited liability company Business Address: 875 Third Avenue, 3rd Floor New York, New York 10022 Place of Organization: Delaware B. Name: Calliope Capital Corporation, a Delaware corporation Business Address: c/o Laurus Capital Management, LLC 875 Third Avenue, 3rd Floor New York, New York 10022 Place of Organization: Delaware C. Name: PSource Structured Debt Limited, closed ended company incorporated with limited liability in Guernsey Business Address: c/o Laurus Capital Management, LLC 875 Third Avenue, 3rd Floor New York, New York 10022 Place of Organization: Guernsey D. Name: Eugene Grin Business Address: c/o Laurus Capital Management, LLC 875 Third Avenue, 3rd Floor New York, New York 10022 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: United States E. Name: David Grin Business Address: c/o Laurus Capital Management, LLC 875 Third Avenue, 3rd Floor New York, New York 10022 Principal Occupation: Principal of Laurus Capital Management, LLC Citizenship: United States and Israel F. Name: Chris Johnson Business Address: Elizabethan Square, 80 Shedden Road, George Town, Grand Cayman, Cayman Islands KY1-1104 Principal Occupation: Managing Director, Johnson Smith Associates Ltd. Citizenship: Cayman Islands L. Name: Russell Smith Business Address: Elizabethan Square, 80 Shedden Road, George Town, Grand Cayman, Cayman Islands KY1-1104 Principal Occupation: Director, Johnson Smith Associates Ltd. Citizenship: Cayman Islands Each of Laurus Capital Management, LLC, Calliope Capital Corporation, PSource Structured Debt Limited, Chris Johnson, Russell Smith, David Grin and Eugene Grin hereby agrees, by their execution below, that the Schedule 13G, as amended, to which this Appendix A is attached is filed on behalf of each of them, respectively. Calliope Capital Corporation PSource Structured Debt Limited By: Laurus Capital Management, LLC Individually and as investment manager /s/ Eugene Grin - ----------------------------------------- Eugene Grin Principal February 11, 2011 /s/ Chris Johnson - ----------------------------------------- Chris Johnson, on his individual behalf February 11, 2011 /s/ Russell Smith - ----------------------------------------- Russell Smith, on his individual behalf February 11, 2011 /s/ David Grin - ----------------------------------------- David Grin, on his individual behalf February 11, 2011 /s/ Eugene Grin - ----------------------------------------- Eugene Grin, on his individual behalf February 11, 2011 -----END PRIVACY-ENHANCED MESSAGE-----