Artificial Life Inc (OTC:ALIF)

HONG KONG, March 28, 2012 (GLOBE NEWSWIRE) -- Artificial Life, Inc. (OTCPK:ALIF), an innovative investment Company, announced today its Board of Directors and its Independent Audit Committee has approved the filing of a Form 15 by the Company with the U.S. Securities and Exchange Commission to voluntarily deregister its common shares under the Securities Exchange Act of 1934. The Company intends to file the Form 15 with the SEC on or about March 30, 2012. 

The Company is eligible to deregister its common shares because it had fewer than 300 holders of record of its common shares at the beginning of its current fiscal year. Upon the filing of the Form 15, the Company's obligation to file certain reports with the SEC, including Forms 10-K, 10-Q and 8-K, will immediately be suspended. Other filing requirements will terminate upon the effectiveness of the deregistration, which is expected to occur 90 days after the filing of the Form 15.

The Company's Board of Directors and its Independent Audit Committee made this decision after careful considerations and review of the cumulative costs and pros and cons of being an SEC registered company. The Company believes that currently the incremental cost of compliance with general SEC regulations and Sarbanes-Oxley and other reporting requirements does not provide a discernible benefit to the Company and its shareholders and is currently not commercially justifiable.

The Company has been charged more than USD 450,000 and USD 850,000 for auditor fees and related legal fees for the fiscal year 2010 and 2011, respectively. Therefore, the savings derived from the deregistration are expected to be significant. The deregistration will also allow management to devote more time and resources to build up the business, to implement its new investment business model, to support its existing promising subsidiaries like Artificial Life Investments, Alife Studios and Green Cortex, to make new investments and to focus on its lawsuits against KPMG and others.

In addition, management is intending to improve and solidify the Company's financial basis by licensing its assets, by establishing credit lines and by raising new funds for growth and acquisitions. The goal of management for the next quarters is to increase shareholder value and to substantially increase the market value of its equity.

Since June 17, 2011, the Company's shares have been listed on the Pink Sheets segment and the Company expects that they will remain traded there after deregistration. Although no longer required by the SEC after deregistration, the Company presently intends to provide performance data from time to time to the public and its shareholders. There can be no assurance, however, that the Company will continue to provide such information in the future or that its common shares will continue to be quoted on the Pink Sheets after deregistration of the common shares.

The Company may elect to register its shares again with the SEC or other foreign regulatory authorities at a later point in time after the new business model has been fully implemented and the market value of its equity has resumed higher levels.

HONG KONG, Jan. 18, 2012 (GLOBE NEWSWIRE) -- Artificial Life, Inc. (OTCPK:ALIF), an innovative investment Company, announced today that it has won a contract from the Asia Pacific regional office of one of the biggest banks in the world to implement the first phase of a custom IT development project.

The project goal is to develop a smart sales support system for the bank as well as its clients.

"This is an interesting opportunity for us and our Alife Studios. We have been very active and successful in the banking and finance world in the past with our intelligent Portfolio Manager™ product. It seems that the finance industry is moving in this direction now again, albeit with a stronger focus on mobile devices and mobile platforms. We hope for a long term relationship with our new client," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

HONG KONG, Dec. 20, 2011 (GLOBE NEWSWIRE) -- Artificial Life, Inc. (OTCPK:ALIF), an innovative investment company, announced today that it and its subsidiaries, Artificial Life Asia Ltd. and Artificial Life Europe GmbH (collectively, "Company") have filed a malpractice lawsuit with the High Court of Hong Kong against KPMG Hong Kong and two of its senior partners. The legal action of the Company was unanimously supported by its board and independent audit committee.

The Company claims that KPMG Hong Kong and two of its senior partners breached their contractual audit obligations under a signed engagement letter during their assignment as Company auditors during 2010 and 2011 until  the termination of their engagement. The Company claims that they are guilty of serious malpractice during their assignment in breach of their contractual duties to the Company and are guilty of a breach of their general duty of care.

The Company also claims that KPMG Hong Kong incorrectly overcharged and overstated invoices for services rendered to the Company during the audit assignment. Despite several written requests, KPMG Hong Kong has – until today - refused even to provide substantiating detailed narratives of the work which it claims to have carried out during the assignment, leaving the Company with no alternative but to question the overall correctness and legitimacy of the audit charges which KPMG has billed to the Company.  

The Company currently estimates and assesses the damage and potential damage caused to the Company by KPMG Hong Kong to exceed US$ 100 million due to – amongst other factors – the loss of substantial market value of its equity, the forced delisting of its shares from the US OTC market and the German Entry Standard Segment, its loss of major cash funding options, its loss of investment opportunities, its loss of revenues and profits and its general loss of business opportunities and general reputation damage caused directly and/or indirectly by KPMG Hong Kong's malpractice, breach of contract and breach of duty of care.

The Company’s Chief Financial Officer, Frank Namyslik tendered his resignation from the position of Chief Financial Officer of Artificial Life, Inc. (the “Company”) effective as of December 5, 2011.

Also, on December 5, 2011, the Board of Directors appointed Eberhard Schoneburg, the current Chief Executive Officer and Chairman of the Board of Directors of the Company, to resume its former position as as the Company’s Chief Financial Officer.

HONG KONG, Dec. 7, 2011 (GLOBE NEWSWIRE) -- Artificial Life, Inc. (Pink Sheets:ALIF), a Hong Kong based investment company, today announced the execution of an application development agreement with WowWee Group Limited.

WowWee is a globally recognized, award-winning designer and manufacturer of high-tech toys and consumer entertainment products. With a focus on the development of breakthrough entertainment technology, WowWee produces some of the most innovative, inventive toys and gadgets on the market.

Through this partnership, Artificial Life with its subsidiary Alife Studios, Inc. will develop a series of smartphone applications for WowWee. The partnership started earlier this year when Artificial Life was chosen to develop the first smartphone application for WowWee, and the partnership has recently been extended for developing more applications.

"We are very excited about working with Artificial Life to develop a series of smartphone applications. They have a very talented development team and we are confident the partnership will be a huge success," said Josh Savage, Technical Director of WowWee Group Limited.

"This is the Company's debut to cooperate with a leading toy manufacturer to develop new and innovative smartphone applications. More importantly, we are proud to work with WowWee and are confident that our partnership will be a great success," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Third Quarter 2011 Results

• Revenues for the quarter ended September 30, 2011 were $146,155 as compared to $10,560,747 for the quarter ended September 30, 2010.
• Loss from operations for the quarter ended September 30, 2011 was $(3,789,975), as compared to income from operations of $4,280,746 for the quarter ended September 30, 2010.
• The basic and diluted net (loss) income per share for the third quarter of 2011 was $(0.04), as compared to $0.08 for the quarter ended September 30, 2010.

Current financial results of Artificial Life, Inc. are considered not to be directly comparable with past and future expected results of the Company due to its recent shift in business focus and business model. The Company has ceased to actively sell its former products under the historic licensing business model and started implementing instead its new business model by evaluating and actively pursuing various investments and joint venture opportunities. Therefore, in the short term the Company does not expect substantial revenues as its old income stream is fading out while its new income will mostly come from future investments. The Company will engage in investment activities over the coming months and will only be able to generate income when selling equity stakes or assets. The first substantial asset sales and trades or sales of equity in its new investment companies are currently expected in early 2012.

"We are satisfied with the careful step-by-step implementation of our new business model and the evaluation of several promising investment opportunities. Everything is starting to take shape. Our first investments are taking off and are becoming active operational entities. Especially our ALife Studios are doing very well already, just weeks after their launch. Hence we are confident in our new strategy and our new business approach and expect to show strong growth and more promising and substantial results to our shareholders already in the near future," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

HONG KONG, Aug. 22, 2011 (GLOBE NEWSWIRE) -- Artificial Life, Inc., (Pink Sheets:ALIF), (http://www.artificial-life.com), today reported that Eberhard Schoneburg, Chairman and Chief Executive Officer of the Company, has substantially increased his beneficiary ownership stake in Artificial Life's common stock.

During 2011, Mr. Schoneburg so far acquired in total 6,767,071 new shares of the Company. This brings Mr. Schoneburg's total beneficiary shares owned in the Company as of today to 17,461,587 shares and increases his personal beneficiary ownership to 22.94%.

The new total number of shares outstanding as of August 22, 2011 is 73,510,068.

The agreement entails Artificial Life (ALIF) to sell their games through the MXit social networking and mobile chat platform in the Republic of South Africa and Africa. MXit users are able to purchase games with MXit's virtual currency, Moola.

On June 27, 2011, the audit committee of Artificial Life, Inc. (the "Company") approved the dismissal of BDO AG ("BDO") as the Company’s principal accountant effective immediately.

BDO has not issued a report on the financial statements of the Company in either of the two most recent fiscal years.

BDO was engaged by the Company on April 20, 2011. Since that date, there were no disagreements between the Company and BDO on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in its report on the Company's consolidated financial statements, and there were no reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K, except as set out below.

During the course of the audit of the Company's financial statements for the fiscal year ended December 31, 2010, BDO raised a number of accounting matters that would have prevented BDO from rendering an unqualified opinion if the issues were not resolved. There were discussions between the Company, its audit committee and BDO in connection with these matters, which principally related to: the commercial substance of certain material transactions, accounting for recognition of revenues (including timing and actual receipt of cash), valuation of intangible assets, the impact of these matters on the Company’s financial statements as of December 31, 2010 and whether prior years’ financial statements were affected by these matters, and accounting for a joint venture agreement. These issues remained unresolved at the end of BDO’s engagement, which occurred before BDO could complete its work on these and other issues. In addition, as of the date of the Company’s termination of BDO’s engagement, BDO was unable to determine whether the Company had taken timely and appropriate remedial actions with respect to possible illegal acts, within the meaning of Section 10A of the Securities Exchange Act of 1934, identified on June 1, 2011 by BDO to the Company.

In connection with the above, at the recommendation of management, the audit committee of the Company engaged accounting consultants on June 18, 2011 to perform an analysis of the above described issues. Such accounting consultants have met with the Company's audit committee on these matters, have been instructed to continue their work and will continue to report to the audit committee which will determine what, if any, action should be taken.  The Company believes that such actions will constitute prompt remedial action.  The Company’s audit committee will also be addressing these matters in connection with its appointment of a successor auditor.

The Company has provided BDO with a copy of the foregoing statements and has requested that BDO furnish it with a letter addressed to the Securities and Exchange Commission stating that BDO agrees with the Company's statements in this Item 4.01(a). A copy of BDO's letter stating its agreement with such statements is attached as Exhibit 16.1. The Company has authorized BDO to respond to inquiries of the successor accountant concerning the matters set forth above.

HONG KONG and LOS ANGELES, May 4, 2011 /PRNewswire-Asia/ -- Artificial Life, Inc., (OTC BB: ALIFE), a leading provider of award-winning mobile technology and applications (the "Company"), announced today that on April 29, 2011, a securities class action against the Company was dismissed voluntarily by the plaintiffs and its counsel in its entirety.

Just two weeks ago, this lawsuit was brought on behalf of certain shareholders by the Rosen Law Firm alleging securities fraud.  The Company (ALIFE) at the time announced that the allegations wholly lacked merit, and just two weeks after the lawsuit was filed, the class action was dismissed - at the request of the plaintiff's attorneys.

"As we stated earlier, the Company's stance from the outset was that the allegations contained in the complaint were completely without merit," said Eberhard Schoneburg, the Company's CEO.

"The voluntary dismissal of the lawsuit by plaintiff's counsel on Friday clearly confirms the Company's position. We will fight any irresponsible and frivolous legal threats with all available means and determination to protect our shareholders and the Company. We are now also in the process of evaluating and investigating appropriate actions against the plaintiffs and their attorneys, the latter of which has recently been named by other public companies in connection with, among other things, the filing of frivolous class action lawsuits and the potential manipulation of other company's share prices." said Frank Namyslik, the Company's CFO.

HONG KONG and LOS ANGELES, April 18, 2011 /PRNewswire-Asia/ -- Artificial Life, Inc. announced that it has learned that a purported securities class action lawsuit was filed on April 15, 2011 against the Company and its CEO.

The Company assumes that the allegations are without merit and intends to vigorously defend itself. The Company is currently preparing a motion to dismiss the lawsuit in due course.

The management of the Company does not assume that these legal proceedings will distract it from its usual course of business.

"We will defend the Company against any false claims and accusations and will use all available means to do so," said Eberhard Schoeneburg, CEO of Artificial Life, Inc.

On March 18, 2011, the audit committee of Artificial Life, Inc. approved the dismissal of KPMG as the Company’s principal accountant effective March 30, 2011

During the course of the audit of the Company’s financial statements for the fiscal year ended December 31, 2010, KPMG identified a number of accounting matters that would have prevented KPMG from rendering an unqualified opinion if the issues were not resolved. After KPMG notified the Company of such matters, the Company provided KPMG with various detailed assessments. In late March 2011, there were discussions between the Company, its audit committee and KPMG in connection with these matters, which principally related to: accounting for a Joint Venture agreement, reserves for accounts receivables, revenue recognition and impairment of license rights related to its 2010 fiscal year. These issues remained unresolved at the end of KPMG’s engagement.

On April 1, 2011, Artificial Life, Inc. filed a Form 12b-25 disclosing that it was still in the process of having its financial statements for the fiscal year ended December 31, 2010 audited by its independent accountants and that it would not be able to complete its audit and Annual Report on Form 10-K (the “2010 10-K”) by March 31, 2011 without incurring undue hardship and expense. At the time of the filing, the Company anticipated that the 2010 10-K would be filed no later than fifteen calendar days after its original due date. On April 6, 2011, the Company announced the termination of its engagement with KPMG, its independent auditors. Such engagement was terminated effective March 30, 2011, though after such termination, the parties continued discussing the possibility of KPMG’s engagement being extended in order for the audit to be completed within the timeframe of the 12b-25 extension. The Company is now in the process of assigning and evaluating new independent registered public accounting firms to audit its financial statements for Fiscal Year 2010. The Company will file its 2010 10-K at such time as its audit has been completed.

Due to the delayed filing, the Company today issued guidance for its fiscal year 2010 anticipated earnings based on its current unaudited results as follows:

For the fiscal year 2010, management of the Company anticipates

• revenues to be in the range of $40,000,000 to $42,000,000 as compared to $27,454,474 for the year ended December 31, 2009;
• income from operations is expected to be in the range of $12,000,000 to $14,000,000 as compared to income from operations of $6,125,050 for the year ended December 31, 2009;
• net income is expected to be in the range of $10,000,000 to $12,000,000 as compared to $7,568,719 for the year ended December 31, 2009;
• basic and diluted net income per share is expected to be in the range of $0.19 to $0.21, as compared to $0.15 for the basic and diluted net income per share for the year ended December 31, 2009.

The above described unaudited financial guidance is based on assessments and information currently available to management and based on assumptions and assessments which they deem reasonable. Any of such preliminary unaudited results are subject to potential substantial change or adjustment pending the completion of the Company's audit for the year ended December 31, 2010. As explained above, the Company is presently in the process of identifying an independent auditor to complete the audit of its 2010 results and will file audited results as part of its Form 10-K at such time as the audit has been completed.

Current and potential investors are cautioned that any preliminary unaudited results may still change and that they should not place undue reliance upon them. As set forth in the Company's Form 8-K filing, filed April 6, 2011 regarding the termination of the engagement of KPMG as disclosed above, there were still some unresolved accounting issues at the time that KPMG's engagement was terminated.

HONG KONG, LOS ANGELES, and BERLIN, Jan. 27, 2011 /PRNewswire-Asia/ -- Artificial Life, Inc., today announced the appointment of PricewaterhouseCoopers as its independent consultant to assist in performing the Company's internal control self-assessment under Section 404 of the Sarbanes-Oxley Act of 2002.

"Even though we are not yet legally required to have our internal control procedures audited we will nevertheless asses and install these strong internal control procedures to be prepared well for our future global expansion and expected investments and joint ventures," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

HONG KONG and LOS ANGELES, Jan. 13, 2011 /PRNewswire-Asia/ -- Artificial Life, Inc. today revealed its current iPhone/iPod and iPad title sales, download numbers and key ranking statistics.

As of December 31st, 2010, the Company has produced and released 36 applications for the iPhone, iPod touch and iPad. The top title was downloaded for over 6.2 million times, the second most for over 3.4 million times, and the third most for close to 3.1 million times. The average number of downloads per game was about 0.66 million. Paid iPhone games were sold at between USD 0.99 to USD 4.99 with an average price per game of USD 2.27. All the new games released have achieved Top 100 or higher download rankings in their categories. Artificial Life's games have reached #1 on Apple App Store Top Charts in over 74 countries or 83% of all the offered countries.

Company intends to acquire equity stakes in several promising start-ups and joint ventures during 2011

Artificial Life, Inc., today announced the launch of a new investment entity and its first two investments.

Artificial Life, Inc. has launched Artificial Life Investments Ltd., a new, wholly owned Cayman Islands subsidiary that will serve as a dedicated investment vehicle of the Artificial Life group.  

In late December 2010, Artificial Life Investments Ltd. already made its first two investments, acquiring equity stakes of approximately 19% and 16%, respectively, in ARE Augmented Reality Europe GmbH a Berlin-based technology start-up, and M-Health Middle East Ltd., a Cayman Islands joint venture that is expected to establish its headquarters in Dubai and begin operations in early 2011.  

ARE is engaged in the global purchase, license and sale of license rights and patents to special augmented reality technology for mobile applications.  Artificial Life Investments Ltd. acquired its equity interest in ARE for approximately $695,000 USD.  

M-Health is a newly formed joint venture between Artificial Life and two of its long-term clients and business partners, each with substantial experience and know how relating to doing business in the Middle East.  The venture will focus on mobile telemedicine technology sales and distribution in the Middle East.  The parties anticipate that M-Health will serve as Artificial Life’s distributor and sales agent in the Middle East in the telemedicine field, including actively selling and supporting Artificial Life’s Mobile Diab® technology and its mobile diabetes monitoring app GluCoMo™.  Artificial Life Investments Ltd. purchased its investment in M-Health by contributing accounts receivable in the aggregate amount of approximately $9.6 million USD.  Two other wholly-owned subsidiaries of Artificial Life, Inc. simultaneously acquired, in the aggregate, approximately 3.9% of the equity of M-Health in exchange for accounts receivable worth approximately $2.3 million USD.

Artificial Life Investments Ltd. intends to make additional investments in 2011, acquiring equity stakes in companies that the Artificial Life group considers to be a valuable extension of its core business.  The investment focus will be on certain mobile technologies such as augmented reality and optical recognition technologies, telemedicine, social networking and general business apps for mobile devices based on iPhone/iPad and Android operating systems.

Artificial Life Investments Ltd.’s flexible investment strategy, in which equity investments are preferably wholly or partially acquired in exchange for non-cash assets, is designed to take advantage of the current demand for Artificial Life’s proprietary technologies. These non-cash assets may include non-exclusive technology licenses, accounts receivable, or stock of Artificial Life, Inc

“The launch of our new investment entity and the completion of its first investments are major milestones in our expansion strategy for 2011 and the coming years.  Artificial Life has experienced rapid organic growth over the past couple of years. The Company has now reached a size and maturity where the logical next step is to engage more in m&a activities and to expand further by making selective equity investments in promising start-ups and joint ventures.  This is possible in part because of the high demand for our technology, which allows us, for example, to leverage licensing rights in our proprietary technologies for equity in new and promising start-ups or joint ventures.  Our new equity investments will give us the opportunity to grow in terms of both increased revenue volumes and new geographical markets” said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Artificial Life welcomes investment proposals in its core business fields. Please contact us at ir@artificial-life.com

Third quarter ended September 30, 2010 

• Revenues for the quarter ended September 30, 2010 were US$10,560,747 as compared to US$8,723,481 for the quarter ended September 30, 2009.

• Income from operations for the quarter ended September 30, 2010 was US$4,280,746, an increase of 14%, as compared to income from operations of US$3,750,768for the quarter ended September 30, 2009.

• Net income for the quarter ended September 30, 2010 was US$5,055,651, an increase of 29%, as compared to net income of US$3,906,424 for the quarter ended September 30, 2009. The basic and diluted net income per share for the third quarter of 2010 was US$0.08, as compared to US$0.08for the quarter ended September 30, 2009.

"We are very satisfied with our growth and financial performance this year with another record quarter in terms of revenues and profits in Q3, 2010. We expect further strong growth for the remainder of the year and for 2011," said Frank Namyslik, CFO of Artificial Life, Inc.

"Our business is doing very well and we continue to expand, especially in the m-commerce arena with our flagship product Opus-M(TM) as the foundation of our growth. The strong demand for iPhone/iPad products coincides with the growing needs of all smartphone users for top quality applications. We see increased demand in many app outlets such as the Android Market. Therefore, in 2011, we will focus on further enhancing Opus-M(TM) and on the development of: new iPhone/iPad apps, more Android apps and ports, new augmented reality apps, and new green products for our subsidiary, Green Cortex, Inc. We will place particular focus on innovative social networking games and business apps across multiple platforms. We are preparing several substantial new partnerships and joint ventures. In short, it seems that 2011 will be a very exciting and a very busy year for us," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

'Until end of July 2009, we sold over 8 million mobile 3G and Java games globally and generated over 3 million downloads for the iPhone/iPod Touch. Many of our games have reached TOP 10 rankings globally and we have had TOP 10 positions in about 90% of all countries in which the iPhone is officially sold. Hence, the second quarter and the first half of 2009 were strong despite the global financial crisis. We were able to keep our expansion and profitability. For the remainder of the year we expect to continue to grow and release several strong new branded game titles and soon also our first iPhone business applications' said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Source: PR Newswire (August 13, 2009)

We expect that we will raise additional capital to support our operations, to finance receivables and to accommodate planned future growth. We are currently also in discussions with additional investors about further investments for the third or fourth quarters of 2009.

Economic conditions in the United States and in foreign markets in which we operate could substantially affect our sales and profitability and our cash position and collection of accounts receivable. Economic activity in the United States and throughout much of the world has undergone a sudden, sharp economic downturn in 2008 and 2009 following the housing downturn and subprime lending collapse in the United States and globally. Global credit and capital markets have experienced unprecedented volatility and disruption. Business credit and liquidity have tightened in much of the world. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors have had a substantial impact on the timeliness of receivable collections from our customers. The Company cannot predict at this point in time how this situation will develop and whether accounts receivable may need to be written off in the coming quarters.

Source: SEC Form 10Q (For the quarterly period ended June 30, 2009)

'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."

Source: PR Newswire (May 13, 2009)

ALIF reported EPS of $0.22 for 2008 ( $.0.15 after adjusting for a standard tax rate and adding back charges).

This compares to EPS of $0.01 for 2007.

The Fourth Quarter adjusted EPS of $0.04 was flat with 2007, as outstanding shares have increased.

Management comments regarding 2008 performance:

"With our well diversified product lines and revenue streams, a growing number of new partners, and an extensive pipeline of exciting new games and new business applications, we are quite optimistic about the future of Artificial Life and our prospects for 2009," said Eberhard Schoneburg, CEO of Artificial Life, Inc."

Source: GlobeNewswire (February 10, 2009)

The GeoTeam was able to find the following verbiage in the Company's 2008 10K:

Even though we have seen a major improvement in sales and revenues in 2007 and 2008, we still may experience significant fluctuations in our future operating results due to a variety of factors. Factors that may affect our operating results include the development of the global mobile broadband markets, the general market acceptance of our products, the growth of the 3G handset markets, the future growth of sales of iPhone/iPod Touch products and Android products, our ability to sell or license our intellectual property at reasonable price levels, success in creating and entering into strategic alliances, our mix of product and service sales, our response to competitive pressure and our ability to attract and retain qualified personnel. In addition to the foregoing industry related factors, the downturn in the global economy over the past several months could have an undesirable effect on our operations and revenue in 2009.