April 4, 2000

My fellow investors:

Ordinarily I would never write this type of letter, but the events of the past week are not ordinary. The NASDAQ Composite has lost over 20 per cent of its value since early March. Zi has also lost considerable market value and has been affected by many of the same factors that have lead to NASDAQ’s decline. This decrease has fuelled a great deal of misinformation. I am writing today to set the record straight.

To begin, let me be clear, the fundamentals of our business have not changed. We have many firm contracts in place and are negotiating many more. Our fourth quarter 1999 grew by almost 200 per cent over our fourth quarter 1998. In fact, a full 76 per cent of Zi’s 1999 revenue was earned in just the last four months of the year. You will see Zi’s revenues continue to grow each quarter as our customers continue to introduce new products. Oztime.com, our Internet education service provider continues developing as expected. With an initial audience of 15 million viewers, it will be the largest education service provider in China from its first full day of operation, scheduled for fall of 2000. We are just at the beginning.

As many of you are aware, we have been engaged in a patent dispute with Tegic Communications for over a year. Zi originally sued Tegic for patent infringement on March 10, 1999. We fully expected them to sue us back, which is normal course in these types of disputes. Just over one year later Tegic finally filed a lawsuit, which we announced on March 27, 2000. Tegic may file suit in numerous jurisdictions, as they did by extending a portion of the United States claim to cover Hong Kong late last week. In my opinion, Tegic is filing this suit to slow down the commercial acceptance we’ve demonstrated over the past eight months. We believe the tactics will ultimately prove unsuccessful and that our superior product and patent position will prevail.

This lawsuit is not news to our customers or to our long-time investors. Zi has already demonstrated our superior patent position with many existing customers. All of our customers, like Ericsson, Alcatel and Legend Computers, take intellectual property rights issues very seriously and we continue openly discussing intellectual property in our negotiations. It is something we’ve elevated in priority as a result of our initial action against Tegic and is a normal part of the contract negotiation process. Zi is well capitalized and prepared to meet these challenges as we continue to grow.

I appreciate your continued support for Zi. I wanted to clarify that there is nothing fundamental that has changed about Zi’s business or prospects, which both remain extremely bright.

Best regards,

Zi Corporation

Michael E. Lobsinger
Chairman & Chief Executive Officer

Certain statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The information in this press release is based on Zi Corporation’s current expectation and assumptions, and is subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks include, among others, general business and economic conditions and competitive actions as well as the risks and uncertainties referred to in Zi Corporation’s 20-F for the most recent calendar year.