ALIF Artificial Life Inc (CE)

Artificial Life, Inc., (Pink Sheets:ALIF), (http://www.artificial-life.com), today announced its first quarter result for 2011 showing strong increases in revenues and profits. Revenues increased by 26% to $10,325,837 and net profit increased by 34% to $4,902,589 generating a net profit margin of 47%.

Financial Results

Results of Operations — Quarter Ended March 31, 2011 compared to Quarter Ended March 31, 2010

Revenues:

Revenues for the quarter ended March 31, 2011 were $10,325,837 as compared to $8,184,175 for the quarter ended March 31, 2010. The increase of revenues of $2,141,662 or 26% was mainly due to revenue recognized from global license deals for our m-commerce platform, OPUS-M™.

Cost of Revenues:

Cost of revenues mainly consisted of amortization of intangible assets. Cost of revenues for the quarter ended March 31, 2011 was $1,859,966 as compared to $1,489,779 for the quarter ended March 31, 2010. The increase of $370,187 or 25% was primarily due to the increased amortization of additional license rights acquired.

Gross Margin:

Gross margin for the quarter ended March 31, 2011 was $8,465,421 as compared to $6,694,396 for the quarter ended March 31, 2010. The increase of $1,771,025 or 26% was mainly due to revenue recognized from global license deals for our m-commerce platform, OPUS-M™, offset by 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, communication and traveling. General and administrative expenses for the quarter ended March 31, 2011 were $850,738 as compared to $702,135 for the quarter ended March 31, 2010. The increase of $148,603 or 21% was primarily due to increase in professional fees.

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 March 31, 2011 were $622,863 as compared to $586,039 for the quarter ended March 31, 2010. The increase of $36,824 or 6% was primarily due to increase in the stock-based compensation and data hosting expenses.

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 March 31, 2011 were $406,063 as compared to $496,299 for the quarter ended March 31, 2010. The decrease of $90,236 or 18% was mostly due to decrease in consulting expenses.

Depreciation of Fixed Assets:

Depreciation of fixed assets for the quarter ended March 31, 2011 was $17,249 as compared to $221,604 for the quarter ended March 31, 2010. The decrease of $204,355 or 92% was primarily due to write-off of certain fixed assets during the remaining period of 2010.

Bad and Doubtful Debt:

Bad and doubtful debt expenses consisted of management's best estimate of allowance for potential credit losses in existing trade receivables based upon detailed analysis of trade receivables. Bad and doubtful debt expenses for the quarter ended March 31, 2011 was $1,683,688 as compared to $0 for the quarter ended March 31, 2010. The increase of $1,683,688 or 100% was primarily due to the deteriorating economic and market conditions which had a substantial impact on the timeliness of receivable collections from our customers in 2011 than in 2010.

Other Income (Expenses):

Other income (expenses) for the quarter ended March 31, 2011 was $992,769 as compared to ($735,765) for the quarter ended March 31, 2010. Net other income of $992,769 was primarily due to foreign currency transaction gain of approximately $1,017,000 in this quarter compared to loss of approximately $715,000 in the first quarter of 2010. The increase in foreign currency transaction gain was mostly due to the significant effect of the strengthening 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 March 31, 2011 was $4,884,820, an increase of 4%, as compared to income from operations of $4,688,319 for the quarter ended March 31, 2010. The income from operations is primarily due to revenue of $10,325,387 generated from global license deals for our m-commerce platform, OPUS-M™, offset by the cost of revenue of $1,859,966 and the operational cost of $3,580,601.

Net income for the quarter ended March 31, 2011 was $4,902,589, an increase of 34%, as compared to net income of $3,648,797 for the quarter ended March 31, 2010. The basic and diluted net income per share for the first quarter of 2011 was $0.07, as compared to $0.06 for the quarter ended March 31, 2010.

"Q1 of 2011 was our last quarter based on our former business model and strategy and it was again a strong quarter as so many before. However, as of the second quarter of this year we do no longer follow the same approach to help increase shareholder value and to achieve a better market value for our equity. In the coming months we focus on preparing investments and selecting appropriate targets. We are looking forward to implementing our new and innovative investment strategy and asset sales now as announced in prior communications," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Non Solicitation Disclaimer:

This press release is for information purposes only. No information in this press release is intended to constitute, and should not be constituted as an offer to sell, or a solicitation of an offer to buy, any securities of Artificial Life, Inc.  When making any investment decisions, investors should review securities reports, filed or submitted by the Company with the relevant regulatory authorities, and should exercise their own judgment in making their investment decisions.

The published financial results in this press release may differ substantially from future results and future quarters of 2011 as the Company has changed its business model and strategy in the second quarter of 2011. 

This press release shall be considered as a forward-looking statement.

About Artificial Life, Inc.

Artificial Life is a new kind of investor. We act as a global incubator and business network provider and facilitator for our holding companies, assisting them in their sales, production, and general business development activities. We invest mainly in the BRICS (Brazil, Russia, India, China and South Africa) markets with a focus on smartphone content and wireless technology such as: near field communication, mobile business apps and games, mobile health services, social networking apps and games, and mobile commerce.

Artificial Life, Inc. is a Delaware registered corporation founded in 1994 in Boston. We are a public US entity (Pink Sheets:ALIF) with a secondary listing on the Frankfurt Stock Exchange (Frankfurt:AIF) (Xetra:AIF). Our global headquarters is in Hong Kong and our EMEA headquarters is in Berlin, Germany. We have won many industry awards for outstanding technology and products in prior years.

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

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: the general economic conditions in the markets in which we operate; the success of our newly adopted business model and strategy; our ability to find investment targets for reasonable conditions; the economic conditions in the BRICS nations; our ability to sell equity or assets and intellectual property; our ability to obtain additional funding to operate and grow our business and to do investments; changing consumer preferences and uncertainty of market acceptance of our products; timely adoption and availability of broadband mobile technology; market acceptance for use of mobile handheld devices;; our reliance on a relatively small number of clients and 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 August 2nd, 2011. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

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