News release

---

Zi achieves revenue growth in 2001

Calgary, AB (April 10, 2002) - Zi Corporation (NASDAQ: ZICA) (TSE: ZIC), a leading provider of intelligent interface solutions today announced its financial results for the year ended December 31, 2001.

Zi completed the year 2001 with $6.2 million in revenues, an increase of 19 per cent over 2000. With the addition or extension of 17 eZiText® licensing agreements in 2001, the company was able to achieve modest revenue growth in the face of challenging industry conditions. Revenue from all customers except one increased 73% year over year. Revenue from that one customer declined by 61%.

The net loss for 2001 increased to $18.5 million from $12.0 million a year earlier with most of the net loss attributable to investing in subsidiaries and higher selling, general & administrative expenses, of which a significant portion was related to litigation costs. Net loss per share was $0.50 compared to $0.33 a year earlier.

"Moving into 2002, it is important to recognize that nearly two thirds of the $18 million loss was associated with costs that are either non-recurring or related to investments we expect to monetize by the end of the year," said Michael E. Lobsinger, Chairman and Chief Executive Officer of Zi Corporation.

"2001 marked the first time in history that the worldwide handset market decreased. Shipments that were scheduled for the fourth quarter of 2001, despite strong indications, were pushed to Q1 2002. So far in 2002, our customers collectively introduced an eZiText-enabled device into the market nearly every three days. For the first quarter alone, the number of eZiText-enabled products introduced into the market increased from 60 to approximately 85," said Gary Kovacs, President of Zi Corporation.

2001 highlights

• Revenue increase of 19 per cent over 2000
• Cash, cash equivalents and short term investments of $27.7 million
• Over 50 global licensees for eZiText
• Zi successfully defended its intellectual property positions against Tegic Communications, a unit of AOL Time Warner - which will clear the way for Zi to launch product in the North American market
• Zi signed and advanced key partnerships with industry leaders such as Openwave, Qualcomm, Wind River, and Texas Instruments
• Developed three new technologies including enhanced eZiText, eZiTap and eZiNet

Zi Corporation will host a teleconference and Webcast to discuss its year-end 2001 results on Wednesday, April 10, 2002, 9am eastern time. To participate, please make your connection 10 minutes prior to the start of the call.

Conference call

Toll free in North America: 1-877-888-4210

International: 1-416-695-5261


Webcast

The call can be accessed on the Internet at: www.zicorp.com


Recording

A recording will be available shortly following the conference call until 11:55 pm eastern time on Wednesday, April 17, 2002.

Toll free in North America: 1-888-509-0082

International: 1-416-695-9731


About Zi Corporation

Zi Corporation is a market-driven technology company delivering intelligent interface solutions to enhance the user experience of wireless and consumer technologies. The company's core technology product, eZiText® connects people to short messaging, e-mail, e-commerce, Web browsing and similar applications in more than 35 languages and regional dialects. Zi supports its strategic partners from offices in Calgary, Beijing, Hong Kong, London, San Francisco, Shenzhen and Stockholm. A publicly traded company, Zi Corporation is listed on the NASDAQ National Market (ZICA) and the Toronto Stock Exchange (ZIC).

Certain statements in this press release that involve expectations or intentions (such as those relating to future deployments or planned cooperation) may 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 expectations 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, competitive actions, continued acceptance of Zi Corporation's products and services and dependence on third party performance as well as the risks and uncertainties referred to in Zi Corporation's 20-F for the most recent calendar year that is filed with the Securities and Exchange Commission. The reader should not place undue reliance on such forward looking statements. Zi Corporation does not assume any obligation to update such forward looking statements.

-30-

For more information:

Media Inquiries: Shawn Kelly Zi Corporation Corporate Communications Manager Phone: 403 537 9770 skelly@zicorp.com

Investor Inquiries: Dale Kearns Zi Corporation Chief Financial Officer Phone: 403 233 8875 investor@zicorp.com

ZI CORPORATION
CONSOLIDATED BALANCE SHEETS
As at December 31					2001		2000		1999
Assets
Current assets
	Cash and cash equivalents				$ 19,090,964		$ 46,891,866		$ 21,519,737
	Short-term investments				8,577,503		-		6,111,987
	Accounts receivable				2,752,262		3,265,301		2,226,004
	Work-in-progress and inventory				509,298		-		-
	Prepayments and deposits				909,388		1,244,111		530,985
					31,839,415		51,401,278		30,388,713
Capital assets - net					3,160,008		2,984,978		650,245
Intangible assets - net					13,082,923		8,467,096		2,964,516
					$ 48,082,346		$ 62,853,352		$ 34,003,474
Liabilities and shareholders’ equity
Current liabilities
	Accounts payable and accrued liabilities				$ 3,097,692		$ 2,658,223		$ 1,031,410
	Deferred revenue				773,115		140,975		-
	Current portion of capital lease obligations				175,996		152,948		-
					4,046,803		2,952,146		1,031,410
Capital lease obligations					159,013		238,066		-
					4,205,816		3,190,212		1,031,410
Shareholders’ equity
Share capital					94,871,503		91,975,823		53,326,681
Deficit					(50,994,973)		(32,312,683)		(20,354,617)
					43,876,530		59,663,140		32,972,064
					$ 48,082,346		$ 62,853,352		$ 34,003,474

ZI CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
Years ended December 31					2001		2000		1999
Revenue
	License and implementation fees				$ 5,130,553		$ 4,675,462		$ 2,388,755
	Engineering services				798,651		543,805		46,186
	Other product revenue				302,564		20,499		20,308
					6,231,768		5,239,766		2,455,249
Cost of sales
	License and implementation fees				1,412,123		987,537		92,372
	Engineering services				280,279		48,443		-
					1,692,402		1,035,980		92,372
Gross margin					4,539,366		4,203,786		2,362,877
Operating expenses
Selling general and administrative					(17,847,762)		(14,189,861)		(4,081,908)
Product research and development					(3,720,410)		(2,837,389)		(2,513,621)
Depreciation and amortization					(4,577,324)		(3,867,596)		(1,185,761)
Foreign exchange gain (loss)					1,601,573		1,465,154		(218,554)
Operating loss before undernoted					(20,004,557)		(15,225,906)		(5,636,967)
	Interest on long term debt				(50,744)		(7,016)		(40,000)
	Other interest				(6,676)		(1,543)		-
	Interest income and other income				1,553,973		3,276,399		173,750
Loss before income taxes					(18,508,004)		(11,958,066)		(5,503,217)
	Income taxes				(174,286)		-		-
Net loss					(18,682,290)		(11,958,066)		(5,503,217)
Deficit, beginning of period					(32,312,683)		(20,354,617)		(14,851,400)
Deficit, end of period					$ (50,994,973)		$ (32,312,683)		$ (20,354,617)
Basic loss per share					$ (0.50)		$ (0.33)		$ (0.18)
Diluted loss per share					$ (0.50)		$ (0.33)		$ (0.18)
Weighted average common shares					37,230,905		36,690,256		30,876,262
Common shares outstanding, end of period					37,544,650		36,990,967		34,818,867

ZI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31					2001		2000		1999
Operating activities:
	Net loss				$ (18,682,290)		$ (11,958,066)		$ (5,503,217)
	Items not affecting cash:
	(Gain) loss on dispositions of capital assets				(20,983)		(6,744)		21,428
	Depreciation and amortization				4,577,324		3,867,596		1,185,761
	Funds applied to operations				(14,125,949)		(8,097,214)		(4,296,028)
	Decrease (increase) in non-cash working capital				1,410,072		457,417		(1,627,938)
	Cash flow applied to operations				(12,715,877)		(7,639,797)		(5,923,966)
Financing activities:
	Proceeds from issuance of common shares				2,645,680		36,836,643		34,280,404
	Payment of capital lease obligations				(139,700)		(53,973)		(1,331)
					2,505,980		36,782,670		34,279,073
Investing activities:
	Short-term investments				(8,577,503)		6,111,987		(6,111,987)
	Purchase of capital assets				(1,192,244)		(1,989,221)		(351,909)
	Proceeds from capital dispositions				118,321		15,787		8,119
	Software development costs				(7,796,943)		(4,626,449)		(1,282,699)
	Other deferred costs				(142,636)		(119,202)		(168,101)
	Acquisition of subsidiaries net of cash acquired				-		(3,163,646)		21,360
					(17,591,005)		(3,770,744)		(7,885,217)
Net cash (outflow) inflow					(27,800,902)		25,372,129		20,469,890
Cash and cash equivalents, beginning of year					46,891,866		21,519,737		1,049,847
Cash and cash equivalents, end of year					$ 19,090,964		$ 46,891,866		$ 21,519,737
Non cash financing activity
	Equipment acquired under capital lease				$ 83,695		$ 433,090		$ -
	Patent acquired through share issuance				$ 250,000		$ -		$ -
	Conversion of note payable				$ -		$ -		$ 500,000
Components of cash and cash equivalents
	Cash				$ 4,971,376		$ 3,572,552		$ 827,326
	Cash equivalents				$ 14,119,588		$ 43,319,314		$ 20,692,411
Supplemental cash flow information
Cash paid for interest					$ 57,420		$ 9,107		$ 40,000
Cash paid for income taxes					$ 174,286		$ -		$ -

---

Close Window