UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB/A-2



|ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
|----------------------------------------------



|SECURITIES EXCHANGE ACT OF 1934
|-------------------------------



FOR THE FISCAL YEAR ENDED MARCH 31, 2005



OR



|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
|--------------------------------------------------------



|SECURITIES EXCHANGE ACT OF 1934
|-------------------------------



FOR THE TRANSITION PERIOD FROM _______________



Commission File Number: 000-31691

ZIM CORPORATION

(Exact name of Registrant as specified in our charter)

|Canada(State or other jurisdiction ofincorporation or organization)                           | N/A(I.R.S. Employer Identification Number)
|--------------------------------------------------------------------------------------------- | ------------------------------------------
|20 Colonnade Road, Suite 200, Ottawa, Ontario, Canada(Address of Principal Executive Offices) | K2E 7M6(Zip Code)                         





Issuers telephone number, including area code: (613) 727-1397



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

Securities registered pursuant to Section 12(g) of the Act:





|Title of Each Class         | Name of Each Exchange
On Which Registered
|--------------------------- | -----------------------------------------
|Common shares, no par value | Over the Counter Bulletin Board          





Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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__



Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.



The registrant's revenues for our most recent fiscal year were $10,027,452. The aggregate market value of voting stock held by non-affiliates is $4,430,450 based on 27,518,324 shares at June 8, 2005 held by non-affiliates.  The registrant does not have any authorized or issued and outstanding non-voting stock.  The closing price on the Over the Counter Bulletin Board on June 8, 2005 was $0.161.



The number of common shares of the registrant outstanding as of June 8, 2005 was 59,561,569.







---









EXPLANATORY NOTE



This Amendment No. 2 to our Annual Report on Form 10-KSB for the fiscal year ended March 31, 2005 filed with the Commission on June 21, 2005 and amended on November 17, 2005, is being filed solely to amend Part I, Item 1; Part II, Item 5; and Part II, Item 8A.  These amendments speak as of the original filing date of the Form 10-KSB for the fiscal year ended March 31, 2005.   No other change has been made to the amended Annual Report on Form 10-KSB/A.











---







TABLE OF CONTENTS



PART I



|Item 1. Description of Business                                  | 5 
|---------------------------------------------------------------- | --
|                                                                 |   
|PART II                                                          |   
|                                                                 |   
|Item 5. Market For Common Equity And Related Shareholder Matters | 15
|                                                                 |   
|Item 8A.  Controls and Procedures                                | 18
|                                                                 |   
|PART IV                                                          |   
|                                                                 |   
|Item 13. Exhibits                                                | 20
|                                                                 |   
|SIGNATURES                                                       | 21
|                                                                 |   
|INDEX TO EXHIBITS                                                | 22





3

---







This Annual Report on Form 10-KSB/A/2 contains forward-looking statements within the meaning of Section 21D of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933 regarding our business, financial condition, results of operations and prospects that are based on our current expectations, estimates and projections. In addition, other written or oral statements which constitute forward-looking statements may be made by or on behalf of the registrant. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," or variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance, and are inherently subject to risks and uncertainties that are difficult to predict. As a result, actual outcomes and results may differ materially from the outcomes and results
discussed in or anticipated by the forward-looking statements. 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 10-KSB/A. 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 the Companys Annual Report on Form 10-KSB for the year ended March 31, 2005. 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 the Annual Report on Form 10-KSB, other than as required by law.























4





---







PART I



ITEM 1. DESCRIPTION OF BUSINESS.



COMPANY OVERVIEW



ZIM Corporation ("ZIM" or the "Company") is a global provider of mobile messaging and data services. In addition, the Company has designed and developed consumer and enterprise applications for the SMS (Short Message Service) channel. Prior to entering the SMS or mobile messaging industry, ZIM was recognized as the developer and provider of the Zim Integrated Development Environment software, which continues to be used by companies in the design, development, and management of information databases.



BUSINESS DEVELOPMENT



ZIM was formed under the 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"). 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.



BUSINESS OF THE COMPANY



Historically, we have been known as a developer and provider of the Zim IDE software. Zim IDE software is currently used by companies in the design, development, and management of information databases and mission critical applications. The technology for the Zim IDE software was developed at Bell Northern Research in Ottawa, Ontario in the 1980s and acquired by ZIM in 1996. The software is now licensed to customers through direct sales as well as through an established network of value added resellers ("VARs") and distributors.



Beginning in 2001, we expanded our business strategy to include the design and development of a line of mobile data software products. We designed these mobile data software products to take advantage of the existing wireless data network infrastructure known as SMS. 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 use of SMS is already considered an accepted form of communication throughout Europe and Asia and the market is now expanding in North America.



We began marketing our main SMS product, referred to as "SMS Office" in the summer of 2003. Although we were successful in establishing several relationships with mobile operators, the product did not receive significant market acceptance from end users. We continue to support these products but our main focus has shifted to our SMS aggregation service offering and to our chat applications.



Since the acquisition of EPL, we have focused on providing aggregation services to mobile content providers. Aggregators transmit a broad variety of messaging, content, and applications worldwide. ZIM is now providing an operator-grade, high-volume delivery infrastructure that is scalable, with detailed reporting available to our mobile content customers. Our goal is to continue to expand our network, allowing our customers to send their messages and campaigns internationally, with reliance that the messages are being successfully delivered.



We believe that a number of significant factors will accelerate the growth of the market for our aggregation services. These factors include:



5



---









| | SMS is a popular channel because it is low cost to the user, secure, available at all times, discreet, efficient, and urgent.
|- | -----------------------------------------------------------------------------------------------------------------------------



| | SMS delivers higher carrier margin compared to other data channels ($350/MB for data vs. $0.70/MB for voice).
|- | -------------------------------------------------------------------------------------------------------------



| | In the Asia-Pacific region, 10-15% of youths' disposable income is spent on mobile products.
|- | --------------------------------------------------------------------------------------------



| | It is estimated that 10 billion SMS messages will be sent annually by the end of the decade.
|- | --------------------------------------------------------------------------------------------





We further believe that there continue to be multiple revenue opportunities available through SMS. We are positioning ZIM to be a leader in the industry with both our service and product offering. We believe ZIM's offering appeals to consumers, mobile content providers and to mobile operators.



OUR SMS PRODUCTS AND SERVICES



SERVICES



BULK SMS



Our bulk SMS Gateway is used for SMS delivery to mobile users. Our bulk SMS service provides direct, reliable mobile operator connections, as well as web based tools to help build effective MT SMS campaigns. Bulk SMS is used for SMS marketing campaigns, SMS alerts, updaters and more.



Within our bulk offering we have two types of customers.  One customer registers for our service using our internet web-site.  These customers pay for a set number of messages using their credit cards.  Our other customers purchase larger amounts of messages and work directly with our sales team.



Similar to premium messaging services, we send mobile content from a customer through our gateway to the mobile operators and then to the end user.



In the case of bulk messaging services, customers send out blocks of messages to their end users.  For bulk messages, our customer, the company sending the messages pays for the message, not the end-user.  Our customers key consideration in this case is cost.  Direct connections to mobile operators for bulk messages are more reliable and stable but also more expensive than connections through other aggregators that may have special relationships with international mobile operators.  As a result, success in bulk messaging comes from the ability to develop relationships with other aggregators that have least-cost routes.  The cost and reliability of these routes change continually.  As such, the goal in our strategic relationships is to be aware of the best routes, and to ensure that we have sufficient traffic to guarantee the least cost prices.



PREMIUM SMS



Premium SMS services open up a variety of possibilities for mobile content providers, application or service developers and marketers looking to monetize their mobile applications, services or payment solutions. Premium SMS works through the use of Short Codes (short, easy to remember phone numbers) and a corresponding tariff, typically between 25(cent) and $5, that is assigned to each number. The end users (consumers or mobile subscribers) are reverse billed for these tariffs when they receive a Premium SMS message. The tariff charge automatically appears on the end user's monthly bill or is deducted from their pre paid card.





6



---







Premium SMS has proven to be the most effective way of charging end users for mobile service as it is user friendly, and it outperforms other micro-payment solutions. Mobile payments are being used for everything from parking passes to vending machine purchases to online subscriptions and are quickly gaining popularity with mobile users internationally.



Within our premium service, we have strategic relationships with other aggregators and mobile operators.  We do not have relationships with the end users.



In general, the transaction flow is as follows:



| | An end-user subscribes to receive certain mobile content such as a horoscope from a mobile content provider, usually through the internet.                                                                                                                         
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The mobile content provider contracts with ZIM to send messages containing the content from the mobile content providers internet portal to mobile operators with which ZIM has connections.                                                                      
| | The mobile operators receive the messages from ZIM and then forward them to the end users.                                                                                                                                                                         
| | The mobile operator bills and collects from the end user a tariff or fee for the content.                                                                                                                                                                          
| | The mobile operator retains a portion of the fee and forwards the balance to ZIM.  ZIM then pays the mobile content provider a share of the revenue.  In certain circumstances, ZIM will pre-pay the mobile content provider when collection is reasonably assured.



Mobile Operators



In order to offer the mobile content providers the farthest reach, and competitive pricing, we contract with various mobile operators directly to send messages.  In the UK we have direct connections with mobile operators such as Vodafone, T-mobile, Orange and O2.  In Canada we have direct connections with Rogers, Telus, Microcell, and Bell.



Other Aggregators



Since the lead time for ZIM to develop direct connections with mobile operators is substantial, and our customers wish to expand their content distribution to new geographical areas as quickly as possible, we have expanded our connections by developing relationships with other aggregators in various countries.  By establishing these relationships, we are able to quickly connect to different countries.  Not only does this increase our coverage and service offering, but often these aggregators then look to us send their messages to operators that we are directly connected to.



When we are using other aggregators to expand our connections, the revenue we receive is reduced as a portion of the overall fee is also shared with the other aggregator.



To date we have strategic relationships with other aggregators in Brazil, the United States, Norway, Sweden, Denmark, Ireland, Spain, Germany and the UK.  Two of the significant providers of SMS services, mBlox Inc. and Mobile 365 Inc. both of which have international reach, are strategic partners of ZIM.    Due to the competitive nature of the industry, we are not substantially dependent on any of our relationships with mobile operators or other aggregators.



VIRTUAL MOBILE



Virtual Mobile is an inbound SMS solution that allocates a mobile number to an SMS server. With Virtual Mobile, users send SMS messages to this defined mobile number and the information is captured by the SMS application. Virtual Mobile is a solution used for SMS-enabled interactive applications, services and advertising promotions including:



7



---









|○ | Interactive broadcasting - text in votes for TV and radio contests;
|- | -------------------------------------------------------------------



|○ | Entertainment and information services - interactive SMS games, SMS chat, 
|- | --------------------------------------------------------------------------
|  | SMS finder, and on-demand financial, travel, sports, news information; and



|○ | Mobile advertising - Print media and packaging, SMS coupons, competitions
|- | -------------------------------------------------------------------------
|  | and games, billboards and big screen advertising.                        



Customers sign up for our virtual mobile service using the internet and pay a monthly fee.



LOCATION BASED SERVICES ("LBS")



LBS use mobile phone towers and innovative software to provide clients with accurate, real-time positioning of mobile devices. LBS clients can use this information to provide mobile users with information on nearby points of interest, current traffic or weather conditions, or to provide routing and tracking information to a central command centre.



LBS customers also sign up for this service using our internet web site.   The monthly fee includes messaging credits and is approximately $380 per account.



MULTI MEDIA MESSAGING SERVICES ("MMS")



MMS is a technology that allows end users to create, send, and receive text messages that also include an image, audio, and/or video clip. MMS messages are sent from one mobile phone to another, or to an email address. ZIM has a gateway that allows these messages to be sent with multiple connections to operators internationally.



To date there have been no significant MMS transactions.



PRODUCTS



ZIM SMS OFFICE - STANDARD EDITION



ZIM SMS Office links two-way SMS text messaging and e-mail with the coordination of Microsoft(R) ("Microsoft") Outlook and Microsoft Excel to create a mobile office software tool. It is designed to extend and enhance a Microsoft Office suite by providing Outlook functionality to SMS-enabled cellular phones through one-way and two-way SMS text messaging capabilities. Users stay connected to the Microsoft Outlook office environment by using a cellular phone to receive, reply, forward and send e-mail messages, request "more" or "all" of e-mail messages, and receive daily calendar items and reminders. Users can send SMS text messages to their contacts from the desktop and receive the responses as e-mail. Filters and preferences can also be set to enhance productivity.



ZIM SMS MAIL



ZIM SMS Mail is a two-way mobile e-mail extension software tool designed to leverage SMS text messaging to keep cellular phone users connected to their e-mail while on the go. ZIM SMS Mail is desktop software that links almost any e-mail account to SMS-enabled cellular phones. When mail that meets the personal filter criteria of the user arrives in the e-mail Inbox, it is automatically pushed to the user's cellular phone using one-way and two-way SMS text messaging through the SMS channel.



ZIM 2-WAY SMS PAGING



ZIM 2-Way SMS Paging is a pager replacement system that uses SMS on a cellular phone to create a two-way communication network. Using a web-based administrative interface and standard cellular phones, customers can easily and quickly implement a modern and cost-effective two-way communication system for employees currently using pagers as part of the enterprise communication process. To ensure



8



---





maximum reach and effectiveness, the product goes beyond SMS and incorporates e-mail message sending options.



This product includes many features to ensure real and measurable results including: web-based message posting through an administrative control panel, easy to use contacts and group controls and escalation hierarchy, real-time message delivery status reporting and record logs for audit trail and results analysis.



ZIM SMS CHAT



ZIM SMS Chat is the next generation of `Instant Messaging' that expands on the real time, two-way chat experience and allows users to send instant SMS text messages from the computer directly to mobile users.



We currently offer our chat product through Rogers Communication Inc.  End users register for the product through Rogers.  ZIM receives revenue when messages are sent using the product.  To date traffic has not been significant.



DATABASE SOFTWARE



ZIM IDE SOFTWARE



As mentioned above, we have historically been 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 thousands of customers through direct sales, and through an established network of VARs and distributors.



The Zim IDE software provides an integrated development environment for Microsoft Windows and UNIX computer operating systems. An integrated development environment is a set of programs that runs from a single user interface for use in the creation and management of corporate databases.



The Zim IDE software was designed to handle complex data management in a more efficient manner than the database technologies historically provided. The distinctive characteristic of the Zim IDE software is the fact that our object dictionary 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, marketing, human resources, information and records management. Applications built with the Zim IDE also fully access most other major databases such as Oracle and SQL Server.



We have established strategic relationships with various value added re-sellers (VAR) who are using our Zim IDE software for a variety of applications.  We have established no new significant relationships in the past fiscal year and management does not expect to develop any further relationships.  We currently have two full time sales people dedicated to supporting existing relationships and one vice president who spends a portion of his time assisting with the maintenance of these relationships.



COMPETITION



ZIM operates primarily in the SMS aggregation industry. The aggregation industry is highly competitive and rapidly changing due to the nature of the growing market. We have many competitors in the industry including, Wireless Information Network PLC (WIN), MBlox and Mobile365. These competitors may have certain competitive advantages over us, including but not limited to:





9



---







|○ | substantially greater financial and technical resources;            
|- | --------------------------------------------------------------------
|○ | more extensive and well developed marketing and sales networks;     
|○ | greater global brand recognition among mobile content providers; and
|○ | larger customer bases.                                              



We compete with these companies primarily for volume of traffic and strategic relationships.



Our existing competitors may in the future achieve greater market acceptance and gain additional market share. It is also possible that new competitors may emerge and acquire significant market share. We believe the rapid increase in the use of SMS as a means of communication will draw more attention from multinational players to the SMS market. Please refer to "Risk Factors" for a more detailed discussion of the risks we face from our competitors.



Our competitive advantage in the SMS aggregation environment is our ability to connect to international operators through a variety of strategic relationships with other aggregators and mobile operators. We have developed strategic relationships with a range of content and service partners in order to serve our customers more effectively and to extend our services to an international audience.



In addition, our competitive advantage is based on the strength of our technical infrastructure.



CUSTOMERS



As of March 31, 2005, we had over 100 customers in over 10 countries in our Zim Ide and SMS applications.  Within our SMS application segment, we have two customers that each generated over 10% of our revenue for the year ended March 31, 2005.  We consider our existing level of business to be substantially dependent on one of these customers, which provided 38% of the years revenue.  These customers are both mobile content providers that primarily generated premium message revenue.



TECHNOLOGY INFRASTRUCTURE



ZIM's operating infrastructure is designed to serve and deliver tens of millions of text messages each week to hundreds of cell phone operators worldwide. The system uses a scalable and redundant infrastructure located on servers at various co-location hosting sites in the UK and in Canada. The Company believes that these hosting partners provide operating advantages, including an enhanced ability to protect its systems from power loss, break-ins and other potential external causes of service interruption. They provide continuous customer service, multiple connections to the Internet and a continuous power supply to its systems. In addition, ZIM conducts online monitoring of all its systems for accessibility, load, system resources, network-server intrusion and timeliness of content.



This infrastructure allows ZIM to be a high performance SMS Gateway connecting large Internet communities to approximately two billion cell phones worldwide through the various mobile operators.



ZIM's servers run on Linux and Windows platforms using Postgres and proprietary SMPP servers. SMPP is a short message peer-to-peer protocol for exchanging SMS messages between SMS peer entities such as short message service centres. It is used to allow third parties to submit messages, often in bulk.  ZIM's database system is an advanced entity-relationship database, which also operates on Windows and Linux platforms.







10



---







PATENTS AND INTELLECTUAL PROPERTY PROTECTION



Our success depends in part on our ability to protect our intellectual property rights. To protect our proprietary information, we use a combination of intellectual property laws, employee and third-party nondisclosure agreements, and licensing arrangements, including confidentiality provisions.



We currently have no issued patents or patent applications pending in Canada. Despite our efforts, we may not successfully protect our proprietary rights from misappropriation. Litigation may be necessary to defend and protect our proprietary rights.



EMPLOYEES



As at March 31, 2005, we had 27 full-time employees, with 12 employees in selling, general and administration and 15 employees in technical areas including technical support and research and development. We consider our relations with our employees to be excellent, and none of our employees are covered by a collective bargaining agreement.



Of these employees, 23 are based in Ottawa, Canada, one in London, England and three are in Sao Paolo, Brazil. Subsequent to March 31, 2005, ZIM eliminated the position in England.



RISK FACTORS



This Annual Report on Form 10-KSB/A contains forward-looking statements. When considering the forward-looking statements made in this Report, you should consider the risks set forth directly below, and other cautionary statements throughout this Report.



BECAUSE OUR OPERATING HISTORY IS LIMITED AND 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.



We believe that our future success depends on our ability to significantly increase revenue from our operations, of which we have a limited history. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in an early stage of development. These risks include our ability to:



| | Offer competitive pricing for our services;                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------
| | Offer new and innovative products;                                                                                      
| | Maintain our current relationships and develop new strategic relationships with other  aggregators and mobile operators;
| | Attract and retain qualified employees; and                                                                             
| | Upgrade our technology infrastructure to manage increased messaging demands.                                            





WE HAVE CONTRACTED WITH THIRD PARTIES TO PROVIDE SERVICES FOR OUR NETWORK AND WE MAY LOSE USERS AND REVENUE IF THESE ARRANGEMENTS ARE TERMINATED.



We have arrangements with a number of third parties to provide services to our customer base. Although no single third party service provider is critical to our operations, if these parties fail to develop and maintain high-quality and successful technical platforms, or if a large number of our existing relationships are terminated, we could lose customers and our services may become less reliable. We have recently experienced fee increases from some of our service providers, mobile operators or other aggregators. If this trend continues, our gross profit from messaging services may be adversely affected.



ZIM MAY EXPERIENCE DIFFICULTIES ACCURATELY FORECASTING ITS OPERATING RESULTS, THEREBY MAKING OUR BUSINESS OPERATIONS MORE DIFFICULT TO SUSTAIN.





11



---







Due to our limited operating history in the SMS market and the uncertainty regarding the market acceptance for our new line of SMS products, ZIM may not be able to accurately forecast its future operating results. If net profits from our SMS services fall materially short of estimated expenses, our business operations will become more difficult to sustain since we will then have to reduce our spending and/or raise additional capital over and above any current capital raising plans. It may not be possible for ZIM to accomplish either task in a timely manner, or at all, in which event ZIM would have to curtail or suspend certain or all of our business operations. Any action to such effect is likely to have a material adverse effect on our business relationships, financial results, financial condition and prospects.



OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.



We may experience significant fluctuations in our quarterly operating results due to a variety of factors, many of which are outside of our control. Factors that may cause our quarterly operating results to fluctuate include: our ability to retain existing customers, attract new customers at a steady rate and maintain user satisfaction; technical difficulties or system downtime; the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure; and industry regulation. As a result of these and other factors, you should not place undue reliance on our quarter-to-quarter comparisons of our operating results as indicators of likely future performance.



WE MAY NOT BE ABLE TO ADAPT QUICKLY ENOUGH TO TECHNOLOGICAL CHANGE AND CHANGING CUSTOMER REQUIREMENTS, THEREBY LOSING SALES.



If we are unable to adapt to the rapid changes in technology and customer needs that are inherent to the SMS industry, ZIM may lose sales and fail to grow. In order to meet these rapid changes, we will have to effectively integrate new wireless and data technologies, continue to develop our technologies and technical expertise and respond to changing customer needs.



THE LOSS OF THE SERVICES OF ZIM'S DR. MICHAEL COWPLAND AND OTHER KEY PERSONNEL COULD NEGATIVELY AFFECT OUR BUSINESS.



The loss of the services of Dr. Michael Cowpland and other key personnel could affect our performance in a material and adverse way. ZIM currently depends heavily on the services of Dr. Cowpland as well as his ability to, and past practice of, funding its cash requirements from time to time. For example, Dr. Cowpland, and a holding company owned by the spouse of Dr. Cowpland, have provided financing of approximately $5.5 million to ZIM.



In December 2003, the Ontario Securities Commission ordered, among other things, that Dr. Cowpland be prohibited from acting as a director for any reporting issuer in the Province of Ontario, Canada until December 2005. Although ZIM is not a reporting issuer in Ontario, Canada, and has no current plans to become a reporting issuer in Ontario, Canada, this prohibition could materially affect ZIM should it decide to seek a listing of our securities in Ontario, Canada before December 2005.



THERE IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.



Our ability to continue as a going concern is subject to substantial doubt given our current financial condition and requirements for additional funding. If ZIM is unable to continue as a going concern, investors in our common shares will likely lose their entire investment. We have indicated in our financial statements that there is substantial doubt about our ability to continue as a going concern. In addition the report of the independent registered public accounting firm to our audited consolidated financial statements for the year ended March 31, 2005 included an explanatory paragraph which indicates that there is substantial doubt about our ability to continue as a going concern. There can be no assurance that ZIM will be successful in raising additional funding as required.



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



12



---







If we are unable to obtain additional funds in a timely manner or on acceptable terms, we may have to curtail or suspend certain 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 at March 31, 2005 of $737,888, along with cash generated from operations, will be sufficient to meet our present operating and capital expenditures for at least the next three months, but that we will require substantially more funds at that time to continue and expand our business operations.



ZIM EXPECTS TO INCUR OPERATING LOSSES FOR A MINIMUM OF THE NEXT TWELVE MONTHS. SUCH LOSSES WILL DIRECTLY AFFECT OUR REQUIREMENTS FOR ADDITIONAL FUNDS AND ABILITY TO CONTINUE AS A GOING CONCERN.



Our anticipated requirements for additional funds are based, in large part, upon our expectation that we will incur operating losses for the next twelve months. The extent to which these anticipated losses are actually incurred will directly affect our need for additional capital and ability to continue as a going concern. If the shortfall between the revenues generated by ZIM and our operating expenses for the next twelve months is greater than the operating losses which are already expected, our need to secure additional funds is likely to increase accordingly and further adversely affect our ability to continue as a going concern. Moreover, we cannot assure that actual operating losses will not exceed management's current expectations. These anticipated operating losses are due in part to anticipated costs in the marketing of our new line of mobile data software and related research and development expenditures.



IN MAY 2003 A SHAREHOLDER DISTRIBUTED SHARES OF OUR COMMON SHARES IN A MANNER THAT MAY GIVE HOLDERS OF THOSE SHARES RESCISSION RIGHTS UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS, AND COULD EXPOSE US TO PENALTIES, FINES OR OTHER LITIGATION.



In May 2003, one of our shareholders distributed shares of our common stock that it held to approximately 70 persons. It is possible that this distribution was not effected in compliance with United States federal and state securities laws. If the distribution was an offer and sale of securities and it was not exempt from the registration requirements of United States federal or state securities laws, then those who received our shares in the distribution have rights to bring claims against us for rescission or damages. Since the distribution did not involve any issuance of securities for cash, it is uncertain how rescission would be valued or damages would be determined. It is possible that the value would be measured as the decline in the value of our stock since that date, or as the decline in value compared with the consideration given (if any), or some alternative method. We cannot offer any assurance
that the extent of our exposure to damages would be limited to these amounts, or calculated according to these assumptions. We would contest any such claim, but any such litigation would be costly to defend and could harm our results of operations, financial condition and liquidity. Investors who have acquired shares since that distribution might claim they were misled in their investment decision, which would further increase our exposure to litigation costs and potential damages. In addition, we may be subject to penalties or fines relating to these issues. Any of these potential events could harm our results of operations, financial condition and liquidity.



WHILE WE BELIEVE THAT WE WILL HAVE ADEQUATE INTERNAL CONTROL PROCEDURES IN PLACE FOR MARCH 31, 2007, WE ARE STILL EXPOSED TO POTENTIAL RISKS FROM RECENT LEGISLATION REQUIRING COMPANIES TO EVALUATE CONTROLS UNDER SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002.



While we believe that we will have adequate internal control procedures in place for March 31, 2007, we are still exposed to potential risks from recent legislation requiring companies to evaluate internal controls under Section 404 of the Sarbanes-Oxley Act of 2002. Under the supervision and with the participation of our management, we are evaluating our internal control systems in order to allow management to report on, and our registered independent public accounting firm to attest to, our internal controls, as required by Section 404 of the Sarbanes-Oxley Act. Throughout this process, we will incur additional expenses and use of management's time. In addition, if we are not able to continue to meet the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by



13



---





regulatory authorities, such as the Securities Exchange Commission ("SEC"). Any such action could adversely affect our financial results and the market price of our shares.



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



A failure to effectively manage the integration of any acquisitions we may decide to 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 AFFLIIATED 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 the Chief Executive Officer and related parties is approximately 64%. As a result, they 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 the Board of Directors or other shareholders may view favorably.



ZIM MAY NOT BE ABLE TO ADEQUATELY PROTECT ITS INTELLECTUAL PROPERTY RIGHTS OR MAY BE ACCUSED OF INFRINGING INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.



If ZIM is not successful in adequately protecting its technology through patent, trademark, copyright and other protections, our competitors could develop competing products based on our intellectual property and thereby damage our business and results of operations. In addition, there has been substantial litigation regarding intellectual property rights involving technology companies. As a result, ZIM may be subject to litigation regarding the intellectual property rights of third parties. Any such litigation, regardless of its validity, may be time-consuming and costly to defend, may divert management's attention away from the operation of our business and could subject us to significant liabilities.



NEW ACCOUNTING PRONOUNCEMENTS MAY REQUIRE US TO CHANGE THE WAY IN WHICH WE ACCOUNT FOR OUR OPERATIONAL OR BUSINESS ACTIVITIES.



The Financial Accounting Standards Board ("FASB") and other bodies that have jurisdiction over the form and content of our accounts are constantly discussing proposals designed to ensure that companies best display relevant and transparent information relating to their respective businesses. The effect of the pronouncements of FASB and other bodies may have the effect of requiring us to account for revenues and/or expenses in a different manner than the manner in which we have had experience. For example, beginning with fiscal years starting after June 15, 2005, a new FASB pronouncement will require us to expense the fair value of stock options issued to employees. As a result, we will likely report increased expenses in our income statement and a reduction of our net income and earnings per share. The impact on our current financial statements of applying a fair value method of accounting for stock options is
disclosed in Note 2 of the Notes to the Consolidated Financial Statements.



REPORTS TO SECURITY HOLDERS



We file annual and quarterly reports with the SEC. In addition, we file additional reports for matters such as material developments or changes within the Company, changes in beneficial ownership of officers and directors, or significant shareholders. These filings are a matter of public record and any person may read and copy any materials filed with the SEC at the SEC's public reference room at Judiciary Plaza, 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and other information statements, and other information regarding issuers that file electronically at http://www.sec.gov. In addition, our periodic reports and Section 16 filings are accessible through our internet web site at www.zim.biz.



14



---







PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.



"Bid" and "asked" offers for our common shares are listed on the NASDAQ Over-the-Counter Bulletin Board ("OTCBB") published by the National Quotation Bureau, Inc. Our common shares have traded on the OTCBB under the symbol "ZIMCF" since October 16, 2003. The following table shows the high and low bid prices of our common shares for the periods indicated as reported by the OTCBB. The OTCBB quotations reflect inter-dealer prices, are without retail markup, markdown or commission, and may not represent actual transactions.





|PERIOD              |  | HIGH  | LOW  
|------------------- |  | ----- | -----
|                    |  |       |      
|2004 Second Quarter |  | $1.10 | $0.38
|2004 Third Quarter  |  | $1.01 | $0.39
|2004 Fourth Quarter |  | $0.79 | $0.62
|2005 First Quarter  |  | $0.71 | $0.38
|2005 Second Quarter |  | $0.49 | $0.28
|2005 Third Quarter  |  | $0.51 | $0.24
|2005 Fourth Quarter |  | $0.40 | $0.16





Our common shares are thinly traded and, accordingly, reported sale prices may not be a true market-based valuation of our common shares. As of June 8, 2005 there were approximately 1,000 record holders 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



On January 7, 2004, we issued 9,211,511 common shares in a private placement to our Chief Executive Officer and majority shareholder Dr. Michael Cowpland and a holding company that is owned by Dr. Cowpland's spouse, upon the conversion of approximately $3.9 million of debt held by Dr. Cowpland and that holding company based on the closing price of the Company's shares on the OTCBB on January 6, 2004.



On January 30, 2004, we issued 1,150,006 units in a non-brokered private placement at $0.75 per unit. Each unit consists of one common share and one warrant to purchase an additional common share at $0.75 per share through July 30, 2004. The units were issued to unaffiliated persons, except that James Stechyson, a member of our Board of Directors, purchased 50,000 of the units. On May 31, 2005, these warrants were extended to May 30, 2008 and repriced to $0.20 per unit.



On February 10, 2004, we issued 4,000,000 common shares to unaffiliated persons as partial consideration for all of the ordinary shares of each of EPL Communications Ltd. and E-Promotions Ltd.



On June 25, 2004, we issued 1,010,555 units in a non-brokered private placement to non-U.S. investors at $0.38 per unit. Each unit consists of one common share and two warrants to purchase an additional common share per warrant at $0.38 per share expiring September 25, 2005. The units were issued to



15



---





unaffiliated persons, except that Michael Cowpland, the Chief Executive Officer of ZIM purchased 387,895 units and his spouse and a corporation controlled by his spouse purchased 193,947 units each.



On July 30, 2004, we issued 2,004,211 units in a non-brokered private placement to the spouse of the Chief Executive Officer at $0.38 per unit and, as a result, raised $761,600 in the aggregate. Each unit consists of one common share and two warrants to purchase an additional common share per warrant at $0.38 per share expiring October 30, 2005.



On October 7, 2004, we issued 1,018,077 units in a non-brokered private placement to the spouse of the Chief Executive Officer at $0.39 per unit and, as a result, raised $397,050 in the aggregate. Each unit consists of one common share and two warrants to purchase an additional common share per warrant at $0.39 per share expiring January 7, 2006.



All of these issuances were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, based on our conduct of these respective offerings not involving any general solicitation or advertising, the accredited investor status (or comparable status under applicable foreign laws) and (in addition to such status) the investment sophistication and financial means of the persons acquiring the shares, their acknowledgment of the risks involved and their ability to bear such risks, the fact that they required us to make representations to them about our business, the fact that we made available to them any materials relating to our business, finances and operations that they requested and afforded them the opportunity to ask questions about such
matters, and the steps we took to ensure that such persons were not underwriters, including without limitation making pertinent inquiries and imposing resale restrictions on the shares acquired.





SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS



ZIM established the Employee Stock Option Plan ("ESOP"), 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.







16



---







Securities authorized for issuance under equity compensation plans at March 31, 2005 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 column (a)
|---------------------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|                                                           | (a)                                                                                         | (b)                                                                         | (c)                                                                                                                                           
|Equity compensation plans approved by security holders     | 16,551,8711                                                                                 | $0.58                                                                       | 4,614,829                                                                                                                                     
|Equity compensation plans not approved by security holders | 6,110,0002                                                                                  | $0.81                                                                       | NIL                                                                                                                                           
|Total                                                      | 22,661,871                                                                                  | $0.64                                                                       | 4,614,829                                                                                                                                     







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



(2) Represents shares of ZIM's common shares issuable upon the exercise of options outstanding and issued outside of ZIM's Employee Stock Option Plan to officers, directors and advisory Board members. During the period from October 13, 2000 to June 25, 2001, ZIM issued an aggregate of 8,285,000 options outside of the Employee Stock Option Plan. Of these options, 145,000 were exercised in the ten months ended March 31, 2004 and 2,030,000 options were cancelled in the fiscal periods ended March 31, 2005 and 2004. The remaining balance of 6,110,000 options expire on February 5, 2007.







_________________________





17



---









ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



Not applicable.



ITEM 8A.  CONTROLS AND PROCEDURES.



Disclosure Controls and Procedures



The Company is required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files 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 the Company's management, including its 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 the Company's are designed to do.



The Companys management, under the supervision and with the participation of the Companys Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March 31, 2005. Based upon that evaluation, the Corporations Chief Executive Officer and Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were not effective, due to the material weakness in our internal control over financial reporting described below, related to the Corporations financial reporting processes and information technology security protocols.



The Company's independent registered public accounting firm advised the Audit Committee and management of certain significant internal control deficiencies that they considered to be, in the aggregate, a material weakness. A material weakness is a significant deficiency in one or more of the internal control components that, alone or in the aggregate, precludes our internal controls from reducing to an appropriately low level of risk that material misstatements in our financial statements will not be prevented or detected on a timely basis.



These deficiencies consisted principally of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. To remedy these deficiencies, the Company has engaged additional compliance staff to oversee the Companys internal controls and to assist in the identification and implementation of improvements to the Companys internal control over financial reporting.  In addition, the Company has begun identifying and developing certain enhancements to its internal control over financial reporting, including improving its contract administration and billing procedures, and the increased automation of several recurring transactions.  We have also implemented regular monthly and weekly reviews of information to reduce the likelihood of untimely identification and resolution of accounting matters.



Other internal control deficiencies that our auditors considered to contribute to the material weakness and the remedies taken to date, or planned, are as follows:



We are reliant on manual systems to account for revenue and expenses.  The industry we operate in is relatively new and we have been unable to find a cost-effective automated process that would eliminate our manual systems.  As such we are dependant on tools such as Excel and reviews by managers and other finance team members.  In order to avoid errors, all manual calculations are cross-referenced to contracts and subsequent amendments for accuracy.  We have developed a contract review policy that involves senior level sales personnel and the CFO.

We are reliant upon data from mobile operators, or other aggregators, to determine successful traffic levels.   Mobile operators in the UK have developed reporting systems that are timely and



18



---





accurate.  However, some mobile operators in North America have only begun in this fiscal year to solidify their reporting process.  In particular, we were subject to significant time delays in verifying the accuracy of the traffic information.  In order to compensate for delays in receiving the data, we compare actual traffic reports from mobile operators or other aggregators to our internally generated traffic reports on a monthly basis.  Based on these reviews we are able to determine estimates, that we believe are reliable, for differences in traffic numbers,

Historically we had internal control deficiencies in our information technology security protocols.  These deficiencies were primarily a result of our development of SMS Office.  Since we are no longer actively developing this product we have been able to improve information technology security protocols.  In addition, we have recently increased the information technology staff to add further controls and improvements.



The Company intends to continue to implement these and other enhancements to its internal controls during fiscal 2006 and beyond.  Management believes that these enhancements will assist in addressing the identified deficiencies. However, the size of the Company continues 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 relationship of possible controls and procedures.



Changes in Internal Control Over Financial Reporting



During the quarter ended March 31, 2005, we enhanced our internal controls over financial reporting by hiring additional compliance staff and expanding the scope of our monthly reviews of financial statements.  These changes have not yet had a material effect on our internal controls over financial reporting, but are reasonably likely to materially affect our internal controls over financial reporting in the future.  These changes were made in response to a reportable condition at December 31, 2004, as identified by the Companys independent registered public accounting firm and disclosed by the Company in its Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004.



ITEM 8B. OTHER INFORMATION.



Not applicable.





19



---







ITEM 13. EXHIBITS.



(a) Exhibits



The exhibits filed herewith are listed in the Exhibit Index immediately preceding such exhibits.  The Exhibit Index is incorporated herein by reference.















20



---







SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



ZIM Corporation

(Registrant)



By /s/ Michael Cowpland

------------------------------------

Michael Cowpland (President and CEO)





|Date | January 19, 2006
|---- | ----------------









21



---







EXHIBIT INDEX



|Exhibit | EXHIBIT
|------- | -------

Number



|2.1    | Reincorporation Merger Agreement (1)                                                                                                                                                      
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.2    | Amended and Restated Acquisition Agreement dated as of May 29, 2002 by and among Private Capital Investors, Inc. and ZIM Technologies International, Inc.(2)                              
|2.3    | Form of Amalgamation Agreement by and among ZIM Corporation, PCI-ZTI Canada, Inc. and ZIM Technologies International, Inc.(1)                                                             
|2.4    | Share Purchase Agreement dated February 10, 2004 among ZIM Corporation and the Shareholders of each of EPL Communications Limited and E-Promotions Limited (3)                            
|3.1    | Articles of Incorporation of the Registrant (1)                                                                                                                                           
|3.2    | By-Laws of the Registrant (1)                                                                                                                                                             
|4.1   | The Registrant's 2003 Stock Option Plan (4)                                                                                                                                               
|4.2    | Form of Subscription Agreement by and between certain investors and ZIM Corporation dated January 30, 2004 (5)                                                                            
|4.2.1  | Amended Form of Warrant Agreement by and between certain investors and ZIM Corporation (6)                                                                                                
|4.3    | Form of Warrant Agreement by and between certain investors and ZIM Corporation (7)                                                                                                        
|10.1   | Agreement by and between ZIM Corporation and ** dated June 23, 2004.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. (8)                                         
|10.2   | Form of Subscription Agreement by and among certain investors and ZIM Corporation dated July 30, 2004 (8)                                                                                 
|10.2.1 | Form of Warrant Agreement by and among certain investors and ZIM Corporation dated June 30, 2004 (8)                                                                                      
|10.3  | Employment agreement between ZIM Technologies International, Inc. and Jennifer North dated May 27, 2003(9)                                                                                
|10.4   | ZIM Technologies International, Inc. International Distribution Agreement dated November 22, 2000 (10)                                                                                    
|10.7   | ZIM Technologies International, Inc. International Distribution Agreement dated January 1, 2002 (10)                                                                                      
|10.8   | Form of Share Purchase Agreement between Marlen Cowpland and ZIM Corporation dated October 7, 2004. (11)                                                                                  
|10.9   | Form of Warrant between Marlen Cowpland and ZIM Corporation dated October 7, 2004 (11)                                                                                                    
|10.10  | Addendum I dated October 11, 2004 to Agreement by and between ZIM Corporation and ** dated June 23, 2004.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT.(13)    
|14.1   | Code of Ethics of ZIM Corporation (12)                                                                                                                                                    
|21.1   | List of subsidiaries of the Registrant (5)                                                                                                                                                
|31.1   | Certification by the President and Chief Executive Officer, Dr. Michael Cowpland, pursuant to U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)
|31.2   | Certification by the Chief Financial Officer, Ms. Jennifer North, pursuant to U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                







22



---









|(1)  | Incorporated by reference to the Registrant's Registration Statement on Form S-4 filed with the United States Securities and Exchange Commission (the "Commission") on November 1, 2002 (333-100920).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Incorporated by reference to the Registrants Current Report on Form 8-K filed with the Commission on June 16, 2003.                                                                                 
|(3)  | Incorporated by reference to the Registrants Current Report on Form 8-K filed with the Commission on February 18, 2004.                                                                             
|(4)  | Incorporated by reference to the Definitive Form 14A filed with the Commission on October 27, 2003.                                                                                                  
|(5)  | Incorporated by reference to the Registrant's Registration Statement on Form SB-2 filed with the Commission on April 22, 2004 (333-114736).                                                          
|(6)  | Incorporated by reference to the Registrants Amendment No.1 to the Registration Statement on Form SB-2 filed with the Commission on June 30, 2004. (333-114736)                                     
|(7)  | Incorporated by reference to the Registrants Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004.                                                                                   
|(8)  | Incorporated by reference to the Registrants Form 10-QSB for the quarter ended September 30, 2004                                                                                                   
|(9)  | Incorporated by reference to the Registrant's Registration Statement on Form SB-2 filed with the Commission on June 24, 2003 (333-106412).                                                           
|(10) | Incorporated by reference to the Registrants Amendment No.4 to the Registration Statement on Form S-4 filed with the Commission on April 14, 2004 (333-100920)                                      
|(11) | Incorporated by reference to the Registrants Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004.                                                                               
|(12) | Incorporated by reference to the Registrants Form 10-KSB filed with the Commission on June 21, 2005.                                                                                                
|(13) | Incorporated by reference to the Registrants amended Annual Report on Form 10-KSB/A filed with the Commission on November 17, 2005.                                                                 
|(*)  | Incorporated by reference to the Registrants Form 10-KSB filed with the Commission on June 21, 2005.                                                                                                
|    | Management contract or compensatory plan or arrangement.                                                                                                                                             









23