1 - BASIS OF PRESENTATION
The accompanying unaudited selected financial data of ZIM
Corporation (“ZIM” or the “Company”) and its subsidiaries have been prepared pursuant to the rules and
regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States
of America (US GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance
sheet as of June 30, 2016 has been derived from our audited consolidated financial statements for the year ended March 31, 2016.
These selected financial data should be read in conjunction with the financial statements and notes thereto included in the latest
annual report on Form 20-F. These data have been prepared on the same basis as the audited consolidated financial statements for
the year ended March 31, 2016 and, in the opinion of management, include all adjustments considered necessary for a fair presentation
of the financial position, results of operations and cash flows of the Company. Unless otherwise stated in this Form 6-K the information
contained herein has not been audited or reviewed by an independent auditor. The results of operations for the three month period
ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.
2 - GOING CONCERN
These
consolidated
financial
statements
have
been
prepared
on
a
going
concern
basis
in accordance with accounting principles generally accepted in the United
States ("US GAAP").The
going
concern
basis
of
presentation assumes
that
the
Company
w
il
l
continue
in
operation
for
the
foreseeable
future
and
be
able
to
realize its
assets
and
discharge
its
liabilities
and
commitment
s
in
the
normal
course
of
business.
T
o
date
the Company
has
incurred
an
accumulated
loss
of
$21,330,832
and
positive cash
flow
fro
m
operations of $50,428 due to
the payment of investment tax credits.. This raises significant
doubt
about
the
ability
of
the Company to continue as a going concern. The ability of
the
Company to
continue
as
a
going
concern
and
to realize the carrying
value of its assets and discharge its liabilities and
commitment
s when due
is
dependent on
the
Company generating
revenue
sufficient
to
fund
its
cash
flow
needs.
There is no certainty
that this
and
other strategies
will
be sufficient
to permit
the
Company to continue as a going concern.
Management is currently investigating and evaluating options that
may include recapitalization of the Company and pursuing other ventures of a different nature.
The
consolidated
financial
statements
do
not
reflect
adjustments
that
would
be
necessary
i
f
the
going concern
assumption
were
not
appropriate.
I
f
the
going
concern
basis
were
not
appropriate
for
these consolidated
financial
statements,
then
adjustments
would
be
necessary
i
n
the
carr
y
ing
value
of
the assets
and
liabilities, the
reported revenue
and
expenses
and the
classifications used in the statement of financial position. Such
differences
in
amounts could be
material.
3 – INVESTMENT AND SUBSIDIARIES
|
Investments and long term deposits
|
|
Original Cost
|
|
Carrying Value
|
|
Seregon
|
|
95,147
|
|
-
|
|
CP4H
|
|
187,367
|
|
-
|
|
LW Capital Pool
|
|
10,290
|
|
-
|
|
Equispheres
|
|
111,990
|
|
115,305
|
|
HostedBizz
|
|
1,005
|
|
769
|
On October 21, 2009, ZIM Corporation made a $95,147 investment in
Seregon Solutions Inc.
The investment consisted of the purchase of 61,480 common shares
and 69,677 warrants. Depending on the fiscal 2010 results of Seregon each warrant was convertible, at no cost to ZIM, to a portion
of a common share or would have expired with no action. The warrants converted during fiscal 2012 and ZIM gained an additional
69,677 common shares to a total of 131,157. With the additional shares provided to ZIM, ZIM did not gain significant influence,
or control, over Seregon.
Due to a significant downturn in the business outlook for Seregon,
ZIM has determined that this investment is fully impaired and, on March 31, 2014, has taken an impairment charge equal to the full
value of the investment.
On June 29
th
, 2012, ZIM Corporation made an equity investment
in Connecting People For Health Co-operative Ltd. (“CP4H”) The investment consisted of the purchase of 200 common shares
at a price of $187,367.
Connecting People for Health Co-operative Ltd. (CP4H) is
owned by a large and varied base of co-operatives and Credit Unions that span Atlantic Canada. CP4H has created HealthConnex
as a healthcare service for its members. CP4H has been promoting and working toward a more user-driven health care system
since it was founded in 2006 by the co-op and credit union sector. HealthConnex is a health portal providing tools for
patients to drive positive change in the health care system, from the patient up. The HealthConnex internet portal provides
convenient services and a pay engine that allow patients to connect with their health care team in new and innovative ways.
In addition, HealthConnex purchased Benneworth Advanced Systems and the Medical Office Manager product (MOM) which was
developed using ZIM's core database technology and language. ZIM's investment in CP4H is strategic in nature as it provides
the company with indirect access to the 1800 medical professionals using MOM and future product opportunities. The equity
interest in CP4H by ZIM is less than 10% and ZIM has no significant influence, over the corporate decisions of CP4H at this
time. Based on these facts the investment has been accounted for using the cost method.
Due to material changes in the business outlook for CP4H, ZIM has
determined that this investment is fully impaired and, on March 31, 2015, has taken an impairment charge equal to the full value
of the investment.
On March 31, 2010, ZIM Corporation invested $10,000 Canadian Dollars
in LW Capital Pool Inc. (“LWCPI”). On April 3, 2015, LWCPI completed a reverse takeover transaction with Tweed Marijuana
Inc. (“Tweed”) and in exchange for its investment in LWCPI ZIM received 20,000 shares of Tweed.
On April 11, 2015 the Company sold its shares of Tweed of a net
gain of $71,842 Canadian Dollars, which at the prevailing exchange rate of 1.0979 equals $65,436 United States Dollars. Transaction
fees amounted to $727.
On April 30, 2015, ZIM Corporation made an equity investment
in Equispheres Inc. The investment consisted of the purchase of 250,000 common shares at a price of $20,042.
On August 26, 2015, ZIM Corporation made an equity investment
in Equispheres Inc. The investment consisted of the purchase of 500,000 common shares at a price of $91,948
Equispheres Inc. is an advanced materials company developing
new technologies for the production of metallic particles for use in additive manufacturing.
In April 2016, ZIM incorporated a wholly owned subsidiary called
GeneSpans Corporation. GenSpans will fund research into genetic therapy solutions.
ITEM 2 – QUARTERLY BUSINESS REVIEW
This Form 6-K contains forward-looking statements regarding our
business, financial condition, results of operations, liquidity and sufficiency of cash reserves, recapitalization, restructuring,
pursuit of new businesses, controls and procedures, prospects, revenue expectations, and allocation of resources that are based
on our current expectations, estimates and projections. In addition, other written or oral statements which constitute forward-looking
statements may be made by or on behalf of the registrant. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," or variations of such words and similar expressions
are intended to identify such forward-looking statements. These statements are not guarantees of future performance, and are inherently
subject to risks and uncertainties that are difficult to predict. As a result, actual outcomes and results may differ materially
from the outcomes and results discussed in or anticipated by the forward-looking statements. These risks include foreign exchange
risk, credit risk, fair value risks and key personnel risk and are therefore qualified in their entirety by reference to the factors
specifically addressed in the sections entitled " QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK " and “RISK
FACTORS” in our Annual Report on Form 20-F for the fiscal year ended March 31, 2016, as well as those discussed elsewhere
in this Form 6-K. We operate in a very competitive and rapidly changing environment. New risks can arise and it is not possible
for management to predict all such risks, nor can it assess the impact of all such risks on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction
of actual results. All forward-looking statements speak only as of the date of this Form 6-K. We undertake no obligation to revise
or update publicly any forward-looking statements in order to reflect any event or circumstance that may arise after the date of
this Form 6-K, other than as required by law.
The following discussion includes information from the Selected
Financial Data for the three month periods ended June 30, 2016 and 2015. These results are not necessarily indicative
of results for any future period. You should not rely on them to predict our future performance.
All financial information is prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") and is stated in US dollars.
