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Technology Stocks : Zi-Corp (ZICA), formerly MCUAF -- Ignore unavailable to you. Want to Upgrade?

To: sPD who wrote (1090)	7/31/1999 2:05:00 PM
From: sPD	Read Replies (1) \| Respond to of 2082

full text: "Series of China deals keeps Zi shares on the boil" Stephen Miles Financial Post - July 30, 1999 A series of promising ventures in China have seen the shares of Calgary-based technology junior Zi Corp. take flight. Stock in the developer of Chinese character-based software applications has more than tripled in the past month on the back of three landmark deals. The shares (ZIC/TSE) climbed as high as $7.10 in Toronto on July 19, while on the Nasdaq Stock Market the shares (ZICA/NASDAQ) peaked at $5 (US). They closed yesterday up 10¢ at $6.10 in Toronto yesterday and up 1/8 at $4 1/8 (US) in New York. The potential market for consumer electronic devices such as computers, TV set-top boxes, mobile phones, pagers and video games in China is vast. But many Chinese have shied away because they have to learn English to become computer literate. Zi's input system allows any user who can write Chinese to type Chinese characters.. Crucial deals struck with the republic's two largest information technology ministries in the past month are spurring investor excitement. The first, reached on July 9, was a joint venture with the Ministry of Education for more than 240 million students to use Zi's Chinese "smart text" input software in schools. The second, announced earlier this week, was with the Research Institute of TV and Electro-Acoustics of the Ministry of Information (MII) for Zi's software to be used as the "preferred input solution'' for set-top TV boxes. Zi also has strategic licensing and royalty agreements with two major manufacturers to use its Chinese character input systems in mobile phones. In February, 1998, it signed an agreement with Ericsson Communications for its line of phones for the China market. The products are expected to be launched next week. Earlier this month, Zi struck a deal with giant manufacturer Xiamen Overseas Chinese Electronic Co Ltd. (Xoceco) to use Zi's input software in its cellular phones. China's cellphone network had about 26 million subscribers at the end of 1998, according to Sean Chen, an analyst at Groome Capital Inc. Industry estimates are for growth to 40 million by the end of this year and to 50 million by year-end 2000. Mr. Chen said the deal may be the first step in developing a series of projects with Xoceco, one of the top five firms in market share for consumer electronic appliances. "With more than 1.2 billion people in China, Zi's software has a vast market to explore many areas which haven't even been considered," Mr. Chen said. Michael Lobsinger, Zi chief executive, told analysts in a conference call yesterday the firm should be able to predict royalty streams from the Ericsson and Xiamen deals before the end of the third quarter. Zi posted a net loss from continuing operations of $2.3-million on revenue of $1.6-million in the year ended Dec. 31, 1998, down from an operating loss of $12.6-million on revenue of $1.3-million in 1997. For the three months ended March 31, 1999, it had a net loss of $1.1-million on revenue of just $230,904. With no significant revenue or cash flow, Zi has so far financed its operations by issuing shares. On April 21, it closed a private placement of 1.9 million units at $1.25 (US) each for proceeds of $3.7-million (Cdn). The firm has about 28 million shares outstanding, of which Mr. Lobsinger owns about 18%. . Mr. Lobsinger said the firm had no immediate need for a cash injection. He said Zi had cash of $3.2-million at the end of the first quarter and, after the big jump in its stock price, he expects the exercise of warrants and options would bring in another $2.2-million by the end of September. Mr. Lobsinger said Zi may consider another financing, but only at a price "significantly ahead" of the current share price. "We don't need capital to exist any more," he said. "We need capital to grow and if we want to grow faster we're going to take some capital but it will be at a price that is higher than today."