Form 424B3 ZIM CORP

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Filed Pursuant to Rule 424(b)(3)
File No. 333-136277

Prospectus
supplement no. 52
to prospectus dated AUGUST 6, 2021

ZIM
CORPORATION

 

This Prospectus Supplement No. 52 supplements
and amends our Prospectus dated July 11, 2008, as amended and supplemented. This Prospectus Supplement No. 52 includes our attached Form
20-F for the month of August, 2021 as filed with the Securities and Exchange Commission on August 4, 2021.

Any statement contained in the Prospectus and
any prospectus supplements filed prior to the date hereof shall be deemed to be modified or superseded to the extent that information
in this Prospectus Supplement No. 52 modifies or supersedes such statement. Any statement that is modified or superseded shall not be
deemed to constitute a part of the Prospectus except as modified or superseded by this Prospectus Supplement No. 52.

This Prospectus Supplement No. 52 should be
read in conjunction with the Prospectus, and any prospectus supplements filed prior to the date hereof.

The date of this Prospectus Supplement No. 52
is August 6, 2021.

 

 

 

 

UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549

 

 

FORM
20-F

 

Registration
statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

 

or

 

Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal
year ended March 31, 2021.

or

 

Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition
period from              to             

or

 

Shell
company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event
requiring this shell company report             

 

Commission
File Number:
000-31691

ZIM
CORPORATION

(Exact
name of registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)
 
   


150 Isabella Street, Suite 150, Ottawa, Ontario, Canada

K1S
1V7

(Address of principal executive offices)

 

 

 

 

 

John
A. Chapman – Chief Financial Officer

150
Isabella Street, Suite 150, Ottawa, Ontario, Canada

K1S
1V7

[email protected]

(613)
727-1397

(Name,
Telephone, E-mail and/or facsimile number and address of Company contact person)

 

Securities
registered or to be registered pursuant to Section 12(b) of the Act: None

 

Securities
for which there is a reporting obligation pursuant to Section 12(g) of the Act:
 

 

   

Common
shares, no par value

(Title
of Class)

 

Securities
registered or to be registered pursuant to Section 15(d) of the Act: None

 

 

8,136,348
common shares outstanding as of March 31, 2021.

 

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes    No  x 

 

If this
report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.    Yes X     No  

 

 

 

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.    Yes  X    No 

 

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes X      No 

 

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.:

Large accelerated
filer      Accelerated filer      Non-accelerated filer X  Emerging
growth company

 

If an emerging
growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act.

 

Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 

Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x     International
Financial Reporting Standards as issued by the International Accounting Standards Board     Other

 

If “Other”
has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected
to follow.    Item 17 o     Item 18 o 

 

If this
is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No x 

 

 

 

TABLE
OF CONTENTS

 

FORWARD-LOOKING
INFORMATION
ii
     
PART
ONE
 
     
ITEM
1.
IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
1
ITEM
2.
OFFER
STATISTICS AND EXPECTED TIMETABLE
1
ITEM
3.
KEY
INFORMATION
1
ITEM
4.
INFORMATION
ON THE COMPANY
7
ITEM
4A.
UNRESOLVED
STAFF COMMENTS
11
ITEM
5.
OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
11
ITEM
6.
DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES
22
ITEM
7.
MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
28
ITEM
7B.
RELATED
PARTY TRANSACTIONS
30
ITEM
8.
FINANCIAL
INFORMATION
31
ITEM
9.
THE
OFFER AND LISTING
31
ITEM
10.
ADDITIONAL
INFORMATION
31
ITEM
11.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
43
ITEM
12.
DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES
45
     
PART
TWO
 
     
ITEM
13.
DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
45
ITEM
14.
MATERIAL
MODIFICATIONS TO THE RIGHTS OF
 
  SECURITY
HOLDERS AND USE OF PROCEEDS
45
ITEM
15.
CONTROLS
AND PROCEDURES
45
ITEM
16A.
AUDIT
COMMITTEE FINANCIAL EXPERT
47
ITEM
16B.
CODE
OF ETHICS
47
ITEM
16C.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
47
ITEM
16D.
EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
48
ITEM
16E.
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER
 
  AND
AFFILIATED PURCHASERS
48
ITEM
16F.
CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT
48
ITEM
16G.
CORPORATE
GOVERNANCE
48
     
PART
THREE
 
     
ITEM
17.
FINANCIAL
STATEMENTS
48
ITEM
18.
FINANCIAL
STATEMENTS
49
ITEM
19.
EXHIBITS 76

 

 

 

INTRODUCTION

 

As used
in this Annual Report on Form 20-F, unless the context otherwise indicates, the terms “we”, “us”, “our”,
“ZIM”, the “Registrant” or the “Company” mean ZIM Corporation and its wholly-owned subsidiaries,
Advanced Internet Inc. (AIS), ZIM Technologies do Brazil Ltda, and NuvoBio Corporation.

 

All references
to dollars ($) in this Annual Report on Form 20-F are expressed in United States dollars, unless otherwise indicated.

 

FORWARD-LOOKING
INFORMATION

 

This Annual
Report on Form 20-F contains certain “forward looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by terminology such as
“planned,” “expected,” “will,” “potential,” “pipeline,” “outlook,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “ estimates,” or similar expressions,
or by express or implied discussions regarding our business, financial condition, results of operations, controls and procedures, and
prospects that are based on our current expectations, estimates and projections. 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. All such statements are therefore
qualified in their entirety by reference to the factors specifically addressed in the section entitled “Risk Factors” as well
as those discussed elsewhere in this Annual Report on Form 20-F. 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 Annual Report on Form
20-F. 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 Annual Report on Form 20-F, other than as required by law.

 

 

  

PART
ONE

 

ITEM 1. IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

 

Not applicable.

 

ITEM 2. OFFER
STATISTICS AND EXPECTED TIMETABLE

 

Not applicable.

 

 

A.           
Selected Financial Data

 

The following
selected consolidated statements of operations data and cash flows for the fiscal years ended March 31, 2021, 2020, and 2019 and consolidated
balance sheet data for the fiscal years ended March 31, 2021 and 2020 have been derived from our audited consolidated financial statements
that are included in this annual report beginning on page 49. The following selected consolidated statements of operations and cash
flows for the fiscal years ended March 31, 2018 and 2017 and consolidated balance sheet data for the fiscal years ended March 31, 2019,
2018 and 2017 have been derived from our audited consolidated financial statements that are not included in this annual report. These
comparisons statements have been reclassified to reflect the presentation of discontinued operations in the financial statements beginning
on page 49.

 

Our historical
results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read
in conjunction with our audited consolidated financial statements and related notes and Item 5 “Operating and Financial Review
and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with accounting principles
generally accepted in the United States (“US GAAP”).

 

All information
regarding share data, including income (loss) per share reflect the twenty to one stock consolidation that took place on January 19,
2017 for all periods presented.

 

 

 

  Consolidated Statements of Operations                
    Year ended March 31, 2021   Year ended March 31, 2020   Year ended
 March 31, 2019
  Year ended
 March 31, 2018
  Year ended
 March 31, 2017
      $       $       $       $       $  
                                         
Revenue     —         —         —         —         —    
Operating expenses     73,621       68,457       82,842       41,261       66,379  
Income (loss) from operations     (73,621 )     (68,457 )     (82,842 )     (41,261 )     (66,379 )
                                         
Other income     (167 )     235,349       617,969       61,349       31,820  
Operating income (loss) from continuing operations     (73,788 )     166,892       535,127       20,088       (34,559 )
                                         
Income (loss) from discontinued operations including gain on disposal of $223,549 in fiscal 2021     (2,780 )     (175,891 )     168,389       (62,990 )     (34,889 )
                                         
Income tax  expense     —         —         —         —         —    
Net income (loss)     (76,568 )     (8,999 )     703,516       (42,902 )     (69,448 )
                                         
                                         
Basic and diluted income (loss) per share from continuing operations     (0.009 )     0.021       0.066       0.002       (0.004 )
Basic and diluted income (loss) per share from discontinued operations     (0.000 )     (0.022 )     0.021       (0.008 )     (0.004 )
Basic and diluted income (loss) per share     (0.009 )     (0.001 )     0.087       (0.006 )     (0.008 )
                                         
Weighted average number of shares outstanding     8,136,348       8,136,348       8,136,348       8,126,222       7,973,352  
                                         
                                         

 

Consolidated Statements of Cash Flows                
  Year ended March 31, 2021   Year ended March 31, 2020   Year ended March 31, 2019   Year ended
March 31, 2018
  Year ended
March 31, 2017
      $       $       $       $       $  

Cash
flows used in continuing operating activities

    (109,289 )     (73,040 )     (60,558 )     (18,619 )     (10,394 )
Cash flows used in discontinued operating activities     (119,057 )     (127,006 )     216,462       472       —    
Cash flows provided by (used in) investing activities     (4,486 )     214,940       (7,040 )     33,841       (9,029 )
Effect of changes in exchange rates on cash and cash equivalents     16,332       (91,594 )     (60,817 )     (16,863 )     (33,218 )

Increase
(decrease) in cash and cash equivalents

    (216,500 )     (76,700 )     88,017       (1,169 )     (52,641 )

Cash
and cash equivalents, beginning of year

    429,824       506,524       418,507       419,676       472,317  

Cash
and cash equivalents, end of year

    213,324       429,824       506,524       418,507       419,676  
                                         
                                         

 

 

 

 

Consolidated Balance Sheets                                        
    As at March 31, 2021       As at March 31, 2020       As at March 31, 2019       As at March 31, 2018       As at March 31, 2017  
ASSETS     $       $       $       $       $  
Current assets                                        
Cash and cash equivalents     213,324       184,675       250,961       201,960       250,636  
Accounts receivable     57,030       4,507       —         —         —    
Investment tax credits receivable     11,928       10,687       —         —         —    
Prepaid expenses     37,447       10,573       7,015       7,270       —    
Current assets of discontinued operations     —         433,327       542,643       487,550       550,167  
      319,729       643,769       800,619       696,780       800,803  
Investments     756,787       670,821       709,047       117,108       114,199  
Long term receivables     63,016       —         —         —         —    
Right of use assets     16,255       772       —         —         —    
Equipment, net     4,997       3,961       4,116       2,877       3,911  
Noncurrent assets of discontinued operations     —         14,422       16,682       21,456       19,846  
      1,160,784       1,333,745       1,530,464       838,221       938,759  
LIABILITIES AND SHAREHOLDERS’ EQUITY                                        
Current liabilities                                        
Accounts payable     6,282       7,186       10,352       9,766       4,250  
Accrued liabilities     2,114       7,929       —         —         —    
Current lease liability     13,004       833       —         —         —    
Current liabilities of discontinued operations     —         83,905       137,780       78,556       128,095  
      21,400       99,853       148,132       88,322       132,345  
Long-term lease liabilities     3,251       —         —         —         —    
Deferred rent     —         —         —         —         3,269  
Noncurrent liabilities of discontinued operations     —         —         —         —         4,903  
      24,651       99,853       148,132       88,322       140,517  
Shareholders’ equity:                                        
Preferred shares, no par value, non-cumulative                                        
dividend at a rate to be determined by the Board of Directors redeemable for CDN $1 per share.  Unlimited authorized shares; NIL issued and outstanding shares at March 31, 2021 and 2020.     —         —         —         —         —    
Common shares, no par value,                                        
Unlimited authorized shares; 8,136,348 shares issued and outstanding as at March 31, 2021 and 8,136,348 shares as at March 31, 2020.     19,491,842       19,491,842       19,491,842       19,491,842       19,491,842  
Additional paid-in capital     2,966,068       2,966,068       2,963,911       2,962,105       2,961,848  
Accumulated deficit     (21,279,678 )     (20,631,106 )     (20,622,106 )     (21,325,620 )     (21,282,719 )
Accumulated other comprehensive loss     (42,099 )     (592,912 )     (451,315 )     (378,425 )     (372,644 )
      1,136,133       1,233,892       1,382,332       749,902       798,242  
      1,160,784       1,333,745       1,530,464       838,224       938,759  
                                         

 

 

 

B.           
Capitalization and Indebtedness

 

Not applicable.

 

C.           
Reasons for the Offer and Use of Proceeds

 

Not applicable.

 

D.           
Risk Factors

 

You should
carefully consider the risks set forth directly below, and other cautionary statements throughout this report. If any event arising from
these risks occurs, our business prospects, financial condition, results of operations and cash flows could be materially adversely affected.

 

RISKS
RELATED TO OUR BUSINESS

 

BECAUSE
THE REVENUE AND INCOME POTENTIAL OF OUR BUSINESS AND MARKETS ARE UNPROVEN, WE CANNOT PREDICT WHETHER WE WILL MEET INTERNAL OR EXTERNAL
EXPECTATIONS OF FUTURE PERFORMANCE.

 

Our future
success depends on our ability to discover new and innovative biotechnology and biotechnology products. Given the very early stage of
our research, there are no guarantees that we will be successful in this discovery.

 

OUR FINANCIAL
AND OPERATING PERFORMANCE MAY BE ADVERSELY AFFECTED BY EPIDEMICS, NATURAL DISASTERS AND OTHER CATASTROPHES.

 

Our financial
and operating performance may be adversely affected by epidemics such as the on-going COVID-19 pandemic, natural disasters and other
catastrophes. Our business could be materially and adversely affected in the event that the slowdown or suspension carries on for a long
period of time. The restrictive measures against the ongoing COVID-19 outbreak adversely affected and slowed down national economic development.
Any prolonged restrictive measures in order to control the contagious disease or other adverse public health developments in may have
a material and adverse effect on our business operations.

 

Similarly,
natural disasters, wars (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest
and heightened travel security measures instituted in response, and travel-related accidents, as well as geopolitical uncertainty and
international conflict, may in turn have a material adverse effect on our business and results of operations. In addition, we may not
be adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis, and as a result, our
operational continuity may be adversely and materially affected, which in turn may harm our reputation.

 

 

 

THE COVID-19
PANDEMIC HAS ADVERSELY IMPACTED, AND POSES RISKS TO, OUR BUSINESS, THE NATURE AND EXTENT OF WHICH ARE HIGHLY UNCERTAIN AND UNPREDICTABLE.

 

The continued
global spread of COVID-19 has led to disruption and volatility in the global capital markets, which has increased the cost of, and adversely
impacted access to, capital (including the commercial paper markets) and increased economic uncertainty. It is likely that the pandemic
will cause an economic slowdown of potentially extended duration, and it is possible that it could cause a global recession.

 

COVID-19
is adversely affecting, and is expected to continue to adversely affect, certain elements of our business, including as a result of impacts
associated with preventive and precautionary measures that we, other businesses, our communities and governments are taking. Due to these
impacts and measures, we have experienced and expect to continue to experience delays in our research activities.

 

In addition
to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel
and business activity, which could significantly impact our ability to conduct research. Due to the speed with which the COVID-19 situation
is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around
its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation
our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and
the impact on our financial and operating results could be material.

 

Negative
economic conditions may also cause debtors to delay and withhold payments to ZIM as a follow through of the negative economic conditions
they are experiencing due to COVOV-19. The extent to which COVID-19 impacts our business will depend on future developments, which are
highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions
to contain COVID-19 or treat its impact, among others.

 

IF WE ARE
UNABLE TO OBTAIN ADDITIONAL FUNDS, WHEN REQUIRED, IN A TIMELY MANNER OR ON ACCEPTABLE TERMS, WE MAY HAVE TO CURTAIL OR SUSPEND CERTAIN
ASPECTS OF OUR BUSINESS OPERATIONS, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS RELATIONSHIPS, FINANCIAL RESULTS, FINANCIAL
CONDITION AND PROSPECTS.

 

We anticipate
that our cash and cash equivalents balance at March 31, 2021 of $213,324 will be sufficient to meet our present operating and capital
expenditures through fiscal year 2022. There is no guarantee that unanticipated circumstances will not require additional liquidity.

 

Future
liquidity and cash requirements will depend on a wide range of factors including the level of success the Company has in executing its
strategic plan as well as its ability to raise additional financing. Accordingly, there can be no assurance that the Company will be
able to meet its working capital needs for any future period.

 

THE LOSS
OF THE SERVICES OF DR. MICHAEL COWPLAND, MR. JAMES STECHYSON AND OTHER KEY PERSONNEL COULD NEGATIVELY AFFECT OUR BUSINESS.

 

We currently
depend heavily on the services of Dr. Michael Cowpland and Mr. James Stechyson. The loss of the services of Dr. Cowpland, Mr. Stechyson
or other key personnel could affect our performance in a material and adverse way.

 

 

 

OUR
INTERNAL CONTROLS OVER FINANCIAL REPORTING ARE NOT EFFECTIVE.

 

We did
not have effective internal control procedures in place at March 31, 2021, when we evaluated our internal control over financial reporting
under Section 404 of the Sarbanes-Oxley Act of 2002. This could affect the reliability of our consolidated financial statements. We are
attempting to remedy our weaknesses but as a small company we have limited resources to employ for this purpose. See Item 15 of this
Form 20-F for additional information on our attempts to rectify our weaknesses. The reduction of the risk will require additional expenses
and use of management’s time.

 

 

OUR STRATEGIC
DIRECTION IS EVOLVING, WHICH COULD NEGATIVELY AFFECT OUR FUTURE RESULTS.

 

Since
inception, our business model has evolved and continues to evolve as we refine our offerings and market focus. Prior to 2004, we focused
on developing
products and services for the wireless data network infrastructure
known as “SMS” or “text messaging”, in 2004 through to fiscal year 2007 we focused
on our SMS aggregation services. From fiscal years 2008 to 2012, we focused on offering mobile content, applications development and
the development of new IDE software. In 2013 we discontinued mobile content sales due to very low sales volume and redirected resources
related to mobile content to the continued development of our IDE software. In 2020 we sold the business and assets related to our databases
business and, due to uncertain sales, discontinued our SMS business. At the end of fiscal year 2021 we have ceased all revenue generating
operations and have focused solely on the research activities in our NuvoBio subsidiary. We continue to evaluate opportunities and alternative
strategies in a rapidly evolving market. We plan to leverage our intellectual capital, core technologies and other business assets to
focus on new strategic directions and attempt to maximize shareholder value mainly through our NuvoBio subsidiary. Changes to our business
may not prove successful in the short or long term and may negatively impact our financial results.

 

WE OPERATE
IN RAPIDLY EVOLVING MARKETS, AND OUR BUSINESS MODEL CONTINUES TO EVOLVE, WHICH MAKES IT DIFFICULT TO EVALUATE OUR FUTURE PROSPECTS.

 

Our potential
for future profitability must be considered in the light of the risks, uncertainties, and difficulties encountered by companies that
are in rapidly evolving markets and continuing to innovate with new and unproven technologies or services, as well as undergoing significant
change. In addition to the other risks we describe in this section, some of these risks relate to our potential inability to attract
and retain unique and sought after technology; to control expenditures and to respond quickly and appropriately to industry developments,
including rapid technological change; changes in customer requirements; and new products introduced into our markets by our competitors.
If we do not effectively address the risks we face, we may not achieve profitability.

 

IF WE ARE
UNABLE TO MANAGE THE INTEGRATION OF ANY ACQUIRED BUSINESSES, OUR FINANCIAL CONDITION AND OPERATING RESULTS MAY BE ADVERSELY AFFECTED.

 

A failure
to effectively manage the integration of any acquisitions we may make may adversely affect our business and financial condition. Any
acquisition that we make will place significant demand on management, technical and other resources.

 

WE HAVE
AFFILIATED SHAREHOLDERS WHO CAN SUBSTANTIALLY INFLUENCE THE OUTCOME OF ALL MATTERS VOTED UPON BY OUR SHAREHOLDERS AND WHOSE INTERESTS
MAY NOT BE ALIGNED WITH YOURS.

 

 

 

The beneficial
ownership of our Chief Executive Officer and related parties in our outstanding shares is approximately 53%. All directors and executive
officers as a group (5 persons) beneficially hold 6,122,299 of our common shares, which totals approximately 75% of ownership. As a result,
our insiders are able to substantially influence all matters requiring the approval of our shareholders, including the election of directors
and the approval of significant corporate transactions such as acquisitions. This concentration of ownership could delay, defer or prevent
a change in control or otherwise impede a merger or other business combination that our Board of Directors or other shareholders may
view favorably.

 

ITEM 4. INFORMATION
ON THE COMPANY

 

History
and Development of the Company

 

ZIM’s
principal place of business and registered office is located at 150 Isabella Street, Suite 150, Ottawa, Ontario, Canada, K1S 1V7 and
we can be contacted at (613) 727-1397. In the United States our agent is Equiniti, Inc., located at 3200 Cherry
Creek South Dr., #430, Denver, CO, 80209 and can be contacted at (303) 282-4800.

ZIM was
incorporated under the Canadian Business Corporations Act on October 17, 2002 in order to purchase ZIM Technologies International Inc.
(“ZIM Technologies”), which was formed in 1997 to acquire the software technology now called the ZIM Integrated Development
Environment (the “ZIM IDE software”). On February 10, 2004, ZIM purchased UK-based SMS service firms EPL Communications Limited
and E-Promotions Limited (together referred to as “EPL”). During the year ended March 31, 2006, EPL was dissolved and all operations
were transferred to ZIM Corporation in Canada. ZIM is also the sole shareholder of ZIM Technologies do Brazil Ltda., a company incorporated
in Brazil that distributes the ZIM IDE Software, and PCI Merge, Inc., a Florida based holding company with no operations. Until March
31, 2004, ZIM was the sole shareholder of ZIM Technologies, a Canadian federal corporation and the chief operating company of the ZIM
group of companies. On April 1, 2004, ZIM Corporation and ZIM Technologies amalgamated into ZIM Corporation. On April 1, 2006, ZIM purchased
a US-based mobile content company called Advanced Internet Inc. (“AIS”). In 2011 ZIM acquired the technology assets of Torch
Technologies and began offering an advanced portfolio of migration services and management products that strengthen and complement ZIM’s
enterprise database products. In April 2016, ZIM incorporated a wholly owned subsidiary called GeneSpans Corporation.
GeneSpans is focused on developing intellectual property and advancing research and development in the areas of new synthetic
drugs and immunotherapies. Genespans name was changed to NuvoBio Corporation on August 25, 2016.

 

In 2013
we discontinued mobile content sales due to very low sales volume and redirected resources related to mobile content to the continued
development of our IDE software. In April 2020 ZIM sold the business and assets related to our databases business and, due to uncertain
sales, discontinued our SMS business on December 31, 2020. At the end of fiscal year 2021 we have ceased all revenue generating operations
and have focused solely on the research activities in our NuvoBio subsidiary.

 

See Note
8 of the consolidated financial statements for details of our principal capital expenditures and divestitures, including those currently
in progress, since the beginning of our last three fiscal years to the date of this annual report.

 

 

 

We submit
reports and other information to the SEC under the Securities Exchange Act of 1934. The reports and other information that we file and
furnish to the SEC may be viewed at the SEC’s website (www.sec.gov), which contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC. We also maintain a website (www.zim.biz) that contains
information about our company. The contents of our website are not part of this Annual Report on Form 20-F.

 

Business
Overview

 

ZIM started
operations as a developer and provider of database software known as ZIM IDE software.  ZIM IDE software is used by companies
in the design, development, and management of information databases and mission critical applications.  

 

Beginning
in 2002, the Company expanded its business strategy to include opportunities associated with mobile products.  Prior to fiscal
year 2007, the Company focused on developing products and services for the wireless data network infrastructure known as “SMS”
or “text messaging”.  Although SMS will continue to provide a minimal amount of revenue within the mobile segment
of operations, with the acquisition of AIS in 2006 the Company shifted its corporate focus to include offering mobile content directly
to end users.  

 

In fiscal
year 2020, ZIM continued to develop and sell enterprise database software to end users, as well as maintain its SMS messaging business.

 

In April
of 2020 the IDE software business and assets were sold to employees of the Company. In addition, due to low sales volumes, the SMS business
was discontinued on December 31, 2020.

 

Also, in 2018,
NuvoBio Corporation signed strategic partnerships and exclusive global licensing agreements with leading drug research institutes. The
company is currently funding research and development projects in the following areas:

 

 

New peptide-derived
inhibitors for therapeutic intervention against various cancer cell lines in the presence or absence of chemotherapeutics to characterize
the in vivo effects of promising inhibitors.

 

The following
tables show the breakdown of total revenues by category of activity and geographic market.

 

Note
that all revenues are from discontinued operations:

Revenue by category   Year ended
March 31,
2021
  Year ended
March 31,
2020
  Year ended
March 31,
2019
      $       $       $  
         Software, software maintenance and consulting     —         278,808       577,411  
         Mobile     45,248       68,701       122,638  
Total revenue     45,248       347,509       700,049  

 

 

 

Revenue by geographic market  

Year ended March 31,

2021

  Year ended March 31,
2020
  Year ended March 31,
2019
      $       $       $  
United States     —         55,548       235,591  
Brazil     —         191,043       170,056  
Canada     —         14,878       41,464  
Singapore     45,248       68,907       122,775  
Austria     —         17,133       130,163  
Total revenue     45,248       347,509       700,049  

 

SOFTWARE

 

Historically,
we were a developer and provider of the ZIM IDE software, which is used by companies in the design, development, and management of information
databases. We now license the ZIM IDE software products to customers through direct and partner sales.

 

The ZIM
IDE software provides an integrated development environment (IDE) for Microsoft Windows, UNIX and Linux computer operating systems. An
integrated development environment is a set of programs that run from a single user interface for use in the creation of applications
and management of databases. The ZIM IDE software was designed to handle complex data management in a more efficient manner than the
database technologies historically provided by other vendors. The distinctive characteristic of the ZIM IDE software is its object dictionary
which contains more than just a table of data. Instead, all relationships and data information are concurrently stored in the object
dictionary, making it easier to manage and retrieve information. Furthermore, ZIM IDE software uses data sets rather than record-by-record
access to manage information. This technique further simplifies the management of data.

 

The ZIM
IDE software has been used to develop database applications that have been deployed in a wide range of industries, including finance,
insurance, marketing, human resources, information and records management. Applications built with the ZIM IDE software also has full
access to most other major databases such as Oracle™ and SQL™ Server.

 

In
2011, ZIM acquired the technology assets of Torch Technologies and began offering an advanced portfolio of migration services and management
products that strengthen and complement ZIM’s enterprise database products. The combined product portfolio is a robust solution
to rapidly and cost effectively migrate existing databases to other industry databases including Oracle™ and SQL™ while
retaining valuable ZIM applications and providing a simplified database management suite.

In April
2020 the IDE software business and assets were sold to employees of the Company.

 

MOBILE

 

Our business
strategy previously involved designing mobile data software products to take advantage of the existing wireless data network infrastructure
known as Short Message Service. SMS, mobile messaging, or text messaging, as it is also known, enables users to communicate person to
person and application to person through cellular handsets and other SMS-enabled devices. The expertise we gained in the SMS infrastructure
and network allowed us to expand into the aggregation of SMS messages in 2004. Aggregators transmit a broad variety of messaging, content,
and applications worldwide. ZIM continues to provide a high-volume delivery infrastructure that is scalable with detailed reporting available
to our mobile content customers.

 

 

 

During
the year ended March 31, 2006, it became apparent that the SMS aggregation market was becoming consolidated, which made it increasingly
difficult for us to compete. We noticed a downward trend in sales of aggregation services by the end of the third quarter of fiscal year
2006 and decided to expand our product and service offerings. On April 1, 2006, we acquired all of the outstanding capital stock of Advanced
Internet, Inc. (“AIS”), from Advanced Telecom Services, Inc. (“ATS”).

 

On December
31, 2020, due to low sales volumes, the Mobile business was discontinued.

 

CUSTOMERS

 

At the
end of fiscal year 2021 the Company ceased all revenue generating operations and consequently had no customers.

 

During
fiscal year 2020, we had 1 revenue generating customer in our mobile segment related to the SMS market. In addition, we had in excess
of 70 customers who utilized ZIM IDE to run their enterprise applications. One customer accounted for approximately 22% for the year
ended March 31, 2018, one customer accounted for approximately 18% of revenue for the year ended March 31, 2019 and one customer accounted
for approximately 20% of revenue for the year ended March 31, 2020.

 

RESEARCH
AND DEVELOPMENT

 

Our continuing
operations research and development activities focus in the area of genetic therapy solutions. Research and development expenditures,
net of refundable tax credits are estimated at $11,928 for fiscal year 2021, and $66,068 was received for fiscal year 2020 and $72,120
for fiscal year 2019.

 

PATENTS
AND INTELLECTUAL PROPERTY PROTECTION

Intellectual
property does not represent a material part of our assets or business strategy at this time. While we have filed two patents related
to our NuvoBio subsidiary, we do not rely on patents or copyrights and, to the extent we maintain trade secrets, we rely on confidentiality
agreements to protect them from misappropriation. In the future we may seek patents and intellectual property protection specifically
related to the drug research programs we are funding through our NuvoBio Corporation subsidiary.

 

C.       Organizational
Structure

 

Refer to
Exhibit 8.1 for a complete list of our subsidiaries.

 

D.       Property,
Plant and Equipment

 

DESCRIPTION
OF PROPERTY

 

Our principal
office is located in Ottawa, Canada. ZIM leases an office suite of approximately 1,258 square feet. The lease is currently scheduled
to expire June 30th, 2022

 

We believe
that our existing facilities are adequate to meet our current needs.
 

 

Refer to
note 9 of our consolidated financial statements “EQUIPMENT” for additional information.

 

 

 

ITEM 4A. UNRESOLVED
STAFF COMMENTS

 

Not
applicable.

 

ITEM 5. OPERATING
AND FINANCIAL REVIEW AND PROSPECTS

EXECUTIVE
SUMMARY

 

Continuing
Operations:

 

The continuing
operations of the business are focused on research and have no generation of revenue at the present time.

 

Net
loss from continuing operations for the fiscal year 2021 was $73,788 as compared to net income of $166,892 for the fiscal year 2020 and
net income of $535,127 for the fiscal year 2019. The increased income in fiscal year 2019 is due mainly to the adoption of FASB 2017-01
and the unrealized gain on equity securities of $604,013. 2020 net income is mainly due to the gains related to the disposition of assets
related to ZIM’s investment in CP4H. In fiscal 2021 the net loss from continuing operations is due to discontinuation of all revenue
generating operations coupled with the loss on the disposition of our database assets.

Discontinued
Operations:

 

In
April 2020, ZIM sold all of its assets related to the database and software business with an effective
date of April 1, 2020. The business was sold for cash consideration of $120,000 Canadian dollars to be paid in five installments
over 5 years. The fair market value of these payments is estimated at $78,924 US dollars. ZIM recognized a net gain on the sale of
these assets in the amount $223,549. The net gain is a combination of a loss on the sale of $348,455 netted against a currency
translation reversal of $572,004. This business has definable revenues and expenses and has been accounted for as a discontinued
operations as per ASU 2014-08.

At
December 31, 2020, ZIM ceased all operations related to the SMS messaging business due to low profit margins and uncertainty regarding
the future of the business. This business has definable revenues and expenses and has been accounted for as
a discontinued operations as per ASU 2014-08.

Revenue
from discontinued operations for the fiscal year 2021 was $45,248 compared with revenue of $347,509 for fiscal year 2020. The decrease
is attributable to the disposition of the database business in April of 2020 with an effective date of April 1, 2020 and the discontinuation
of the Mobile business on December 31, 2020.

 

Revenue
from discontinued operations for the fiscal year 2020 was $347,509, compared with revenue of $700,049 for fiscal year 2019. The decline
is attributable to the decreases across all lines of business ranging from a 52% decrease in our software, software maintenance and consulting
business to 44% in our mobile messaging business.

 

Net loss
from discontinued operations for the fiscal year 2021 was $2,780 as compared to net loss of $175,891 for the fiscal year 2020. The loss
in fiscal year 2021 is due mainly to the to the disposition of the database business in April of 2020 and the discontinuation of the
Mobile business on December 31, 2020.

 

Net
loss for the fiscal year 2020 was $175,891 as compared to net income of $168,389 for the fiscal year 2019. The decreased income in fiscal
year 2020 is due to declining revenue in all business segments while expenses stayed flat. The net gain is a combination of a loss on the sale of $348,455 netted
against a currency translation reversal of $572,004.

 

 

 

The
following is an overview of our operating results for the year ended March 31, 2021. A more detailed discussion of our operating results,
comparing our operating results for the years ended March 31, 2021, 2020 and 2019, is included under the heading “
Results
of Operations for the Year Ended March 31, 2021 Compared to the Year Ended March 31, 2020 and 2019” of this “OPERATING AND
FINANCIAL REVIEW AND PROSPECTS.” A discussion on the effects of currency fluctuations can be found in Item 11.

 

Continuing
Operations:

 

The continuing
operations of the business are focused on research and have no generation of revenue at the present time.

 

Total operating
expenses from continuing operations for the year ended March 31, 2021 were $72,621 an increase of approximately $4,164 compared to operating
expenses of $68,457 for the year ended March 31, 2020 and a decrease of approximately $14,385 compared to operating expenses of $82,842
for the year ended March 31, 2019. The changes in expenses are a result of continual declines in selling, general and administrative
expenses paired with fluctuations in the expenses related to research.

 

Discontinued
Operations:

 

Revenue
from discontinued operations for the fiscal year 2021 was $45,248 compared with revenue of $347,509 for fiscal year 2020. The decrease
is attributable to the disposition of the database business in April of 2020 with an effective date of April 1, 2020 and the discontinuation
of the Mobile business on December 31, 2020.

 

Revenue
from discontinued operations for the fiscal year 2020 was $347,509, compared with revenue of $700,049 for fiscal year 2019. The decline
is attributable to the decreases across all lines of business ranging from a 52% decrease in our software, software maintenance and consulting
business to 44% in our mobile messaging business.

 

Total expenses
from discontinued operations for the year ended March 31, 2021 were $271,578, a decrease of approximately $251,822 compared to operating
expenses of $523,400 for the year ended March 31, 2020 and a decrease of approximately $8,260 compared to operating expenses of $531,660
for the year ended March 31, 2019. The rapid decline in expenses in fiscal 2021 is due to the sale of the database business and discontinuation
of all research and development related to IDE software.

 

CURRENT
STRATEGIC DIRECTION

 

Due to
the decrease in revenues from SMS aggregation services in previous years, we started exploring new opportunities both within the mobile
industry and enterprise application industry. In 2013 we discontinued mobile content sales due to very low
sales volume and on December 31, 2020 we discontinued sales of our SMS aggregation services.

 

 

 

In
2011, with ZIM’s acquisition of the technology assets of Torch Technologies, we increased our focus on the enterprise software
market. Torch’s advanced portfolio of migration services and management products strengthened and complemented ZIM’s enterprise
database products, and the combined product portfolio is a robust solution to rapidly and cost effectively migrate existing databases
to other industry databases including Oracle™ and SQL™ while retaining valuable ZIM applications and providing
a simplified database management suite. In April 2020, ZIM sold all of its assets related to the database
and software business to employees and discontinued this line of business.

In April 2016,
ZIM incorporated a wholly owned subsidiary called GeneSpans Corporation. GeneSpans will fund research into genetic therapy solutions.
Genespans name was changed to NuvoBio Corporation on August 25, 2016.

 

NuvoBio Corporation
has signed strategic partnerships and exclusive global licensing agreements with leading drug research institutes. The company is currently
funding research and development projects in the following areas:

   

 

New peptide-derived
inhibitors for therapeutic intervention against various cancer cell lines in the presence or absence of chemotherapeutics to characterize
the in vivo effects of promising inhibitors.

 

 

ZIM’s
current main strategic focus is the genetic therapy solutions being researched through NuvoBio Corporation.

 

RECENT
DEVELOPMENTS

The
COVID-19 Pandemic

We
are monitoring the global outbreak and spread of the novel strain of coronavirus (COVID-19) and taking steps in an effort to identify
and mitigate the adverse impacts on, and risks to, our business (including but not limited to our employees, customers and other business
partners, and) posed by its spread and the governmental and community reactions thereto. We continue to assess and update our business
continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy and safe. The
spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations in certain cases,
and cancellation of physical participation in certain meetings, events and conferences), and we expect to take further actions as may
be required or recommended by government authorities or as we determine are in the best interests of our employees, customers and other
business partners. We are also working to understand the existing and possible future negative impacts to our infrastructure and take
actions in an effort to mitigate such impacts. Due to the speed with which the COVID-19 situation is developing, the global breadth of
its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact;
therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot be
reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial
and operating results could be material. See “Risk Factors—Risks Related to our Business—The COVID-19 pandemic has
adversely impacted, and poses risks to, our business, the nature and extent of which are highly uncertain and unpredictable.”

CRITICAL
ACCOUNTING POLICIES AND ESTIMATES

 

We prepare
our consolidated financial statements in accordance with accounting principles generally accepted in the United States, which requires
management to make certain estimates and apply judgments that affect reported amounts of assets, liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. We base our estimates and judgments on historical experience, current trends,
and other factors that management believes to be important at the time the consolidated financial statements are prepared. Actual results
could differ from our estimates, and such differences could be material. On an ongoing basis, management reviews our accounting policies
and how they are applied and disclosed in our consolidated financial statements.

 

 

 

The following
supplemental information describes significant judgments and estimates involved in our critical accounting policies, which are more fully
described in Note 3 to the consolidated financial statements included in this annual report.

 

JUDGMENTS
REGARDING TAX POSITIONS

 

The Company
recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of not being
sustained on an audit, based on the technical merits of the position. Accordingly, management may be required to make additional judgments
regarding the accounting treatment of tax positions.

 

VALUATION
ALLOWANCES

 

We must
make certain estimates and judgments in determining the income tax expense for financial statement purposes. These estimates and judgments
occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue
and expense for tax and financial statement purposes. Judgments regarding realization of deferred tax assets and the ultimate outcome
of tax-related contingencies represent key items involved in the determination of tax expense and related balance sheet accounts. We
have currently recorded a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.
Should we determine that based on factors such as future profitability that a reduction in the valuation allowance is appropriate, an
adjustment to our deferred tax assets would increase income in the period that such determination was made.

 

REVENUE
RECOGNITION

The
Company derived revenue from two sources of discontinued operations: enterprise software, including maintenance and consulting services
and mobile services and applications. Enterprise software involves providing enterprise software for designing, developing and manipulating
database systems and applications. Mobile services involve providing SMS applications and services. The Company presents revenues net
of sales tax and other related taxes.

Enterprise
Software

ZIM
recorded revenues from the perpetual license of the Company’s software products and the sale of related maintenance and consulting. The
Company’s standard license agreement provides a license to use the Company’s products based on the number of licensed users. The Company
may license its software in performance obligation arrangements if the customer purchases any combination of maintenance, consulting
or training services in conjunction with the license.

The
Company recognized revenue pursuant to the requirements of the ASC 606. Revenue is recognized using the residual method when objective
evidence of fair value exists for all of the undelivered performance obligations in the arrangement, but does not exist for one or more
performance obligations. The Company allocates revenue to each undelivered performance obligation based on its respective fair value
determined by the price charged when that performance obligation is sold separately. The Company defers revenue for the undelivered performance
obligations and recognizes the residual amount of the arrangement fee, if any. The separate performance obligations of the arrangements
are considered to be separate units of accounting.

 

 

The
following steps are taken to recognize revenue:

1. Identification
on the contract(s) with the customer(s).
2. Identify
the performance obligations in the contract.
3. Determine
the transaction price.
4. Allocate
the transaction price to the performance obligations in the contract.
5. Recognize
revenue when (or as) the Company satisfies the performance obligations.

 

The
Company recorded revenue as earned as evidenced by contracts or invoices for its services at prices established by contract, price list
and/or fee schedule less applicable discounts and the objective evidence that each performance obligation has been achieved. If at the
outset of an arrangement the Company determines that the collectability is not probable, revenue is deferred until payment is received.

Collectability
is assessed based on the collection history of the client, current economic trends, customer concentrations and customer credit worthiness.
Delivery of the software has occurred once the customer has accepted the product or has been provided with permanent keys to the file
transfer protocol (“FTP”) site. If an arrangement allows for customer acceptance of the software or services, the Company defers
revenue recognition until the earlier of customer acceptance or when the acceptance right lapses.

Maintenance
and Consulting Revenue

Maintenance
revenues was recognized using a time base approach equally over the term of the maintenance contract. The liability relating to the received
but unearned portion of maintenance revenues is recognized as deferred revenues.

Consulting
revenue, which represents services provided on a per diem basis to customers, was recognized as the services were performed as there
were no customer acceptance provisions involved in these types of arrangements. Consulting revenue, which represents services provided
on a fixed price basis to customers, was recognized upon achieving the related performance obligation.

In
general, credit terms of 30 days were extended to customers with a small number of customers receiving longer payment terms based on
the long-standing relationship with ZIM.

Mobile
Revenue

Aggregation
services occurred when ZIM sent messages from its content provider customers through mobile operators to end users on their cell phones.
In this situation, the Company contracted with its customers that cannot connect directly to the mobile operators and with the third-party
mobile operators or other aggregators directly for the transmission of the messages. The performance obligation was to transmit a message.
Revenues were recognized in the month in which the performance obligation was satisfied, provided no significant ZIM obligations remained.
We worked with aggregators to provide delivery routes and received statements and billing in real time. We prepaid for message credits
and billed customers for message delivery at the end of each month. We purchased service credits from the aggregators and billed our
customers directly for the delivery of messages on a monthly basis.

 

STOCK-BASED
COMPENSATION

 

ZIM measures
compensation cost for all stock-based awards at fair value on the date of the grant and recognizes compensation expense over the service
period for awards expected to vest. The fair value of stock options is determined using the Black Scholes valuation model and requires
judgment in establishing the volatility and option forfeiture rates. These internal judgments
may be incorrect in any period, which may result in our recording materially incorrect compensation expense
.

 

 

 

INVESTMENTS

 

ZIM measures
the value if its investments on a fair value basis. Investments are measured based on the observable price changes in orderly transactions
for the identical or similar investment of the same issuer. In the absence of observable price changes the alternative measurement basis
of cost less any impairments is used as a valuation methodology.

 

RESULTS
OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2021 COMPARED TO THE YEAR ENDED MARCH 31, 2020 AND THE YEAR ENDED MARCH 31, 2019

 

The company
does not generate any revenue from continuing operations.

 

All revenue
has been generated from discontinued operations.

 

REVENUES

 

  Year ended March 31, 2021   As a %   Year ended March 31, 2020   As a %   Year ended March 31, 2019   As a %
                              $       $       $  
Bulk SMS     45,248       100 %     68,701       20 %     122,638       18 %
      45,248       100 %     68,701       20 %     122,638       18 %
Software     —         0 %     24,769       7 %     117,533       17 %
Maintenance and consulting     —         0 %     254,039       73 %     459,878       65 %
      —         0 %     278,808       80 %     577,411       82 %
      45,248       100 %     347,509       100 %     700,049       100 %

 

Revenue
from discontinued operations for the fiscal year 2021 was $45,248 compared with revenue of $347,509 for fiscal year 2020. The decrease
is attributable to the disposition of the database business in April of 2020 and the discontinuation of the Mobile business on December
31, 2020.

 

Revenue
from discontinued operations for the fiscal year 2020 was $347,509, compared with revenue of $700,049 for fiscal year 2019. The decline
is attributable to the decreases across all lines of business ranging from a 52% decrease in our software, software maintenance and consulting
business to 44% in our mobile messaging business.

 

 

 

DISCONTINUED
OPERATIONS REVENUE ANALYSIS BY SERVICE/PRODUCT OFFERING

 

BULK
SMS

 

In fiscal
year 2021 our revenue from bulk SMS messaging continued to decline as our cost to deliver the services increased. Due to the decrease
in volume and erosion of profit margins, ZIM discontinued its Bulk SMS messaging service with a revenue for fiscal 2021 of $45,248 as
compared to $68,701 for fiscal year 2020. Our bulk SMS messaging revenue increased from $104,485 in fiscal year 2018 to $122,638 in fiscal
year 2019 and then had a sharp decrease to $68,701 in fiscal year 2020. We experienced a decrease in the volume of messages transacted
through SMS routes in fiscal year 2020, as compared to the increases we experienced in fiscal year 2018 and fiscal year 2019. In general,
bulk messaging customers choose the aggregator that is offering the lowest cost route and this results in fluctuating and unpredictable
revenue from this segment.

 

SOFTWARE,
MAINTENANCE AND CONSULTING

 

In
April 2020, ZIM sold all of its assets related to the database and software business to employees and discontinued
this line of business.

Prior to
fiscal 2021 we generated revenues from the sale of our database product as well as the subsequent maintenance and consulting fees. Software
sales increased from $34,435 in fiscal year 2018 to $117,533 in fiscal year 2019 then decreased to a more historical level in 2020 of
$24,769 as compared to fiscal year 2018. The increase in 2020 reflects increased activity in our Canadian operation after the decline
we experienced in 2018.

 

In addition
to the sale of the software, we are generating revenue from software maintenance and consulting. Maintenance and consulting revenues
have also decreased substantially from $459,878 in fiscal year 2019 to $254,039 in fiscal year 2020. The decline in 2020 is also a decline
compared to the $360,322 in 2018. The spike in revenue in 2019 was due to the maintenance contract renewals from returning customers
in the Canadian operations.

 

EXPENSES

 

Operating
expenses – continuing operations

 

  Year ended March 31,
2021
  Year ended March 31,
2020
  Year ended March 31
2019
      $       $       $  
Selling, general and administrative     50,501       60,249       69,125  
Research and development     23,120       8,208       13,717  
      73,621       68,457       82,842  

 

Total operating
expenses increased in fiscal year 2021 compared to fiscal year 2020 from $68,457 to $73,621 due to increase expenditures on research
activities.

 

 

 

Operating
expenses – discontinued operations

 

  Year ended March 31, 
2021
  Year ended March 31,
2020
  Year ended March 31,
2019
      $       $       $  
Cost of revenue     32,122       19,229       20,588  
Selling, general and administrative     228,402       446,312       452,669  
Research and development     1,054       57,859       58,402  
      271,578       523,400       531,660  

 

Total expenses
from discontinued operations decreased in fiscal year 2021 compared to fiscal year 2020 from $523,400 to $271,578. Between fiscal year
2019 and fiscal year 2020 expenses remained stable. The rapid decline in expenses in fiscal 2021 is due to
the sale of the database business and discontinuation of all research and development related to IDE software. This is partially offset
by the increase in the cost of delivering SMS services.

 

SELLING,
GENERAL AND ADMINISTRATIVE

 

Selling,
general and administrative expenses from continuing operations for the years ended March 31, 2021, March 31, 2020 and March 31, 2019
were $50,501, $60,249, and $69,125 respectively. Decline is due to decline in operational expenses from the decline in operating activity.

 

Selling,
general and administrative expenses from discontinued operations for the years ended March 31, 2021, March 31, 2020 and March 31, 2019
were $228,402, $446,312, and $452,669 respectively. The rapid decline in expenses in fiscal 2021 is due to
the sale of the database business and discontinuation of all research and development related to IDE software.

 

INTEREST

 

For the
year ended March 31, 2021, we incurred interest expense of $620 related to draws on the available overdraft protection facility with
the Royal Bank of Canada.

 

For the
year ended March 31, 2020, we incurred interest expense of $460 related to draws on the available overdraft protection facility with
the Royal Bank of Canada.

 

For the
year ended March 31, 2019, we incurred interest expense of $14 related to draws on the available overdraft protection facility with the
Royal Bank of Canada.

 

ASSET
IMPAIRMENT

On
August 9, 2018 (fiscal year 2019), Connecting People for Health Co-operative Ltd. (CP4H) was acquired for an undisclosed amount. ZIM
recognized its portion of the proceeds, in the amount $220,233 as a gain on the sale of assets.

In
April 2020, ZIM sold all of its assets related to the database and software business to former employees with
an effective date of April 1, 2020 and discontinued this line of business. ZIM recognized a gain on the sale of these assets in the amount
$223,549. The net gain is a combination of a loss on the sale of $348,455 netted
against a currency translation reversal of $572,004.

 

 

INCOME
TAXES

 

Investment
tax credits on research and development expenditures from continuing operations in Canada are netted against research and development
costs from continuing operations as shown above.

 

Included
in income taxes from discontinued operations are taxes paid on income earned in Brazil. Investment tax credits on research and development
expenditures in Canada are netted against research and development costs. The increase in income taxes recoverable is due to increased
research and development tax credits related to database migration technologies.

 

The Scientific
Research and Development Credits received from the Canadian federal government for all operations were assessed as filed in fiscal years
2020, 2019 and 2018.

 

ADOPTED
ACCOUNTING PRONOUNCEMENTS

None.

RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS – NOT YET ADOPTED

From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards
setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company’s management
believes that the impact of recently issued standards that are not yet effective will not have any significant impact on the consolidated
financial statements upon adoption.

In
June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326).
This ASU represents a significant change in the Accounting for Credit Losses (“ACL”) accounting model by requiring immediate
recognition of management’s estimates of current expected credit losses (CECL). Under the prior model, losses were recognized only
as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being
probable.
The new standard effective date for Smaller Reporting Companies
is fiscal years beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact ASU 2016-13 will
have on the Company’s consolidated financial statements.

B.
Liquidity and Capital Resources

As at March
31, 2021, we had cash and cash equivalents of $213,324 and working capital of $298,330 as compared to cash of $429,824 and working capital
of $543,916 at March 31, 2020. As at March 31, 2019, we had cash and cash equivalents of $506,524 and working capital of $652,488.

 

 

 

Cash flows
for the fiscal periods were as follows:

 

 

Year ended

March 31,
2021

 

Year ended

March 31,
2020

 

Year ended

March 31,
2019

      $       $       $  
Cash flows provided by (used in) operating activities     (109,293 )     (73,045 )     (60,591 )
Cash flows provided by (used in) discontinued operations     (119,053 )     (127,001 )     216,465  
Cash flows provided by (used in) investing activities     (4,486 )     214,940       (7,040 )
Cash flows provided by financing activities     —         —         —    

 

Operating
activities consumed $109,293 of cash for the year ended March 31, 2021 as compared to consuming cash of $73,045 for the year ended March
31, 2020 and using $60,591 during the year ended March 31, 2019.

 

Discontinued
operations activities consumed $119,053 of cash for the year ended March 31, 2021 as compared to consuming cash of $127,001 for the year
ended March 31, 2020 and providing cash of $216,465 during the year ended March 31, 2019.

 

We used
cash in the amount of $4,486 in fiscal year 2021, generated $214,940 in fiscal year 2020, and used $7,040 in fiscal year 2019 in investing
activities. In fiscal year 2020, cash was generated by the sales of our investment in CP4H for an amount of $220,233 and was slightly
offset by the purchase of computers and software for $5,293. In fiscal year 2019, cash was used for leasehold improvements and the purchase
of computer equipment and software.

 

At March
31, 2021, the Company had access to an overdraft protection facility from its principal banker for approximately $39,760 (refer to Note
9 “Line of Credit” to consolidated financial statements), in addition to a cash and cash equivalent balance of $213,324.  Management
believes that these funds, together with cash from on-going operations, will be sufficient to fund existing operations for the next 12
months. However, there is no guarantee that unanticipated circumstances will not require additional liquidity, and in any event, these
funds alone may not allow for any additional expenditures or growth.

 

Credit
terms for software, maintenance and consulting services have remained consistent from prior periods at 30 days.

 

As at March
31, 2021, 48% of all receivables were current. As at March 31, 2020, approximately 100% of all receivables were current. As at March
31, 2019, approximately 58% of all receivables were current.

 

Cash and
cash equivalents of $213,324 are comprised of $84,245 in cash and $129,079 in cash equivalents. The cash equivalents of $129,079 at March
31, 2021 ($371,229 at March 31, 2020, $290,598 at March 31, 2019) are comprised of:

 

 

 

Held
in Canada:

CIBC Wood
Gundy at 1.00% – $129,079 ($162,323 CDN) – No Maturity

 

Future
liquidity and cash requirements will depend on a wide range of factors, including the level of success the Company has in executing its
strategic plan as well as its ability to raise additional financing. Accordingly, there can be no assurance that ZIM will be able to
meet its working capital needs for any future period. In addition, the Company has an accumulated deficit of $21,279,678 for the fiscal
year ended March 31, 2021. 

 

If ZIM’s
expenses surpass the funds available or if ZIM requires additional expenditures to grow the business, the Company may be unable to obtain
the necessary funds and ZIM may have to curtail or suspend some or all of its business operations, which would likely have a material
adverse effect on its business relationships, financial results, financial condition and prospects, as well as on the ability of shareholders
to recover their investment.

 

C. Research
and development

 

Research
and development expenses for continuing operations, net of refundable tax credits, went from $13,717 for the year ended March 31, 2019
to $8,208 for the year ended March 31, 2020 and to $23,120 for the year ended March 31, 2021. The increase in cost for fiscal years 2021
relates to increased funding of research projects related to our NuvoBio subsidiary and are net of refundable investment tax credits
on research and development expenses in Canada.

 

Research
and development expenses for discontinued operations, net of refundable tax credits, went from $58,402 for the year ended March 31, 2019
to $57,859 for the year ended March 31, 2020 and to $1,054 for the year ended March 31, 2021. The sharp decline in expenditures in fiscal
year 2021 relates to the sale of the database business and the discontinuation of all research and development related to these assets.
Prior year research and development expenses are related to the development of the ZIM database language and are net of refundable investment
tax credits on research and development expenses in Canada.

 

 

The Company
has not identified and is not aware of any trends that will have a significant impact on its consolidated financial position, statement
of operations or cash flows.

 

E. Off-Balance
Sheet Arrangements

 

The Company
does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

F. Tabular
Disclosure of Contractual Obligations

 

The following
table sets forth our known contractual obligations as of March 31, 2021.

 

 

Contractual Obligations   Payment Due by Period
Total Less than
1 year
1-3 years 3-5 years Greater than 5 years
      $       $       $       $       $  
Operating Lease Obligations     16,256       13,005       3,251       —         —    
Research     39,760       39,760       —         —         —    
Accounts Payable     6,282       6,282       —                    
Total     62,298       59,047       3,251       —         —    

 

ITEM
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

 

Each member
of our Board of Directors is elected for a three-year term. The term of all Directors will expire in September 2022.

 

The following
sets forth information concerning our executive officers and directors, including their ages, present principal occupations, other business
experience during the last five years, memberships on committees of the Board of Directors and directorships in other companies:

 

 

NAME                     AGE     POSITION
WITH ZIM
Dr.
Michael Cowpland
78 President,
Chief Executive Officer, and Director
John
Chapman  
57 Chief
Financial Officer / Consultant
Steven
Houck
51     Director
James
Stechyson        
56 Director
Donald
Gibbs
75 Director

 

Michael
Cowpland has served as our President, Director and Chief Executive Officer since February 2001 and as our Chief Financial Officer from
March 2007 to November 2007. In 1973, Dr. Cowpland co-founded Mitel Corporation (formerly NYSE:MTL) and was that company’s Chief Executive
Officer for 10 years. During Dr. Cowpland’s tenure as CEO of Mitel, Mitel’s sales reached $300 million before it was acquired by British
Telecom in 1984. After the acquisition of Mitel, Dr. Cowpland founded Corel Corporation (formerly NASDAQ:CORL), a company that evolved
into one of the world’s leading providers of office productivity software. Corel was widely recognized for its WordPerfect Office Suite,
and its PC graphics application, Corel Draw. Dr. Cowpland served as President of Corel from 1985 to January 2001. Dr. Cowpland began
his career in 1964 at Bell Northern Research. Dr. Cowpland received a Bachelor of Science and Engineering from the Imperial College (London),
a Masters of Engineering from Carleton University and Ph.D. in Engineering from Carleton University (Ottawa, Canada).

 

John Chapman
has served as our Chief Financial Officer since November 2007 and has provided consulting services to the Company since July 2007. Since
January 2020, Mr. Chapman has also served as the Chief Financial Officer of PiiComm Inc.. Between 2006 and 2020 he provided virtual CFO
consulting services to various companies. From 2003 to 2005, Mr. Chapman held the positions of Director of Finance and Program Management
Office at Amdocs Canadian Managed Services. From 1988 to 2003, Mr. Chapman held various positions at Bell Canada and BCE companies in
the areas of Finance, Human Resources and Engineering. He received a Bachelor of Technology (Mechanical Engineering) from Ryerson Polytechnical
Institute in 1988 and a Master of Business Administration from the University of Ottawa in 1999. Mr. Chapman is a member of, and holds
professional designations, with the Association of Professional Engineers of Ontario and the Society of Management Accountants of Ontario
(CPA, CMA).

 

 

 

Steven
Houck has served as a Director of ZIM since April 2001. Currently, Mr. Houck is self-employed. Between August, 2017 and February, 2020
he held the position of Chief Executive Officer at Virtual Power Systems, a company enabling autonomous digital infrastructure. From
July, 2012 to June, 2017, Mr. Houck was the Chief Operating Officer of DataCore Software, a company that develops storage virtualization
software. Mr. Houck also held the position of Chief Executive Officer of GRIDTREE Inc., a technology company
headquartered in Miami, Florida providing enterprise class IT services to the small to medium sized business market. Previously Mr. Houck
was
the Vice President of Latin America at VMware, a developer of software for
the virtualization market
.  Prior to working at VMware Mr. Houck was Vice President of World Wide SMB Sales at EMC Corporation,
a developer and provider of information infrastructure technology and solutions. During 2004 and 2005, Mr. Houck worked as a consultant
for various start-up companies.
From 1995 to early 2004, Mr. Houck held various positions with Corel Corporation including Executive
Vice President of World Wide
Sales. Prior to his service to Corel, he founded Worldview Technologies, a company specializing in
multimedia design and authoring and served as its CEO until 1995. He attended Florida State University and Florida Atlantic University.

 

James Stechyson
has served as a Director and Chairman of ZIM since June 1, 2003. He also served as a Director of ZIM Technologies beginning in January
1998 and was appointed into the position of Chairman in May 2001.  Mr. Stechyson is also currently Managing Director of HostedBizz
Inc., a company delivering cloud computing infrastructure services.  From September 2002 until 2003, Mr. Stechyson served as the
President of ClearOne Communications Canada a subsidiary of ClearOne Communications a global provider of audio & video conferencing
solutions.  From 1990 to September 2002, he was the President of OM Video, a company specializing in the design, sales
and systems integration of professional audio/visual technologies.

 

Donald
R. Gibbs has been a Director of ZIM since July 2003. He also serves as the Chairman of ZIM’s Audit Committee. Since November 2017, Mr.
Gibbs has served as a consultant and Chairman of DRG & Associates in Ottawa, Ontario. Previously, from May 2017 to November 2017
he was an advisor to The Pythian Group and from October 2015 until June 2017, was the Chief Operating Officer and Chief Financial Officer
of The Pythian Group.
From April 2015 until May 2016 Mr. Gibbs held the
position of Chief Financial Officer of Tweed Marijuana Inc. Prior to Tweed, Mr. Gibbs was Chief Executive Officer of AirIQ between June
2008 and April 2015. From April 2007, to June 2008, Mr. Gibbs was the Chief Executive Officer of Tarquin Inc. Since July of 2004, Mr.
Gibbs has been the Chairman and Chief Executive Officer of Process Photonics Inc. From June 2001 to April 2004, Mr. Gibbs was the President
and Chief Executive Officer of Original Solutions Inc. He is also the principal of his own consulting company, Donald R Gibbs and Associates
which provides financial and management assistance to start-up corporations. Since 1970, Mr. Gibbs has held senior financial and executive
positions in Mitel Corporation, Cognos Inc., Gandalf Systems Corporation, Positron Fiber Systems Inc., Gorilla Capital Inc., VIPswitch
Inc. and Original Solutions Inc. Mr. Gibbs received his Bachelor of Commerce degree from the University of Ottawa and holds a professional
designation as a CPA, CMA.

 

EMPLOYEES

 

As at March
31, 2021, we had 0 employees (5 as at March 31, 2020 and 6 as at March 31, 2019).

 

 

 

COMMITTEES
OF THE BOARD OF DIRECTORS

 

We have
an Audit Committee and a Compensation Committee. ZIM does not have a Nominating Committee. In the absence of such a committee, the Board
as a whole considers individuals to recommend to the Board for inclusion among management’s nominees and considers corporate governance
issues. The Board will consider director candidates recommended by shareholders of the Company if the name and qualifications of such
candidates are presented to the Board in a timely manner. The membership term for Board and Board Committee members is 3 years.

 

The Audit
Committee’s functions include evaluating, and recommending to the Board the engagement of the independent registered public accounting
firm, reviewing the results of their audit findings, and monitoring on a periodic basis our internal controls over financial reporting.
The Audit Committee has a formally approved written charter. The Audit Committee consists of Donald Gibbs (Chairman) and Steven Houck.
Mr. Gibbs is the Audit Committee’s “audit committee financial expert,” as defined in Item 16A of Form 20-F, and he
is “independent” under the NASDAQ Listing Rules. Mr. Houck replaced James Stechyson as a member of the audit committee effective
June 24, 2009. The Audit Committee held four meetings during the fiscal year ended March 31, 2021.

 

The Compensation
Committee’s functions include evaluating compensation for directors, officers, employees of and consultants to the Company, and
making recommendations to the Board regarding such compensation matters. The Compensation Committee has a formally approved written charter.
The Compensation Committee currently consists of James Stechyson and Steven Houck. The Compensation Committee did not hold a meeting
during the fiscal year ended March 31, 2021.

 

CODE
OF ETHICS FOR SENIOR FINANCIAL OFFICERS

 

Our Board
of Directors has adopted a Code of Ethics that qualifies as a “code of ethics” within the meaning of such term in Form 20-F
and applies to our Chief Executive Officer and our Chief Financial Officer, as well as to other senior management and senior financial
staff of ZIM, including, without limitation, our comptroller and person performing such function, and complies with the requirements
imposed by the Sarbanes-Oxley Act of 2002 and the rules issued thereunder for codes of ethics applicable to such officers. Our Board
has reviewed and will continue to evaluate its role and responsibilities with respect to the new legislative and other requirements of
the Securities and Exchange Commission. Interested persons can obtain a copy of our Code of Ethics without charge by writing to: Investor
Relations c/o 150 Isabella Street, Suite 150, Ottawa, Ontario K1S 1V7 or by visiting our web-site at www.ZIM.biz.

 

EXECUTIVE
COMPENSATION

 

Compensation
Discussion and Analysis

 

Philosophy

 

We design
all of our compensation programs to retain and as necessary attract key employees who are motivated to achieve growth in technology.
Our program has been kept simple due to the size of our staff and our lack of performance measurements. Our programs are designed to
reward performance based on team and individual performances. Due to the size of our organization, our executive compensation programs
impact all employees because these programs help establish expectations for our general approach to rewards. The Company encourages our
business leaders to work together to create a high performance environment that is reinforced by constant attention to individual’s
goals and expectations.

 

We believe
that the performance of the executives in managing our company should be considered in light of general economic and specific company,
industry and competitive conditions. We believe that our compensation programs for our executives should reflect our success as a management
team and in attaining an increased value for shareholders. We also believe that individual performance should be evaluated annually and
considered in compensation decisions.

 

 

 

Overview
of Compensation and Process

 

Elements
of compensation for our executives include: salary and stock option grants and health, disability and life insurance. Our Compensation
Committee consists of Messrs Stechyson and Houck. It generally meets as required to review any changes to the compensation plans
for the next year. In fiscal 2021, there were no changes to the plan, no bonuses and no changes to the salary levels for executives,
and as a result, there were no Compensation Committee meetings.

 

Due to
the size of the organization, the Compensation Committee is aware of all the elements of each executive’s total compensation over
each of the past three years, as well as a comparison to the compensation of other executive officers in an appropriate market comparison
group. Typically, our Chief Executive Officer recommends compensation changes with respect to the executive officers who report to him.
The Chief Executive Officer has no salary so there have been no compensation recommendations to the compensation committee with respect
to him. All option grants to the executives in the organization are approved by our Board of Directors at the time of grant. The Compensation
Committee has the authority to accept or adjust any recommendations.

 

We choose
to pay each element of compensation in order to attract and retain the necessary executive talent, reward annual performance and provide
incentive for their balanced focus on long-term strategic goals as well as short-term performance. The amount of each element of compensation
is determined by or under the direction of the Compensation Committee, which uses the following factors to determine the amount of salary
and other benefits to pay each executive:

 

· Performance
in the previous year;
· Difficulty
of achieving desired results in the coming year;
· Value
of their unique skills and capabilities to increase the performance of the Company;
· Performance
of their general management responsibilities; and
· Contribution
as a member of the management team.

 

These elements
fit into our overall compensation objectives by helping to secure the future potential of our operations, facilitating our entry into
new markets, providing proper compliance and regulatory guidance, and helping to create a cohesive team.

 

Our policy
for allocating between long-term and currently paid compensation is to ensure adequate base compensation to attract and retain personnel,
while providing stock option incentives to maximize long-term value for our Company.

 

 

Base
Salary and Bonus

 

It is the
goal of the Compensation Committee to establish salary compensation for our executive officers based on our comparable peer companies.
We believe that this gives us the opportunity to attract and retain appropriate managerial employees both at the senior executive level
and below.

 

Equity
Incentives

 

A significant
goal of our compensation is to afford our executives (and employees) an opportunity to participate in our performance through stock option
grants. The Compensation Committee considers factors such as the ability for the Company to attract, motivate and retain qualified individuals
and to align their success with that of the Company’s shareholders through the achievement of strategic corporate objectives and
creation of shareholder value. The level of equity incentives paid to an individual is based on the individual’s overall experience,
responsibility, performance and base salary.

 

Factors
also considered are the equity incentives offered for similar positions in the high-tech industry and other labor markets in which the
Company competes for employees. The Compensation Committee compares remuneration for executive officers of the Company to the remuneration
for similar executives in relevant labor markets.

 

Perquisites

 

We limit
the perquisites that we make available to our executive officers. Our executives are not entitled to any benefits that are not otherwise
available to all of our employees.

 

Post-Employment
Compensation

 

We do not
provide pension arrangements or post-retirement health coverage for our executives or employees. Our executive officers are eligible
to participate in our registered retirement savings plan.

 

Summary
Compensation Table

 

The table
below provides detailed information on the compensation of the Chief Executive Officer and the Chief Financial Officer of ZIM for services
rendered for the fiscal years ended March 31, 2021, 2020 and 2018. No executive officer or employee received compensation in excess of
$100,000 for the fiscal year ended March 31, 2021.

 

Name
and principal position
Year Salary/
Consulting Payments ($)
Option
Awards (
$)(1)
Shares
($)
Total
($)

 

Michael
Cowpland, President and Chief Executive Officer

 

2019

2020

2021

 

 

 

 

 

John Chapman,
(Chapman CFO Resources Inc.) Chief Financial Officer

 

2019

2020

2021

 

12,821

17,778

3,597

 

 

 

12,821

17,778

3,597

           

 

(1) Represents
the compensation expense incurred by the Company for the years ended March 31, 2019, March
31, 2020, and March 31, 2021, respectively, relating to outstanding stock options held by
the named executive officers (“NEOs”), determined in accordance with ASC 718
using the assumptions described under “Stock Options” in Note 2 to the Company’s
consolidated financial statements included in this Form 20-F, provided that no forfeitures
of awards have been assumed for the NEOs. All options vest immediately upon option grant.

 

 

COMPENSATION
OF DIRECTORS

 

Non-employee
members of the Board of Directors are reimbursed for reasonable travel expenses related to attendance at Board meetings. No other fees
are paid for attendance at meetings of the Board or their Committees. Each director is also awarded for his first year of service as
a director, 10,000 stock options to purchase common shares at fair market value at date of the option grant. In addition, non-employee
members of the Board of Directors are eligible to receive option grants as determined by the Board of Directors.

 

The following
table shows compensation of our non-employee directors for the fiscal year ended March 31, 2021.

Name Option
Awards (
$)(1)
Common
Shares ($)
Total
($)
Steven
Houck
James
Stechyson        
Donald
Gibbs

 

(1) Represents
the compensation expense incurred by the Company for the years ended March 31, 2021, relating
to outstanding stock options held by the named executive officers (“NEOs”), determined
in accordance with ASC 718 using the assumptions described under “Stock Options”
in Note 3 to the Company’s consolidated financial statements included in this Form
20-F, provided that no forfeitures of awards have been assumed for the NEOs. All options
vest immediately upon option grant.

 

Refer to
Item 7 for share ownership information with respect to the Company’s directors.

 

SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

ZIM established
the Employee Stock Option Plan, which was approved by our shareholders on November 19, 2003, to promote the interests of the Company
and our shareholders by using investment interests in the Company to attract, retain and motivate our directors, officers, employees
and other persons, to encourage and reward their contributions to the performance of the Company, and to align their interests with the
interests of the Company’s shareholders.

 

 

 

Securities
authorized for issuance under equity compensation plans at March 31, 2021 are as follows:

 

Plan category   Number of securities to be issued upon exercise of outstanding options, warrants and rights  

Weighted
average exercise price of outstanding options, warrants
and rights

($)

 

Number of securities remaining available for future issuance under equity compensation plans, excluding the securities reflected in the

first column

Equity compensation plans approved by security holders     80,500 (1)     0.0350       1,258,150  
Total     80,500       0.0350       1,258,150  

 

(1) Represents
ZIM common shares issuable upon the exercise of options outstanding under ZIM’s Employee
Stock Option Plan.

 

 

 

ITEM
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

 

SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

 

 

The following
table sets forth, as of June 30, 2021, the number and percentage of our outstanding common shares which are beneficially owned, directly
or indirectly, by:

 

· Each
person who is known to us as the beneficial owner of 5% or more of our outstanding common
shares;
· Each
director and executive officer of ZIM Corporation; and
· All
directors and executive officers of ZIM Corporation as a group.

 

Beneficial
ownership includes shares over which the indicated person has sole or shared voting or investment power and shares which he or she has
the right to acquire within 60 days of June 30, 2021. Unless otherwise indicated, the persons listed are deemed to have sole voting and
investment power over the shares beneficially owned.

 

          Common shares
Name   Address   Title   Number   Percentage
Michael Cowpland(1)   234 Perley Court, Ottawa, Ontario   President and CEO     4,304,752       52.9 %

 

James Stechyson(2)

 

5597 Goddard Street

Manotick, Ontario

  Director     1,467,000       18.0 %
Advanced Telecom Services(3)   996 Bold Eagle School Road, Suite 1105, Wayne, PA   N/A     500,000       6.1 %
John Chapman (CHAPMAN CFO Resources Inc.)(4)   9C Maple Ridge Crescent, Ottawa, Ontario   Chief Financial Officer     195,047       2.4 %
Steven Houck (5)   401 Hillview Avenue, Palo Alto,  CA  94304   Director     79,500       1.0 %
Donald Gibbs (6)   104 Maple Crest Lane, Perth, Ontario, Canada, K7H, 3C7   Director     76,000       0.9 %
                         

All directors
and executive officers as a group (5 persons) beneficially hold 6,122,299 common shares, which totals 74.7% of ownership.

 

 

 

Applicable
percentage of ownership is based upon 8,136,348 common shares outstanding as of June 30, 2021, together with applicable options for such
shareholder or group. Shares of common stock subject to options currently exercisable or exercisable within 60 days of June 30, 2021
are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options, but are not deemed outstanding
for computing the percentage of any other person.

 

(1) The
beneficial ownership of Michael Cowpland consists of 3,639,126 common shares owned directly
by Dr. Cowpland. In addition, Dr. Cowpland’s ownership includes 225,936 common shares
owned by Dr. Cowpland’s spouse and 439,690 common shares owned by a company controlled by
Dr. Cowpland’s spouse. Dr. Cowpland disclaims beneficial ownership of the shares held by
his spouse and the company controlled by his spouse.

 

(2) The
beneficial ownership of James Stechyson consists of 1,468,500 common shares. 22,500 shares
are owned directly by Mr. Stechyson and 1,446,000 are owned by a company controlled by Mr.
Stechyson.

 

(3) The
beneficial ownership of Advanced Telecom Services Inc. consists of 500,000 common shares
owned directly.

 

(4) The
beneficial ownership of John Chapman consists of 195,047 common shares. The shares assigned
to Mr. Chapman are held by CHAPMAN CFO Resources Inc. in which Mr. Chapman is the controlling
shareholder.

 

(5) The
beneficial ownership of Steven Houck consists of 50,000 common shares owned directly by Mr.
Houck and 29,500 common shares, which he has a right to acquire under stock options that
are currently exercisable or are exercisable within 60 days of June 30, 2021
.

 

(6) The
beneficial ownership of Donald Gibbs consists of 50,000 common shares owned directly by Mr.
Gibbs and 26,000 common shares, which he has a right to acquire under stock options that
are currently exercisable or are exercisable within 60 days of June 26, 2021
.

 

The Board
of Directors has determined that all directors who served on the Board during fiscal year 2021, other than Dr. Michael Cowpland and Mr.
James Stechyson, are or were “independent” under NASDAQ Listing Rules. The Board has further determined that the members
of the Audit Committee also meet the additional independence requirements of the Sarbanes-Oxley Act of 2002 and the rules of the Securities
and Exchange Commission.

 

 

 

The services
of John Chapman, our Chief Financial Officer, are provided through a contractual relationship with CHAPMAN CFO Resources Inc., a company
owned 50% by Mr. Chapman and controlled by Mr. Chapman. The total cash and option compensation provided to CHAPMAN CFO Resources Inc.
for the services provided by Mr. Chapman are detailed in “Executive Compensation” above.

 

Change
in Ownership of Shareholders Owning More Than 5%:

 

On February
22, 2017, 342,501 shares were issued to Dr. Michael Cowpland, 6,000 shares were issued to a holding company controlled by Mr. James Stechyson
on approval of the Board of Directors.

 

On November
17, 2017, 31,793 shares were issued to Dr. Michael Cowpland, 156,500 shares were issued to a holding company controlled by Mr. James
Stechyson on approval of the Board of Directors.

 

On February
28, 2018, 500 shares were issued to Dr. Michael Cowpland on approval of the Board of Directors.

 

On November
22, 2018, 11,000 shares were issued to Dr. Michael Cowpland on approval of the Board of Directors.

 

On November
22, 2018, 5,000 shares were issued to a holding company controlled by Mr. James Stechyson on approval of the Board of Directors.

 

VOTING
RIGHTS

 

Major shareholders
of the Company do not hold any special voting rights.

 

LOCATION
OF STOCK HOLDINGS

 

At June
30, 2021, 6,496,343 (80%) of ZIM’s common shares are held outside of the United States. The number of shareholders of record is
660. The number of shareholders of record within the United States is 532.

 

CONTROL

 

The Company
is not owned or controlled directly or indirectly by another corporation, foreign government or by any other natural of legal person(s)
severally or jointly.

 

B.        
Related Party Transactions

 

A director
of the Company is a director and principal owner of a company that provides computing and hosting services to ZIM. During the fiscal
year ending March 31, 2021, the Company paid $30,995 for these services (March 31, 2020 – $52,660, March 31, 2019 – $59,829). At March
31, 2021, included in accounts payable is $1,760 connected to these services as compared to $5,683 at March 31, 2020. From April 1, 2021
to May 31, 2021, the Company paid $5,022 for these services.

 

An officer
of the Company is the principal owner of a company that provides finance, accounting and bookkeeping services to ZIM. During the fiscal
year ending March 31, 2021 the Company paid $3,597 for these services (March 31, 2020 – $17,778, March 31, 2019 – $12,821). At March
31, 2021, included in accounts payable is $NIL connected to these services as compared to $1,919 at March 31, 2020. From April 1, 2021
to May 31, 2021, the Company paid $NIL for these services.

 

 

 

On June
5, 2020, ZIM Corporation announced the sale of its database technology business as part of management’s plan to focus the business
on its biomedical subsidiary NuvoBio. The database assets include all of the Software, Consulting and Maintenance segment and have been
purchased by former members of Zim Corporation’s staff and will operate under the name Zim Databases Canada Inc. The purchase price
of $95,424 ($120,000 Canadian dollars) is to be paid in 5 payments over a 5-year period on the anniversary date of the agreement. The
effective date of the transaction was April 1, 2020.

 

ITEM
8. FINANCIAL INFORMATION

 

 A. Consolidated
Statements and Other Financial Information

 

Refer to
Item 18 for Consolidated Financial Statements

 

 B.

Significant
Changes

 

On June
5, 2020, ZIM Corporation announced the sale of its database technology business as part of management’s plan to focus the business
on its biomedical subsidiary NuvoBio. The database assets include all of the Software, Consulting and Maintenance segment and have been
purchased by members of Zim Corporation’s staff and will operate under the name Zim Databases Canada Inc. The purchase price of
$95,424 ($120,000 Canadian dollars) is to be paid in 5 payments over a 5-year period on the anniversary date of the agreement. The effective
date of the transaction was April 1, 2020.

 

ITEM 9. THE
OFFER AND LISTING

 

OFFER
AND LISTING DETAILS

 

“Bid”
and “asked” offers for our common shares are quoted on the Over-the-Counter Bulletin Board (“OTCBB”). Our common
shares have been quoted on the OTCBB under the symbol “ZIMCF” since October 16, 2003.

 

Our common
shares are thinly traded and, accordingly, reported sale prices may not represent a true market-based valuation of our common shares.

 

We have
not paid any dividends on our common shares and we intend to retain all earnings for use in our operations and to finance the development
and the expansion of our business. We do not anticipate paying any dividends on the common shares in the foreseeable future. The payment
of dividends is within the discretion of our Board of Directors. Any future decision with respect to dividends will depend on future
earnings, future capital needs and our operating and financial condition, among other factors.

 

RECENT
SALES OF UNREGISTERED SECURITIES

 

None.

 

 

ITEM 10. ADDITIONAL
INFORMATION

 

 

Not Applicable.

 

B. MEMORANDUM
AND ARTICLES OF ASSOCIATION

 

ZIM was
incorporated under the federal laws of Canada on October 17, 2002, in order to purchase ZIM Technologies International Inc. (“ZIM
Technologies”), which was formed in 1997 to acquire the software technology now called the ZIM Integrated Development Environment
(the “ZIM IDE software”). On February 10, 2004, ZIM purchased UK-based SMS service firms EPL Communications Limited and E-Promotions
Limited (together referred to as “EPL”). During the year ended March 31, 2006, EPL was dissolved and all operations were transferred
to ZIM Corporation in Canada. ZIM is also the sole shareholder of ZIM Technologies do Brazil Ltda., a company incorporated in Brazil
that distributes the ZIM IDE Software, and PCI Merge, Inc., a Florida based holding company with no operations. Until March 31, 2004,
ZIM was the sole shareholder of ZIM Technologies, a Canadian federal corporation and the chief operating company of the ZIM group of
companies. On April 1, 2004, ZIM Corporation and ZIM Technologies amalgamated into ZIM Corporation. On April 1, 2006, ZIM purchased a
US-based mobile content company called Advanced Internet Inc. (“AIS”). In 2011 ZIM acquired the technology assets of Torch
Technologies and began offering an advanced portfolio of migration services and management products that strengthen and complement ZIM’s
enterprise database products.

 

Other
Provisions of Articles and By-laws

 

There are
no provisions in the Articles or By-laws:

· Delaying
or prohibiting a change in control of the Company that operate only with respect to a merger,
acquisition or corporate restructuring;
· Discriminating
against any existing or prospective holder of shares as a result of such shareholder owning
a substantial number of shares;
· Requiring
disclosure of share ownership; or
· Governing
changes in capital, where such provisions are more stringent than those required by law.

 

Share
Capital

 

The
Company is authorized to issue an unlimited number of common shares and an unlimited number of Special Shares which shall have the following
rights, privileges, restrictions and conditions:

COMMON
SHARES

      The
common shares have attached thereto the following rights, privileges, restrictions and conditions:

1.     Voting

      The
holders of the common shares are entitled to receive notice of and to attend and shall be entitled to one (1) vote at any meeting
of the shareholders of the Company for each Common Share held.

2.     Dividends

      The
holders of the common shares are entitled to receive dividends as and when the directors shall in their discretion declare dividends
on the Common Shares and pay the same.

3.     Dissolution

      The
holders of the common shares are entitled to receive the remaining property of the Company in the event of any liquidation, dissolution
or winding-up of the Company, whether voluntary or involuntary, or other distribution of assets of the Company among its shareholders
for the purpose of winding-up its affairs.

 

SPECIAL
SHARES

      The
Special Shares have attached thereto the following rights, privileges, restrictions and conditions:

1.     Voting
Rights

      Except
as may be required by applicable law, the holders of the Special Shares are not entitled to notice of or to attend or vote at any meeting
of the shareholders of the Company.

      Notwithstanding
the provisions of the Act and any other provision contained herein, the holders of the Special Shares shall not be entitled to vote separately
as a class upon a proposal to amend these Articles to:

   
        (a) increase
or decrease any maximum number of authorized Special Shares, or increase any maximum number of authorized shares of a class of shares
having rights or privileges equal or superior to the Special Shares; or
   
        (b) effect
an exchange, reclassification or cancellation of the Special Shares; or
   
 

(c) create
a new class of shares equal or superior to the Special Shares.

 

2.     Dividends

      Subject
to the rights of the holders of any shares ranking prior to the Special Shares or the common shares, the holders of the Special Shares
are entitled to receive, pro rata with the holders of the common shares, such dividends as may be declared by the board of directors
of the Company, out of funds legally available therefor; the holder of any Special Shares on the record date for any dividend payable
on such share will be entitled to such dividend, notwithstanding that such share is converted into a common share as described below
after such record date and before the payment date of such dividend. Dividends shall not be paid or declared or set aside for payment
on the Special Shares unless dividends in an equal amount per common share are paid or set aside for payment at the same time on the
common shares.

3.     Rights
on Dissolution

      In
the event of the liquidation, dissolution or winding-up of the Company, the holders of the Special Shares are entitled to receive on
a pro rata basis and on a share-for-share basis with the holders of the common shares, all of the assets of the Company remaining after
payment of all of the Company’s liabilities, subject to the preferential rights of any shares ranking prior to the Special Shares.

4.     Conversion
Rights

      Any
holder of Special Shares is entitled, at any time on written notice to the Company, to have any or all of the Special Shares held by
him or it converted into common shares on the basis (the “Special Conversion Basis”) of one common share for each Special
Share which such holder may desire to convert.

      No
fractional common shares will be issued upon the conversion of the Special Shares and no payment shall be made to the holders of Special
Shares in lieu thereof.

 

5.     Adjustment
Rights

      In
the event of the Special Shares or common shares being at any time subdivided, consolidated, converted or exchanged for a greater or
lesser number of shares of the same or another class, appropriate adjustments will be made in the rights and conditions attaching to
the Special Shares and the common shares, respectively, so as to preserve in all respects the benefits conferred on the holders of each
such class. No such adjustment will be required to be made unless the cumulative effect of such adjustment or adjustments would change
the number of common shares issuable upon the conversion of the Special Shares by at least one-hundredth of a share, provided that such
adjustment not so made shall be carried forward and taken into account at any subsequent adjustment.

      In
the event of any reclassification of common shares, any amalgamation, merger or other consolidation of the Company with another entity,
or the transfer of all or substantially all of the Company’s assets, the holders of the Special Shares will be entitled to receive
such securities or other property as if on the effective date of such event they were registered holders of the number of common shares
which such holders of Special Shares were entitled to receive upon the conversion of their Special Shares. No such adjustment shall be
made if the holders of the Special Shares are entitled to participate in any such event on the same terms, as though they had converted
their Special Shares prior to the occurrence of such event.

6.     General
Rights and Attributes

      Except
as specifically referred to above, each Special Share and each common share shall have the same rights and attributes and not have any
priority over the other.

Powers
and Duties of Directors

 

The
Board of Directors shall manage or supervise the management of our affairs and business and shall have authority to exercise all such
powers as are not, by the Company Act, Articles or By-laws, required to be exercised by the shareholders in a general meeting or prohibited
by law.
 

 

A majority
of the directors shall be resident Canadians and, if any of the issued securities of the Company are or were a part of a distribution
to the public, at least two of the directors shall not be officers or employees of the Company or any affiliate of the Company. No director
shall be required to hold shares issued by the Company, unless the articles otherwise provide. In exercising his powers and discharging
his duties each director must (a) act honestly and in good faith with a view to the best interests of the Company and (b) exercise
the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

 

 Directors
serve for three (3) years, until each third annual meeting of shareholders.  In general, a Director who is, in any way, directly
or indirectly interested in an existing or proposed contract or transaction with us whereby a duty or interest might be created to conflict
with his duty or interest as a director, shall declare the nature and extent of his interest in such contract or transaction or the conflict
or potential conflict with his duty and interest as a director.  Such a Director shall not vote in respect of any such contract
or transaction with us if the Chairman disqualifies him.  If he votes, his vote shall not be counted, but he shall be counted
in the quorum present at the meeting at which such a vote is taken.  The shareholders at the general meeting shall determine
the remuneration of the Directors.  However, notwithstanding the foregoing, Directors shall be paid all expenses incurred in
attending meetings or conducting business on our behalf.

 

Shareholders

 

An
Annual General Meeting of Shareholders must be held once in every year at such time and place as may be determined by the Directors.  Notice
of the meeting must be given not less than twenty-one (21) nor more than fifty (50) days prior to the meeting.  A quorum at
an Annual General Meeting and Special Meeting shall be such person or number of persons present, in person or by proxy, holding or representing
a majority of the total number of issued shares of the Company carrying voting rights for such meeting.

 

 

 

In
accordance with our By-laws, Directors are elected by an “ordinary resolution” which means (a) a resolution passed by our
shareholders in a General Meeting by a simple majority of the votes cast in person or by proxy, or (b) a resolution that has been submitted
to our shareholders who would have been entitled to vote on it in person or by proxy at our general meeting and that has been consented
to in writing by all of our shareholders entitled to vote on it.

 

For further
details refer to the following exhibits to this Annual Report on Form 20-F:

 

1.1       Articles
of Incorporation of the Registrant (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 filed on November
1, 2002 (No. 333-100920))
1.2       By-Laws
of the Registrant (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 filed on November 1, 2002 (No.
333-100920))

 

C. MATERIAL
CONTRACTS

 

None.

 

D. EXCHANGE
CONTROLS

 

As of the
date hereof, there are no governmental laws, decrees or regulations in Canada on the export or import of capital, or which impose foreign
exchange controls or affect the remittance of interest, dividends or other payments to non-resident holders of our common stock, except
as described under ITEM 10E “Taxation”.

 

Except
as provided in the Investment Canada Act, which has provisions that restrict the holding of voting shares by non-Canadians, there are
no limitations specific to the rights of non-Canadians to hold or vote the Company’s common shares under the laws of Canada or
Ontario, or in its charter documents. The following summarizes the principal features of the Investment Canada Act for non-Canadian residents
proposing to acquire the Company’s common shares.

 

This summary
is of a general nature only and is not intended to be, and should not be construed to be, legal advice to any holder or prospective holder
of the Company’s common shares, and no opinion or representation to any holder or prospective holder of our common shares is hereby
made. Accordingly, holders and prospective holders of the Company’s common shares should consult with their own legal advisors
with respect to the consequences of purchasing and owning the Company’s common shares.

The Investment
Canada Act governs the acquisition of Canadian businesses by non-Canadians. Under the Investment Canada Act, non-Canadian persons or
entities acquiring “control” (as defined in the Investment Canada Act) of a corporation carrying on business in Canada are
required to either notify, or file an application for review with, Industry Canada, subject to certain statutory exemptions. The relevant
Minister may review any transaction which constitutes an acquisition of control of a Canadian business, where the book value of the assets
acquired exceeds certain thresholds (which are higher for investors from members of the World Trade Organization, including United States
residents, or World Trade Organization member-controlled companies) or where the activity of the business is related to Canada’s
cultural heritage or national identity, or where the investment could be injurious to Canada’s national security. For acquisitions
of control of a business which do not involve a business related to Canada’s cultural heritage or national identity or present
national security issues, no change of voting control will be deemed to have occurred, for purposes of the Investment Canada Act, if
less than one-third of the voting control of a Canadian corporation is acquired by an investor. Different rules apply to acquisitions
of control of businesses related to Canada’s cultural heritage or national identity, or present national security concerns.

 

 

 

If an investment
is reviewable under the Investment Canada Act, an application for review in the form prescribed is normally required to be filed with
Industry Canada prior to the investment taking place, and the investment may not be implemented until the review has been completed and
the Minister responsible for the Investment Canada Act is satisfied that the investment is likely to be of net benefit to Canada. If
the Minister is not satisfied that the investment is likely to be of net benefit to Canada, the non-Canadian applicant must not implement
the investment, or if the investment has been implemented, may be required to divest itself of control of the Canadian business that
is the subject of the investment. Different rules apply if the Minister determines that the investment may be injurious to Canada’s
national security.

Certain
transactions relating to ZIM’s common stock would be exempt from the Investment Canada Act, if they are not found to be potentially
injurious to Canada’s national security by the Minister responsible for the Investment Canada Act, including:

 

· The
acquisition of the Company’s common stock by a person in the ordinary course of that
person’s business as a trader or dealer in securities;
· The
acquisition of control of the Company in connection with the realization of security granted
for a loan or other financial assistance and not for a purpose related to the provisions
of the Investment Canada Act; and the acquisition of control of the Company by reason of
an amalgamation, merger, consolidation or corporate reorganization following which the ultimate
direct or indirect control in fact of the Company, through ownership of our common stock,
remains unchanged.

 

These exemptions
do not apply to an acquisition of control of a Canadian business that is deemed to be potentially injurious to Canada’s national
security.

 

E. TAXATION

 

Certain
United States Federal Income Tax Consequences

 

The following
is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising
from and relating to the acquisition, ownership, and disposition of common shares of the Company.

 

This
summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of
common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder
that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under
an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any U.S. Holder. This summary does not address the U.S. federal alternative minimum, U.S. federal estate and
gift, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition of common shares.
Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each U.S. Holder should
consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and
local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of common shares.

 

 

No
legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will
be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares. This
summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions
taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the
IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope
of this Summary

Authorities

This
summary is based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations (whether final, temporary, or proposed),
published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America
with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended, or the Canada-U.S. Tax Convention, and U.S. court
decisions that are applicable and, in each case, as in effect and available, as of the date of this document. Any of the authorities
on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on
a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary. This summary
does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied
on a retroactive or prospective basis.

U.S.
Holders

For
purposes of this summary, the term “U.S. Holder” means a beneficial owner of common shares that is for U.S. federal income
tax purposes:

· an
individual who is a citizen or resident of the U.S.;
· a
corporation (or other entity taxable as a corporation for U.S. federal income tax purposes)
organized under the laws of the U.S., any state thereof or the District of Columbia;
· an
estate whose income is subject to U.S. federal income taxation regardless of its source;
or
· a
trust that (1) is subject to the primary supervision of a court within the U.S. and the control
of one or more U.S. persons for all substantial decisions or (2) has a valid election in
effect under applicable Treasury Regulations to be treated as a U.S. person.

 

Non-U.S.
Holders

For
purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder. This summary
does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership,
and disposition of common shares. Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S.
federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences (including the potential
application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.

U.S.
Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This
summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including, but not limited to, the following: (a) U.S. Holders that are tax-exempt organizations, qualified retirement
plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, underwriters,
insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are broker-dealers, dealers,
or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional
currency” other than the U.S. dollar; (e) U.S. Holders that own common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired common shares in
connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold common shares
other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); or (h)
U.S. Holders that own or have owned (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding
shares of the Company. This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are:
(a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be
a resident in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); (c) persons that use or hold, will use
or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; (d) persons
whose common shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment
in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including,
but not limited to, U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership
and disposition of common shares.

 

 

If
an entity or arrangement that is classified as a partnership (or “pass-through” entity) for U.S. federal income tax purposes
holds common shares, the U.S. federal income tax consequences to such partnership and the partners of such partnership generally will
depend on the activities of the partnership and the status of such partners (or owners). This summary does not address the tax consequences
to any such partnership or partner. Partners of entities or arrangements that are classified as partnerships for U.S. federal income
tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences arising from and relating to the
acquisition, ownership, and disposition of common shares.

Passive
Foreign Investment Company Rules

If the
Company were to constitute a “passive foreign investment company” under the meaning of Section 1297 of the Code, or a PFIC,
as defined below, for any year during a U.S. Holder’s holding period, then certain different and potentially adverse rules will
affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of common
shares. In addition, in any year in which the Company is classified as a PFIC, such holder may be required to file an annual report with
the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. U.S. Holders should consult their
own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an
IRS Form 8621.

PFIC
Status of the Company

The
Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company is passive income (the “income
test”) or (b) 50% or more of the value of the Company’s assets either produce passive income or are held for the production
of passive income, based on the quarterly average of the fair market value of such assets (the “asset test”). “Gross
income” generally includes all sales revenues less the cost of goods sold, plus income from investments and from incidental or
outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

For
purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total
value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets
of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes
of the PFIC income test and asset test described above, and assuming certain other requirements are met, “passive income”
does not include certain interest, dividends, rents, or royalties that are received or accrued by the Company from certain “related
persons” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related
person that is not passive income.

 

In
addition, under certain attribution rules, if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate share of
the stock of any subsidiary of the Company that is also a PFIC, or a Subsidiary PFIC, and will be subject to U.S. federal income tax
on their proportionate share of (a) a distribution on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the
stock of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.

The
Company believes that it was classified as a PFIC during the tax year ended March 31, 2021 and may be a PFIC in future tax years. The
determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S.
federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any
tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted
with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any determination
made by the Company (or a Subsidiary PFIC) concerning its PFIC status. Each U.S. Holder should consult its own tax advisor regarding
the PFIC status of the Company and any Subsidiary PFIC.

Default
PFIC Rules Under Section 1291 of the Code

If
the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of common
shares will depend on whether such U.S. Holder makes an election to treat the Company and each Subsidiary PFIC, if any, as a “qualified
electing fund” or “QEF” under Section 1295 of the Code, or a QEF Election, or a mark-to-market election under Section
1296 of the Code, or a Mark-to-Market Election. A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will
be referred to in this summary as a “Non-Electing U.S. Holder.”

A
Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale
or other taxable disposition of common shares and (b) any excess distribution received on our common shares. A distribution generally
will be an “excess distribution” to the extent that such distribution (together with all other distributions received in
the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder’s
holding period for our common shares, if shorter).

Under
Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of common shares (including an indirect disposition
of the stock of any Subsidiary PFIC), and any “excess distribution” received on common shares, must be ratably allocated
to each day in a Non-Electing U.S. Holder’s holding period for the respective common shares. The amount of any such gain or excess
distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became
a PFIC, if any, would be taxed as ordinary income. The amounts allocated to any other tax year would be subject to U.S. federal income
tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability
for each such year, calculated as if such tax liability had been due in each such year. A Non-Electing U.S. Holder that is not a corporation
must treat any such interest paid as “personal interest,” which is not deductible.

 

 

If
the Company is a PFIC for any tax year during which a Non-Electing U.S. Holder holds common shares, the Company will continue to be treated
as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent
tax years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under
the rules of Section 1291 of the Code discussed above), but not loss, as if such common shares were sold on the last day of the last
tax year for which the Company was a PFIC.

QEF
Election

A
U.S. Holder that makes a timely and effective QEF Election for the first tax year in which its holding period of its common shares begins
generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to its common shares. A U.S. Holder
that makes a timely and effective QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share
of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) the ordinary earnings
of the Company, which will be taxed as ordinary income to such U.S. Holder. Generally, “net capital gain” is the excess of
(a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings
and profits” over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such
amounts for each tax year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder
by the Company. However, for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a
QEF Election would not have any income inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF Election has an income
inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such
amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal
interest,” which is not deductible.

A
U.S. Holder that makes a timely and effective QEF Election with respect to the Company generally (a) may receive a tax-free distribution
from the Company to the extent that such distribution represents “earnings and profits” of the Company that were previously
included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in our common
shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. In addition, a U.S.
Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of common shares.

The
procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such
QEF Election is timely. A QEF Election will be treated as “timely” if such QEF Election is made for the first year in the
U.S. Holder’s holding period for our common shares in which the Company was a PFIC. A U.S. Holder may make a timely QEF Election
by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year. If
a U.S. Holder does not make a timely and effective QEF Election for the first year in the U.S. Holder’s holding period for our
common shares, the U.S. Holder may still be able to make a timely and effective QEF Election in a subsequent year if such U.S. Holder
also makes a “purging” election to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed
above) as if such common shares were sold for their fair market value on the day the QEF Election is effective.

A
QEF Election will apply to the tax year for which such QEF Election is timely made and to all subsequent tax years, unless such QEF Election
is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a
subsequent tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during
those tax years in which the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF
Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which
the Company qualifies as a PFIC.

 

U.S.
Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF,
or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in event
that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election. Thus, U.S. Holders may not be able to make a QEF Election
with respect to their common shares. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure
for making, a QEF Election.

Mark-to-Market
Election

A
U.S. Holder may make a Mark-to-Market Election only if the common shares are marketable stock. Our common shares generally will be “marketable
stock” if our common shares are regularly traded on (a) a national securities exchange that is registered with the Securities and
Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or
(c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located,
provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and meets other requirements and the laws
of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements
are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks. If such stock is traded on
such a qualified exchange or other market, such stock generally will be “regularly traded” for any calendar year during which
such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A
U.S. Holder that makes a Mark-to-Market Election with respect to its common shares generally will not be subject to the rules of Section
1291 of the Code discussed above with respect to such common shares. However, if a U.S. Holder does not make a Mark-to-Market Election
beginning in the first tax year of such U.S. Holder’s holding period for our common shares or such U.S. Holder has not made a timely
QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on,
our common shares.

A
U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an
amount equal to the excess, if any, of (a) the fair market value of our common shares, as of the close of such tax year over (b) such
U.S. Holder’s tax basis in such common shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in
an amount equal to the excess, if any, of (a) such U.S. Holder’s adjusted tax basis in our common shares, over (b) the fair market
value of such common shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market
Election for prior tax years).

A
U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in our common shares to
reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale
or other taxable disposition of common shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary
loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior
tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

A
Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless
our common shares cease to be “marketable stock” or the IRS consents to revocation of such election. Each U.S. Holder should
consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

 

Although
a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to our common shares, no such election may be made with
respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning, because such stock is not marketable. Hence, the
Mark-to-Market Election will not be effective to eliminate the application of the default rules of Section 1291 of the Code described
above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.

Other
PFIC Rules

Under
Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S.
Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of common shares that would otherwise
be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However, the specific U.S. federal income tax consequences
to a U.S. Holder may vary based on the manner in which common shares are transferred.

Certain
additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes
a QEF Election. For example, under Section 1298(b)(6) of the Code, a U.S. Holder that uses common shares as security for a loan will,
except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such common shares.

Special
rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special
rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit.
The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should
consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

The
PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect
the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.

Ownership
and Disposition of Common Shares

The
following discussion is subject to the rules described above under the heading “Passive Foreign Investment Company Rules.”

Distributions
on Common Shares

Subject
to the PFIC rules discussed above, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to
an Offered Share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any
Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of
the Company, as computed for U.S. federal income tax purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income
tax rates if the Company is a PFIC. To the extent that a distribution exceeds the current and accumulated “earnings and profits”
of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in
our common shares and thereafter as gain from the sale or exchange of such common shares. (See “Sale or Other Taxable Disposition
of common shares” below). However, the Company may not maintain the calculations of earnings and profits in accordance with U.S.
federal income tax principles, and each U.S. Holder should therefore assume that any distribution by the Company with respect to our
common shares will constitute ordinary dividend income. Dividends received on common shares generally will not be eligible for the “dividends
received deduction”. Subject to applicable limitations and provided the Company is eligible for the benefits of the Canada-U.S.
Tax Convention, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible for the
preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are
satisfied, including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend
rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

 

Sale
or Other Taxable Disposition of Common Shares

Subject
to the PFIC rules discussed above, upon the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize
capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received
and such U.S. Holder’s tax basis in such common shares sold or otherwise disposed of. Subject to the PFIC rules discussed above, gain
or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or
other disposition, our common shares have been held for more than one year.

Preferential
tax rates apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential
tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant
limitations under the Code.

Additional
Considerations

Additional
Tax on Passive Income

 

Individuals,
estates and certain trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on “net investment
income” including, among other things, dividends and net gain from disposition of property (other than property held in certain
trades or businesses). U.S. Holders should consult with their own tax advisors regarding the effect, if any, of this tax on their ownership
and disposition of common shares.

F.        DIVIDENDS
AND PAYING AGENTS

 

Not Applicable.

 

G.        STATEMENT
BY EXPERTS

Not Applicable.

 

H.       DOCUMENTS
ON DISPLAY

 

The documents
referred to in this Form 20-F may be viewed at the Company’s office located at 150 Isabella Street, Suite 150, Ottawa, Ontario,
Canada, K1S 1V7 during normal business hours.

 

 

Not Applicable.

 

ITEM 11.

 

QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

 

FOREIGN
EXCHANGE RISK

 

Foreign
exchange risk as at March 31, 2021 consists of cash and receivables being in the Company’s functional currency of Canadian dollars
while reporting is in United States dollars.

 

In years
previous to fiscal year 2021, the Company operated internationally, giving rise to significant exposure to market risks from changes
in foreign exchange rates. The Company’s financial assets are in the form of cash and cash equivalents held at institutions with
high quality credit ratings, accounts receivable and investments. The Company was previously exposed to exchange risk due to the timing
of the movement of funds between subsidiaries and the parent company related to the transfer pricing agreement and the pricing of contracts
in non-functional currencies. Financial instruments denominated in foreign currencies that led to foreign exchange risk when funds where
moved include:

 

Cash and
cash equivalents includes the following amounts in their source currency:

 

 

 

    March 31, 2021       March 31, 2020  
Canadian dollars     263,927       266,005  
U.S. dollars     3,449       6,638  
Brazilian reals     —         1,223,708  

 

Accounts
receivable include the following amounts receivable in their source currency:

 

    March 31, 2021       March 31, 2020  
Canadian dollars     150,965       17,349  
Brazilian reals     —         68,975  

 

Accounts
payable include the following amounts payable in their source currency:

 

    March 31, 2021       March 31, 2020  
Canadian dollars     7,901       19,085  
Brazilian reals     —         772  

 

Accrued
liabilities and lease liabilities include the following accruals in their source currency:

 

    March 31, 2021       March 31, 2020  
Canadian dollars     29,642       32,012  

Brazilian reals

    —         19,439  

 

The Company
does not use derivative financial instruments to reduce its foreign exchange risk exposure. The Company does not have any significant
assets of liabilities denominated in foreign currencies. All significant assets and liabilities are denominated in the Company’s
functional currency of Canadian dollars. and has no foreign exchange exposure.

 

 

 

 

CREDIT
RISK

 

The Company
is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. Credit exposure is minimized
by dealing with only creditworthy counterparties in accordance with established credit approval policies.

 

Concentration
of credit risk in accounts receivable is indicated below by the percentage of the total balance receivable from customers in the specified
geographic area:

 

      March 31, 2021       March 31, 2020  
Canada     100 %     48 %
North America, excluding Canada      -%        -%  
South America     -%       52 %
      100 %     100 %

 

FAIR
VALUE

 

The carrying
values of accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short periods
to maturity of the instruments.

 

KEY
PERSONNEL RISK
 

If we lose
the services of any key personnel, in particular Dr. Michael Cowpland, our President and Chief Executive Officer, and Mr. James Stechyson,
our Chairman, the loss could significantly impede the achievement of our research and development objectives and delay our product development
programs and commercialization of our product candidates.  We do not currently have any key man life insurance policies.  

 

ITEM 12. DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES

 

Not applicable.

 

PART
TWO

 

ITEM 13. DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES

 

Not applicable.

 

ITEM 14. MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

 

Not applicable.

 

 

 

ITEM 15.

 

CONTROLS
AND PROCEDURES

 

Evaluation
of Disclosure Controls and Procedures

 

We are
required to maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information that we are required
to disclose in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do.

 

Our management,
under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021.  Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not
effective due to the material weaknesses in our internal control over financial reporting described below related to our financial reporting
processes and information technology security protocols.

 

 

Management’s
Annual Report on Internal Control over Financial Reporting

 

ZIM’s
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act.

 

Based on
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework, as previously stated in this annual report, our management concluded that our internal control over financial reporting was
not effective as of March 31, 2021, due to the existence of certain significant deficiencies which constituted a material weakness, as
described in greater detail below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement in our consolidated financial statements will not
be prevented or detected on a timely basis.

Our principal
deficiency was inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and
disclosure matters. Other significant deficiencies that contributed to the material weakness were:

 

· Inadequate
segregation of duties and cross training; and
· Continued
reliance on manual systems to account for revenue and expenses.

 

Changes
in Internal Control over Financial Reporting

 

We are
taking steps to make the necessary improvements to remedy these deficiencies. We have implemented certain remedial measures and are in
the process of designing and implementing additional measures to remedy the material weakness. These include addressing our inadequate
staffing and supervision by reduction of workload through process optimization and documentation.

 

 

We intend
to continue to improve our internal controls; however, our small size and financial resources continue to prevent us from being able
to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system.  Management
is required to apply its judgment in evaluating the cost-benefit.

 

 

 

Attestation
Report of the Registered Public Accounting Firm

 

Because
the Company is a “non-accelerated filer”, this Annual Report on Form 20-F is not required to include an attestation report
of the Company’s registered public accounting firm regarding internal control over financial reporting.

 

ITEM 16A.

 

AUDIT
COMMITTEE FINANCIAL EXPERT

 

Our Board
of Directors has determined that we have a least one audit committee financial expert serving on the audit committee. Mr. Donald
Gibbs, a member of the audit committee, is an audit committee financial expert and “independent” as that term is defined
in the NASDAQ Listing Rules.

 

ITEM 16B. CODE
OF ETHICS

 

Our Board
of Directors has adopted a code of conduct and ethics that applies to our directors, officers, employees and agents, including certain
provisions that specifically apply to our Chief Executive Officer, Chief Financial Officer, Comptroller, Vice Presidents and any other
persons who perform similar functions for us. Our code of business conduct and ethics is posted on our website at www.ZIM.biz.

 

ITEM 16C. PRINCIPAL
ACCOUNTANT FEES AND SERVICES

 

During
the most recent two fiscal year ends, we were billed for audit, audit-related, tax and other services provided by Independent Registered
Public Accounting Firm, MNP LLP, as follows:

 

    Year ended
March 31, 2021
  Year ended
March 31, 2020
Audit fees     52,911       56,189  
Tax fees     9,372       4,303  
Total     62,283       60,492  

 

Audit
Fees
. Audit fees were for professional services rendered for the audits of ZIM’s consolidated financial statements and services
that generally only the independent auditor can reasonably provide, such as comfort letters, consents and assistance and review of documents
filed with the Securities and Exchange Commission.

 

Tax
Fees
. Tax fees were for tax compliance, tax advice and tax planning. These services included the preparation of the Canadian and
subsidiaries’ income tax returns in the respective jurisdictions, assistance with questions regarding tax audits from the various
taxation authorities in Canada and tax planning relating to common forms of domestic and international taxation (i.e., income tax, capital
tax and excise tax).

 

 

 

All audit
and tax fees are estimated by the Independent Registered Public Accounting Firm and approved by the audit committee before they are performed.
There were no significant differences between the approved estimates and final fees for fiscal years 2020 and 2021.

 

The audit
committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Independent Registered Public Accounting
Firm. These services may include audit services, audit-related services, tax services and other services. The policy prohibits retention
of the Independent Registered Public Accounting Firm to perform the prohibited non-audit functions defined in section 201 of the Sarbanes-Oxley
Act of 2002 or the rules of the SEC, and also considers whether proposed services are compatible with the independence of the public
auditors. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget.
The Independent Registered Public Accounting Firm and management are required to periodically report to the Audit Committee regarding
the extent of services provided by the Independent Registered Public Accounting Firm in accordance with this pre-approval and the fees
for the services performed to date.

 

ITEM 16D. EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

 

Not Applicable.

 

ITEM 16E. PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

 

None. 

 

ITEM 16F. CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT

 

None

 

 

 ITEM 16G. CORPORATE
GOVERNANCE

 

Not applicable.

 

PART
THREE

 

ITEM 17.

 

FINANCIAL
STATEMENTS

 

We have
elected to provide consolidated financial statements prepared under United States generally accepted accounting principles, which appear
in Item 18.

 

 

 

ITEM 18.

FINANCIAL
STATEMENTS

 

REPORT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board
of Directors and Shareholders of ZIM Corporation

Opinion
on the Consolidated Financial Statements

We
have audited the accompanying consolidated balance sheets of ZIM Corporation (the Company) as of March 31, 2021 and 2020, and the related
consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity, and cash flows
for each of the years in the three-year period ended March 31, 2021, and the related notes (collectively referred to as the “consolidated
financial statements”).

In
our opinion, the consolidated financial statements
present fairly, in
all material respects, the consolidated financial position of the Company as of March 31, 2021 and 2020, and the results of its consolidated
operations and its consolidated cash flows for each of the years in the three-year period ended March 31, 2021, in conformity with accounting
principles generally accepted in the United States of America.

Material
Uncertainty Related to Going Concern

The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, the Company has an accumulated deficit as at March 31, 2021 and has a history
of operating losses which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 2.
The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty. This matter is also described in the “Critical
Audit Matters” section of our report.

Basis
for Opinion

These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

Critical
Audit Matters

The
critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

 

Critical
Audit Matter Description
Audit
Response

Going
Concern

Refer
to Note 2 to the consolidated financial statements.

The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Company has a history of losses and negative cash flows from operating activities,
and as at March 31, 2021, the Company had an accumulated deficit of $21,279,678. In addition to the losses, the Company has discontinued
its operations which have historically generated revenue and no substantial cash inflows are expected in the next 12 months. This
matter is also described in the Material Uncertainty Related to Going Concern” section of our report.

We
identified management’s judgements and assumptions used to assess the Company’s ability to continue as a going concern as
a critical audit matter due to inherent complexities and uncertainties related to the Company’s cash flow forecasts. Auditing these
judgements and assumptions involved especially challenging auditor judgement due to the nature and extent of audit evidence and effort
required to address these matters.
 

 

We
responded to this matter by performing procedures which included, but were not restricted to, the following:

·      
We obtained and tested the Company’s forecasted
future cash flows by testing the completeness and accuracy of the underlying data used by tracing the balances to the current year’s
recurring operating expenses related to continuing operations and by assessing the terms of current year agreements that will be
extended to the following period;

·      
We evaluated the estimates and assumptions by developing
an understanding of the nature of each critical assumption and estimate and then assessed their sensitivity to reasonably possible
changes, including notably, the probability of management being able to access funding by assessing the company’s history in
obtaining financing; and

·      
We assessed the adequacy of the disclosures related
to the application of the going concern assumption.

 

 

 

Recoverability
of Long-term Accounts Receivable

Refer
to Note 5 and Note 6 to the consolidated financial statements.

During
the year ended March 31, 2021, the Company sold one of its operating segments to ZIM Databases Canada (“ZDC”). The sale
of the segment generated a gain on disposal of $223,549. The agreement with ZDC generated a receivable from the ZDC totaling
$120,000 Canadian dollars, of which a substantial portion is due over the long-term.

We
identified the recoverability of the long-term receivable as a critical audit matter due to portions of the amounts due by ZDC
becoming overdue as at March 31, 2021, which raised significant doubt about whether ZDC will have the ability to pay the current and
future amounts due in relation to the sale agreement.

 

 

We
responded to this matter by performing procedures over the gain on disposal of the operating segment and the related amounts receivable
from ZDC. Our audit work in relation to this included, but was not restricted to, the following:

·      
We obtained from management and reviewed the purchase
and sale agreement and any related agreements;

·      
We obtained management’s memorandum analyzing
the accounting for the disposal of the operating segment, assessed the appropriateness of the accounting treatment applied and audited
the numbers used in the calculation of the related gain on disposal;

·      
We obtained management’s assessment of the
credit risk related to the acquirer of the operating segment and applied professional judgement to evaluate and conclude whether
the discount rate used by management appropriately reflected the credit risk of the acquirer;

·      
We discussed with representatives of ZDC the amounts
recorded by the Company as receivable in order to confirm those representatives agreed with those amounts;

·      
We obtained supporting documentation and agreements
supporting a subsequent payment plan agreed to between ZDC and the Company relating to the payment of the outstanding balances and
verified payment, subsequent to year end, of amounts received in accordance with such payment plan;

·      
We applied professional judgement to evaluate the
reasonability of management’s assertion that ZDC is expected to have the ability to pay the amounts receivable in future periods,
and their conclusion that no impairment of the amounts receivable was required as of March 31, 2021.

 

Chartered
Professional Accountants
, Licensed Public Accountants

We
have served as the Company’s auditor since 2015.

Ottawa,
Canada

August
4, 2021

 

ZIM Corporation and Subsidiaries

Consolidated Balance Sheets

       
(Expressed in U.S. dollars)        
         
    March 31, 2021   March 31, 2020
ASSETS   $   $
Current assets                
Cash and cash equivalents     213,324       184,675  
Accounts receivable     57,030       4,507  
Investment tax credits receivable     11,928       10,687  
Prepaid expenses     37,447       10,573  
Current assets of discontinued operations     —         433,327  
      319,729       643,769  
                 
Investments     756,787       670,821  
Long term receivables     63,016       —    
Right of use assets     16,255       772  
Equipment, net     4,997       3,961  
Noncurrent assets of discontinued operations     —         14,422  
      1,160,784       1,333,745  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities                
Accounts payable     6,282       7,186  
Accrued liabilities     2,114       7,929  
Current lease liability     13,004       833  
Current liabilities of discontinued operations     —         89,905  
      21,400       99,853  
                 
Long-term lease liabilities     3,251       —    
      24,651       99,853  
Shareholders’ equity:                
Preferred shares, no par value, non-cumulative                
dividend at a rate to be determined by the Board of Directors redeemable for CDN $1 per share.  Unlimited authorized shares; NIL issued and outstanding shares at March 31, 2021 and 2020.     —         —    
Common shares, no par value,                
Unlimited authorized shares; 8,136,348 shares issued and outstanding as at March 31, 2021 and 8,136,348 shares as at March 31, 2020.     19,491,842       19,491,842  
Additional paid-in capital     2,966,068       2,966,068  
Accumulated deficit     (21,279,678 )     (20,631,106 )
Accumulated other comprehensive loss     (42,099 )     (592,912 )
      1,136,133       1,233,892  
      1,160,784       1,333,745  
                 

Refer to Going Concern Note 2

The accompanying notes are an integral part of these consolidated financial statements.

   

 

 

 

 

 

ZIM
Corporation and Subsidiaries

Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss)

(Expressed
in U.S. Dollars)

 

                   
      Year ended
March 31,
2019
    Year ended
March 31,
2018
    Year ended
March 31,
2017
        $       $      
Revenues     —         —         —    
Operating expenses                        
Selling, general and administrative     50,501       60,249       69,125  
Research and development (net)     23,120       8,209       13,717  
Total operating expenses     73,621       68,457       82,842  
Income (loss) from operations     (73,621 )     (68,457 )     (82,842 )
Other income:                        
Gain (loss) on disposal of investment     —         220,233       —    
Gain on revaluation of investment     —         2,956       604,013  
Interest income (expense), net     (167 )     12,160       13,956  
Total other income     (167 )     235,349       617,969  
Income (loss) from continuing operations net of  income taxes of nil     (73,788 )     166,892       535,127  
Income (loss) from discontinued operations including gain on disposal of $223,549 in fiscal year 2021     (2,780 )     (175,891 )     168,389  
Net income (loss)     (76,568 )     (8,999 )     703,516  
Other comprehensive income (loss), net of tax     —         —         —    
    Foreign currency translation adjustment     (21,191 )     (141,598 )     (72,890 )
Comprehensive income (loss)     (97,759 )     (150,597 )     630,626  
Basic and diluted income (loss) per share from continuing operations     (0.009 )     0.021       0.066  
Basic and diluted income (loss) per share from discontinued operations     (0.000 )     (0.022 )     0.021  
Basic and diluted income (loss) per share     (0.009 )     (0.001 )     0.087  
Weighted average number of shares outstanding – basic and diluted     8,136,348       8,136,348       8,136,348  
                         

The
accompanying notes are an integral part of these consolidated financial statements.

 

 

 

ZIM
Corporation and Subsidiaries

Consolidated
Statements of Shareholders’ Equity

(Expressed
in U.S. Dollars)

                         
  Number of common shares issued   Common shares   Additional paid-in-capital   Accumulated deficit   Accumulated other comprehensive loss   Total shareholders’ equity
              $       $       $       $       $  
Balance as at March 31, 2018     8,136,348       19,491,842       2,962,105       (21,325,620 )     (378,424 )     749,901  
Stock based compensation                 1,807                       1,807  
   Net income                         703,516               703,516  
Foreign currency translation adjustment                             (72,890 )     (72,890 )
Balance as at March 31, 2019     8,136,348       19,491,842       2,963,912       (20,622,106 )     (451,314 )     1,382,334  
                         
    Number of common shares issued        Common shares       Additional paid-in-capital         Accumulated deficit       Accumulated other comprehensive loss       Total shareholders’ equity  
              $       $       $       $       $  
Balance as at March 31, 2019     8,136,348       19,491,842       2,963,912       (20,622,106 )     (451,314 )     1,382,334  
Stock based compensation               2,156                       2,156  
   Net loss                   (8,999 )             (8,999 )
Foreign currency translation adjustment                         (141,598 )     (141,598 )
Balance as at March 31, 2020     8,136,348       19,491,842       2,966,068       (20,631,105 )     (592,912 )     1,233,894  
                         
      Number of common shares issued        Common shares       Additional paid-in-capital         Accumulated deficit       Accumulated other comprehensive loss       Total shareholders’ equity  
              $       $       $       $       $  
Balance as at March 31, 2020     8,136,348       19,491,842       2,966,068       (20,631,105 )     (592,912 )     1,233,894  
   Net loss                 (76,568 )             (76,568 )
Accumulated foreign currency translation adjustment reclassified to income (loss) from discontinued operations               —         (572,004 )     572,004          
Foreign currency translation adjustmet                         (21,191 )     (21,191 )
Balance as at March 31, 2021     8,136,348       19,491,842       2,966,068       (21,279,678 )     (42,099 )     1,136,135  
                                                 

 The
accompanying notes are an integral part of these consolidated financial statements.

 

ZIM Corporation and Subsidiaries

           
Consolidated Statements of Cash Flows            

(Expressed in U.S. dollars)

           
             
  Year ended
March 31,
2021
  Year ended
March 31,
2020
  Year ended
March 31,
2019
    $   $   $
OPERATING ACTIVITIES                        
Net income (loss)     (76,568 )     (8,999 )     703,516  
Items not involving cash:                        
Depreciation of equipment     3,109       8,867       10,575  
Gain on disposal of investment     —         (220,233 )     —    
Gain on disposal of discontinued operations     (223,549 )     —         —    
Gain on revaluation of investment     —         (2,956 )     (604,013 )
Stock-based compensation     —         2,156       1,807  
Changes in operating working capital:                        
Decrease (increase) in accounts receivable     (27,148 )     28,825       (21,168 )
Decrease (increase) in investment tax credits     132,397       34,704       (39,984 )
Decrease (increase) in other tax credits     —         (5,047 )     47,646  
Decrease (increase) in prepaid expenses     (4,566 )     (3,113 )     (2,316 )
Increase (decrease) in accounts payable     (32,020 )     (22,422 )     27,745  
Decrease in accrued liabilities     —         7,477       2,446  
Decrease in contract liabilities     —         (19,307 )     29,620  
Cash flows provided by (used in) operating activities     (228,346 )     (200,046 )     155,874  
INVESTING ACTIVITIES                        
Purchase of equipment     (4,486 )     (5,293 )     (7,040 )
Proceeds from disposal of investment     —         220,233       —    
Cash flows provided by (used in) investing activities     (4,486 )     214,940       (7,040 )
Increase (decrease) in cash and cash equivalents     (232,832 )     14,894       148,834  
Cash and cash equivalents, beginning of year     429,824       506,524       418,507  
Effect of changes in exchange rates on cash and cash equivalents     16,332       (91,594 )     (60,817 )
Cash and cash equivalents, end of year     213,324       429,824       506,524  
                         
The accompanying notes are an integral part of the consolidated financial statements.              

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

 1 – NATURE OF OPERATIONS

 

COMPANY
OVERVIEW

 

ZIM Corporation
(“ZIM” or the “Company”) undertook a strategic shift to discontinue all operations related to software products
and services for the database and mobile markets and focused all of its resources on developing intellectual
property and advancing research and development in the areas of new synthetic drugs and immunotherapies.

 

In April
2016, ZIM incorporated a wholly owned subsidiary called GeneSpans Corporation to develop intellectual property related to its research.
Genespans name was changed to NuvoBio Corporation on August 25, 2016.

 

In 2017, NuvoBio
signed strategic partnerships and exclusive global licensing agreements with leading drug research institutes and companies. The Company
is currently funding research and development projects in the following areas:

 

 

New peptide-derived
inhibitors for therapeutic intervention against various cancer cell lines in the presence or absence of chemotherapeutics to characterize
the in vivo effects of promising inhibitors.

 

In years
prior to fiscal year 2020, ZIM was a provider of software products and services for the database and mobile markets. ZIM products and
services were used by enterprises in the design, development and management of business, database and mobile applications. ZIM also provided
mobile content to the consumer market. These operations were discontinued and disposed of in fiscal year 2021.

 

 

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 preparation assumes that the Company will
continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments
in the normal course of business. The Company had an operating loss and negative cash flows from
operations during the year ended March 31, 2021,
the Company has incurred an accumulated deficit of $21,279,678 to
date
as a result of its history of operating losses and negative cash flows from
operations in prior years. This raises substantial 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 commitments 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 if
the going concern assumption was not appropriate. If the going concern assumption
was not appropriate for these consolidated financial statements, then adjustments could be necessary to the carrying
values of the assets and liabilities, the reported revenue and expenses and the classifications used in the consolidated balance sheets.
Such adjustments could be material.

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

THE
COVID-19 PANDEMIC HAS ADVERSELY IMPACTED, AND POSES RISKS TO, OUR BUSINESS, THE NATURE AND EXTENT OF WHICH ARE HIGHLY UNCERTAIN AND UNPREDICTABLE.

 

The continued
global spread of COVID-19 has led to disruption and volatility in the global capital markets, which has increased the cost of, and adversely
impacted access to, capital (including the commercial paper markets) and increased economic uncertainty. It is likely that the pandemic
will cause an economic slowdown of potentially extended duration, and it is possible that it could cause a global recession.

 

COVID-19
is adversely affecting, and is expected to continue to adversely affect, certain elements of our business, including as a result of impacts
associated with preventive and precautionary measures that we, other businesses, our communities and governments are taking. Due to these
impacts and measures, we have experienced and expect to continue to experience delays in our research activities.

 

In addition
to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel
and business activity, which could significantly impact our ability to conduct research. Due to the speed with which the COVID-19 situation
is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around
its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation
our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and
the impact on our financial and operating results could be material.

 

Negative
economic conditions may also cause debtors to delay and withhold payments to ZIM as a follow through of the negative economic conditions
they are experiencing due to COVOV-19. The extent to which COVID-19 impacts our business will depend on future developments, which are
highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions
to contain COVID-19 or treat its impact, among others.

 

3
– SIGNIFICANT ACCOUNTING POLICIES

BASIS
OF PRESENTATION

 

These consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”).

 

PRINCIPLES
OF CONSOLIDATION

 

These consolidated
financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. The results of operations
for acquisitions are included in these consolidated financial statements from the date of acquisition. Inter-company transactions and
balances are eliminated upon consolidation.

 

 

 

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

USE
OF ESTIMATES

 

The preparation
of consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amount of revenue and expenses during the period. Estimates have been made by management in several areas,
including, but not limited to, the realizability of accounts receivable, the valuation allowance associated with deferred income tax
assets, investment tax credits, the calculations supporting the revaluation of investments, expected useful life of equipment and the
fair value calculation with respect to the stock options. Actual results may differ from those estimates.

 

CASH
AND CASH EQUIVALENTS

 

The Company
considers all highly liquid investments with an original term to maturity of three months or less to be cash equivalents.

 

ALLOWANCE
FOR DOUBTFUL ACCOUNTS

 

Accounts
receivable are recorded at the invoiced amount net of an allowance for doubtful accounts. The Company determines its allowance for doubtful
accounts by considering a number of factors, including the age of the receivable, the financial stability of the customer, discussions
that may have occurred with the customer and management’s judgment as to the overall collectability of the receivable from that customer.
The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are
credited to selling, general and administration expense in the period of recovery.

 

REVENUE
RECOGNITION

Prior
to our strategic shift as stated in Note 1 above, the Company derived revenue from two sources: enterprise software, including maintenance
and consulting services and mobile services and applications. Enterprise software involves providing enterprise software for designing,
developing and manipulating database systems and applications. Mobile services involve providing SMS applications and services. The Company
presents revenues net of sales tax and other related taxes.

ENTERPRISE
SOFTWARE REVENUE RECOGNITION

ZIM
recorded revenues from the perpetual license of the Company’s software products and the sale of related maintenance and consulting. The
Company’s standard license agreement provided a license to use the Company’s products based on the number of licensed users. The Company
may have licensed its software in multiple element arrangements if the customer purchased any combination of maintenance, consulting
or training services in conjunction with the license.

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

The
Company recognized revenue pursuant to the requirements of ASC 606, Revenue from Contracts with Customers. Revenue was recognized
using the residual method when evidence of fair value exists for all of the undelivered performance obligations in the arrangement, but
does not exist for one or more performance obligations. The Company allocated revenue to each undelivered performance obligation based
on its respective fair value determined by the price charged when that performance obligation was sold separately. The Company deferred
revenue for the undelivered performance obligations and recognized the residual amount of the arrangement fee, if any. The separate performance
obligations of the arrangements were considered to be separate units of accounting.

The
following steps are taken to recognize revenue:

1. Identification
of the contract(s) with the customer(s).
2. Identify
the performance obligations in the contract.
3. Determine
the transaction price.
4. Allocate
the transaction price to the performance obligations in the contract.
5. Recognize
revenue when (or as) the Company satisfies the performance obligations.

 

The
Company recognized revenue from software license agreements at the point in time that the related performance obligation was satisfied,
which was generally when the software key was delivered. Discounts were allocated among the various performance obligations on a pro-rata
basis. If at the outset of an arrangement the Company determined that the arrangement fee was not fixed or determinable, revenue was
deferred until the arrangement fee become fixed or determinable.

Collectability
was assessed based on the collection history of the client, current economic trends, customer concentrations and customer credit worthiness.
Delivery of the software had occurred once the customer had accepted the product or had been provided with permanent keys to the file
transfer protocol (“FTP”) site. If an arrangement allowed for customer acceptance of the software or services, the Company
deferred revenue recognition until the earlier of customer acceptance or when the acceptance right lapses.

MAINTENANCE
AND CONSULTING REVENUE RECOGNITION

Maintenance
revenues were recognized using a time-based approach equally over the term of the maintenance contract. The liability relating to the
received but unearned portion of maintenance revenues was recognized as deferred revenues.

Consulting
revenue, which represents services provided on a per diem basis to customers, was recognized as the services were performed as there
are no customer acceptance provisions involved in these types of arrangements. Consulting revenue, which represents services provided
on a fixed price basis to customers, was recognized upon achieving the related performance obligation.

In
general, credit terms of 30 days were extended to customers with a small number of customers receiving longer payment terms based on
the long-standing relationship with ZIM.

MOBILE
REVENUE RECOGNITION

Aggregation
services occur when ZIM sent messages from its content provider customers through mobile operators to end users on their cell phones.
In this situation, the Company contracted with its customers that cannot connect directly to the mobile operators and with the third-party
mobile operators or other aggregators directly for the transmission of the messages. The performance obligation was to transmit a message.
Revenues were recognized in the month in which the performance obligation was satisfied, provided no significant ZIM obligations remained.
We worked with aggregators to provide delivery routes and receive statements and billing in real time. We prepaid for message credits
and billed customers for message delivery at the end of each month. We purchased service credits from the aggregators and billed our
customers directly for the delivery of messages on a monthly basis.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

RESEARCH
AND DEVELOPMENT EXPENSES

 

Costs related
to research, design and development of products and applications are charged to research and development expense as incurred. Software
development costs are capitalized beginning when a product’s technological feasibility has been established, which generally occurs upon
completion of a working model, and ending when a product is available for general release to customers. All subsequent costs are expensed
as incurred. To date, completing a working model of the Company’s products and the general release of the products has substantially
coincided. The Company has not capitalized any software development costs since such costs have not been significant.

 

The Company
qualifies for scientific research and experimental development refundable investment tax credits. These credits are recorded as a reduction
of research and development expense when it is more likely than not that the credits will be realized. Other non-refundable investment
tax credits not utilized in the current year will be used to offset income taxes otherwise payable in future year and will be accounted
for as a reduction in income tax expense.

 

TRANSLATION
OF FOREIGN CURRENCIES

 

The Company’s
reporting currency is the U.S. dollar and the functional currency is the Canadian dollar for ZIM Corporation and NuvoBio.

 

Transactions
denominated in currencies other than the functional currency of the Company or its subsidiaries are initially measured using the exchange
rate in effect on the date of the transaction. At each balance sheet date, monetary assets and liabilities are remeasured into the functional
currency using the exchange rate in effect on that date. Any foreign exchange gains or losses resulting from this remeasurement are recognized
in the statement of income (loss) and comprehensive income (loss) of the respective entity for that period. For the years ended March
31, 2021, 2020, and 2019, the Company recognized a foreign exchange gain of $923, $1,075, and $7,221 respectively, in the accompanying
consolidated statements of income (loss) and comprehensive income (loss) included in the selling, general and administrative expenses.

 

The translation
of the Company’s financial statements and those of its subsidiaries from their respective functional currencies to the Company’s
reporting currency is performed as follows: all assets and liabilities are translated into U.S. dollars at the rate of exchange in effect
at the balance sheet date. Equity transactions and cash flows related to investing and financing activities are translated at the exchange
rate in effect at the date of the transaction. Revenues, expenses and cash flows related to operating activities are translated at the
weighted average exchange rates for the period. The resulting translation adjustments are included in accumulated other comprehensive
income (loss) in shareholders’ equity. The translation adjustments did not result in a tax impact.

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

INCOME
TAXES

 

Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax basis and operating loss and tax credit carry-forwards using enacted tax rates and laws in effect in the year in which the differences
are expected to reverse. When necessary, a valuation allowance is recorded to reduce the tax assets to an amount for which realization
is more likely than not. The effect of changes in tax rates is recognized in the period in which the rate change occurs.

 

The Company
is subject to examination by taxing authorities in the jurisdictions of Canada, Brazil and the United States. Management does not believe
that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying
consolidated financial statements.

 

EARNINGS
(LOSS) PER SHARE

 

Basic earnings
(loss) per share are computed by dividing net earnings available to common shareholders by the weighted average number of common shares
outstanding during the reporting period. Diluted earnings per share are calculated giving effect to the potential dilution that could
occur if securities or other contracts to issue common shares were exercised or converted to such shares at the later of the beginning
of the period or the issuance date. The treasury stock method is used to determine the dilutive effect of warrants and stock options.
The treasury stock method assumes that proceeds received from the exercise of in-the-money share purchase warrants and stock options
are used to repurchase common shares at the average market price during the period.

 

STOCK
OPTIONS AND GRANTS

 

Compensation
cost for all stock-based awards is measured at fair value on the date of grant and recognized as compensation expense over the service
period for awards expected to vest. Stock-based awards granted to consultants are measured at fair value on the grant date and compensation
expense is recognized on the date at which the consultant’s performance is complete which, for the Company, is on the date of grant.

 

The fair
value of stock options is determined using the Black Scholes-Merton option pricing model. The expected dividend yield is based on historical
dividend payouts, the expected volatility is based on historical volatilities of company stock (management believes that the historical
volatility is an appropriate measure of expected volatility) for a period approximating the expected life; the risk-free rate is based
on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option; and the
expected life represents the period of time the options are expected to be outstanding and is based on historical trends. The weighted
average assumptions used in the computations are as follows:

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

    Year ended
March 31, 2021
  Year ended
March 31, 2020
  Year ended
March 31, 2018
     
Risk-free interest rates     N/A       1.49 %     2.52 %
Expected volatility     N/A       284 %     120 %
Dividend yield     N/A       —         —    
Expected life of options (years)     N/A       3.0       3.0  

 

EQUIPMENT

 

Equipment
is recorded at cost net of depreciation and any impairment losses. Depreciation is provided over the estimated useful lives of the underlying
assets using the following methods and rates:

  

Computer equipment   40%   Declining balance
Software   40%   Declining balance
Office furniture and equipment   20%   Declining balance
Voice communications equipment   20%   Declining balance
Leasehold improvements   5 years   Straight line over the
lesser of 5 years or
the term of the
underlying lease

 

 

IMPAIRMENT
OF EQUIPMENT

 

Equipment
is tested for impairment whenever events or changes in circumstances indicate that the Company may not be able to recover the net book
value of its productive assets, If the carrying value of these assets is not recoverable, the assets are deemed impaired and are to be
written down to their estimated fair value through a charge to earnings (loss). The guidance states that fair values may be estimated
using discounted cash flow analysis or quoted market prices, together with other available information. The Company reviewed its property
and equipment assets for impairment to determine if there were events or changes in circumstances that would indicate that the carrying
amount of the assets may not be recoverable through undiscounted future cash flows. It was determined that no impairment was evident.

 

INVESTMENTS

 

ZIM measures
the value of its equity investments in privately-held companies, which do not have readily determinable fair values, using the alternative
measurement basis permitted under Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall:
Recognition and Measurement of Financial Assets and Financial Liabilities
. Under this
alternative measurement basis, equity investments in privately-held companies without readily determinable fair values are measured at
cost, less any impairments, plus or minus any adjustments resulting from observable price changes in orderly transactions for the identical
or similar investment of the same issuer. In the absence of observable price changes, the alternative measurement basis of cost less
any impairments is used as a valuation methodology.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

ADOPTED
ACCOUNTING PRONOUNCEMENTS

None.

RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS – NOT YET ADOPTED

From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards
setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company’s management
believes that the impact of recently issued standards that are not yet effective will not have any significant impact on the consolidated
financial statements upon adoption.

In
June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326).
This ASU represents a significant change in the Accounting for Credit Losses (“ACL”) accounting model by requiring immediate
recognition of management’s estimates of current expected credit losses (CECL). Under the prior model, losses were recognized only
as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being
probable.
The new standard effective date for Smaller Reporting Companies
is fiscal years beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact ASU 2016-13 will
have on the Company’s consolidated financial statements.

4
– ACCOUNTING FOR UNCERTAIN TAX POSITIONS

The Company
recognizes any interest accrued related to unrecognized tax benefits in interest and penalties in income tax benefit in the consolidated
statement of loss and comprehensive loss.

 

5 –
DISCONTINUED OPERATIONS

 

In
April 2020, ZIM sold all of its assets related to the database and software business with an effective
date of April 1, 2020. The business was sold for cash consideration of $120,000 Canadian dollars to be paid in five equal
installments over 5 years. The fair value of these payments is estimated at $78,924 US dollars. ZIM recognized a net gain on the
sale of these assets in the amount $223,549. The net gain is a combination of a loss on the sale of $348,455 netted against a
currency translation reversal of $572,004. This business had definable revenues and expenses and has been accounted for as a
discontinued operations as per ASU 2014-08.

At
December 31, 2020, ZIM ceased all operations related to the SMS messaging business due to low profit margins and uncertainty in the future
of the business. This business had definable revenues and expenses and has been accounted for as a discontinued
operations as per ASU 2014-08.

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

Revenue
and expenses related to all discontinued operations are detailed in the table below in US dollars:

 

 

  Year ended
March 31, 2021
  Year ended
March 31, 2020
  Year ended
March 31, 2019
      $       $       $  
Revenues                        
  Mobile     45,248       68,700       122,637  
  Software     —         24,768       117,533  
  Software maintenance and consulting     —         254,039       459,878  
Total revenue from discontinued operations     45,248       347,507       700,048  
                         
Operating expenses                        
Cost of revenue     32,122       19,228       20,588  
Selling, general and administrative     238,401       446,311       452,669  
Research and development (net)     1,054       57,859       58,402  
Total operating expenses from discontinued operations     271,577       523,398       531,659  
Results of discontinued operations     (226,329 )     (175,791 )     168,389  

 

Gain on disposal of database business

    223,549       —         —    
                         
Income (loss) from discontinued operations     (2,780 )     (175,891 )     168,389  
                         
                         

Assets
and liabilities related to all discontinued operations are detailed in the table below in US dollars:

  March 31, 2021   March 31, 2020
ASSETS   $   $
Current assets                
Cash and cash equivalents     —         245,148  
Accounts receivable     —         21,006  
Investment tax credits receivable     —         118,031  
Prepaid expenses     —         30,525  
Current assets of discontinued operations     —         18,617  
      —         433,327  
                 
Right of use assets     —         1,159  
Equipment, net             13,263  
      —         447,749  
LIABILITIES                
Current liabilities                
Accounts payable     —         6,415  
Accrued liabilities     —         18,378  
Current lease liability     —         1,251  
Contract liabilities     —         57,862  
      —         83,905  

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

Cashflow
related to all discontinued operations are detailed in the table below in US dollars:

    Year ended
March 31,
2021
  Year ended
March 31,
2020
  Year ended
March 31,
2019
      $       $       $  
Net income (loss) from discontinued operations     (226,329 )     (175,791 )     168,389  
Depreciation     1,839       4,916       4,928  
Decrease (increase) in accounts receivable     21,006       38,625       (21,168 )
Decrease (increase) in investment tax credits     118,031       53,174       (39,985 )
Decrease in other tax credits     30,525       4,826       47,646  
Decrease (increase) in prepaid expenses     18,617       2,278       (2,571 )
Increase (decrease) in accounts payable     (6,415 )     (20,035 )     26,449  
Increase (decrease) in accrued liabilities     (18,379 )     (1,858 )     3,155  
Increase (decrease) in contract liabilities     (57,862 )     (31,982 )     29,620  
Cash flows provided by (used in) discontinued operations     (119,057 )     (127,006 )     216,462  

 

6 –
ACCOUNTS RECEIVABLE

    March 31, 2021   March 31, 2020
      $       $  
Trade accounts receivable     57,030       31,215  
Allowance for doubtful accounts     —         (6,666 )
Other             964  
      57,030       25,513  

 

7 –
INVESTMENTS

 

All investments
are in private companies located within Canada.

 

Investments
and long-term deposits
Investment
Date
Value
at Investment Date
2021 2020 Available
For Sale
HostedBizz Dec.
31, 2013
1,005 No
Equispheres
Inc.
August
26,2016
112,752 745,500 660,816 No
Spiderwort August
24, 2019
7,725 11,288 10,006 No
Total   308,849 756,788 670,822  

 

On April 30,
2017, 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,
2017, 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.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

On February
9, 2018 ZIM sold 100,000 shares of HostedBizz to HostedBizz, for cancellation, for gross proceeds of $45,758 United States dollars ($60,000
Canadian dollars).

 

On August 24,
2019 NuvoBio Corporation made an investment in Spiderwort Inc. The investment consisted of the purchase of a $7,725 U.S. dollar ($10,000
Canadian dollar) convertible promissory note and is accounted for at amortized cost. The note accrues simple interest of 5% per annum.

 

On
October 15, 2019, Spiderwort Inc. completed a qualifying equity financing in an amount greater than $3,000,000 Canadian dollars. NuvoBio
automatically converted securities in Spiderwort to Class B voting common shares. The convertible promissory note converted into shares
of Spiderwort at a value of $10,006 US dollars. This represents an unrealized gain on this equity investment of $2,956.

 

8 –
EQUIPMENT

 

March 31, 2021

  Cost   Accumulated depreciation   Net book value
      $       $       $  
                         
Computer equipment     867,144       867,144       —    
Software     84,854       81,183       3,671  
Office furniture and equipment     185,018       184,627       391  
Voice communications equipment     4,534       4,473       61  
Leasehold improvements     127,447       126,573       874  
      1,268,998       1,264,000       4,997  

 

 

 

March 31, 2020

 

 

 

Cost

 

 

Accumulated depreciation

 

 

 

Net book value

      $       $       $  
                         
Computer equipment     785,145       778,440       6,705  
Software     79,523       74,099       5,424  
Office furniture and equipment     167,665       166,082       1,583  
Voice communications equipment     4,297       4,128       169  
Leasehold improvements     117,004       113,660       3,344  
      1,153,634       1,136,409       17,225  

 

Depreciation
expense for the year ended March 31, 2021 was $2,964 ($8,867 and $10,575 for the years ended March 31, 2020 and 2019 respectively). These
expenses are included in the cost of revenue for discontinued operations, selling, general, and administrative expenses and research
and development expenses.

 

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

9 –
LINE OF CREDIT

 

During
fiscal 2021, a working capital line of credit, in the form of overdraft protection, was available at approximately $39,760 (equivalent
to $50,000 Canadian, the Company’s functional currency) from the Company’s major financial institution. This credit facility
is secured by the Company’s assets. Amounts can be drawn in Canadian funds on this credit facility and bear interest at the prime
rate, as published by the Royal Bank of Canada, plus 2.15% (4.60% at March 31, 2021). Amounts can also be drawn in United States of America
funds on this credit facility and bear interest at the US Base Rate plus 2.15% (5.90% at March 31, 2021).

 

In order
to maintain the working capital line of credit the Company must maintain a Tangible Net Worth of greater than $150,000 Canadian dollars
(equivalent to $119,280 US dollars) and a ratio of current assets to current liabilities greater than 1.10:1. The Company was in compliance
with these covenants as at March 31, 2021.

 

As at March
31, 2021, nothing was drawn down on this line of credit. The line of credit does not have defined expiration or renewal dates.

 

10 –
ACCRUED LIABILITIES

    March 31, 2021  

March
31, 2020

      $       $  
                 
Employee related accruals     —         23,037  
Trade     2,114       3,272  
      2,114       26,308  

 

11 –
COMMON SHARE ISSUE

 

The Company
did not issue any common shares during the years ended March 31, 2021, March 31, 2020 and March 31, 2019.

 

On November
12, 2009, the Board of Directors approved a share repurchase plan. Shares may be repurchased by the Company to a maximum of $200 per
day and $12,000 per quarter. The repurchase program has no expiration date. As of March 31, 2021, no shares have been repurchased as
part of this program.

 

12 –
RELATED PARTY TRANSACTIONS

 

A director
of the Company is a director and principal owner of a company that provides computing and hosting services to ZIM. During the fiscal
year ending March 31, 2021, the Company paid $30,995 for these services (March 31, 2020 – $52,660, March 31, 2019- $59,829). At March
31, 2021, included in accounts payable is $1,760 connected to these services as compared to $5,683 at March 31, 2020.

 

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

An officer
of the Company is the principal owner of a company that provides finance, accounting and bookkeeping services to ZIM. During the fiscal
year ending March 31, 2021 the Company paid $3,597 for these services (March 31, 2020 – $17,778, March 31, 2019 – $12,821). At March
31, 2021, included in accounts payable is $NIL connected to these services as compared to $1,919 at March 31, 2020.

 

On June
5, 2020, ZIM Corporation announced the sale of its database technology business as part of management’s plan to focus the business
on its biomedical subsidiary NuvoBio. The effective date of the sale was April 1, 2020. The database assets include all of the Software,
Consulting and Maintenance segment and have been purchased by previous members of ZIM Corporation’s staff and will operate under
the name ZIM Databases Canada Inc. The purchase price of $95,424 ($120,000 Canadian dollars) is to be paid in 5 payments over a 5-year
period on the anniversary date of the agreement.

 

13 –
STOCK BASED COMPENSATION

 

During
the years ended March 31, 2020 and March 31, 2019 the Company issued common shares options to employees and non-employees, and as a result,
additional paid in capital has been increased by $2,156 and $1,807 respectively.

 

The increase
in additional paid in capital is the value associated with the granting and the vesting of options, which is recorded as compensation
expense in the statement of income (loss) and comprehensive income (loss) as a part of selling, general and administrative expense.

 

Under ZIM’s
Employee Stock Option Plan, the Company may grant options to its officers, directors and employees for up to 1,360,000 common shares.
As at March 31, 2021, options to purchase 80,500 (March 31, 2020, 161,500) were outstanding under the Employee Stock Option Plan. Stock
options are granted with an exercise price equal to the common share’s fair market value at the date of grant. Options are granted
periodically, and both the maximum term of an option and the vesting period are set at the Board’s discretion. All options granted vested
on the day of grant and have a three-year term. The expected life of the grants due to forfeitures and exercise of options is estimated
based on recent history and is 3 years.

 

The Company
recognized the following expense relating to stock options and grants:

 

    Year ended
March 31,
2021
  Year ended
March 31,
2020
  Year ended March 31,
2019
      $       $       $  
Options compensation expense for employees     —         1,506       268  
Options compensation expense for consultants     —         650       1,539  
Total expense     —         2,156       1,807  

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

All options
granted vested on the day of grant resulting in the Company not having any non-vested awards as of March 31, 2021 or March 31, 2020.

 

A summary
of the status of the stock options is as follows:

 

         
   

March 31, 2021

Number of options outstanding

 

March 31, 2020

Number of options outstanding

 

March 31, 2019

Number of options outstanding

             
Options outstanding, beginning of year     161,500       170,250       204,150  
Granted     —         33,750       79,250  
Expired     (81,000 )     (42,500 )     (113,150 )
Options outstanding, end of year     80,500       161,500       170,250  

 

All share
options outstanding at March 31, 2021 and 2020 are exercisable.

 

The following
table represents a summary of the options outstanding as at March 31, 2021:

 

          Options outstanding and exercisable
  Range of exercise prices       Number
outstanding at
March 31, 2021
      Weighted
average
remaining
contractual life
 
  $               Years  
  0.000-0.015       27,500       0.39  
  0.015-0.040       18,000       1.38  
  0.040-0.080       35,000       0.90  
          80,500       0.83  

 

The weighted
average grant-date fair value of options granted and vested in fiscal years 2020 and 2019 were $0.0784 and $0.0169 respectively.

 

As at March
31, 2021 there were 80,500 options in the money with an intrinsic value of $5,236.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

EMPLOYEE
AND NON-EMPLOYEE OPTIONS

 

During
the year ended March 31, 2020, 15,750 options were granted to employees. In the year ended March 31, 2019, 16,750 options were granted
to employees.

 

During
the year ended March 31, 2020, 18,000 options were granted to non-employees. In the year ended March 31, 2019, 62,500 options were granted
to non-employees.

 

No options
have been granted with exercise prices below the market price on the respective grant dates during the years ended March 31, 2021, March
31, 2020 or March 31, 2019.

 

14 –
INTEREST

 

    Year ended
March 31, 2021
  Year ended
March 31,2020
  Year ended
March 31, 2019
      $       $       $  
                         
Interest income     524       14,398       16,334  
Interest expense     (691 )     (2,238 )     (2,378 )
Total     (167 )     12,160       13,956  

 

 

15 –
CONTRACT LIABILITIES

 

Contract
liabilities relate to deferred revenue from maintenance from discontinued operations.

 

    Years ended
    March 31, 2021   March 31, 2020
      $       $  
Balance beginning of the year     57,862       89,844  
Aggregate amount of revenue recognized     —         (178,638 )
Revenue sold through disposal of business     (57,862 )     —    
Contract liabilities recognized     —         146,656  
Balance, end of year     —         57,862  
                 
      March 31, 2021       March 31, 2020  
      $       $  
Current portion     —         57,862  

 

16 –
INCOME TAXES

 

The Company
recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of not being
sustained on an audit, based on the technical merits of the position.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

The Company
and its subsidiaries file income tax returns in Canadian and U.S. federal jurisdictions, and various provincial jurisdictions. The Company’s
federal income tax returns are generally subject to examination for a period of three years after filing of the respective return in
the U.S. and Canada.

 

Income
tax expense varies from the amount that would be computed by applying the basic federal and provincial income tax rates to income (loss)
before taxes, as follows:

 

    Year ended March 31,
2021
  Year ended March 31,
2020
  Year ended March 31,
2019
Expected Tax Rate     12.20 %     12.43 %     13.25 %
                         
Income (loss) before tax from continuing operations   $ (73,788 )   $ 166,892     $ 535,127  
Income (loss) before tax from discontinued operations     (2,780 )     (175,891 )     168,389  
Total income (loss) before tax     (76,568 )     (8,999 )     703,516  
                         
Expected tax (benefit) resulting from income (loss)     (9,341 )     (1,118 )     83,562  
Permanent differences     (15,631 )     (10,491 )     (39,088 )
Change in valuation allowance     44,313       (180,415 )     (148,300 )
Difference in foreign tax rates     —         (10,650 )     (30,102 )
Change in tax rates     —         169,750       99,278  
Other     (19,340 )     32,925       34,650  
Income tax expense   $ —       $ —       $ —    

 

The change
in valuation allowance for originating temporary differences and losses available for carry forward, is calculated using an expected
deferred tax rate of 12.2%, based on the application of the Small Business Deduction. The rate at which such amounts may be realized
as disclosed as part of a deferred tax asset and related valuation allowance takes into account the enacted tax rate decreases over the
expected period of realization.

 

Refundable
investment tax credits for research and development in Canada of $11,928, $128,718 and $171,204 for the years ended March 31, 2021, March
31, 2020 and March 31, 2019, respectively is netted against research and development expense. The investment tax credits are subject
to review and approval by taxation authorities and it is possible that the amounts granted will be different from the amounts recorded
by the Company.

 

Deferred
taxes reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. The Company’s deferred tax assets are as follows:

 

 

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

 

    March 31,
2021
  March 31,
2020
  March 31,
2019
Property and equipment – differences in net book value and unamortized capital cost   $ 72,721     $ 64,094     $ 69,560  
Intangible assets – differences in net book value and tax basis     151,116       133,946       156,668  
Unused scientific research and experimental development amounts deductible and investment tax credits available for carry forward     792,137       716,111       763,519  
Losses available for carry forward     50,150       104,751       132,739  
Other     48       2,960       79,789  
Gross deferred tax asset     1,006,173       1,021,860       1,202,275  
Valuation allowance     (1,006,173 )     (1,021,860 )     (1,202,275 )
Net deferred tax asset   $ —       $ —       $ —    

 

 

The Company
has federal and provincial non-capital losses available to reduce taxable income in Canada, which expire in the following years:

 

    Federal & Provincial
     
  2026       479,499  
  2027       325,207  
  2037       143,734  
  2038       2,450  
  2039       16,790  
  2040       1,299  
  2041       200,230  
          1,169,210  

 

The Company
has capital losses of $260,867, which are available indefinitely to reduce capital gains in future years as of March 31, 2021.

 

As at March
31, 2021, the Company had accumulated unclaimed federal and provincial scientific research and experimental development deductions of
approximately $4,269,004 ($3,858,244 in 2020). This amount can be carried forward indefinitely and can be used to reduce future years’
Canadian taxable income.

 

The Company
has federal scientific research and experimental development credits available to reduce future years’ income taxes payable in Canada
of $310,049 ($279,505 in 2020), which can be carried forward for a period of twenty years and expire in 2023-2033.

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

17 –
INCOME (LOSS) PER SHARE

 

For the
purposes of the income (loss) per share computation, the weighted average number of common shares outstanding has been used.

 

The following
securities are considered “in the money” and could potentially dilute the basic income per share in the future but have not
been included in diluted loss income per share because their effect was antidilutive for all periods presented:

 

    March 31, 2021   March 31, 2020   March 31, 2019
                         
Stock options     80,500       161,500       170,250  

 

Diluted
income (loss) per share for the years ended March 31, 2021, 2020 and 2019 is deemed to be identical to basic loss per share as exercise
of the options outstanding is antidilutive.

 

18 –
FINANCIAL RISKS

 

Foreign
exchange risk as at March 31, 2021 consists of cash and receivables being in the Company’s functional currency of Canadian dollars
while reporting is in United States dollars.

 

In years
previous to fiscal year 2021, the Company operated internationally, giving rise to significant exposure to market risks from changes
in foreign exchange rates. The Company’s financial assets are in the form of cash and cash equivalents held at institutions with
high quality credit ratings, accounts receivable and investments. The Company was previously exposed to exchange risk due to the timing
of the movement of funds between subsidiaries and the parent company related to the transfer pricing agreement and the pricing of contracts
in non-functional currencies. Financial instruments denominated in foreign currencies that led to foreign exchange risk when funds where
moved include:

 

Cash and
cash equivalents includes the following amounts in their source currency:

 

    March 31, 2021   March 31, 2020
         
Canadian dollars     263,927       266,005  
U.S. dollars     3,449       6,638  
Brazilian reals     —         1,223,708  

 

Accounts
receivable include the following amounts receivable in their source currency:

 

    March 31, 2021   March 31, 2020
         
Canadian dollars     150,965       17,349  
Brazilian reals     —         68,975  

 

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

Accounts
payable include the following amounts payable in their source currency:

 

    March 31, 2021   March 31, 2020
         
Canadian dollars     7,901       19,085  
Brazilian reals     —         772  

 

Accrued
liabilities and lease liabilities include the following accruals in their source currency:

 

    March 31, 2021   March 31, 2020
         
Canadian dollars     29,642       32,012  

Brazilian reals

 

    —         19,439  
                 

The Company
does not use derivative financial instruments to reduce its foreign exchange risk exposure. The Company does not have any significant
assets of liabilities denominated in foreign currencies. All significant assets and liabilities are denominated in the Company’s
functional currency of Canadian dollars. and has no foreign exchange exposure.

 

CREDIT
RISK

 

The Company
is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. Credit exposure is minimized
by dealing with only creditworthy counterparties in accordance with established credit approval policies.

 

Concentration
of credit risk in accounts receivable is indicated below by the percentage of the total balance receivable from customers in the specified
geographic area:

 

    March 31, 2021   March 31, 2020
         
Canada     100 %     48 %
North America, excluding Canada      -%        -%  
South America     -%       52 %
      100 %     100 %

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

FAIR
VALUE OF FINANCIAL INSTRUMENTS

 

The carrying
values of cash, accounts receivable, and accounts payable and accrued liabilities approximate, which are carried at amortized costs,
approximate their fair values due to the relatively short periods to maturity of the instruments.

 

Investments
are fair valued in their source currency (Canadian dollars) based on objective evidence of fair value. The value is translated to the
reporting currency (U.S. dollars) at the exchange rate on March 31, 2021 and 2020.

 

19 –
COMMITMENTS AND CONTINGENCIES

 

OPERATING
LEASE COMMITMENTS

 

The Company
has the following financial commitments related to minimum facilities lease expenses for facilities:

    $
  2022       13,005  
  2023       3,251  
  Total       16,256  

 

For the
year ended March 31, 2021, facilities expense was $15,456 ($36,994 for the year ended March 31, 2020 and $39,113
for the year ended March 31, 2019).

 

RESEARCH
COMMITMENTS

 

The Company
has a commitment to pay $39,760 in research related fees.

 

OTHER

 

The Company
is committed to pay an unrelated third party $75,000 upon the listing of ZIM Corporation’s common shares on a national securities
exchange.

 

20 –
SUPPLEMENTAL CASH FLOW DISCLOSURE

 

    Year ended
March 31, 2021
  Year ended
March 31, 2020
      $       $  
Interest paid     (691 )     (2,237 )
Non-cash investing activity     78,924       —    

Investment
tax credit on research

and development
received

    128,718       132,109  

nvestment
tax credit on research

 

 

ZIM
CORPORATION AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEAR ENDED MARCH 31, 2021

(EXPRESSED
IN US DOLLARS)

 

21 –
SEGMENT REPORTING

In fiscal
year 2021 all revenue generated was from discontinued operations and the only continuing operations segment was our biomedical research.
The Company only operated research activities in its NuvoBio subsidiary with all assets being utilized in Canada.

 

 

22 –
SUBSEQUENT EVENTS

 

None.

 

ITEM
19. EXHIBITS.

 

See the
Exhibit Index hereto.

 

 

 

SIGNATURES

 

The registrant
hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

 

 

ZIM Corporation

(Registrant)

 

By /s/
Michael Cowpland

————————————

Michael
Cowpland (President and CEO)

Date: August
4, 2021

 

 

 

EXHIBIT
INDEX

Exhibit
EXHIBIT

Number

1.1       Articles
of Incorporation of the Registrant (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 filed on November
1, 2002 (No. 333-100920))
1.2       By-Laws
of the Registrant (Incorporated by reference to the Registrant’s Registration Statement on Form S-4 filed on November 1, 2002 (No.
333-100920))
4.10 Employee
Stock Option Plan, as amended September 22, 2005 (Incorporated by reference to Appendix A to the Registrant’s Proxy Statement
filed August 19, 2005)
4.11 Form
of Stock Option Agreement under Employee Stock Option Plan (Incorporated by reference to Exhibit 10.11 to the Registrant’s
Annual Report on Form 10-KSB filed June 28, 2006)
4.12 Form
of Non-Qualified Stock Option Agreement between the Registrant and each of Michael Cowpland, James Stechyson, Steve Houck and Charles
Saikaley, dated, 2001  (Incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-KSB
filed June 28, 2006)
4.13 ZIM
SMS Gateway Agreement with SIT Consulting, dated October 27, 2004 (Incorporated by reference to Exhibit 10.13 to the Registrant’s
Annual Report on Form 10-KSB filed June 28, 2006)
4.14 Secured
Senior Promissory Note dated March 31, 2006 between ZIM Corporation and Advanced Telecom Services, Inc. (Incorporated by reference
to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 4, 2006)
4.15 Loan
Agreement dated August 11, 2005 between ZIM Corporation and Dr. Michael Cowpland (Incorporated by reference to Exhibit 10.11 to the
Registrant’s Current Report on Form 8-K filed August 11, 2005)
4.16 Surrender
and Conversion Agreement by and between Michael Cowpland and ZIM Corporation dated December 4, 2008 (Incorporated by reference to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2008).
4.17
Consulting
Agreement by and between Chapman CFO Resources Inc. and ZIM Corporation dated July 20, 2008 (Incorporated by reference to Exhibit
10.2 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2008).
4.18       Stock
Purchase Agreement dated March 28, 2006 by and among ZIM Corporation, Advanced Telecom Services, Inc. and Advanced Internet, Inc.
(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 28, 2006)
8.1
*    
List
of subsidiaries of the Registrant
12.1
*
Certification
by the Chief Executive Officer, Michael Cowpland, pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a)
12.2
*
Certification
by the Chief Financial Officer, John Chapman, pursuant to Exchange Act Rules 13(a)-14(a) and 15d-14(a)
13.1
*     
Certification
by the Chief Executive Officer, Michael Cowpland, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
13.2
*    
Certification
by the Chief Financial Officer, John Chapman, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
101 XBRL
files
   
* Filed
herewith.

 

 

78