Zi CORPORATION
NEWS RELEASE

For immediate release (Calgary, AB Canada)
May 15, 2000


Zi Corporation’s first quarter revenue grows 191 per cent

Calgary, AB (May 15, 2000) - Zi Corporation (NASDAQ: ZICA) (TSE: ZIC) recorded first quarter revenue of $672,000, a 191 per cent increase over the $231,000 earned in the same period of 1999. Revenues earned during the first quarter of 2000 were primarily based on royalties, compared to 1999 where revenues were earned primarily on up front licensing fees.

"Our revenues are growing 50 per cent faster than our operating loss," says Peter Inman, chief financial officer of Zi Corporation. "This is a positive signal for future margins as our customers continue introducing their products to the market."

First quarter highlights
(in 000's except earnings per share) Q1 2000 Q1 1999 % change
Revenues $ 672 $ 230 up 191
Operating income (loss) $(2,694) $(1,176) up 129
Interest and other income $685 $2 n/a
Earnings (loss) per share $(0.056) $(0.042) up 33
Common shares outstanding 36,643,467 30,148,817 up 29
Employees 145 46 up 215

Operating loss in the first quarter was $2,694,000, ($0.06 per share, a 33 per cent increase over the same period in 1999). Operating costs increased in areas necessary to expand Zi's business including, wages and salaries ($782,000), marketing and sales ($171,000 excluding wages and salaries), research and development activities ($672,000) and depreciation and amortization ($267,000).

Zi expects operating costs to increase over subsequent quarters as new employees and locations are added to support Zi's global sales and marketing efforts. Additional funds are being designated for Zi's research and development activities and Zi also anticipates that these costs will continue to increase over the next several quarters.

Zi currently has $62 million in cash and short-term investments, no debt and working capital of $63 million, which is certainly sufficient to achieve growth targets for 2000. Interest income from cash and short-term investments generated $685,000 during the first quarter. Zi's cash and short-term investments are designated for the expansion of Zi's employee complement and offices, as well as acquisitions in the wireless and interactive delivery arena.

Zi is positioned to grow with the market for wireless and interactive delivery devices. Industry estimates now project one billion mobile subscribers by 2002. Broadband delivery methods that could benefit from Zi technology are also being developed and enhanced in all major world markets. Products for the future marketplace emphasize data capability. Key areas of strength in Zi's technology portfolio are the user interface and language capabilities - product features that differentiate manufacturer's offerings.

Zi Corporation is a leading provider of embedded software technology and web enabled educational products and services. The company's core product, eZiText™ connects people to short messaging, e-mail, e-commerce, Web browsing, and similar applications in almost any written language. Zi's wholly owned subsidiary, Oztime.com, is China's first Web-enabled education service provider. Zi supports its customers and strategic partners from offices in Calgary, Beijing, Hong Kong, San Francisco, Shenzhen and Stockholm. A publicly traded company, Zi Corporation is listed on the NASDAQ Stock Market (ZICA) and the Toronto Stock Exchange (ZIC).

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.

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For further information, please contact:

Karen Attwell
Manager, Investor/Media Relations
Phone: (403) 233-8875
Email: investor@zicorp.com
Web site: www.zicorp.com
  

Click here to download a complete copy of the first quarter report in PDF format.

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