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<SEC-DOCUMENT>0000885462-06-000020.txt : 20060410
<SEC-HEADER>0000885462-06-000020.hdr.sgml : 20060410
<ACCEPTANCE-DATETIME>20060410110943
ACCESSION NUMBER:		0000885462-06-000020
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20051231
FILED AS OF DATE:		20060410
DATE AS OF CHANGE:		20060410

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DIVERSIFAX INC
		CENTRAL INDEX KEY:			0000885462
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MAILING, REPRODUCTION, COMMERCIAL ART & PHOTOGRAPHY [7330]
		IRS NUMBER:				133637458
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-20936
		FILM NUMBER:		06749931

	BUSINESS ADDRESS:	
		STREET 1:		4274 INDEPENDENCE CT
		CITY:			SARASOTA
		STATE:			FL
		ZIP:			34241-2109
		BUSINESS PHONE:		9413512720

	MAIL ADDRESS:	
		STREET 1:		4274 INDEPENDENCE CT
		CITY:			SARASOTA
		STATE:			FL
		ZIP:			34241-2109
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>dfax122005.txt
<DESCRIPTION>DFAX DEC 2005
<TEXT>



FILER:

     COMPANY DATA:
          COMPANY CONFORMED NAME:                   DIVERSIFAX INC
          CENTRAL INDEX KEY:                        0000885462
          STANDARD INDUSTRIAL CLASSIFICATION:       SERVICES-MAILING,
          REPRODUCTION,COMMERCIAL ART & PHOTOGRAPHY [7330]

          IRS NUMBER:                              133637458
          STATE OF INCORPORATION:                  DE
          FISCAL YEAR END:                         1130

FILING VALUES:
          FORM TYPE:                               10KSB
          SEC ACT:
          SEC FILE NUMBER:                         000-20936
          FILM NUMBER:                            98565165

BUSINESS ADDRESS:
          STREET 1:                               4274 INDEPENDENCE CT
          CITY:                                  SARASOTA
          STATE:                                 FL
          ZIP:                                   34234-2109
          BUSINESS PHONE:                        (941) 351-2720
          BUSINESS PHONE:                       (941) 351-2720

MAIL ADDRESS:
          STREET 1:                             4274 INDEPENDENCE CT
          CITY:                                SARASOTA
          STATE:                                 FL
          ZIP:                                 34234-2109

















<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549
                                   FORM 10-KSB

(Mark One)

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

                   For the fiscal year ended NOVEMBER 30, 2005

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

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

              For the transition period from _________ to _________


                        Commission File Number   0-20936

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

                                DIVERSIFAX, INC.
                    ----------------------------------------
                 (Name of Small Business Issuer in Its Charter)

                DELAWARE                        13-3637458
     ------------------------------------------------------------------------
     (State or Other Jurisdiction of     (I.R.S. Employer Identification No.)
     Incorporation or Organization)


     4274 INDEPENDENCE COURT, SARASOTA, FLORIDA                    34234-2109
     ---------------------------------------------------- ------------------
                     (Address of Principal Executive Offices)       (ZipCode)


                                 (941) 351-2720
                              --------------------
                 (Issuer's Telephone Number Including Area Code)

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

                                      None

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


                     COMMON STOCK, PAR VALUE $.001 PER SHARE
              ----------------------------------------------------
                                (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        NO  X
       -----        -----
<PAGE>

     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/

Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act).
YES       NO  X

     The issuer's revenues for its most recent fiscal year: $1,023,477

     The aggregate market value of the voting stock held by non-affiliates of
the Issuer as of March 29, 2006 was $48,460.

     There were 26,399,702_ shares outstanding of the issuer's common stock, par
value $.001 per share, as of March 29, 2006 and 326,498 shares held in treasury.

     Transitional Small Business Disclosure Format (check one):

          YES       NO  X
                  ----        ----

     Documents incorporated by reference:

          None

                                      INDEX


PART I
     Item 1. Description of Business
     Item 2. Description of Property
     Item 3. Legal Proceedings
     Item 4. Submission of Matters to a Vote of Security Holders

PART II
     Item 5. Market for Common Equity and Related Stockholder Matters
     Item 6. Management's Discussion and Analysis and Plan of Operation
     Item 7. Financial Statements
     Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
     Item 8A. Controls and Procedures
     Item 8B. Other Information

PART III
     Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
     Item 10. Executive Compensation
     Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
     Item 12. Certain Relationships and Related Transactions
     Item 13. Exhibits
     Item 14. Principal Accountant Fees and Services

SIGNATURES

EXHIBITS







<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

INTRODUCTION

     DiversiFax, Inc. has been engaged, since November 1993, in the business of
owning, leasing, and operating coin and debit card pay-per-copy photocopy
machines, fax machines, microfilm reader-printers and accessory equipment.

     Unfortunately due to the increased use of internet services, demand for the
services provided by the Company has declined sharply.

     The Company was incorporated under the laws of the State of Delaware on
February 28, 1989.  The Company's principal executive offices and operations
center are located at 4274 Independence Court, Sarasota, Florida 34234-2109,
telephone number (941) 351-2720.

     ACQUISITION AND MERGER OF IMSG SYSTEMS, INC. AND AFFILIATES.  Prior to
November 1, 1993, the Company was only engaged in the self-service public fax
machine business.  As of November 1, 1993, the Company became the sole parent of
IMSG Systems, Inc. ("IMSG") and its affiliated companies , National Copy Corp.
 "National"), Capital Copy Corp. ("Capital") and Advanced Business Systems, Inc.
 ("Advanced") (IMSG, National, Capital and Advanced
collectively "IMSG and Affiliates"), which have been operating their
self-service pay-per-copy photocopy and microfilm reader-printer business since
1969. Herein after, Diversifax, Inc. and its subsidiaries will be refered to as
" the Company".

     ACQUISITION OF MDM. On January 27, 1994, the Company through its
wholly-owned subsidiary, Coin Copy, Inc. acquired the contract revenues and
business of MDM Copying Services, and Coin-Op, Inc., which at the time had
expanded the Company's position in the New York Metropolitan area. This
subsidiary has been folded into the wholly-owned subsidiary JA-Hunt Services,
Inc.

     PENNSYLVANIA ACQUISITION. In June 1996, the Company, through its
wholly-owned subsidiary JA-Hunt Services, Inc., acquired the assets of a
Pennsylvania-based company engaged in the servicing of high end copier equipment
and the retail sale of copier supplies and office equipment. This was
subsequently disposed of on August 22, 2001.

     FLORIDA ACQUISITION. In February 1998, the Company, through its
wholly-owned subsidiary JA-Hunt Services, Inc., acquired the assets and assumed
the liabilities of a Florida-based company engaged in the retail sale and
servicing of copier supplies and equipment for cash or stock.

     CAPITAL COPY EQUIPMENT SALE.  In May 2005, the Company sold all fully
depreciated equipment of its wholly-owned subsidiary Capital Copy, to a former
employee in exchange for a note in the amount of $31,250.

OPERATIONS : COPIERS

     GENERAL.  Since November 1, 1993, the Company, through its wholly-owned
subsidiaries IMSG and Affiliates, has been engaged in the business of owning,
leasing, operating and servicing coin and debit card pay-per-copy photocopiers
and microfilm reader-printers (collectively the "Copiers"), card dispensers,
laser printers and accessory equipment.  IMSG and Affiliates have been in
business since 1969.  The Company operates its copiers in New York and Florida,
in various sites including libraries, courthouses, colleges and similar high
traffic outlets.  The Company has over 500 Copiers and accessories on site.
Generally, the Company is responsible for the collection of payments from each
site and, at most locations, site operators share in the revenues derived from
the copy sales at their site.  The Company has the ability to service and repair
its Copiers seven days a week.  Users can pay per copy by inserting coins in the
Copier or by using a debit access card, which the user may purchase at the site
location.

     PRODUCTS.  The Company's Copiers consist of a photocopier or microfilm
reader-printer with an adapter that allows the user to operate the Copier and
pay for the copy by inserting coins or a debit access card.  The users can
purchase debit access cards at the site location.  If coins are used, the Copier
will return change in excess of the price of the copies.  As copies are made
using the debit access card, the price of each copy is deducted from the
aggregate value of the debit access card.

     SUPPORT SERVICES.  The Company provides continuous preventative maintenance
to its Copiers and related  equipment based on manufacturer specifications.
Frequency of service varies depending upon usage of a given machine.  Copiers in
high volume locations may require servicing as frequently as once a day.  The
Company maintains service centers in Valley Stream (Long Island), New York, and
Sarasota, Florida.  The Company uses the service centers
to service regional accounts including repairing machines and storing supplies
and parts.  The Company may also service machines on site.

     SUPPLIES AND SUPPLIERS.  The Company currently purchases both new and used
copiers from a variety of sources, including acquiring Copiers from other
companies as it expands when it purchases assets from other companies.  Since
machines are available from a variety of sources, the loss of any one supplier
will not adversely impact the Company.

     The Company has primarily used Sharp photocopiers and Minolta microfilm
reader-printers.  The Company buys these machines and supplies from brokers,
dealers and the manufacturers.

     The Company has not experienced any difficulties in obtaining equipment or
parts and supplies and does not anticipate that there will be any problems
obtaining any equipment, parts or supplies in the future.

     EXPANSION STRATEGY.  Due to the declining demand for its products and
services, the Company presently intends to expand by diversifying selectively
into other areas. The Company may seek additional financing for such
acquisitions through equity and/or debt offerings, or through loans from Dr.
Horowitz, its Chief Executive Officer. There can be no assurance that the
Company will be able to obtain any such financing.  During the fiscal years
ended November 30, 2005 and November 30, 2004, Dr. Horowitz has made loans
 to the Company to finance acquisitions and for working capital and has
deferred certain salary payments.  At November 30, 2005 and 2004, the
Company owed Dr. Horowitz a balance of $2,825,981 and $2,778,563,
respectively, for loans, salary, and interest.  In addition, the Company
 may pay all or a portion of additional acquired businesses by means of
issuing Stock of the Company.

     SIGNIFICANT CUSTOMERS.  During the fiscal years ended November 30, 2005 and
2004, revenues derived from two of the Company's Copier customers, public
libraries located in New York city, amounted to approximately 43% of the
Company's revenues.

     PATENTS AND TECHNOLOGY.  The Company does not, in general, rely on patented
technology with respect to its Copier operations.  The Company purchases and
operates Copiers which may contain patented technology.  However, management
believes that the proprietary nature of this technology does not affect the
Company's operations.  Patented technology could affect the Company in the
future if the Company is unable to obtain Copiers using the most current
technology.

     COMPETITION.  The Company markets its coin-operated Copier services to
users at site locations who need to copy documents, books and other materials
located at the sites where the Company's Copiers have been placed.  Each of
these competitors competes directly with the Company in a different and limited
geographic region.  Continental Copy Products Limited, another company that
offers similar coin-operated services, principally conducts operations in
Connecticut and downstate New York (including New York City). Copico principally
conducts operations in Massachusetts, Connecticut, downstate New York and
southern Florida.  Competition between companies is generally based on price and
quality of service offered.

     SEASONALITY.  The Company's Copier activities are subject to seasonal
fluctuations.  Revenues from Copiers tend to be lower during the summer months
of June through September and in the last weeks of December and the first weeks
of January due to school and employee vacation patterns.  Although the Company
has experienced working capital deficits and cash flow tends to be tight in
these periods of low revenue, the Company has been able to maintain day to day
operations.  Seasonally slow periods are immediately preceded by periods of high
volume of use, which generate increased cash flows.  In addition, because the
Copier business is conducted primarily in cash, there is no lag time





 <PAGE>

between sales and collections.  Also, fluctuations are regular and predictable,
thereby allowing the Company to plan for such low revenue months.  If necessary,
Dr. Horowitz has advanced funds to the Company when needed so that it could meet
its day to day cash obligations, although there can be no assurance he will
continue to do so in the future. Cash flow has also been favorably affected in
that creditors have typically relaxed payment terms during these slow months,
although there can be no assurance they will continue to do so in the future.

EMPLOYEES

     At November 30, 2005, the Company had 7 full time employees, including one
executive officer, 5 service technicians and 2 clerical and administrative
employees, none of whom are subject to a collective bargaining agreement.

OPERATIONS:  Evolve One, Inc.
On  March  15, 2005, the Company entered into a Management Agreement with Evolve
One,  Inc. ("Evolve One").  Irwin Horowitz, principal shareholder, member of the
Board  of  Directors,  and  Chief  Executive  Officer  of the Company, is also a
principal  shareholder  and  Chief Executive Officer of Evolve One.  The Company
made its facilities at 39 Stringham Avenue, Valley Stream, New York available to
Evolve One; the services on a part-time basis of 7 persons presently employed by
the  Company  for  approximately  100  hours  per week; equipment, hardware, and
software  of  the  Company; and related utilities and overhead functions at that
facility.  The term of the agreement  was for six months and could be terminated
prior  to  the conclusion of its term on 10 days' prior written notice by either
party,  or  the  agreement  may  be  renewed  for  a  successive six-month term.

In  consideration  for  the  management  services  and  facilities  provided  by
DiversiFax  during  the  initial six-month term, Evolve One issued to DiversiFax
2,900,000  shares  of  its  common  stock.  In addition, in the event the market
price  of  the  common stock of Evolve One on the six-month anniversary date was
below  $0.15  per  share,  Evolve  One  agreed to issue to DiversiFax additional
shares of its common stock so that the common shares provided to DiversiFax plus
such  additional  shares of common stock would be equal in value to $435,000. In
addition,  DiversiFax  would  receive  10%  of  the  total  amount of the monies
received  as  a  result of their efforts with regard to auctions being completed
for accounts they have introduced to AuctionStore.com, Evolve One's wholly-owned
subsidiary.  Payment  of  the  percentage  fee would be made in cash or stock as
determined  by  DiversiFax  .

The  Company recorded $435,000 of stock as a long-term investment as payment for
services rendered in connection with the Evolve One contract.  The investment is
accounted  for under the equity method because the Company exercises significant
influence  over  Evolve  One's  operating and financial activities.  The Company
recognized  $435,000  of  service fee during 2005 based on the six-month term of
the  agreement.

On  June  20,  2005,  Diversifax  purchased  an aggregate of 100,000 units in an
Evolve  One offering  and received 6,000,000 shares of common stock and warrants
to  purchase  6,000,000  shares.

DiversiFax's business plan with Evolve One expected revenues to exceed $1
million within the year.  DiversiFax expected to employ 20 sales & support
personnel and provided 2 warehousing facilities, one of which was  in Valley
Stream, NY.  As the year progressed, Evolve One hired a sales manager, 4
salespeople, and several support staff.  DiversiFax incurred expenses to execute
the business plan, however, the original projections were never realized and
Evolve One operations ceased by November 2005.  As a result, management recorded
their proportionate share of losses and impairment on the Evolve One investment
in the amount of $430,000 in the income statement.

DiversiFax continued to pay for Evolve One expenses in an attempt to assist them
with remaining viable because DiversiFax has a substantial investment in Evolve
One.  Evolve One's management has decided to sell the corporate shell, reimburse
DiversiFax for expenses incurred subsequent to ceasing Evolve One operations,
and pay DiversiFax cash for the remaining investment balance in Evolve One at
November 30, 2005 of $105,000.  DiversiFax will retain previously issued options
in connection with the Evolve One agreement.  Although the sale agreement with
Evolve One is near to closing, no assurance can be given that the transaction
will be completed.


ITEM 2.  DESCRIPTION OF PROPERTY

     The executive offices of the Company are currently maintained at 4274
Independence Court, Sarasota, Florida  34234-2109.  Rental on these offices  is
currently $350 per month.

     The Company also maintains  a service center in Valley Stream, New York.
All space currently utilized by the Company is dedicated to administrative,
marketing, data processing, equipment assembly storage, service, maintenance and
clerical functions.  The Company believes that its facilities are adequate for
its present operations.  Additionally, the Company believes its facilities are
adequately covered by insurance.

     Machines are on site locations in New York.


ITEM 3.  LEGAL PROCEEDINGS

     The Company is not a party to any material legal proceedings, except as
follows:

     (1)     Jacksonville Public Library re breach of contract

     (2)     Ikon Business Solutions re commission

     The above legal proceedings are pending in the courts in Jacksonville, FL.
The proceedings began in 2001 and the principal parties are Capital Copy Inc.,
the City of Jacksonville, and Ikon Office Solutions.  The disputes concern
commissions payable from the city for copy services and contracts and the
Company has filed a proposal for settlement amounting to $100,000.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No Annual Meeting of Stockholders was held during the preceding year.
















 <PAGE>


                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED  STOCKHOLDER MATTERS

     The Common Stock was traded on the over-the-counter market with quotations
reported on the National Association of Securities Dealers Automatic Quotation
System (NASDAQ), Small Cap Market, under the symbol "DFAX,"  until delisted on
10/30/1998.  Subsequently, all trading has been done on the Pink Sheets. For the
years ended November 30, 2005 and 2004, there were no market values for the
stock per "finance.yahoo.com."

     As of November 30, 2005, there were approximately 236 holders of record of
the Common Stock, including record holders which may hold such stock for
beneficial owners and which have not been polled to determine the extent of
beneficial ownership.

     The Company has never paid cash dividends on its Common Stock. Holders of
Common Stock are entitled to receive such dividends as may be declared and paid
from time to time by the Board of Directors out of funds legally available
therefor. The Company intends to retain any earnings for the operation and
expansion of its business and does not anticipate paying cash dividends in the
foreseeable future. Any future determination as to the payment of cash dividends
will depend upon future earnings, results of operations, capital requirements,
the Company's financial condition and such other factors as the Board of
Directors may consider.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OFOPERATIONS

THE FISCAL YEAR ENDED NOVEMBER 30, 2005 COMPARED TO THE FISCAL YEAR ENDED
NOVEMBER 30, 2004

     In the ordinary course of business, operating losses have been incurred
resulting in an accumulated deficit of approximately $14,000,000 at November 30,
2005 and negative working capital in the amount of $2,890,630 as of  November
30, 2005.  Currently, the Company's Chief Executive Officer funds any operating
deficits and management believes that actions presently being taken to
restructure operations provide the opportunity for the Company to continue as a
going concern; however, no assurance can be given.  These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

     Coin and Leasing Revenue decreased $149,229 or 20% for the fiscal year
ended November 30, 2005 compared to fiscal 2004.  This decrease represents the
continuing decline in demand for the Company's products.  The majority of the
Company's customers are maintained pursuant to contractual agreements, generally
ranging from three to five years.  Over the past few years, the Company's
business has become increasingly more competitive.  Accordingly, when contracts
come up for renewal, the Company may be out bid by its competitors.  Secondly,
the Company has continued a critical review of its customer base, and has
determined not to renew customer contracts where the costs of maintaining such
customers exceeded the benefits.  This often occurs when the required commission
structure is excessive or the customer's demands for equipment are not
reasonable.  Service income increased $420,743 primarily due to the recognition
of $435,000 of income in connection with the receipt of stock for services for
Evolve One Ebay activities.  This increase was offset by a decrease in service
income not related to the management agreement with Evolve One.

     Cost of sales as a percentage of Coin revenue represented 56% of sales for
the fiscal year 2005 compared to 50% of sales for the fiscal year 2004.  This
increase is due to a change in the mix of machines used and the costs of
collections.

     Other income decreased approximately $272,000 due to recording the
Company's proportionate share of Evolve One losses combined with an impairment
loss in the amount of $430,000 relating to the Evolve One investment.  The
Company was issued $435,000 of stock for services and purchased additional stock
for $100,000.  The remaining investment balance at November 30, 2005 is
$105,000.  The decrease in other income was offset by recognition of deferred
income of $225,000 relating to the Brooklyn Public Library lease termination.

     Selling, general and administrative expenses increased to $511,139, or 50%
of total sales and 87% of coin revenue, for the year ended November 30, 2005
from $421,567, or 56% of total sales and 57% of coin revenue, for the year ended
November 30, 2004.  This increase as a percentage of coin revenue is primarily
due to the provision of services, facilities, and personnel utilized under the
Evolve One management agreement.

     The above factors resulted in a net loss of $33,400 for the year ended
November 30, 2005 compared to $18,035 for the year ended November 30, 2004.

     The Company's Copier activities are subject to seasonal fluctuations.
Revenues from Copiers tend to be lower during the summer months of June through
September and in the last weeks of December and the first weeks of January due
to school and employee vacation patterns.

CRITICAL ACCOUNTING POLICIES

     The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

  The long term investment in Evolve One is accounted for using the equity
method.  Evolve One has experienced substantial operating losses during the past
year. Accordingly, at November 30,2005 the company's investment has been written
down to its estimated realizable value. Management's estimate is based on a
non-binding offer to purchase Diversifax's shares of Evolve One, Inc. The
combined amount of the write-down and the company's share of losses in Evolve
One, Inc. of $430,000 has been charged to operations in 2005. If the offer does
not materialize, management will re-evaluate the estimated realizable value.

  Equipment and vehicles are recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the respective
assets, ranging generally from five to ten years. For income tax purposes, the
Company uses accelerated methods for all assets. Maintenance and repairs are
charged to operations when incurred. Betterments and renewals are capitalized.
When equipment and vehicles are sold or otherwise disposed of, the asset account
and related accumulated depreciation account are relieved, and any gain or loss
is included in operations.

     Revenue from the Company's self-service coin and card reader operated
photocopy machines is principally recognized at the time payment is received.
Revenue from the Company's scanner units is recognized when the product is
shipped.

     Deferred revenue is recorded for amounts received but not earned as of the
balance sheet dates. As of November 30, 2005, all income from these transactions
has been recognized as earned.

  The Company estimates the amount of cash in copy and change machines at the
end of each year. This estimate is determined based on the actual cash collected
for the first collection period subsequent to year end multiplied by the
pro-rata number of days of collection during the period. Management estimates
that there was approximately $14,000 in cash in copy and change machines as of
November 30, 2005.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In November 2004, the Financial Accounting Standards Board issued statement
of Financial Accounting Standard No. 151, "Inventory Costs". The new Statement
amends Accounting Research Bulletin No. 43, Chapter 4, "Inventory Pricing," to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material. This Statement requires that those items be
recognized as current-period charges and requires that allocation of fixed
production overheads to the cost of conversion be based on the normal capacity
of the production facilities. This statement is effective for fiscal years
beginning after June 15, 2005.  The Company does not expect adoption of this
statement to have a material impact on our financial condition or results of
operations.

     In December 2004, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.
This Statement replaces FASB Statement No. 123 and supersedes APB Opinion No.
25. Statement No. 123(R) will require the fair value of all stock option awards
issued to employees to be recorded as an expense over the related vesting
period. The Statement also requires the recognition of compensation expense for
the fair value of any unvested stock option awards outstanding at the date of
adoption.  The Company is evaluating these new rules, but expect no material
impact upon adoption relating to outstanding options since a majority of the
awards under the existing incentive stock option plan will be fully vested prior
to the effective date of the revised rules.

     In May 2005, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard 154, "Accounting Changes and Error Corrections."
The Statement applies to all voluntary changes in accounting principle and to
changes required by an accounting pronouncement that do not include explicit
transition provisions.  SFAS No. 154 requires that changes in accounting
principle be retroactively applied, instead of including the cumulative effect
in the income statement.  The correction of an error will continue to require
financial statement restatement.  A change in accounting estimate will continue
to be accounted for in the period of change and in subsequent periods, if
necessary.  SFAS No. 154 is effective for fiscal years beginning after December
31, 2005.  We do not expect the adoption of this Statement to have a material
impact on our financial condition or results of operations.



LIQUIDITY AND CAPITAL RESOURCES

     At November 30, 2005, the Company had cash of $15,741 as compared to
$287,474 at November 30, 2004.

     The Company's primary need for funds is to finance working capital, capital
expenditures and the further development and the acquisition of new businesses
and the further growth of acquisitions to broaden and diversify its revenue
source making it less seasonal.

     Net cash used by operating activities of approximately $104,000 during the
fiscal year ended November 30, 2005 resulted from the net loss of $33,400 offset
by non-cash items including a gain of approximately $32,000 on disposal of
equipment,  depreciation of $9,191, loss on Evolve One investment of $430,000,
loss on note receivable of approximately $40,000, and recognition of  deferred
revenue of $225,000, as well as recognition of income of $435,000 related to the
Evolve One management contract .  In addition, net cash used by operating
activities included an increase in accounts payable and  accrued expenses, and
an increase in other receivables and prepaid expenses.

     Net cash used by investing activities amounted to approximately $69,000
during the fiscal year ended November 30, 2005 and resulted primarily from the
purchase of $100,000 of Evolve One stock offset by collection of approximately
$31,000 of a note receivable.

     Net cash used in financing activities amounted to approximately $99,000
during the fiscal year ended November 30, 2005. At November 30, 2005, the amount
of the loan payable by the Company to Dr. Irwin Horowitz was $1,774,838.

     The above resulted in a net decrease in cash of $271,733 for the year ended
November 30, 2005.

     Management continues to believe the expected cash flow from operations, and
the willingness and ability of the Company's Chief Executive officer to fund any
operating deficit will allow the Company to continue operations over the next 12
months.  However, no assurance can be given that these factors will materialize.


ITEM 7.  FINANCIAL STATEMENTS

     The response to this Item is submitted as a separate section to this report
on pages F-1 through F-24.


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

     None

ITEM 8a.  CONTROLS AND PROCEDURES

(a)     Under the supervision and with the participation of our Management,
including our principal executive officer, we conducted an evaluation of the
effectiveness of the design and operations of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the
period covered by this report.  Based on this evaluation, our Principal
Executive Officer  concluded that our disclosure controls and procedures were
not effective  so as to timely identify, correct and disclose  information
required to be included in our Securities and Exchange Commission ("SEC")
reports due to the Company's limited internal resources and lack of ability to
have multiple levels of transaction review. Through the use of an external
consultant and the audit process, management believes that the financial
statements and other information presented herewith are materially correct.















                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS:  COMPLIANCE WITH
SECTION 16(A) OF TAX EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

     The current directors and executive officers of the Company are as follows:


NAME                      AGE      POSITION

Dr. Irwin A. Horowitz     69     Chairman of the Board,
                                 Chief Executive Officer
                                 and President

     Irwin A. Horowitz has been the Chairman of the Board, Chief Executive
Officer and President of the Company since November 1, 1993.  From July through
October 1993, he served as Chief Operating Officer of the Company.  For more
than the past five years, Dr. Horowitz has been Chairman of the Board and
President of IMSG and  Affiliates, which were acquired by the Company effective
November 1, 1993.


Lonnie L. Sciambi         61     Director

     Lonnie L Sciambi has been a director since 1999. Mr. Sciambi is also
managing Director and CEO of Hamilton Capital Group, an investment banking firm.
He was previously Managing Director of LBC Capital Resources, Inc, an investment
banking firm, and prior to that, President and CEO of Ion Networks, Inc, a
telecommunications network management company. Mr. Sciambi, who began his career
with IBM, followed by 25 years as an entrepreneur, holds a bachelor of science
degree in electrical engineering from Drexel University.

     No family relationship exists between any director or executive officer and
any other director or executive officer.


AUDIT COMMITTEE

We do not have an Audit Committee, because we have only one director.  Our Board
of Directors has determined that we do not have an "audit committee financial
expert", and we do not have sufficient resources to engage such a person to be a
member of our Board of Directors.


COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

     The Company's officers, directors and beneficial owners of more than 10% of
any class of its equity securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 ("Reporting Persons") are required under that
Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission.  Copies
of those reports must also be furnished to the Company.  Based solely on a
review of the copies of reports furnished to the Company pursuant to that Act,
the Company believes that during fiscal year ended November 30, 2005 all filing
requirements applicable to Reporting Persons were complied with, and no Form 5
is required.








<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth information with respect to the compensation
of each of the named executive officers for services provided in all capacities
to the Company and its subsidiaries in the fiscal years ended November 30, 2005,
2004, and 2003.  No other executive officer or former executive officer received
more than $100,000 in compensation in the fiscal years reported below.  For the
purposes of this table, warrants are deemed to be equivalent of stock Options.

<TABLE>
<CAPTION>



                                     ANNUAL COMPENSATION                                 LONG TERM COMPENSATION

NAME AND PRINCIPAL                                                                            SECURITIES UNDERLYING
POSITION                             YEAR        SALARY ($)       BONUS($)       OTHER ($)        OPTIONS
- --------------------------------    --------        ----------------       --------------       -----------------
<S>

Dr. Irwin A. Horowitz                2005        $125,000 (1)                      0                    15,613,097
Chairman of the Board,
Chief Executive Officer,
and President
                                    2004          $125,000 (1)                      0                    5,613,097

                                    2003          $125,000 (1)                      0                    5,613,097



(1)     Salary for all years after 1997 has been accrued and remains unpaid.


EMPLOYMENT AGREEMENT

     During fiscal 2004, Dr. Horowitz divided his business time primarily
between New York (the location of the Company's service center and warehouse)
and Florida (where the Company also has significant business).  On October 29,
1996, the Company entered into a renewable one year Employment Agreement with
Dr. Horowitz, pursuant to which the Company agreed to pay Dr. Horowitz a salary
of $125,000, together with an annual incentive bonus equal to a percentage of
the Company's pre-tax profits.  Such incentive bonus ranges from 6% to 18% of
the Company's pre-tax profits, based on the level of such pre-tax profits.


COMPENSATION OF DIRECTORS

     The directors of the Company are not currently compensated, nor were they
during the last fiscal year.


INDEMNIFICATION OF DIRECTORS

     The Company's Certificate of Incorporation eliminates the liability of a
director of the Company for monetary damages for breach of duty as a director,
subject to certain exceptions.  In addition, the Certificate of Incorporation
provides for the Company to indemnify, under certain conditions, directors,
officers, employees and agents of the Company against all expenses, liabilities
and losses reasonably incurred by such persons in connection therewith.  The
foregoing provisions may reduce the likelihood of derivative litigation against
directors and may discourage or deter stockholders or  management from suing
directors for breaches of their duty of care, even though such an action, if
successful, might otherwise benefit the Company and its stockholders.



<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

     The following table sets forth, based upon information obtained from the
persons named below, certain information regarding beneficial ownership of the
Common Stock as of November 30, 2005 as adjusted to reflect the sale of all of
the Common Stock offered hereby by (i) each stockholder known by the Company to
be the beneficial owner of 5% or more of the outstanding shares of Common Stock,
(ii) each director of the Company, (iii) each person named in the Summary
Compensation Table above and (iv) all of the Company's current officers and
directors as a group.

BENEFICIAL OWNERSHIP OF COMMON STOCK


NAME AND ADDRESS OF                  NUMBER OF SHARES     PERCENTAGE OF CLASS
BENEFICIAL HOLDER                    BENEFICIALLY OWNED(1)

Dr. Irwin A. Horowitz                16,320,000                61.3
555 Fifth Ave NE, #1121
St Petersburg, FL 33701


Cede & Co                           8,368,497                  31.4
P O Box 20
Bowling Green Station
New York NY 10004



(1)  Unless otherwise indicated below, all shares are owned beneficially and of
     record.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     From time to time, Dr. Irwin A. Horowitz, the Chairman of the Board, Chief
Executive Officer, and President of the Company, loans the Company funds to
cover its working capital needs and to finance acquisitions.

     The loans payable, officer/stockholder amounts to $1,774,838  at November
30, 2005.   Included in this amounts is a $500,000 note that bears interest at
eight percent per year beginning in September 1998 and a non-interest bearing
note in the amount of $668,000, along with various loans and accruals.  Each
year, the Company reclassifies the accumulated prior year balance of accrued
interest from accrued expenses to loans payable, officer/stockholder.  As of
November 30, 2005, accrued interest of $250,000  is included in loans payable,
officer/stockholder.

On  March  15, 2005, the Company entered into a Management Agreement with Evolve
One,  Inc. ("Evolve One").  Irwin Horowitz, principal shareholder, member of the
Board  of  Directors,  and  Chief  Executive  Officer  of the Company, is also a
principal  shareholder  and  Chief Executive Officer of Evolve One.  The Company
made its facilities at 39 Stringham Avenue, Valley Stream, New York available to
Evolve One; the services on a part-time basis of 7 persons presently employed by
the  Company  for  approximately  100  hours  per week; equipment, hardware, and
software  of  the  Company; and related utilities and overhead functions at that
facility.  The  term of the agreement was for six months and could be terminated
prior  to  the conclusion of its term on 10 days' prior written notice by either
party,  or  the  agreement  may  be  renewed  for  a  successive six-month term.

In  consideration  for  the  management  services  and  facilities  provided  by
DiversiFax  during  the  initial six-month term, Evolve One issued to DiversiFax
2,900,000  shares  of  its  common  stock.  In addition, in the event the market
price  of  the  common stock of Evolve One on the six-month anniversary date was
below  $0.15  per  share,  Evolve  One  agreed to issue to DiversiFax additional
shares of its common stock so that the common shares provided to DiversiFax plus
such  additional  shares of common stock would be equal in value to $435,000. In
addition,  DiversiFax  would  receive  10%  of  the  total  amount of the monies
received  as  a  result of their efforts with regard to auctions being completed
for accounts they have introduced to AuctionStore.com, Evolve One's wholly-owned
subsidiary.  Payment  of  the  percentage  fee would be made in cash or stock as
determined  by  DiversiFax  .

The  Company recorded $435,000 of stock as a long-term investment as payment for
services rendered in connection with the Evolve One contract.  The investment is
accounted  for under the equity method because the Company exercises significant
influence  over  Evolve  One's operating and financial activities.   The Company
recognized  $435,000  of  service  fee income during 2005 based on the six-month
term  of  the  agreement.

On  June  20,  2005,  Diversifax  purchased  an aggregate of 100,000 units in an
Evolve  One  offering and received 6,000,000 shares of common stock and warrants
to  purchase  6,000,000  shares.

DiversiFax's business plan with Evolve One expected revenues to exceed $1
million within the year.  DiversiFax expected to employ 20 sales & support
personnel and provided 2 warehousing facilities, one of which was  in Valley
Stream, NY.  As the year progressed, Evolve One hired a sales manager, 4
salespeople, and several support staff.  DiversiFax incurred expenses to execute
the business plan, however, the original projections were never realized and
Evolve One operations ceased by November 2005.  As a result, management recorded
their proportionate share of losses and impairment on the Evolve One investment
in the amount of $430,000 in the income statement.

DiversiFax continued to pay for Evolve One expenses in an attempt to assist them
with remaining viable because DiversiFax has a substantial investment in Evolve
One.  Evolve One's management has decided to sell the corporate shell, reimburse
DiversiFax for expenses incurred subsequent to ceasing Evolve One operations,
and pay DiversiFax cash for the remaining investment balance in Evolve One at
November 30, 2005 of $105,000.  DiversiFax will retain previously issued options
in connection with the Evolve One agreement.  Although the sale agreement with
Evolve One is near to closing, no assurance can be given that the transaction
will be completed.



ITEM 13.  EXHIBITS, LIST AND REPORT ON FORM 8-K

     (a)  Exhibits.  The Exhibits are filed as part of, or incorporated by
reference into this report.

31 - 32     Certifications




ITEM  14.     PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

Audit  Fees
- -----------

During  2005,  we  were  billed  by  our  accountants, Pender Newkirk & Company,
approximately  $42,000  for the audit and review fees associated with our 10-KSB
and  10-QSB  filings.  During  2004,  Pender  Newkirk  & Company billed $22,000.

Tax  Fees
- ---------

During  2005,  our tax work was performed by a local accountant at nominal cost.

All  Other  Fees
- ----------------

During  2005,  no  other  fees  were billed by our accountants, Pender Newkirk &
Company.

Board  of  Directors  Pre-Approval  Process,  Policies  and  Procedures
- -----------------------------------------------------------------------

Our  principal auditors have performed their audit procedures in accordance with
pre-approved policies and procedures established by our Board of Directors.  Our
principal  auditors have informed our Board of Directors of the scope and nature
of each service provided.  With respect to the provisions of services other than
audit,  review,  or  attest  services,  our  principal  accountants brought such
services  to  the  attention  of our Board of Directors prior to commencing such
services.

<PAGE>


                                   SIGNATURES


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


                                                           DIVERSIFAX, INC.


                                                         /s/ Irwin A. Horowitz
                                                ------------------------------
Date:            April 10, 2006                       Dr. Irwin A. Horowitz
                                                 Chairman of the Board, Chief
                                                 Executive Officer and President
                                                 (principal executive officer)



     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.

Signature                                        Title                    Date

/s/ Irwin A. Horowitz                           Director         April 10,2006
Irwin A. Horowitz


/s/ Lonnie L. Sciambi                          Director          April 10,2006
Lonnie L. Sciambi



<PAGE>






                        CONSOLIDATED FINANCIAL STATEMENTS

                        DIVERSIFAX, INC. AND SUBSIDIARIES

                     Years Ended November 30, 2005 and 2004
                          Independent Auditors' Report



<PAGE>




                        DiversiFax, Inc. and Subsidiaries

                        Consolidated Financial Statements

                     Years Ended November 30, 2005 and 2004









                                    CONTENTS


Report  of  Independent  Registered  Public  Accounting  Firm  on
     Consolidated  Financial  Statements                                   1

Consolidated  Financial  Statements:

     Consolidated  Balance  Sheet                                          2
     Consolidated  Statements  of  Operations                              3
     Consolidated  Statements  of  Changes  in  Stockholders'  Deficit     4
     Consolidated  Statements  of  Cash  Flows                             5
     Notes  to  Consolidated  Financial  Statements                     6-15

<PAGE>






             Report of Independent Registered Public Accounting Firm



Board  of  Directors
DiversiFax,  Inc.  &  Subsidiaries
Sarasota,  Florida


We  have  audited  the  accompanying  balance  sheet  of  DiversiFax,  Inc.  and
Subsidiaries  as  of November 30, 2005 and the related statements of operations,
changes  in  stockholders'  deficit,  and  cash  flows  for  the  years  ended
November  30,  2005 and 2004.  These financial statements are the responsibility
of  the  management  of  DiversiFax,  Inc.  Our  responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audits to obtain reasonable assurance about whether the
financial  statements  are  free  of  material misstatement.  The Company is not
required  to  have,  nor  were  we  engaged to perform, an audit of its internal
control  over financial reporting.  Our audit included consideration of internal
control  over financial reporting as a basis for designing audit procedures that
are  appropriate  in the circumstances, but not for the purpose of expressing an
opinion  on  the  effectiveness of the Company's internal control over financial
reporting.  Accordingly,  we  expressed no such opinion.  An audit also includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements,  assessing  the  accounting  principles  used  and
significant  estimates  made  by  management  as  well as evaluating the overall
financial  statement  presentation.  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  financial  position  of  DiversiFax,  Inc.  and
Subsidiaries  as  of November 30, 2005 and the results of its operations and its
cash  flows  for  the  years ended November 30, 2005 and 2004 in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue as a going concern.  As discussed in Note 2, the Company
has  accumulated  a  significant  deficit  over  the  years  in  the  amount  of
approximately  $14.0 million.  The Company has negative working capital and owes
a  significant  amount  to  an  officer  and  shareholder.  These factors, among
others,  raise  substantial  doubt  about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in  Note  2.  The financial statements do not include any adjustments that might
result  from  the  outcome  of  this  uncertainty.




Pender  Newkirk  &  Company  LLP
Certified  Public  Accountants
Tampa,  Florida
February  6,  2006

<PAGE>
                        DiversiFax, Inc. and Subsidiaries

                           Consolidated Balance Sheet
                     For  the  year  ended November 30, 2005
<CAPTION>


<S>                                                          <C>

ASSETS
Current assets:
    Cash and cash equivalents                                $     15,741
     Other Receivables, related party                              20,540
    Prepaid expenses and other current assets                       3,248
  Note receivable, current                                          9,275
                                                             -------------

Total current assets                                               48,804

Equipment and vehicles, net  of accumulated depreciation           22,679

Note receivable                                                    18,025
Investment, Evolve One Inc.                                       105,000
                                                             -------------
                                                                  123,025
Total assets
                                                             $    194,508
                                                             =============


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Current maturities of long-term debt and notes payable     $     10,565
  Accounts payable                                                 26,334
  Accrued expenses and other current liabilities                   76,553
  Accrued payroll, stockholder                                  1,051,144
  Loan payable, officer/stockholder                             1,774,838
                                                             -------------

Total current liabilities                                       2,939,434

Long-term liabilities:
  Long-term debt and notes payable, less current maturities        13,764

Stockholders' deficit:
  Common stock; $.001 par value; 70,000,000 shares
    authorized; 26,726,200 shares issued; 26,399,702
    shares outstanding                                             26,726
  Additional paid-in capital                                   11,641,395
  Accumulated deficit                                         (14,158,463)
                                                             -------------
                                                               (2,490,342)
  Less treasury stock, 326,498 shares, at cost                   (268,348)
                                                             -------------
Total stockholders' deficit                                    (2,758,690)

                                                             $    194,508
                                                             =============
</TABLE>




The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.     2
<PAGE>
                        DiversiFax, Inc. and Subsidiaries

                      Consolidated Statements of Operations
           For the years ended November 30, 2005 and November 30,2004
<TABLE>
<CAPTION>




                                                                       Year Ended November 30,
                                                                 2005                       2004
                                                            --------------------------------------
<S>                                                            <C>                           <C>
Sales
 Coin and leasing revenue                                      587,305                     736,535
 Service fees                                                  436,171                      15,428
                                                            --------------------------------------
                                                             1,023,476                     751,963
                                                            --------------------------------------


Operating expenses:
  Cost of sales                                                 333,301                   367,764
  Depreciation expense                                            9,191                    12,194
  Selling, general and administrative                           511,139                   421,567
                                                            --------------------------------------
                                                                851,631                   801,525
                                                            --------------------------------------

Net operating income  (loss)                                    171,845                   (49,562)
                                                            -------------------------- -----------

Other income (expenses):
  Other income                                                  259,776                    98,287
    Impairment & share of unconsolidated
        losses on investment in Evolve One                     (430,000)
  Interest income                                                 6,984                    11,466
  Interest expense                                              (42,005)                  (42,156)
                                                            --------------------------------------
                                                               (205,245)                   67,597
                                                            --------------------------------------

Net (loss) income before income taxes                           (33,400)                   18,035
Income tax provision                                                   0                       0
                                                            --------------------------------------

Net (loss) income                                            $  (33,400)              $    18,035
                                                            ======================================


Weighted average common shares outstanding - basic            26,642,867               26,299,702
                                                            --------------------------------------

(Loss) earnings per share of common stock - basic      $            0.00              $      0.00
                                                            ======================================

Weighted average common shares outstanding - diluted          40,954,872               32,334,297
                                                            ======================================

Earnings (loss) per share of common stock - diluted    $            0.00              $      0.00
                                                            ======================================
</TABLE>


The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.
<PAGE>
                        DiversiFax, Inc. and Subsidiaries

           Consolidated Statements of Changes in Stockholders' Deficit

                     Years Ended November 30, 2005 and 2004


<TABLE>
<CAPTION>


<S>                               <C>           <C>         <C>            <C>            <C>          <C>         <C>


                                                        Additional                                  Treasury    Total
                                                                                                     Stock    Stockholders'
                                  Common Stock            Paid-In      Accumulated                   at Cost    Deficit
- -                                ---------------
                                  Shares  Amount          Capital        Deficit        Total
                          -------------------------------------------------------------------------------------------------

Balance, 11/30/03          26,626,200   $  26,626   $ 11,641,395   $(14,143,098)  $   (2,475,077)  $(268,348)  $(2,743,425)

Net income for year                                                       18,035           18,035                   18,035
                       ----------------------------------------------------------------------------------------------------
Balance, 11/30/04          26,626,200      26,626     11,641,395    (14,125,063)      (2,457,042)   (268,348)   (2,725,390)
Exercise of common stock options
                              100,000         100                                            100

Net loss for year                                                        (33,400)        (33,400)                  (33,400)
                     ------------------------------------------------------------------------------------------------------
Balance, 11/30/05          26,726,200   $  26,726   $ 11,641,395   $(14,158,463)  $   (2,490,342)  $(268,348)  $(2,728,690)
                     ======================================================================================================
</TABLE>

























The  accompanying  notes  are  an  integral  part  of  the financial statements.
<PAGE>
                        DiversiFax, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows
           For the years ended November 30, 2005 and November 30, 2004

<TABLE>
<CAPTION>

                                                                                   Year Ended November 30,
                                                                                -------------------------
                                                                                     2005             2004
                                                                                 -------------------------
<S>                                                                                   <C>              <C>
OPERATING ACTIVITIES
  Net (loss) income                                                              $  (33,400)    $  18,035
                                                                                --------------------------
  Adjustments to reconcile net (loss)  income to net cash (used)
    provided by operating activities:
      (Gain) loss on sale and disposal of vehicles                                   (31,850)      8,050
      Depreciation and amortization                                                    9,191      12,194
              Write off of note receivable                                            39,160
              Impairment loss on investment in Evolve One, Inc                       430,000
              Investment in Evolve One received for services                        (435,000)
      Amortization of deferred revenue                                               (225,000)    (75,000)
      Increase in:
                    Other receivables, related party                                 (20,540)
                    Prepaid expenses and other current assets                         (2,748)        6,576
        Accounts payable                                                                3,000      (4,547)
        Accrued expenses                                                               30,688      21,039
        Accrued payroll, related party                                                132,319     132,318
                                                                                --------------------------
  Total adjustments                                                                   (70,780)    100,630
                                                                                --------------------------
  Net cash (used) provided by operating activities                                   (104,180)    118,665
                                                                                --------------------------

INVESTING ACTIVITIES
  Capital expenditures                                                                            (36,317)
  Proceeds from sale of vehicles                                                                    3,150
  Collections on note receivable                                                       31,106       5,091
     Investment, Evolve One, Inc                                                    ( 100,000)
                                                                                ---------------- ---------
  Net cash used by investing activities                                              ( 68,894)    (28,076)
                                                                                --------------------------

FINANCING ACTIVITIES
  Net repayments under loan payable to officer/stockholder                            (88,725)   (286,262)
  Principal borrowings on long-term debt                                                           30,780
  Repayments on long-term debt                                                        (10,034)     (8,773)
     Exercise of common stock options                                                     100
                                                                                --------------------------
  Net cash used by financing activities                                               (98,659)   (264,255)
                                                                                --------------------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                 (271,733)   (173,666)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                        287,474     461,140
                                                                                --------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                     $         15,741   $ 287,474
                                                                                ==========================



SUPPLEMENTAL  DISCLOSURE  OF  CASH  FLOW  INFORMATION:
     Cash  paid  for  interest                                                        $2,005    $    3,512
                                                                                ==========================
</TABLE>



The  Company  sold  all fully depreciated equipment of a subsidiary to a related
party  in  exchange  for  a  note  in  the  amount  of  $31,850  in  May  2005.

The  company  received  $435,000 in stock in May 2005 and recognized $435,000 in
revenue  during 2005 related to a six month management service agreement with an
affiliated  company,  Evolve  One,  Inc.


The  accompanying  notes  are  an  integral  part  of  the financial statements.

                        DiversiFax, Inc. and Subsidiaries

                        Consolidated Financial Statements

                     Years Ended November 30, 2005 and 2004



1.     BACKGROUND INFORMATION

Effective  November  1,  1993,  DiversiFax, Inc. acquired all of the outstanding
common  stock  of  IMSG  Systems,  Inc.  ("IMSG")  and its affiliated companies,
National  Copy  Corp.  ("National"), Capital Copy Corp. ("Capital") and Advanced
Business  Systems,  Inc.  ("Advanced")  (IMSG,  National,  Capital  and Advanced
collectively  "IMSG  and  Affiliates")  in  exchange for the issuance of 662,000
shares  of  Series A, convertible preferred stock.  Hereinafter, Diversifax Inc.
and  its subsidiaries will be referred to as "the Company".  The preferred stock
was  automatically  converted  into  an  aggregate of 6,620,200 shares of common
stock  of  the  Company  in  November,  1995.

IMSG  and  Affiliates  owns,  supplies  and maintains self-service coin and card
reader  operated  photocopy  machines  in  colleges,  universities,  libraries,
courthouses,  government  agencies,  pharmacies  and other retail establishments
located  in  Florida  and  New  York.

The  Company  is primarily responsible for the collection of the payments.  Most
locations  share  in  the  revenue  from  the  photocopy  machines.


2.     GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going
concern  basis, which contemplates the realization of assets and liabilities. In
the  ordinary  course of business, operating losses have been incurred resulting
in  an accumulated deficit of $14,158,463 at November 30, 2005.  The Company has
negative  working  capital in the amount of approximately $2,890,000 at November
30,  2005,  including  owing  approximately  $2,800,000  to  its chief executive
officer.  These  conditions  raise substantial doubt about the Company's ability
to  continue  as  a going concern.  The consolidated financial statements of the
Company  do  not  include  any  adjustments  relating  to the recoverability and
classification  of  recorded  asset amounts or the amounts and classification of
liabilities  that might be necessary should the Company be unable to continue as
a  going  concern.  Currently,  the  Company's Chief Executive Officer funds any
operating deficits and management believes that actions presently being taken to
restructure  operations provide the opportunity for the Company to continue as a
going  concern;  however,  no  assurance  can  be  given.



3.     SIGNIFICANT ACCOUNTING POLICIES

The  significant  accounting  policies  followed  are:

     The preparation of consolidated financial statements in conformity with
     accounting principles generally accepted in the United States of America
     requires management to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the consolidated financial statements
     and the reported amounts of revenues and expenses during the reporting
     period. Actual results could differ from those estimates.

     The consolidated financial statements include the accounts of the Company
     and its wholly-owned subsidiaries. All significant intercompany accounts
     and transactions have been eliminated.

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

     The majority of cash is maintained with a major financial institution in
     the United States. Deposits with this bank may exceed the amount of
     insurance provided on such deposits. Generally, these deposits may be
     redeemed upon demand and, therefore, bear minimal risk.

     The Company has an investment of approximately 18% in an affiliated
     corporation where the President and CEO of Diversifax is also the President
     and CEO of the affiliated company. Accordingly, Diversifax is considered to
     have significant influence over the affiliated corporation and therefore
     the investment is accounted for using the equity method under APB 18, " The
     Equity Method of Accounting for Investments in Common Stock (as amended)."
     Under the equity method, the investment is recorded at cost and adjusted to
     recognize earnings or losses subsequent to the date of acquisition. The
     affiliated company has experienced a series of operating losses and a
     decline in the fair market value of their stock subsequent to the date of
     the investment indicating that a decrease in the value of the investment
     has occurred and is other than temporary. Accordingly, the Company recorded
     an impairment loss and their share of losses of the unconsolidated
     affiliated company in the income statement at November 30,2005.

     Equipment and vehicles are recorded at cost. Depreciation is computed using
     the straight-line method over the estimated useful lives of the respective
     assets, ranging generally from five to ten years. For income tax purposes,
     the Company uses accelerated methods for all assets. Maintenance and
     repairs are charged to operations when incurred. Betterments and renewals
     are capitalized. When equipment and vehicles are sold or otherwise disposed
     of, the asset account and related accumulated depreciation account are
     relieved, and any gain or loss is included in operations.

     Deferred tax assets and liabilities are recognized for the estimated future
     tax consequences attributable to differences between the financial
     statements carrying amounts of existing assets and liabilities and their
     respective income tax bases. Deferred tax assets and liabilities are
     measured using enacted tax rates expected to apply to taxable income in the
     years in which those temporary differences are expected to be recovered or
     settled. The effect on deferred tax assets and liabilities of a change in
     tax rates is recognized as income in the period that included the enactment
     date.

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards No. 109, "Accounting For Income Taxes"
     ("SFAS 109"), which requires recognition of deferred tax assets and
     liabilities for the expected future tax consequences of events that have
     been included in the financial statements or tax returns. Under this
     method, deferred tax assets and liabilities are determined based on the
     differences between the consolidated financial statement and tax bases of
     assets and liabilities using enacted tax rates in effect for the year in
     which the differences are expected to reverse.

     The Company accounts for its stock option awards to employees under the
     intrinsic value based method of accounting prescribed by Accounting
     Principles Board Opinion No. 25, "Accounting for Stock Issued to
     Employees." Under the intrinsic value based method, compensation cost is
     the excess, if any, of the quoted market price of the stock at grant date
     or other measurement date over the amount an employee must pay to acquire
     the stock. Under APB Opinion No. 25, the Company did not record
     compensation expense for the year ended November 30, 2005. Awards granted
     to non-employees of the Company are accounted for in accordance with SFAS
     No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 requires
     that expense equal to the fair value of all stock-based awards granted to
     non-employees on the date of grant be recognized over the vesting period.
     During the years ended November 30, 2005 and 2004, the Company recorded
     $100 and $0, respectively, of compensation expense for stock-based awards
     granted to non-employees. Of this amount, $100 related to a director's
     fees. Had compensation costs for awards to employees been determined on the
     basis of fair value pursuant to SFAS No. 123, there would have been no
     impact on net loss per share.

     The Company issues stock in lieu of cash for certain transactions.
     Generally, the fair Value of the stock, based on quoted market prices, is
     used to value the transactions.

     (Loss) earnings per share is based on the weighted average number of common
     shares outstanding. All loss per share amounts in the consolidated
     financial statements are basic loss per share, as defined by SFAS No. 128,
     "Earnings Per Share." Options and warrants of 15,708,097 shares of common
     stock for the year ended November 30, 2005 were not considered in the
     calculation since the effect would be anti-dilutive.

     Revenue from the Company's self-service coin and card reader operated
     photocopy machines is principally recognized at the time payment is
     received. Revenue from the Company's scanner units is recognized when the
     product is shipped.

     Deferred revenue is recorded for amounts received but not earned as of the
     balance sheet dates. Income from these transactions is recognized as earned
     or on a straight-line basis over the term of the contract.

     The Company considers that the carrying amount of assets and liabilities
     approximates their fair value.


4.     NOTE RECEIVABLE

During 2005, the Company entered into a non-interest bearing note receivable for
$31,850 in connection with the sale of equipment to a former employee.  The note
requires  182  weekly installments, and matures November 2008.  This note is not
collateralized.  As  of  November  30,  2005 the balance on the note is $27,300.

During  2001,  the  Company  entered  into  a  note  receivable  for $250,000 in
connection  with  the sale of equipment.  At November 30, 2004, the note balance
was  $131,431 and management established an allowance equal to 50 percent of the
outstanding  balance  since  the  note  was in default.  During 2005, management
entered into a settlement agreement whereby the Company agreed to accept $25,000
for  full  and  final settlement of the note balance.  The settlement amount was
received  and  as  of  November  30,  2005, the note balance has been satisfied.


5.     INVESTMENT IN EVOLVE ONE, INC.

On  March  15, 2005, the Company entered into a Management Agreement with Evolve
One,  Inc. ("Evolve One").  Irwin Horowitz, principal shareholder, member of the
Board  of  Directors,  and  Chief  Executive  Officer  of the Company, is also a
principal  shareholder  and  Chief Executive Officer of Evolve One.  The Company
made its facilities at 39 Stringham Avenue, Valley Stream, New York available to
Evolve One; the services on a part-time basis of 7 persons presently employed by
the  Company  for  approximately  100  hours  per week; equipment, hardware, and
software  of  the  Company; and related utilities and overhead functions at that
facility.  The term of the agreement  was for six months and could be terminated
prior  to  the conclusion of its term on 10 days' prior written notice by either
party,  or  the  agreement  may  be  renewed  for  a  successive six-month term.

In  consideration  for  the  management  services  and  facilities  provided  by
DiversiFax  during  the  initial six-month term, Evolve One issued to DiversiFax
2,900,000  shares  of  its  common  stock.  In addition, in the event the market
price  of  the  common stock of Evolve One on the six-month anniversary date was
below  $0.15  per  share,  Evolve  One  agreed to issue to DiversiFax additional
shares of its common stock so that the common shares provided to DiversiFax plus
such  additional  shares of common stock would be equal in value to $435,000. In
addition,  DiversiFax  would  receive  10%  of  the  total  amount of the monies
received  as  a  result of their efforts with regard to auctions being completed
for accounts they have introduced to AuctionStore.com, Evolve One's wholly-owned
subsidiary.  Payment  of  the  percentage  fee would be made in cash or stock as
determined  by  DiversiFax  .

On  June  20,  2005,  DiversiFax  purchased  an aggregate of 100,000 units in an
Evolve  One  offering and received 6,000,000 shares of common stock and warrants
to  purchase  6,000,000  shares.

The Company's investment in Evolve One is less than 20% of the common stock of
Evolve One and is accounted for under equity method because the Company
exercises significant influence over Evolve One's operating and financial
activities. Accordingly, the investment in Evolve One was recorded at cost and
adjusted for the company's proportionate share of losses and impairment. The
Company valued the management service contract based on the anticipated cost of
services to be provided and recognized $430,000 of service fee income during
2005 based on the six-month term of the agreement.

Diversifax's original projections of revenue from Evolve One were never realized
and Evolve One operations ceased by November 2005.  As a result, management
recorded an impairment loss combined with their proportionate share of losses in
Evolve One in the amount of $430,000 in the income statement at November
30,2005.

DiversiFax continued to pay for Evolve One expenses in an attempt to assist them
with remaining viable because DiversiFax has a substantial investment in Evolve
One.  Evolve One's management has decided to sell the corporate shell, reimburse
DiversiFax for expenses incurred subsequent to ceasing Evolve One operations,
and pay DiversiFax cash for the remaining investment balance in Evolve One at
November 30, 2005 of $105,000.  DiversiFax will retain previously issued options
in connection with the Evolve One agreement.  Although the sale agreement with
Evolve One is near to closing, no assurance can be given that the transaction
will be completed.


<PAGE>



6.     EQUIPMENT AND VEHICLES

Equipment and vehicles as of November 30, 2005 consists of the following:
                                                                     2005
                                                                ---------
     Photocopy machines and accessories                        $5,777,408
     Furniture and fixtures and computer equipment                115,416
     Software                                                     400,000
     Vehicles                                                      57,513
                                                                   ------
                                                                6,350,337
                                                              -----------
                              Less accumulated depreciation     6,327,658
                                                                ---------
                                                             $     22,679
                                                             ============


7.     ACCRUED EXPENSES

Accrued  expenses  consist  of $40,000 of accrued interest at eight percent on a
$500,000  loan  payable, officer/stockholder, and miscellaneous accrued expenses
in  the  amounts  of  $36,553  as  of  November  30,  2005  .


8.     NOTES PAYABLE AND LONG-TERM DEBT

Notes  payable  and  long-term  debt  consist  of:

                                                                      2005
                                                                   -------
     Notes  payable;  interest  ranging  from  0.00%
          to  1.9%;  payments  aggregating  $889  per
          month  including  interest;  collateralized
          by  vehicles                                           $  24,329
          Less  amounts  currently  due                             10,565
                                                                    ------
                                                                   $13,764
                                                                   =======

The  following is a schedule by year of the principal payments required on these
notes  payable  and  long-term  debt:

     2006                                                         $10,565
                                                                  =======
     2007                                                         $10,606
                                                                  =======
     2008                                                          $3,158
                                                                   ======

9.     RELATED PARTY TRANSACTIONS

From  time  to  time,  Dr.  Irwin  A. Horowitz, the Chairman of the Board, Chief
Executive  Officer,  and  President  of  the Company, loans the Company funds to
cover  its  working  capital  needs  and  to  finance  acquisitions.

The  loans  payable,  officer/stockholder amounts to $1,774,838  at November 30,
2005.  Included  in  this amount is a $500,000 note that bears interest at eight
percent  per year beginning in September 1998 and a non-interest bearing note in
the  amount of $668,000, along with various unsecured and interest bearing loans
and  accruals.  Each  year,  the Company reclassifies the accumulated prior year
balance  of  accrued  interest  from  accrued  expenses  to  loans  payable,
officer/stockholder.  As  of November 30, 2005, accrued interest of $250,000  is
included  in  loans  payable,  officer/stockholder.

In  October 1996, the Company entered into a renewable employment agreement with
Dr.  Irwin A. Horowitz, pursuant to which the Company agreed to pay Dr. Horowitz
a salary of $125,000 per year.  Beginning in 1998, Dr. Horowitz agreed to accrue
rather  than  receive  his salary.  Accrued salary payable and estimated related
payroll  taxes  are  included  in  accrued expenses at November 30, 2005  in the
amount  of  $1,051,144.

In  March  2005,  the  Company  entered  into  a  management  agreement  with an
affiliated  company  (see  Note  5).

During  2005,  the  Company  sold  all  fully depreciated equipment and existing
service  contracts  of  Capital Copy, Inc to a former employee in exchange for a
$31,850  note  (see  Note  4).

The  above amounts are not necessarily indicative of the amounts that would have
been  incurred  had  comparable  transactions been entered into with independent
parties.


10.     DEFERRED REVENUE

The  Company  received  a  lump  sum  payment  of $375,000 in 2003 for the early
termination  of  the  exclusive  right to provide services under a contract that
expires in 2009.  The Company continued to own and service the equipment through
2004.  Revenue  in  the  amount  of $75,000 was  recognized during 2003 and 2004
based  on  the  remaining life of the contract. In 2005, the Company removed all
equipment  and  discontinued  service  under the contract. Accordingly, deferred
revenue  of  $225,000  was  recognized  in  2005.


11.     LEASES

The  Company  rents  office  space  on  a  month-to-month basis.  The total rent
expense  for the years ended November 30, 2005 and 2004 were $52,755 and 46,776,
respectively.


12.     WARRANTS

The  Company  grants warrants and options to purchase shares of its common stock
to  various  employees  and  other  individuals  based  on the discretion of the
Company's  Board  of  Directors.

The  fair  value of each option granted is estimated on the grant date using the
Black-Scholes  option  pricing  model.  The  following  assumptions were made in
estimating  fair  value  for  the  years  ended  November  30,  2005  and  2004:
<TABLE>
<CAPTION>





<S>                                                                <C>             <C>

  Dividend yield                                                      0%              0%
  Risk-free interest rate                                          4.17%           4.37%
  Expected life                                                   5-7 years         5years
  Expected volatility                                               421%             394%

Following is a summary of the status of common stock option and warrant activity during 2005 and 2004:

                                                                                    Weighted
                                                                      Number         Average
                                                                     of Shares     Exercise Price
                                                                  -----------------------
 Outstanding,  December 1, 2004                                         5,708,097   $.0002
  Granted                                                              10,100,000   $.0001
  Exercised                                                               100,000        -
  Expired                                                                                -
                                                             ------------------------------
  Outstanding, November 30, 2005                                       15,708,097   $.0001
                                                              =====================  =======
  Exercisable at November 30, 2005                                     15,708,097   $.0001
                                                              =====================  =======
  Weighted average fair value of options
    granted during 2005                                                $              .0001
                                                                        =====================

  Outstanding, December 1, 2003                                          5,708,097   $.0002
  Granted                                                                        -        -
  Exercised                                                                      -        -
  Expired                                                                        -        -
                                                                ---------------------  -------
  Outstanding, November 30, 2004                                          5,708,097   $.0002
                                                                =====================  =======
  Exercisable at November 30, 2004                                       5, 708,097   $.0002
                                                                 =====================  =======
</TABLE>






The  following  table  summarizes  information  about  options  and  warrants
outstanding  and  exercisable  as  of  November  30,  2005:
<TABLE>
<CAPTION>


<S>              <C>                                <C>                               <C>      <C>

                 OUTSTANDING OPTIONS  AND WARRANTS                                   EXERCISABLE OPTIONS AND WARRANTS
- ---------------------------------------------------------------------------------------------------------------------

                 NUMBER OF    WEIGHTED AVERAGE    WEIGHTED AVERAGE      NUMBER OF SHARES   WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE  UNDERLYING    REMAINING LIFE         PRICE               EXERCISABLE       REMAINING LIFE         PRICE
                   SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
$0.0001        15,613,097        4.33 years          $ .0001              15,613,097         4.33 years         $.0001

$0.005             95,000        1.14 years           $ 0.005                 95,000         1.14 years         $0.005


<S>              <C>                              <C>



</TABLE>




13.     INCOME TAXES

Deferred  taxes  re recorded for existing temporary differences in the Company's
assets and liabilities  for income tax and financial reporting purposes.  Due to
the valuation allowance for deferred tax assets as noted below, there was no net
deferred  tax benefit or expense for the years ended November 30, 2005 and 2004.
The  Company  has incurred significant operating losses since its inception that
have  been  carried  forward  for  income  tax  purposes  and, therefore, no tax
liabilities  have been incurred for the years presented.  These operating losses
and  other  timing  differences  give  rise  to  deferred tax assets as follows:
<TABLE>
<CAPTION>
<S>                                                                         <C>
                                                                                   2005
                                                                            ------------
  Deferred tax assets:
    Net operating loss                                                      $ 3,041,400

    Allowance for bad debt                                                        2,900
              Impairment loss on investment in Evolve One, Inc                   167,500
    Accrued expenses and accounts payable                                       117,300
    Accrued salaries                                                            389,500
    Valuation allowance                                                      (3,671,500)
                                                                            ------------

  Net deferred tax assets                                                        47,100
                                                                            ------------

  Deferred tax liabilities:
    Depreciation                                                                (47,100)
                                                                            ------------
  Net deferred tax liabilities                                              $   (47,100)
                                                                            ============
</TABLE>

Differences  between  the  federal ( benefit) provision computed
at a statutory rate and the Company's  effective  tax  rate  and
 provision  are  as  follows:
<TABLE>
<CAPTION>
<S>                                                                                                    <C>        <C>
                                                                                                           2005      2004
                                                                                                       ---------  --------
  Statutory provision                                                                                  $(11,300)  $ 6,100
          Penalties assessed by government                                                                  300
  State tax provision, net of federal effect                                                             (1,600)      900
  Increase (decrease) in deferred income tax valuation
       allowance                                                                                         12,600    (7,000)
                                                                                                       ---------  --------
                                                                                                       $      0   $     0
                                                                                                       =========  ========
</TABLE>



The  Company  has  available  at November 30, 2005 approximately $7.9 million of
unused  operating  loss carryforwards that may be applied against future taxable
income,  which  would  reduce taxes payable by approximately $3.0 million in the
future.  These  operating  loss  carryforwards  begin expiring in November 2009.
Income  tax  benefits resulting from the utilization of these carryforwards will
be  recognized  in the year in which they are realized for federal and state tax
purposes.

The Company has provided a full valuation allowance related to the realizability
of  the  deferred  tax asset.  The valuation allowance is based on evidence that
the  deferred  tax  asset  will  more  likely  than  not, not be realized.  Such
valuation  allowance  may  be  increased or decreased in the future based on the
likelihood  of  achieving  future  taxable  earnings.


14.     CONTINGENCIES, COMMITMENTS, AND CONCENTRATIONS

From  time  to  time,  the Company is party as plaintiff or defendant to various
legal  proceedings related to its normal business operations.  In the opinion of
management,  although  the  outcome  of any legal proceeding cannot be predicted
with  certainty,  the  ultimate  liability of the Company in connection with its
legal  proceedings  will  not  have  a  material adverse effect on the Company's
financial  position,  but  could be material to the results of operations in any
one  future  accounting  period.  The  Company  makes  appropriate  reserves for
litigation,  if  necessary.  Defense  costs  are  expensed  as  incurred.

During  the fiscal years ended November 30, 2005 and 2004, revenues derived from
two of the Company's Copier customers, a public library and a college located in
New  York  City, amounted to approximately 43 percent of the Company's revenues.


15.     SUBSEQUENT EVENTS

On December 11, 2005 Evolve One transferred all the stock and assets of
Auctionstore.com and Stogiesonline (both wholly owned subsidiaries of Evolve
One) to Diversifax in settlement of a receivable of approximately $20,000
recorded as of November 30, 2005.

In January 2006,  Evolve One issued an additional 3,253,875 shares of  stock to
DiversiFax in connection with the March 2005 management agreement (see Note 5).
These shares plus the shares issued to DiversiFax as of November 30, 2005
increased the Company's ownership in Evolve One from approximately 18% at
November 30,2005 to 24.5%.

A group of investors representing 80% of the issued share capital in  Evolve one
are currently negotiating the sale of their interest in the Evolve One. A
non-binding letter of intent received from a potential buyer directs the
proceeds of the sale to be included in escrow  and distributed to the 80%
holders based on their equity in Evolve One. If the sale comes to fruition,
Diversifax will receive $105,000  for their 24.5% holdings in Evolve One.









                                       20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>dfax1205311.txt
<DESCRIPTION>DFAX 12/2005 EX 311
<TEXT>





                                                                    EXHIBIT 31.1

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002
I, Dr. Irwin A. Horowitz, certify that:
1.     I have reviewed this Form 10-KSB of DiversiFax, Inc. and Subsidiaries;

2.     Based on my knowledge, this report does not contain any untrue statement
       of a material fact or omit to state a material fact necessary to make the
       statements made, in light of the circumstances under which such
       statements were made, not misleading with respect to the period covered
       by this report;

3.     Based on my knowledge, the financial statements, and other financial
       information included in this report, fairly present in all material
       respects the  financial condition, results of operations and cash
       flows of the registrant as of, and for, the periods presented in
       this report;

4.     The registrant's other certifying officer(s) and I are responsible for
       establishing and maintaining disclosure controls and procedures (as
       defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
       registrant and have:
        a.     Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating
               to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities,
               particularly during the period in which this report is being
               prepared;
       b.      Evaluated the effectiveness of the registrant's disclosure
               controls and  procedures and presented in this report our
               conclusions about the effectiveness  of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and
      c.       Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent  fiscal quarter (the registrant's
               fourth fiscal quarter in the case of an annual  report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

5.     The registrant's other certifying officer(s) and I have disclosed, based
       on our most recent evaluation of internal control over financial
       reporting, to  the registrant's auditors and the audit committee of
       the registrant's board of  directors (or persons performing the
       equivalent functions):
       a.      All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial
               reporting which  are reasonably likely to adversely affect
               the registrant's ability  to record, process, summarize and
               report financial information; and
       b.      Any fraud, whether or not material, that involves management or
               other  employees who have a significant role in the registrant's
               internal control over  financial reporting.




Date     April 10, 2006,


By:     _____________________________
     Dr. Irwin A. Horowitz, Chief Executive
     Officer and Chief Financial Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>3
<FILENAME>dfax1205ex321.txt
<DESCRIPTION>DFAX 12/2005 EX32.1
<TEXT>
                                                                   EXHIBIT 32.1


                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Form 10-KSB of DiversiFax, Inc. and Subsidiaries
     (the "Company") for the year ended November 30, 2005, as filed with the
     Securities and Exchange Commission on the date hereof (the "Report"), the
     undersigned certifies, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant
     to Sec. 906 of the Sarbanes-Oxley Act of 2002, to the best of their
     knowledge and belief, that:

1)     the  Report  fully  complies  with  the requirements of Sections 13(a) or
       15(d)  of  the  Securities  and  Exchange  Act  of  1934,  as  amended;
        and

2)     the  information contained in the Report fairly presents, in all material
       respects,  the  financial  condition  and  results of operations of the
       Company.




Date:             April 10, 2006

By:     _____________________________
     Dr. Irwin A. Horowitz, Chief Executive
     Officer and Chief Financial Officer



This certification shall not be deemed "filed" for purposes of Section 18 of the
Securities and Exchange Act of 1934, or the Exchange Act, or otherwise subject
to the liability of Section 18 of the Exchange Act. Such certification shall not
be deemed to be incorporated by reference into any filing under the Securities
Act of 1933 or the Exchange Act, except to the extent that the Company
specifically incorporates by reference.



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
