Registration No. 333-113646

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-3/A1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

DIVERSINET CORP.
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(Exact name of registrant as specified in its charter)

Ontario, Canada
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(State or other jurisdiction of incorporation or organization)

N/A
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(I.R.S. Employer Identification Number)

2225 Sheppard Avenue East, Suite 1801, Toronto, ON M2J 5C2 Canada (416) 756-2324
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(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

David Hackett c/o Diversinet Corp.
2225 Sheppard Avenue East, Suite 1801, Toronto, ON M2J 5C2 Canada (416) 756-2324
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement is declared effective.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: |_|

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box: |X|

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, please check the
following box and list the Securities Act of 1933, as amended registration
statement number of the earlier effective registration statement for the same
offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, as amended, please check the following box and list
the Securities Act of 1933, as amended registration statement number of the
earlier effective registration statement for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|

CALCULATION OF REGISTRATION FEE
(In U.S. $)

Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered share price registration fee
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Common shares 2,402,000 (1) (3) $1.81 (2) $4,347,620 $ 351.76
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(1) Includes of 1,202,000 common shares issuable upon the exercise of
outstanding warrants.

(2) Estimated pursuant to Rule 457(c) and 457(o) solely for the purpose of
computing the amount of the registration fee on the basis of the average
of the low bid and high ask prices ($1.81 and $1.80) of a common share as
reported on the Over the Counter Bulletin Board on March 12, 2004.
Includes 500,000 shares issuable upon exercise of warrants at $2.00,
720,000 shares issuable upon exercise of warrants at $2.05 per share and
102,000 shares issuable upon exercise of warrants at $2.50.

(3) Pursuant to Rule 416, also includes such indeterminate number of ordinary
shares as may become issuable upon stock splits, stock dividends and other
changes affecting the ordinary shares as described herein.

The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

Subject to completion, dated April 15, 2004

THE HOLDER OF THESE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION
OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

PROSPECTUS

2,402,000 COMMON SHARES

DIVERSINET CORP.

Certain selling securityholders are offering up to 2,402,000 of our common
shares for sale under this prospectus. We will not receive the proceeds of any
shares sold under this prospectus.

Our common shares are quoted on the Over-the-Counter Bulletin Board ("OTC BB")
under the symbol "DVNT.OB". On March 12, 2004, the average of the closing bid
and asked prices of our common shares on the OTC BB was $1.80 per share.

AN INVESTMENT IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK AND ONLY
PEOPLE WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD CONSIDER
INVESTING. SEE "RISK FACTORS" BEGINNING ON PAGE 5.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

INFORMATION SUMMARY

This summary highlights important information about our business and about this
offering. Because this is a summary, it does not contain all of the information
you should consider before investing in our common shares or warrants. You
should read the entire prospectus before making an investment decision.

ABOUT DIVERSINET

Diversinet Corp. (formerly The Instant Publisher Inc.) was formed on December 8,
1993 through the amalgamation of The Instant Publisher Inc. with Lombard
Consolidated Resources Inc., an Ontario corporation. We are regulated in
accordance with the Business Corporation Act (Ontario).

Our company was formed under the laws of Ontario, Canada. Our principal
executive offices are located at 2225 Sheppard Avenue East, Suite 1801, Toronto,
Ontario, M2J 5C2, Canada. Our telephone number is (416) 756-2324.

We are a security software product company that develops, markets and
distributes wireless security infrastructure solutions that provide for the
secure transmission of data over wireless networks and devices. Our solution
encompasses all aspects of commercial transaction security requirements,
covering the authentication and authorization of individuals involved, the
integrity of the information being sent and the non-repudiation or legalization
of the transaction.

We believe we are a pioneer in providing security products for mobile commerce
over wireless networks and are striving to become the leading provider of
wireless security solutions. Our strategy to achieve this objective involves:
targeting emerging m-commerce markets, expanding strategic partnerships and
sales channel relationships, maintaining a leadership position in terms of
products and research and development and building awareness of the Diversinet
brand.

We develop and license the Passport Certificate Server(R), Passport ONE(TM),
Passport Authorization Product(TM) and Passport VPN computer software products,
which provide for the secure transmission of data over wireless networks as well
as various other kinds of networks, including corporate networks,
telecommunications systems and the Internet. The transmission of data over these
networks is known as "e-commerce".

The Passport Certificate Server(R) software verifies the identities of the
parties to an e-commerce transmission through the use of digital certificates so
that unauthorized persons cannot intercept its contents.

The Passport ONE(TM) software product provides a single point of contact to
enable the security tools embedded in mobile devices. By providing application
providers, enterprises, and operators a single security infrastructure solution
for all mobile devices, Passport avoids the development time and infrastructure
costs normally associated with multiple device coverage.

The Passport Authorization Product software issues digital permits that are
linked to the holder's digital certificate. The Diversinet digital permit is
designed to allow digital certificates to serve additional functions such as
authorizing users to perform specific tasks once they have accessed a given
network.

Virtual private network ("VPN") software uses encryption to provide a secure
connection through the Internet, establishing a "secure tunnel" through which
any enterprise data can travel. VPNs are less expensive than true private
networks using dedicated connections and can use digital certificates to
securely identify and authenticate the enterprise server and remote user.
Diversinet's Passport Wireless VPN combines the strength of public key
infrastructure (PKI) digital certificates with a robust, wireless-optimized VPN
solution.

We believe that the Passport products offer a unique approach to facilitating
and securing commercial transactions and data transmissions over these networks.

ACQUISITION OF DSS SOFTWARE TECHNOLOGIES

In early January, 2003, we acquired all of the capital stock of DSS Software
Technologies ("DSS"), a systems integration provider headquartered in Fremont,
California. DSS provides technical consulting services to tier one customers
including financial, enterprise and technology companies such as Cisco Systems,
Lucent, Oracle, Sun Microsystems and Wells Fargo in the areas of systems
integration, software development, and Enterprise Resource Planning "ERP" and
Customer Relationship Management "CRM" implementation. Consideration for the DSS
acquisition was provided through a combination of cash payments and an earn-out
position, plus warrants, provided over a three-year term.

We expect that the addition of DSS' services suite will enhance our ongoing
strategy to provide greater depth and breadth in our product and service
offering. Combined, DSS and our technical and industry expertise can offer
integrated solutions and full services offerings. We believe our acquisition of
DSS will strengthen our position in the U.S. through expanded access to key
customers and the addition of a comprehensive line of services that will help us
to better address rapidly growing demands for security in telecommunication
services.

The synergy between the two companies is expected to provide the infrastructure
and capability to expand into new markets and convey a unique opportunity to
deliver products and services that will meet the specific needs of enterprise
customers.

With DSS's professional services focus on high profile customers in our target
markets (enterprise, financial, et cetera) our complementary skill sets
(application development and wireless), and a U.S. sales force, the combined
company can provide technical consulting services to companies in the areas of
system integration, software development, and ERP and CRM implementation, which
are all natural extensions of wireless and require enhanced security.

DSS's operations have been integrated with ours as a wholly owned subsidiary of
Diversinet. The purchase of DSS was accounted for using the purchase method and
consolidated financial statements have been prepared.

ACQUISITION OF CARADAS, INC.

In September 2003, we acquired all of the capital stock of Caradas, Inc.
("Caradas"), a systems integration provider headquartered in Braintree,
Massachusetts. Caradas provides `smart card enablement' to the financial,
retail, enterprise, government and other markets looking for open, secure,
multi-application solutions. Caradas technology answers the increasing and
urgent need for multi-application smart card technology, essential for managing
critical business processes. For customers that want to manage security
processes in both the physical and digital environments, Caradas offers an
identity and authentication that connects with continuously updated, smart
card-aware applications.

Caradas focuses on smart card-based application security systems within the
financial services industry, particularly as a vehicle for managing
relationships between issuers and cardholders. Caradas offers a suite of
solutions and services to define and implement secure application
infrastructures.

o The Caradas Connexus(TM) Platform Caradas provides turnkey solutions for
smart card-based application security systems using a suite of Caradas
developed and third-party technology components.

o Visa and MasterCard Issuer Solutions: Caradas adds value to Visa and
MasterCard issuer projects, by working closely on architecture and design,
providing integration services, followed by test and operational transfer
as the deployment occurs. The smart Visa and MasterCard oneSmart Solutions
are based upon established methodologies, third-party technologies and the
Caradas Connexus(TM) Platform technology.

o Caradas Services: Caradas provides a set of professional integration
services for the strategy and support behind the technology. The Caradas
team has developed a methodology for implementing application security
systems.

o Caradas Labs(TM): Caradas provides benchmarking and evaluation of core
technologies through the testing center.

We expect that the addition of Caradas will enhance our ongoing strategy to
provide greater depth and breadth in our product and service offering, namely in
the financial services and government verticals. Combined, Caradas and our
technical and industry expertise can offer integrated solutions and full
services offerings. We believe our acquisition of Caradas will strengthen our
position in the U.S. through expanded access to key customers and the addition
of a comprehensive line of services that will help us to better address rapidly
growing demands for security in telecommunication services.

With Caradas' focus on smart card technology in our target markets (financial,
government) our complementary skill sets (application development and wireless),
and a U.S. sales force, the combined company can provide technical consulting
services to companies in the areas of smart card-based application security
systems and software development, which are natural extensions of wireless and
require enhanced security.

Caradas' operations will be integrated with ours as a wholly owned subsidiary of
Diversinet. The purchase of Caradas was accounted for using the purchase method
and consolidated financial statements will be prepared.

THE OFFERING

Certain of our shareholders are offering the following securities for sale under
this prospectus:

o 1,200,000 common shares, and
o 1,202,000 common shares issuable upon the exercise of the warrants.

There are a total of 2,402,000 common shares issued and common shares issuable
pursuant to this registration statement.

We are not offering or selling any securities under this prospectus and will not
receive any proceeds from the sale of the selling shareholder's securities. We
may receive up to $2,485,000 upon the exercise of the warrants. However, we will
pay all costs associated with this prospectus.

RISK FACTORS

The common shares offered by this prospectus are speculative, involve a high
degree of risk and should only be purchased by persons who can afford to lose
their entire investment. You should therefore carefully review the following
risk factors, as well as all of the other information in this prospectus, before
investing in the securities offered by this prospectus.

RISKS RELATING TO OUR BUSINESS

WE HAVE LOST MONEY IN THE PAST, WE HAVE REALIZED MINIMAL REVENUES FROM
CONTINUING OPERATIONS AND WE EXPECT TO CONTINUE TO SUSTAIN LOSSES IN THE FUTURE.
We have generated minimal revenue to date from the sales of our solutions and
licensing of our products. For the fourteen months ended December 31, 2003, we
posted a net loss of $5,618,000. For the year ended October 31, 2003, we posted
a net loss of $4,834,000, for October 31, 2002, we posted a net loss of
$4,065,000 and for October 31, 2001, we posted a net loss of $12,272,000. For
the years ended October 31, 2000 and October 31, 1999, we had net losses of
$10,189,000 and $9,421,000, respectively. We generated revenue of $8,563,000 for
the fourteen months ended December 31, 2003, $7,108,000 in the twelve months
ended October 31, 2003, $710,000 in the year ended October 31, 2002, $793,000 in
the year ended October 31, 2001, $1,787,000 in the year ended October 31, 2000
and $164,000 in the year ended October 31, 1999. The revenue represents the
sales of our secured wireless and identity management solutions and professional
services including the initial licensing of our Passport Certificate Server(R),
Passport Authorization Product(TM) and Connexus product together with related
professional services and consulting revenue. During fiscal 2001, 40% of our
revenue was generated from one customer. During fiscal 2002, 28% of revenue was
generated from one customer although not the same customer as in fiscal 2002,
and 54% of revenue was generated from three customers. During fiscal 2003, 30%
of revenue was generated from one customer although not the same customer as in
fiscal 2001, and 50% of revenue was generated from two customers. To date, the
sales of our solutions, including related consulting services and licensing our
products to various customers and providing them with related professional
services has generated our revenues. We cannot provide assurance that recurring
revenues will arise from these agreements. The auditors' reports on our December
31, 2003 and October 31, 2002 consolidated financial statements included
additional comments for U.S. readers that states that conditions and events
exist that cast substantial doubt on our ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.

OUR BUSINESS PLAN IS DEPENDENT UPON CUSTOMER ADOPTION AND COMMERCIAL DEPLOYMENT
OF OUR PRODUCTS. Our ability to continue operations is also dependent on the
acceptance of our security solutions and the adoption of transaction-based
applications using public key infrastructure-based security (also known in the
industry as PKI-based security) over wireless networks as an accepted method of
commerce in sufficient volume for us to generate enough revenues to fund our
expenses and capital requirements. The wireless mobile commerce market is in a
very early stage, and it may not develop to a sufficient level to support our
business.

Our solutions are marketed to large companies and government agencies. The
implementation of our solutions by these entities typically involves a lengthy
education process and a significant technical evaluation and commitment of
capital and other resources. This process is also subject to the risk of delays
associated with customers' internal budgeting and other procedures for approving
large capital expenditures, deploying new technologies within their networks and
testing and accepting new technologies that affect key operations. As a result,
the associated sales and implementation cycles can be lengthy. Our quarterly and
annual operating results could be materially harmed if orders forecasted for a
specific customer for a particular quarter are not realized.

Many of our early licensing agreements permitted our customers to examine and
test our products with no initial up-front payments to us. These customers are
not required to make payments to us until they begin to use our solutions for
commercial purposes. In certain cases, we also enter into evaluation agreements,
whereby potential customers may examine our solutions for a specified period of
time with no payment to us. Our current licensing agreements typically require
the customer to pay a license fee attributable to the software components and
the solution and upon shipment of these items to the customer, although we have
sometimes waived the up-front fee.

PRODUCT AND MARKET CONDITIONS. General economic conditions may have a
significant impact on our ability to generate sales for our solutions. During
fiscal 2002 and 2001, we experienced decreased activity from our potential
customers, and generally the adoption of wireless services has not proceeded as
rapidly as previously expected. During 2003, with the acquisitions of DSS and
Caradas, we were able to increase revenues, however there is no guarantee that
future sales will not decline in the near future.

FOREIGN EXCHANGE. Our functional currency is the U.S. dollar. Sales generated
outside Canada are generally denominated in U.S. dollars. During fiscal 2003, we
incurred a large portion of our expenses in U.S. dollars, but we also incurred a
smaller portion of our expenses in other currencies including Canadian dollars,
Pound Sterling and Hong Kong dollars. Changes in the value of these currencies
relative to the U.S. dollar may result in currency losses that may have an
adverse effect on our operating results. With the completion of our financings
in June 2003 and January 2004, we have a portion of our cash resources in U.S.
dollar short-term investments and in Canadian dollars. During fiscal 2003 we
maintained a portion of our cash resources in both U.S. and Canadian dollar term
deposits. During 2003 we with the acquisitions of DSS and Caradas, we switched
our reporting currency from Canadian dollars to U.S. dollars.

Sales generated outside Canada are generally denominated in U.S. dollars.
Furthermore the majority of Caradas' and DSS's revenues and costs from
operations are denominated in U.S. dollars. During fiscal 2002, we incurred most
of our expenses in Canadian dollars, but we also incurred a portion of our
expenses in foreign currencies including U.S. dollars, Pound Sterling and Hong
Kong dollars. Changes in the value of these currencies relative to the U.S.
dollar may result in currency losses that may have an adverse effect on our
operating results. With the completion of our recent financing in June 2003, we
have a portion of our cash resources in U.S. dollar term deposits. To date we
have not entered into any foreign currency hedging activities.

WE MAY NOT BE SUCCESSFUL IF WE FAIL TO RETAIN OUR KEY TECHNICAL PERSONNEL.
During 2003, in order to reduce our largest single expenditure, salaries and
benefits, we reduced our headcount of employees in the Toronto office. During
September 2001, we substantially reduced our headcount and curtailed certain
sales and marketing activities, particularly in the U.S. During 2002 and 2003,
we continued to review our cost structure and have continued to reduce our
headcount. Workforce reductions may have a detrimental effect on the morale of
remaining employees, impeding their performance levels. In addition, our ability
to attract potential new employees in the future may suffer if our reputation
was hurt by this staff reduction.

We currently have seven senior officers and 124 employees and contractors. We
may not be able to improve our solutions and products or create new products if
we lose any of our key employees or contractors. The contract with our CEO, Mr.

Nagy Moustafa, had a term of five years, commencing September 29, 1997, and has
been renewed on a year to year basis. None of our other employment agreements
has a specified term. We do not maintain key person life insurance policies on
any of our employees. Skilled technical personnel can be difficult to attract
depending on the strength of the economy and competitive opportunities. We may
not be able to retain our current employees if they receive better job offers
from other employers. The weakened economy through 2002 and 2003 may not
alleviate this risk in the future.

WE ARE INVOLVED IN LITIGATION WHICH COULD RESULT IN JUDGMENTS AGAINST US WHICH,
IN THE AGGREGATE, COULD TOTAL MORE THAN OUR COMBINED CURRENT ASSETS, WORKING
CAPITAL AND NET ASSETS. There are currently four material claims pending against
us. If we lose any of these suits or enter into settlements requiring us to pay
cash or issue any of our common shares, our liquidity and financial position
will be adversely affected and our shareholders' ownership may be diluted.

We have been sued, along with other individuals and corporations, by Silva Run
Worldwide Ltd. in connection with Silva Run's purchase of 212,500 common shares
(850,000 common shares prior to a one for four reverse split in May 1997) in
1995 for a purchase price of $3,700,000. Silva Run is seeking to cancel the
stock purchase and reimbursement of the $3,700,000 purchase price, plus
interest, attorneys' fees and costs. Silva Run has alleged that we, directly or
as the control person of other defendants, violated certain provisions of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended.

In May 2000 we were sued, along with our wholly-owned Barbados subsidiary,
Instant Publisher Ltd. The plaintiff is seeking damages of $1,533,950 for breach
of an October 25, 1995 dealer agreement with our previous printing business
regarding the distribution of printing equipment, and damages of $25,000,000 for
loss of reputation and loss of opportunity, pre-judgment and post-judgment
interest, and costs.

In July 2003, we were sued in the Ontario Superior Court of Justice by two
former employees who claim, inter alia, that each was terminated, while on short
term disability, in a manner that exhibited bad faith and unfair dealings. One
is seeking against Diversinet $125,000 in special, general, punitive and
exemplary damages. The other is seeking against Diversinet $350,000 in special,
general, punitive and exemplary damages.

In January 2004, we and an officer of the Company were sued in the Ontario
Superior Court of Justice by a former employee who claims, inter alia, that he
was wrongfully terminated in a manner that exhibited bad faith and unfair
dealings. He is seeking a total of Cdn$450,000 against us and our officer in
aggravated, general, punitive and exemplary damages.

WE HAVE LIMITED EXPERIENCE IN THE WIRELESS INTERNET SECURITY SOFTWARE AND
IDENTITY MANAGEMENT SOLUTIONS FIELD, AND WE ARE THEREFORE SUBJECT TO RISKS
INHERENT IN ESTABLISHING A NEW BUSINESS. We have been in the wireless Internet
security software field since fiscal 1997 and the identity management solutions
field since 2001, and we have only generated minimal revenues from this
business. We are not sufficiently established to fully evaluate or forecast our
prospects, and we are subject to the risks inherent in establishing a new
business enterprise.

WE ARE DEPENDENT ON THE ADOPTION OF TRANSACTION-BASED APPLICATIONS OVER WIRELESS
NETWORKS AS AN ACCEPTED METHOD OF COMMERCE. In order for us to be successful,
transaction-based applications using wireless security infrastructure over
wireless networks must be adopted as a means of trusted and secure
communications and commerce to a sufficient extent and within a reasonable time
frame, particularly considering our existing financial resources and future
capital needs. Since trusted and secure communications and commerce over these
networks is new and evolving, it is difficult to predict with any assurance the
size of this market and its growth rate, if any.

If the market for trusted and secure communications and commerce utilizing
wireless solutions over these networks fails to develop or develops more slowly
than expected, we may have difficulty selling solutions or generating sufficient
revenues to support our business.

OUR ABILITY TO KEEP PACE WITH THE RAPID TECHNOLOGICAL CHANGES AND FREQUENT NEW
PRODUCT INTRODUCTIONS COMMON IN THE ELECTRONIC COMMERCE INDUSTRY WILL DETERMINE
OUR ABILITY TO REMAIN COMPETITIVE AND AFFECT THE VIABILITY OF OUR PRODUCTS. To
succeed in the mobile e-commerce and the identity management solutions business,
we believe that we will have to continuously improve the performance, features
and reliability of our products and be the first to the market with new products
or enhancements to existing products. We cannot provide assurance that we will
be able to improve our products in a timely manner. The emerging market for
security solutions for mobile e-commerce and the identity management is
characterized by rapid technological developments, frequent new product

introductions and evolving industry standards. We anticipate this evolution will
also occur in the mobile e-commerce and the identity management solutions market
in which we focus our technological developments. The adoption of new standards,
or the informal adoption of certain standards by a significant percentage of the
computer security and related industries, could require us to reconfigure our
products. We may not be able to counter challenges to our current products or to
introduce product offerings that keep pace with the technological changes
introduced by competitors or persons seeking to breach information security. We
are not currently aware of any significant new technologies either under
development or about to be introduced in the mobile e-commerce or the identity
management solutions security field.

THE HIGHLY COMPETITIVE NATURE OF THE ELECTRONIC COMMERCE FIELD COULD PREVENT US
FROM ACHIEVING SUCCESS. Our solutions are targeted at the new and rapidly
evolving market for authentication and authorization products for wireless
electronic commerce, telecommunications and identity management. This market is
not mature. We anticipate that it will be intensely competitive, subject to
rapid change and significantly affected by new solution, product and service
introductions and other market activities of industry participants. Many of our
competitors and potential competitors have a longer operating history, greater
name recognition, larger installed customer base and significantly greater
financial, technical and marketing resources than we have. As a result, they may
be able to adapt more quickly to new or emerging technologies and changes in
customer requirements, and they could therefore render our technologies and
products obsolete.

Because of the broad potential application of our authentication and
authorization software and identity management solutions, we compete with
vendors offering a wide range of computer security products. These competitors
include Entrust Technologies, VeriSign, Certicom, Baltimore Technologies and RSA
Security. There also may be other potential entrants to the market of whom we
are not yet aware.

OUR LICENSING REVENUES ARE DEPENDENT ON OUR CUSTOMERS' ACCEPTANCE AND USE OF OUR
SOFTWARE PRODUCTS, AND WE EXPECT OUR SALES CYCLE TO BE LENGTHY. Many of our
early licensing agreements permitted our customers to examine and test our
products with no initial up-front payments to us. These customers are not
required to make payments to us until they begin to use our product for
commercial purposes. We also enter into evaluation agreements in certain cases,
whereby potential customers may examine our solutions for a specified period of
time with no payment to us. Our current licensing agreements typically require
the customer to pay a license fee attributable to the software components and
the application solution and upon shipment of these items to the customer,
although we have sometimes waived the up-front fee.

Customers cannot simply license our solutions and begin using them immediately
in their businesses. Making our solutions work with a particular customer's
application may be a complex, expensive and, in certain cases, an ultimately
unsuccessful process. This process may also require the customer to make
significant commitments of time and money. Based on discussions with our
customers, we believe that a customer's required cycle of testing, internal
approval and network modifications can reasonably take between six and nine
months or longer. Therefore, we expect our sales cycle, or the time between
entering into an agreement and when we begin to receive revenue, to be six to
nine months or longer. Also, the amount of revenue can be very limited until the
customer's product is made generally available and adopted. Our sales are also
subject to significant risks over which we have little or no control, including
customers' budgetary constraints and internal acceptance procedures regarding
security-related matters.

TWO MAJOR ENCRYPTION TECHNOLOGY VENDORS SERVICE OUR AREA OF BUSINESS, AND IF WE
ARE UNABLE TO LICENSE ENCRYPTION TECHNOLOGY FROM AT LEAST ONE OF THEM, IT WOULD
CAUSE A SIGNIFICANT DISRUPTION TO OUR BUSINESS. Our current product offerings
include encryption technology that we source from a third-party vendor, RSA
Security, an encryption technology vendor who services the wireless and the
e-commerce security market. The term of each licensing arrangement is
open-ended. Encryption technology is currently available from other vendors;
however, if this agreement is terminated for any reason, we would have to
license encryption technology from an alternative vendor, and there might be a
significant disruption to our business.

Our success will depend in part on our continued ability to have access to these
and other technologies that are important to our existing products and may
become important to products we may develop in the future. We cannot be certain
that we will be able to procure or use any necessary technology on terms similar
to existing licenses.

WE LACK EXPERIENCE IN SALES AND MARKETING, AND DEPEND ON OUR RELATIONSHIPS WITH
MORE ESTABLISHED CORPORATIONS TO ASSIST IN SELLING AND MARKETING OUR PRODUCTS.
We have limited sales and marketing experience and limited money to fund
marketing. A significant part of our business strategy is to form strategic
relationships with more established companies to expose our solutions to a
larger customer base than we could reach through direct sales and marketing
force. Our existing relationships have not resulted in any significant revenues
to date and may not result in any revenues in the future.

As a result of our emphasis on these relationships, our success will partially
depend on both the ultimate success of the third parties with which we have
these relationships and the ability of these third parties to market our
products and services successfully.

In the past, we have concentrated our sales and marketing efforts on application
service providers. This strategy has lead to no commercial deployments. As a
result and due to some success experienced by us in Hong Kong, we are focussing
our efforts on working to establish the necessary infrastructure first. We have
jointly developed Mobile e-Cert with Hongkong Post. Hongkong Post will support
the Mobile e-Certs through its Mobile Certification Authority and mobile
operators will act as the Registration Authorities for the authentication of the
identity of Mobile e-Cert subscribers. Hongkong Post is the first recognized
public Certification Authority in Hong Kong. Hutchinson, the largest and the
leading mobile operator in Hong Kong, has been appointed the first certified
Registration Authority for the registration of Hongkong Post Mobile e-Cert
digital certificates to mobile users. This appointment also marks the first time
worldwide a mobile operator is acting as a Registration Authority for the
issuance of wireless digital certificates. After this was successfully
accomplished, we have been working with application service providers who will
develop applications that will have our software embedded and will utilize
Mobile e-Cert. Furthermore, with our recent acquisitions of DSS and Caradas, we
believe that we have mitigated our risk by diversifying our solution offering.

We cannot provide assurance that we will be able to enter into additional, or
maintain our existing, strategic relationships on commercially reasonable terms,
if at all. Our failure to do so would require us to devote substantially more
resources to the distribution, sales and marketing of our products and services.
Also, these strategic relationships do not afford us any exclusive marketing or
distribution rights. The third parties may reduce their commitments to us in the
future or pursue alternative technologies.

THE NATURE OF OUR PRODUCTS SUBJECTS US TO PRODUCT LIABILITY RISKS, POTENTIAL
LOST REVENUES AND ADVERSE PUBLICITY IN THE EVENT OF PRODUCT FAILURE. Our
customers may rely on our products to prevent unauthorized access to computer
networks. Malfunctions or design defects of our products could:

o cause interruptions, delays or cessation of services to our
customers;
o result in product returns;
o result in liability for damages;
o adversely affect the market's perception of the security offered by
our product, resulting in a lack of demand for our products; or,
o require us to make significant expenditures of capital or other
resources to alleviate the problem.

OUR LICENSE AGREEMENTS MAY NOT BE ADEQUATE TO LIMIT OUR LIABILITY. A large
number of claims by our customers could subject us to significant liability as
well as limit the demand for our solutions and products. In most cases our
license and support agreements attempt to limit our liability to the total
amount of the licensing and support fees paid during the twelve-month period
preceding an alleged error in or failure of our software. This contractual
provision may not always be enforceable. Courts have held that contractual
limitations on liability of this type, or the "shrink-wrap licenses" in which
they are sometimes embodied, are unenforceable because the licensee does not
sign them. If these contract provisions limiting our liability are not
enforceable, we could be obligated to pay significant damages resulting from
customer claims.

IF COMPUTER HACKERS FIND WAYS TO CIRCUMVENT OUR PRODUCTS, OUR PRODUCTS WOULD NOT
PERFORM THEIR ESSENTIAL FUNCTION. Any compromise of the security offered by our
products, in a single incident or a series of incidents, would make our products
less attractive to our customers. Software error or failure may result from a
hacker seeking unauthorized access to a computer network. The methods used by
hackers are evolving rapidly and generally are not recognized until they are
launched against one or more systems. We are unable to anticipate hackers'
tactics. The publicity surrounding any security breaches could adversely affect
the public perception of the security offered by our authentication and
authorization products and make it more difficult for us to sell our products.

TECHNICAL ADVANCES IN THE INFORMATION SECURITY MARKET MAY MAKE OUR PRODUCTS
OBSOLETE. Our products are based on PKI and identity management technology and
depend in part on the application of certain mathematical principles forming the
basis of the encryption technology that we license and embed in our products.
Any significant advance in techniques for decoding or cracking encrypted
computer information could render our products obsolete or unmarketable.

Our PKI products use algorithms, or mathematical formulae, to encrypt and secure
information. The security afforded by our products is predicated on the
assumption that these mathematical formulae are very difficult to solve. This
assumption is based on the fact that years of theoretical and empirical research
by leading mathematicians have not resulted in any efficient solutions to these
problems. There can be no assurance, however, that future research will not
uncover efficient solutions to these problems.

Also, even if no breakthrough in solving these problems is discovered, they may
eventually be solved by computer systems having sufficient speed and power. If
improved techniques for decoding encrypted information are developed or made
possible by the increased availability of powerful computing resources, our
products could be rendered obsolete.

WE MIGHT NOT BE ABLE TO ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS. Our success
depends significantly upon our proprietary technology, and our means of
protecting our proprietary and intellectual property rights may not be adequate.
We rely on a combination of patent and trademark laws, trade secrets,
confidentiality agreements and contractual provisions to protect our proprietary
rights. We have two U.S. patents, which will be in effect until August 22, 2017,
and three patents granted in Israel in effect until 2017 and 2021, as well as 13
applications pending in Israel, U.S. and Canada. We cannot provide assurance
that any of our applications will be approved, that any new patents will be
issued, that we will develop proprietary products or technologies that are
subject to patent protection, that any issued patent will provide us with any
competitive advantages or will not be challenged by third parties. Furthermore,
we cannot provide assurance that the patents of others will not have a material
adverse effect on our business and operating results. There is also a risk that
our competitors will independently develop similar technology, duplicate our
products or design around our patents or other intellectual property rights.

If our technology or products were determined to infringe upon the rights of
others, we would be required to obtain licenses to use that technology. If we
are not able to obtain a license in a timely manner on acceptable terms or at
all, we may have to stop producing our product until we can develop an
alternative that does not infringe the rights of others.

Patent disputes are common in technology-related industries. We cannot provide
any assurance that we will have the financial resources to enforce or defend a
patent infringement or proprietary rights action. As the number of products and
competitors in our target markets grows, the likelihood of infringement claims
also increases. Any claims or litigation may be time-consuming and costly, cause
product shipment delays or require us to redesign our product or require us to
enter into royalty or licensing agreements. Any of these events could have a
material adverse effect on our business and operating results. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy aspects of our products or to use our proprietary information and software.
In addition, the laws of some foreign countries do not protect proprietary and
intellectual property rights to as great an extent as do the laws of Canada and
the U.S.

WE HAVE FOCUSED OUR SALES AND MARKETING EFFORTS IN ASIA AND HONG KONG. IN 2003,
SEVERAL ECONOMIES IN ASIA, INCLUDING HONG KONG, HAVE BEEN NEGATIVELY AFFECTED BY
THE OUTBREAK OF SEVERE ACUTE RESPIRATORY SYNDROME, OR SARS. Some industries in
Hong Kong were been hit hard by the SARS outbreak. The dramatic decline in the
business has had a negative effect on the economy of Hong Kong for 2003. The
Government of Hong Kong and business communities have taken various measures to
stimulate the economic recovery of Hong Kong. While the ultimate impact of SARS
is unclear at this time, the effects of these measures are crucial to Hong
Kong's future financial condition and economic developments, which would in turn
affect our financial condition and results of operations.

CHANGES IN THE EXPORT REGULATION OF ENCRYPTION-BASED TECHNOLOGIES MAY RESTRICT
OUR ABILITY TO SELL OR LICENSE OUR PRODUCTS. Our products are subject to export
controls under Canadian and U.S. laws and regulations. These laws and
regulations may be revised from time to time in ways that may materially and
adversely affect our ability to sell our products abroad or to make products
available for sale or license via international computer networks such as the
Internet, although pursuant to an international treaty, a number of countries
have relaxed, or are in the process of relaxing, their export rules as
applicable to products of the type licensed by us. Canadian and U.S. government

controls on the export of encryption technologies which we license from third
parties and which are embedded in our products may, if subject to revision, be
amended and subsequently restrict our ability to freely export our products. As
a result, foreign competitors subject to less stringent export controls on their
products may be able to compete more effectively than we can in the global
information and computer security market.

OUR ARTICLES OF INCORPORATION AUTHORIZE US TO ISSUE AN UNLIMITED NUMBER OF
COMMON SHARES, WHICH COULD RESULT IN DILUTION TO OUR SHAREHOLDERS. Subject to
regulatory and/or shareholder approval, shareholders may experience dilution or
limitations in takeover attempts because our articles of incorporation allow us
to issue an unlimited number of common shares. Our shareholders have no right to
purchase additional common shares when we issue new shares. As of February 15,
2004, we had 12,043,027 common shares issued and outstanding.

WE HAVE LIMITED FINANCIAL RESOURCES. Our ability to continue operations during
the next fiscal year may be dependent on our ability to obtain additional
financing. Although we have made progress in developing our solutions and have
completed initial consumer deployments, our revenue from operations is not
sufficient to cover our operating expenses at present and is unlikely to be
sufficient within fiscal 2004. We have obtained funding for operations from
private equity placements in the past, raising approximately $49,835,000 through
selling a total of 10,421,132 common shares, but there is no assurance we will
be able to do so again in the near future despite the progress of the business.
In January 2004 we completed a private placement through the issuance of
1,000,000 common shares and 1,100,000 common share purchase warrants. We
received gross proceeds of $2,000,000 in the transaction. The warrants were
comprised of 500,000 warrants exercisable at $2.00 and 600,000 at $2.05. Each
warrant entitles the holder thereof to acquire one common share for a period of
three years. In June 2003 we completed a private placement with the issuance of
5,000,000 common shares at a price of $0.62 per common share for gross proceeds
of $3,100,000 to us. In April 2002, we completed a private placement with the
issuance of 518,671 units at a price of $6.00 per unit for gross proceeds of
$3,112,022 to the Company. Each unit is comprised of one (1) common share and
three-quarters (3/4) of one common share purchase warrant (each whole warrant, a
"Warrant"). Each Warrant will entitle the holder thereof to acquire one (1)
common share at a price of $7.20 per common share for a period of up to three
years from April 4, 2002. There is no assurance we will be able to obtain
further placements in the near future despite the progress of the business. As
well, the terms of new capital, if any, may materially dilute existing
shareholders. Our failure to either raise capital when needed or to generate
revenues would leave us with insufficient resources to continue our business.

IF OUR COMMON SHARES SHOULD BECOME INELIGIBLE FOR CONTINUED QUOTATION ON THE OTC
BB OR A PUBLIC TRADING MARKET DOES NOT CONTINUE FOR ANY REASON, HOLDERS OF OUR
COMMON SHARES MAY HAVE DIFFICULTY SELLING THEIR SHARES. Our common shares became
ineligible for continued quotation on the NASDAQ SmallCap Market and are now
trading on the Over the Counter Bulletin Board; therefore holders of our common
shares may have difficulty selling their shares. Our common shares were quoted
on the NASDAQ SmallCap Market from June 1995 through late April 2003.

OUR COMMON SHARES MAY CONTINUE TO BE PENNY STOCK, WHICH MAY ADVERSELY AFFECT THE
LIQUIDITY OF OUR COMMON SHARES. The United States Securities and Exchange
Commission has adopted regulations that define a penny stock to be any equity
security that has a market price, as defined in those regulations, of less than
$5.00 per share, subject to certain exceptions. Our common shares are currently
penny stock.

Generally, for any transaction involving a penny stock, a broker-dealer is
required to deliver, prior to the transaction, a disclosure schedule relating to
the penny stock market as well as disclosure concerning, among other things, the
commissions payable, current quotations for the securities and information on
the limited market in penny stocks.

The liquidity of our common shares may be materially and adversely affected if
our common shares continue to be penny stock due to the administration
requirements imposed by these rules.

IT MAY BE DIFFICULT FOR OUR SHAREHOLDERS TO ENFORCE CIVIL LIABILITIES UNDER THE
U.S. FEDERAL SECURITIES LAWS BECAUSE WE ARE INCORPORATED IN CANADA. We are
incorporated under Canadian law and the majority of our directors and executive
officers are Canadian citizens or residents. All, or a substantial portion, of
these persons' assets and substantially all of our assets are located outside
the U.S. As a result, it may not be possible for investors to effect service of
process within the U.S. upon those persons or Diversinet or to enforce against
them judgments of U.S. courts predicated upon civil liabilities under U.S.
federal or state securities laws. Also, there is uncertainty as to the
enforceability in Canada, in original actions or in actions for enforcement of
judgments of the U.S. courts, of civil liabilities predicated upon U.S. federal
or state securities laws.

WE MAY BE TREATED AS A PASSIVE FOREIGN INVESTMENT COMPANY, WHICH WOULD HAVE
ADVERSE TAX CONSEQUENCES FOR OUR U.S. SHAREHOLDERS. We may be treated as a
passive foreign investment company, or a PFIC. While we do not believe that we
should be treated as a PFIC, whether we are treated as a PFIC depends on
questions of fact concerning our assets and revenues. Accordingly, we cannot
assure you that we will not be treated as a PFIC. If we were to be treated as a
PFIC, there could be material adverse tax consequences to U.S. holders of our
common shares. See "United States Federal Income Tax Consequences" beginning on
page 23.

NOTICE REGARDING FORWARD-LOOKING INFORMATION

This prospectus and the documents incorporated in it by reference contain
forward-looking statements which involve known and unknown risks and
uncertainties. We include this notice for the express purpose of permitting us
to obtain the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include: projections of
capital expenditures, competitive pressures, revenues, growth prospects, product
development, financial resources and other financial matters. You can identify
these and other forward-looking statements by the use of words such as "may",
"will", "should", "plans", "anticipates", "believes", "estimates", "predicts",
"intends", "potential" or the negative of such terms, or other comparable
terminology.

Our ability to predict the results of our operations or the effects of various
events on our operating results is inherently uncertain. Therefore, we caution
you to consider carefully the matters described under the caption "Risk Factors:
and certain other matters discussed in this prospectus, the documents
incorporated by reference in this prospectus, and other publicly available
sources. Such factors and many other factors beyond the control of our
management could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by the forward-looking statements.

USE OF PROCEEDS

We will not receive any proceeds when the selling shareholders sell their common
shares. The $2,485,000 in gross proceeds that we may receive upon the exercise
of 1,202,000 warrants will be used for continued sales efforts, general
operations and general working capital purposes. We will pay all costs of this
prospectus.

DIVIDEND POLICY

We have not paid any cash dividends on our common shares to date and do not
anticipate paying cash dividends in the foreseeable future.

SELECTED FINANCIAL DATA

Our selected financial data for the fourteen month year ended December 31, 2003
and the years ended October 31, 2003, 2002, 2001, 2000, and 1999 are derived
from our audited financial statements and should be read in conjunction with our
consolidated financial statements and the accompanying notes. The selected
financial data for the two months ended December 31, 2003 are derived from our
unaudited financial statements. During 2003 we changed our fiscal year from
October 31st to December 31st. Our financial statements are expressed in U.S.
dollars. All financial information contained in the prospectus is presented in
U.S. dollars except where otherwise indicated. On January 28, 2003, the Company
implemented a 1 for 10 reverse stock split that was approved by its shareholders
at the Company's Annual and Special Meeting of Shareholders on January 22, 2003.
The share data has been adjusted for this reverse stock split.

Our financial statements have been prepared in accordance with Canadian GAAP.
These principles conform in all material respects with U.S. GAAP except as
described in Note 15 to our 2003 consolidated financial statements.

SELECTED FINANCIAL DATA
(IN 000'S, EXCEPT PER SHARE DATA)

FOURTEEN TWO TWELVE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED FISCAL YEAR ENDED OCTOBER 31
DECEMBER 31 DECEMBER 31 OCTOBER 31 ----------------------------------------------------
2003 2003 2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- -------- -------- --------
(In accordance with Canadian GAAP)

Revenue....................... $8,563 $1,454 $7,108 $710 $793 $1,787 $164 $0
Loss from Continuing (5,618) (784) (4,840) (4,065) (12,272) (10,019) (9,230) (5,273)
Operations....................
Net loss from Discontinued 0 0 0 0 0 (170) (190) (470)
Operations....................
Net Loss ..................... (5,618) (784) (4,840) (4,065) (12,272) (10,189) (9,420) (5,743)
Weighted Average no. of 6,478 11,043 5,715 2,972 2,638 2,353 1,674 1,533
shares (000's)................
Loss Per Share - Continuing (0.87) (0.07) (0.85) (1.37) (4.65) (4.27) (5.47) (3.42)
Operations....................
Net Loss Per Share............ (0.87) (0.07) (0.85) (1.37) (4.65) (4.34) (5.61) (3.76)
Dividends Per Share........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Working Capital (Deficit)..... 452 452 1,114 1,752 2,253 14,135 3,389 1,709
Long-term Investment.......... 0 0 0 0 0 0 0 65
Long-term Liabilities......... 300 300 300 0 0 0 966 1,329
Shareholders' Equity.......... 7,647 7,647 8,462 2,950 3,835 16,223 5,338 2,428
Total Assets.................. 11,004 11,004 12,099 4,009 6,093 18,786 8,311 4,768
Share Capital ................ 49,191 49,191 49,202 40,678 34,212 35,186 14,220 28,330

(In accordance with U.S. GAAP)
Loss from Continuing (5,618) (783) (4,834) (4,100) (12,309) (11,002) (9,110) (2,450)
Operations....................
Net Loss from Discontinued 0 0 0 0 0 (170) (190) (470)
Operations....................
Net Loss...................... (5,618) (783) (4,840) (4,100) (12,309) (11,171) (9,301) (2,920)
Loss Per Share - Continuing (0.87) (0.07) (0.85) (1.38) (4.67) (4.68) (5.47) (1.57)
Operations....................
Net Loss Per Share............ (0.87) (0.07) (0.85) (1.38) (4.67) (4.75) (5.54) (1.91)
Long-term Liabilities......... 300 300 300 0 0 0 1,158 1,719
Shareholders' Equity.......... 6,655 6,655 7,471 1,958 2,881 15,277 5,147 2,010
Total Assets.................. 11,004 11,004 12,099 4,009 6,093 18,786 8,311 4,738
Share Capital ................ 79,281 79,281 79,291 70,767 60,348 62,119 42,261 28,893

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The nature of our business is not highly complex, as we operate in one primary
business. We develop, market and sell wireless security and identity management
solutions and professional services to the enterprise, financial services,
government and gaming and wagering marketplace. As part of providing these
solutions we perform professional services to install, support and integrate our
solutions with other applications. We operate globally in a functional
organization. We do not have any off-balance sheet financing, other than
operating leases entered into in the normal course of business and we do not
actively engage in derivative or hedging transactions. During 2003 with the
acquisitions of DSS and Caradas, the majority of our revenues and expenses are
now in U.S. dollars. Therefore during the year we switched our functional
currency from Canadian to U.S. dollars. A significant portion of our cash
balance is denoted in U.S. dollars.

In 2003, our most complex accounting judgments were made in the areas of revenue
recognition. Revenue recognition is expected to continue to be an on-going
element of our accounting processes and judgments. In 2002, our most complex
accounting judgments were made in the areas of software revenue recognition.
Software revenue recognition is expected to continue to be an on-going element
of our accounting processes and judgments.

REVENUE RECOGNITION

We derive our revenue primarily from two sources: sales of products, including
hardware and software licenses, and services, including maintenance, support and
professional services. Significant management judgments and estimates must be
made and used in connection with the revenue recognized in any reporting period.
Material differences may affect the amount and timing of our revenue for any
period if our management made different judgments.

Consulting revenues are recognized on a time and materials basis, or on a
percentage of completion basis, depending on the contract, as employees and
subcontractors provide services. Revenue from time and materials service
contracts are recognized as the services are provided. Revenue from fixed price
long-term contracts is recognized over the contract term based on the percentage
of services provided during the period compared to the total estimated services
to be provided over the entire contract. Losses on contracts are recognized
during the period in which the loss first becomes probable and reasonably
estimable. Contract losses are determined to be the amount by which the
estimated direct and indirect costs of the contract exceed the estimated total
revenues that will be generated by the contract. Revenue recognized in excess of
billings is recorded as unbilled services. Billings in excess of revenue
recognized are recorded as deferred revenue until the above revenue recognition
criteria are met. Reimbursements, including those relating to travel and other
out-of-pocket expenses, and other similar third-party costs, are included in
revenues.

Revenue from software license agreements is recognized upon execution of a
license agreement and the shipment of the software, as long as all vendor
obligations have been satisfied, the license fee is fixed and determinable and
collection of the license fees is probable. Revenue from the sale of additional
software products is recognized as software is delivered.

Revenue earned on software arrangements involving multiple elements (i.e.,
software products, upgrades/enhancements, post contract customer support,
installation, training, et cetera) is allocated to each element based on vendor
specific objective evidence of relative fair value of the elements. When
arrangements contain multiple elements and vendor specific objective evidence
only exists for all undelivered elements, the Company recognizes revenue for the
delivered elements using the residual method, whereby the total arrangement fee
is assigned to the undelivered elements based on their fair value, with the
residual assigned to the delivered elements and recognized. For arrangements
containing multiple elements where vendor specific objective evidence does not
exist for all undelivered elements, revenue for the delivered and undelivered
elements is deferred until either vendor specific objective evidence exists for
the remaining undelivered elements or all elements have been delivered. The
revenue allocated to post contract customer support is recognized ratably over
the term of the support and revenue allocated to service elements (such as
training and installation) is recognized as the services are performed.

With respect to software revenue recognition, we recognize revenues in
accordance with the provisions of the American Institute of Certified Public
Accountants' Statement of Position No. 97-2, "Software Revenue Recognition" and
SOP No. 98-9, "Modifications of SOP No. 97-2, Software Revenue Recognition, with
Respect to Certain Transactions".

For all sales, we use a binding contract, purchase order or another form of
documented agreement as evidence of an arrangement with the customer. Revenues
from software license agreements are recognized upon receipt of an executed
license agreement and shipment of the software, if there are no significant
remaining vendor obligations, collection of the receivable is probable and
payment is due in accordance with our normal payment terms.

We consider delivery to occur when we ship the product, so long as title and
risk of loss have passed to the customer.

At the time of a transaction, we assess whether the sale amount is fixed or
determinable and whether collection is probable. If we determine the fee is not
fixed or determinable, we recognize revenue when payment becomes due. We assess
collectibility based on a number of factors, including the creditworthiness of
the customer. If we determine that collectibility is not probable, we do not
record revenue until such time when collectibility becomes probable, which is
generally upon the receipt of cash.

When arrangements contain multiple elements and vendor specific objective
evidence ("VSOE") of fair value exists for all undelivered elements, we
recognize revenue for the delivered elements using the residual method. Our
determination of fair value of each of the undelivered elements in multi-element
arrangements is based on VSOE of fair value. VSOE of fair value for each element
is either the price charged when the same element is sold separately or the
price established by management, having the relevant authority to do so, for an
element not yet sold separately. For arrangements containing multiple elements
wherein VSOE of fair value does not exist for all undelivered elements, revenue
for the delivered and undelivered elements is deferred until VSOE of fair value
exists or all elements have been delivered.

Maintenance service revenue, whether sold separately or as part of a multiple
element arrangement, is deferred and recognized ratably over the term of the
maintenance contract, generally twelve months. Revenue allocated to professional
service elements is recognized as the services are performed.

Due to the complexity of some software license agreements, we routinely apply
judgment to the application of software revenue recognition accounting
principles to specific agreements and transactions. Different judgments and/or
different contract structures could have led to different accounting
conclusions, which could have had a material effect on our reported quarterly
earnings.

CAPITAL ASSETS

We record our capital assets at their cost less accumulated depreciation. On a
periodic basis, management reviews the carrying values of these assets and
compares it to their estimated net recoverable amount. The determination of net
recoverable amount necessitates various assumptions, many of which are forward
looking and which are based on management's best estimate of future revenues,
expenses and cash flows. To the extent that actual financial performance
adversely differs from the results projected by these assumptions, an impairment
charge in the value of these assets would be necessary.

GOODWILL AND OTHER INTANGIBLE ASSETS

We record our goodwill in accordance with CICA Handbook section 3062 "Goodwill
and Other Intangible Assets", that requires that goodwill no longer be amortized
but instead be tested for impairment at least annually by comparing the carrying
value of a reporting unit with its fair value. If any potential impairment is
indicated, then it is quantified by comparing the carrying value of goodwill to
its fair value. During the fourth quarter of 2003 the Company completed its
goodwill impairment test. The Company determined that the fair values of its
reporting units are in excess of their respective carrying amounts.

STOCK BASED COMPENSATION

Effective November 1, 2002 we record our stock based compensation in accordance
with the new CICA Handbook section 3870, "Stock-Based Compensation and Other
Stock-Based Payments", which requires that a fair value based method of
accounting be applied to all stock-based payments to non-employees and to direct
awards of stock to employees. However, the standard permits the Company to
continue its existing policy of recording no compensation cost on the grant of
stock options and warrants to employees with the addition of pro-forma
information as if the fair value method has been applied.

RESULTS OF OPERATIONS
Two and Fourteen month period ended December 31, 2003 and year ended October 31,
2003 compared to year ended October 31, 2002

During fiscal 2003, the Company purchased 100% of the common shares of two
companies, the DSS acquisition occurred on January 2, 2003 resulting in the
inclusion of twelve month's activities in the consolidated financial results for
December 31, 2003 and the Caradas acquisition occurred on September 1, 2003
resulting in the inclusion of four month's activity in the consolidated
financial results for December 31, 2003. The common shares of DSS were purchased
through the issuance of shares, common share purchase warrants, cash and a
promissory note. The common shares of Caradas were purchased through the
issuance of shares and common share purchase warrants. As a result of a number
of circumstances, including the current year financing activities, the
acquisition of DSS and Caradas and the U.S. dollar becoming the measurement
currency in which most of the Company's business is transacted, effective
October 1, 2003, the Company adopted the U.S. dollar as its measurement and
reporting currency for preparation of its consolidated financial statements.

For the periods ending December 31, 2003 and October 31, 2003, we reported
revenue of $8,563,000 and $7,108,000 respectively compared to revenue of
$710,000 for the year ended October 31, 2002. For the two month period ending
December 31, 2003 we reported revenue of 1,455,000. We generated 96% (2% in
2002) of our revenues from the United States, 3% (63% for 2002) from the Asia
Pacific region, 0% (29% in 2002) from Canada and 1% (6% in 2002) from other
areas during the period ended December 31, 2003 and the period ended October 31,
2003. The increase in revenue is the result of the acquisition of DSS and
Caradas during the year, both companies are located in the United States,
leading to the high percentage of U.S. based revenue. Furthermore, we changed
our year end to December 31st, leading to a two month and fourteen month
reporting period. We are operating in an evolving and unpredictable market and
accordingly have and may continue to experience wide fluctuations in our
revenues.

During the two periods ending in 2003, 30% (28% in 2002) of our revenue came
from one customer. These customers are not related to each other. While we are
endeavoring to increase our customer base, as the market that we operate in is
still in an evolving stage and our revenue is still quite small, it is
reasonable to expect that our revenue may continue to be concentrated among
relatively few customers for the near future.

We reported a net loss of $5,618,000 for the fourteen month period ended
December 31, 2003 and $4,834,000 for the year ended October 31, 2003 compared to
a net loss of $4,065,000 in the prior year. For the two month period ended
December 31, 2003, we reported a net loss of $783, 000. This net loss includes
stock-based compensation expense relating to the issuance of options and
warrants of $825,000 and $772,000 respectively and nil for 2002 (and $53,000 for
the two month period ended December 31, 2003). During the year the Company
started to report a fair value for stock-based compensation and including this
as an expense.

Research and development expenses were $1,513,000 in the period ended December
31, 2003 and $1,244,000 at October 31, 2003 compared to $1,479,000 in 2002 (and
$270,000 for the two month period ended December 31, 2003). The annualized
decrease is due to further cost reduction measures carried out in the second
quarter of 2003. During the year we received a net amount of $289,000 relating
to investment tax credits for R&D work done in 2002 and 2001 and a rebate of
retail sales taxes paid in excess in 2001.

Sales and marketing expenses were $2,656,000 in the period ended December 31,
2003 and $2,271,000 at October 31, 2003 compared to 1,104,000 in 2002 (and
$385,000 for the two month period ended December 31, 2003). The increase in
sales and marketing is largely due to the two acquisitions that were done during
the year and the increase is consistent with the increase in sales activity to
generate the revenues during the period. While the Asia Pacific market place
continues to be a focal point for the Company, with the addition of DSS and
Caradas, we have increased our U.S. presence and increased sales and marketing
in the U.S. accordingly. Included in the fourteen month period December 31, 2003
sales and marketing expenses is $300,000 relating to stock-based compensation
expenses.

General and administrative expenses were $2,654,000 at December 31, 2003 and
$2,369,000 at October 31, 2003 compared to $1,899,000 in 2002 (and $285,000 for
the two month period ended December 31, 2003). These figures include foreign
exchange losses of $309,000 for the fourteen month period ended December 31,
2003 and $230,000 in October 31, 2003 and a loss of $145,000 for 2002 (and
$79,000 for the two month period ended December 31, 2003). Until October 1, 2003
the Company has historically prepared its consolidated financial statements in
Canadian dollars and used the Canadian dollar as its measurement currency.
Included in the December 31, 2003 G&A expenses is $525,000 relating to
stock-based compensation expenses.

Depreciation and amortization expense was $740,000 in the fourteen month period
ended December 31, 2003 and $574,000 for the year ended October 31, 2003 (and
$166,000 for the two month period ended December 31, 2003). These figures
include amortization of intangible assets acquired on September 1, 2003 in the
amount of $173,000 and $87,000, respectively. Depreciation and amortization
expense in fiscal 2002 was $404,000.

We earned interest and other income of $26,000 during the period ended December
31, 2003 and the year ended October 31, 2003 and $111,000 in fiscal 2002 through
investing our excess cash.

Interest expenses were $21,000 during the period ended December 31, 2003 and
$20,000 for the year ended October 31, 2003 compared to $nil in 2002. This
interest relates to notes payable on capital assets acquired during the year.

Year ended October 31, 2002 compared to year ended October 31, 2001

For the year ended October 31, 2002, we reported revenue of $710,000 compared to
revenue of $793,000 for the year ended October 31, 2001. We are operating in an
evolving and unpredictable market and accordingly have and may continue to
experience wide fluctuations in our revenues. We generated 63% (55% for 2001) of
our revenues from the Asian region, 2% (24% in 2001) from the United States, 29%
(17% in 2001) from Canada and 6% (4% in 2001) from other areas during fiscal
year 2002.

During fiscal 2002, 28% (40% in 2001) of our revenue came from one customer.
These customers are not related to each other. As the market that we operate in
is still in an early stage of development and our revenue is still quite small,
it is reasonable to expect that our revenue may continue to be concentrated
among relatively few customers for the near future.

We reported an improved net loss of $4,065,000 for the year ended October 31,
2002 compared to a net loss of $12,272,000 in the prior year. We completed
operating cost reductions in the fourth quarter of 2001 that resulted in a
decline in expenses from operations during fiscal 2002 compared to fiscal 2001.
These reductions included workforce reductions in the United States and Canada,
closure of offices in the United States and the discontinuance of non-core
programs particularly in the marketing area. The restructuring was aimed at
refocusing our efforts on the most significant market opportunities in Asia and
Europe.

Research and development expenses decreased to $1,479,000 in 2002 from
$4,485,000 in 2001 resulting primarily as a result of continued efforts to
reduce costs as started in the last quarter of fiscal 2001. During the year we
received a net amount of $182,000 relating to investment tax credits for R&D
work done in 2000 and 1999.

Sales and marketing expenses were $1,104,000 in 2002 compared to $4,712,000 in
2001. The Company continues to focus a significant portion of its efforts in the
Austral Asian markets where we derived 63% of our 2002 revenues. During 2002 we
implemented a pilot project for Hong Kong's six local mobile operators, the Hong
Kong m-Cert Implementation Forum to develop and implement a single mobile
digital certificate (m-Cert) standard to promote mobile commerce in Hong Kong.
We continue to make progress in this region and expect to increase our presence
in 2003.

General and administrative expenses were $1,899,000 in 2002 compared to
$2,616,000 in 2001. These figures include foreign exchange losses of $145,000
for 2002 and a gain of $403,000 for 2001.

Depreciation and amortization expense in fiscal 2002 decreased to $404,000 from
$1,226,000 in fiscal 2001. The Company's deferred development and purchased
technology costs were fully amortized in 2001 and the reduction in additions to
capital assets has resulted in reduced amortization for the 2002 fiscal year.

During fiscal 2001, we entered into a joint venture to conduct certain of our
Asian activities, as detailed in note 8 to our audited financial statements. We
own 50% of this joint venture and our financial statements reflect our
proportionate interest in its assets, liabilities, revenue and expenses.

We earned interest and other income of $111,000 and $448,000 in fiscal 2002 and
2001, respectively. The decrease is primarily due to our lower average cash and
cash equivalents in 2002 and due to lower interest rates than we received during
2001.

LIQUIDITY AND CAPITAL RESOURCES
Two and Fourteen month period ended December 31, 2003 and year ended October 31,
2003 compared to year ended October 31, 2002 and October 31, 2001

Cash used in operating activities was $1,677,000 in the period ended December
31, 2003. Cash used in operating activities during the year was comprised of the
net loss of $5,618,000, less net depreciation and amortization of $740,000,
stock-based compensation expense of $825,000 and unrealized foreign exchange
loss of $416,000. Changes in other non-cash items include a decrease in accounts
payable and accrued liabilities of $140,000, a decrease in receivables of
$2,356,000, a decrease in deferred revenue of $156,000 and an increase in
prepaid expenses of $99,000. With the addition of DSS and Caradas in 2003, we
incorporated the fair value of their balance sheets into the Company's on the
acquisition dates. The inclusion of these balance sheets have affected the
calculation of non-cash operating working capital.

Cash used in operating activities was $722,000 in the two month period ended
December 31, 2003. Cash used in operating activities during the year was
comprised of the net loss of $784,000, less net depreciation and amortization of
$166,000, stock-based compensation expense of $53,000 and unrealized foreign
exchange gain of $75,000. Changes in other non-cash items include a decrease in
accounts payable and accrued liabilities of $99,000, a decrease in receivables
of $341,000, a decrease in deferred revenue of $175,000 and an increase in
prepaid expenses of $142,000. With the addition of DSS and Caradas in 2003, we
incorporated the fair value of their balance sheets into the Company's on the
acquisition dates. The inclusion of these balance sheets has affected the
calculation of non-cash operating working capital.

Cash used in operating activities was $954,000 in the year ended October 31,
2003. Cash used in operating activities during the year was comprised of the net
loss of $4,834,000, less net depreciation and amortization of $574,000,
stock-based compensation expense of $772,000 and unrealized foreign exchange
loss of $491,000. Changes in other non-cash items include a decrease in accounts
payable and accrued liabilities of $41,000, a decrease in receivables of
$2,023,000, an increase in deferred revenue of $20,000 and an decrease in
prepaid expenses of $43,000.

Cash used in operating activities was $4,532,000 in the year ended October 31,
2002, a decline of 55% from the amount used in the same period of the prior
year. Cash used in operating activities during the year was comprised of the net
loss of $4,065,000, less net depreciation and amortization of $404,000 and
unrealized foreign exchange loss of $72,000. Changes in other non-cash items
include a decrease in accounts payable and accrued liabilities of $1,180,000, an
increase in receivables of $45,000, a decrease in deferred revenue of $19,000
and a decrease in prepaid expenses of $301,000.

Cash used in operating activities was $10,596,000 in the year ended October 31,
2001, attributable to the net loss of $12,272,000 less net depreciation and
amortization of $1,226,000 and unrealized foreign exchange gain of $185,000.
Changes in other non-cash items include a decrease in accounts payable and
accrued liabilities of $278,000, a decrease in receivables of $946,000, a
decrease in deferred revenue of $27,000 and an increase in prepaid expenses of
$7,000.

Cash provided by financing activities in the period ended December 31, 2003 was
$1,806,000 and $1,822,000 in the year ended October 31, 2003 (and $15,000 for
the two months ended December 31, 2003). In June 2003 the Company completed the
issue and sale of 5,000,000 common shares in the capital of the Company at $0.62
per unit for gross proceeds of $3,100,000. This was offset by repayments of bank
indebtedness of $241,000 and notes payable of $873,000 at December 31, 2003 and
$868,000 at October 31, 2003.

Cash provided by financing activities in the year ended October 31, 2002 was
$3,108,000. In April 2002, we completed a private placement for net proceeds of
$3,108,000. The Company completed the issue and sale of 518,671 units in the
capital of the Company at $6.00 per unit for gross proceeds of $3,112,022.

Cash provided by financing activities in the year ended October 31, 2001, was
$69,000 as a result of proceeds received from issuing common shares under an
employee stock option exercise.

Cash used in investing activities in the period ended December 31, 2003 was
$16,000. Cash was provided by the maturity of a short-term investment in the
amount of $600,000. Cash in the amount of $541,000 was utilized in the
acquisitions that occurred during the year. As well, the Company purchased
capital assets in the amount of $75,000 during this period.

Cash used in investing activities in the two month period ended December 31,
2003 was $597,000. Cash was provided by the maturity of a short-term investment
in the amount of $609,000. As well, the Company purchased capital assets in the
amount of $13,000 during this period.

Cash used in investing activities in the year ended October 31, 2003 was
$613,000. Additional funds of $10,000 were invested in a short-term investment.
Cash in the amount of $541,000 was utilized in the acquisitions that occurred
during the year. As well, the Company purchased capital assets in the amount of
$62,000 during this year.

Cash provided by investing activities in the year ended October 31, 2002 was
$92,000 consisting of $113,000 received from proceeds of a short-term investment
offset by $21,000 spent on capital assets.

Cash used in investing activities in the year ended October 31, 2001 was
$2,676,000 consisting of $719,000 spent on capital asset additions and the
purchase of a $1,956,000 short-term investment.

As of December 31, 2003 we had commitments under non-cancelable operating leases
for our facilities and equipment through 2006 in amounts ranging from $620,000
in fiscal 2004 declining to $308,000 in fiscal 2006.

On January 20, 2004, the Company completed a private placement through the
issuance of 1,000,000 common shares and 1,100,000 common share purchase
warrants. The Company received gross proceeds of $2,000,000 in the transaction.
The warrants were comprised of 500,000 warrants exercisable at $2.00 and 600,000
at $2.05. Each warrant entitles the holder thereof to acquire one common share
for a period of three years. The common shares cannot be re-sold in the public
markets until a registration statement has been filed and declared effective by
the U.S. Securities and Exchange Commission.

We believe that our cash and cash equivalents and short-term investments as at
December 31, 2003 of $1,967,000 together with the additional funds raised
subsequent to our year end will be sufficient to meet our short-term working
capital requirements for the next fiscal year. We may need to raise additional
amounts to meet our working capital requirements through private or public
financings, strategic relationships or other arrangements. However, additional
funding may not be available on terms attractive to us, or at all. If we enter
into strategic relationships to raise additional funds, we may be required to
relinquish rights to certain of our technologies. Our failure to either raise
capital when needed or to generate revenues would leave us with insufficient
resources to continue our business.

The following table presents unaudited selected financial data for each of the
last eight quarters ending October 31, 2003 and the two months ended December
31, 2003:
Revenue for Loss for Basic and diluted
the period the period loss per share
----------- ----------- -----------------

December 31, 2003 $1,455,000 $ 784,000 $ 0.07
October 31, 2003 2,687,000 1,882,000 0.33
July 31, 2003 1,742,000 738,000 0.13
April 31, 2003 1,835,000 1,443,000 0.45
January 31, 2003 843,000 772,000 2.39
October 31, 2002 261,000 657,000 0.22
July 31, 2002 140,000 1,001,000 0.31
April 31, 2002 198,000 1,311,000 0.47
January 31, 2002 111,000 1,096,000 0.41

SELLING SECURITYHOLDERS

The Registration Statement filed with the Securities and Exchange Commission of
which this prospectus forms a part covers the registration of the following
securities:

o 1,200,000 common shares;
o 1,202,000 common shares issuable upon the exercise of the warrants.

SELLING SHAREHOLDERS

The table below sets forth the names of the selling shareholders; the number of
common shares beneficially owned by the selling shareholders, as of March 3,
2004, the percentage of our outstanding common shares beneficially owned by each
of the selling shareholders as of March 3, 2004, the number of common shares
that each selling shareholder may offer under this prospectus, are the number of
common shares that each selling shareholder will beneficially own assuming the
sale of all of the common shares covered by this prospectus.

Except as noted below, none of these selling shareholders has held any position
or office or had a material relationship with us or any of our affiliates within
the past three years, other than as a result of the ownership of our ordinary
shares.
SHARES ISSUABLE UPON
TRANSACTION SHARES WARRANT EXERCISE

Lakefront Wigdale Placement 1,000,000 1,100,000
DSS Acquisition Shares and Warrants 200,000 -
Howard Schmidt - 25,000
Corman Communications, LLC - 72,000
Asymmetri Incorporation - 5,000
--------------------------------
Shares subject to this registration statement 1,200,000 1,202,000
--------------------------------

COMMON SHARES BENEFICIALLY COMMON SHARES BENEFICIALLY
OWNED PRIOR TO THIS OFFERING COMMON SHARES OWNED AFTER THIS OFFERING
OFFERED
PERCENT OF PURSUANT TO PERCENT OF
TOTAL SHARES THIS PROSPECTUS TOTAL SHARES
NAME OF BENEFICIAL OWNER NUMBER OUTSTANDING NUMBER OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------------------

Lakefront Partners, LLC (1) 1,098,750 9% 1,000,000 98,750 *
205 E. Wisconsin Avenue, Suite 220
Milwaukee, WI 53202
- ------------------------------------------------------------------------------------------------------------------------------
James Wigdale, Jr. (2) 1,100,000 9% 1,100,000 -0- -0-
205 E. Wisconsin Avenue, Suite 220
Milwaukee, WI 53202
- ------------------------------------------------------------------------------------------------------------------------------
Greg Sutyak (3) 5,000
1196 Vacation Drive
Lafayette, CA 94549 8,000 * 3,000 *
- ------------------------------------------------------------------------------------------------------------------------------
Mukesh Shah (4)
#212, 1500 White Birch Ter
Fremont, CA 94536 13,000 * 10,000 3,000 *
- ------------------------------------------------------------------------------------------------------------------------------
Michael Lamb (5)
10153 Parkwood Drive #6
Cupertino, CA 95014 16,000 * 10,000 6,000 *
- ------------------------------------------------------------------------------------------------------------------------------
Patrick Corman (6)
1015 Hobart Street
Menlo Park, CA 94025 72,000 * 72,000 -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------
Howard Schmidt (7)
2145 Hamilton Avenue
San Jose, CA 95125 25,000 * 25,000 -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------
Asymmetri Incorporation (8)
6200 Stoneridge Mall Road, 3rd Floor,
Pleasanton, CA 94588 5,000 * 5,000 -0- -0-
- ------------------------------------------------------------------------------------------------------------------------------
Parul Atul Parikh (9)
44081 Linda Vista Road
Fremont, CA 94539 433,323 4% 175,000 152,323 1%
- ------------------------------------------------------------------------------------------------------------------------------

* indicates less than one percent (1%)

We will not receive any proceeds from the sale of the securities by the selling
securityholders.

(1) Mr. James Wigdale, Jr. has voting or investment control. Includes 18,750
shares subject to outstanding warrants.
(2) Includes 1,100,000 shares subject to outstanding warrants. Excludes shares
owned by Lakefront Partners, LLC.
(3) Includes 3,000 shares subject to outstanding warrants.
(4) Includes 3,000 shares subject to outstanding warrants.
(5) Includes 6,000 shares subject to outstanding warrants.
(6) Includes 72,000 shares subject to outstanding warrants.
(7) Includes 25,000 shares subject to outstanding warrants.
(8) Includes 5,000 shares subject to outstanding warrants. Mr. Joseph Bentzel
has voting or investment control
(9) Includes 106,000 shares subject to outstanding warrants.

PLAN OF DISTRIBUTION

We are registering the common shares offered hereby on behalf of the selling
shareholders. As used herein, "selling shareholders" includes donees, pledgees,
transferees or other successors-in-interest selling shares received after the
date of this prospectus from a named selling shareholder as a gift, pledge,
partnership distribution or other transfer. All costs, expenses and fees in
connection with the registration of the shares offered by this prospectus will
be borne by the Company, other than brokerage commissions and similar selling
expenses, if any, attributable to the sale of shares offered hereby which will
be borne by the selling shareholders. Sales of the shares offered hereby may be
effected by selling shareholders from time to time in one or more types of
transactions (which may include block transactions) on the Over the Counter
Bulletin Board at prevailing market prices, in the over-the-counter market, in
negotiated transactions, through publicly or privately negotiated put or call
options transactions relating to the shares offered hereby, through short sales
of the shares offered hereby (including the closing of any open short position),
or a combination of such methods of sale, at market prices prevailing at the
time of sale, or at negotiated prices. Such transactions may or may not involve
brokers or dealers. The selling shareholders have advised us that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sale of the shares offered hereby by the selling shareholders.

The selling shareholders may enter into hedging transactions with regard to the
shares offered hereby. In connection with such transactions the counter parties
to such transactions may engage in short sales of the shares offered hereby or
of securities convertible into or exchangeable for such shares in the course of
hedging positions they assume with selling shareholders. The selling
shareholders may also enter into other transactions which require the delivery
of the shares offered by this prospectus, which shares such counter parties may
resell pursuant to this prospectus (as amended or supplemented, if necessary, to
reflect such transaction).

The selling shareholders may effect these transactions by selling the shares
offered hereby directly to purchasers or to or through broker-dealers, which may
act as agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling shareholders
and/or the purchasers of the shares offered hereby for whom such broker-dealers
may act as agents or to whom they sell as principal, or both (which compensation
as to a particular broker-dealer might be in excess of customary brokerage
commissions).

The selling shareholders and any broker-dealers that act in connection with the
sale of the shares offered herein might may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by such broker-dealers and any profit on the resale of the shares
offered herein sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. We have agreed
to indemnify each selling shareholder against certain liabilities, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares offered hereby against certain
liabilities, including liabilities arising under the Securities Act.

Because selling shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling shareholders will be
subject to the prospectus delivery requirements of the Securities Act. We have
informed the selling shareholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales in the
market.

Selling shareholders also may resell all or a portion of the shares offered
hereby in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of Rule 144 or another exemption under the Securities Act.

Upon our being notified by a selling shareholder that any material arrangement
has been entered into with a broker-dealer for the sale of shares offered hereby
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:

o the name of each such selling shareholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the initial price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
o other facts material to the transaction.

We will pay all of the costs of qualifying these securities under federal and
state securities laws, including legal and accounting fees, as well as printing
and other related costs.

DESCRIPTION OF PRIVATE PLACEMENTS

2004 PRIVATE PLACEMENT

Issuance of 1,000,000 common shares and 1,100,000 common share purchase warrants
for gross proceeds of $2,000,000.

On January 20, 2004, we completed a private placement of 1,000,000 common shares
and 1,100,000 common share purchase warrants for gross proceeds of $2,000,000.
All the warrants expire on January 15, 2007 with 500,000 vesting immediately and
exercisable at $2.00 per share, 350,000 vesting on January 15 2005 and
exercisable at a price of $2.05 and the remaining 250,000 warrants vesting on
July 15, 2004 and exercisable at a price of $2.05 per share. The later two
vestings will become immediate if any one of a number of significant changes
occurs within the Company. This transaction was effected as a private placement
in accordance with Rule 506 of Regulation D promulgated under the Securities Act
of 1933, as amended. We will use the net proceeds of that private placement for
ongoing sales operations, working capital purposes, to continue our research and
development activities and for general corporate purposes. We also entered into
a consultation agreement and advisory board agreement with Mr. Wigdale for which
no compensation is payable by us other than a commission on sales of products
generated by Mr. Wigdale.

We agreed to file the registration statement to register the shares and the
shares underlying the warrants issued pursuant to this private placement within
60 days of the closing of the private placement.

Lakefront Partners, LLC acquired 80,000 common shares and 18,750 common share
purchase warrants as part of our April 2002 private placement.

DSS ACQUISITION SHARES AND SHARE PURCHASE WARRANTS

Issuance of 200,000 common shares and 120,000 common shares purchase warrants.

In January 2003, we acquired 100% of the outstanding shares of DSS Software
Technologies, a consulting services provider. The aggregate purchase price was
$1,301,038 consisting of $300,000 in cash, $26,998 in the costs associated with
the acquisition, $600,000 of promissory note payable in instalments of $300,000
on January 2, 2004 and $300,000 on January 2, 2005 and 120,000 share purchase
warrants with a value of $374,040. The share purchase warrants vest equally on
January 2, 2003, 2004 and 2005 and are exercisable at $3.75 per share for five
years. Additional future cash consideration in the amount of $800,000 is payable
based on the achievement of certain financial targets over the next two years
and will be recorded with an increase to goodwill if and when the targets have
been met.

In February 2004, we renegotiated the purchase price whereby the $600,000 of
promissory note payable in installments of $300,000 on January 2, 2004 and
$300,000 on January 2, 2005 and 120,000 share purchase warrants with a fair
value of Cdn $589,824 ($374,040) were exchanged for $50,000 paid on February 15,
2004, $50,000 to be paid on April 15, 2004, $100,000 to be paid on January 15,
2005 and by issuance of 200,000 common shares with a fair value of $400,000 and
120,000 share purchase warrants. The share purchase warrants vest on January 2,
2005 and are exercisable at $2.05 per share for two years.

ADVISORY BOARD CONSULTANT AGREEMENT
Issuance of 25,000 common share purchase warrants issuable upon the exercise of
warrants.

On July 1, 2003, we entered into an agreement with Howard Schmidt to provide
advisory board consulting services. In consideration for the services to be
rendered in accordance with the agreement, we issued a three-year warrant
terminating on January 31, 2006 to purchase up to 25,000 of our common shares at
$2.50 per share in regards to the compensation payable by us for these services.

CONSULTANT AGREEMENT
Issuance of 72,000 common share purchase warrants issuable upon the exercise of
warrants.

On January 31, 2004, we entered into an agreement with Corman Communications,
LLC. to provide public relations services. In consideration for the services to
be rendered in accordance with the agreement, we issued a two-year warrant
terminating on January 31, 2006 to purchase up to 72,000 of our common shares at
$2.50 per share in regards to partial compensation payable by us for these
services.

CONSULTANT AGREEMENT

Issuance of 5,000 common share purchase warrants issuable upon the exercise of
warrants.

During October 2003, we entered into an agreement with Asymmetri Incorporated to
provide marketing services. In consideration for the services to be rendered in
accordance with the agreement, we issued a one-year warrant terminating on
October 20, 2004 to purchase up to 5,000 of our common shares at $2.50 per share
in regards to partial compensation payable by us for these services.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of material United States Federal income tax
consequences generally applicable to a U.S. Holder (as defined below) of our
common shares as well as certain Canadian federal income tax requirements
applicable to shareholders who are not resident of Canada. This discussion does
not address all potentially relevant Federal income tax matters and it does not
address consequences peculiar to persons subject to special provisions of
Federal income tax law, such as, for example, tax-exempt organizations,
qualified retirement plans, persons subject to alternative minimum tax,
financial institutions, insurance companies, real estate investment trusts,
regulated investment companies, broker-dealers, non-resident alien individuals
or foreign corporations whose ownership of our common shares is not effectively
connected with the conduct of a trade or business in the United States and
shareholders who acquired their shares through the exercise of employee share
options or otherwise as compensation. In addition, this discussion only applies
to common shares held by U.S. Holders as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended, and does not
cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue
Code, Treasury Regulations, published Internal Revenue Service rulings,
published administrative positions of the Internal Revenue Service and court
decisions that are currently applicable, any or all of which could be materially
and adversely changed, possibly on a retroactive basis, at any time. The
following discussion is for general information only and is not intended to be,
nor should it be construed to be, legal or tax advice to any holder or
prospective holder of our common shares and no opinion or representation with
respect to the United States Federal income tax consequences to any such holder
or prospective holder is made. Accordingly, holders and prospective holders of
our common shares should consult their own tax advisors about the federal,
state, local, and foreign tax consequences of purchasing, owning and disposing
of our common shares.

U.S. HOLDERS

As used herein, a "U.S. Holder" includes any person, with the exception of those
subject to special provisions of Federal income tax law, who holds our common
shares who is a citizen or resident of the United States, a partnership or
corporation organized under the laws of the United States, an estate, the income
of which is subject to United States federal income tax without regard to its
source and a trust if a United States court is able to exercise primary
supervision over administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust or if
the trust was in existence on August 20, 1996 and has elected to continue to be
treated as a United States person, and any other person or entity whose
ownership of our common shares is effectively connected with the conduct of a
trade or business in the United States.

DISTRIBUTIONS ON OUR COMMON SHARES

U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to our common shares are required to include in gross income for
United States Federal income tax purposes the gross amount of such distributions
to the extent that we have current or accumulated earnings and profits, without
reduction for any Canadian income tax withheld from such distributions. Such
Canadian tax withheld may be credited, subject to certain limitations, against
the U.S. Holder's United States Federal Income tax liability or, alternatively,
may be deducted in computing the U.S. Holder's United States Federal taxable
income by those who itemize deductions (see more detailed discussion at "Foreign

Tax Credit" below). To the extent that distributions exceed our current or
accumulated earnings and profits, they will be treated first as a return of
capital up to the U.S. Holder's adjusted basis in the common shares and
thereafter as gain from the sale or exchange of the common shares. Preferential
tax rates for long-term capital gains are applicable to an U.S. Holder, which is
an individual, estate or trust. There are currently no preferential tax rates
for long-term capital gains for an U.S. Holder, which is a corporation.
Dividends paid in Canadian dollars will be included in income in an U.S. dollar
amount based on the exchange rate at the time of their receipt. U.S. Holders
should consult their own tax advisors regarding the treatment of any foreign
currency gain or loss on any Canadian dollars received as a dividend which are
converted into U.S. dollars on a date subsequent to receipt.

Dividends paid on our common shares will not generally be eligible for the
dividends received deduction provided to corporations receiving dividends from
certain United States corporations. A U.S. Holder which is a corporation may,
under certain circumstances, be entitled to a 70% deduction of the United States
source portion of dividends received from us (unless we qualify as a "foreign
personal holding company" or a "passive foreign investment company", as defined
below) if such U.S. Holder owns shares representing at least 10% of the voting
power and value of Diversinet. The availability of this deduction is subject to
several complex limitations, which are beyond the scope of this discussion.

FOREIGN TAX CREDIT
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of our common shares may be entitled, at the
option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States Federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on an annual basis and applies to all
foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from)
the U.S. Holder during the year. There are significant and complex limitations
which apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holders United States income
tax liability that the U.S. Holder's foreign source income bears to his/her or
its worldwide taxable income.

In the determination of the application of this limitation, the various items of
income and deduction must be classified into foreign and domestic sources.
Complex rules govern this classification process. There are further limitations
on the foreign tax credit for certain types of income such as "passive income",
"high withholding tax interest", "financial services income", "shipping income",
and certain other classifications of income. In certain circumstances, recently
enacted legislation and other guidance issued by the United States Treasury may
deny a United States holder foreign tax credits (and instead may allow
deductions) for foreign taxes imposed on a dividend if the United States holder
(i) has not held the common shares for at least 16 days in the 30-day period
beginning 15 days before the ex-dividend date, during which it is not protected
from risk of loss; (ii) is obligated to make payments related to the dividends;
or (iii) holds the common shares in arrangements in which the United States
holder's expected economic profit, after non-US taxes, is insubstantial.

The availability of the foreign tax credit and the application of the
limitations on the credit are fact specific and holders and prospective holders
of our common shares should consult their own tax advisors regarding their
individual circumstances.

DISPOSITION OF OUR COMMON SHARES

A U.S. Holder will recognize gain or loss upon the sale of our common shares
equal to the difference, if any, between (i) the amount of cash plus the fair
market value of any property received, and (ii) the shareholder's tax basis in
the our common shares. Any gain recognized on the sale or other disposition of
common shares will generally be U.S. source income. Any loss recognized on the
sale or other disposition of common shares will generally be U.S. source.
However, such loss will be foreign source to the extent certain dividends were
received by the U.S. Holder within the 24-month period proceeding the date on
which the loss was recognized. This gain or loss will be capital gain or loss if
the common shares are capital asset in the hands of the U.S. Holder, which will
be a short-term or long-term capital gain or loss depending upon the holding
period of the U.S. Holder. Gains and losses are netted and combined according to
special rules in arriving at the overall capital gain or loss for a particular
tax year. Deductions for net capital losses are subject to significant
limitations. For U.S. Holders who are individuals, a capital loss is deductible

only to the extent of capital gains, plus ordinary income of up to $3,000; any
unused portion of such net capital loss may be carried over to be used in later
tax years until such net capital loss is thereby exhausted. For U.S. Holders
which are corporations (other than corporations subject to Subchapter S of the
Internal Revenue Code), any unused net capital loss may be carried back three
years from the loss year and carried forward five years from the loss year to be
offset against capital gains until such net capital loss is thereby exhausted.
If the amount realized on a sale or exchange is not denominated in U.S. dollars,
the amount realized will be equal to the U.S. dollar value thereof, determined
at the spot rate on the date of the sale or exchange.

Until such time as our common shares are listed on a stock exchange prescribed
for the purposes of the Income Tax Act (Canada) (which includes NASDAQ, but not
the OTC BB) our common shares will be taxable Canadian property for the purposes
of the Income Tax Act (Canada).

Under section 116 of the Income Tax Act (Canada), non-resident vendors who
dispose of certain types of taxable Canadian property (including our common
shares for as long as they are not listed on a prescribed stock exchange), have
to notify Canada Customs and Revenue Agency (CCRA) about the disposition either
before they dispose of the property or after they dispose of it. This
notification (the "Notice of Disposition") is due not later than ten (10) days
after the date the property was disposed of. The vendor may be able to claim an
exemption under an applicable tax treaty at the time the Notice of Disposition
is filed. If no exemption is available under an applicable treaty, before CCRA
can issue a certificate of compliance to the vendor, CCRA must receive either an
amount to cover the tax owing, or appropriate security for the tax on any gain
the vendor may realize at the time the property is disposed of. Such payments or
security the vendor provides will be credited to the vendor's account. If the
vendor does not comply with the section 116 requirements, which the vendor must
do so before receiving the certificate of compliance, the purchaser of the
property may deduct or withhold a specified amount from the proceeds of the
disposition to cover any tax which the vendor owes.

When filing a Notice of Disposition and claiming an exemption under a specific
tax treaty, necessary documentation to support the claim should be submitted
along with the request. The documentation which is acceptable must be based on
the particular tax treaty under which the exemption is claimed, such as proof of
residency, or that the gain has or will be reported in the vendor's country. Tax
officials, in some countries, will supply the necessary certification required
to claim the exemption. The United States Department of the Treasury, Internal
Revenue Service will provide certification for corporations, exempt
organizations and individuals. Requests for certification should be sent to the
appropriate service centre. The Department of the Treasury, Publication 686,
Certification for Reduced Tax Rates in Tax Treaty Countries, outlines the
certification process.

If the vendor does not obtain a certificate pursuant to section 116, the
purchaser becomes liable to pay as tax, on behalf of the vendor, an amount equal
to 25% of the proceeds of disposition. The purchaser of the property is then
entitled to withhold that amount from the proceeds of the disposition to cover
any tax which the vendor owes or may owe.

The required amount must be remitted to the Receiver General for Canada 30 days
after the end of the month is which the property was acquired.

OTHER CONSIDERATIONS

In the following three circumstances, the above sections of the discussion may
not describe the United States Federal income tax consequences resulting from
the holding and disposition of our common shares. Based on (a) the number of
shareholders of our common shares, and (b) our shareholder profile, we do not
believe that we are either a "Foreign Personal Holding Company" or a "Controlled
Foreign Corporation". However, we do not believe that we are likely to be
treated as a "Passive Foreign Investment Company" for the taxable years 1999,
2000 and 2001.

FOREIGN PERSONAL HOLDING COMPANY

If, at any time during a taxable year, more than 50% of the total combined
voting power or the total value of our outstanding shares are owned, actually or
constructively, by five or fewer individuals who are citizens or residents of
the United States and 60% or more of our gross income for such year was derived
from certain passive sources (e.g. from dividends received from unrelated
persons), we would be treated as a "foreign personal holding company." In that
event, U.S. Holders that hold our common shares would be required to include in
gross income for such year their allowable portions of such foreign personal
holding company income to the extent that we do not actually distribute such
income.

CONTROLLED FOREIGN CORPORATION

If more than 50% of the voting power of all classes of shares or the total value
of our shares is owned, directly or indirectly, by U.S. shareholders, each of
whom own 10% or more of our voting shares ("U.S. Shareholders"), we could be
treated as a "controlled foreign corporation" (a "CFC") under SubPart F of the
Internal Revenue Code. If we were classified as a CFC and as a PFIC, CFC
treatment would prevail with respect to U.S. Shareholders. CFC classification
would affect many complex results including the required inclusion by such
United States shareholders in income of their pro rata share: of "SubPart F
Income" (as specially defined by the Internal Revenue Code) of Diversinet; and
of our earnings invested in U.S. property. In addition, under Section 1248 of
the Internal Revenue Code, gain from the sale or exchange of our common shares
by a U.S. person who is or was a United States shareholder (as defined in the
Internal Revenue Code) at any time during the five years period ending with the
sale or exchange is generally treated as ordinary dividend income to the extent
of our earnings and profits attributable to the shares sold or exchanged.
Because of the complexity of SubPart F, and because it is not clear that we are
a controlled foreign corporation, a more detailed review of these rules is
outside of the scope of this discussion.

PASSIVE FOREIGN INVESTMENT COMPANY

As stated above, we believe that we will not be treated as a passive foreign
investment company ("PFIC"), as defined in Section 1297 of the Internal Revenue
Code, for our fiscal years 2002 or 2003.

United States income tax legislation contains rules governing PFIC's, that can
have significant tax effects on U.S. Holders of foreign corporations. These
rules do not apply to non-U.S. Holders. Section 1297 of the Internal Revenue
Code defines a PFIC as a corporation that is not formed in the United States
and, for any taxable year, either (i) 75% or more of its gross income is
"passive income", which includes interest, dividends and some types of rents and
royalties or (ii) the average percentage, by fair market value (or, if the
company is a controlled foreign corporation or makes an election, by adjusted
tax basis), of its assets that produce or are held for the production of
"passive income" is 50% or more. Based on these tests we do not meet the
definition of a PFIC in 1999, 2000 or 2001.

An U.S. Holder who holds shares in a foreign corporation during any year in
which such corporation qualifies as a PFIC is subject to U.S. Federal income
taxation under alternative tax regimes, depending upon whether such U.S. Holder
makes elections. The following is a discussion of these alternative tax regimes
as applicable to our U.S. Holders.

A U.S. Holder of a PFIC who does not make either of the elections described
below (a "Non-electing U.S. Holder") is subject to special taxation rules under
Section 1291 of the Internal Revenue Code with respect to (i) gains realized on
the disposition (or deemed to be realized by reason of a pledge) of his/her
common shares and (ii) excess distributions by us, defined as any distribution
received by a U.S. Holder from a PFIC in a taxable year that is greater than
125% of the average distributions received by the U.S. Holder in the three
preceding taxable years, or, if shorter, the U.S. Holder's holding period for
the shares.

A Non-electing U.S. Holder generally would be required to include in income pro
rata all gains realized on the disposition of his/her common shares and all
excess distributions over the entire holding period for the PFIC common shares.
All gains or excess distributions allocated to prior years of the U.S. Holder
(other than years prior to the first taxable year of the company during such
U.S. Holder's holding period and beginning after January 1, 1987 for which it
was a PFIC) would be taxed at the highest tax rate for each such prior year
applicable to ordinary income. The Non-electing U.S. Holder also would be liable
for interest on the foregoing tax liability for each such prior year calculated
as if such liability had been due with respect to each such prior year. A
Non-electing U.S. Holder that is not a corporation must treat this interest
charge as "personal interest" which, as discussed above, is partially or wholly
non-deductible. The balance of the gain or the excess distribution will be
treated as ordinary income in the year of the disposition or distribution, and
no interest charge will be incurred with respect to such balance.

If we are a PFIC for any taxable year during which a Non-electing U.S. Holder
holds common shares, then we will continue to be treated as a PFIC with respect
to such common shares, even if we are no longer a PFIC as defined above. A
Non-electing U.S. Holder may terminate this deemed PFIC status by electing to
recognize a gain (which will be taxed under the rules discussed above for
Non-electing U.S. Holders) as if such common shares had been sold on the last
day of the last taxable year for which it was a PFIC.

Under Section 1291(f) of the Internal Revenue Code, the Department of the
Treasury has issued proposed regulations that would treat as taxable transfers
of PFIC shares by Non-electing U.S. Holders that are generally not otherwise
taxed, such as gifts, exchanges pursuant to corporate reorganizations, and
transfers at death. Special, generally adverse, rules will apply with respect to
the common shares while the company is a PFIC. For example under Section
1298(b)(6) of the Internal Revenue Code, a U.S. Holder who uses PFIC shares as
security for a loan (including a margin loan) will, except as may be provided in
regulations, be treated as having made a taxable disposition of such shares.

Alternatively, if we are a PFIC, an U.S. Holder (an "Electing U.S. Holder") who
owns common shares is permitted generally to elect out of the tax treatment
discussed above, if an U.S. Holder makes a mark-to-market election with respect
to common shares. Under such election, an Electing U.S. Holder would generally
recognize as ordinary income for each taxable year an amount equal to the
excess, if any, of the fair market value of common shares as of the close of the
taxable year over the Electing U.S. Holder's adjusted tax basis in such shares.
An Electing U.S. Holder would generally be allowed an ordinary deduction (to the
extent of any net mark-to-market gains recognized for prior taxable years) for
the excess, if any, of the adjusted tax basis of the common shares over their
fair market value as of the close of the taxable year. An Electing U.S. Holder's
adjusted tax basis of the common shares would generally be adjusted to reflect
the amounts included or deducted under the mark-to-market election.
Additionally, any gain on the actual sale or other disposition of the common
shares generally will be treated as ordinary income. Ordinary loss treatment
also would generally apply to any loss realized on the actual sale or other
disposition of the common shares to the extent that the amount of such loss did
not exceed the net mark-to-market gains previously included with respect to such
shares. An election to mark to market would generally apply to the taxable year
made and all subsequent taxable years. A mark-to-market election is subject to
complex and specific rules and requirements, and U.S. Holders are strongly urged
to consult their tax advisors concerning such election if the company is
classified as a PFIC.

Finally, an U.S. Holder who elects in a timely manner to treat us as a
"qualified electing fund" (a "QEF") as defined in the Internal Revenue Code
would be subject to another set of special rules different from those described
above. Although a QEF election may be beneficial to some U.S. Holders depending
upon their particular tax situations, it requires us to make information
available to such holders, and we do not intend to make such information
available even if it is classified as a PFIC. Accordingly, the QEF election will
not be available to U.S. Holders.

The foregoing discussion is based on existing provisions of the Internal Revenue
Code, existing and proposed regulations thereunder, and current administrative
ruling and court decisions, all of which are subject to change. Any such change
could affect the validity of this discussion. In addition, the implementation of
aspects of the PFIC rules requires the issuance of regulations which in many
instances have not been promulgated and which may have retroactive effect. There
can be no certainty that any of these proposed regulations will be enacted or
promulgated and if so, the form they will take or the effect that they may have
on this discussion. Accordingly, and due to the complexity of the PFIC rules,
U.S. Holders who are shareholders of Diversinet are strongly urged to consult
their own tax advisors concerning the impact of these rules on their investment
in us.

EXPERTS

Our consolidated financial statements for the fourteen months ended December 31,
2003 and the twelve months ended October 31, 2003 and 2002 and for each of the
years in the three-year period ended October 31, 2003, have been incorporated by
reference herein and in the Registration Statement in reliance on the report of
KPMG LLP, independent accountants, also incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The audit
report of KPMG LLP concerning the December 31, 2003 consolidated financial
statements included additional comments for U.S. readers that states that
conditions and events exist that cast substantial doubt on our ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of that uncertainty.

Certain legal matters in connection with the registration of the common shares
hereunder with respect to Canadian law will be passed upon for us by Lang
Michener of Toronto, Ontario, our Canadian counsel.

WHERE YOU CAN FIND MORE INFORMATION AND INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE

This prospectus is a part of a registration statement on Form F-3, which we
filed with the Securities and Exchange Commission under the Securities Act of
1933. As permitted by the rules and regulations of the SEC, this prospectus does
not contain all of the information contained in the registration statement and
the exhibits and schedules thereto. As such we make reference in this prospectus
to the registration statement and to the exhibits and schedules thereto. For
further information about us and about the securities we hereby offer, you
should consult the registration statement and the exhibits and schedules
thereto. You should be aware that statements contained in this prospectus
concerning the provisions of any documents filed as an exhibit to the
registration statement or otherwise filed with the SEC are not necessarily
complete, and in each instance reference is made to the copy of such document so
filed. Each such statement is qualified in its entirety by such reference.

We file annual and special reports and other information with the Securities and
Exchange Commission (Commission File Number 0000918387). These filings contain
important information which does not appear in this prospectus. For further
information about us, you may read and copy these filings at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330, and may obtain copies of our filings from the public reference
room by calling (202) 942-8090.

The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which we have filed or will file with the SEC.
We are incorporating by reference in this prospectus the documents listed below:

(a) Our Annual Report on Form 20-F dated April 15, 2004
(b) Our Report on Form 6-K dated March 11, 2004
(c) Our Report on Form 6-K dated January 29, 2004
(d) Our Report on Form 6-K dated December 24, 2003
(e) Our Annual Report on Form 20-F dated April 29, 2003
(f) Our Report on Form 6-K dated September 16, 2003
(g) Our Report on Form 6-K dated September 12, 2003
(h) Our Report on Form 6-K dated July 21, 2003;
(i) Our Report on Form 6-K dated June 24, 2003;
(j) Our Report on Form 6-K dated March 14, 2003;
(k) Our Report on Form S-8 dated February 20, 2003;
(l) Our Report on Form 6-K dated December 31, 2002;
(m) Our Report on Form 6-K dated December 20, 2002; and,
(n) The description of our securities contained in our Registration
Statement under Section 12 of the Securities Exchange Act of 1934,
as amended, of which this prospectus is a part and any and all
amendments and reports filed for the purpose of updating such
description.

All documents which we file with the SEC pursuant to Section 13(a), 13(c) or
15(d) of the Securities Exchange Act after the date of this prospectus and
before the expiration or termination of this prospectus shall be deemed to be
incorporated by reference in this prospectus and to be a part of it from the
filing dates of such documents. Certain statements in and portions of this
prospectus update and replace information in the above listed documents
incorporated by reference. Likewise, statements in or portions of a future
document incorporated by reference in this prospectus may update and replace
statements in and portions of this prospectus or the above listed documents.

We shall provide you without charge, upon your written or oral request, a copy
of any of the documents incorporated by reference in this prospectus, other than
exhibits to such documents which are not specifically incorporated by reference
into such documents. Please direct your written or telephone requests to
Diversinet Corp., 2225 Sheppard Avenue East, Suite 1801, Toronto, Ontario, M2J
5C2 Canada, Attn: David Hackett, Chief Financial Officer, telephone number (416)
756-2324. You may also obtain information about us by visiting our website at
www.diversinet.com. Information contained in our website is not part of this
prospectus.

We are a Canadian company and are a "foreign private issuer" as defined in Rule
3b-4 under the Securities Exchange Act of 1934. As a result, (1) our proxy
solicitations are not subject to the disclosure and procedural requirements of
Regulation 14A under the Exchange Act, (2) transactions in our equity securities
by our officers and directors are exempt from Section 16 of the Exchange Act,
and (3) until November 4, 2002, we were not required to make, and did not make,
its SEC filings electronically, so that those filings are not available on the
SEC's Web site. However, since that date, we have been making all filings with
the SEC electronically, and these filings are available over the Internet at the
SEC's Web site at www.sec.gov.

ENFORCEABILITY OF CIVIL LIABILITIES

Service of process upon us and upon our directors and officers and the Canadian
experts named in this prospectus, most of whom reside outside the U.S., may be
difficult to obtain within the U.S. Furthermore, because substantially all of
our assets and substantially all of our directors and officers are located
outside the U.S., any judgment obtained in the U.S. against us or any of our
directors and officers may not be collectible within the U.S.
____________

You should rely only on the information contained in this prospectus or that to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus does not constitute an offer to
sell, or the solicitation of an offer to buy, any of the securities offered
hereby to any person in any jurisdiction in which such offer or solicitation
would be unlawful. Our business may change after the date of this prospectus.
Delivery of this document and any sale of securities made hereunder does not
mean otherwise.

TABLE OF CONTENTS Page

FORWARD-LOOKING INFORMATION..............................................13
INFORMATION SUMMARY.......................................................2
RISK FACTORS..............................................................5
USE OF PROCEEDS..........................................................13
DIVIDEND POLICY..........................................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........................13
SELLING SECURITYHOLDERS..................................................22
PLAN OF DISTRIBUTION.....................................................25
DESCRIPTION OF PRIVATE PLACEMENTS........................................25
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............................29
EXPERTS 33
WHERE YOU CAN FIND MORE INFORMATION AND
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................33

-----------

DIVERSINET CORP.
2,402,000 COMMON SHARES

PROSPECTUS

________________________________________________________________________________

References in this prospectus to "Diversinet" mean Diversinet Corp., and
references to "we", "us", and "our" refer to Diversinet Corp. unless the context
otherwise indicates.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses of this offering which will be borne by Diversinet are estimated,
in U.S. dollars, to be as follows:

SEC Registration Fee 352
Legal Services 40,000
Accounting 10,000
Miscellaneous 15,000
------
Total $65,352

All of the above expenses except the registration fee and miscellaneous are
estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under the Business Corporations Act (Ontario) (the "Act"), Diversinet may
indemnify a present or former director or officer or a person who acts or acted
at Diversinet's request as a director or officer of another corporation of which
Diversinet is or was a shareholder or creditor and his heirs and legal
representatives against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been such a director or officer
if the director or officer acted honestly and in good faith with a view to the
best interests of Diversinet and, in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, had reasonable
grounds for believing that his conduct was lawful. Such indemnification may be
made in connection with an action by or on behalf of Diversinet or such other
corporation only with court approval. A director or officer is entitled to
indemnification from Diversinet as a matter of right in respects of all costs,
charges and expenses reasonably incurred by him in connection with the defense
of any civil, criminal or administrative proceeding to which he is a party by
reason of being or having been a director or officer of such corporation if he
was substantially successful on the merits and fulfilled the conditions set
forth above.

The by-laws of Diversinet provide that each director, each officer, each former
director, each former officer and each person who acts or acted at Diversinet's
request as a director or officer of a body corporate of which Diversinet is or
was a shareholder or creditor, and his heirs and legal representatives shall be
indemnified and saved harmless by Diversinet from and against all costs, charges
and expenses, including without limitation, each amount paid to settle an action
or satisfy a judgment, reasonably incurred by him in respect of any civil,
criminal or administrative action or proceeding to which his is made a party by
reason or being or having been a director or officer of Diversinet or such body
corporation, if he acted honestly and in good faith with a view to Diversinet's
best interests and in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty he had reasonable grounds for
believing his conduct was lawful. In certain circumstances Diversinet has
provided its Directors or its subsidiaries' Directors with a written
indemnification confirming the indemnification available under its by-laws.

Diversinet currently maintains directors' and officers' liability insurance,
which, subject to the provisions contained in the policy, protects the directors
and officers, as such, against all claims during the term of their office
provided they acted honestly and in good faith with a view to the best interests
of Diversinet. Such insurance provides for an aggregate of $5,000,000 annual
protection against liability for and reimbursement of amounts paid.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended may be permitted to directors, officers or persons controlling
the registrant pursuant to the foregoing provisions, the registrant has been
informed that, in the opinion of the U.S. Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
of 1933, as amended and is therefore unenforceable.

ITEM 16. EXHIBITS

EXHIBIT NO.

EXHIBITS

4.1 Form of Stock Purchase Agreement for the January 20, 2004 private
placement
4.2 Form of Stock Purchase Agreement for the June 23, 2003 private
placement.(1)
4.3 Form of Warrant for purchase of shares for the April 4, 2002 private
placement.(1)
4.4 Form of Warrant for purchase of shares for the June 23, 2003 private
placement. (1)
23.1 Consent of KPMG LLP.

ITEM 17. UNDERTAKINGS

Paragraph designations correspond to designations in Regulation S-K, Item 512.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;

(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation
S-X at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Act need not be furnished, provided, that
the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to
this paragraph (a)(4) and other information necessary to ensure that
all other information in the prospectus is at least as current as
the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act
or Rule 3-19 of Regulation S-X if such financial statements and
information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended
that are incorporated by reference in the Form F-3.

(1) Previously filed with Registration Statement on Form F-3 filed July 22,
2003 2 Previously filed with Registration

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as
amended, each filing of the registrant's annual report pursuant to
section 13(a) of section 15(d) of the Securities Exchange Act of
1934, as amended (and where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934, as amended) that is incorporated by
reference in the registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended may be permitted to directors,
officers and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expense incurred or paid by a
director, officer, or controlling person of the registrant in the
successful defense of any such action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, Province of Ontario, Canada on March 15,
2004.

DIVERSINET CORP.

By: /s/ David Hackett
--------------------------------------
David Hackett, Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date

/s/ Stanley Beck Director March 15, 2004
- ----------------
Stanley Beck

/s/ Derek Buntain Director March 15, 2004
- -----------------
Derek Buntain

/s/ Keith Powell Director March 15, 2004
- ----------------
Keith Powell

/s/ Nagy Moustafa President, Chief Executive March 15, 2004
- ----------------- Officer and Director
Nagy Moustafa

/s/ Charles Shiu Director March 15, 2004
- ----------------
Charles Shiu

/s/ Mark Steinman Director March 15, 2004
- -----------------
Mark Steinman

/s/ Charles Walton Director March 15, 2004
- ------------------
Charles Walton

/s/ Nagy Moustafa Authorized United States March 15, 2004
- -----------------
Nagy Moustafa Representative, CEO of Diversinet
Corporation of America, a Delaware
corporation and wholly owned
subsidiary of the Registrant

EXHIBIT INDEX

EXHIBIT NO. EXHIBIT

4.1 Form of Stock Purchase Agreement for the January 20, 2004 private
placement

4.2 Form of Stock Purchase Agreement for the June 23, 2003 private
placement.(1)

4.3 Form of Warrant for purchase of shares for the April 4, 2002 private
placement.(1)

4.4 Form of Warrant for purchase of shares for the June 23, 2003 private
placement.(1)

23.1 Consent of KPMG LLP.

(1) Previously filed with Registration Statement on Form F-3 filed July 22,
2003 2 Previously filed with Registration

Statement on Form F-3 filed July 22, 2003