Artificial Life Announces Q1 2010 Results
Strong Demand for iPhone Games and OPUS-M(TM)
LOS ANGELES, BERLIN and HONG KONG, May 14 /PRNewswire-Asia/ -- Artificial Life, Inc., (OTC Bulletin Board: ALIF), (http://www.artificial-life.com ), today announced its first 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 Q1 2010 was 16%, profit growth 44%
The release of the powerful and carrier grade m-commerce platform, OPUS-M(TM) in the first quarter of 2010 was an instant and remarkable global success. The demand for OPUS M(TM) was very strong. The sales of the system dominated Q1 revenues.
The demand for the Company's iPhone and iPad games was also significant. The Company released 5 new games in 2010. In total the Company has now produced 29 iPhone/iPad games so far and offers 10 of them for free and 19 as paid games. The total number of iPhone/iPad game downloads generated in 2010 through April 30, 2010 was over 4.4 million compared to approximately 1.8 million for the first four months of 2009, an increase of 144%.
Financial Results
Results of Operations -- Quarter Ended March 31, 2010 compared to Quarter Ended March 31, 2009
Revenues:
Revenues for the quarter ended March 31, 2010 were $8,184,175 as compared to $7,063,200 for the quarter ended March 31, 2009. The increase of revenues of $1,120,975 or 16% was mainly due to global license deals for the sale of our m-commerce platform, OPUS-M(TM).
Cost of Revenues:
Cost of revenues mainly consists of amortization of intangible assets. Cost of revenues for the quarter ended March 31, 2010 was $1,489,779 as compared to $741,412 for the quarter ended March 31, 2009. The increase of $748,367 or 101% was primarily due to the increased amortization of license rights.
Gross Margin:
Gross margin for the quarter ended March 31, 2010 was $6,694,396 as compared to $6,321,788 for the quarter ended March 31, 2009. The increase of $372,608 or 6% was mainly due to global license deals for the sale of our m-commerce platform, OPUS-M(TM), 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 March 31, 2010 were $702,135 as compared to $1,651,891 for the quarter ended March 31, 2009. The decrease of $949,756 or 57% was mainly due to significant decrease in bad debt expense of approximately $1,095,000, offset by the increase in professional fees.
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 expense, traveling and public relations activities. Sales and marketing expenses for the quarter ended March 31, 2010 were $496,299 as compared to $447,510 for the quarter ended March 31, 2009. The increase of $48,789 or 11% was primarily due to increase in staff and 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 March 31, 2010 were $586,039 as compared to $777,806 for the quarter ended March 31, 2009. The decrease of $191,767 or 25% was primarily due to decrease in staff and consulting expenses, offset by increase in data hosting and web service and travel expenses.
Other Expense/Income:
Other (expense)/income for the quarter ended March 31, 2010 was ($735,765) as compared to ($159,438) for the quarter ended March 31, 2009. Net expense of $735,765 was primarily due to foreign currency transaction losses of approximately $715,000 in this quarter comparing to approximately $129,000 in the first quarter of 2009.
Income from Operations and Net Income:
Income from operations for the quarter ended March 31, 2010 was $4,688,319 as compared to income from operations of $3,386,669 for the quarter ended March 31, 2009. The income from operations is primarily due to revenue of $8,184,175 generated from global license deals for the sale of our m-commerce platform, OPUS-M(TM), offset by cost of revenue of $1,489,779 and operational cost of $2,006,077. Net income for the quarter ended March 31, 2010 was $3,648,797 as compared to net income of $2,712,231 for the quarter ended March 31, 2009, an increase of 44%. The basic and diluted net income per share was $0.06 for the first quarter of 2010 and 2009.
Cash and Liquidity:
During the quarter ended March 31, 2010, the Company entered into private placement offerings with one institutional investor and one individual accredited investor for 471,134 shares of common stock and warrants to purchase an additional 145,516 shares of common stock. The purchase price of the shares of common stock and warrants was $608,600.
On March 31, 2010, the Company agreed to a private placement offering with one institutional investor for 1,666,667 shares of common stock and warrants to purchase an additional 416,667 shares of common stock which was completed in April 2010. The aggregate purchase price of the shares of common stock and warrants was $2,000,000. The transaction closed and such amounts were collected in April 2010.
During the quarter ended March 31, 2010, we continued to utilize working capital strategies to offset receivables and payables with certain customers and licensors and to acquire licenses while minimizing cash outflow and cash usage. We have benefited from a liquidity perspective and reduced our credit risk and exposure.
"We are satisfied with the first quarter results. Demand for both of our key business lines, mobile games and our new m-commerce platform OPUS-MTM, were very strong. Game downloads increased nearly 150% and OPUS-MTM was an instant hit with two major corporate licenses sold in its first quarter after release," 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 US corporation (OTC BB: ALIF) with listing on the Frankfurt Stock Exchange (Frankfurt: AIF.F; Xetra: AIF.DE) and headquarters in Los Angeles. Our production center is in Hong Kong and we have additional offices in Berlin, Germany (EMEA headquarters) and Tokyo, Japan. As a leading provider of broadband mobile content and technology solutions in the world, we develop and sell a wide range of mobile applications for 3G, 3.5G and 4G network-enabled mobile (smart) phones. Currently our main business areas are: high quality 3D interactive (massive multiplayer) mobile games, mobile participation television, mobile business applications and our mobile commerce technology platform OPUS-MTM. We are supporting all major mobile phone operating systems and platforms. Recognized internationally for outstanding content quality and technology we have received many international awards and have been ranked one of the fastest growing companies in Asia Pacific by Deloitte.
For more information about Artificial Life, Inc., please visit our website http://www.artificial-life.com or our product websites: http://www.botme.com , http://www.mopa-tv.com and http:;/www.opus-m.com .
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
For more information, please contact:
Artificial Life IR and PR Contact:
Michelle Lam
Tel: +852-3102-2800
Email: [email protected]
ARTIFICIAL LIFE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(UNAUDITED)
Three-Month Periods Ended March 31,
2010 2009
Revenues:
Software license agreements $8,179,546 $7,052,373
Application services and other 4,629 10,827
8,184,175 7,063,200
Cost of revenues:
Cost of software license agreements 1,429,638 721,770
Others 60,141 19,642
1,489,779 741,412
Gross profit 6,694,396 6,321,788
Operating expenses:
General and administrative 702,135 1,651,891
Research and development 586,039 777,806
Sales and marketing 496,299 447,510
Depreciation and amortization 221,604 57,912
Total operating expenses 2,006,077 2,935,119
Income from operations 4,688,319 3,386,669
Other income (expenses):
Interest income and other income 32 20
Interest expense (20,370) (30,252)
Foreign currency transaction loss (715,427) (129,206)
(735,765) (159,438)
Income before income tax 3,952,554 3,227,231
Income tax expense (303,757) (515,000)
Net income 3,648,797 2,712,231
Foreign currency translation
adjustment (113,243) (92,678)
Comprehensive income $3,535,554 $2,619,553
Net income per share:
Basic $0.06 $0.06
Diluted $0.06 $0.06
Weighted average shares outstanding:
Basic 57,752,470 47,724,132
Diluted 60,022,934 48,044,509
ARTIFICIAL LIFE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31,2010 December 31, 2009
(Audited)
ASSETS
Current assets:
Cash $921,903 $2,356,336
Trade accounts receivables, net of
discount interest of $208,218 10,933,164 9,498,896
Trade installment receivables, net of
discount interest of $139,743 6,741,534 8,473,270
Prepaid expenses and other 756,386 473,166
Deferred tax asset 1,100,107 1,000,000
Total current assets 20,453,094 21,801,668
Fixed assets, net of accumulated
depreciation of $2,144,900 and
$1,932,684, respectively 1,376,650 1,575,531
License rights, net of accumulated
amortization of $7,713,471 and
$6,317,060, respectively 31,262,452 26,421,105
Prepaid expenses, deposits and other
assets 1,578,695 1,325,702
Deferred tax asset 909,770 710,000
33,750,917 28,456,807
TOTAL ASSETS $55,580,661 $51,834,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,103,816 $2,297,854
Accrued expenses and other 463,417 737,128
Income tax payable 605,028 17,394
Note payable - officer/stockholder 1,755,611 1,606,328
Note payable - stockholder -- 666,667
Total liabilities (all current) 4,927,872 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,
57,882,337 shares issued and
outstanding as of March 31, 2010
and 57,411,203 shares issued and
outstanding as of December 31, 2009 578,823 574,111
Additional paid-in capital 63,610,670 63,006,782
Notes receivable from stockholders (19,577) (19,577)
Accumulated deficit (13,468,628) (17,117,425)
Accumulated other comprehensive
(loss) income (48,499) 64,744
Total stockholders' equity 50,652,789 46,508,635
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $55,580,661 $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.
SOURCE Artificial Life, Inc.
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