Zi records revenue growth of 216 per cent in second quarter
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CALGARY, Aug. 15 /CNW/ - 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
- Revenue growth of 216 per cent over second quarter of 1999
- Cash and short term investments of $58 million - no debt
- Added five new licensees from Japan, Korea and China
- Completed acquisition of EnglishPractice.com adding content for
Oztime.com
- Laid groundwork for subsequent TTC acquisition to expand technology
offering
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(Cdn 000s except earnings per share) Q2 2000 Q2 1999 % change
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Revenues $ 1,176 $ 372 216 increase
Operating income (loss) $(2,619) $(1,461) 79 increase
Interest and other income $934 $16 60 increase
Earnings (loss) per share $(0.046) $(0.05) 8 decrease
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Common shares outstanding 36,643,467 30,298,817 21 increase
Employees 170 45 278 increase
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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 and services. The company's core product, eZiText(TM) 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.
<<
Zi Corporation
Consolidated statements of operations
six months ended June 30 three months ended June 30
(unaudited - Cdn$) 2000 1999 2000 1999
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Revenue $ 1,848,781 $ 602,650 $ 1,176,326 $ 371,745
Operating costs
and expenses
Operating costs 3,899,125 1,861,326 $ 1,749,907 1,151,201
General and
administrative 1,957,838 865,402 $ 1,288,889 449,506
Depreciation and
amortization 1,304,397 513,096 $ 756,384 232,064
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7,161,360 3,239,824 3,795,180 1,832,771
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Operating income
(loss) before
undernoted (5,312,579) (2,637,174) (2,618,854) (1,461,026)
Interest and
other income 1,619,361 17,929 934,239 15,656
Interest expense - (19,836) - (9,973)
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Net income (loss) (3,693,218) (2,639,081) (1,684,615) (1,455,343)
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Earning (loss)
per share $ (0.102) $ (0.090) $ (0.046) $ (0.050)
Common shares
outstanding at
end of period
(weighted
average) 36,357,543 29,329,204 36,357,543 29,329,204
Zi Corporation
Condensed consolidated balance sheets
June 30 December 31 June 30
(unaudited - Cdn$) 2000 1999 1999
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Assets
Current assets
Cash and cash equivalents $ 55,638,879 $ 21,519,737 $ 1,921,103
Short term investments 2,780,997 6,111,987 -
Accounts receivable 1,412,082 2,226,004 775,687
Prepayments and deposits 1,200,475 530,985 195,716
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61,032,433 30,388,713 2,892,506
Capital assets - net 1,370,233 650,246 435,890
Intangible assets - net 5,692,212 2,964,515 1,522,728
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$ 68,094,878 $ 34,003,474 $ 4,851,124
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Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued
liabilities $ 1,634,003 $ 1,031,410 $ 648,862
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1,634,003 1,031,410 648,862
Convertible notes payable - - 500,000
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1,634,003 1,031,410 1,148,862
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Shareholders' equity
Share capital 90,508,710 53,326,681 21,192,743
Deficit (24,047,835) (20,354,617)(17,490,481)
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66,460,875 32,972,064 3,702,262
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$ 68,094,878 $ 34,003,474 $ 4,851,124
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Zi Corporation
Consolidated statements of cash flow
six months ended June 30 (unaudited - Cdn$) 2000 1999
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Operating activities:
Net loss $ (3,693,218) $ (2,639,081)
Add (less) items not affecting cash:
Loss on dispositions of capital assets 6,315 10,681
Depreciation and amortization 1,304,397 513,096
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Funds applied to operations (2,382,506) (2,115,304)
Decrease (Increase) in non-cash working
capital 751,444 (276,815)
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Cash flow applied to operations (1,631,063) (2,392,119)
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Financing activities:
Proceeds from issuance of common shares 36,022,030 3,717,469
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36,022,030 3,717,469
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Investing activities:
Short term investments 3,330,990 -
Purchase of capital assets (879,143) (42,401)
Purchase of subsidiary (332,220) -
Proceeds from capital dispositions 9,328 -
Payment of capital lease obligation
related to capital assets - (1,331)
Deferred development costs (2,356,032) (410,362)
Other deferred costs (45,755) -
Cash received in acquistion of subsidiary 1,006 -
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(271,825) (454,094)
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Net cash inflow (outflow) 34,119,142 871,256
Cash and cash equilvalents,
at the beginning of year 21,519,737 1,049,847
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Cash and cash equilvalents,
at the end of the period $ 55,638,879 $ 1,921,103
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