U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 FORM 10-KSB/A


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

     For the fiscal year ended March 31, 2001

                                      OR

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

             For the transition period from ____________ to ____________

                         Commission File No.: 0-13117

                              ION NETWORKS, INC.
                (Name of Small Business Issuer in Its Charter)

                        Delaware                      22-2413505
               ---------------------------      ------------------------
                    (State or Other                  (IRS Employer
                    Jurisdiction of             Identification Number)
                    Incorporation or
                     Organization)

                 1551 S. Washington Ave.,                  08854
                     Piscataway, NJ             ------------------------
                  (Address of Principal                (Zip Code)
                   Executive Offices)

Issuer's telephone number, including area code:  (732) 529-0100

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

Securities  registered  under  Section  12(g) of the Exchange  Act:
Common Stock, $.001 par value

[X]  Check whether the issuer:  (1) filed all reports  required to be filed by
     Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
     such  shorter  period  that the  registrant  was  required  to file  such
     reports),  and (2) has been subject to such filing  requirements  for the
     past 90 days.

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

The  issuer's revenues for its most recent fiscal year totaled $11,676,547.

The  aggregate  market  value  of the  voting  stock  held  by  non-affiliates
     computed  by  reference  to the  average  of the bid and asked  prices as
     reported by the Nasdaq Stock Market as of June 25, 2001 was approximately
     $10,501,434.

There were 18,203,302 shares of Common Stock outstanding as of June 25, 2001.

DOCUMENTS INCORPORATED BY REFERENCE: None.

      This  amendment  to Form  10-KSB  for the  period  ended
      March 31, 2001 is filed to include Items 9-12  contained
      in  Part  III  of  Form  10-KSB  that  were   previously
      incorporated  by reference to the  Company's  definitive
      Proxy  Statement in connection  with the Company's  2001
      Annual Meeting of Stockholders.

<PAGE>

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

Directors and Executive Officers

     The  directors  and  executive  officers of the  Company,  their ages and
present positions with the Company are as follows:

                                   Position Held with the        Director
           Name             Age            Company               Since
           ----             ---    ----------------------        --------

Stephen M. Deixler          66     Chairman of the Board of      1985
(1)(2)(3)(4)                       Directors

Alexander C. Stark, Jr.     68     Director                      1997
(1)(2)(3)(4)

Alan Hardie (3)             61     Director                      1999

William Martin Ritchie(4)   52     Director                      1999

Baruch Halpern              50     Director                      1999

Frank S. Russo(4)           58     Director                      2000

Ronald C. Sacks             43     Chief Executive Officer        N/A
                                   and Interim Principal
                                   Financial Officer

Jane Kaufman                53     President, Chief Operating     N/A
                                   Officer and Secretary

---------------
(1)  Member of Compensation/Stock Option Committee
(2)  Member of Nominating Committee
(3)  Member of Audit Committee
(4)  Member of Strategic Steering Committee


Information About Directors

     Set forth below is certain information with respect to each director:

     STEPHEN M. DEIXLER has been Chairman of the Board of Directors since 1985
and served as Chief  Executive  Officer of the Company  from April 1996 to May
1997. He was President of the Company from May 1982 to June 1985 and served as
Treasurer of the Company from its formation in 1982 until  September 1993. Mr.
Deixler was the Chairman of Princeton Credit Corporation until April 1995.

     ALEXANDER  C. STARK,  JR. has been a director of the Company  since 1997.
Mr. Stark is the  President of AdCon,  Inc.,  a consulting  firm  organized to
advise and counsel  senior  officers of global  telecom  companies.  Mr. Stark
previously  worked for 40 years at AT&T,  where he most  recently  served as a
Senior Vice President.


                                     -2-
<PAGE>

     ALAN HARDIE has served as a director of the Company  since April 1, 1999.
From 1994 until June,  2001,  when he retired,  Mr.  Hardie served as Chief of
Customer Service for AT&T and BT Global Venture-Concert.*

     WILLIAM  MARTIN  RITCHIE has served as a director  of the  Company  since
April  1,  1999.  Mr.  Ritchie  currently  acts  as a  consultant  in his  own
consulting  entity, MR Ventures,  where he provides various start-up companies
with  management  assistance  and early stage  investment.  Mr.  Ritchie was a
founder of Spider Systems, a Scottish electronics company,  where he served in
several  capacities,  including as Managing  Director,  from 1984 to 1995. Mr.
Ritchie  currently  serves on the board of directors  of various  companies in
Scotland.*

     BARUCH  HALPERN  has served as a director of the  Company  since  October
1999.  From January 1995 to 1999,  Mr. Halpern was an  institutional  research
analyst with Goldsmith & Harris  Incorporated,  where he advised  institutions
about  investment  opportunities.  He was also an advisor in connection with a
leveraged buy-out of a public company and several private placements. In 1999,
Mr. Halpern formed Halpern Capital  Advisors which was a division of Goldsmith
& Harris Incorporated.  In 2000, Halpern Capital Advisors became a division of
Magna  Securities  Corp.  In 2000,  Halpern  Capital  Advisors was involved in
numerous  financings,  having  raised over $120 million in capital for several
public entities. Mr. Halpern is a Chartered Financial Analyst.

     FRANK RUSSO has served as a director of the Company since  November 2000.
Mr. Russo was with AT&T Corporation for nearly 20 years,  most recently (since
1995) as Vice President - Corporate Strategy and Business  Development.  While
at AT&T Solutions, Mr. Russo helped architect and launch AT&T's entry into the
global network outsourcing and professional  services business. He also served
as General Manager - Network Management Services,  General Manager - Satellite
Transponder  and VSAT  Services,  and General  Manager - AT&T Consumer  Direct
Products and Services.  Mr. Russo retired from AT&T in 2000.  Prior to joining
AT&T,  Mr. Russo was employed by IBM  Corporation,  in  engineering  and sales
positions.  Mr.  Russo  served  as a  director  of  Oak  Industries,  Inc.,  a
manufacturer of highly engineered components,  in 1999 and 2000. He holds a BS
from the State University of New York at Oswego.

Non-Director Executive Officers

     Set forth below is certain  information  with  respect to each  executive
officer of the Company who is not also a director of the Company:

     RONALD C. SACKS has been Chief  Executive  Officer and Interim  Principal
Financial  Officer of the Company since October 9, 2000.  Mr. Sacks'  services
are being provided pursuant to a consulting  agreement between the Company and
Venture  Consulting  Group,  Inc. It is  anticipated  that Mr.  Sacks will not
continue to provide services as an Officer of the Company after the expiration
of the  consulting  agreement  on  September  18,  2001.  Prior to joining the
Company, Mr. Sacks was and continues to be the President of

---------------
* Each of Messrs.  Hardie and  Ritchie  was  elected to serve as a director in
  connection  with an  agreement  among the  Company and the  shareholders  of
  SolCom Systems Limited  ("SolCom") in March 1999 to nominate two nominees to
  the Board of Directors upon the closing of the  acquisition of SolCom by the
  Company.


                                      -3-
<PAGE>

Venture  Consulting  Group, Inc. a consulting firm he founded in 1994 to serve
corporate ventures and new business start-ups.  Mr. Sacks spent 1982 - 1996 at
AT&T  Corporation  where he played a leading  role in the  start-up  of AT&T's
Network  Management  Services  Division  in 1989,  and guided it  through  its
initial five years. He also directed national sales and engineering teams that
addressed  the  wide-range  of network  service  and  product  needs of global
enterprises.  Mr.Sacks  began his career in  marketing at TCI. He holds an MBA
degree from the Stern School of  Management  at New York  University  and a BS
from State University of New York at Plattsburgh.

     JANE KAUFMAN has been the  President and Chief  Operating  Officer of the
Company  since May,  2001,  and has been the  Secretary  of the Company  since
October,  2000. From January,  2000 and until her appointment as President and
COO,  Ms.  Kaufman was the  Executive  Vice  President-Marketing  and Business
Development of the Company.  From 1996, and prior to joining the Company,  she
worked as a consultant with small technology companies to develop new business
opportunities  and  restructure  operations.  From 1995 to 1996,  Ms.  Kaufman
served as President and COO of Wave Systems Corp., an e-commerce company. From
1990 to 1994 she was  President  of NYNEX  Venture  Company,  an  incubator of
high-tech   start-up   companies.   Ms.  Kaufman  has  a  doctoral  degree  in
experimental psychology and an MSOR, both from New York University.  She has a
BA from Bennington College.

     The  officers of the Company are elected by the Board of Directors at its
first meeting after each annual meeting of the Company's stockholders and hold
office until their successors are chosen and qualified,  until their death, or
until they resign or have been  removed from  office.  No family  relationship
exists  between any  director or executive  officer and any other  director or
executive officer.


Executive Officers

     The  executive  officers  of the  Company  are  Ronald  C.  Sacks,  Chief
Executive  Officer and Jane Kaufman,  President,  Chief Operating  Officer and
Secretary. Mr. Sacks also serves as the Interim Principal Financial Officer of
the Company.

Section 16(A) Beneficial Ownership Reporting Compliance

     The  following  persons  have  failed to file on a timely  basis  certain
reports  required by Section 16(a) of the  Securities  Exchange Act of 1934 as
follows:  Mr. Alan Hardie failed to timely file an Annual Statement of Changes
in  Beneficial  Ownership of  Securities  on Form 5. Mr. Frank Russo failed to
timely file a Statement of Initial Beneficial  Ownership of Securities on Form
3. All such  filings  have been made.  During the fiscal  year ended March 31,
2001, the Company is not aware of other late filings,  or failure to file, any
other reports required by Section 16(a) of the Exchange Act.

Item 10. Executive Compensation.

     The following table  summarizes the  compensation  paid or accrued by the
Company  during the past three fiscal  years,  including the fiscal year ended
March 31, 2001, to the Company's Chief Executive Officer, the Company's former
Chief Executive  Officer,  to the Company's one other most highly  compensated
officer who earned salary and bonus  compensation  of at least $100,000 during
the fiscal year ended March 31, 2001,  and to two other  employees  who earned
salary and bonus  compensation  of at least  $100,000  during the fiscal  year
ended March 31, 2001 (these executive officers and employees being hereinafter
referred to as the "Named Executive Officers").

                                     -4-

<PAGE>

<TABLE>
<CAPTION>

                                                    SUMMARY COMPENSATION TABLE

          Annual Compensation                                             Long-term Compensation
-----------------------------------------            -----------------------------------------------------------------
                                                              Awards                                              Payouts
                                                     --------------------------                         -------------------------

                                                      Other              Restricted      Securities                   All Other
Principal                                             Annual             Stock           Underlying     LTIP          Compensation
Position                Year   Salary($)  Bonus($)    Compensation($)    Award(s)($)     Options (#)    Payouts($)     ($)(1)
--------                ----   ---------  --------    ---------------    ------------    ------------   -----------   -------------
<S>                     <C>     <C>        <C>         <C>                     <C>           <C>            <C>           <C>
Ronald C. Sacks(2)      2001      --         --          --                                  119,400        --               --
Chief-Executive
Officer and Interim
Principal Financial
Officer

Stephen B. Gray(3)      2001    137,500      --        26,442                                   --          --            2,515
Former President,       2000    261,076    54,616      36,000                  --            132,966        --            3,115
Chief Executive         1999    265,750      --            --                  --             60,000        --              519
Officer, Chief
Operating Officer

Jane Kaufman(4)         2001    159,000      --            --                  --            172,430        --             3,187
President and Chief     2000     36,115      --        10,000                  --            153,376        --               232
Operating Officer

Thomas Enright(5)       2001    151,129      --            --                  --             73,374        --            2,875
Sales                   2000    116,988      --            --                  --              7,537        --              134
                        1999     13,492      --            --                  --                 --        --               --

Gregory Pasco(6)        2001    196,207      --            --                  --             46,600        --            3,532
Sales
</TABLE>

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

(1)  Represents contribution of the Company under the Company's 401(k) Plan.

(2)  The  services  of Mr.  Sacks are  being  provided  through  a  consulting
     agreement between the Company and Venture Consulting Group, Inc. ("VCGI")
     (see  Employment  Contracts,  Termination  of  Employment  and  Change of
     Control  Arrangements  section  below for a detailed  description  of the
     consulting  contract  with  VCGI).  The  Company has agreed to pay VCGI a
     consulting  fee  of  $500,000,   $400,000  of  which  is  being  paid  in
     consideration  of Mr.  Sacks's  services,  payable  over a  period  of 12
     months. During the fiscal year ended March 31, 2001, $252,000 was paid to
     VCGI in consulting fees.

(3)  Mr. Gray  resigned as a director and officer of the Company  effective as
     of September 29, 2000.

(4)  Ms. Kaufman joined the Company in January 2000.

(5)  Mr. Enright resigned his position with the Company in January 2001.

(6)  Mr. Pasco joined the Company in May 2000.


                                     -5-
<PAGE>

               OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2001

     The  following  table sets forth  certain  information  concerning  stock
option  grants  during  the  fiscal  year  ended  March 31,  2001 to the Named
Executive Officers:

                                         Individual Grants
                    ----------------------------------------------------------
                                   Percent
                    Number of      of Total
                    Securities     Options          Exercise
                    Underlying     Granted to       or Base
                    Options        Employees in     Price           Expiration
Name                Granted(#)     Fiscal Year      ($/Sh)          Date
                    -------        ------------     --------        ----------

Ronald C. Sacks     119,400           3.6%            2.00            9/30/05

Stephen B. Gray          --            --               --                 --

Jane Kaufman        22,430(1)         0.7%           13.69             5/2/10
                    150,000           4.5%           1.125           11/28/10

Thomas Enright      8,374(1)          0.3%           13.69             5/2/10
                    65,000            2.0%           1.125           11/28/10

Gregory Pasco       9,100(1)          0.3%          12.719             5/5/10
                    7,500             0.2%          12.719             5/5/10
                    10,000            0.3%           6.156            6/15/10
                    20,000            0.6%           1.125           11/28/10

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

(1)  Represents  options  granted  pursuant to the Company's Time  Accelerated
     Restricted Stock Award Program (TARSAP).


        Aggregated Option Exercises in Fiscal Year Ended March 31, 2001
                       and Fiscal year-end Option Values

     The  following  table  sets forth  certain  information  concerning  each
exercise of stock options  during the fiscal year ended March 31, 2001 by each
of the Named  Executive  Officers  and the  number  and  value of  unexercised
options held by each of the Named Executive Officers on March 31, 2000.


                                     -6-
<PAGE>

<TABLE>
<CAPTION>

                                                       Number of Securities        Value of Unexercised
                        Shares                         Underlying Unexercised      In-the-Money
                        Acquired on     Value          Options at FY-End(#)        Options at FY-End($)(1)
Name                    Exercise(#)     Realized($)    Exercisable/Unexercisable   Exercisable/Unexercisable
----                    -----------     -----------    -------------------------   -------------------------
<S>                     <C>             <C>             <C>                                <C>

Ronald C. Sacks         --              --              59,700/59,700                      0/0

Stephen B. Gray         --              --              400,000/0                          0/0

Jane Kaufman            --              --              74,750/251,056                     0/0

Thomas Enright          --              --              1,250/79,661                       0/0

Gregory Pasco           --              --              3,300/43,300                       0/0


<FN>
---------------

(1)  The average  price for the Common  Stock as reported by the Nasdaq  Stock
     Market on March 31, 2001 was $.92 per share.  Value is  calculated on the
     basis of the  difference  between  the  option  exercise  price  and $.92
     multiplied  by the  number  of  shares of  Common  Stock  underlying  the
     options.
</FN>
</TABLE>

Compensation of Directors

     For the fiscal  year ended  March 31,  2001,  each of the  members of the
Board of Directors who was not also an employee of the Company  ("Non-Employee
Directors")  received  options to purchase  10,000  shares of Common  Stock at
exercise  prices per share equal to the fair market  value of the Common Stock
on the date of grant on an  annual  basis.  Non-employee  directors  were also
granted  options to purchase an  additional  1,500  shares of Common Stock for
each meeting of the Board of Directors attended by such non-employee director.
Non-employee  directors  serving on committees of the Board of Directors  were
granted, on an annual basis,  options to purchase 1,500 shares of Common Stock
for each committee served thereby.

     In July  2001,  the Board of  Directors  approved a  modification  to the
director  compensation  plan for the fiscal year ending  March 31,  2002.  The
modification is to provide that any director who was not previously serving as
such would  receive an additional  grant of options to purchase  20,000 shares
upon election by the stockholders.

     In addition,  the Company reimburses all non-employee directors traveling
more  than  fifty  miles  to a  meeting  of the  Board  of  Directors  for all
reasonable travel expenses.


                                     -7-
<PAGE>

     On October 6, 2000, Mr. Halpern,  a director of the Company,  was granted
options to purchase  125,000  shares of Common stock,  at an exercise price of
$1.625 per share.  The options were granted to Mr. Halpern for his services in
negotiating  favorable terms in connection  with the Company's  August 2000 $5
million private placement. The options are immediately exercisable.

     On October 16, 2000, Mr. Deixler, a director of the Company,  was granted
options to purchase  125,000  shares of Common Stock,  at an exercise price of
$1.625 per share.  The options were granted to Mr.  Deixler in  recognition of
additional services provided in connection with working with the Company's new
management team. The options are immediately exercisable.

     On October 16, 2000, Mr. Hardie,  a director of the Company,  was granted
options to purchase  30,000  shares of Common Stock,  at an exercise  price of
$1.625 per share.  The options were granted to Mr. Hardie  in connection  with
his services in providing an extensive  written report regarding the Company's
strategic direction to the Board. The options are immediately exercisable.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF
CONTROL ARRANGEMENTS

     The  Company  has no  employment  agreements  with  any of its  executive
officers.  The  Company  entered  into a  consulting  agreement  with  Venture
Consulting   Group,   Inc.  ("VCGI")  on  October  5,  2000  (the  "Consulting
Agreement").  VCGI is currently performing certain management services for the
Company and is  providing  the services of Ronald C. Sacks,  William  Gilbert,
George  Jarrold  and  Daniel  Hunt.  Pursuant  to the terms of the  Consulting
Agreement,  Mr. Sacks has been appointed as the Chief Executive Officer of the
Company and is to provide his services on a full time,  exclusive  basis.  The
other  persons  specified  above will provide 10 days per quarter  each,  with
respect to such services.  The  Consulting  Agreement is terminable at will on
thirty  days  written  notice  by  either  party,  and  provides  for a fee of
$500,000,  payable  over twelve (12) months to VCGI.  The Company does not pay
salaries to any of the management team members  provided by VCGI. In addition,
the Company has granted options to the persons  performing  services on behalf
of VCGI to purchase an  aggregate  of 240,000  shares of Common  Stock,  at an
exercise price of $2.00 per share which become  exercisable over a period of 1
year,  or  immediately  upon a change in control  event (as  described  in the
Company's  1998  Stock  Option  Plan).  The  Consulting  Agreement  expires on
September 18, 2001, and it is anticipated  that Mr. Sacks will not continue to
provide  services as CEO of the Company after the expiration of the Consulting
Agreement.


                                     -8-
<PAGE>

ITEM 11. Security   Ownership  of  Certain  Beneficial  Owners  and
         Management.

     The  following  table sets  forth the  number of shares of the  Company's
Common Stock owned by each person or institution who, as of July 1, 2001, owns
of record or is known by the Company to own beneficially,  more than five (5%)
percent of such securities, and by the Company's executive officers and by its
directors,  both  individually  and as a  group,  and the  percentage  of such
securities  owned  by  each  such  person  and  the  group.  Unless  otherwise
indicated,  such persons have sole voting and investment power with respect to
shares listed as owned by them.

<TABLE>

Name and Address               Shares Owned          Percent of Class
----------------               ------------          ----------------
<S>                            <C>                        <C>

Stephen M. Deixler(1)            901,202                   4.9 %
371 Eagle Drive
Jupiter, Florida 33477

Alexander C. Stark, Jr.(2)       340,500                   1.8 %
356 Jupiter Drive
Jupiter, Florida 33477

Alan Hardie(3)                    88,000                   *
PP318 Westgate
#11 Hope Street
Glasgow G2 6AB
Scotland

William Martin Ritchie(4)         47,000                   *
Keston
4 Buckstane Park
Edinburgh EH10 6PA
Scotland

Frank Russo(10)                   14,500                   *

Jane Kaufman(6)(10)               99,500                   *

Baruch Halpern(7)(10)            264,500                   1.4%

Ronald C. Sacks(8)(10)           119,400                   *

Zesiger Capital Group LLC      2,314,130(9)               12.7%
320 Park Avenue,
30th Floor
New York, NY  10022

Directors and Executive        1,874,602                   9.7%
Officers as a group (8
persons)

<FN>
---------------
(1)  Does not include  108,824  shares of Common Stock owned by Mr.  Deixler's
     wife,  mother,  children and grandchildren as to which shares Mr. Deixler
     disclaims beneficial  ownership.  Includes 120,406 shares of Common Stock
     held by Merrill  Lynch Pierce Fenner & Smith  custodian  f/b/o Stephen M.
     Deixler,  IRA.  Includes  331,500  shares  of Common  Stock  which may be
     acquired pursuant to currently exercisable options.
</FN>
</TABLE>


                                     -9-
<PAGE>
(2)  Includes 240,500 shares of Common Stock which may be acquired pursuant to
     currently exercisable options.

(3)  Consists of 88,000 shares of Common Stock which may be acquired  pursuant
     to currently exercisable options.

(4)  Consists of 47,000 shares of Common Stock which may be acquired  pursuant
     to currently exercisable options.

(5)  Consists of 14,500 shares of Common Stock which may be acquired  pursuant
     to currently exercisable options.

(6)  Consists of 99,500 shares of Common Stock, which may be acquired pursuant
     to currently exercisable options.

(7)  Consists of 164,500 shares of Common Stock which may be acquired pursuant
     to currently exercisable options and 100,000 shares of Common Stock which
     may be acquired pursuant to currently exercisable warrants.

(8)  Consists of 119,400 shares of Common Stock which may be acquired pursuant
     to currently exercisable options.

(9)  Based on Schedule 13G as filed by such  beneficial  owner with the SEC on
     February 12, 2001.

(10) The address of such person is c/o the Company, 1551 S. Washington Avenue,
     Piscataway, New Jersey 08854.

---------------
*Indicates  ownership  of  Common  Stock  of  less  than  one  (1%)
 percent of the total  issued and  outstanding  Common Stock on the
 Record Date.


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     On June 7, 1999, the Company  issued an aggregate of 1,000,000  shares of
Common Stock and warrants to purchase an aggregate of 500,000 shares of Common
Stock to Special Situations  Private Equity Fund, L.P. ("Special  Situations")
and  certain  affiliated  entities  of  Special  Situations  for an  aggregate
consideration   of  $3,000,000.   The  securities   issued  were   "restricted
securities" under the Securities Act of 1933, as amended (the "Act"). Pursuant
to the  transaction,  the Company has  registered  the shares of Common  Stock
(including  those shares  underlying the warrants) under the Act pursuant to a
Form S-3, which was declared  effective in September 1999. The warrants expire
in three years and the exercise prices thereof are $4.50 per share for 250,000
warrants and $6.00 per share for the remaining 250,000 warrants.

     On August 5, 1999, the Company issued an aggregate of 2,000,000 shares of
Common stock to Zesiger Capital Group LLC and certain of its affiliates for an
aggregate  consideration of $9,500,00.  The securities issued were "restricted
securities" under the Act. Pursuant to the transaction, the Company registered
the shares of Common  Stock under the Act  pursuant  to a Form S-3,  which was
declared effective in September, 1999.


                                     -10-
<PAGE>

     In  April  2000,  the  Company  made a loan  of  $750,000  pursuant  to a
promissory  note to Steve Gray, its former Chief Executive  Officer.  The loan
bore  interest  at the rate of Libor + 1% per annum.  The loan had an original
maturity  date of the earlier of (i) April 2005, or (ii) thirty days after Mr.
Gray was no longer  employed by the Company for any reason.  Mr. Gray resigned
his position at the Company  effective as of September 29, 2000. On October 5,
the Company  entered into an  agreement  with  Mr. Gray  pursuant to which the
$750,000 promissory note was amended to extend the due date to April 30, 2001,
and to provide that interest on such note shall accrue  through  September 29,
2000.  The $750,000  promissory  note is  collateralized  by a first  mortgage
interest on the personal  residence of Mr. Gray.  Pursuant to this  agreement,
Mr. Gray also agreed to reimburse  the Company for certain  expenses  totaling
$163,000, to be paid over a period of six months ending March 31, 2001. During
the fiscal year ended March 31, 2001. $50,000 of the $163,000 owing was repaid
by Mr. Gray,  and $22,000 of such amount has been recorded as non-cash  offset
as a result of earned but unpaid vacation owed to Mr. Gray. At March 31, 2001,
the total amount owed by Mr. Gray to the Company was $897,250. The Company has
been advised that Mr. Gray has sold his  personal  residence,  and based on an
anticipated closing date in August, 2001, $750,000 of the amounts due from Mr.
Gray are expected to be repaid from the proceeds of the sale of the residence.

     On June 29,  2000,  the Company made an advance of $135,000 to Steve Gray
its former Chief Executive  Officer.  The advance was  subsequently  repaid in
full on July 26, 2000.

     On August 18, 2000,  the Company  issued an  aggregate  of 1,739,130  and
869,565 shares of Common Stock to Zesiger Capital Group LLC and certain of its
affiliates  and to Special  Situations  and  certain  affiliated  entities  of
Special Situations,  for aggregate consideration of $3,043,478 and $1,521,739,
respectively.  Pursuant to the  transaction,  the Company has  registered  the
shares  of  Common  Stock  under the Act  pursuant  to a Form  S-3,  which was
declared effective in January 2001.

     On October 5, 2000, the Company entered into a consulting  agreement with
Venture  Consulting  Group,  Inc.  ("VCGI"),  whereby  VCGI is to provide  the
services of Mr. Ronald C. Sacks as Chief Executive Officer of the Company, and
the services of three additional consultants.  The fees for Mr. Sacks' and the
consultants'  services are $500,000 over a period of 1 year. In addition,  the
Company has granted  options to the persons  performing  services on behalf of
VCGI to purchase an aggregate of 240,000 shares of the Company's Common Stock,
at an  exercise  price of $2.00 per share,  which  become  exercisable  over a
period of 1 year or  immediately  upon a change in control event (as described
in the  Company's  1998 Stock Option  Plan).  Mr. Sacks is the President and a
principal of VCGI.

     On October 16, 2000 the Company granted Special Situations Fund III, L.P.
("Special  Situations"),  a stockholder of the Company,  the right to nominate
one (1) director to the Company's  Board of Directors,  such right to continue
for a period of two (2) years,  provided  that at all times during such period
Special  Situations  and its  affiliates  own at least two (2%) percent of the
Company's outstanding and issued Common Stock.


                                     -11-
<PAGE>

                                  SIGNATURES

     In  accordance  with  the  requirements  of  Section  13 or  15(d) of the
Securities  Exchange  Act of 1934,  the  registrant  caused  this report to be
signed on its behalf by the undersigned,  thereunto duly  authorized,  in this
City of Piscataway and State of New Jersey

DATED: July 27, 2001

                                       ION NETWORKS, INC.




                                       By:/s/ Ronald C. Sacks
                                          ----------------------
                                          Ronald C. Sacks, Chief
                                          Executive Officer


                                     -12-