LiveWorld Announces Record $3.1 Million Revenue for 2^nd Quarter 2008

SAN JOSE, Calif. & NEW YORK & LONDON--(BUSINESS WIRE)--LiveWorld, Inc. (Pink Sheets:LVWD), a leading social media marketing agency, today reported approximately $3.1 million in total revenues for the second quarter of 2008. This represents 25% growth over the $2.5 million in total revenues from a year ago, and was an improvement of approximately $153,000 over the first quarter of 2008.

$3.1 Million is the Company’s largest revenue quarter in the 12 year history of its private label social media services business.

The company improved its operating results by approximately $500,000 when compared to the second quarter of 2007, and by $364,000 when compared to the first quarter of 2008. GAAP net loss for the second quarter of 2008, including non-cash expense was approximately $138,000. This compares to a second quarter of 2007 GAAP net loss of approximately $637,000, and a GAAP net loss of approximately $502,000 for the first quarter of 2008.

LiveWorld’s Adjusted EBITDA for the second quarter of 2008 was $107,000, a $545,000 improvement compared to a $438,000 loss for the second quarter of 2007. Second quarter 2008 results represent a $374,000 improvement compared to a $267,000 Adjusted EBITDA loss for the first quarter of 2008. LiveWorld defines Adjusted EBITDA as net income or loss with an add-back for depreciation and amortization, non-cash stock-based compensation expense, interest income net, and income taxes. Adjusted EBITDA is not a term defined by GAAP and as a result LiveWorld’s measure of Adjusted EBITDA might not be comparable to similarly titled measures used by other companies.

“Our revenue growth is driven by our ability to help major brands transform their relationship with customers through vibrant online communities,” said Peter Friedman Chairman and CEO of LiveWorld. “We are distinguished in the industry by offering the complete social marketing solution, which provides not only the technology platform but the social know-how to make online community successful for brands. Our business has expanded due to the growth of current clients, the addition of new clients and the launch of new services.”

Since the beginning of 2008, LiveWorld launched new services for ten Fortune 500 global brands in the consumer packaged goods, pharmaceuticals, telecom, financial and travel sectors. The Company also introduced multiple new products such as its LiveAPI Suite 2.0 for digital agencies and inhouse web groups and its LiveEngage 1.0 Widget for Facebook.

“Our financial results reflect a growth strategy combined with conservative fiscal management,” said David Houston, LiveWorld’s Chief Financial Officer. “In 2007 we invested to build a foundation for growth. In 2008 we are bringing our spending in line with cash from operations, while maintaining an appropriate cash reserve.”

Detailed quarterly financial information may be downloaded at www.liveworld.com (financials page) or at www.pinksheets.com.

About LiveWorld

LiveWorld is the go-to social media marketing agency for everything global corporations need to leverage the power of social networks to build their brands and their business. LiveWorld thinks differently about how companies can use social networks for customer dialogue and relationships and is the only company that offers the combination of a full technology platform, moderation services, community management and marketing strategy, all in one place. This combination – unique in the industry – is the reason why more global brands turn to LiveWorld than any other firm for their ongoing, integrated social media marketing strategy and implementation.

With 24 years of experience, an extensive applications hosting platform, and a track record of delivering over 1 million hours of moderation services, LiveWorld offers its clients a team of experienced community managers and moderators who oversee activity and user content online. LiveWorld deploys its services in more than 70 country-language combinations, and is the trusted partner of leading brands worldwide, including: A&E, The Campbell Soup Company, eBay, HBO, HSBC, Kraft Foods, LeapFrog, Neutrogena, MINI Cooper USA,TJX, QVC and many others. For further information visit www.liveworld.com.

LiveWorld is headquartered in San Jose, California with additional offices in New York City and London. For further information visit www.liveworld.com.

“Safe Harbor" Statement Under The Private Securities Litigation Reform Act:

This press release may contain forward-looking information concerning LiveWorld's plans, objectives, future expectations, forecasts and prospects. These statements may include those regarding LiveWorld’s current or future financial performance including but not limited to lists of clients, revenue and profit, use of cash, investments, relationships and the actual or potential impact of stock option expense, and the results of its product development efforts. Actual results may differ materially from those expressed in the forward looking statements made as a result of, among other things, final accounting adjustments and results, LiveWorld’s ability to attract new clients and preserve or expand its relationship with existing clients, LiveWorld’s ability to retain and attract high quality employees, including its management staff, the ability to deliver new innovative products in a timely manner, changing accounting treatments, and other risks applicable to the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances. For a detailed discussion of these and other risk factors, please refer to LiveWorld’s Report on Form 10-K dated March 25, 2008. You can obtain a copy of the Form 10-K on either our website or the SEC Web site (www.sec.gov).

LIVEWORLD, INC.
CONDENSED BALANCE SHEETS
(In thousands, except share data)
		UNAUDITED
		June 30,				December 31,
			2008				2007
ASSETS
Current assets
Cash and cash equivalent		$	1,762			$	2,020
Accounts receivable, net			1,205				1,394
Prepaid expenses			196				82
Other current assets			3				8
Total current assets			3,166				3,504
Property and equipment, net			812				908
Investment in joint venture			765				817
Other assets			5				5
Total assets		$	4,748			$	5,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	318			$	555
Accrued employee expenses			513				460
Other accrued liabilities			165				130
Current portion of capital lease obligations			151				100
Current portion of note payable			83				----
Deferred revenue			595				727
Total current liabilities			1,825				1,972
Long-term capital lease obligation			197				150
Long-term note payable			82				----
Total liabilities			2,104				2,122
Stockholders' equity
Common stock: $0.001 par value, 100,000,000 shares authorized 30,862,811 issued and outstanding at December 31, 2007 and June 30, 2008, respectively			31				31
Additional paid-in capital			140,105				139,932
Accumulated deficit			(137,492	)			(136,851	)
Total stockholders' equity			2,644				3,112
Total liabilities and stockholders' equity		$	4,748			$	5,234

LIVEWORLD, INC.
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
			2008				2007				2008				2007
Total revenues		$	3,123			$	2,492			$	6,093			$	5,076
Cost of revenues			1,050				866				2,138				1,916
Gross Margin			2,073				1,626				3,955				3,160
Operating Expense
Product development			756				660				1,627				1,256
Sales and marketing			673				605				1,343				1,194
General and administrative			672				906				1,417				1,812
Stock based compensation			92				76				173				143
Total operating expense			2,193				2,247				4,560				4,405
Income (loss) from operations			(120	)			(621	)			(605	)			(1,245	)
Interest Income (expense), net			8				35				19				81
Income (loss) before tax			(112	)			(586	)			(586	)			(1,164	)
Provision for income taxes			(2	)			(3	)			(3	)			(18	)
Equity in net loss of unconsolidated affiliate			(24	)			(48	)			(52	)			(79	)
Net income (loss)			(138	)			(637	)			(641	)			(1,261	)
Basic net income (loss) per share		$	(0.00	)		$	(0.02	)		$	(0.02	)		$	(0.04	)
Shares used in computing basic income (loss) per share			30,862,811				30,749,477				30,862,811				30,853,582
Departmental allocation of stock-based compensation:
Product development		$	46			$	39			$	86			$	69
Sales and marketing			21				14				39				28
General and administrative			25				23				48				46
Total stock-based compensation		$	92			$	76			$	173			$	143

LIVEWORLD, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
			Three Months Ended June 30,								Six Months Ended June 30,
				2008				2007				2008				2007
Cash flows from operating activities
Net loss			$	(138	)		$	(637	)		$	(641	)		$	(1,261	)
Adjustments to reconcile net loss provided by (used in) operating activities:
Depreciation of long-lived assets				159				155				324				306
Stock-based compensation				92				76				173				143
Equity in net loss of unconsolidated affiliate				24				49				52				79
Changes in operating assets and liabilities:
Accounts receivable				257				(48	)			189				445
Accrued development and setup				----				64				----				72
Other assets				(92	)			(37	)			(111	)			(66	)
Accounts payable				(447	)			17				(237	)			208
Accrued liabilities				61				83				90				87
Deferred revenue				(173	)			137				(132	)			50
Net cash provided by (used in) operating activities				(257	)			(141	)			(293	)			63
Cash flows from investing activities:
Purchase of property and equipment				(133	)			(54	)			(228	)			(182	)
Net cash used in investing activities				(133	)			(54	)			(228	)			(182	)
Cash flows from financing activities:
Payment on capital lease obligation				(26	)			(12	)			(50	)			(25	)
Increase in obligation under capital lease				90				----				148				----
Capital lease financing				64				(12	)			98				(25	)
Proceeds from exercise of stock options				----				47				----				47
Note payable financing				165				----				165				----
Net cash provided by financing activities				229				35				263				22
Change in cash and cash equivalent				(161	)			(160	)			(258	)			(97	)
Cash and cash equivalents, beginning of period				1,923				3,280				2,020				3,217
Cash and cash equivalents, end of period			$	1,762			$	3,120			$	1,762			$	3,120