**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-KSB/A**

**Amendment      No. 2**

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

**For      the fiscal year ended **
**December      31, 2004**

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

**For      the transition period from _____________________.**

**Commission      File No.: 0-13117**

**ION      NETWORKS, INC.**

|  **Delaware**(State                or Other Jurisdiction of Incorporation                or Organization)                   |  **22-2413505**(IRS                Employer Identification Number) |
|---------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|
|                                                                                                                                  |                                                                    |
|                                                                                                                                  |                                                                    |
|                                                                                                                                  |                                                                    |
|  **120                Corporate Blvd., S. Plainfield,                NJ**(Address                of Principal Executive Offices) |  **07080**(Zip                Code)                                |

**(908)      546-3900**

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

|  Title                of Each Class**None** |  Name                of Each ExchangeOn                Which Registered**None** |
|--------------------------------------------------|--------------------------------------------------------------------------------------|

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

**Common      Stock, $.001 par value**

----

**EXPLANATORY      NOTE**

| §   | Item                6: Management’s Discussion and Analysis or Plan of Operations to reflect                the change in classification of amortized expense related to capitalized                software costs to cost of sales. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Item                7. Financial Statements was updated to reflect the change in                classification of amortized expense related to capitalized software                costs                to cost of sales. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Note                2 of the Financial Statements were updated to reflect the change                in                classification of amortized expense related to capitalized software                costs                to cost of sales. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Note                3 of the Financial Statements were updated to reflect additional                disclosures for restructuring, asset impairment and other                credits. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Item                13 Exhibits and Reports of Form 8-K is updated to reflect the refilling                of                Independent Auditors Consent and the various CEO and CFO certifications,                in connection with the amendments set forth                herein. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      6: Management's Discussion and Analysis or Plan of Operation**

*Overview      *

*Results      Of Operations *

*The      Year Ended December 31, 2004 Compared to the Year Ended December 31,      2003*

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*Financial      Condition And Capital Resources*

*Critical      Accounting Policies *

----

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**Item        7: Financial Statements **

**ION      Networks, Inc. and Subsidiary**

**Index      to Consolidated Financial Statements **

**For      the Year Ended December 31, 2004 and 2003 **

|                                                                                                                                   |  Page(s) |
|----------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                                                                                                                   |          |
|  Report of                Independent Registered Public Accounting Firm                                                           | 37            |
|                                                                                                                                   |          |
|  Consolidated Financial Statements:                                                                                               |          |
|                                                                                                                                   |          |
|  Consolidated                  Balance Sheet as of December 31,                  2004                                             | 38            |
|                                                                                                                                   |          |
|  Consolidated                  Statements of Operations for the Years                  Ended December 31, 2004 and 2003           | 39            |
|                                                                                                                                   |          |
|  Consolidated                  Statements of Cash Flows for the Years                  Ended December 31, 2004 and 2003           | 40            |
|                                                                                                                                   |          |
|  Consolidated                  Statements of Stockholders' Equity for                  the Years Ended December 31, 2004 and 2003 | 41-42         |
|                                                                                                                                   |          |
|  Notes to Consolidated Financial                Statements                                                                   | 43-54         |
|                                                                                                                                   |          |

----

REPORT          OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING          FIRM

----

**ION      Networks, Inc. and Subsidiary**

**Consolidated      Balance Sheet**

|                                                                                                                                                                                                                                                                      |   | December** **31**,** |        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|
|  **Assets**                                                                                                                                                                                                                                                          |   | 2004                 |        |
|                                                                                                                                                                                                                                                                      |   |                      |        |
| Current                assets                                                                                                                                                                                                                                             |   |                      |        |
| Cash                and cash equivalents                                                                                                                                                                                                                                  |   | $                         | 287,437     |   |
| Accounts                receivable, less allowance for doubtful accounts of $16,923                                                                                                                                                                                       |   |                      | 578,491     |   |
| Inventory,                net                                                                                                                                                                                                                                             |   |                      | 511,426     |   |
| Prepaid                expenses and other current assets                                                                                                                                                                                                                  |   |                      | 78,436      |   |
| Total                current assets                                                                                                                                                                                                                                       |   |                      | 1,455,790   |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
| Property                and equipment, net                                                                                                                                                                                                                                |   |                      | 11,847      |   |
| Capitalized                software, net                                                                                                                                                                                                                                  |   |                      | 406,351     |   |
| Other                assets                                                                                                                                                                                                                                               |   |                      | 12,836      |   |
| Total                assets                                                                                                                                                                                                                                               |   | $                         | 1,886,824   |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
| **Liabilities                and Stockholders’ Equity**                                                                                                                                                                                                             |   |                      |        |   |
| Current                liabilities                                                                                                                                                                                                                                        |   |                      |        |   |
| Current                portion of long-term debt                                                                                                                                                                                                                          |   |                      | 2,311       |   |
| Accounts                payable                                                                                                                                                                                                                                           |   |                      | 354,602     |   |
| Accrued                expenses                                                                                                                                                                                                                                           |   |                      | 549,730     |   |
| Deferred                income                                                                                                                                                                                                                                            |   |                      | 160,212     |   |
| Sales                tax payable                                                                                                                                                                                                                                          |   |                      | 6,074       |   |
| Other                current liabilities                                                                                                                                                                                                                                  |   |                      | 10,000      |   |
| Total                current liabilities                                                                                                                                                                                                                                  |   | $                         | 1,082,929   |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
| Convertible                debenture - related party                                                                                                                                                                                                                      |   |                      | 204,167     |   |
| Long                term debt, net of current portion                                                                                                                                                                                                                     |   |                      | 6,942       |   |
| Total                liabilities                                                                                                                                                                                                                                          |   | $                         | 1,294,038   |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
| Commitments                and contingencies                                                                                                                                                                                                                              |   |                      |        |   |
|                                                                                                                                                                                                                                                                      |   |                      |        |   |
| Stockholders’                equity                                                                                                                                                                                                                                 |   |                      |        |   |
| Preferred                stock - par value $.001 per share; authorized 1,000,000 shares,                200,000                shares designated Series A; 158,335 shares issued and                outstanding(Aggregate                Liquidation Preference $285,003) |   |                      | 158         |   |
| Common                stock - par value $.001 per share; authorized 50,000,000                shares;22,610,500                shares issued and outstanding                                                                                                              |   |                      | 22,611      |   |
| Additional                paid-in capital                                                                                                                                                                                                                                 |   |                      | 44,146,595  |   |
| Accumulated                deficit                                                                                                                                                                                                                                        |   |                      | (43,576,578 | ) |
| Total                stockholders’ equity                                                                                                                                                                                                                           |   |                      | 592,786     |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                                                           |   | $                         | 1,886,824   |   |

----

**ION      Networks, Inc. and Subsidiary**

**Consolidated      Statements of Operations**

|                                                                                                                                                                                                                                                                                                |   | Years                Ended December 31,  |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                |   |  2004                                    |       |  2003 |   |
|                                                                                                                                                                                                                                                                                                |   |                                     |       |    |   |
| Net                sales                                                                                                                                                                                                                                                                            |   | $                                             | 3,616,261  |   | $ | 3,342,620 |   |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Cost                of sales                                                                                                                                                                                                                                                                        |   |                                          | 1,417,603  |   |   | 1,423,509 |   |
| Gross                margin                                                                                                                                                                                                                                                                         |   |                                          | 2,198,658  |   |   | 1,919,111 |   |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Research                and development expenses                                                                                                                                                                                                                                                    |   |                                          | 598,012    |   |   | 503,146 |   |
| Selling,                general and administrative expenses, including $58,750 and $(95,000)                of                non-cash                stock based compensation/(recovery) for the years ended December                31, 2004                and 2003,                respectively |   |                                          | 2,314,834  |   |   | 2,452,031 |   |
| Depreciation                expenses                                                                                                                                                                                                                                                                |   |                                          | 57,325     |   |   | 205,558 |   |
| Restructuring,                asset impairments and other credits                                                                                                                                                                                                                                   |   |                                          | (180,533   | ) |   | (405,402 | ) |
| Loss                from operations                                                                                                                                                                                                                                                                 |   |                                          | (590,980   | ) |   | (836,222 | ) |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Interest                income                                                                                                                                                                                                                                                                      |   |                                          | 25,810     |   |   | 19,872 |   |
| Interest                income/(expense)- related party                                                                                                                                                                                                                                             |   |                                          | (4,167     | ) |   | - |   |
| Interest                income/(expense)                                                                                                                                                                                                                                                            |   |                                          | (3,334     | ) |   | (14,593 | ) |
|  Loss                before income taxes                                                                                                                                                                                                                                                       |   |                                          | (572,671   | ) |   | (830,943 | ) |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Income                tax benefit                                                                                                                                                                                                                                                                   |   |                                          | 322,831    |   |   | 227,151 |   |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Net                loss                                                                                                                                                                                                                                                                             |   | $                                             | (249,840   | ) | $ | (603,792 | ) |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Per                share data                                                                                                                                                                                                                                                                       |   |                                          |       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Basic                and diluted                                                                                                                                                                                                                                                                    |   | $                                             | (0.01      | ) | $ | (0.03 | ) |
|                                                                                                                                                                                                                                                                                                |   |                                          |       |   |   |   |   |
| Weighted                average number of common shares outstanding                                                                                                                                                                                                                                 |   |                                          |       |   |   |   |   |
| Basic                and diluted                                                                                                                                                                                                                                                                    |   |                                          | 23,294,325 |   |   | 23,900,500 |   |

----

**ION      Networks, Inc. and Subsidiary**

**Consolidated      Statements of Cash Flows**

|                                                                                                   |   | Years                Ended December 31, |     |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|----------|
|                                                                                                   |   | 2004                                    |     | 2003 |   |
|                                                                                                   |   |                                    |     |   |   |
| Cash                flows from operating activities                                                    |   |                                    |     |   |   |
| Net                loss                                                                                |   | $                                       | (249,840 | ) | $ | (603,792 | ) |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Adjustments                to reconcile net loss to net cash from operating                activities: |   |                                    |     |   |   |   |   |
| Restructuring,                asset impairments and other charges, non-cash                            |   |                                    | (180,533 | ) |   | (405,402 | ) |
| Depreciation                and amortization                                                           |   |                                    | 409,485  |   |   | 736,694 |   |
| Provision                for inventory reserves                                                        |   |                                    | (48,880  | ) |   | (26,002 | ) |
| Other                                                                                                  |   |                                    | (39,171  | ) |   | - |   |
| Non-cash                stock-based compensation charge (credit)                                       |   |                                    | 58,750   |   |   | (95,000 | ) |
| Non-cash                interest income from notes receivable from officers                            |   |                                    | (24,884  | ) |   | (13,130 | ) |
| Changes                in operating assets and liabilities:                                            |   |                                    |     |   |   |   |   |
| Accounts                receivable, net                                                                |   |                                    | (180,747 | ) |   | 164,018 |   |
| Inventory                                                                                              |   |                                    | 239,496  |   |   | 583,228 |   |
| Prepaid                expenses and other current assets                                               |   |                                    | 49,702   |   |   | 75,796 |   |
| Other                assets                                                                            |   |                                    | 465      |   |   | 1,577 |   |
| Accounts                payable                                                                        |   |                                    | 126,723  |   |   | (690,303 | ) |
| Accrued                expenses                                                                        |   |                                    | 20,714   |   |   | (82,543 | ) |
| Deferred                income                                                                         |   |                                    | (40,093  | ) |   | 45,284 |   |
| Sales                tax payable                                                                       |   |                                    | (32,908  | ) |   | (31,385 | ) |
| Other                current liabilities                                                               |   |                                    | -        |   |   | (35,980 | ) |
| Net                cash provided by (used in) operating activities                                     |   |                                    | 108,279  |   |   | (376,940 | ) |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Cash                flows from investing activities                                                    |   |                                    |     |   |   |   |   |
| Acquisition                of property and equipment                                                   |   |                                    | (11,740  | ) |   | - |   |
| Capitalized                software expenditures                                                       |   |                                    | (310,223 | ) |   | (214,996 | ) |
| Proceeds                from sale of equipment                                                         |   |                                    | -        |   |   | 30,129 |   |
| Restricted                cash                                                                         |   |                                    | -        |   |   | 125,700 |   |
| Net                cash used in investing activities                                                   |   |                                    | (321,963 | ) |   | (59,167 | ) |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Cash                flows from financing activities                                                    |   |                                    |     |   |   |   |   |
| Principal                payments on debt and capital leases                                           |   |                                    | (67,840  | ) |   | (85,135 | ) |
| Issuance                of convertible debenture                                                       |   |                                    | 200,000  |   |   | - |   |
| Proceeds                from the exercise of stock options                                             |   |                                    | 11,250   |   |   | - |   |
| Net                cash provided by (used in) financing activities                                     |   |                                    | 143,410  |   |   | (85,135 | ) |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Effect                of exchange rates on cash                                                        |   |                                    | -        |   |   | 13,269 |   |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Net                decrease in cash and cash equivalents                                               |   |                                    | (70,274  | ) |   | (507,973 | ) |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Cash                and cash equivalents - beginning of year                                           |   |                                    | 357,711  |   |   | 865,684 |   |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Cash                and cash equivalents - end of year                                                 |   | $                                       | 287,437  |   | $ | 357,711 |   |
|                                                                                                   |   |                                    |     |   |   |   |   |
| Supplemental                information                                                                |   |                                    |     |   |   |   |   |
| Cash                paid during period for interest                                                    |   | $                                       | 3,334    |   | $ | 13,650 |   |

----

**ION      Networks, Inc. and Subsidiary**

**Consolidated      Statements of Stockholders’      Equity**

**For      the Years Ended December 31, 2004 and 2003**

|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   | Accumulated   |   |
|----------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------------|--------|--------|------------------|--------|--------|-------------|--------|--------|-------------------------|--------|
|                                                                                         |   |   | Preferred  |   |   | Common  |   |   | Additional  |   |   |        |   |   | Other                   |   |
|                                                                                         |   |   | Shares          |   |   | Stock   |   |   | Shares      |   |   | Stock  |   |   | Paid-InCapital     |   |   | AccumulatedDeficit  |   |   |  Comprehensive                    Income (Loss)  |   |
| Balance,                    December 31, 2002                                                |   |   | 166,835         |   | $      | 167          |   |   | 24,875,500       |   | $      | 24,876      |   | $      | 44,680,740              |   | $ | (42,722,946) |   | $ | (13,269) |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Comprehensive                    loss                                                        |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Net                    loss                                                                  |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   | (603,792) |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Translation                    adjustments                                                   |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   | 13,269 |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Total                    comprehensive loss                                                  |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Notes                    receivable from officers -accrued interest                          |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Non-cash                    stock-based compensation to officers                             |   |   |            |   |   |         |   |   |             |   |   |        |   |   | (95,000)                |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Balance,                    December 31, 2003                                                |   |   | 166,835         |   | $      | 167          |   |   | 24,875,500       |   | $      | 24,876      |   | $      | 44,585,740              |   | $ | (43,326,738) |   | $ | - |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Net                    loss                                                                  |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   | (249,840) |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Conversion                    of preferred stock to common stock                             |   |   | (8,500)         |   |   | (9           | )      |   | 85,000           |   |   | 85          |   |   | (76)                    |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Issuances                    of common stock upon exercise of options                        |   |   |            |   |   |         |   |   | 250,000          |   |   | 250         |   |   | 11,000                  |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Notes                    receivable from officers - accrued interest                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Cancellation                    of restricted shares from                    former officers |   |   |            |   |   |         |   |   | (2,600,000       | )      |   | (2,600      | )      |   | (508,819)               |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Non-cash                    stock-based compensation issued to officers                      |   |   |            |   |   |         |   |   |             |   |   |        |   |   | 58,750                  |   |   |   |   |   |   |   |
|                                                                                         |   |   |            |   |   |         |   |   |             |   |   |        |   |   |                    |   |   |   |   |   |   |   |
| Balance,                    December 31, 2004                                                |   |   | 158,335         |   | $      | 158          |   |   | 22,610,500       |   | $      | 22,611      |   | $      | 44,146,595              |   | $ | (43,576,578) |   | $ | - |   |

----

**ION      Networks, Inc. and Subsidiary**

**Consolidated      Statements of Stockholders' Equity**

**For      the Years Ended December 31, 2004 and 2003 **

|                                                                    |   | Notes                  Receivable from                  former Officers |     |   |   | Total                  Stockholders’Equity |   |
|-------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|----------|--------|--------|--------------------------------------------------|--------|
|                                                                    |   |
| Balance,                  December 31, 2002                             |   | $                  (473,405)                                            |     |   |   | $                  1,496,163                     |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Comprehensive                  loss                                     |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Net                  loss                                               |   |                                                                    |     |   |   |                                             |   |   | (603,792 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Translation                  adjustments                                |   |                                                                    |     |   |   |                                             |   |   | 13,269 |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Total                  comprehensive loss                               |   |                                                                    |     |   |   |                                             |   |   | (590,523 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Notes                  receivable from officers - accrued interest      |   |                                                                    | (13,130  | )      |   |                                             |   |   | (13,130 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Non-cash                  stock-based compensation to officers          |   |                                                                    |     |   |   |                                             |   |   | (95,000 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Balance,                  December 31, 2003                             |   | $                                                                       | (486,535 | )      |   |                                             |   | $ | 797,510 |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Net                  loss                                               |   |                                                                    |     |   |   |                                             |   |   | (249,840 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Conversion                  of preferred stock to common stock          |   |                                                                    |     |   |   |                                             |   |   | - |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Issuances                  of common stock upon exercise of options     |   |                                                                    |     |   |   |                                             |   |   | 11,250 |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Notes                  receivable from officers - accrued interest      |   |                                                                    | (24,884  | )      |   |                                             |   |   | (24,884 | ) |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Cancellation                  of restricted shares from former officers |   |                                                                    | 511,419  |   |   |                                             |   |   | - |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Non-cash                  stock-based compensation issued to officers   |   |                                                                    |     |   |   |                                             |   |   | 58,750 |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |
| Balance,                  December 31, 2004                             |   | $                                                                       | -        |   |   |                                             |   | $ | 592,786 |   |
|                                                                    |   |                                                                    |     |   |   |                                             |   |   |   |   |

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

**1.      Organization and Basis of Presentation **

*The      Company *

**2.      Summary of Significant Accounting Policies **

*Principles      of Consolidation *

*Use      of Estimates *

*Cash      and Cash Equivalents *

*Allowance      for Doubtful Accounts Receivable *

*Inventory,      net *

*Property      and Equipment *

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

*Capitalized      Software *

*Research      and Development Costs *

*Revenue      Recognition Policy *

*Shipping      and Handling Costs *

*Fair      Value of Financial Instruments *

*Net      Loss Per Share of Common Stock*

----

**ION        Networks, Inc. and Subsidiary**

**Notes        to Consolidated Financial Statements**

*Stock      Compensation*

*Accounting      for Stock Issued to Employees*
*"Accounting      for Stock-Based Compensation” as amended by SFAS No. 148 *
*Accounting      for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB      Statement No. 123,*
*      issued i*

| Expected                Volatility     | 214.97%                   |
|----------------------------------------|---------------------------|
| Risk-free                interest rate | 4.00                      |
| Expected                option lives   | 5.00                years |

|                                                                                                           |   | Years                Ended December 31, |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|
|                                                                                                           |   | 2004                                    |   | 2003 |
|                                                                                                           |   |                                    |   |   |
| Net                loss as reported                                                                            |   | $(249,840)                              |   | $(603,792) |
|                                                                                                           |   |                                    |   |   |
| Add:                Stock based compensation expense (recovery) included in net                loss            |   | 58,750                                  |   | (95,000) |
|                                                                                                           |   |                                    |   |   |
| Deduct:                Stock based employee compensation determined under the fair value                method |   | (454,493)                               |   | (217,158) |
| Pro                forma net loss                                                                              |   | $(645,583)                              |   | $(915,950) |
|                                                                                                           |   |                                    |   |   |
| Basic                and diluted net loss per share of common stock                                            |   |                                    |   |   |
| As                reported                                                                                     |   | (0.01)                                  |   | (0.03) |
| Pro                forma                                                                                       |   | (0.03)                                  |   | (0.04) |

*Foreign      Currency Translation *

*Income      Taxes *

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

*Warranty      Costs*

|                                                             |   | For                  the years ended     |    |
|------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                             |   |  December                  31, 2004 |    |  December                  31, 2003 |   |
| Balance                  at beginning of the year                |   | $                                        | 48,388  |   | $ | 48,388 |   |
| Change                  in liability due to preexisting warranty |   |                                     | (38,388 | ) |   | - |   |
| Balance                  at the end of the year                  |   | $                                        | 10,000  |   | $ | 48,388 |   |

*Reclassifications      *

**3.      Restructuring, Asset Impairments and Other Credits**

|                                                     |   | Asset                  Impairment |    | Restructuring |   | Other                  Credits |   | Total  |     |
|----------------------------------------------------------|--------|-----------------------------------|---------|---------------|--------|--------------------------------|--------|--------|----------|
| First                  Quarter 2004 charges              |   | $                                 | -       |          | $      | -                              |   | $      | -        |   | $ | - |   |
| Second                  Quarter 2004 charges (reversals) |   |                              | -       |          |   | -                              |   |   | (59,570  | ) |   | (59,570 | ) |
| Third                  Quarter 2004 charges (reversals)  |   |                              | -       |          |   | (63,716                        | )      |   | -        |   |   | (63,716 | ) |
| Fourth                  Quarter 2004 charges (reversals) |   |                              | -       |          |   | -                              |   |   | (57,247  | ) |   | (57,247 | ) |
| Total                                                    |   | $                                 | -       |          | $      | (63,716                        | )      | $      | (116,817 | ) | $ | (180,533 | ) |
|                                                     |   |                              |    |          |   |                           |   |   |     |   |   |   |   |
| First                  Quarter 2003 charges              |   | $                                 | -       |          | $      | 123,510                        |   | $      | -        |   | $ | 123,510 |   |
| Second                  Quarter 2003 charges (reversals) |   |                              | 192,617 |          |   | (508,458                       | )      |   | -        |   |   | (315,841 | ) |
| Third                  Quarter 2003 charges (reversals)  |   |                              | -       |          |   | -                              |   |   | (213,071 | ) |   | (213,071 | ) |
| Fourth                  Quarter 2003 charges             |   |                              | -       |          |   | -                              |   |   | -        |   |   | - |   |
| Total                                                    |   | $                                 | 192,617 |          | $      | (384,948                       | )      | $      | (213,071 | ) | $ | (405,402 | ) |

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

**4.      Inventory **

|                            |   | December                  31, |    |
|---------------------------------|--------|-------------------------------|---------|
|                            |   | 2004                          |    |
|                            |   |                          |    |
| Finished                  goods |   | $                             | 448,742 |   |
| Raw                  materials  |   |                          | 61,844  |   |
| Work-in-progress                |   |                          | 840     |   |
|                            |   |                          |    |   |
| Inventory,                  net |   | $                             | 511,426 |   |

**5.      Property and Equipment, net **

|                                           |   | December                  31, |     |
|------------------------------------------------|--------|-------------------------------|----------|
|                                           |   |  2004                    |     |
|                                           |   |                          |     |   |
| Computer                  and other equipment  |   | $                             | 764,900  |   |
| Furniture                  and fixtures        |   |                          | 68,408   |   |
|                                           |   |                          | 833,308  |   |
|                                           |   |                          |     |   |
| Less                  accumulated depreciation |   |                          | (821,461 | ) |
|                                           |   |                          |     |   |
| Property                  and equipment, net   |   | $                             | 11,847   |   |

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

**6.      Debt - Related Party**

**7.      Income Taxes **

|                                                              |   | December                  31, |        |
|-------------------------------------------------------------------|--------|-------------------------------|-------------|
|                                                              |   | 2004                          |        |
| Current                  deferred tax assets                      |   |                          |             |   |
| Inventory                  reserves                               |   | $                             | 88,727      |   |
| Accrued                  expenses                                 |   |                          | 196,526     |   |
| Allowance                  for doubtful accounts                  |   |                          | 85,239      |   |
| Total                  current deferred tax assets                |   |                          | 370,492     |   |
| Valuation                  allowance                              |   |                          | (370,492    | ) |
| Net                  current deferred tax assets                  |   |                          | -           |   |
|                                                              |   |                          |             |   |
| Noncurrent                  deferred tax assets                   |   |                          |             |   |
| Depreciation                  and amortization                    |   |                          | 245,425     |   |
| Net                  operating loss carry forwards                |   |                          | 16,103,494  |   |
| Research                  and development credit                  |   |                          | 405,078     |   |
| Total                  noncurrent deferred tax assets             |   |                          | 16,753,997  |   |
| Valuation                  allowance                              |   |                          | (16,591,457 | ) |
| Net                  noncurrent deferred tax assets               |   |                          | 162,540     |   |
|                                                              |   |                          |             |   |
| Noncurrent                  deferred tax liabilities              |   |                          |             |   |
| Capitalized                  software                             |   |                          | (162,540    | ) |
| Total                  noncurrent deferred tax liabilities        |   |                          | (162,540    | ) |
| Net                  noncurrent deferred tax (liabilities) assets |   | $                             | -           |   |

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

**8.      Stockholders' Equity **

***Preferred      Stock -***

***Restricted        Stock -***
** **

***Common      Stock***

***Stock      Option Plans***
** **

----

**ION      Networks, Inc. and Subsidiary**

***Notes      to Consolidated Financial Statements***

***Warrants***

***Other      Options***
** **

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

***Accounting      for Stock-Based Compensation***
** **

|                                                    | Shares      |   | Weighted                Average Exercise                Price ($) |
|---------------------------------------------------------|-------------|--------|-------------------------------------------------------------------|
|                                                    |        |   |                                                              |
|                                                    |        |   |                                                              |
| Options                outstanding at December 31, 2002 | 3,667,102   |   | 1.62                                                              |
|                                                    |        |   |                                                              |
| Granted                                                 | -           |   | -                                                                 |
| Canceled                                                | (1,821,947) |   | 3.55                                                              |
| Exercised                                               | -           |   | -                                                                 |
|                                                    |        |   |                                                              |
| Options                outstanding at December 31, 2003 | 1,845,155   |   | 1.59                                                              |
|                                                    |        |   |                                                              |
| Granted                                                 | 4,333,000   |   | 0.15                                                              |
| Expired                                                 | (73,250)    |   | 5.63                                                              |
| Canceled                                                | (487,276)   |   | 1.16                                                              |
| Exercised                                               | (250,000)   |   | 0..05                                                             |
|                                                    |        |   |                                                              |
| Options                outstanding at December 31, 2004 | 5,367,629   |   | 0.51                                                              |
|                                                    |        |   |                                                              |
| Options                exercisable at December 31, 2004 | 3,750,650   |   | 0.50                                                              |
|                                                    |        |   |                                                              |

| Range                of Exercise | Number                Outstanding |   | Weighted                Average Remaining Years of Contractual Life |   | Weighted                Average                Exercise Price |   | Number                Exercisable |   | Weighted                Average                Exercise                Price |
|----------------------------------|-----------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|-----------------------------------|--------|------------------------------------------------------------------------------|
|                             |                              |   |                                                                |   |                                                          |   |                              |   |                                                                         |
| $0.00                - 7.53      | 5,320,694                         |   | 4.67                                                                |   | $                0.36                                         |   | 3,737,550                         |   | $                0.40                                                        |
| $7.54                - 15.06     | 36,605                            |   | 4.85                                                                |   | 13.62                                                         |   | 3,600                             |   | 13.62                                                                        |
| $15.06                - 22.59    | 1,500                             |   | .05                                                                 |   | 22.00                                                         |   | 1,500                             |   | 22.00                                                                        |
| $22.59                - 30.12    | 1,500                             |   | .25                                                                 |   | 29.25                                                         |   | 1,500                             |   | 29.25                                                                        |
| $30.12                - 37.65    | 7,060                             |   | .49                                                                 |   | 34.69                                                         |   | 6,500                             |   | 34.66                                                                        |
|                             |                              |   |                                                                |   |                                                          |   |                              |   |                                                                         |
|                             |                              |   |                                                                |   |                                                          |   |                              |   |                                                                         |
| $0.00                - 37.65     | 5,367,629                         |   | 4.67                                                                |   | $0.51                                                         |   | 3,750,650                         |   | $0.50                                                                        |

**9.**
**Commitments**

*Operating      Leases*

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

|                                                      |   | Capital                Leases |   | Operating                Leases |
|-----------------------------------------------------------|--------|-------------------------------|--------|---------------------------------|
|                                                      |   |                          |   |                            |
| Year                ending December 31,                   |   |                          |   |                            |
| 2005                                                      |   | $                             | 2,691  |                            | $ | 77,016 |
| 2006                                                      |   |                          | 2,691  |                            |   | 44,926 |
| 2007                                                      |   |                          | 2,691  |                            |   | - |
| 2008                                                      |   |                          | 2,243  |                            |   | - |
|                                                      |   |                          |   |                            |   |   |
| Total                minimum lease payments               |   | $                             | 10,316 |                            | $ | 121,942 |
|                                                      |   |                          |   |                            |   |   |
| Less                amount representing interest          |   |                          | 1,063  |                            |   |   |
|                                                      |   |                          |   |                            |   |   |
| Present                value on net minimum lease payment |   | $                             | 9,253  |                            |   |   |

**10.      Contingent Liabilities **

**11.      Employee Benefit Plans **

**12.      Geographic Information **

|                         |   | Year                EndedDecember                31, 2004 |      | Year                EndedDecember                31, 2003 |
|------------------------------|--------|-----------------------------------------------------------|-----------|-----------------------------------------------------------|
| United                States |   | $                                                         | 2,875,996 |                                                      | $ | 2,743,170 |
| Europe                       |   |                                                      | 723,222   |                                                      |   | 477,153 |
| Pacific                Rim   |   |                                                      | 16,657    |                                                      |   | 122,188 |
| Other                        |   |                                                      | 386       |                                                      |   | 109 |
|                         |   | $                                                         | 3,616,261 |                                                      | $ | 3,342,620 |

----

**ION      Networks, Inc. and Subsidiary**

**Notes      to Consolidated Financial Statements**

**13.      Concentration of Credit Risk **

**14.      Supplemental Cash Flow Information **

**15.      New Accounting Pronouncements **

----

**16.        Subsequent Events**

|  (a) | Subsequent                  to December 31, 2004 the Company converted 2,778 shares of preferred                  stock                  into 27,780 of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|  (b) |  On March 31, 2005, we completed                a private                placement of 4,411,764 shares of common stock and warrants to purchase                an                additional 2,205,882 shares of common stock. The total offering price                was                $750,000. The shares of common stock were issued at $0.17 cents per                share                and the warrants are exercisable at a price of $0.23 per share subject                to                certain anti-dilution adjustments. The warrants will expire on March                31,                2010. The Company has the right to call the warrants in the event                that its                common stock trades at a price exceeding $0.69 per share for twenty                (20)                consecutive trading sessions and certain other conditions are met.                The                Company also agreed to register for resale the shares of common stock                as                well as the shares issued upon exercise of the                warrants. |

**Item      13. Exhibits and Reports on Form 8-K**

|  (a) |  Exhibits: |   |
|-----------|-----------------|--------|

|   | ExhibitNo: |  Description                                                                                                                                                                                                                                      |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |       |                                                                                                                                                                                                                                                   |
|   |  3.1  | (i)Certificate                      of Incorporation of the Company, as filed with the Secretary                      of State of                      the State of Delaware on August 5, 1998./(2)/                                                   |
|   |       |                                                                                                                                                                                                                                                   |
|   |       | (ii)Certificate                      of Amendment of the Certificate of Incorporation, as filed                      with the                      Secretary of State of the State of Delaware on December 11,                      1998./(2)/         |
|   |       |                                                                                                                                                                                                                                                   |
|   |       | (iii)Certificate                      of Amendment of the Certificate of Incorporation, as filed                      with the                      Secretary of state of the State of Delaware an October 12,                      1999./(3)/         |
|   |       |                                                                                                                                                                                                                                                   |
|   |       | (iv)Amended                      and Restated Certificate of Designation of Rights Preferences,                      Privileges                      and Restrictions of Series A Preferred Stock of ION Networks,                      Inc. /15/ |
|   |       |                                                                                                                                                                                                                                                   |
|   |  3.2  | By-Laws                      of the Company./(19)/                                                                                                                                                                                                     |
|   |       |                                                                                                                                                                                                                                                   |
|   |  3.3  | Form                      of Specimen Common Stock Certificate of the Company./(4)                                                                                                                                                                     |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.1  | 1994                      Stock Option Plan of the Company. /(1)/+                                                                                                                                                                                     |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.2  | Stock                      Option Plan of the Company./(2)/+                                                                                                                                                                                           |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.3  | U.K.                      Sub-Plan of the Company, as amended./(2)/+                                                                                                                                                                                   |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.4  | 2000                      Stock Option Plan of the Company./(12)/+                                                                                                                                                                                     |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.5  | Form                      of Warrant Agreement dated July 17, 2001./(11)/+                                                                                                                                                                             |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.6  | Form                      of Warrant Agreement dated February 14, 2002./(11)/                                                                                                                                                                          |
|   |       |                                                                                                                                                                                                                                                   |
|   |  4.7  | Convertible                      Debenture dated August 5, 2004./19/                                                                                                                                                                                   |
|   |       |                                                                                                                                                                                                                                                   |
|   |  10.3 | Agreement                      dated as of December 19, 1994 by and between LeeMAH DataCom                      Security                      Corporation and Siemens Rolm Communications                        Inc./(4)/                             |
|   |       |                                                                                                                                                                                                                                                   |
|   |  10.4 | Equipment                      Lease Agreements dated October 29, 2003 by                      and between the Company and GE Capital Corporation.                      /(21)/                                                                         |
|   |       |                                                                                                                                                                                                                                                   |
|   |  10.5 | (i)                      Non-negotiable Promissory Note in the principal amount                      of $750,000 issued by Stephen B. Gray to the Company./(5)/                                                                                        |
|   |       |                                                                                                                                                                                                                                                   |
|   |       | (ii)                      First Amendment to Promissory Note dated as of August                      5, 2000 by and between the Company and Stephen B. Gray./(5)/                                                                                      |
|   |       |                                                                                                                                                                                                                                                   |

----

|   | ExhibitNo.  | Description                                                                                                                                                                                                                                                                               |
|--------|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.6  | (i)                        Separation and Forbearance Agreement made as of October                                                                                                                                                                                                        |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |        | (ii)Promissory                        Note in the amount of $163,000 dated October 5, 2000 made                        by Stephen B.                        Gray to the Company./(6)/                                                                                                     |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.7  | Materials                        and Services Contract dated January 16, 2001, between the                        Company and SBC                        Services, Inc./(7)/                                                                                                              |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.8  | Stock                        Purchase Agreement dated August 11, 2000 by and between the                        Company and                        the parties identified therein./(7)/                                                                                                   |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.9  | Purchase                        Agreement by and between the Company and the Selling Shareholders                        set                        forth therein dated February 7, 2002./(13)/                                                                                           |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.10 | Employment                        Agreement dated October 4, 2001 between the Company                        and Kam                        Saifi./(9)/+                                                                                                                             |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.11 | Employment                        Agreement dated October 17, 2001 between the Company and                        Cameron                        Saifi./(10)/+                                                                                                                            |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.12 | Employment                        Agreement dated February 25, 2002, between the Company                        and William                        Whitney./15/+                                                                                                                |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.13 | Amended                        and Restated Employment Agreement dated August 15, 2003,                        between the                        Company and Norman E. Corn./16/+                                                                                                        |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.14 | Employment                        Agreement dated September 15, 2003, between the Company and                        Patrick E.                        Delaney./14/+                                                                                                                      |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.15 | Lease                        Agreement dated July 21, 2003 by and between the Company                        and 116 Corporate                        Boulevard, LLC, Inc. / 17 /                                                                                                    |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.16 | Separation                        Agreement dated March 29, 2004 between the Company and Kam                        Saifi. / 21                        /                                                                                                                                  |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.17 | Separation                        Agreement dated October 14, 2004 between the Company and                        Cameron Saifi. /                        21 /                                                                                                                            |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.18 | First                        Amendment to the Amended and Restated Employment Agreement                        dated September                        8, 2003 by and between the Company and Norman E. Corn dated                        November 10,                        2004 /(21)/+ |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.19 | First                        Amendment to the Employment Agreement dated September 15,                        2003 by and                        between the Company and Patrick E. Delaney dated November                        10, 2004.                        /(21)/+                |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.20 | Employment                        Agreement dated August 31, 2004 by and between the Company                        and Henry A.                        Hill. /20/+                                                                                                                       |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.21 | Severance                        Agreement dated September 2, 2004 by and between the Company                        and William                        Whitney. /(21)/+                                                                                                                  |
|   |        |                                                                                                                                                                                                                                                                                      |
|   |  10.22 | Severance                        Agreement dated September 2, 2004 by and between the Company                        and Henry                        Gold. /(21)/+                                                                                                                       |
|   |        |                                                                                                                                                                                                                                                                                      |

----

|   | ExhibitNo.  | Description                                                                                                                                                                   |
|--------|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |        |                                                                                                                                                                          |
|   |  10.23 | Option                        Agreement dated January 28, 2004 by and between the Company                        and Norman E.                        Corn. /(21)/+           |
|   |        |                                                                                                                                                                          |
|   |  10.24 | Option                        Agreement dated January 28, 2004 by and between the Company                        and Patrick E.                        Delaney. /(21)/+       |
|   |        |                                                                                                                                                                          |
|   |  10.25 | Agreement                        dated February 25, 2005 by and between the Company and Sprint/Untied                        Management Company. /(21)/                       |
|   |        |                                                                                                                                                                          |
|   |  10.26 | Agreement                        dated October 28, 2004 by and between the Company and General                        Dynamics                        Network Systems. /(21)/ |
|   |        |                                                                                                                                                                          |
|   |  16.1  | Letter                        dated October 31,2003, from Deloitte & Touche, LLP. To the Securities                        and Exchange Commission./(8)/                  |
|   |        |                                                                                                                                                                          |
|   |  21.1  | List                          of Subsidiaries./(21)/                                                                                                                          |
|   |        |                                                                                                                                                                          |
|   |  23.1  | Independent                        Auditors Consent.*                                                                                                                         |
|   |        |                                                                                                                                                                          |
|   |  31.1  | Certification                        of CEO Pursuant to Section 302 of the Sarbanes Oxley Act                        of                        2002.*                         |
|   |        |                                                                                                                                                                          |
|   |  31.2  | Certification                        of CFO Pursuant to Section 302 of the Sarbanes Oxley Act                        of                        2002.*                         |
|   |        |                                                                                                                                                                          |
|   |  32.1  | Certification                        of CEO Pursuant to Section 906 of the Sarbanes Oxley Act                        of                        2002.*                         |
|   |        |                                                                                                                                                                          |
|   |  32.2  | Certification                        of CFO Pursuant to Section 906 of the Sarbanes Oxley Act                        of                        2002.*                         |
|   |        |                                                                                                                                                                          |
|   |        |                                                                                                                                                                          |

----

**SIGNATURES**

|   | **ION                NETWORKS, INC.** |
|--------|---------------------------------------|
|   |                                  |   |   |
|   | By:                                   |  /s/              Norman E.              Corn            |
|   |                                  | Norman                E. CornChief                Executive Officer |