IPO Company Profile
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Artificial Life Inc.
Four Copley Place, Suite 102, Boston, MA 02116 * (617) 266-5542

The company develops, markets and supports "intelligent" software robots ("bots").

Primary Underwriting Group
ManagerTierPhone
New York Broker, Inc.Lead Manager

Offering Information
NASNTL:ALIF High-Tech: SIC 7372
Type of Shares:Common Shares Filing Date:9/29/98
U.S. Shares:1,600,000 Offer Date:12/16/98
Non-U.S. Shares:0 Filing Range:$6.00 - $7.00
Primary Shares:1,200,000 Offer Price:$8.50
Secondary Shares:400,000 Gross Spread:$0.68
Offering Amount: $10,400,000 Selling:$0.43
Expenses:$1,200,000 Reallowance:$0.10
Post-IPO Shares:9,070,574
Employees:24

Legal Counsel, Auditor and Registrar
Issuer's Law Firm: Mintz, Levin, Cohn, Ferris, Glovsky And Popeo
Bank's Law Firm: Greenberg Traurig Hoffman Lipoff Rosen & Quentel
Registrar/Transfer Agent: American Stock Transfer & Trust Co
Auditor: Wolf & Company P.C.

Selected Financial Data

Dollar amounts in U.S. millions except for per share data
6 Month Ending Financials
Full Year
Audited
Income
Latest
Unaudited
Income
Prior
Audited
Income
Balance
Sheet
12/31/97 6/30/98 6/30/97 6/30/98
Revenue:$1.77$0.45$1.03Assets:$1.27
Net Income:$0.02-$0.50$0.02Curr Assets:$0.85
EPS:$0.00-$0.07$0.00Liabilities:$0.94
Prior EPS:$0.08Curr Liab:$0.44
Cash Flow/Oper:$0.11-$0.15$0.05Equity:$0.33
Cash Flow/Fin:-$0.08$0.68Cash:$0.55
Cash Flow/Inv:-$0.04$0.00-$0.03Working Cap:$0.41

Competition
The market for the Company's products and services is new, evolving and growing rapidly. Competition can be expected to intensify significantly as the market matures and the more established software companies, such as Microsoft Corporation, become increasingly involved. Barriers to entry are relatively insubstantial. Although the Company has not yet identified any competitors in exactly the same areas in which it is active, there are companies that have overlapping activities and therefore could be regarded as competition to Artificial Life. Such firms include, among others: Brightware, Inc.; Broadvision, Inc.; Extempo, Inc.; Haptek, Inc.; Nearlife, Inc.; Netsage Corp.; Neuromedia, Inc. and Virtual Personalities, Inc. This list may not be complete and may change and substantially increase over time. The Company believes that the principal competitive factors affecting the market for the Company's products include core technology, delivery methods, brand recognition, ease of use and interfaces. The relative importance of each of these factors depends upon the specific customer involved. There can be no assurance that the Company will be able to compete effectively with respect to any of these factors.

Use of Proceeds
The proceeds from the proposed offering will be used to fund research and product development, to expand sales and marketing capabilities, to establish strategic alliances, to expand its employee base and infrastructure and for general corporate purposes and working capital.

Additional Underwriter Compensation
Warrant to purchase 160,000 shares/units at $100.00 per share/unit.

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