SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934.

                    For the fiscal year ended: June 30, 2005


[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                      COMMISSION FILE NUMBER: 000 - 30254.

                      SHANNON INTERNATIONAL RESOURCES INC.
                      ------------------------------------
       (Exact name of small business issuer as specified in its charter)

             Nevada                                   98-02049656
            --------                                 -------------
   (State or other jurisdiction                     (IRS Employer
          of incorporation)                       Identification No.)

          Suite 2000, 715 - 5th Avenue, S.W., Calgary, Alberta T2P 2X6
          ------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code:(403) 538 3706
                                                          --------------

      Securities registered under Section 12(b) of the Exchange Act: NONE.

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 in response 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. [X]

     State issuer's revenues for its most recent fiscal year.$-0-

As of September 23, 2005, 29,607,200 shares of Common Stock of the Registrant
were deemed outstanding. (See Item 11). The aggregate market value of the voting
and non-voting common equity stock held by non-affiliates of the registrant
(29,587,200 shares) as of October 11, 2005: $3,550,440 (See Item 5)

          Documents incorporated by reference:   None.

Transitional Small Business Disclosure Format (check one): YES [ ]  NO [X]

Exhibit index on consecutive page 58          Page 1 of 60 Pages


<PAGE>




                                     Part I.

Item 1. Development of Business

Shannon International Inc., hereafter Shannon has grown from its origins in
natural resources exploration into the information technology sector.


Natural Gas Exploration Program
-------------------------------

Shannon was incorporated on February 17, 1999 under the laws of the State of
Nevada for the purpose of financing and owning oil and natural gas development
properties.

During March 1999, Shannon acquired working interests in oil and natural gas
exploration permits covering approximately 640,000 acres of Prince Edward
Island, Canada.

On July 23, 2004, the permits expired. Rally Energy Corp., the Operator under
the joint operating agreement covering the expired permits acquired new permits
for approximately 376,000 acres of the approximately 640,000 acres covered by
the expired permits, including the acreage where the first two exploratory
natural gas wells were drilled.

On September 23, 2004, Shannon entered into a letter of agreement with Rally
Energy Corp., whereby it acquired a 20% working interest in the new permits,
referred to as the 2004 working interest. Shannon has also agreed to enter into
a new Joint Venture Operating Agreement with the holders of the balance of the
2004 working interests. Shannon acquired the 2004 working interest in
consideration of a promissory note in the principal amount of $168,561.74 Cdn.,
payable to Rally Energy Corp., due on or before December 31, 2004. Shannon also
gave Rally Energy Corp., a promissory note payable to Rally Energy Corp., in the
principal amount of $71,145 payable upon thirty days written notice for the
outstanding costs attributed from the prior working interests.

On February 23, 2005 Shannon executed and closed an Asset Purchase Agreement
with Rally Energy Corp. Under the terms of the Asset Purchase Agreement, Shannon
purchased all of Rally's working interests in approximately 376,000 gross acres
of PNG permits, as well as Rally's interest in all seismic, geomagnetic surveys
and well bore information.

The consideration paid to Rally is as follows:

o    2,500,000 common shares of Shannon,
o    500,000 common share purchase warrants exercisable at US$0.85 per share for
     one year from the date of issue,
o    retention by Rally of a 2% gross overriding royalty (GORR) on the interests
     being conveyed.

The amount of consideration was determined by negotiation between the parties
based upon the value of the oil and gas permits as recorded in the financial
statements of Shannon and Rally and the historical and estimated market value of
Shannon's common stock.


                                       2
<PAGE>
Shannon also paid the approximately $245,000 in promissory notes due to Rally
from the September 2004 acquisition of its 20% working interest in the Prince
Edward Island oil and gas permits. Shannon obtained a demand note from the Bank
of Montreal accruing interest, paid monthly at 4.5% per annum as the source of
the funds.

This purchase gave Shannon a 92% working interest in a large contiguous block of
permits to consolidate with its current working interests.

On May 10, 2005, Shannon acquired the remaining 8% working interest from
Conquistador Trust for 750,000 shares of Shannon's common stock and 750,000
common stock purchase warrants, each entitling the holder to acquire an
additional share of Shannon common stock at $0.40 per shares at any time prior
to May 10, 2007.


Logical Sequence Incorporated.
------------------------------

In October 2003, Shannon entered into an agreement to acquire fifty-one percent
of the equity ownership of Logical Sequence Incorporated, hereafter LSI, a
privately held Canadian corporation. The acquisition closed and became effective
on June 30, 2004.

A wholly owned Canadian subsidiary corporation, Shannon Investments Ltd., was
created which issued 5,100,000 shares of non-voting exchangeable stock to the
shareholders of Logical Sequence Incorporated at closing. These shares are
exchangeable into common stock of Shannon at the election of the holder at any
time over the next five years on a share for share basis. Shannon provided
Logical Sequence Incorporated, $341,000 Cdn. for software development. Shannon
also has an option to acquire the remaining forty-nine percent of the Logical
Sequence Incorporated, common stock for $2.00 US per share on or before October
20, 2005.

LSI, is the developer of comprehensive and integrated software applications for
the automotive industry. LSI had an exclusive distribution agreement with
Electronic Data Systems Inc., (EDS) to market, distribute and support its
web-based Dealer Management software. In April 2004, Logical Sequence
Incorporated terminated its agreement with Electronic Data Systems Inc., in
response to Electronic Data Systems Inc.'s announced sale of its Automotive
Retail Group to Automated Data Processing Inc. - LSI's largest competitor. LSI
is currently seeking new partners to enter into distribution agreements for its
software.

EnerVision-Helical Investment
-----------------------------
In May 2003, Shannon entered into a subscription agreement with EnerVision
Incorporated ("EnerVision") and its subsidiary Helical Systems Inc. ("Helical")
of Dartmouth, Nova Scotia, whereby Shannon will participate in the development
and commercialization of the Helical Software Platform for Very Large Data Base
(VLDB) management. The Helical Software Platform capabilities allow for the
acquisition, visualization, fusion, management and archiving of near limitless
quantities of data in real time at the desktop level. The software platform is
based on Helical's proprietary implementation of HHCode technology, known as
Self Defining Structure (SDS).


                                       3
<PAGE>
Shannon subscribed for 1,250,000 units of EnerVision securities at a
subscription price of CDN $150,000 or CDN $0.12 per unit. Each unit consists of
one common share of EnerVision and one common share purchase warrant. Each
warrant will entitle the holder to acquire one common share upon exercise and
payment of CDN $0.18 per common share, within two years of the date of the
warrant. On November 10, 2004, Shannon purchased an additional 200,000 shares of
The Helical Corporation, Inc., (formerly EnerVision) at $0.18 Cdn., for a total
investment of $37,000 Cdn.

Helical and Shannon will jointly develop a software application for the
processing, visualization and archiving of seismic data built on the Helical
Software Platform.

Under the terms of the subscription agreement, Helical will develop a Proof of
Concept for the application. Shannon will receive a 15% interest in the venture,
as a condition of the above private placement and can earn additional interest
through providing additional financing up to a maximum of CDN $350,000, for a
potential 50% interest in the venture. Helical will provide technology to the
venture and hold the balance of the interest in the venture. Any subsequent
venture funding required beyond the CDN $350,000 above, will be the pro-rata
responsibility of venture partners.


                  Description of the Businesses of the Company

Information Technology:     Logical Sequence Incorporated.

Summary

o    Logical Sequence Incorporated (LSI) develops software applications for the
     North American automotive industry. LSI's legacy product, the TIM system,
     is currently running in over 300 dealerships across Canada. LSI's next
     generation product, Lynxphere, is currently being developed to operate on a
     purely web-based technology architecture. LSI's current legacy product
     suite has gained a high degree of success in Canada. In a Canadian
     industry-wide customer satisfaction survey conducted by Price Waterhouse
     Coopers and DesRosiers Automotive Consultants in 2000, LSI software placed
     first by a wide margin, winning out over ADP and Reynolds & Reynolds, among
     others.

o    LSI's new suite consists of dealership Accounting & Vehicle Inventory,
     Parts Inventory, Service Management, Leasing and Sales, and Customer
     Relationship Management or CRM tools that are full-featured and fully
     integrated. LSI is differentiated from its competition by its ability to
     seamlessly handle all transactions for the automotive dealer in a pure web
     based environment.



                                       4
<PAGE>
LSI's installed products have been traditionally distributed through direct
selling of licensing agreements. However, the Company intends to enter
agreements with large distribution partners with the infrastructure required to
deploy LSI products on a mass scale. In addition, LSI will build on its OEM
relationships, while continuing direct sales where necessary. As of the date of
this report, LSI has not entered into any third party distribution agreements.

Automotive dealers are increasingly opting to rent applications from an
Application Service Provider or ASP. This lowers the overall cost of ownership
by eliminating both a large up-front investment of capital and the resource
investment required to maintain local servers. LSI's market plans include
seeking distribution partners who possess expertise as ASPs.

Our mission is to establish LSI products as world leaders in software-based
automobile dealership management solutions.

Products and Services
---------------------
LSI's products consist of automobile dealership management software that fully
integrates back-office and front office functions with full-featured Accounting,
Inventory Control, Parts, Service, Electronic Time Clock, Contact Management,
F&I, CRM, and Management Reporting tools, among others. The dealership suite
consists of:

o    Accounting - This full-featured and fully integrated accounting package
     contains all the features you expect from any professional accounting
     package and much more. In particular, the package works in concert with
     Glove, i.e. General Ledger Open View Environment. Glove is an invaluable
     management tool within the LSI System. This powerful tool offers dealers an
     up to the moment or "Real Time" screen snapshot of financial statements and
     Daily Operating Control (DOC). Just place your pointer on "statement
     balance" and Glove drills down to reveal all transactions for the selected
     balance. The Glove Daily Operating Control offers standard or user-defined
     department-by-department layout breakdowns, including budget graphical
     presentations, pie charts, bar graphs, etc.

o    Parts - LSI's Parts Inventory System operates in "Real Time" with Vehicle
     and Service departments. The system offers greatly increased efficiency by
     fully eliminating time consuming manual tasks such as generating and
     tracking customer orders, placing parts orders, and effectively managing
     and maintaining the shop's requirements and wholesale accounts. LSI records
     all sales, tabulates inventory, tracks activity history, and enables access
     to all transactional detail on screen and/or in print indefinitely.

o    Service - LSI's fully integrated Service Repair system works hand in hand
     with both LSI Parts and Vehicle Inventory. It features electronic repair
     orders and a "Real Time" computerized time clock for automatic pricing and
     labor costing, tracking productivity and efficiency, and updating payroll.
     Dealers experience higher hours per repair order, as the system reduces the
     tendency to discount. With real-time integration to Vehicle Inventory, the
     exact cost of every unit is available on-screen, accurate to the second, as
     all service invoices are automatically posted against applicable units.
     Open repair orders are displayed on-screen. A detailed profit analysis can
     be accessed any time beginning with the estimate process.


                                       5
<PAGE>
o    Sales Tracking - LSI's Sales Tracking system is designed to help sales
     staff maximize unit sales by tracking and profiling prospects, maintaining
     customer databases through successive purchases, and employing user-defined
     follow-up procedures.

o    Financing and Insurance - This is a fully integrated Windows-based Finance
     and Insurance (F&I) System, which utilizes open database compliant
     architecture to provide dealers with a powerful tool to improve
     profitability through user-friendly input screens. LSI's F&I can function
     in a stand-alone environment or as a fully integrated module with
     Accounting and Vehicle Inventory Programs.

o    Electronic Time Clock - LSI offers an integrated time clock, which enables
     service and body shop technicians to electronically log into repair and/or
     orders, made available to them. This Electronic Time Clock keeps an
     electronic listing of not only available time, but also clocked time and
     flat rate time on a work order. As well, this function automatically
     charges technician time to the appropriate work order. These times are
     available to be printed on a report or on a warranty invoice as needed.

o    Customer Relationship Management (CRM) - LSI's CRM increases absorption and
     customer satisfaction. This program includes customized reminder letters,
     postcards, phone lists, and more, offering you the ability to target a
     specific group of customers with a number of variables or choices. With the
     Service History and Next Service Due right on the Repair Order screen,
     personnel will have the tools to sell more effectively, efficiently, and
     professionally.

Our solutions are configurable, sophisticated, easy to use, scalable and
affordable. They fit any size of dealer from the single location to large
multi-branch and multi-franchise enterprises.

Installed Products
------------------
Our installed products are for auto-dealers that choose to host our automobile
management solution on their own in house server. Implementation consists of
installing our software on a server and PC's at the client's site, followed by
training.

ASP Products
------------
Our ASP or Application Service Provider products are for auto-dealers that
choose to rent a solution on a monthly basis. Implementation consists of
configuring the ASP server for the client's specific needs, followed by
training.


Sales and Distribution

Distributor Sales
-----------------
LSI will train all distributor sales representatives. In addition, LSI will
regularly provide refresher training and pre-rollout product education to its
partner sales teams.

Sales Model
-----------
Our partner's sales process is expect to include the following steps:

Lead generation from advertising, trade shows, customer references, visitors to
our Website and cold calling;


                                       6
<PAGE>
Initial contact and qualification performed by telephone;

Provision of product information electronically or by mail;

Telephone follow-up and additional qualification;

Product demonstrations performed on-line;

Customer evaluation and decision;

Price negotiation if the customer is considered strategic;

Collection of a deposit if hardware is bought with our installed product line.


Sources of Revenue
------------------
Sources of revenue expected to be and are:

Monthly recurring revenue in the form of license & support fees for installed
products and ASP fees for ASP products. Monthly fees for existing users are
currently $200 per user per month. Contracts are expected to be 5 years in
duration and subject to renewal following expiration.

Training fees, charged at the rate of $85 per hour. LSI will regularly provide
sales and product training for its partner sales representatives.


The Market for LSI Products and Services

Definition of Dealership Management Solutions
---------------------------------------------
We define automobile dealership management solutions as hardware and software
used to handle the various aspects of automobile dealer operations. Primary
functions include accounting, inventory control, time management, job costing,
parts and service. These systems often include a central computer or server that
may control or augment several transaction terminals or PCs.

Other management functions such as Leasing, Finance and Insurance and Customer
Relationship Management or CRM tools are often bundled together or interfaced
with dealer management systems, as is the case with LSI.

LSI's Target Markets
--------------------
While our products are flexible enough to be used by broader categories of
retailers, LSI has developed a market niche that caters to automobile
dealerships. Our target markets have been divided into manufacturer sales,
direct dealer sales, and distributor sales.
These segments are defined as follows:

                                       7
<PAGE>
o    Distributor Sales. Ford of Canada or Ford was the first Original Equipment
     Manufacturer or OEM to directly market LSI software to its dealers. This
     relationship became the model for LSI's software distribution strategy. LSI
     next entered a distribution agreement with Electronic Data Systems or EDS
     of Plano, Texas whereby EDS would provide Sales and Distribution, as well
     as Tier 1 and Tier 2 Support Services. LSI subsequently terminated this
     agreement in April 2004 after EDS announced it was discontinuing its
     activity in the retail automotive industry.

LSI is currently seeking out large service providers and intends to negotiate an
agreement to have one or more providers distribute its new product offering. As
of the date of this report, LSI has not entered into any distribution
agreements.

Direct Dealer Sales. LSI software was sold and installed in approximately 100
automobile dealerships across Canada through direct sales. A number of qualified
leads have been generated and we anticipate that, with the rollout of LynXphere,
significant sales will be made in Year 1 going forward.

Manufacturer Sales. LSi's marketing plan has outlined opportunities with a
number of automobile manufacturers. Currently, LSI software applications operate
in dealer brands such as Chrysler, Ford, Honda, Hyundai, Kia, LandRover, Mazda,
Mitsubishi, Nissan, Subaru, Suzuki, and Volkswagen.

Ford of Canada utilizes software applications developed by LSI's
predecessorunder the T.I.M. label in over half its dealer network. LSI has
initiated discussions to advance opportunities within the Ford network for LSI's
new web-based suite of products.


Automobile Dealership Management Market Size
--------------------------------------------
The automobile dealership management software market size is a function of the
number of dealerships, what they are willing to pay for management systems and
the percentage that are actively looking to upgrade their systems. Based on an
average of 25 seats per dealer with seat fees at $119 per month, this yields the
following 2003 market size in millions of CDN Dollars for North America, Europe,
the Rest of the World and in Total:

Current Market Size                   N. A.      Europe      RoW        Total
-------------------                   -----      ------      ---        -----
Estimated Dealership Count(1)         25,000     65,000      50,000     140,000
Avg 25 seats/ dealer(2)               625000     1.625M      1.250M     3.5M
Licensing per seat/year               1428       1428        1428       1428
Licensing Revenue (M's)               892        2,320       1,785      4,998
% of auto-dealers upgrading(3)        10%        10%         15%        12%
Market Size (M's)                     89         232         267        599

In a mature market like the automobile dealership management market, this
cumulative definition of market size is appropriate as it excludes those
auto-dealers that will not be upgrading their systems and focuses only on
investments in new systems that will take place over time. Of course, if one
includes amounts currently being spent maintaining dealer systems in the
definition of market size, the market would be much larger.


                                       8
<PAGE>
A key component of our plan is the delivery of automobile dealership management
solutions via the ASP model. The overall market for ASP applications targeted at
the high-end market, of which automobile dealerships are an example, is forecast
to grow from $600 million U.S. in 2001 to $ 8 billion U.S. in 2005 (Source:
IDC). Data was not available for the automobile dealership management component
of the projected ASP market.

(1) Source: Deloitte Consulting
(2) Source: Logical Sequence
(3) Source: Desrosiers Automotive Consultants


Status of New Products
----------------------
LSI's next generation software suite, Lynxphere, is now under development and is
slated for general release in 2006. The new suite consists of dealership
Accounting & Vehicle Inventory, Parts Inventory, Service Management, Leasing and
Sales, and Customer Relationship Management or CRM tools that are full-featured
and fully integrated. LSI is differentiated from its competition by its ability
to seamlessly handle all transactions for the automotive dealer in a true
web-based environment.

Competition
-----------
The software-based automobile dealership management marketplace was once
proprietary and dominated by only a few vendors. While a small number of players
are still dominant, small software vendors are much more common. LSI faces
competition from a number of sources.

LSI has two large competitors, ADP and Reynolds & Reynolds. They have a combined
70% of the North American market. Other Canadian providers of automobile
management solutions include Automate, PBS, DIS Limited, Mega-Wheels
Incorporated, and Oasis. LSI will also face competition from ASP traditionally
focused on other markets seeking to enter the automobile dealership management
software market. The nature of competition is functionality, service and
pricing. LSI has significantly less capital and resources than its major
competitors.

Trademarks and Intellectual Property
------------------------------------
LSI holds the following trademarks and servicemarks: "Lynxphere", and TIM. LSI
owns the source code for all of its software.

Research and Development
------------------------
Approximately $750,000 Cdn, has been spent on research and development by LSI
during the past two fiscal years.

Governmental Regulation
-----------------------
LSI is not subject to any governmental regulation other than such as generally
effect all businesses. No governmental approval is necessary for any of LSI's
products and services.

Employees
---------
LSI has sixteen full time employees.



                                       9
<PAGE>
Natural Gas Exploration Program
-------------------------------

Shannon holds a 100% working interest in petroleum and natural gas exploration
and development permits covering 376,000 acres of Prince Edward Island, Nova
Scotia. Shannon's Plan of Operation in natural gas exploration on Prince Edward
Island is that it intends to pursue the sale of these assets in whole or in
part. If sold in part, Shannon anticipates it would sell a percentage of the
2004 working interest and enter into a joint operating agreement with such other
working interest partners to proportionally fund the exploration program.
Shannon does not expect that it would become the operator responsible for the
conduct of an exploration program.

Shannon through joint operating agreements on the prior working interests had
engaged in planning and exploration activities. Shannon was not the operator of
the prior working interest joint operating agreements and, therefore, was not be
required to own any equipment. If Shannon retains any proportion of the 2004
working interest, it anticipates entering into a new joint operating agreement
to provide the necessary equipment and personnel to carry out the exploration of
the covered acreage.

Through the joint operating agreements on the prior working interests an
exploratory drilling program was established and commenced. This program was
expected to provide for the drilling of up to five exploration or test wells,
two of which were drilled to determine whether there are sufficient reserves of
natural gas to then develop a program to establish production. Management
believes that sufficient reserves would be such reserves that the sale of
natural gas from the area at the current market prices would repay the cost of
exploration and development of the area within a reasonable time, as well as
provide profitable production for a period of time consistent with industry
standards. Exploratory data determining the size and pressures of reserves and
other drilling factors affecting production cost must first be obtained and then
analyzed before a final determination may be made that there are sufficient
reserves to justify production.

As of September 30, 2004, all available data relevant to the permits had been
assembled and analyzed. 1200 kilometers of 2D seismic data has been acquired,
assessed and analyzed, along with well logs and core samples. Based on seismic
data, core samples and well log analysis, several shallow depth, less than 2000
meters in depth, conventional natural gas targets have been identified. A 126
kilometer 2D seismic acquisition program was completed to supplement the 1200
kilometer existing seismic data, in order to provide information relevant to
finalizing the selection of locations for planned exploratory wells.

The focus of the exploration program was on conventional natural gas
accumulations at depths of less than 2000 meters. An initial program of up to
five wells was initiated. Exploratory drilling began in February 2003. The first
exploratory well, Irishtown #2, of the multi-well exploration program reached
total depth of 1620 meters. It has been determined by Shannon and its Joint
Venture Partners that although gas was evident in several zones, they were not
deemed to be commercial and the well has been abandoned. The second exploratory
well Seaview #1, situated on a separate structure, was drilled in June 2003 to a
total depth of 1610 meters and has been cased as a potential gas well. To date
five potential zones have been perforated but commercial quantities of natural
gas have not been encountered. Testing of an additional two zones was completed
with similar results. However upon investigation it appears that mechanical
failure or errors in the perforation process may have occurred and the well has
been suspended pending further investigation and study, with a view to
successfully completing the well.


                                       10
<PAGE>
Until a new joint operating agreement is entered into, Management will not know
what the general and administrative expenses, capital and operating expenditures
related to the implementation of this program will be. However Shannon
anticipates it will be responsible for a percentage of such expenditures
equivalent to its retained ownership percentage.

Shannon intends to raise additional funds as required through private equity
offerings in order to fund the exploration of the 2004 working interest and its
ongoing lease payments.

However there is no assurance Shannon will be able to raise additional funds in
the future. Any financing program conducted by Shannon will most likely result
in the issuance of additional shares of common stock which will dilute the
ownership interests of Shannon's current shareholders.

Shannon and any further joint operating partners will be obligated to maintain
the leases in good standing by to be determined expenditures per year. Shannon's
portion of this obligation is presently one hundred percent.


Principal Products or Services And Markets
------------------------------------------
Shannon's principal target markets are natural gas transmission pipeline
companies, utilities and private end-users, which may purchase the natural gas
directly from Shannon or from pipeline companies.


Competitive Business Conditions, Competitive Position In The Industry And
-------------------------------------------------------------------------
Methods Of Competition
----------------------
Shannon's planned petroleum and natural gas exploration activities in Prince
Edward Island are undertaken in a highly competitive and speculative business
atmosphere. Shannon is not the operator of the Joint Operating Agreements and,
therefore, will not be required to own any equipment. Shannon and its joint
operating partners have entered into joint operating agreements described above
to provide the necessary equipment and personnel to carry out the exploration of
the joint lands. There is significant competition in the exploration business
and Shannon is an insignificant participant. Shannon will have to raise
additional capital to fully participate in the exploration program. There are a
significant number of companies seeking funding for exploration programs, many
which are more developed than Shannon. Given its size and the lack of
significant exploration activity on the joint lands to date, Shannon may have
difficulty raising additional capital in order to successfully compete in this
exploration and development business.


                                       11
<PAGE>
Governmental Regulations And Environmental Laws
-----------------------------------------------
As of June 30, 2005, Shannon does not offer or sell any products or services and
is not subject to material government regulations. However any venture in which
it participates, will be required to obtain permits for drilling oil or gas
wells.

Exploration and production activities relating to oil and gas permits and leases
are subject to extensive regulation for the protection of the environment by the
Canadian Federal Government and the Provincial Government, where the acreage is
located. Shannon must submit exploration and, if warranted, development plans to
the Department of the Environment for the Province of Prince Edward Island for
approval prior to the execution of such plans. Compliance with environmental
regulation may be expected to result in Cdn.$50,000, of estimated expenses once
the exploration program is implemented. Environmental protection expenses are
expected to include the cost of site preparation such as road construction,
fencing and earthen berms or retaining walls to contain potential overflows or
spillage of oil or drilling fluids. If production is begun, the temporary
measures must be made permanent, if production is not warranted, the temporary
measures must be removed and the land restored to its prior condition.

Shannon believes it is presently in compliance with all applicable environmental
laws, rules or regulations; however, future legislation may have an adverse
impact on Shannon's present and contemplated business operations.

The foregoing is a brief summary of the regulations and legislation to which
Shannon is subject to by virtue of its operations and activities. Shannon cannot
predict what impact any future environmental laws, rules or regulations would
have on business operations. But given that Shannon operates in a highly
regulated industry and historically such operations are of a high profile from
the standpoint of environmental groups, studies and advocates, the impact could
be substantial.


Research And Development
------------------------
As of June 30, 2005, Shannon had not spent any money on research and development
in the Natural Gas Exploration Program.


Employees
---------
As of June 30, 2005, LSI has fifteen full time employees. Shannon has one full
time employee, its President. Shannon employs up to six additional
professionals, consultants and advisors as required.


Item 2. Description of Property.

Shannon holds a 100% working interest in Oil and Natural Gas Permits no.s 04-01
and 04-04 in Prince Edward Island, Canada. The portion of the 2004 Working
Interest gives Shannon the right to receive 100% of any income derived from the
property covered in the permits. In exchange for the right to receive income,
Shannon has an obligation to pay 100% respectively of the of exploration,
development and production costs of the property.


                                       12
<PAGE>
Prince Edward Island, where the 2004 working interest is located, lies in the
southwestern part of a large, mainly non- marine, Carboniferous to Permian area
called the Maritimes Basin. The basin fill consists of fluvial, alluvial,
lacustrine and minor marine strata. Seismic and borehole data suggest Prince
Edward Island is underlain by coal measures strata, as estimated by the
Geological Survey of Canada. The offshore extension of the coal measures basin
strata containing up to 20 to 25 coal seams, ranging in thickness between 0.6 to
3 meters (2 to 10 feet) with a net coal thickness from 15 to 40 meters (48 to
131 feet). The coal rank is bituminous, and calculated theoretical gas capacity
values for eastern Canadian coals range form 14.4 to 17.08 cubic meters per gram
of coal. Structural features associated with major northeast trending faults
systems and salt deposits may have created favorable permeability conditions for
enhanced natural gas and coalbed methane gas recovery. Source rock studies
indicate that the early Carboniferous rocks are oil prone with more than 2%
total oil capacity and greater than 5 milligrams per gram of rock. Conversely,
the upper Carboniferous rocks are mainly gas prone. In addition, excess coal gas
expelled during coalification may have charged nearby reservoirs. Porosities up
to 25% and favorable permeabilities have been reported from the lower
Carboniferous rocks, whereas porosities up to 15% have been reported for the
upper Carboniferous rocks. The Prince Edward Island property is not currently
producing oil or gas and has no proven reserves.


Undeveloped Acreage
-------------------
As of June 30, 2005, Shannon, directly or indirectly, held undeveloped acreage
in the 2004 working interest and the prior working interests as follows:

                             June 30, 2005    June 30,2004
                             -------------    ------------
Undeveloped Acres:

        Gross                    376,000         642,136

        Net                      376,000          55,363


The 2004 working interest acreage was part of the prior working interests
acreage and are covered by the same exploration program.


Drilling Activities
-------------------
As of June 30, 2005, all available data relevant to the permits has been
assembled and analyzed. 1200 kilometers of 2D seismic data has been acquired,
assessed and analyzed, along with well logs and core samples. Based on seismic
data, core samples and well log analysis, several shallow depth, less than 2000
meters in depth and conventional natural gas targets have been identified. A 126
kilometer 2D seismic acquisition program was completed to supplement the 1200
kilometer existing seismic data in order to provide information relevant to
finalizing the selection of locations for planned exploratory wells.


                                       13
<PAGE>
The focus of the exploration program is on conventional natural gas
accumulations at depths of less than 2000 meters. An initial program of up to
five wells was initiated. Exploratory drilling began in February 2003. The first
exploratory well, Irishtown #2, of the multi-well exploration program reached
total depth of 1620 meters. It has been determined by Shannon and its Joint
Venture Partners that although gas was evident in several zones, they were not
deemed to be commercial and the well has been abandoned. The second exploratory
well Seaview #1, situated on a separate structure, was drilled in June 2003 to a
total depth of 1610 meters and has been cased as a potential gas well. To date
five potential zones have been perforated but commercial quantities of natural
gas have not been encountered. Testing of two additional zones was carried out
with similar results. It appears that mechanical failure or errors in the
perforation process may have occurred and the well has been suspended pending
further investigation and study, with a view to successfully completing the
well.

Shannon's Principal Offices
---------------------------
Shannon's offices are located at 2000, 715 5th Avenue, S.W., Calgary, Alberta
T2P 2X6. The offices are rented from Rally Energy Corp., on a month-to-month
basis to Shannon. Blair Coady, Shannon's President, is a director of Rally
Energy Corp.


Logical Sequence Incorporated Offices
-------------------------------------
LSI's offices are located at 192 Joseph Zatzman Drive, Suite 14, Dartmouth, Nova
Scotia B3B 1N4. The offices are approximately 2000 square feet and are leased
from CREIT Property Management, an unaffiliated third party on a lease of 60
months for $1700 per month.


Item 3. Legal Proceedings.

There is no action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
Shannon, threatened, against or affecting Shannon, or any of its properties,
business affairs or business prospects.


Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 2005.



                                       14
<PAGE>



                                     Part II

Item 5. Market For Common Equity And Related Stockholder Matters.

Shannon's common stock is listed for sale on the National Association of
Securities Dealers OTC Electronic Bulletin Board and began trading in January
2003. Prior to January 2003 there was no established market for Shannon's common
stock.

The following table summarizes trading in Shannon's common stock, as provided by
quotations published by the OTC Bulletin Board for the periods as indicated. The
quotations reflect inter-dealer prices without retail mark-up, markdown or
commission, and may not represent actual transactions.

            Quarter Ended           High Bid       Low Bid
            -------------           --------       -------
            June 30, 2005            $0.26          $0.11
            March 31, 2005           $0.30          $0.22
            December 31, 2004        $0.45          $0.31
            September 30, 2004       $0.54          $0.32
            June 30, 2004            $0.94          $0.35
            March 31, 2004           $0.96          $0.40
            December 31, 2003        $0.71          $0.20
            September 30, 2003       $0.42          $0.20



As of September 23, 2005 there were 29,607,200 shares of common stock
outstanding and there were ninety-eight record holders of Shannon's common
stock.

Shannon has not declared a dividend during the fiscal year ended June 30, 2005
and does not anticipate declaring a dividend in its current fiscal year.


Equity Compensation Plan Information
------------------------------------

Shannon has a Stock Option Plan, the "Shannon International Resources, Inc,
Amended 1999 Stock Option Plan" (the "Plan"). The Plan provides that the Board
shall exercise its discretion in awarding options under the Plan, not to exceed
2,000,000 shares. The per share option price for the stock subject to each
option shall be as the Board may determine. All options must be granted within
ten years from the effective date of the Plan. There is no express termination
date for the options although the Board may vote to terminate the Plan. In March
2005, the stockholders approved a 5,000,000 share Officers and Directors Stock
Option Plan. The Plan provides that the Board shall exercise its discretion in
awarding options under the Plan, not to exceed 5,000,000 shares. The per share
option price for the stock subject to each option shall be as the Board may
determine. All options must be granted within ten years from the effective date
of the Plan. There is no express termination date for the options although the
Board may vote to terminate the Plan.


                                       15
<PAGE>
Shannon also has a Consultants and Advisors Stock Option Plan which reserves up
to 3,000,000 shares of common stock for issuance to employees, consultants and
advisors of Shannon other than executive officers and directors. The per share
option price for the stock subject to each option shall be as the Board may
determine. All options must be granted within ten years from the effective date
of the Plan. There is no express termination date for the options although the
Board may vote to terminate the Plan. 582,200 shares were issued as grants
pursuant to this plan.
<TABLE>
<CAPTION>


             Plan category                Number of securities to       Weighted average        Number of securities
                                          be issued upon exercise      exercise price of      remaining available for
                                          of outstanding options,     outstanding options,        future issuance
                                            warrants and rights       warrants and rights
<S>                                             <C>                         <C>                       <C>
Equity compensation plans approved by           1,700,000                   $0.45                     5,300,000
security holders

Equity compensation plans not approved            850,000                   $0.33                     1,568,000
by security holders

Total                                           3,025,000                   $0.35                     6,868,000
</TABLE>



Item 6. Management's Discussion And Analysis Or Plan Of Operation.
        Management's Discussion and Analysis or Plan of Operation.

Overview
--------
Except for the historical information contained herein, the following discussion
contains forward-looking statements that are subject to risks and uncertainties.
Actual results may differ substantially from those referred to herein. The
following discussion and analysis should be read in conjunction with the audited
financial statements of Shannon.

Shannon has the following areas of operations and investments as summarized
below.


     Logical Sequence Incorporated

In October 2003, Shannon entered into an agreement to acquire fifty-one percent
of the equity ownership of Logical Sequence Incorporated, a privately held
Canadian corporation. The acquisition closed and became effective on June 30,
2004.

A Canadian subsidiary corporation, Shannon Investments Ltd., was created which
issued 5,100,000 shares of exchange-able stock to the shareholders of Logical
Sequence Incorporated at closing. These shares are exchangeable into Shannon
common stock at the election of the holder at any time over the next five years
on a share for share basis. Shannon agreed to provide Logical Sequence
Incorporated, up to $760,000 U.S. for software development over the period
ending October 31, 2004 of which $341,000 Cdn., was provided. Shannon also has
an option to acquire the remaining forty-nine percent of the Logical Sequence
Incorporated, common stock for $2.00 US per share on or before October 20, 2005.



                                       16
<PAGE>
Logical Sequence Incorporated is the developer of comprehensive and integrated
software applications for the automotive industry.


     Natural Gas Exploration Program

Prior to July 23, 2004, Shannon held a 25% working interest in Oil and Natural
Gas Permit No. 9606 covering 116,279 acres of Prince Edward Island, Canada.
Shannon also held a further five percent working interest in six additional Oil
and Natural Gas permits in Prince Edward Island, Canada, referred to below as
the prior working interests.

On July 23, 2004, the prior working interests permits expired. Rally Energy,
Corp., the Operator under the joint operating agreements for the prior working
interests acquired new permits for approximately 376,000 acres of approximately
640,000 acres covered by the prior working interests, including the acreage
where the first two exploratory natural gas wells were drilled.

On September 23, 2004, Shannon entered into a letter of agreement with Rally
Energy Corp., whereby it acquired a 20% working interest in the new permits,
referred to below as the 2004 working interest. Shannon acquired the 2004
working interest in consideration of a promissory note in the principal amount
of $168,561.74 Cdn., payable to Rally Energy Corp., due on or before December
31, 2004. Shannon also gave Rally Energy Corp., a promissory note payable to
Rally Energy Corp., in the principal amount of $71,145 payable upon thirty days
written notice for the outstanding costs attributed from the Prior Working
Interests.

On February 23, 2005 Shannon executed and closed an Asset Purchase Agreement
with Rally Energy Corp ("Rally"). Under the terms of the Asset Purchase
Agreement, Shannon purchased all of Rally's working interests in approximately
376,000 gross acres of PNG permits, as well as Rally's interest in all seismic,
geomagnetic surveys and well bore information.

The consideration paid to Rally is as follows:

o    2,500,000 common shares of Shannon,
o    500,000 common share purchase warrants exercisable at US$0.85 per share for
     one year from the date of issue,
o    retention by Rally of a 2% gross overriding royalty (GORR) on the interests
     being conveyed.

The amount of consideration was determined by negotiation between the parties
based upon the value of the oil and gas permits as recorded in the financial
statements of Shannon and Rally and the historical and estimated market value of
Shannon's common stock.

Shannon also paid the approximately $245,000 in promissory notes due to Rally
from the September 2004 acquisition of its 20% working interest in the Prince
Edward Island oil and gas permits. Shannon obtained a demand note from the Bank
of Montreal accruing interest at 4.5% per annum as the source of the funds.


                                       17
<PAGE>
This purchase gave Shannon a 92% working interest in a large contiguous block of
permits to consolidate with its current working interests.

On May 10, 2005, Shannon acquired the remaining 8% working interest from
Conquistador Trust for 750,000 shares of Shannon's common stock and 750,000
common stock purchase warrants, each entitling the holder to acquire an
additional share of Shannon common stock at $0.40 per shares at any time prior
to May 10, 2007. Subject to the consent of Rally, the Conquistador Trust may
request that the common stock and the common stock underlying the warrants be
included in the registration statement described above.

Shannon follows the full cost method of accounting for oil and gas properties.
Shannon is deemed to be in the planning and exploration stage. Under the full
cost method of accounting for oil and gas properties, all costs associated with
acquisition, exploration and development of oil and gas reserves, including
directly related overhead costs, are capitalized.

All capitalized costs of oil and gas properties, including the estimated future
costs to develop proved reserves, are amortized on the unit-of-production method
using estimates of proved reserves. Investments in unproved properties and major
development projects are not amortized until proved reserves associated with the
projects can be determined or until impairment occurs. If the results of an
assessment indicate that the properties are impaired, the amount of the
impairment is added to the capitalized costs to be amortized. In addition, the
capitalized costs are subject to a "ceiling test," which basically limits such
costs to the aggregate of the "estimated present value," discounted at a ten
percent interest rate of future net revenues from proved reserves, based on
current economic and operating conditions, plus the lower of cost or fair market
value of unproved properties.

Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves or oil and gas, in which case the gain or loss is recognized in income.

Abandonment of properties is accounted for as adjustments of capitalized costs
with no loss recognized.

     Helical Investment

In May 2003, Shannon entered into a subscription agreement with EnerVision
Incorporated ("EnerVision") and its subsidiary Helical Systems Inc. ("Helical")
of Dartmouth, Nova Scotia, whereby Shannon will participate in the development
and commercialization of the Helical Software Platform for Very Large Data Base
(VLDB) management. The Helical Software Platform capabilities allow for the
acquisition, visualization, fusion, management and archiving of near limitless
quantities of data in real time at the desktop level. The software platform is
based on Helical's proprietary implementation of HHCode technology, known as
Self Defining Structure (SDS).


                                       18
<PAGE>
Shannon subscribed for 1,250,000 units of EnerVision securities at a
subscription price of Cdn. $150,000 or CDN $0.12 per unit. Each unit consists of
one common share of EnerVision and one common share purchase warrant. Each
warrant will entitle the holder to acquire one common share upon exercise and
payment of $0.18 Cdn. per common share, within two years of the date of the
warrant.

On November 10, 2004, Shannon purchased an additional 200,000 shares of The
Helical Corporation, Inc., (formerly EnerVision) at $0.18 Cdn., for a total
investment of $37,000 Cdn.

Helical and Shannon will jointly develop a software application for the
processing, visualization and archiving of seismic data built on the Helical
Software Platform.

Under the terms of the subscription agreement, Helical will develop a Proof of
Concept for the application. Shannon will receive a 15% interest in the venture,
as a condition of the above private placement and can earn additional interest
through providing additional financing up to a maximum of CDN $350,000, for a
potential 50% interest in the venture. Helical will provide technology to the
venture and hold the balance of the interest in the venture. Any subsequent
venture funding required beyond the CDN $350,000 above, will be the pro-rata
responsibility of venture partners.


Plan of Operation

Logical Sequence Incorporated

LSI has completed initial development of its new product Lynxphere. As the
product will complete its pilot testing during the current fiscal year, a
marketing/distribution plan will be developed. Emphasis will be placed on
securing major partners, distributors, and OEM's as the primary strategic avenue
of pursuit in this plan. LSI intends to add three to six persons for training
and implementation of the new product as well as sales and marketing.

To further ensure a successful launch of Lynxsphere, LSI has bolstered its
development team with another senior software developer. The new team member
brings an abundance of experience in the ASP.NET development environment and
will contribute greatly to the success of the Lynxphere project. Other
development resources will be added as required.

In addition, LSI is currently interviewing potential candidates to complement
its call center team. LSI is looking for those candidates who, among other
things, possess strengths in system training and implementation.

LSI has launched an awareness campaign throughout its Canadian customer base.
Information is being distributed both in written form and through personal
visits to prepare customers for the Lynxphere upgrade. Approximately $300,000 to
$1,000,000 is estimated as required capital to implement LSI`s marketing plans
over the next twelve months.


                                       19
<PAGE>
As a result of the termination of LSI's licensing agreement with Electronic Data
Systems (EDS) of Plano, Texas in April 2004, LSI has engaged legal counsel to
determine what its obligations to EDS are and what claims for damages it has
against EDS. It is Shannon's intention to seek a negotiated settlement with EDS
although as of October 18, 2005, no such negotiations have occurred.

LSI also anticipates negotiating a payment schedule of its approximately
$494,739, debt with GE of Canada which is currently due and payable.

Shannon's plan of operations for LSI is to raise additional capital as required
through private placements or public offerings of its equity securities and use
the capital to pay for LSI's sales and marketing expenses and make payments on
its outstanding debt. Shannon has not established any limitations on the amount
or price for Shannon's securities. Shannon does not, however, intend to sell
such securities as would result in a change in voting control of Shannon.


Natural Gas Exploration Program

Shannon's Plan of Operation in natural gas exploration on Prince Edward Island
is that it intends to seek out joint venture partners for a further exploration
program or consider the sale of these assets if an acceptable offer is received.
As of September 23, 2005, Shannon has no agreements with respect to either a
joint venture partner or a sale of the assets. If sold in part, Shannon
anticipates it would sell a percentage of the 100% of the 2004 working interest
it presently holds and enter into a joint operating agreement with such other
working interest partners to proportionally fund the exploration program.
Shannon does not expect that it would become the operator responsible for the
conduct of an exploration program.

Shannon through joint operating agreements on the prior working interests had
engaged in planning and exploration activities. Shannon was not the operator of
the prior joint operating agreements and, therefore, was not be required to own
any equipment. If Shannon retains any proportion of 100% of the 2004 working
interest it presently holds, it anticipates entering into a new joint operating
agreement wherein the new partner would be the operator and would provide the
necessary equipment and personnel to carry out the exploration of the covered
acreage.

Through the joint operating agreements on the prior working interests an
exploratory drilling program was established and commenced. This program was
expected to provide for the drilling of up to five exploration or test wells,
two of which were drilled to determine whether there are sufficient reserves of
natural gas to then develop a program to establish production. Management
believes that sufficient reserves would be such reserves that the sale of
natural gas from the area at the current market prices would repay the cost of
exploration and development of the area within a reasonable time, as well as
provide profitable production for a period of time consistent with industry
standards. Exploratory data determining the size and pressures of reserves and
other drilling factors affecting production cost must first be obtained and then
analyzed before a final determination may be made that there are sufficient
reserves to justify production.


                                       20
<PAGE>
As of September 30, 2004, all available data relevant to the permits had been
assembled and analyzed. 1200 kilometers of 2D seismic data has been acquired,
assessed and analyzed, along with well logs and core samples. Based on seismic
data, core samples and well log analysis, several shallow depth, less than 2000
meters in depth, conventional natural gas targets have been identified. A 126
kilometer 2D seismic acquisition program was completed to supplement the 1200
kilometer existing seismic data, in order to provide information relevant to
finalizing the selection of locations for planned exploratory wells.

The focus of the exploration program was on conventional natural gas
accumulations at depths of less than 2000 meters. An initial program of up to
five wells was initiated. Exploratory drilling began in February 2003. The first
exploratory well, Irishtown #2, of the multi-well exploration program reached
total depth of 1620 meters. It has been determined by Shannon and its Joint
Venture Partners that although gas was evident in several zones, they were not
deemed to be commercial and the well has been abandoned. The second exploratory
well Seaview #1, situated on a separate structure, was drilled in June 2003 to a
total depth of 1610 meters and has been cased as a potential gas well. To date
five potential zones have been perforated but commercial quantities of natural
gas have not been encountered. Testing of an additional two zones was completed
with similar results. However upon investigation it appears that mechanical
failure or errors in the perforation process may have occurred and the well has
been suspended pending further investigation and study, with a view to
successfully completing the well.

Until a new joint operating agreement is entered into, Management will not know
what the general and administrative expenses, capital and operating expenditures
related to the implementation of this program will be. However Shannon
anticipates it will be responsible for a percentage of such expenditures
equivalent to its retained ownership percentage.


Results of Operations - Logical Sequence Incorporated
Year Ended June 30, 2005

For the fiscal year ended June 30, 2005, Logical Sequence Incorporated (LSI) had
a net loss of $460,264.00 Cdn. LSI had revenues of $1,135,607.00 Cdn, with cost
of goods sold of $22,471.00 Cdn, and a gross profit of $1,113,136.00 Cdn.
Revenues are from existing customers using the legacy software. Expenses were
$1,243,657.00 Cdn, of which $1,012,423.00 Cdn, was salaries and wages. LSI also
recorded $286,592.00 Cdn, as interest on LSI's redeemable preferred stock. In
addition, As a result of finalization of LSI's SRED tax recovery, LSI reduced
its tax receivable by 43,151.00 Cdn. This amount is included in the net loss for
the year.


                                       21
<PAGE>
Results Of Operations - Shannon International Inc.
Year Ended June 30, 2005

During the year ended June 30, 2005, Shannon recorded a net loss of $881,857 as
compared to a loss of $895,115 for the year ended June 30, 2004. This is a
decrease in the loss of approximately $13,000. However there was an approximate
$30,000 increase in administrative costs. Salaries and wages paid through LSI
were approximately $800,000. Professional fees increased from approximately
$75,000 in 2004 to approximately $207,000 in 2005 reflecting the increased
professional services due to LSI operations and as a result of increased costs
of compliance with the Sarbanes Oxley Act of 2002. The loss is $0.05 per common
share. Shannon has not yet generated any revenues from its Natural Gas
Exploration Program. The $1,790,307 in total expenses consisted of consulting
fees in the amount of $442,483 which include Shannon's executive compensation
and fees paid to third parties assisting Shannon with business development
projects. Consulting fees decreased approximately $196,000 from $638,000 in
2004. Shannon recorded a gain on sale of investments in the amount of $41,007.

As of June 30, 2005, Shannon had total liabilities of $6,119,615 consisting of
$705,148 in accounts payable and accrued liabilities, $143,991 due to related
parties and 882,742 in promissory notes. Liabilities increased approximately
$1,600,000 from 2004 due to a $455,000 increase in promissory notes, a $141,000
increase in accounts payables and an approximately $600,000 increase in the
obligation for mandatory redemption of preferred shares as described below. In
addition, Shannon recorded a $327,175 liability to a shareholder
arising from a dispute over the liquidation of collateral given to secure
payment of the exercise of warrants in May 2004. Please see Note 16 -
Subscription Receivable and Reserve for Replacement Loss.

The accounts payable include $400,000.00 Cdn, ($296,000 U.S.) which is LSI's
management's estimate of what is potentially owed to Electronic Data Systems as
a result of the termination of LSI's contract with them. The $143,991 due to
related parties is due to LSI shareholders and a former officer and director.
This amount increased from $107,640 in 2004 due to currency conversion.

The $882,742 in promissory notes includes LSI's $550,000 principal balance owed
to GE of Canada, and approximately $380,000 in demand notes incurred during the
year. These demand notes are the primarily reason for the increase in promissory
note liabilities.

A $4,034,324 liability has been reserved as a result of outstanding redeemable
preferred stock of LSI. This amount increased from $3,439,269 in 2004 due to
accrued interest. The preferred shares are 50,000 preferred shares issued by LSI
in August 2002 in connection with LSI's acquisition of its predecessor software.
The preferred stock accrues a 4% dividend which only becomes payable if LSI has
a minimum of $1,000,000 cdn., after tax profit. The preferred shares are
redeemable by LSI at their $100 per share par value at any time prior to
September 1, 2012 when redemption is mandatory.


                                       22
<PAGE>
Shannon has also recorded a liability of $1,848,183 for the minority interest in
LSI. This amount decreased from $2,028,599 in 2004 due to LSI's loss.

Shannon's current assets at June 30, 2005, consisted of $45,339 in cash and
investments in marketable securities of $96,758 which decreased from $76,784 and
$134,048 respectively in the year ended June 30, 2004. The decreases in market
value of the securities is due to Shannon liquidated marketable securities in
order to pay critical expenses.

As of June 30, 2005, Shannon had an investment in unevaluated oil and gas
properties of $1,816,255 which increased from $664,770 for the year ended June
30, 2004. The increase is due to the acquisition of 100% of the 2004 working
interests and permits.

Total assets as of June 30, 2005 were $11,634,008 compared to $9,697,399 as of
June 30, 2004. The increase is due primarily to an approximately $1,100,000
increase for the intangible asset for Shannon's acquisition of LSI due to
currency translation and the rising exchange rate of the Canadian dollar to the
U.S. dollar and the approximately $1,300,000 increase in unevaluated oil and gas
properties due the acquisition of 100% of the 2004 working interests and
permits.



Liquidity and Capital Resources - Logical Sequence Incorporated

Shannon's Logical Sequence Incorporated subsidiary is producing revenue which
was $908,450 for the fiscal year ended June 30, 2005. This is Shannon's only
internal source of liquidity which is insufficient to meet Shannon's expenses
and liabilities. Shannon is not producing revenues from its natural gas
exploration program. Shannon is dependent upon the sale of its equity securities
to meet its operating expenses and liabilities. Shannon had $45,339 in cash and
$96,758 in marketable securities as of June 30, 2005.

Shannon had an income tax credit receivable of $172,726 from Revenue Canada from
its LSI subsidiary. These funds were paid to LSI in August 2005 and LSI repaid
$65,000.00 Cdn. of its debt to Shannon. Shannon used these funds to pay for the
maintenance of the 2004 working interest permits and other accounts payable.

Shannon's cash requirements are approximately $2,000,000. This amount includes a
minimum of $300,000 to fund LSI sales and marketing; approximately $1,700,000 of
current liabilities which include the LSI debt to GE of Canada and potential
liability to EDS.

Shannon intends to raise the required capital through debt financing and or the
sale of its securities. However, no assurances can be given that Shannon will be
successful in its efforts.



                                       23
<PAGE>
Item 7.   Financial Statements



                                 C O N T E N T S

                                                                       Page
                                                                     ----------

Report of Independent Registered Public Accounting Firm                 F-2

Financial Statements

       Consolidated Balance Sheets                                      F-3

       Consolidated Statements of Operations                            F-4

       Consolidated Statement of Stockholders' Equity                F-5 - F-7

       Consolidated Statements of Cash Flows                         F-8 - F-9

Notes to Consolidated Financial Statements                           F10 - F28









                                      F-1

<PAGE>



             Report of Independent Registered Public Accounting Firm


The Board of Directors
Shannon International Inc.



We have audited the accompanying consolidated balance sheets of Shannon
International Inc. as of June 30, 2005 and 2004, and the related statements of
operations, stockholders' equity and cash flows for the years ended June 30,
2005 and 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentations. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Shannon
International Resources, Inc. and the results of its operations and its cash
flows for the years ended June 30, 2005 and 2004, in conformity with generally
accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2, the Company
has insufficient working capital and has incurred operating losses since
inception, which raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to this matter is also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


/s/ MILLER AND McCOLLOM
-----------------------
MILLER AND McCOLLOM
Certified Public Accountants
4350 Wadsworth Boulevard, Suite 300
Wheat Ridge, Colorado 80033
October 20, 2005




                                      F-2
<PAGE>
<TABLE>
<CAPTION>



                            SHANNON INTERNATIONAL INC
                          Consolidated Balance Sheets

                                     ASSETS
                                     ------

                                                                   June 30, 2005  June 30, 2004
                                                                   -------------  -------------
<S>                                                                <C>             <C>
Current Assets:
   Cash                                                            $     45,339    $     76,784
   Accounts receivable and advances                                      32,442          35,365
   Income tax credit receivable                                         172,726         188,062
   Prepaid expense                                                        2,686          20,413
   Investments in marketable securities                                  96,758         134,048
                                                                   ------------    ------------
         Total current assets                                           349,951         454,672
Furniture and fixtures less accumulated  depreciation
   of $63,468 and $542 on  June 30, 2005 and 2004                        37,386          45,178
Unevaluated oil and gas properties (Full cost method)                 1,816,255         664,770
Intangible assets                                                     9,430,416       8,532,779
                                                                   ------------    ------------
         Total assets                                              $ 11,634,008    $  9,697,399
                                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:
   Accounts payable, other accrued expenses and unearned revenue   $    705,148    $    563,692
   Due to related parties                                               143,991         107,640
   Promissory notes                                                     882,742         427,516
   Reserve for collateral replacement                                   327,175              --
                                                                   ------------    ------------
         Total current liabilities                                    2,059,056       1,098,848

Asset retirement obligations                                             26,235           3,487
Obligation for mandatory redemption of preferred shares               4,034,324       3,439,269
                                                                   ------------    ------------

         Total liabilities                                            6,119,615       4,541,604

Minority interest in subsidiary                                       1,848,183       2,028,599

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock - 200,000,000 shares of $.001 par value
     authorized; 29,907,200  and 20,745,000 shares issued
     and outstanding at June 30, 2005 and 2004                           29,907          20,745
   Convertible subsidiary shares issued                                      --       2,111,400
   Additional paid-in capital                                         5,362,931       2,147,035
   Common stock warrants                                                371,319         268,000
   Accumulated deficit                                               (2,527,909)     (1,246,688)
   Accumulated other comprehensive income                               429,962         (13,296)
   Less subscription receivable                                              --        (160,000)
                                                                   ------------    ------------
         Total stockholders' equity                                   3,666,210       3,127,196
                                                                   ------------    ------------
Total liabilities and stockholders' equity                         $ 11,634,008    $  9,697,399
                                                                   ============    ============
</TABLE>



         The accompanying notes are an integral part of these statements

                                       F-3

<PAGE>

<TABLE>
<CAPTION>

                            SHANNON INTERNATIONAL INC
                      Consolidated Statements of Operations


                                                  For the year      For the year
                                                     ended             ended
                                                 June 30, 2005     June 30, 2004
                                                 -------------     -------------
<S>                                              <C>               <C>
Sales                                            $    908,450      $         --

Expenses
     Administrative costs                             229,852           181,951
     Salaries and wages                               801,531                --
     Consulting                                       442,483           638,189
     Lease impairment                                 107,679                --
     Professional fees                                206,856            74,778
     Currency exchange                                  1,388                --
     Accretion expense                                    518               197
                                                 ------------      ------------
         Total expenses                             1,790,307           895,115
                                                 ------------      ------------

(Loss) from operations                               (881,857)         (895,115)

Other Income and Expenses:
     Interest expense                                (286,212)           (1,361)
     Interest income                                    1,293                --
     Miscellaneous income                                  --             1,252
     Gain on sale of investments                       41,007            42,025
                                                 ------------      ------------
Net (loss) before income tax                       (1,125,769)         (853,199)

Minority interest (income) loss in
     subsidiary's earnings                            180,416                --

Provision for income tax                              (34,520)          (47,267)
                                                 ------------      ------------

Net (loss) before extraordinary item                 (979,873)         (900,466)

Extraordinary Item:
Provision for collateral replacement
(Note 15)                                            (301,348)               --
                                                 ------------      ------------

Net loss                                           (1,281,221)         (900,466)
                                                 ============      ============

Net (loss) per share                             $       (.05)     $       (.05)

Weighted average number of shares
     outstanding                                   25,351,367        18,446,012




         The accompanying notes are an integral part of these statements

                                      F-4
<PAGE>

                            SHANNON INTERNATIONAL INC




Other comprehensive income:
     Net (loss)                                  $ (1,281,221)     $   (900,466)
     Currency translation adjustment                  459,029                --
     Unrealized gain (loss) on
     marketable securities                             72,011          (101,078)
                                                 ------------      ------------
Total other comprehensive income                 $   (750,181)     $ (1,001,544)
                                                 ============      ============
</TABLE>











         The accompanying notes are an integral part of these statements

                                      F-5


<PAGE>
<TABLE>
<CAPTION>


                           SHANNON INTERNATIONAL INC,
                 Consolidated Statement of Stockholders' Equity




                                                           Convertible    Additional
                                                           Subsidiary     Paid-in
                                    Shares      Par Value  Shares Issued  Capital
                                ------------    ---------  -------------- ---------

<S>                                <C>              <C>      <C>             <C>
Balance
June 30, 2003                     16,147,024       16,147          --        787,110
                                ------------    ---------  -------------- ---------

Common stock sold                  2,832,900        2,833                    530,629
Common stock issued for
services, June 2004                1,165,076        1,165                    368,711
Warrants exercised, December
2003                                 600,000          600                    204,797
Expired warrants, December
2003                                                                          15,395
Options expensed June 2004                                                   240,393
Convertible subsidiary shares
issued                                                        2,111,400
Net loss for the year ended
June 30, 2004
Unrealized (loss) on
marketable securities
                                ------------    ---------  -------------  ----------

Totals                            20,745,000       20,745      2,111,400   2,147,035
Subscription receivable
                                ------------    ---------  -------------- ---------
Balance June 30, 2004             20,745,000    $  20,745  $   2,111,400  $2,147,035



         The accompanying notes are an integral part of these statements


                                      F-6a

<PAGE>

                           SHANNON INTERNATIONAL INC,
                 Consolidated Statement of Stockholders' Equity
                                  (continued)


                                                                    Accumulated Other
                                    Common Stock    Accumulated       Comprehensive
                                       Warrants        Deficit            Income          Total
                                    ------------    -----------    ----------------- -------------

Balance
June 30, 2003                            125,779       (346,222)           87,782         670,596
                                    ------------    -----------    ----------------- -------------

Common stock sold                        238,038                                          771,596
Common stock issued for
services, June 2004                                                                       369,876
Warrants exercised, December
2003                                     (80,422)                                         124,975
Expired warrants, December
2003                                     (15,395)                                             --
Options expensed June 2004                                                                240,393
Convertible subsidiary shares
issued                                                                                  2,111,400
Net loss for the year ended
June 30, 2004                                          (900,466)                         (900,466)
Unrealized (loss) on
marketable securities                                                   (101,078)        (101,078)
                                     -----------   ------------    ----------------- -------------

Totals                                   268,000     (1,246,688)         (13,296)       3,287,196
Subscription receivable                                                                  (160,000)
                                     -----------   ------------    ----------------- -------------
Balance June 30, 2004                $   268,000   $ (1,246,688)   $     (13,296)    $  3,127,196

</TABLE>





         The accompanying notes are an integral part of these statements



                                      F-6b
<PAGE>
<TABLE>
<CAPTION>


                           SHANNON INTERNATIONAL INC,



                                                             Convertible        Additional
                                                             Subsidiary          Paid-in
                                    Shares     Par Value     Shares Issued       Capital
                                ------------  ----------    ---------------   ------------
<S>                               <C>         <C>           <C>               <C>
Convertible subsidiary shares     5,100,000   $    5,100    $   (2,111,400)   $  2,106,300

Common stock issued for
services                            312,200          712                           167,558
Common stock exchanged for
oil and gas properties            3,250,000        3,250                           895,431

Warrants exercised, December
31, 2004                            100,000          100                            47,900

Imputed interest promissory
note contributed by
shareholder                                                                         (1,293)

Net loss for the year ended
June 30, 2005

Currency translation

Unrealized gain on marketable
securities and currency
translation
                                ------------  ----------    --------------    -------------

Balance June 30,2005             29,907,200   $   29,907                --    $   5,362,931
                                ============  ==========    ==============    =============


         The accompanying notes are an integral part of these statements



                                      F-7a
<PAGE>



                           SHANNON INTERNATIONAL INC,



                                                                       Accumulated Other
                                      Common Stock     Accumulated       Comprehensive
                                        Warrants         Deficit             Income             Total
                                      -------------    ------------    ------------------   -------------
Convertible subsidiary shares                                                               $        --

Common stock issued for
services                                                                                         168,582
Common stock exchanged for
oil and gas properties                     111,319                                             1,010,000

Warrants exercised, December
31, 2004                                    (8,000)                                               40,000

Imputed interest promissory
note contributed by
shareholder                                                                                      (1,293)

Net loss for the year ended
June 30, 2005                                           (1,281,221)                          (1,281,221)

Currency translation                                                             459,029        459,029

Unrealized gain on marketable
securities and currency
translation                                                                      (15,771)       (15,771)
                                      -------------    -----------     ------------------   -------------

Balance June 30,2005                  $     371,319    $(2,527,909)    $        429,962     $  3,666,210
                                      =============    ===========     ==================   =============

</TABLE>


         The accompanying notes are an integral part of these statements

                                      F-7b
<PAGE>


<TABLE>
<CAPTION>


                           SHANNON INTERNATIONAL INC,

                      Consolidated Statements of Cash Flows


                                                        Year ended      Year ended
                                                       June 30, 2005   June 30, 2004
                                                      --------------   -------------
Operating activities:
<S>                                                   <C>               <C>
     Net (loss)                                       $   (1,281,221)   $   (900,466)
     Adjustments to reconcile net loss to cash
       used for operating activities:
     Adjustments for non-cash items:
       (Gain) on sale of investments                         (41,007)        (42,025)
       Depreciation expense                                   24,694             542
       Minority interest in subsidiary earnings             (180,416)             --
       Interest added to notes payable                       298,380              --
       Non cash interest income                               (1,293)             --
       Deferred income tax benefit                            34,519          47,267
       Currency exchange                                       1,388              --
       Lease impairment                                      107,679              --
       Provision for collateral replacement                  301,348              --
       Stock and options issued for services                 168,270         610,269
     Changes in operating assets and liabilities:
       Accounts receivable                                    24,529              --
       Accounts payable and advances                         (94,180)         51,092
       Prepaid expense                                        12,281         (15,824)
                                                      --------------    ------------
       Total adjustments                                     656,192         651,321
                                                      --------------    ------------
       Net cash (used by)
        operating activities                                (625,029)       (249,145)

Investing activities
     Investment in oil and gas properties                         --        (304,166)
     Acquisition of furniture and fixtures                   (12,612)         (1,715)
     Cash advanced to LSI                                         --        (241,277)
     Purchases of marketable securities                      (85,227)        (29,882)
     Sales of marketable securities                           15,281         101,836
                                                      --------------    ------------
       Net cash (used by) investing activities               (82,558)       (475,204)

Financing activities
     Proceeds from notes payable                             670,459              --
     Repayment of notes payable                             (197,164)             --
     Sale of collateral                                      185,827              --
     Issuance of common stock and warrants                    40,000         731,456
                                                      --------------    ------------
       Net cash provided by financing                        699,122         731,456
activities
                                                      --------------    ------------
Net change in cash and cash equivalents                       (8,465)          7,107
Foreign currency translation adjustment                      (22,980)             --
Cash at beginning of period                                   76,784          16,048
Cash from purchase of LSI                                         --          53,629
                                                      --------------    ------------
Cash at end of period                                 $       45,339    $     76,784
                                                      ==============    ============



         The accompanying notes are an integral part of these statements

                                      F-8
<PAGE>
                           SHANNON INTERNATIONAL INC,




 Supplemental disclosure of cash flow information:
   Cash paid during the period for:
       Interest                                       $       58,724    $        449
       Income taxes                                               --              --

 Supplemental schedule of noncash investing
     and financing activities:
     Issuance of stock for subscription
        receivable                                    $           --    $    160,000
     Exchange of marketable securities for  payment
        of note payable                                       91,354              --
     Stock issued LSI                                             --       2,111,400
     Exchange of marketable securities for
       oil and gas properties at fair value                       --         102,532

</TABLE>





        The accompanying notes are an integral part of these statements



                                      F-9
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



Note 1 - Summary of Significant Accounting Policies

This summary of significant accounting policies of Shannon International
Resources, Inc. is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles in
the United States of America and have been consistently applied in the
preparation of the financial statements. The financial statements are stated in
United States of America dollars.

Organization and Description of Business
----------------------------------------

The Company was incorporated in the State of Nevada on February 17, 1999. The
Company incorporated a wholly owned subsidiary, Shannon Investments Ltd. on
August 15, 2003. A 51% interest in Logical Sequence Incorporated "LSI" was
acquired on June 30, 2004 by Shannon Investments Ltd.

The Company's primary business activity is investments in oil and gas and
technology.

To date, the Company has invested in the acquisition, development and production
of natural gas and coalbed methane properties. Currently, the Company has an
interest in non-producing properties in the province of Prince Edward Island,
Canada.

The Company's subsidiary, Logical Sequence Incorporated, is a developer of
comprehensive and integrated software applications for the automotive industry.

The Company has also made an investment in EnerVision Incorporated
("EnerVision") and its subsidiary Helical Systems Inc. ("Helical") of Dartmouth,
Nova Scotia, whereby Shannon will participate in the development and
commercialization of the Helical Software Platform for Very Large Data Base
(VLDB) management.

Revenue Recognition
-------------------

Revenues are recognized in accordance with SEC Staff Accounting Bulletin (SAB)
No. 101, "Revenue Recognition in Financial Statements". Under SAB 101, product
revenues (or service revenues) are recognized when persuasive evidence of an
arrangement exists, delivery has occurred (or the service has been performed),
the sales price is fixed and determinable and collectibility is reasonably
assured.

The Company's operating subsidiary, LSI, obtains revenues from licensing the
right to use its software to end users, the sale of maintenance agreements, and
other consulting and software-related services. The Company generally has
separate agreements with customers regarding these services that determine the
terms and conditions of each type of service. Revenues from product user license
fees are recognized in accordance with Statement of Position (SOP) No. 97-2,
"Software Revenue Recognition" and SOP 98-9 Modification of SOP 97-2, "Software
Revenue Recognition, With Respect to Certain Transactions".



                                      F-10
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


Property, Plant and Equipment
-----------------------------

Property, plant and equipment assets are recorded at cost. Depreciation is
provided annually at rates calculated to write-off the assets over their useful
lives.

Foreign Currency
----------------

The Company records foreign currency transactions in accordance with Statement
of Financial Accounting Standards (SFAS) No. 52.

The functional currency of the Company is the United States Dollar. The Company
does not hedge foreign currency transactions. The Company maintains Canadian
Dollar bank accounts for settlement of Canadian Dollar transactions. At June 30,
2005, cash shown on the financial statements includes CAD$47,840 (US$38,924) in
Canadian Dollar bank accounts.

The functional currency of the Company's operating subsidiary, LSI, is the
Canadian Dollar. LSI translates amounts into United States dollars using the
current rate method. Under this method, assets and liabilities are translated to
United States dollars at current exchange rates; revenues and expenses are
translated at the average exchange rate during the period, and equity accounts
are translated at the historical rate. Related translation adjustments are
reported as other comprehensive income, a component of stockholders' equity.

Use of Estimates
----------------

The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in these financial statements
and accompanying notes. Actual results could differ from those estimates.

Earnings (Loss) Per Share
-------------------------

Earnings (loss) per share of common stock is computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is not shown for periods in which
the Company incurs a loss because it would be anti-dilutive.

Estimated Fair Value of Financial Instruments
---------------------------------------------

The carrying value of accounts receivable, accounts payable, shareholder
advances and other financial instruments reflected in the financial statement
approximates fair value due to the short-term maturity of the instruments.




                                      F-11
<PAGE>
                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


The fair value of promissory notes and the obligation for mandatory redemption
of preferred shares cannot be estimated because of the unique nature of these
financial instruments.

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include the Company and its'
subsidiaries. All inter-company accounts have been eliminated in the
consolidation. Minority interest is recorded for subsidiaries that are less than
100% owned.

Comprehensive Income
--------------------

The Company has adopted Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income". SFAS 130 requires that the components and
total amounts of comprehensive income be displayed in the financial statements
beginning in 1998. Comprehensive income includes net income and all changes in
equity during a period that arises from non-owner sources, such as foreign
currency items and unrealized gains and losses on certain investments in equity
securities. The Company's components of comprehensive income include net income,
currency translation adjustment in the amount of $459,029 and unrealized gains
in the amount of $29,067 from marketable securities.

Income Taxes
------------

The Company records deferred taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The
statement requires recognition of deferred tax assets and liabilities for
temporary differences between the tax basis of assets and liabilities and the
amounts at which they are carried in the financial statements, based upon the
enacted tax rates in effect for the year in which the differences are expected
to reverse. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.

Valuation of Long-Lived Assets
------------------------------

The Company periodically analyzes its long-lived assets for potential
impairment, assessing the appropriateness of lives and recoverability of
unamortized balances through measurement of undiscounted operation cash flows on
a basis consistent with accounting principles generally accepted in the United
States of America.

Accounting for Oil and Gas Operations
-------------------------------------

The Company has adopted the full cost method of accounting for oil and gas
properties. Accordingly, all costs associated with acquisition, exploration, and
development of oil and gas reserves, including directly related overhead costs,
are capitalized.


                                      F-12
<PAGE>




                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005

All capitalized costs of oil and gas properties, including the estimated future
costs to develop proved reserves, is included in cost centers and are amortized
on the unit-of-production method using estimates of proved reserves. Investments
in unproved properties and major development projects are not amortized until
proved reserves associated with the projects can be determined. All costs
incurred in acquiring mineral rights, in drilling, and in exploration
activities, including all carrying costs of nonproductive properties in the cost
center, are included as a cost of reserves in that cost center.

In addition, the capitalized costs are subject to a "ceiling test," which limits
such costs to the aggregate of the estimated present value, discounted at a
10-percent interest rate of future net revenues from proved reserves, based on
current economic and operating conditions, plus the lower of cost or fair market
value of unproved properties.

Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in income.
Abandonment of properties is accounted for as adjustments of capitalized costs
with no loss recognized.

Prior to the Company acquisition of 100% of the working interests in the PEI
properties, substantially all of the Company's exploration and development
activities related to oil and gas are conducted jointly with others and
accordingly the consolidated financial statements reflect only the Company's
proportionate ownership interest in such activities.

Software Development Costs
--------------------------

The Company considers development costs for software to be sold or otherwise
marketed that occur before technological feasibility is established to be
research and development costs and are expensed as incurred. After technological
feasibility is established, material software development costs are capitalized
and amortized over the estimated product life. We have defined technological
feasibility as the establishment of a working model, which typically occurs when
company places a product into beta testing. To date, the period between
achieving technological feasibility and the general availability of such
software has been short and software development costs qualifying for
capitalization have been insignificant. Accordingly, we have not capitalized any
software development costs.

Other
-----

The Company's fiscal year end is June 30.

The Company paid no dividends during the periods presented.

Certain comparative figures have been reclassified to conform to the current
year presentation.


                                      F-13
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


All of the Company's assets are located in Canada.

The company has no cash equivalents.

Note 2 - Basis of Presentation - Going Concern
         -------------------------------------

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has insufficient working capital and has suffered operating losses since
inception. This fact raises substantial doubt about the Company's ability to
continue as a going concern. Management plans to obtain additional working
capital to further develop the Company's properties or to locate a business
combination candidate.

Note 3 - Acquisition of Logical Sequence Incorporated
         --------------------------------------------

In October 2003, the Company entered into an agreement to acquire fifty-one
percent of the equity ownership of Logical Sequence Incorporated, a privately
held Canadian corporation. The acquisition closed and became effective on June
30, 2004.

A wholly owned Canadian subsidiary corporation, Shannon Investments Ltd., was
created which issued 5,100,000 shares of non-voting common stock to the
shareholders of Logical Sequence Incorporated at closing. These shares are
exchangeable into common stock of the Company at election of the holder at any
time over the next five years on a share for share basis. The Company also has
an option to acquire the remaining forty-nine percent of the Logical Sequence
Incorporated common stock for $2.00 USD per share on or before October 20, 2005.

The purpose of the acquisition was for the Company's entry into the information
technology sector.

The value assigned to the Shannon Investments Ltd. exchangeable stock,
$2,111,400 ($0.41 per share), is based upon market price of the Company's common
stock that may be exchanged at the effective date. The Company allocated the
purchase price to the assets of the acquired company based on the fair value of
the assets acquired, less the liabilities acquired, with the excess assigned to
the intangible asset representing the intellectual property of LSI's software
products. Following is a condensed balance sheet showing the fair values of the
assets acquired and the liabilities assumed as of the date of acquisition, and
reconciliation to the purchase price.

Current assets                                                      $   281,118
Property and equipment                                                   42,709
Intangible assets (see note 9)                                        8,532,779
Current liabilities                                                    (846,593)
Long-term debt                                                       (3,870,014)
                                                                    -----------
Net assets acquired                                                   4,139,999
                                                                    ===========
51% ownership                                                         2,111,400
                                                                    -----------
Purchase price                                                      $ 2,111,400
                                                                    ===========



                                      F-14
<PAGE>




                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005

As the effective date of the acquisition, June 30, 2004, was the last day of the
Company's fiscal year, none of the results of LSI's operations are included in
those of the Company for the fiscal year ended June 30, 2004.

Note 4 - Accounts Receivable
         -------------------

                                                            2005          2004
                                                           ---------------------
Current accounts receivable and advances                   $32,442       $35,365
                                                           =======       =======

The Company considers accounts over 90 days old to be past due. The company
periodically reviews its accounts receivable to determine uncollectible amounts.


Note 5 - Marketable Securities (including related party)
         -----------------------------------------------

In accordance with the Statement of Financial Accounting Standards no. 115 (SFAS
115), marketable securities are recorded in the accompanying balance sheet at
their market value. The Company has investments in marketable securities as
follows:
<TABLE>
<CAPTION>

                         Fair Value                               Year Ended        Year Ended
                                                                 June 30, 2005    June 30, 2004
--------------------------------------------------------------   -------------    -------------
<S>                                                              <C>              <C>
Classified as available for sale:
     Securities with net unrealized gains                        $         --     $    152,293
     Securities with net unrealized losses                             96,758          (18,245)
                                                                 ------------     ------------
Total                                                            $     96,758     $    134,048
                                                                 ============     ============


Unrealized gains included in comprehensive income:
     Balance at beginning of year:                               $    (13,296)    $     87,782
       Realized during year                                            41,007           42,025
       Unrealized gains (losses) added to
       comprehensive income during year                               (57,672)        (143,103)
                                                                 ------------     ------------
     Balance at end of year                                      $    (29,961)    $    (13,296)
                                                                 ============     ============

Additional information:
     Proceeds from sales of marketable securities                $     93,000     $   101,824
     Exchange of marketable securities for
       oil and gas properties (at fair value)                              --         102,532
     Payment of note payable with marketable
       securities                                                      91,354              --
     Gains realized during the year                                    41,007          42,025

</TABLE>


                                      F-15
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



Cost of securities sold is computed using the first-in first-out method.

At June 30, 2005 and 2004, $70 included in marketable securities represents 154
shares of a company that is a related party because the Company's president is
an officer and director.

Note 6 - Property and Equipment
         ----------------------

Components of property and equipment consist of:
<TABLE>
<CAPTION>

                                                                                        Depreciation
                                                                                            Rate
                                                     Accumulated        Net                  and
                                     Cost           Depreciation       Amount              Method
<S>                            <C>                 <C>              <C>                            <C>
June 30, 2005
   Furniture and Fixtures      $        37,839     $       23,458   $      14,381    Straight Line 3 yr
   Computer equipment                   63,015             40,010          23,005      30% diminishing
                               ------------------  --------------  ----------------
                               $       100,854     $       63,468   $      37,386

June 30, 2004:
   Furniture and Fixtures      $        33,195     $       10,845   $      22,350     Straight Line 3yr
   Computer equipment                   46,755             23,927          22,828      30% diminishing
                               ------------------  --------------  ----------------
                               $        79,950     $       34,772   $      45,178
</TABLE>


Depreciation has been provided in amounts sufficient to recover asset costs over
their estimated useful lives. All components of property and equipment are being
depreciated or amortized.

Note 7 - Oil and Gas Properties
         ----------------------

By letter agreement dated February 18, 1999, the Company acquired a 25% interest
in 116,279 acres of non-producing oil and gas properties in the province of
Prince Edward Island, Canada. This interest was acquired by the issuance of
2,000,000 common shares at an agreed value of $0.015 per share ($30,000) and
paid fees related to the acquisition of $15,000.

During the fiscal year ending June 30, 2002, the Company acquired an additional
5% working interest in properties in the general location of its earlier
properties at a cost of $164,334. The properties were acquired from the same
company as its previous acquisition.

On July 23, 2004 the permits related to the Company's working interest expired
and on September 23, 2004 the Company acquired a new 20% working interest in new
permits. The lease costs of the permits not renewed have been determined to be
impaired and have been expensed. The Company also agreed to enter into a new
Joint Venture Operating Agreement with the holders of the balance of the working
interests. The Company acquired the working interest in consideration of
promissory note in the amount of $132,736 USD payable to the former operator due
on or before December 31, 2004. Shannon also gave the former operator, a
promissory note in the amount of $56,025 payable upon thirty days written notice
for the outstanding costs.


                                      F-16
<PAGE>


                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



The Company acquired an additional 72% interest in the Prince Edward Island oil
and gas permits, on February 23, 2005. As described in Note 14, the Company
exchanged stock and warrants valued at $875,000 USD. The value of shares issued
was based on fair market value on the date issued. The seller granted a gross
overriding royalty of 2% on the interests being conveyed to a third party.

On May 2, 2005 a Canadian Trust (the `Trust") agreed to assign an undivided 8%
working interest in PEI to the Company. As described in Note 14, the Company
exchanged stock and warrants valued at $135,000 USD. The value of the shares
issued was based on fair market value on the date issued.

As of June 30, 2005, the Company's oil and gas properties consisted entirely of
unproved properties, and therefore are not being amortized. The Company expects
to amortize the costs of these properties when sufficient evidence exists to
determine proved reserves, if any. Since the Company has no proved reserves, no
reserve information has been reported to any government agency. As of June 30,
2005 the undeveloped acreage for the properties was approximately 376,000 acres.

As of the date of this report, the property has one abandoned well and one
suspended well.

Components of the Company's unevaluated oil and gas properties are:

Acquisition Costs                    $         1,227,119
Development Costs                                589,136
                                     -------------------
         Total                       $         1,816,255
                                     ===================


Note 8 - Intangible Assets
         -----------------

Effective June 30, 2004, the Company acquired intangible assets identified as
intellectual property and composed of exclusive rights, future rights and
derivative products associated with the comprehensive and integrated software
applications for the automotive industry as part of its acquisition of Logical
Sequence Incorporated. In connection with the acquisition the intangible assets
were valued at $8,532,779. Because the assets have no determinable life, the
asset value is not subject to amortization, but is subject to periodic
impairment tests.


                                      F-17
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



Note 9 - Asset Retirement Obligations
         ----------------------------

Effective January 1, 2003, the Company adopted SFAS No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS 143"). SFAS 143 applies to obligations
associated with the retirement of tangible long-lived assets that result from
the acquisition, construction and development of the assets. SFAS 143 requires
that the Company records the fair value of a liability for an asset retirement
obligation in the period in which it is incurred and a corresponding increase in
the carrying amount of the related long-lived asset.

Balance July 1, 2003                                                     10,027
         Obligations paid                                                (6,737)
         Accretion expense                                                  197
                                                                       --------
Balance June 30, 2004                                                  $  3,487
                                                                       --------
         Additional obligations incurred                                 22,230
         Accretion expense                                                  518
                                                                       --------
Balance June 30, 2005                                                  $ 26,235
                                                                       ========


Note 10 - Promissory Note - GE of Canada
          ------------------------------

The Company's subsidiary, Logical Sequence Incorporated, has a note payable to
Commercial Finance Canada Inc. secured by a general security agreement
constituting a first lien on all assets of the Company's LSI subsidiary. The
promissory note bears interest at 5% compounded monthly. During the year ended
June 30, 2005 the $550,000 principal balance plus accrued interest of $30,548
represented by the promissory note with GE became due and payable and the loan
is currently in default. Management sought negotiations to have the payment
obligation deferred over time. However, GE has neither responded to the request
nor pursued collection so the amount remains in default and accruing interest.


Note 11 - Due to Related Parties
          ----------------------

As at June 30, 2005 and September 30, 2004, the Company owed related parties
(companies owned by a shareholder and former management of LSI) the following
amounts:


                                                           2005           2004
                                                         --------       --------
Accounts payable to related parties                      $135,882       $ 94,487
Accrued interest                                            8,109         13,153
                                                         --------       --------
                                                         $143,991       $107,640
                                                         ========       ========

Note 12 - Promissory Notes
          ----------------

The Company entered into a promissory note with a Canadian corporation in the
amount of $220,000 CDN ($180,328 USD) on January 6, 2005, with an interest rate
of 10% per annum calculated and payable semiannually. The note, due upon demand
for payment is made in writing, then becomes payable forty-five days thereafter.



                                      F-18
<PAGE>

                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



A note payable was entered into on March 15, 2005 with a Canadian chartered bank
in the amount of $250,000 CDN ($201,613 USD) is a demand loan - non-revolving,
interest only for a maximum of one year. If the loan is not in default the
interest rate is prime rate payable monthly. Prime rate means the floating
annual rate of interest established from time to time by the Bank of Montreal as
the reference rate it will use to determine rates of interest on Canadian dollar
loans to customers in Canada.

The Company borrowed $357,777 CDN ($288,519 USD) during February 2005 from a
Canadian company, which was repaid with marketable securities valued at $91,932
USD and cash of $196,587 USD.

Note 13 - Obligation for Mandatory Redemption of Preferred Shares
          -------------------------------------------------------

The Company's subsidiary, LSI, has issued 50,000 shares of preferred stock that
has a mandatory redemption feature. The obligation for the mandatory redemption
of preferred shares was recorded as a liability on the books at the present
value of $4,449,981 at September 30, 2003. The accretion of the preferred stock
in the amount of $286,592 CDN ($229,264 USD) was recorded on the books as
interest expense, bringing the obligation balance to $4,956,973 CDN ($4,035,951
USD) at June 30, 2005.

The preferred shares are redeemable by the Company at any time by paying the
holder the par value, 5,000,000 ($100 per share), plus any accrued dividends.
The redemption of the preferred shares becomes mandatory September 1, 2012.
Dividends are payable at 4% annually in arrears, will accrue if not paid and are
only required to be paid if profits after tax are a minimum of $1,000,000 CDN.

Note 14 - Stockholders' Equity
          --------------------

During the year ended June 30, 2004, the Company issued 4,597,976 shares of
common stock in a private placement for $1,266,351 (weighted average $.28 per
share).

The Company also received $256,632 from the exercise of warrants for 4,273,741
shares (weighted average $.08 per share).

On May 10, 2004, 400,000 shares of stock were issued for a promissory note in
the amount of $160,000 due October 8, 2004 with interest rate of 5%. The Company
agreed to extend the note with no date due with an interest rate of 18%. 500,000
shares of a publicly traded company were held by the Company as security. The
note is shown on the balance sheet as an offset to stockholders' equity
(subscription receivable).


                                      F-19
<PAGE>


                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


Pursuant to the acquisition of the 51% interest in LSI by Shannon Investments
Ltd., Investments issued 5,100,000 shares of non-voting common stock, which are
exchangeable for the Company's common stock. To date the Company has exchanged
1,037,350 shares of its common stock for former shareholders of LSI and has
issued the balance of 4,062,650 shares to Investments to be held in trust for
future exchanges of stock. The LSI exchangeable shares are eliminated in the
consolidation of the Company's financial statements.

During the three months ending September 30, 2004, the Company issued 100,000
shares of common stock for services, valued at $39,000 (weighted average $.39
per share) based on fair market value on the date issued.

During the three months ended December 31, 2004, an investor purchased 100,000
additional shares of the Company's common stock for $40,100 by redeeming 100,000
warrants. The Company issued 100,000 shares of common stock for services, valued
at $39,000 (weighted average $.39 per share) based on fair market value on the
date issued.

During the three months ended March 31, 2005, the Company issued 112,200 shares
of common stock for services, valued at $37,270 (weighted average of $.33 per
share). The value of shares issued was based on fair market value on the date
issued.

As described in Note 8, the Company issued 2,500,000 shares of common stock and
500,000 common share purchase warrants for the acquisition of an oil and gas
working interest. The total amount allocated is the fair market value at the
date of issuance of the common stock shares and warrants is as follows: the
combined value of the acquisition was $875,000 composed of 2,500,000 shares of
common stock allocated at $813,706 ($0.35 per share) and the warrants valued at
$61,294 (approximately $0.12 per warrant). Each warrant entitles the holder to
acquire one common share at an exercise price of $0.85 for a period of twelve
months from the date of issuance. The fair value of each warrant granted was
computed by the Black-Scholes method using the following weighted-average
assumptions: The expected volatility is 150%. The risk-free interest rate is
2.54% and the expected term is one year.

As described in Note 8, the Company issued 750,000 shares of common stock and
750,000 common share purchase warrants for the acquisition of an oil and gas
working interest. The total amount allocated is the fair market value at the
date of issuance of the common stock shares and warrant is as follows: the
combined value of the acquisition was $135,000 composed of stock allocated at
$84,975 (approximately $0.11 per share) and the warrants valued at $50,025
(approximately $0.07 per warrant). Each warrant entitles the holder to acquire
one common share at an exercise price of $0.40 for a period of two years from
the date of issuance. The fair value of each warrant granted was computed by the
Black-Scholes method using the following weighted-average assumptions. The
expected volatility is 150%. The risk-free interest rate is 2.84% and the
expected term is two years.

During the three months ended June 30, 2005, the Company issued 100,000 shares
of common stock for services valued at $17,000 (weighted average of $.17 per
share) and 300,000 shares of common stock for services valued at $36,000
(weighted average of $.12 pre share). The value of shares issued was based on
fair market value on the date issued.


                                     F-20
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


3,350,000 warrants were to expire on December 31, 2004. The Company extended
the exercise period of the Securities Holder's Warrants until 5pm Mountain time
of the sixtieth day following the effective date of the registration statement
described in the registration rights agreement, provided that if said sixtieth
day is a weekend day or legal holiday in Canada, the exercise period is extended
until 5:00pm Mountain time of the next business day.

Warrants outstanding at June 30, 2005 consist of:

 Number Outstanding   Exercise Price         Expiration Date
      (Shares)
-------------------   --------------    ---------------------------
     3,250,000              .40               60 days after
                                          registration statement
                                                  filed

      500,000               .85              February 28, 2006

      750,000               .40                May 10, 2007

Note 15 - Subscription Receivable and Reserve for Replacement Loss
          --------------------------------------------------------

In May 2004, a shareholder exercised warrants to acquire 400,000 shares of the
Company's common stock at $.40 per share. The Company accepted a promissory note
in the amount of $160,000 USD due in October 2004 that was secured by 500,000
shares of a publicly traded company. The Company liquidated 373,000 shares of
the collateral for the amount of $185,827 USD an excess of $25,827 USD of the
promissory note. The shareholder has communicated to the Company that it
believes that the sale of the collateral shares was in breach of the terms of
the promissory note and that the shareholder believes it is entitled to
rescission of the warrant exercise. No legal action has been filed at this time
and the Company intends to seek a negotiated settlement.

The Company believes that it is liable to the shareholder for the approximate
current value of the liquidated collateral in the amount of $487,175 USD minus
the $160,000 USD of the promissory note resulting in the approximate amount of
$402,000 CDN ($327,175 USD). Any settlement of the claims would likely involve a
similar amount. As a result the Company has recorded a liability for such
amount. The company recorded an expense in the amount of $301,348 USD that was
the amount collected less the amount of the promissory note.

If the claim for rescission of the warrant exercise were allowed, the Company
would receive the 400,000 shares for cancellation and deduct $160,000 USD from
paid in capital and the Company could be liable for the full amount of
approximately $600,000 CDN ($488,321 USD).



                                      F-21
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005

Note 16 - Commitments
          -----------

LSI has entered into a lease obligation for office space that will expire in
2008.

Minimum annual lease payments over the next three years are as follows:

                  2006                    $             15,460
                  2007                                  15,460
                  2008                                  13,787

The Company has entered into lease obligations with an energy corporation that
will expire in 2008 and 2010. Lease obligations are based on $.10 CDN per acre.
The Company has also entered into a surface lease with an individual that shall
be reviewed and mutually agreed upon every five years. The rental amount will be
reviewed after twenty years.

Annual lease payments over the next five years are as follows:

                  2006                      $            34,185
                  2007                                   34,185
                  2008                                   28,800
                  2009                                   28,800
                  2010                                   28,800

Note 17 - Segments
          --------

The company's operations are classified into two principal reportable segments
that provide different products or services. Separate management of each segment
is required because each business unit is subject to different marketing,
production, and technology strategies.

Segment information is as follows:

Segment                     Oil and Gas        Technology      Total
                           ---------------- --------------- ------------
Revenue                          --             908,450        908,450
Interest expense               19,901           277,091        296,992
Depreciation                    1,295            23,399         24,694

Segment                     Oil and Gas       Technology       Total
                           ---------------- --------------- ------------
Net income (loss)             (606,633)        (369,796)       (976,429)
Total assets                 2,127,438        9,892,179      12,019,617
Expenditures for
long lived assets            2,005,490           96,895       2,102,385



                                      F-22
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


Oil and Gas has no revenues. Technology derives its revenues from licensing the
right to use its software to end users, the sale of maintenance agreements, and
other consulting and software-related services. There are no inter-segment
transactions.

Note 18 - Related Party Transactions
          --------------------------

The operator conducting certain exploratory and development activities for
properties in which the Company participates is a related party because the
Company's president is a director of the operator. During the fiscal year ended
June 30, 2004, the Company incurred costs of $353,213 with the operator. No
costs were incurred in the fiscal year ended June 30, 2005.

Note 19 - Amount Due - Electronic Data Systems Inc.
          -----------------------------------------

The Company's subsidiary, Logical Sequence Incorporated, was party to a license
sales agreement with Electronic Data Systems Inc. (EDS), whereby EDS was to
market certain of LSI's products on a revenue-sharing basis. The agreement was
terminated on August 16, 2004, under conditions contained within the EDS
Purchase and Sale Agreement.

The agreement includes a requirement for the Company to pay EDS 60% of license
revenues collected, and includes certain other provisions for payments.
Management contends that the failure of EDS to perform its obligations under the
agreement was a breach of the agreement. The amount due to EDS under the
agreement is uncertain. The Company believes is has valid and substantial claims
against EDS.

The Company is not currently engaged in negotiations with EDS and EDS has not
asserted any claims. Given the uncertainties, complexity and expense of
international litigation, the Company has accrued $296,000 USD ($400,000 CDN),
included in the balance sheet as unearned revenue rather than including the
amount in LSI revenue. The amount is Management's estimate of the net amount due
to EDS if there had been no breach of the agreement by EDS. This estimate may
change as further information is available. The maximum amount which may be due
under the contract, before any offsets, is $468,813.

Note 20 - Stock-Based Compensation
          ------------------------

The Company's stock option plan, the "Shannon International Resources, Inc.
Amended 1999 Stock Option Plan" ("Plan") became effective June 1, 1999. Under
the terms of the plan, the board of directors is authorized to grant options for
up to 2,000,000 shares of common stock. The board has discretion as to the
determination of exercise prices and terms of the options. All options must be
granted within ten years from the effective date of the Plan. There is no
express termination date for the options although the Board may vote to
terminate the Plan. In May 2004, the board of directors resolved to submit a
5,000,000 share "Officers and Directors Stock Option Plan" for approval by the
Company's stockholders at the next annual general meeting of stockholders.


                                      F-23
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005

Shannon also has a "Consultants and Advisors Stock Option Plan" which reserves
up to 3,000,000 shares of common stock for issuance to employees, consultants
and advisors of Shannon other than executive officers and directors. The per
share option price for the stock subject to each option shall be as the Board
may determine. All options must be granted within ten years from the effective
date of the Plan. There is no express termination date for the options although
the board may vote to terminate the Plan.

The Company's shareholders approved the "Shannon International Resources, Inc.
2005 Directors and Officers Stock Option Plan" ("Plan") that became effective
March 11, 2005. Under the terms of the plan, the board of directors is
authorized to grant options for up to 5,000,000 shares of common stock. The
board has discretion as to the determination of eligibility of persons, exercise
prices and terms of the options, provided however that in no instance shall the
period exceed five (5) years from the date of grant of the option. All options
must be granted within ten years from the effective date of the Plan. No options
were granted as of June 30, 2005. During the year ended June 30, 2005, 1,300,000
shares for options for common stock expired.

The following is a table of outstanding options and changes during 2005 and
2004:

                                                                       Weighted
                                                             Non-       Average
                                            Employee       Employee    Exercise
                                             Options        Options      Price
                                            ---------     ----------  ----------

Options Outstanding, June 30, 2003            775,000             --        .16
       Options granted:
           Employees                        1,400,000             --        .60
           Non-employees                           --        850,000         --
       Options expired                             --             --         --
       Options exercised                           --             --         --
                                           ----------     ----------  ----------

Options Outstanding, June 30, 2004          2,175,000        850,000        .42
       Options granted:
           Employees                               --             --         --
           Non-employees                           --             --         --
       Options expired                     (1,150,000)      (150,000)       .34
       Options exercised                           --             --         --
                                           ----------     ----------  ----------
Options Outstanding, June 30, 2005          1,025,000        700,000        .49
                                           ==========     ==========  ==========

Outstanding options vest as follows:




                                      F-24
<PAGE>


                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


<TABLE>
<CAPTION>


                              Range of Exercise                        Weighted
                                  Prices                                Average
                           ----------------------      Number          Exercise
 Vested at June 30,          High         Low         of Shares          Price
----------------------     ---------   ----------   -------------    -----------
<S>                          <C>          <C>           <C>          <C>
  2002 and earlier           .10          .10           250,000      $    .10
        2003                 .25          .25           225,000           .25
        2004                 .85          .10         1,250,000           .50
                                                    -------------
                                                      1,725,000
                                                    =============
</TABLE>

Options granted during 2005 and 2004 consist of:
<TABLE>
<CAPTION>

                                                 Weighted Average
Year and Exercise price relative to fair value    Fair Value at     Weighted Average
               of underlying stock                  Grant Date       Exercise Price
----------------------------------------------   ----------------  -------------------
Year ending June 30, 2004
<S>                                                     <C>               <C>
   Exercise price less than fair value                  .43               .60
   Exercise price equal to fair value                   .25               .25
   Exercise price greater than fair value               .65               .53
Year ending June 30, 2005                                --                --
</TABLE>

In January 2003, the board extended the expiration date for 350,000 options that
would expire in 2004 to February of 2006, and 100,000 options from 2005 to 2007.
In June 2004, the board extended the expiration date for 150,000 options nine
months.

If not previously exercised or canceled, options outstanding at June 30, 2005
will expire as follows:
<TABLE>
<CAPTION>

                                                                           Weighted
                        Range of Exercise                                  Average
                             Prices                    Number              Exercise
                      ----------------------
                        High         Low             of Shares              Price
                      ---------   ----------     -------------------    ---------------
Year Ending June 30,
<S>     <C>             <C>          <C>               <C>           <C>
        2008            .10          .10               300,000       $       .10
        2009            .25          .85             1,125,000               .60
        2010            .50          .50               400,000       $       .47
                                                 -------------------
                                                     1,725,000               .43
                                                 ===================
</TABLE>

The fair value of each option granted was computed by the Black-Scholes method
using the following weighted-average assumptions:



                                      F-25
<PAGE>


                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005




                                   Year Ended        Year Ended
                                  June 30, 2005     June 30, 2004
                                -----------------  ----------------
Expected Volatility:                    --                150%
Risk-free interest rate:                --               1.01%
Expected Dividends:                     --                 --
Expected Term in Years:                 --                 5

As permitted by FASB Statement No. 123, the company applies the methods of APB
25 and related interpretations in accounting for stock options issued to
employees. Accordingly, no compensation cost was recognized for grants of
employee options because all were issued with exercise prices less than or equal
to the fair value of the underlying stock at the grant date. If compensation
cost had been determined based on the estimated fair value (using methods
consistent with FASB Statement No. 123) of the options at grant date, the
Company's net income and earnings per share would have been replaced with the
following amounts:
<TABLE>
<CAPTION>

                                      Year Ended                              Year Ended
                                    June 30, 2005                            June 30, 2004
                           As Reported          Pro forma          As Reported           Pro forma
                          ----------------   -----------------   -----------------   ------------------
<S>                          <C>                  <C>                <C>                     <C>
Employee option expense         --                   --                   --                 850,061
Net (loss):                     --                   --               (900,466)           (1,850,527)
Net loss per share:             --                   --                 (.04)                (.08)
</TABLE>


Note 21 - Income Taxes
          ------------

The Company is subject to United States and Canadian income taxes. The Company
has paid no income taxes due to its operating losses carrying forward since
inception.

The Company has estimated net operating losses as follows:

    Expiration year:           Amount
-------------------------    -----------------
2019                         $         6,174
2020                                  11,931
2021                                  58,716
2022                                  73,331
2023                                 215,311
2024                                 853,199
2025                                 980,689
                             -----------------
Total                        $     2,199,351
                             =================

A valuation allowance equal to the tax benefit of the net operating loss
carryforward has been provided due to the uncertainty of the Company's ability
to utilize the carryforwards.

The Company's income tax benefit (expense) consists of the following:



                                      F-26
<PAGE>


                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005


<TABLE>
<CAPTION>


                         Component:                    Year Ended          Year Ended
                                                      June 30, 2005       June 30, 2004
-------------------------------------------------     --------------     ---------------
<S>                                                   <C>                 <C>
Change in tax deferred taxes on unrealized gains      $          --       $     (47,267)
Change in Canadian tax credit                               (34,520)                 --
                                                      --------------     ---------------
     Total                                            $     (34,520)      $     (47,267)
                                                      ==============     ===============
</TABLE>


The Company's deferred income tax asset (liability) consists of the following:
<TABLE>
<CAPTION>

                                                    Year Ended           Year Ended
                         Component:                June 30, 2005        June 30, 2004
---------------------------------------------     ----------------     ----------------
<S>                                                <C>                  <C>
Deferred tax benefit from net operating loss       $     769,773        $     426,532
  carryforwards
Tax valuation allowance                                 (769,773)            (426,532)
                                                  ----------------     ----------------
     Total                                         $           --       $          --
                                                  ================     ================
</TABLE>


The overall effective tax rate differs from tcted statutory
rate for the year ended June 30, 2004 is as follow:


Tax provision based upon statutory rate                             35.0%
Change in valuation allowance                                      (29.5%)
                                                              ------------
Effective tax rate                                                   5.5%
                                                              ============


The Company's operating subsidiary, LSI, has an outstanding tax credit
receivable from the Canadian and Nova Scotia governments in the amount of
$172,726 for refundable research and development tax credits.

Note 22 - Risks and Uncertainties
          -----------------------

The Company's oil and gas properties are located in Prince Edward Island,
Canada, which is a geographic concentration of risk.

The Company transacts the majority of its business and has outstanding balances
in Canadian Dollars, which is a foreign currency risk.

Note 23 - Recent Accounting Pronouncements
          --------------------------------

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." It requires existing unconsolidated variable
interest entities (VIE's) to be consolidated by their primary beneficiaries if
the entities do not effectively disperse risks among the parties involved. It
applies immediately to VIE's created after January 31, 2003 and to VIE's in
which an enterprise holds a variable interest that was acquired before February
1, 2003, the Interpretation applies for periods beginning after June 15, 2003.
In December 2003, the FASB reissued Interpretation No. 46 with certain
modifications and clarifications for certain VIE's. The Company has no
unconsolidated VIE's and therefore its financial statements are in compliance
with the requirements of Interpretation No. 46.


                                      F-27
<PAGE>



                           SHANNON INTERNATIONAL INC.
                   Notes to Consolidated Financial Statements
                                  June 30, 2005



In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", which amends and clarifies the
accounting guidance on certain derivative instruments and hedging activities.
SFAS 149 is generally effective for contracts entered into or modified after
June 30, 2003 and hedging relationships designated after June 30, 2003. The
adoption of this statement did not impact the Company's financial position,
results of operations, or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS 150
establishes standards for how an issuer of equity (including the equity shares
of any entity whose financial statements are included in the consolidated
financial statements) classifies and measures on its balance sheet certain
financial instruments with characteristics of both liabilities and equity. SFAS
150 is effective for financial instruments entered into or modified after May
31, 2003 and for existing financial instruments after July 1, 2003. The adoption
of this statement did not impact the Company's financial position, results of
operations, or cash flows.

During 2004 and 2005, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4", SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67", SFAS
No. 153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29",
SFAS No. 123 (revised 2004), "Share-based Payment" and SFAS No. 154, "Accounting
Changes and Error Corrections--a replacement of APB Opinion No. 20 and FASB
Statement No. 3". These statements are effective for periods after these
financial statements. We do not believe the impact of adoption of these
statements will be significant to our overall results of operations or financial
position.






                                      F-28

<PAGE>
Item 8. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure.

There have been no changes in and/or disagreements with the accountants on any
accounting and financial disclosure.

Item 8a.  Controls And Procedures
---------------------------------
Shannon maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in Shannon's Exchange Act reports 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 Shannon's management, including its Chief Executive Officer /
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure based closely on the definition of "disclosure controls and
procedures" in Rule 13a-14(c). Shannon's disclosure controls and procedures are
designed to provide a reasonable level of assurance of reaching Shannon's
desired disclosure control objectives. 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, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Shannon's certifying officer
has concluded that Shannon's disclosure controls and procedures are effective in
reaching that level of assurance.

On or about June 30, 2005, Shannon carried out an evaluation, under the
supervision and with the participation of Shannon's management, including
Shannon's Chief Executive Officer / Chief Financial Officer, of the
effectiveness of the design and operation of Shannon's disclosure controls and
procedures. Based on the foregoing, Shannon's Chief Executive Officer and Chief
Financial Officer concluded that Shannon's disclosure controls and procedures
were effective.

Shannon's internal controls are presently being revised and codified to ensure
compliance with the requirements of the Sarbanes Oxley Act of 2002.


                                    Part III

Item 9. Directors, Executive Officers, Promoters And Control Persons; Compliance
With Section 16(A) Of The Exchange Act.

The officers and directors of the Company are as follows:

Blair Coady            President and Director since February 18,1999.
Dennis Brovarone       Director since February 2003

Blair Coady.      Mr. Coady is the Founder of the Company and has served as
President and Director since February 1999. Since June 2001 to October 2003, Mr.
Coady has served as an officer and director and from October 2003 to the present
he has served as a director of Rally Energy Corporation, a publicly held company
engaged in oil and gas exploration. Mr. Coady served as the President and
Chairman of the Board of Wolf Industries, Inc., a publicly held management
company with interests in the oil and gas industry, from August 1996 to April
1998. From October 1996 to February 2001. Mr. Coady was the President and Chief
Executive Officer of Calgary Chemical, a privately-held custom blender of
petroleum production chemicals. From 1992 to 1995 Mr. Coady served as Chairman
of the Board of Earthwhile Developments Inc., a Canadian corporation involved in
waste management, specifically solvent recycling, bioremediation and composting.


                                       24
<PAGE>
Dennis Brovarone.     Mr. Brovarone has been practicing corporate and securities
law since 1986 and as a sole practitioner since 1990. He serves as U.S.
securities law counsel to Shannon. He is a director of Pure Bioscience, a
publicly held California corporation since April 1996. From December 1997 to
April 2001, Mr. Brovarone served as the President and Chairman of the Board of
Directors of Ethika Corporation, a publicly held, Mississippi corporation
investment holding company with its office in Littleton, Colorado. Prior to
1990, Mr. Brovarone served as in-house counsel to R.B. Marich, Inc., a Denver,
Colorado based brokerage firm. Mr. Brovarone lives and works in Littleton,
Colorado.

Committees: Meetings of the Board
---------------------------------
Shannon does not have a separate Compensation Committee, Audit Committee or
Nominating Committee. These functions are done by the Board of Directors meeting
as a whole. Shannon's Board of Directors held six meetings during the fiscal
year ended June 30, 2005 at which all directors were present either in person or
by telephonic conference call. Corporate actions by the Board of Directors were
unanimously also consented to in writing after telephone discussion.

Audit Committee
---------------
The board of directors has not yet established an audit committee. The functions
of the audit committee are currently performed by the entire board of directors.
Shannon is under no legal obligation to establish an audit committee and has
elected not to do so at this time so as to avoid the time and expense of
identifying independent directors willing to serve on the audit committee.
Shannon may establish an audit committee in the future if the board determines
it to be advisable or we are otherwise required to do so by applicable law, rule
or regulation.

As the board of directors does not have an audit committee, it therefore has no
"audit committee financial expert" within the meaning of Item 401(e) of
Regulation S-B. In general, an "audit committee financial expert" is an
individual member of the audit committee who:

*    understands generally accepted accounting principles and financial
     statements,

*    is able to assess the general application of such principles in connection
     with accounting for estimates, accruals and reserves,


                                       25
<PAGE>
*    has experience preparing, auditing, analyzing or evaluating financial
     statements comparable to the breadth and complexity to our financial
     statements,

*    understands internal controls over financial reporting, and

*    understands audit committee functions.


Board of Directors Independence
-------------------------------
Neither of Shannon's directors, are "independent" within the meaning of
definitions established by the Securities and Exchange Commission or any
self-regulatory organization. Shannon is not currently subject to any law, rule
or regulation requiring that all or any portion of its board of directors
include "independent" directors.

Code of Ethics
--------------
Under the Sarbanes-Oxley Act of 2002 and the Securities and Exchange
Commission's related rules, Shannon is required to disclose whether it has
adopted a code of ethics that applies to Shannon's principal executive officer,
principal financial officer, principal accounting officer or controller or
persons performing similar functions. Shannon has adopted a code of ethics that
applies to its chief executive officer, chief financial officer and other
officers, legal counsel and to any person performing similar functions. Shannon
has made the code of ethics available and intends to provide disclosure of any
amendments or waivers of the code within five business days after an amendment
or waiver on its website, www.shannon-intl.com.

Compliance with Section 16(a) of Securities Exchange Act of 1934
To our knowledge, during the fiscal year ended June 30, 2005, our current
Directors and Officers complied with all applicable Section 16(a) filing
requirements. This statement is based solely on a review of the copies of such
reports that reflect all reportable transactions furnished to us by our
Directors and Officers and their written representations that such reports
accurately reflect all reportable transactions.

Family Relationships
--------------------
There is no family relationship between any Director, executive or person
nominated or chosen by Shannon to become a Director or executive officer.




                                       26
<PAGE>



Item 10.       Executive Compensation.

The following table shows for the fiscal years ending June 30, 2004, 2003 and
2001, the compensation awarded or paid by Shannon to its Chief Executive Officer
and any of the executive officers of Shannon whose total salary and bonus
exceeded $100,000 during such year.
<TABLE>
<CAPTION>

                                             SUMMARY COMPENSATION TABLE
                                                                                  Long Term Compensation

                                         Annual Compensation                Awards                  Payouts

                                                        Other Annual      Securities
                                                        Compensation  Underlying Options
   Name and Principle Position     Year    Salary ($)       ($)              (#)          All Other Compensation ($)
-----------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>             <C>           <C>                         <C>
  Blair Coady                      2005      87,300          0             225,000                     0
  President/CEO                               cdn.                          Common
-----------------------------------------------------------------------------------------------------------------------
  Blair Coady                      2004      87,300          0                0                        0
  President/CEO                               cdn.
-----------------------------------------------------------------------------------------------------------------------
  Blair Coady President/CEO        2003         0            0              75,000                     0
                                                                            Common
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

No executive officer earned more than $100,000 during the current fiscal year or
the previous two fiscal years.

<TABLE>
<CAPTION>

Option Grants in Last Fiscal Year
---------------------------------------------------------------------------------------------------
Individual Grants
---------------------------------------------------------------------------------------------------
Name                              Number of         % of Total Options
                                  Common Shares         Granted in
                                  Underlying          Exercise Price
                                  Options               Fiscal Year       Expiration
                                  Granted (#)       ended June 30, 2005     ($/Sh)           Date
---------------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>               <C>            <C>
Blair Coady, CEO, director            100,000             12.1%             0.30           03/25/10
                                      125,000             15.2%             0.40           05/25/10
---------------------------------------------------------------------------------------------------
Dennis Brovarone, Secretary            75,000              9.1%             0.30           03/25/10
Director                              275,000             33.3%             0.40           05/25/10
---------------------------------------------------------------------------------------------------
</TABLE>


                                       27
<PAGE>



     Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End
     Option/Values

The following table sets forth the number and value of the unexercised options
held by each of the Named Executive Officers and Directors at June 30, 2005.
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
Aggregate Option Exercises in Last Fiscal Year and Option Values
------------------------------------------------------------------------------------------------------------------------
                                     Value                                           Value of Unexercised In-the
                        Shares       Realized    Number of Securities Underlying     Money Options at
                        Acquired on  at FY-End   Unexercised Options at FY-End       June 30, 2005  (1)
Name                    Exercise (#) ($)         (#) Exercisable/Unexercisable       Exercisable/Unexercisable
------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>    <C>                                <C>
Blair Coady Pres./CEO,         0           0      450,000 Common Shares Exercisable  $2,250 Exercisable
Dir.
------------------------------------------------------------------------------------------------------------------------
Dennis Brovarone                0          0      450,000 Common Shares Exercisable  $ 0 Exercisable
Secretary, Director
------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Option value based on the difference between the exercise price of
     unexercised options and the closing sale price on June 30, 2005 ($0.115 per
     share).

Employment Agreements
---------------------
Blair Coady, Shannon's president and chief executive officer and director
entered into an employment agreement with Shannon effective October 2003. The
employment agreement provides for base remuneration of $9,700 Cdn., per month
plus insurance benefits and vehicle lease. Officers are reimbursed for expenses
incurred on Company business. Dennis Brovarone, Shannon's secretary and director
also serves as U.S. securities law counsel and is compensated for his time at
his regular hourly rate of $200 per hour.

Directors' Compensation/ Other Arrangements
-------------------------------------------
Shannon's directors are reimbursed for actual expenses incurred in attending
Board meetings. There are no other arrangements regarding compensation to
officers and directors of Shannon.

Termination of Employment and Change of Control Arrangement
-----------------------------------------------------------
Pursuant to Mr. Coady's employment agreement, in the event of his termination
without cause or a Change in Control of Shannon, Mr. Coady is entitled to
receive his base remuneration of $9,700 Cdn., per month for three years
following the date of termination or Change in Control. Except for Mr. Coady,
there is no compensatory plan or arrangement in excess of $100,000 with respect
to any individual named above which results or will result from the resignation,
retirement or any other termination of employment with Shannon, or from a change
in the control of Shannon.

Transactions with Management
----------------------------
Shannon did not enter into any transactions with Management during the fiscal
year ended June 30, 2005.


                                       28
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners And Management.

The following table sets forth information, as of September 23, 2005, with
respect to the beneficial ownership of Shannon's common stock by each person
known by Shannon to be the beneficial owner of more than five percent of the
outstanding Common Stock and by the officer and directors of Shannon based on
29,607,200 shares of common stock outstanding as of September 23, 2005 plus the
number of shares underlying outstanding options.
<TABLE>
<CAPTION>

Name and Address of                                         Common Stock    Percentage of Shares
Beneficial Owner                  Title                     Ownership            Outstanding
----------------------------      -------------------       ---------------   ------------------
<S>                                                            <C>      <C>         <C>
Blair Coady                       President, Director          450,000  (1)         1.5%
Suite 2000, 715 5th Av. SW
Calgary, Alberta  T2P 2X6
------------------------------------------------------------------------------------------------
Dennis Brovarone                  Secretary, Director          470,000  (2)         1.6%
18 Mt. Laurel Dr.
Littleton, CO 80127
------------------------------------------------------------------------------------------------
Directors and Officers as a Group
(2 individuals)                                                 920,000 (3)         3.0%
------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes exercisable options to acquire up to 450,000 shares.
(2)  Includes exercisable options to acquire up to 450,000 shares.
(3)  Includes exercisable options held by the officers and directors to acquire
     up to 900,000 shares


Changes of Control

As of June 30, 2005 and September 23, 2005, there are no arrangements known to
Shannon which may at a subsequent date result in a change of control of Shannon.


Item 12. Certain Relationships and Related Transactions.

As of September 23, 2005 Mr. Coady Shannon's President and a Director serves as
a director of Rally Energy Corp. ("Rally"). Rally is a Calgary based energy
company. On February 23, 2005 Shannon acquired 92% of its working interests in
oil and natural gas permits located on-shore Prince Edward Island from Rally.





                                       29
<PAGE>



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)         Exhibits:

3.1  Articles of Incorporation(1)
3.2  Bylaws(1)
3.3  Articles of Amendment dated March 16, 2005 (2)
10.1 Working Interest Acquisition Agreement(1)
10.2 Purchase and Joint Venture Agreement(1)
10.3 Oil and Natural Gas Permit No. 96-06 (1)
10.4 Amendment to Working Interest Acquisition Agreement (1)
10.7 Acquisition of Additional Interests Agreement (3)
10.8 Oil and Natural Gas Permits No. 96-04, -05, -07, -08, -09, -10. (3)
10.9 Joint Operating Agreements dated October 22, 2001 and October 23, 2001. (3)
10.10 Participation Agreement (4)
10.11 Logical Sequence Inc. Distribution Agreement (5)
10.12 Share Purchase Agreement (5)
10.13 Share Purchase Support Agreement (5)
10.14 Voting Trust Agreement (5)
10.15 Addendum Agreement (6)
10.16 Letter of Agreement with Rally Energy Corp., for the acquisition of the
      2004 Working Interest dated September 23, 2004 and promissory notes. (7)
10.17 Asset Sale Agreement dated February 24, 2005 (8)
10.18 Registration Rights Agreement dated February 24, 2005 (8)
10.19 Conquistador Trust 8% working interest agreement dated May 10, 2005 (2)
14.1 Code of Ethics (7)
31.1 Sarbanes Oxley Section 302 Certification
31.2 Sarbanes Oxley Section 302 Certification
32.1 Sarbanes Oxley Section 906 Certification
32.2 Sarbanes Oxley Section 906 Certification

(1)  Incorporated by reference to the exhibits to Shannon's registration
     statement in Form 10-SB(file number 000-30254)

(2)  Incorporated by reference to the exhibits to Shannon's quarterly report on
     Form 10qsb for the fiscal quarter ended March 31, 2005 filed on or about
     May 14, 2005.

(3)  Incorporated by reference to the exhibits to Shannon's annual report on
     Form 10ksb for the fiscal year ended June 30, 2002 filed on or about
     September 30, 2002

(4)  Incorporated by reference to the exhibits to Shannon's quarterly report on
     Form 10qsb for the fiscal quarter ended December 31, 2002 filed on or about
     February 14, 2003.

(5)  Incorporated by reference to the exhibits to Shannon's quarterly report on
     Form 10-QSB for the three month period ended September 30, 2003. (file
     number 000-30254).


                                       30
<PAGE>
(6)  Incorporated by reference to the exhibits to Shannon's amended quarterly
     report on Form 10-QSB for the three month period ended September 30, 2003
     filed on December 2, 2003. (file number 000-30254).

(7)  Incorporated by reference to the exhibits to Shannon's annual report on
     Form 10-KSB for the fiscal year ended June 30, 2004 filed on October 29,
     2004. (file number 000-30254)

(8)  Incorporated by reference to the exhibits to Shannon's current report on
     Form 8-K dated February 23, 2005. (file number 000-30254)


     (b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.


Item 14.  Principal Accountant Fees And Services

Miller & McCollom, Certified Public Accountants, are Shannon's independent
auditors to examine the financial statements of Shannon for the fiscal year
ending June 30, 2005. Miller & McCollom has performed the following services and
has been paid the following fees for these fiscal years.

Audit Fees
----------
Miller & McCollom was paid aggregate fees of $37,194 for the fiscal year ended
June 30, 2005 and $29,825 for the fiscal year ended June 30, 2004 for
professional services rendered for the audit of Shannon's annual financial
statements and for the reviews of the financial statements included in Company's
quarterly reports on Form 10QSB during these fiscal years.

Audit -Related Fees
-------------------
Miller & McCollom was not paid any additional fees for the fiscal year ended
June 30, 2005 and June 30, 2004 for assurance and related services reasonably
related to the performance of the audit or review of Shannon's financial
statements.

Tax Fees
--------
Miller & McCollom was paid no fees for the fiscal year ended June 30, 2005 and
no fees for the fiscal year ended June 30, 2004 for professional services
rendered for tax compliance, tax advice and tax planning.

Other Fees
----------
Miller & McCollom was paid no other fees for professional services during the
fiscal years ended June 30, 2005 and June 30, 2004.





                                       31
<PAGE>




                                   SIGNATURES

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

                      SHANNON INTERNATIONAL RESOURCES INC.
                                  (Registrant)


By  /s/ BLAIR COADY
    --------------------------
    Blair Coady, President, Chief Financial Officer
    October 20, 2005


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.


By  /s/ BLAIR COADY
    ---------------------
    BLAIR COADY, Director, October 20 2005


By  /s/ DENNIS BROVARONE
    --------------------------
    DENNIS BROVARONE, Director, October 20 2005







                                       32
<PAGE>