Zi CORPORATION
NEWS RELEASE

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


Zi records revenue growth of 216 per cent in second quarter

Calgary, AB (Aug. 15, 2000) - Zi Corporation (NASDAQ: ZICA) (TSE: ZIC) recorded second quarter revenue of $1,176,326, a 216 per cent increase over the $372,000 earned in the same period of 1999. Year to date, revenues were up by 207 per cent. Second quarter revenues were largely made up of royalty payments from licensees, compared to 1999 where a majority of revenues were earned on licensing fees. Revenues increased 75 per cent relative to the first quarter of 2000.

"We continue making significant progress in the transition from a pure research and development company to an operating entity," says Michael Lobsinger, chairman and chief executive officer of Zi Corporation. "Our revenues are growing faster than our operating expenses based on existing contracts, and we are not slowing down. The last three months have resulted in five new licensing agreements, two core acquisitions and two exclusive education distribution agreements."

Second quarter highlights
(Cdn 000s except earnings per share) Q2 2000 Q2 1999 % change
Revenues $ 1,176 $ 372 up 216
Operating income (loss) $(2,619) $(1,461) up 79
Interest and other income $ 934 $ 16 up 60
Earnings (loss) per share $(0.046) $(0.05) down 8
Common shares outstanding 36,643,467 30,298,817 up 21
Employees 170 45 up 278

Operating loss in the second quarter was $2,618,854, a loss of $0.046 per share compared to a loss of $0.05 per share in the same period in 1999. The primary increase in operating loss results from expenditures related to the expansion of Zi's business including product and business development.

Zi is continuing to add new employees and locations and expects operating costs to increase over subsequent quarters to support the company's global sales and marketing efforts. New product development is also a priority for Zi's research and development teams. The establishment of a Hong Kong based R&D centre, through the recent acquisition of Telecom Technology Centre, will speed up product development and provide a base for customer-driven engineering projects in Japan, Korea and Greater China.

Zi's wholly owned subsidiary, Oztime.com, is expected to launch its commercial service at the end of August. Oztime.com is China's first education service provider (ESP) and offers continuing education courses over the Internet. Zi expects the revenue contribution from this subsidiary to begin emerging during the fourth quarter. Oztime.com expects to earn revenues primarily from the sale of courses and is developing additional revenue lines, including advertising, e-commerce, seminars and subscriptions. The subsidiary currently holds contracts with a variety of ministries and educational institutions, such as the prestigious Tsinghua University and the China e-commerce Association to develop and operate the Ministry of Information Industries e-commerce training site.

Zi Corporation is a leading provider of embedded software technology and 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-based education service provider. Zi supports its strategic partners from offices in Calgary, Beijing, Hong Kong, San Francisco, Shenzhen and Stockholm and Tokyo. 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 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 second quarter report in PDF format.

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