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Artificial Life Announces New Business Strategy

HONG KONG BERLIN July 18, 2011

ALIF Cayman Islands Middle East Africa

South America Brazil Russia India Asia Greater China South) Africa Middle East Europe

In these markets the goal will be to become a major player in the smartphone business by investing in promising firms with special products and expertise in the following technologies:

  • near field communication (NFC)
  • smartphone apps (games, lifestyle, healthcare and business apps)
  • augmented reality
  • social networking games and apps
  • m-commerce

The Company plans to acquire equity stakes in exchange for its IP or do cash investments or a combination thereof whenever appropriate.

By focusing on investment and financing activities the Company intends to substantially transfer its own current operational activities and outsource its future R&D, new product development, sales, and distribution activities to the companies it will invest in rather than doing it by itself.

Current contracts and obligations however will be honored with existing clients and will be fulfilled and phased out through 2012. Future new contracts will be executed with partners, investment companies, and joint ventures as subcontractors when needed.

In addition the Company plans to launch joint ventures with larger companies around the globe to make the best future commercial use of its diverse range of IP.

The Company also announced that it already entertains concrete negotiations with several major companies towards this end. Negotiations are ongoing about licensing and sales of some of the Company’s assets such as some of its game titles and development engines, some of its business apps, its Opus-M™ platform, its MoPA-TV® platform, and its augmented reality assets.

Los Angeles Tokyo Hong Kong Berlin South Africa

"Management values our current assets at a multiple of our current market cap. Therefore, we think the time is ripe to make better use of our assets to increase shareholder value. With our innovative investment strategy using our valuable IP to acquire equity in promising companies and strongly reducing operational costs we believe that we are in a unique position to become a stronger player in the smartphone business and a serious player in the mobile investment field . Our key financial goal is to improve shareholder value and to get our stock price back to acceptable levels with our new business approach," said Frank Namyslik, CFO of Artificial Life, Inc.

"We have been successful in the mobile and smartphone business since we ventured into the mobile space with continuous and substantial growth in revenues and profits year after year since 2006. We have become one of the leading smartphone developers and publishers in the world with over 60 million downloads and even reached the #1 ranking among iPhone apps fourteen times in many key countries around the world. However, our stock price and market cap have not followed this success story and our stock price has now reached such low levels that are in no way satisfying. Therefore, we made the strategic decision to change our business model and goals. We believe this is necessary and appropriate now and in the best interest of all our shareholders.

We have worked hard over the past years and have produced valuable IP and leading edge mobile products and technologies. However, due to the low stock price over the last years we have never had the chance to raise a substantial amount of cash to get the Company to the next level or to invest in other entities without a major potential dilution for our shareholders. Hence, our alternative approach now is to license and sell some of our IP which is in demand and use it as a "currency" for investments rather than our equity or cash.

We believe that our Company will grow faster and stronger with this new strategy than it would by continuing to grow organically as we have done in the past. We have shown that we know how the mobile markets work and how to be successful with mobile apps and technologies, so we believe we have the expertise and knowledge to find and evaluate solid and promising investments in this space.

Our goal is now to become an even stronger player in the smartphone field by scouting good firms preferably in an early stage, investing in them, helping them to grow their business through the introduction to our partner and client networks. We would then work with these partners and other investors to increase value and/or to sell our stake to strategic investors or partners or to exit through IPO’s at the appropriate time. On top of that we are planning to launch some key joint ventures with partners in which we will inject some of our intellectual properties. It’s a fascinating new perspective and we are excited about the new tasks and commercial opportunities," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

The Company announced that due to the new business strategy it expects the 2011 financial results to differ substantially from the 2010 results and from former years and that no guidance can be given about how the new business strategy will impact the current and future financial results. The Company has evaluated several potential investments in the first half of 2011 but has not done any new investments in the current year yet, however expects to do so in the second half of 2011. Investments in 2011 and 2012 are expected to be mostly minority investments and hence may not be consolidated into the Company’s consolidated financial statements. The time and value of income generated from the sales of its assets and current or future investment stakes cannot be predicted at this time and neither can the value of future license arrangements or IP sales.  Future income is expected to be derived mostly from selling equity stakes in companies after investments and no longer from operational activities and product revenues.

About Artificial Life, Inc.

Boston ALIF Frankfurt AIF.F AIF.DE Hong Kong Berlin, Germany

Forward-Looking Statements:

March 16, 2010

Non Solicitation Disclaimer:

For more information on ARTIFICIAL LIFE, INC., please contact:

Adeline Law

[email protected]

SOURCE Artificial Life, Inc.

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