Software

Artificial Life, Inc. (Nasdaq: ALIF), a leading provider of
intelligent software robots (bots) for the Internet, today announced
the creation of Artificial Life Banner Bots (TM). Artificial Life
Banner Bots(TM) represent a completely new way of Internet
advertising. Centered on Artificial Life's SmartEngine technology,
Banner Bots are intelligent, animated characters that are embedded
within standard banner advertisements frequently found on web
sites. These Banner Bots(TM) allow integrated conversation with users
in natural language. Therefore, they are intended to strongly enhance
an advertisers online presence by entertaining, educating, and/or
leading users where they want to go by responding to questions
instantaneously. Banner Bots(TM) can even act as sales agents
promoting the banner advertisers products and services directly
without even hyper linking them to their site.

With average click through rates on most banner advertisements at less
than 1%, companies are looking for innovative ways to increase click
though rates and stickiness to web sites. Artificial Life Banner
Bots(TM) offer a unique way to attract and promote users to company's
sites.

Banner Bots(TM) can also be valuable market research tools by storing
and analyzing conversation logs between consumers and the
bots. Accurate reports of actual user-bot discussions can strongly
enhance a company's knowledge of customer needs.

ALife Banner Bots(TM) offer unique branding opportunities by using
existing branded or new animated characters that pro-actively converse
with users, transforming them from passive viewers to active shoppers.
The appearance and animation can be easily customized and created to
embody the online personality that advertisers want to
portray. Through goal directed conversations and dialogues, the bot is
intended to:

-- Qualify a shopper through advanced natural language profiling

-- Respond to user needs by answering questions directly from the banner
ad

-- Forward the user to web pages based on user needs, requests or
interests

"Our new Banner Bots(TM) offer a unique medium for advertisers to
increase the click-through rate of conventional banner ads," said
Eberhard Schoneburg, President and CEO of Artificial Life. "We believe
that the combination of branding with animated characters,
intelligence, and the capabilities of natural language based dialogue
with clients can greatly improve the effectiveness of Internet
advertising," Mr. Schoneburg continued.

More detailed information about Artificial Life banner Bots can be
found on the corporate website at: www.artificial-life.com/bannerad