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Artificial Life Announces Q2 2010 Results

(August 05, 2010)

LOS ANGELES, BERLIN and HONG KONG, Aug. 5, 2010 (GLOBE NEWSWIRE) -- Artificial Life, Inc., (OTCBB:ALIF), (http://www.artificial-life.com), today announced its second quarterly results for 2010 showing strong increases in revenues and profits.



Business Highlights:



The Company reports strong growth in its mobile gaming and non-gaming sectors.


Revenue growth in Q2 2010 was 19%, profit growth 30%.




Company delivers the best financial quarter in its history.



The release of the powerful and carrier grade m-commerce platform, OPUS-M™, in the first quarter of 2010 was an instant and remarkable global success. The demand for OPUS-M™ was very strong. In the second quarter of 2010, we continued focusing our sales efforts on the sales of OPUS-MTM, and were very successful with our efforts as the majority of our new revenues were related to or derived from this product since its commercial launch. OPUS-MTM, with its broad appeal, flexible module selection concept, competitive pricing, hosting support and comprehensive feature set is our current key product and the basis for our future expansion.



The demand for the Company's iPhone and iPad games was also significant. The Company released 6 new games in 2010. In total the Company has now produced 30 iPhone/iPad games; offers 14 of them for free and 16 as paid games. The total number of iPhone/iPad game downloads generated in 2010 through July 31, 2010 was approximately 8 million in total compared to approximately 8 million for the whole fiscal year of 2009.



Financial Results



Results of Operations — Quarter Ended June 30, 2010 compared to Quarter Ended June 30, 2009



Revenues:



Revenues for the quarter ended June 30, 2010 were $9,043,463 as compared to $7,577,969 for the quarter ended June 30, 2009. The increase of revenues of $1,465,494 or 19% was mainly due to global licensing deals for the sale of our m-commerce platform, OPUS-M™.



Cost of Revenues:



Cost of revenues mainly consist of amortization of intangible assets. Cost of revenues for the quarter ended June 30, 2010 was $1,923,541 as compared to $1,097,607 for the quarter ended June 30, 2009. The increase of $825,934 or 75% was primarily due to the increased amortization of additional license rights acquired.



Gross Margin:



Gross margin for the quarter ended June 30, 2010 was $7,119,922 as compared to $6,480,362 for the quarter ended June 30, 2009. The increase of $639,560 or 10% was mainly due to global license deals for the sale of our m-commerce platform, OPUS-M™, offset by the decreased product license revenue generated from mobile games and amortization of license rights acquired.



General and Administrative:



General and administrative expenses consisted of salary for administrative personnel, rent, professional fees, and costs associated with employee benefits, supplies, communications, travel, and provision for doubtful accounts. General and administrative expenses for the quarter ended June 30, 2010 were $623,132 as compared to $1,988,105 for the quarter ended June 30, 2009. The decrease of $1,364,973 or 69% was mainly due to significant decrease in bad debt expense of approximately $1.5 million, offset by the increase in professional fees. The significant decrease in bad debt expense was due to a one-time write-off of trade receivables in 2009 which were determined to be irrecoverable after management's detailed analysis.



Sales and Marketing:



Sales and marketing expenses consisted of salary expenses of sales and marketing personnel, costs relating to marketing materials, advertising, trade show related expenses, traveling and public relations activities. Sales and marketing expenses for the quarter ended June 30, 2010 were $399,038 as compared to $472,515 for the quarter ended June 30, 2009. The decrease of $73,477 or 16% was mostly due to decrease in consulting expenses.



Research and Development:



Research and development expenses consisted of salary, training, consulting, subcontracting and other expenses incurred to develop and fulfill the design specifications and productions of the products and services from which we derive our revenues. Research and development expenses for the quarter ended June 30, 2010 were $656,222 as compared to $842,437 for the quarter ended June 30, 2009. The decrease of $186,215 or 22% was primarily due to decrease in staff and consulting expenses, offset by increase in data hosting and web service costs.



Other Expense/Income:



Other (expense)/income for the quarter ended June 30, 2010 was ($822,932) as compared to ($209,899) for the quarter ended June 30, 2009. Net expense of $822,932 was primarily due to foreign currency transaction losses of approximately $807,000 in this quarter compared to approximately $283,000 in the second quarter of 2009. The increase in foreign currency transaction losses was mostly due to the adverse effect of the weakening of the Euro relative to the United States Dollar on the trade receivables denominated in Euro.



Income from Operations and Net Income:



Income from operations for the quarter ended June 30, 2010 was $5,235,633 as compared to income from operations of $3,124,103 for the quarter ended June 30, 2009. The income from operations is primarily due to revenue of $9,043,463 generated from global licensing deals for the sale of our m-commerce platform, OPUS-M™, offset by the cost of revenue of $1,923,541 and the operational cost of $1,884,289. Net income for the quarter ended June 30, 2010 was $3,589,213 as compared to net income of $2,771,204 for the quarter ended June 30, 2009, an increase of 30%. The basic and diluted net income per share for the second quarter of 2010 was $0.06, as compared to $0.06 for the quarter ended June 30, 2009.



Cash and Liquidity:



During the quarter ended June 30, 2010, the Company closed private placement offerings with two institutional investors and one accredited investor for 2,668,152 shares of common stock and warrants to purchase an additional 918,152 shares of common stock. The shares of common stock and warrants were sold for an aggregate purchase price of $3,250,979.



As of August 5, 2010, cash receipt of approximately $8.3 million of the total trade accounts and installment receivables as at June 30, 2010 has been collected, which has significantly increased as compared to the cash payment of approximately $4.6 million collected during the full year of 2009.



"Our business is doing well and we keep expanding especially in the m-commerce arena with our flagship product OPUS-M™," said Eberhard Schoneburg, CEO of Artificial Life, Inc.



(iPod is a trademark of Apple Inc., registered in the US and other countries. iPhone is a trademark of Apple Inc. App Store is a service mark of Apple Inc.)



About Artificial Life, Inc.



Artificial Life, Inc. has been a pioneer in artificial intelligence and mobile technology since its inception in Boston in 1994. We are a public U.S. corporation (OTCBB:ALIF) with secondary listings on the Frankfurt Stock Exchange (Frankfurt:AIF) (XETRA:AIF) and headquarters and production center in Hong Kong.  We have additional offices in Berlin, Germany (EMEA headquarters) and Tokyo, Japan. Currently our main business areas are: high quality (3D) interactive (massive multiplayer) mobile games, mobile participation television, mobile business applications, our powerful mobile commerce technology platform OPUS-MTM and our green IT solutions provided by Green Cortex, Inc. We have won many industry awards for our outstanding technology and products.



For more information please visit: www.artificial-life.com; www.botme.com; www.mopa-tv.com; www.opus-m.com and www.green-cortex.com.



Please also follow us on:



Facebook: http://www.botme.com/ref/alife-fb



Twitter: http://twitter.com/alifegames



MySpace: http://www.myspace.com/artificial_life_inc



YouTube: http://www.youtube.com/user/alifegames



The Artificial Life logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=1669


















































































































































































































































































































































ARTIFICIAL LIFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

 

 

 

Three-Month Periods Ended June 30,

Six-Month Periods Ended June 30,

 

2010

2009

2010

2009

 

USD

USD

USD

USD

 

 

 

 

 

Revenues:

 

 

 

 

Software license agreements

$9,032,238

$7,577,225

$17,211,784

$14,629,598

Application services and other

11,225

744

15,854

11,571

 

9,043,463

7,577,969

17,227,638

14,641,169

 

 

 

 

 

Cost of revenues:

 

 

 

 

Cost of software license agreements

1,831,715

1,090,980

3,261,353

1,812,750

Others

91,826

6,627

151,967

26,269

 

1,923,541

1,097,607

3,413,320

1,839,019

Gross profit

7,119,922

6,480,362

13,814,318

12,802,150

 

 

 

 

 

Operating expenses:

 

 

 

 

General and administrative

623,132

1,988,105

1,325,267

3,639,996

Research and development

656,222

842,437

1,242,261

1,620,243

Sales and marketing

399,038

472,515

895,337

920,025

Depreciation 

205,897

53,202

427,501

111,114

Total operating expenses

1,884,289

3,356,259

3,890,366

6,291,378

 

 

 

 

 

Income from operations

5,235,633

3,124,103

9,923,952

6,510,772

 

 

 

 

 

Other income (expenses):

 

 

 

 

Interest income and other income

5,388

109,483

5,420

109,503

Interest expense

(21,389)

(36,228)

(41,759)

(66,480)

Foreign currency transaction loss

(806,931)

(283,154)

(1,522,358)

(412,360)

 

(822,932)

(209,899)

(1,558,697)

(369,337)

 

 

 

 

 

Income before income taxes

4,412,701

2,914,204

8,365,255

6,141,435

Income tax expense

(823,488)

(143,000)

(1,127,245)

(658,000)

 

 

 

 

 

Net income

3,589,213

2,771,204

7,238,010

5,483,435

Foreign currency translation adjustment

(39,743)

231,696

(152,986)

139,018

 

 

 

 

 

Comprehensive income

$3,549,470

$3,002,900

$7,085,024

$5,622,453

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$0.06

$0.06

$0.12

$0.11

Diluted

$0.06

$0.06

$0.12

$0.11

 

 

 

 

 

Weighted average shares outstanding: 

 

 

 

 

Basic

60,235,405

48,397,539

59,000,796

48,062,696

Diluted

61,630,883

48,421,914

60,844,454

48,220,370






























































































































































































































 

ARTIFICIAL LIFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

June 30, 2010

December 31, 2009

 

USD

USD

ASSETS

 

 

Current assets:

 

 

Cash 

$1,791,015

$2,356,336

Pledged deposit

25,641

--

Trade accounts receivables, net of discount interest of $207,960 and $208,218, respectively 

16,968,456

9,498,896

Trade installment receivables, net of discount interest of $26,319 and $139,743, respectively

4,243,341

8,473,270

 

 

 

Prepaid expenses and other

778,321

473,166

Deferred income taxes, net

837,714

1,000,000

Total current assets

24,644,488

21,801,668

 

 

 

Fixed assets, net of accumulated depreciation of $2,331,951 and $1,932,684, respectively

1,178,591

1,575,531

 

 

 

License rights, net of accumulated amortization of $9,501,157 and $6,317,060, respectively

36,428,869

26,421,105

Prepaid expenses, deposits and other assets

1,380,163

1,325,702

Deferred income taxes

1,170,331

710,000

 

38,979,363

28,456,807

 

 

 

TOTAL ASSETS

$64,802,442

$51,834,006

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$3,736,656

$2,297,854

Accrued expenses and other

521,769

737,128

Income taxes payable

1,420,078

17,394

Note payable – officer/stockholder

1,745,701

1,606,328

Note payable – stockholder

--

666,667

Total liabilities (all current)

7,424,204

5,325,371

 

 

 

Stockholders' Equity

 

 

Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding

--

--

Common stock, $.01 par value; 130,000,000 shares authorized, 60,590,489 shares issued and outstanding as of June 30, 2010 and 57,411,203 shares issued and outstanding as of December 31, 2009

605,904

574,111

Additional paid-in capital

66,759,568

63,006,782

Notes receivable from stockholders

(19,577)

(19,577)

Accumulated deficit

(9,879,415)

(17,117,425)

Accumulated other comprehensive (loss) income

(88,242)

64,744

Total stockholders' equity

57,378,238

46,508,635

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$64,802,442

$51,834,006


Forward-Looking Statements:



This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, our ability to obtain additional funding to operate and grow our business; the unproven potential of our mobile gaming business model; changing consumer preferences and uncertainty of market acceptance of our products; timely adoption and availability of 3G mobile technology; market acceptance for use of mobile handheld devices to play the interactive games; unpredictable mobile game development schedules; our reliance on a relatively small number of brands; our ability to license brands from others; our dependence upon resellers and telecommunication carriers and operators to distribute our products; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-KSB filed on March 16, 2010. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.


CONTACT: Artificial Life, Inc.
IR and PR Contact:
Adeline Law
(+852) 3102 2800
ir@artificial-life.com



Artificial Life, Inc


Page: 1


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