UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13G

o

Rule 13d-1(b)

ý

Rule 13d-1(c)

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Rule 13d-1(d)

CUSIP No.  98974P100

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Vertical Fund I, L.P.

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)

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(b)

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3.

SEC Use Only

4.

Citizenship or Place of Organization
Delaware

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
438,108

6.

Shared Voting Power 
0

7.

Sole Dispositive Power 
438,108

8.

Shared Dispositive Power
0

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
438,108

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o

11.

Percent of Class Represented by Amount in Row (9)
1.36%

12.

Type of Reporting Person (See Instructions)
PN

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Vertical Fund II, L.P.

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)

o

(b)

ý

3.

SEC Use Only

4.

Citizenship or Place of Organization
Delaware

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
105,902

6.

Shared Voting Power 
0

7.

Sole Dispositive Power 
105,902

8.

Shared Dispositive Power
0

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
105,902

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o

11.

Percent of Class Represented by Amount in Row (9)
.33%

12.

Type of Reporting Person (See Instructions)
PN

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Stephen D. Baksa

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

(a)

o

(b)

ý

3.

SEC Use Only

4.

Citizenship or Place of Organization
U.S.A.

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
277,000

6.

Shared Voting Power 
821,010

7.

Sole Dispositive Power 
277,000

8.

Shared Dispositive Power
821,010

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
821,010

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o

11.

Percent of Class Represented by Amount in Row (9)
2.55%

12.

Type of Reporting Person (See Instructions)
IN

Item 1.

(a)

Name of Issuer
ZIX Corporation (“ZIXI”)

(b)

Address of Issuer’s Principal Executive Offices
2711 North Haskell Avenue
Suite 2300 LB36
Dallas, Texas  75204

Item 2.

(a)

Name of Person Filing
Vertical Fund I, L.P. (“VF-I”)
Vertical Fund II, L.P. (“VF-II”) (together with VF-I, the “Partnerships”)
Stephen D. Baksa (“Baksa”)

(b)

Address of Principal Business Office or, if none, Residence
Each of the Partnerships and Baksa has a principal business address at 25 DeForest Avenue, Summit, New Jersey 07901.

(c)

Citizenship
Each of the Partnerships is a Delaware limited partnership.

Baksa is a citizen of the United States of America.

(d)

Title of Class of Securities
Common Stock

(e)

CUSIP Number
98974P100

Item 3.

If this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:

(a)

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Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o).

(b)

o

Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).

(c)

o

Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c).

(d)

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Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C 80a-8).

(e)

o

An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E);

(f)

o

An employee benefit plan or endowment fund in accordance with §240.13d-1(b)(1)(ii)(F);

(g)

o

A parent holding company or control person in accordance with § 240.13d-1(b)(1)(ii)(G);

(h)

o

A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);

(i)

o

A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);

(j)

o

Group, in accordance with §240.13d-1(b)(1)(ii)(J).

None of the above.  The statement is filed pursuant to Rule 13d-1(c).

Item 4.

Ownership

Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.

(a)

Amount beneficially owned:   

821,010 shares of Common Stock

(b)

Percent of class:   

2.55%

(c)

Number of shares as to which the person has:

(i)

Sole power to vote or to direct the vote   

821,010

(ii)

Shared power to vote or to direct the vote    

0

(iii)

Sole power to dispose or to direct the disposition of   

821,010

(iv)

Shared power to dispose or to direct the disposition of   

0

The foregoing amounts of shares and percentage represent the combined holdings of the Partnerships and Baksa.  The Partnerships and Baksa are filing this statement jointly to reflect their combined ownership because the sole general partner of each Partnership is The Vertical Group, L.P. (“Group”), a Delaware limited partnership, and Baksa is a general partner of Group.  The Partnerships and Baksa may therefore be deemed to constitute a “group” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and Baksa may be deemed to be the beneficial owner of the ZIXI shares owned by each Partnership.  Baksa disclaims beneficial ownership of the ZIXI shares owned by the Partnerships except to the extent of his indirect pecuniary interest therein.

Item 5.

Ownership of Five Percent or Less of a Class

If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following   ý.

Item 6.

Ownership of More than Five Percent on Behalf of Another Person

Not applicable.

Item 7.

Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person

Not applicable.

Item 8.

Identification and Classification of Members of the Group

Not applicable.

Item 9.

Notice of Dissolution of Group

Not applicable.

Item 10.

Certification

By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

Dated: February 7, 2005

VERTICAL FUND I, L.P.

By: THE VERTICAL GROUP, L.P.

General Partner

By:

  /s/ John E. Runnells

John E. Runnells

General Partner.

VERTICAL FUND II, L.P.

By: THE VERTICAL GROUP, L.P.

General Partner

By:

  /s/ John E. Runnells

John E. Runnells

General Partner.

  /s/ Stephen D. Baksa

Stephen D. Baksa