CALGARY, Nov. 15 /PRNewswire/
- Zi Corporation's (NASDAQ: ZICA) (TSE: ZIC) revenue increased 32 per cent over the same nine-month period last year. In addition Zi Corporation delivered improved results during the third quarter with the company reporting a 59 per cent decrease in net loss compared to the second quarter 2001. Zi's funds applied to operating activities were within $1.8 million of break-even for the three-month period ended September 30, 2001.
"By establishing a diversified customer base, Zi has built a strong position moving into 2002. Despite industry turbulence we have held our revenue steady and narrowed our loss," says Michael Lobsinger, chairman and chief executive officer, Zi Corporation. "When the wireless and telecom sectors recover, we are well positioned to realize accelerated growth as we have only scratched the surface on revenue potential from our 48 licensees. eZiText(TM) enabled products in the market now number 52, with several times this amount expected a year from now."
Third quarter highlights
- Revenue increased 32 per cent over the same nine-month period last year
- Funds applied to operations within $1.8 million of break-even for the
three-month period
- Decreased loss by 59 per cent compared to the second quarter 2001
- Increased gross margin by 37 per cent over the same nine-month period
last year
- Secured first significant contract to provide a full Voice over
Internet Protocol solution
- eZiText(TM) licensees increased to a total of 48 global customers
- Strong cash position with no debt
License, implementation and royalty revenue grew 28 per cent in this quarter over third quarter last year, despite two of the company's largest clients generating lower revenue. The nine additional revenue-generating clients, delivered more than enough revenue to offset the decline from these two clients. Of Zi's 48 licensees and six marketing agreements, 11 have begun to generate revenue to date. As product implementations increase over the coming months, revenue from these clients, together with revenue from existing clients is expected to increase.
"Considering the economic and industry environment, we have made considerable progress towards positive operating cash flow," says Dale Kearns, chief financial officer, Zi Corporation. "With potential revenue streams from 37 more licensees, six marketing agreements, VoIP contracts and significant improvements in operating cost levels, 2002 holds the expectation for further growth."
On a year to date basis, total revenue was $4.5 million, up $1.1 million or 32 per cent over the year earlier period. This reflects the diversification and overall increase of Zi's customer base. Total revenue for the three-month period ended September 30, 2001 was $1.6 million, approximately even with revenues for the same period a year earlier.
Zi reported a net loss of $0.08 per share for the three months ended September 30, 2001, approximately equal to the per share loss in the same period in 2000. Increases in litigation costs together with expenses associated with the global expansion of Zi's operations and the development of Zi services resulted in a net loss of $0.36 per share for the first nine months of 2001, compared to $0.18 per share for the first nine months of 2000.
Zi holds $32.6 million in cash and short-term investments and has net working capital of $34.0 million. Zi has no debt other than equipment leases and is capitalized entirely by common stock.
All figures presented are quoted in Canadian dollars. Detailed financial statements for the third quarter ended September 30, 2001 are attached.
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Financial highlights
(CDN $000) 3 months 9 months
September 30 September 30
------------------------------------------------------------------------
2001 2000 2001 2000
Revenue 1,567 1,515 4,450 3,364
Gross margin 1,446 1,173 3,817 2,788
Foreign exchange gain 1,373 940 1,874 2,107
Net loss (2,959) (3,034) (13,194) (6,727)
Net loss per share (.08) (.08) (.36) (.18)
------------------------------------------------------------------------
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Zi Corporation will host a teleconference and Webcast to discuss the third quarter results on Thursday November 15, 2001, 9am eastern standard time. To participate, please make your connection 10 minutes prior to the start of the call.
Conference call
Toll free in North America: 1-888-571-5411
International: 1-416-646-3096
Webcast
The call can be accessed on the Internet at:
http://webevents.broadcast.com/financecalls/event/index.asp?EarningsID
(equals)2134
or
The call can also be accessed on the Internet at:
http://www.vcall.com/NASApp/VCall/EventPage?ID(equals)79209
Recording
A recording is available after 12 pm eastern standard time
(10 am mountain) on Thursday, November 15. The recording will be
available until 11:55 pm eastern standard time (9:55 pm mountain) on
Thursday, November 22.
Toll free in North America 1-877-289-8525 and enter code
145641 No. (pound key)
International 1-416-640-1917 and enter code 145641 No. (pound key)
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(TM) connects people to short messaging, e-mail, e-commerce, Web browsing and similar applications in almost any written language. Zi Services provides market-leading engineering design in Bluetooth, VoIP and man-machine interface. Zi supports its strategic partners from offices in Calgary, Beijing, Hong Kong, San Francisco, Shenzhen, 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, competitive actions and continued acceptance of Zi Corporation's products and services 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.
<<
ZI CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
3 months ended 9 months ended
(unaudited) 30-Sep-01 30-Sep-00 30-Sep-01 30-Sep-00
------------------------------------------------------------------------
Revenue
License & implementation
fees $ 1,477,406 $ 1,156,492 $ 3,922,880 $ 2,722,161
Engineering services 22,339 257,402 330,908 534,899
Other product revenue 67,606 101,443 196,681 107,058
----------------------------------------------------
1,567,351 1,515,337 4,450,469 3,364,118
Cost of sales
License & implementation
fees 103,701 291,262 503,762 440,233
Engineering services 17,828 50,723 129,186 135,511
----------------------------------------------------
121,529 341,985 632,948 575,744
----------------------------------------------------
Gross margin 1,445,822 1,173,352 3,817,521 2,788,374
Selling, general and
administrative (4,075,105) (4,149,501) (13,809,676) (9,431,942)
Product research and
development (776,390) (799,234) (3,606,904) (2,307,283)
Depreciation and
amortization (1,175,718) (1,051,437) (2,888,677) (2,355,834)
Foreign exchange gain 1,373,043 939,972 1,873,612 2,107,258
Interest income and
other income 249,621 852,945 1,419,943 2,472,306
----------------------------------------------------
Net loss (2,958,727) (3,033,903) (13,194,181) (6,727,121)
----------------------------------------------------
Deficit, beginning
of period (42,548,137) (24,047,835) (32,312,683) (20,354,617)
----------------------------------------------------
Deficit, end of
period $(45,506,864)$(27,081,738)$(45,506,864)$(27,081,738)
----------------------------------------------------
Loss per share $ (0.08)$ (0.08)$ (0.36)$ (0.18)
Weighted average common
shares 37,256,584 36,574,926 37,122,792 36,574,926
Common shares
outstanding 37,503,350 36,794,967 37,503,350 36,794,967
ZI CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited) (audited) (unaudited)
30-Sep-01 31-Dec-00 30-Sep-00
-----------------------------------------------------------------------
Assets
Current assets
Cash and cash
equivalents $ 27,907,035 $ 46,891,866 $ 51,459,806
Short-term investments 4,702,029 - -
Accounts receivable 2,164,834 3,265,301 3,099,599
Prepayments and deposits 2,488,501 1,244,111 1,391,545
--------------------------------------------
37,262,399 51,401,278 55,950,950
Capital assets - net 3,491,722 2,984,978 2,561,231
Intangible assets - net 11,627,952 8,467,096 7,868,714
--------------------------------------------
$ 52,382,073 $ 62,853,352 $ 66,380,895
--------------------------------------------
Liabilities and shareholders' equity
Current liabilities
Accounts payable and
accrued liabilities $ 2,976,889 $ 2,658,223 $ 2,716,673
Deferred revenue 162,690 140,975 -
Current portion of capital
lease obligations 165,089 152,948 -
--------------------------------------------
3,304,668 2,952,146 2,716,673
Capital lease obligations 171,546 238,066 -
--------------------------------------------
3,476,214 3,190,212 2,716,673
--------------------------------------------
Shareholders' equity
Share capital 94,412,723 91,975,823 90,745,960
Deficit (45,506,864) (32,312,683) (27,081,738)
--------------------------------------------
48,905,859 59,663,140 63,664,222
--------------------------------------------
$ 52,382,073 $ 62,853,352 $ 66,380,895
--------------------------------------------
ZI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
3 months ended 9 months ended
(unaudited) 30-Sep-01 30-Sep-00 30-Sep-01 30-Sep-00
-------------------------------------------------------------------------
Operating activities:
Net loss $(2,958,727)$(3,033,903)$(13,194,181)$(6,727,121)
Add items not affecting cash:
Loss (gain) on disposition
of capital assets - 47 (20,983) 6,362
Depreciation and
amortization 1,175,718 1,051,437 2,888,677 2,355,834
-------------------------------------------------
Funds applied to
operations (1,783,009) (1,982,419) (10,326,487) (4,364,925)
Decrease (increase) in non-cash
working capital (921,461) (374,562) 196,458 376,882
-------------------------------------------------
Cash flow applied to
operations (2,704,470) (2,356,981) (10,130,029) (3,988,043)
-------------------------------------------------
Financing activities:
Proceeds from issuance of
common shares 2,018,275 237,250 2,436,900 36,259,280
Payment of capital lease
obligations (87,235) - (116,556) -
-------------------------------------------------
1,931,040 237,250 2,320,344 36,259,280
-------------------------------------------------
Investing activities:
Short-term investments (4,702,029) 2,780,997 (4,702,029) 6,111,987
Purchase of capital
assets (385,407) (749,077) (1,124,415) (1,628,220)
Acquisition of subsidiaries net
of cash acquired - (4,744,771) - (5,076,991)
Cash acquired through purchase
of subsidiaries - 1,931,435 - 1,932,441
Proceeds from capital
dispositions - 60 - 9,388
Deferred development
costs (1,858,398) (1,275,225) (5,108,155) (3,631,257)
Other deferred costs - (2,761) (240,547) (48,516)
-------------------------------------------------
(6,945,834) (2,059,342) (11,175,146) (2,331,168)
-------------------------------------------------
Net cash (outflow) inflow(7,719,264) (4,179,073) (18,984,831) 29,940,069
Cash and cash equivalents, at
the beginning of period 35,626,299 55,638,879 46,891,866 21,519,737
-------------------------------------------------
Cash and cash equivalents, at
the end of the period $27,907,035 $51,459,806 $27,907,035 $51,459,806
-------------------------------------------------
Non cash financing activity
Equipment acquired under
capital lease $ 45,826 $ - $ 62,177 $ -
Components of cash and cash equivalents
Cash $ 5,172,054 $ 6,526,659
Short-term investments 22,734,981 44,933,147
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