Strong Profits and over 70% Growth in Revenues
LOS ANGELES and HONG KONG, May 13 /PRNewswire-Asia-FirstCall/ -- Artificial Life, Inc. (OTC BB: ALIF)( http://www.artificial-life.com ) today announced a strong first quarter 2009 with the highest quarterly revenues in the Company's history and revenue growth of over 70% compared to Q1 2008.
In the first quarter of 2009, the Company sold over 3,443,000 mobile 3G and Java games globally. In addition the Company successfully launched seven iPhone/iPod touch games until today and generated over 1,2 million downloads since the beginning of 2009. Four of the released iPhone games have already reached the TOP 10 ranks for most downloads in the USA and/or in many other countries around the globe.
As for the financial results:
REVENUES: Revenues for the quarter ended March 31, 2009 were $7,063,200 as compared to $4,125,004 for the quarter ended March 31, 2008. The increase of revenues of $2,938,196 or 71% was mainly due to increased product license revenue from mobile games one-time downloads and monthly subscription revenues for 3G games derived from mobile operators, bulk resellers and hand set distributors and a global license deal for the sale of our technology platform MobileBooster(TM).
COST OF REVENUES: Cost of revenues mainly consist of amortization of intangible assets. Cost of revenues for the quarter ended March 31, 2009 was $741,412 as compared to $200,800 for the quarter ended March 31, 2008. The increase of $540,612 or 269% was primarily due to amortization expense of license rights.
GROSS MARGIN: Gross margin for the quarter ended March 31, 2009 was $6,321,788 as compared to $3,924,204 for the quarter ended March 31, 2008. The increase of $2,397,584 or 61% was mainly due to increased product license income from mobile games, one time downloads and monthly subscription revenues for 3G games derived from mobile operators, bulk resellers and hand set distributors and a global license deal for the sale of our technology platform offset by amortization of license rights acquired in earlier periods.
GENERAL AND ADMINISTRATIVE: General and administrative expenses consist of salary for administrative personnel, rent, professional fees and costs associated with employee benefits, supplies, communications, travel and provisions for doubtful accounts. General and administrative expenses for the quarter ended March 31, 2009 were $1,585,173 as compared to $446,932 for the quarter ended March 31, 2008. The increase of $1,138,241 was mainly due to slight increases in legal, staff and office expenses and a charge to increase the allowance for doubtful accounts receivable by approximately $1,095,000. The Company has experienced a slow down of payments from clients over the last 3 quarters mainly due to the tight cash liquidity in the financial markets. As a cautionary step the company has hence increased its allowance for potential doubtful accounts.
SALES AND MARKETING: Sales and marketing expenses consist 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, 2009 were $491,620 as compared to $422,635 for the quarter ended March 31, 2008. The increase of $68,985 was primarily due to slight increases in staff and consulting, office and traveling expenses.
RESEARCH & DEVELOPMENT: Research and development expenses consist 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, 2009 were $858,326 as compared to $523,917 for the quarter ended March 31, 2008. The increase of $334,409 was mainly due to increases of approximately $269,000 in staff and consulting expenses and $75,000 in data hosting and web service.
OTHER EXPENSE/INCOME: Other (expense)/income for the quarter ended March 31, 2009 was ($159,438) as compared to $88,420 for the quarter ended March 31, 2008. Net expense of $159,438 was mainly due to interest expense of ($30,252) and foreign currency transaction losses of approximately ($129,000) in this quarter comparing to a gain of approximately $168,000 in the first quarter of 2008.
INCOME FROM OPERATIONS AND NET INCOME: Income from operations for the quarter ended March 31, 2009 was $3,386,669 as compared to income from operations of $2,530,720 for the quarter ended March 31, 2008. The income from operations is mainly due to revenue of $7,063,200 from the sale of product licenses for our mobile games, one time downloads and monthly subscription revenues for 3G games and business application licenses offset by cost of revenue of $741,412 and operational cost of $2,935,119. Net income for the quarter ended March 31, 2009 was $2,712,231 as compared to net income of 2,493,585 for the quarter ended March 31, 2008. The basic and diluted net income per share for the first quarter of 2009 was $0.06, as compared to $0.06 and $0.05, respectively, for the quarter ended March 31, 2008.
"We are satisfied with our performance, revenues and profits. The first quarter 2009 was our seventh consecutive profitable quarter. So far, we have not experienced a reduction of demand for our products despite the global financial crisis. Sales in Q1 were strong and actually the best in our history. The iPhone market was performing especially well and we achieved a major milestone with over 1.2 mm downloads of our products from the Apple app store in just a few weeks. The general licensing business for our MobileBooster technology was strong as well. As a result of the many TOP 10 rankings we achieved for our games in many countries we got very positive feedback from partners and clients and are now experiencing even more interest from global brands to work with us to launch more iPhone apps. Going forward we are especially excited about the opportunity to work with Linkin Park on a first music community iPhone game which we anticipate to release end of Q3, 2009. Other upcoming highlights for our iPhone gamers will be the BMW F1 racing game in 3D which is scheduled for release at end of Q2 and the imminent release of our new and very funny iDroids(TM) series," 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.)
About Artificial Life, Inc.
Artificial Life, Inc. (OTC BB: ALIF) is a public U.S. corporation headquartered in Los Angeles, with its production center in Hong Kong and additional offices in Berlin (EMEA headquarters) and Tokyo. As a leading, full-service provider of mobile broadband 3G technology, mobile participation TV, mobile gaming, content and business applications, Artificial Life provides 2D and 3D multi- and single-player rich-media applications for 3G, 3.5G and 4G network-enabled mobile phones. Recognized internationally for outstanding content quality and technology, Artificial Life transcends traditional modes of mobile communications and interactive gaming. For more information, please visit http://www.artificial-life.com or the company's m-commerce portal at http://www.botme.com .
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-K filed on February 9, 2009. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.
Artificial Life IR Contact:
Annie Lau
Tel: +852-3102-2800
Email: ir@artificial-life.com
