**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**





x**QUARTERLY
      REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT** **OF
      1934**





For
      the
      quarterly period ended September 30, 2008





OR





o**TRANSITION
      REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT** **OF
      1934**





For
      the
      transition period from ____________ to ____________





Commission
      File Number: 0-13117





**Clacendix,
      Inc.**


(Exact
      Name of registrant as specified in Its Charter)


Delaware
              
              22-2413505(State
                  or Other Jurisdiction of
              
              (IRS
                  Employer Identification Number)Incorporation
                  or Organization)
 
 201Route
                  46 Parsippany, NJ
              
              07054(Address
                  of Principal Executive Offices)
              
              (Zip
                  Code)
  (973)
        402-4251
 (Telephone
        number)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      proceeding 12 months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days:


Yes
x No
o.





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o       Accelerated
      filer o


Non-accelerated
      filer o(Do not check if a smaller
      reporting company)  Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes x No
o





There
      were 33,047,161 shares of Common Stock outstanding as of November 13,
      2008.







**CLACENDIX,
      INC. AND SUBSIDIARY**





**FORM
      10-Q**





**FOR
      THE QUARTER ENDED SEPTEMBER 30, 2008**





**PART
      I. FINANCIAL INFORMATION**





**Page**Item
                1. Financial Statements
            3Condensed
                Consolidated Balance Sheets as of September 30, 2008 (Unaudited)
                and
                December 31, 2007
            4Condensed
                Consolidated Statements of Operations for the Three and Nine
                Months Ended September 30, 2008 and 2007
                (Unaudited)
            5Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended September
                30, 2008 and 2007 (Unaudited)
            6Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            7Item
                2. Management's Discussion and Analysis of Financial Condition and
                Results
                of Operations
            11Item
                3. Quantitative and Qualitative Disclosure about Market
                Risk
            15Item
                4T. Controls and Procedures
            15PART
                II. OTHER INFORMATIONItem
                1. Legal Proceedings
            16Item
                2. Unregistered Sale of Equity Securities and Use of
                Proceeds
            16Item
                5. Other Information
            16Item
                6. Exhibits
            17SIGNATURES
            18





2


**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**




The
      condensed consolidated financial statements included herein have been prepared
      by us without audit pursuant to the rules and regulations of the Securities
      and
      Exchange Commission. Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations. It is suggested
      that these financial statements be read in conjunction with the audited
      financial statements and the notes thereto included in our report on Form 10-KSB
      for the year ended December 31, 2007 as filed with the Securities and Exchange
      Commission.




3




**CLACENDIX,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY COMMENCING JANUARY 1, 2008)**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**September
                    30, 2008**
                
                **December
                    31, 2007**(Unaudited)**Assets**Current
                    assetsCash
                    and cash equivalents
                
                $
                1,251,399
                
                $
                2,525,641Restricted
                    cash
                
                
                321,329
                
                
                320,000Other
                    receivables
                
                
                1,033
                
                
                397,868Prepaid
                    expenses and other current assets
                
                
                5,981
                
                
                9,527Total
                    assets
                
                $
                1,579,742
                
                $
                3,253,036
 **Liabilities
                    and Stockholders’ Equity**Current
                    liabilitiesAccounts
                    payable
                
                $
                130,751
                
                $
                333,880Accrued
                    expenses
                
                
                107,317
                
                
                164,248Accrued
                    payroll and related liabilities
                
                
                17,262
                
                
                897,248Accrued
                    interest - related party
                
                
                15,814
                
                
                15,814Total
                    liabilities
                
                
                271,144
                
                
                1,411,190Commitments
                    and contingenciesStockholders’
                    EquityPreferred
                    stock - par value $.001 per share; authorized 1,000,000
                    shares;
                  200,000
                    shares designated Series A; 155,557 shares issued and
                  outstanding
                    (aggregate liquidation preference $280,003)
                
                
                156
                
                
                156Common
                    stock - par value $.001 per share; authorized 750,000,000
                    shares;
                  33,047,161
                    shares issued and outstanding
                
                
                33,048
                
                
                33,048Additional
                    paid-in capital
                
                
                45,870,896
                
                
                45,862,529Accumulated
                    deficit
                
                
                (44,053,887
                )
                
                (44,053,887
                )Deficit
                    accumulated during the development stage
                
                
                (541,615
                )
                
                —Total
                    stockholders’ equity
                
                
                1,308,598
                
                
                1,841,846Total
                    liabilities and stockholders’ equity
                
                $
                1,579,742
                
                $
                3,253,036





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




4





**CLACENDIX,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY COMMENCING JANUARY 1, 2008)**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(Unaudited)





For
                the
              Three
                Months Ended September 30, 2008
            
            For
                the
              Three
                Months Ended September 30, 2007
            
            For
                the
              Nine
                Months Ended September 30, 2008
            
            For
                the
              Nine
                Months Ended September 30, 2007Net
                sales
            
            $
            —
            
            $
            744,643
            
            $
            —
            
            $
            2,323,214Cost
                of sales
            
            
            —
            
            
            361,652
            
            
            —
            
            
            1,024,615Gross
                margin
            
            
            —
            
            
            382,991
            
            
            —
            
            
            1,298,599Operating
                expenses:Research
                and development
            
            
            —
            
            
            72,002
            
            
            236
            
            
            239,500Selling,
                general and administrative expenses
            
            
            129,230
            
            
            561,402
            
            
            564,277
            
            
            1,845,414Depreciation
                expense
            
            
            —
            
            
            5,767
            
            
            —
            
            
            16,236Total
                operating expenses
            
            
            129,230
            
            
            639,171
            
            
            564,513
            
            
            2,101,150Loss
                from operations
            
            
            (129,230
            )
            
            (256,180
            )
            
            (564,513
            )
            
            (802,551
            )Other
                income
            
            
            —
            
            
            758
            
            
            —
            
            
            2,098Interest
                (expense) - related party
            
            
            
            
            
            (4,137
            )
            
            
            
            
            (4,137
            )Interest
                income/(expense)
            
            
            9,246
            
            
            (17,369
            )
            
            37,593
            
            
            (48,965
            )Loss
                before income taxes
            
            
            (119,984
            )
            
            (276,928
            )
            
            (526,920
            )
            
            (853,555
            )Income
                tax expense
            
            
            13,239
            
            
            370
            
            
            14,695
            
            
            2,682Net
                loss
            
            $
            (133,223
            )
            $
            (276,558
            )
            $
            (541,615
            )
            $
            (856,237
            )Per
                share data:Net
                loss per common shareBasic
                and diluted
            
            $
            0.00
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.03
            )Weighted
                average number of common shares outstandingBasic
                and diluted
            
            
            33,047,161
            
            
            32,785,565
            
            
            33,047,161
            
            
            32,785,565





The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




5





**CLACENDIX,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY COMMENCING JANUARY 1, 2008)**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(Unaudited)








For
                the
              Nine
                MonthsEnded
              September
                30, 2008
            
            For
                the
              Nine
                MonthsEnded
                September 30, 2007Cash
                flows from operating activitiesNet
                loss
            
            $
            (541,615
            )
            $
            (856,237
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            —
            
            
            281,707Non-cash
                stock-based compensation
            
            
            8,367
            
            
            139,989Provision
                for doubtful accounts
            
            
            —
            
            
            20,142Provision
                for inventory reserve
            
            
            —
            
            
            (29,777
            )Interest
                on notes payable
            
            
            —
            
            
            3,123Interest
                on notes payable - related party
            
            
            -
            
            
            3,915Deferred
                rent
            
            
            —
            
            
            2,251Amortization
                of deferred financing costs
            
            
            —
            
            
            24,525Amortization
                of debt discount
            
            
            —
            
            
            488Interest
                income on restricted cash
            
            
            (1,329
            )
            
            —Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            —
            
            
            64,247Other
                receivables
            
            
            396,835
            
            
            —Inventories
            
            
            —
            
            
            273,350Prepaid
                expenses and other current assets
            
            
            3,546
            
            
            13,121Other
                assets
            
            
            —
            
            
            10,085Accounts
                payable
            
            
            (203,129
            )
            
            48,374Accrued
                expenses
            
            
            (56,931
            )
            
            (21,378
            )Accrued
                payroll and related liabilities
            
            
            (879,986
            )
            
            4,099Deferred
                income
            
            
            —
            
            
            (32,099
            )Net
                cash used in operating activities
            
            
            (1,274,242
            )
            
            (50,075
            )Cash
                flow from investing activitiesAcquisition
                of property and equipment
            
            
            —
            
            
            (1,379
            )Capitalized
                software expenditures
            
            
            —
            
            
            (439,899
            )Net
                cash used in investing activities
            
            
            —
            
            
            (441,278
            )Cash
                flows from financing activitiesPrincipal
                payments on debt and capital leases
            
            
            —
            
            
            (1,891
            )Advances
                under notes payable
            
            
            —
            
            
            150,000Advances
                under notes payable - related parties
            
            
            —
            
            
            175,000Borrowings
                from revolving credit facility
            
            
            
            
            
            395,269Repayment
                of revolving credit facility
            
            
            —
            
            
            (472,943
            )Deferred
                financing costs
            
            
            
            
            
            (10,000
            )Net
                cash provided by financing activities
            
            
            —
            
            
            235,435Net
                decrease in cash and cash equivalents
            
            
            (1,274,242
            )
            
            (255,918
            )Cash
                and cash equivalents - beginning of period
            
            
            2,525,641
            
            
            265,936Cash
                and cash equivalents - end of period
            
            $
            1,251,399
            
            $
            10,018




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




6


**CLACENDIX,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY COMMENCING JANUARY 1, 2008)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


September
      30, 2008


(Unaudited)





**NOTE
      1 - ORGANIZATION, BASIS OF PRESENTATION AND PLAN OF
      OPERATION**




*Organization
      and Basis of Presentation*





Clacendix,
      Inc., a Delaware corporation was founded, as ION Networks, Inc. (“ION”), in 1999
      through the combination of two companies -- MicroFrame, a New Jersey
      Corporation, and SolCom Systems Limited, a Scottish corporation located in
      Livingston, Scotland. ION designed, developed, manufactured and sold network
      and
      information security and management products to corporations, service providers
      and government agencies. On December 31, 2007, ION Networks, Inc. changed its
      name to Clacendix, Inc., in connection with the sale of substantially all of
      its
      operating assets to Cryptek, Inc., a Delaware Corporation (“Cryptek”), as
      described below. The accompanying condensed consolidated financial statements
      include the accounts of Clacendix, Inc. and ION Networks, N.V., a wholly-owned,
      inactive subsidiary (collectively, the “Company”). All material inter-company
      balances and transactions have been eliminated in consolidation.





The
      condensed consolidated balance sheet as of September 30, 2008, the condensed
      consolidated statements of operations for the three and nine months ended
      September 30, 2008 and 2007, and cash flows for the nine months ended September
      30, 2008 and 2007, have been prepared by the Company without audit. In the
      opinion of management, all adjustments (which include normal recurring
      adjustments) necessary to make the Company's financial position, results of
      operations and cash flows at September 30, 2008 and for the three and nine
      months ended September 30, 2008 and 2007 not misleading have been made. The
      results of operations for the three and nine months ended September 30, 2008,
      are not necessarily indicative of results that would be expected for the full
      year or any other interim period.





Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States of America have been condensed or omitted. It is suggested that
      these financial statements be read in conjunction with the audited financial
      statements and notes thereto included in the report on Form 10-KSB for the
      year
      ended December 31, 2007, filed with the Securities and Exchange Commission.




On
      December 31, 2007, the Company sold substantially all of the operating assets
      of
      the Company to Cryptek, Inc. Stockholder approval was required, and obtained,
      with respect to such sale. Since the date of this transaction, the Company
      exists as a shell company with no operations, and is reporting as a development
      stage company.




*Plan
      of Operation*




The
      plan
      of operation of the Company is to seek a target company with which to merge
      or
      to complete a business combination.  In any transaction, it is expected
      that the Company would be the surviving legal entity and the shareholders of
      the
      Company would retain a percentage ownership interest in the post-transaction
      company.  The Company does not plan to restrict its search to any specific
      business, industry or geographic location, and it may participate in a business
      venture of virtually any kind or nature.




The
      Company may seek a business opportunity with entities which have recently
      commenced operations, or that desire to utilize the public marketplace in order
      to raise additional capital in order to expand into new products or markets,
      to
      develop a new product or service, or for other corporate purposes.  The
      Company may acquire assets and establish wholly owned subsidiaries in various
      businesses or acquire existing businesses as subsidiaries.




The
      Company can give no assurance that any such a transaction will occur, or that
      if
      such a transaction were to occur, it would enhance the Company’s future
      operations or financial results, or specifically that the Company would become
      and remain profitable as a result of such transaction. If the Company is not
      able to complete a transaction within a reasonable time frame, the Company
      may
      liquidate.




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




*Net
      Loss Per Share of Common Stock*




Basic
      net
      loss per share is computed by dividing net loss attributable to common
      shareholders by the weighted average number of common shares outstanding during
      the period.  Diluted net loss per share reflects the potential dilution
      that could occur if securities or other instruments to issue common stock were
      exercised or converted into common stock.  Potentially dilutive securities
      of 5,660,974 and 10,073,013 at September 30, 2008 and 2007, respectively are
      excluded from the computation of diluted net loss per share, as their inclusion
      would be antidilutive.




7




Stock-Based
      Compensation




The
      Company accounts for stock-based compensation in accordance with the fair value
      recognition provisions of Statement of Financial Accounting Standards No. 123R,
      entitled “Share Based Payment” (“FAS 123R”). Stock-based compensation
      expense for all share-based payment awards is based on the grant-date fair
      value
      estimated in accordance with the provisions of FAS 123R. The Company
      recognizes these compensation costs over the requisite service period of the
      award, which is generally the option vesting term. As of September 30, 2008,
      the
      fair value of unvested options totaled $1,793. Stock
      based compensation for the three and nine months ended September 30, 2008 and
      2007 was recorded in the accompanying condensed consolidated statements of
      operations as follows:




For
                the three months
              ended
                September 30,
            
            For
                the nine months
              ended
                September 30,2008
            
            2007
            
            2008
            
            2007Cost
                of Sales
            
            $
            —
            
            $
            851
            
            $
            —
            
            $
            3,860Research
                & Development
            
            
            —
            
            
            4,853
            
            
            —
            
            
            29,226Selling,
                General & Administrative
            
            
            2,060
            
            
            28,142
            
            
            8,367
            
            
            106,903Totals
            
            $
            2,060
            
            $
            33,846
            
            $
            8,367
            
            $
            139,989




The
      fair
      value of share-based payment awards was estimated using the Black-Scholes option
      pricing model with the following assumptions and weighted average fair values
      as
      follows:




**Nine
                months ended September 30,****2008**
            
            
            **2007**Risk-free
                interest rate
            
            
            2.61-3.27
            %
            
            4.52%-5.05
            %Dividend
                yield
            
            
            N/A
            
            
            N/AExpected
                volatility range
            
            
            227-233
            %
            
            202-224
            %Expected
                life in years
            
            
            5
            
            
            5Expected
                forfeiture rate (through term)
            
            
            0
            %
            
            0
            %





The
      Company accounts for the expected life of share options in accordance with
      the
“simplified” method provisions of Securities and Exchange Commission Staff
      Accounting Bulletin (“SAB”) No. 110 (December 2007), which enables the use of
      the simplified method for “plain vanilla” share options as defined in SAB No.
      107.





A
      summary
      of option activity for the nine months ended September 30, 2008 is as
      follows:





Options
            
            Shares
            
            Weighted-
              Average
              Exercise
              Price
            
            Weighted-
              Average
              Remaining
              Contractual
              Term
            
            Aggregate
              Intrinsic
              ValueOutstanding
                at January 1, 2008
            
            
            5,490,407
            
            $
            0.27
            
            
            2.75
                yearsGranted
            
            
            52,500
            
            $
            0.06
            
            
            4.67
                yearsCanceled
            
            
            (2,650,003
            )
            $
            0.44
            
            
            3.43
                yearsOutstanding
                at September 30, 2008
            
            
            2,892,904
            
            $
            0.12
            
            
            0.95
                years
            
            $
            413Exercisable
                at September 30, 2008
            
            
            2,810,404
            
            $
            0.11
            
            
            0.91
                years
            
            $
            413




The
      weighted-average grant-date fair value of options granted during the three
      and
      nine months ended September 30, 2008 amounted to $0.04 and $0.06 per share,
      respectively.





**NOTE
      3 - STOCKHOLDERS’ EQUITY**




***Common
      Stock***





On
      December 31, 2007, at the Company’s annual shareholders’ meeting, the
      shareholders’ approved a proposal to amend Article Fourth of the certificate of
      incorporation of the Company to increase the number of authorized shares of
      common stock from 50,000,000
      to 750,000,000. This amendment to the certificate of incorporation was filed
      on
      July 14, 2008.




8





*Options*




On
      March
      25, 2008, the Company granted board members immediately exercisable options,
      under an option plan previously approved by stockholders, to purchase an
      aggregate of 4,500 shares of common stock with an exercise price of $0.03 for
      a
      total value of $135, based on the Black-Scholes model.





On
      May
      19, 2008, the Company granted board members immediately exercisable options,
      under an option plan previously approved by stockholders, to purchase an
      aggregate of 43,500 shares of common stock with an exercise price of $0.06
      for a
      total value of $2,586, based on the Black-Scholes model.





On
      August
      11, 2008, the Company granted board members immediately exercisable options,
      under an option plan previously approved by stockholders, to purchase an
      aggregate of 4,500 shares of common stock with an exercise price of $0.04 for
      a
      total value of $178, based on the Black-Scholes model.




**NOTE
      4 - CONTINGENT LIABILITIES**





In
      the
      normal course of business the Company may be involved in legal proceedings,
      claims and assessments arising in the ordinary course of business. Such matters
      are subject to many uncertainties, and outcomes are not predictable with
      assurance. Management is not aware of any item existing that will have a
      significant impact on the Company’s business or financial
      condition.





**NOTE
      5 - EMPLOYMENT AGREEMENTS**





On
      June
      19, 2008, the Board of Directors of Clacendix extended the employment term
      of
      Norman E. Corn, its Chief Executive Officer, and Patrick E. Delaney, its Chief
      Financial Officer, through December 31, 2008, unless terminated earlier by
      either party upon thirty days prior notice. Effective July 1, 2008, Messrs.
      Corn
      and Delaney’s compensation has been adjusted to an annual base salary of
      $100,000, as compared to previous annual base salaries of $235,000 and $200,000,
      respectively, in addition to certain employee benefits.





**NOTE
      6 -NEW ACCOUNTING PRONOUNCEMENTS**





On
      October 10, 2008, the FASB issue FSP FAS 157-3, “Determining the Fair Value of a
      Financial Asset When the Market for That Asset Is Not Active (FSP).” The FSP
      clarifies the application of FASB Statement No. 157 in a market that is not
      active. The guidance is primarily focused on addressing how the reporting
      entity’s own assumptions should be considered when measuring fair value when
      relevant observable inputs does not exist; how available observable inputs
      in a
      market that is not active should be considered when measuring fair value; and
      how the use of market quotes should be considered when assessing the relevance
      of observable and unobservable inputs available to measure fair value. The
      adoption of FSP FAS 157-3 did not have a material impact on the Company’s
      financial statements.




In
      May
      2008, the FASB issued Statement No. 162 “The Hierarchy of Generally Accepted
      Accounting Principles.” The current hierarchy of generally accepted accounting
      principles is set forth in the American Institute of Certified Accountants
      (AICPA) Statement of Auditing Standards (SAS) No. 69, “The meaning of Present
      Fairly in Conformity With Generally Accepted Accounting Principles. Statement
      No. 162 is intended to improve financial reporting by identifying a consistent
      framework or hierarchy for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      generally accepted accounting principles for nongovernmental entities. This
      Statement is effective 60 days following the SEC’s approval of the Public
      Company Oversight Board Auditing amendments to SAS 69. The Company is currently
      evaluating the application of this Statement but does not anticipate that the
      Statement will have a material effect on the Company’s results of operations or
      financial position.




In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS 161”), to
      require enhanced disclosures about an entity’s derivative and hedging activities
      and thereby improves the transparency of financial reporting. SFAS 161 is
      effective for financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008, with early adoption encouraged. The Company
      is currently evaluating the effect that the adoption of SFAS 161 will have
      on
      its consolidated results of operations and financial condition, but does not
      expect it to have a material impact.





In
      February 2008, the FASB issued Staff Position No. 157-2, Effective Date of
      FASB
      Statement No. 157 (“FSP 157-2”) that defers the effective date of applying the
      provisions of SFAS 157 to the fair value measurement of non-financial assets
      and
      non-financial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (or at least annually),
      until fiscal years beginning after November 15, 2008. The Company is currently
      evaluating the effect that the adoption of FSP 157-2 will have on its
      consolidated results of operations and financial condition, but does not expect
      it to have a material impact.




9





In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (“SFAS 159”) including an amendment of FASB
      Statement No. 115. SFAS 159 permits companies to choose to measure certain
      financial instruments and certain other items at fair value. The standard
      requires that unrealized gains and losses on items for which the fair value
      option has been elected be reported in earnings. The Company adopted SFAS 159
      beginning in the first quarter of 2008, without material effect on the Company’s
      consolidated financial position or results of operations.





In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS
      157”). SFAS 157 provides guidance for using fair value to measure assets and
      liabilities. It also responds to investors’ requests for expanded information
      about the extent to which companies measure assets and liabilities at fair
      value, the information used to measure fair value, and the effect of fair value
      measurements on earnings. SFAS 157 applies whenever other standards require
      (or
      permit) assets or liabilities to be measured at fair value, and does not expand
      the use of fair value in any new circumstances. SFAS 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007
      and has been adopted by the Company in 2008 without material effect on the
      Company’s consolidated financial position or results of operations.




10


**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





Information
      Regarding Forward-Looking Statements




A
      number
      of statements contained in this report are forward-looking statements within
      the
      meaning of the Private Securities Litigation Reform Act of 1995 that involve
      risks and uncertainties that could cause actual results to differ materially
      from those expressed or implied in the applicable statements. You can identify
      forward-looking statements by our use of words such as “may”, “will”, “should”,
“could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”,
“predicts”, “potential”, or “continue” or the negative or other variations of
      these words, or other comparable words or phrases. These statements include,
      but
      are not limited to, statements regarding our ability to complete our business
      objectives. These risks and uncertainties include, but are not limited to:




·
            our
                ability to complete a combination with one or more target businesses;




·
            our
                success in retaining or recruiting, or changes required in, our officers
                or directors prior to or following a business combination;




·
            our
                potential inability to obtain additional financing to complete a
                business
                combination;




·
            a
                limited pool of prospective target businesses;




·
            a
                potential change in control if we acquire one or more target businesses
                for stock;




·
            our
                public securities’ limited liquidity and trading;
                and




·
            our
                ongoing financial performance.




Unless
      otherwise required by applicable law, the Company assumes no obligation to
      update any such forward-looking statements, or to update the reasons why actual
      results could differ from those projected in the forward-looking statements.
      These risk factors are further described in our annual report on Form 10-KSB
      for
      the fiscal year ended December 31, 2007.




**OVERVIEW**




Clacendix,
      Inc., a Delaware corporation was founded, as ION Networks, Inc. (“ION”), in 1999
      through the combination of two companies -- MicroFrame, a New Jersey
      Corporation, and SolCom Systems Limited, a Scottish corporation located in
      Livingston, Scotland. ION designed, developed, manufactured and sold network
      and
      information security and management products to corporations, service providers
      and government agencies. On December 31, 2007, ION Networks, Inc. changed its
      name to Clacendix, Inc. The accompanying condensed consolidated financial
      statements include the accounts of Clacendix, Inc. and ION Networks, N.V.,
      a
      wholly-owned, inactive subsidiary (collectively, the “Company”).





This
      discussion and analysis should be read in conjunction with our condensed
      consolidated financial statements and accompanying notes included elsewhere
      in
      this Quarterly Report. This discussion includes forward-looking statements
      that
      involve risk and uncertainties. The following financial information for the
      year
      ended December 31, 2007, and the periods ended September 30, 2008 and September
      30, 2007 should be considered in light of the completion of the sale of
      substantially all of the operating assets of the Company on December 31, 2007
      and the fact that the Company currently has no operations other than to seek
      a
      target company with which to merge or to complete a business combination, as
      further described in our Annual Report on Form 10-KSB for the year ended
      December 31, 2007. The Company can give no assurance that any such a transaction
      will occur, or that if such a transaction were to occur, it would enhance the
      Company’s future operations or financial results, or specifically that the
      Company would become and remain profitable as a result of such transaction.
      The
      Company will not generate any future revenues until, at the earliest, after
      the
      consummation of a business combination. If a transaction is not completed by
      December 31, 2008, the Board of Directors will take whatever steps it deems
      appropriate at the relevant time in order to further cut the Company’s expenses.
      If the Company is not able to complete a transaction within a reasonable time
      frame, the Company may liquidate.




On
      December 31, 2007, the Company sold substantially all of its operating assets
      to
      Cryptek, Inc., a privately held Delaware Corporation. Stockholder approval
      was
      required, and obtained, with respect to such sale.





**RESULTS
      OF OPERATIONS**




*For
      the three months ended September 30, 2008 compared to the same period in
      2007:*





Net
      sales
      for the three months ended September 30, 2008 were zero compared to net sales
      of
      $744,643 for the same period in 2007. Cost of sales for the three months ended
      September 30, 2008 was zero compared to $361,652 for the same period in 2007.
      The decrease for third quarter of 2008 compared to the same period last year
      was
      due to the sale of substantially all the operating assets of the Company on
      December 31, 2007.




Research
      and development expenses for the three months ended September 30, 2008 was
      zero
      compared to $72,002 for the same period in 2007. The decrease in research and
      development expenses for third quarter of 2008 compared to the same period
      last year was due to the sale of substantially all the operating assets of
      the
      Company on December 31, 2007.




11




Selling,
      general and administrative expenses ("SG&A") for the three months ended
      September 30, 2008 were $129,230 compared to $561,402 for the same period in
      2007, a decrease of $432,172. The decrease in SG&A expenses was primarily
      due to the sale of substantially all the operating assets of the Company on
      December 31, 2007. SG&A expenses for the three months ended September 30,
      2008 comprised mainly of payroll related expenses for salaries, benefits and
      incentive compensation of $65,038 and professional fees of $43,358.





Depreciation
      expense was zero for the three months ended September 30, 2008 compared to
      $5,767 in the same period in 2007. The decrease in depreciation expense for
      third quarter of 2008 compared to the same period last year was due primarily
      to
      the sale of substantially all the operating assets of the Company on December
      31, 2007.





The
      Company incurred a net loss of $133,223 for the three months ended September
      30,
      2008, compared to $276,558 for the same period in 2007. The decrease was due
      to
      lower general overhead resulting from the sale of substantially all the
      operating assets of the Company on December 31, 2007.





*For
      the nine months ended September 30, 2008 compared to the same period in
      2007:*





Net
      sales
      for the nine months ended September 30, 2008, were zero compared to net sales
      of
      $2,323,214 for the same period in 2007. Cost of sales for the nine months ended
      September 30, 2008 was zero compared to $1,024,615 for the same period in 2007.
      The decrease for the nine months ended September 30, 2008 compared to the same
      period last year was due to the sale of substantially all the operating assets
      of the Company on December 31, 2007.




Research
      and development expenses for the nine months ended September 30, 2008 was $236
      compared to $239,500 for the same period in 2007 or a decrease of $239,264.
      The
      decrease in research and development expenses during the nine months ended
      September 30, 2008 compared to the same period last year was due to the sale
      of
      substantially all the operating assets of the Company on December 31,
      2007.




Selling,
      general and administrative expenses ("SG&A") for the nine months ended
      September 30, 2008 were $564,277 compared to $1,845,414 for the same period
      in
      2007, a decrease of $1,281,137. The decrease in SG&A expenses was primarily
      due to the sale of substantially all the operating assets of the Company on
      December 31, 2007. SG&A expenses for the nine months ended September 30,
      2008 comprised mainly of payroll related expenses for salaries, benefits and
      incentive compensation of $349,824 and professional fees of $139,257.





Depreciation
      expense was zero for the nine months ended September 30, 2008 compared to
      $16,236 in the same period in 2007. The decrease in depreciation expense for
      the
      nine months ended September 30, 2008 compared to the same period last year
      was
      due primarily to the sale of substantially all the operating assets of the
      Company on December 31, 2007.





The
      Company incurred a net loss of $541,615 for the nine months ended September
      30,
      2008, compared to $856,237 for the same period in 2007. The decrease was due
      to
      lower general overhead resulting from the sale of substantially all the
      operating assets of the Company on December 31, 2007.





**FINANCIAL
      CONDITION AND CAPITAL RESOURCES**




The
      Company's working capital balance as of September 30, 2008 was $1,308,598 as
      compared to $1,841,846 at December 31, 2007. The decrease of $533,248 was due
      to
      the operating expenses of the Company for the nine months ended September 30,
      2008. We presently anticipate that cash requirements during the next twelve
      months will relate to maintaining the corporate entity, complying with the
      periodic reporting requirements of the Securities and Exchange Commission,
      evaluating and reviewing possible business ventures and acquisition
      opportunities and potentially negotiating and consummating any such
      transactions.  The Company believes that it has sufficient cash on hand to
      meet these cash requirements during the next twelve months.





Net
      cash
      used in operating activities during the nine months ended September 30, 2008
      was
      $1,274,242 compared to net cash used by operating activities of $50,075 in
      the
      same period in 2007, a difference of $1,224,167. The use of cash in the nine
      months ended September 30, 2008 included severance payments of $826,250 and
      paying accrued payroll of $52,000.





Net
      cash
      used in investing activities during the nine months ended September 30, 2008
      was
      zero compared to the same period in 2007 of $441,278. Capitalized software
      expenditures for the nine months ended September 30, 2007 were $439,899 and
      zero
      for the nine months ended September 30, 2008.





Net
      cash
      provided by financing activities during the nine months ended September 30,
      2008
      was zero compared to the nine months ended September 30, 2007 of $235,435.
      During the nine months ended September 30, 2007, the Company received advances
      of $175,000 and advances from related parties of $150,000 offset by net
      repayments on the credit facility of $77,674.




12




**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Use
      of
      Estimates **





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





Stock-Based
      Compensation




The
      Company accounts for stock-based compensation in accordance with the fair value
      recognition provisions of Statement of Financial Accounting Standards No. 123R,
      entitled “Share Based Payment” (“FAS 123R”). Stock-based compensation
      expense for all share-based payment awards is based on the grant-date fair
      value
      estimated in accordance with the provisions of FAS 123R. The Company
      recognizes these compensation costs over the requisite service period of the
      award, which is generally the option vesting term.




The
      Company accounts for the expected life of share options in accordance with
      the
“simplified” method provisions of Securities and Exchange Commission Staff
      Accounting Bulletin (“SAB”) No. 110 (December 2007), which enables the use of
      the simplified method for “plain vanilla” share options as defined in SAB No.
      107.





*Recent
      Accounting Pronouncements*





On
      October 10, 2008, the FASB issue FSP FAS 157-3, “Determining the Fair Value of a
      Financial Asset When the Market for That Asset Is Not Active (FSP).” The FSP
      clarifies the application of FASB Statement No. 157 in a market that is not
      active. The guidance is primarily focused on addressing how the reporting
      entity’s own assumptions should be considered when measuring fair value when
      relevant observable inputs does not exist; how available observable inputs
      in a
      market that is not active should be considered when measuring fair value; and
      how the use of market quotes should be considered when assessing the relevance
      of observable and unobservable inputs available to measure fair value. The
      adoption of FSP FAS 157-3 did not have a material impact on the Company’s
      financial statements.




In
      May
      2008, the FASB issued Statement No. 162 “The Hierarchy of Generally Accepted
      Accounting Principles.” The current hierarchy of generally accepted accounting
      principles is set forth in the American Institute of Certified Accountants
      (AICPA) Statement of Auditing Standards (SAS) No. 69, “The meaning of Present
      Fairly in Conformity With Generally Accepted Accounting Principles. Statement
      No. 162 is intended to improve financial reporting by identifying a consistent
      framework or hierarchy for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      generally accepted accounting principles for nongovernmental entities. This
      Statement is effective 60 days following the SEC’s approval of the Public
      Company Oversight Board Auditing amendments to SAS 69. The Company is currently
      evaluating the application of this Statement but does not anticipate that the
      Statement will have a material effect on the Company’s results of operations or
      financial position.




In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS 161”), to
      require enhanced disclosures about an entity’s derivative and hedging activities
      and thereby improves the transparency of financial reporting. SFAS 161 is
      effective for financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008, with early adoption encouraged. The Company
      is currently evaluating the effect that
      the
      adoption of SFAS 161 will have on its consolidated results of operations and
      financial condition, but does not expect it to have a material
      impact.





In
      February 2008, the FASB issued Staff Position No. 157-2, Effective Date of
      FASB
      Statement No. 157 (“FSP 157-2”) that defers the effective date of applying the
      provisions of SFAS 157 to the fair value measurement of non-financial assets
      and
      non-financial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (or at least annually),
      until fiscal years beginning after November 15, 2008. The Company is currently
      evaluating the effect that the adoption of FSP 157-2 will have on its
      consolidated results of operations and financial condition, but does not expect
      it to have a material impact.





In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (“SFAS 159”) including an amendment of FASB
      Statement No. 115. SFAS 159 permits companies to choose to measure certain
      financial instruments and certain other items at fair value. The standard
      requires that unrealized gains and losses on items for which the fair value
      option has been elected be reported in earnings. The Company adopted SFAS 159
      beginning in the first quarter of 2008, without material effect on the Company’s
      consolidated financial position or results of operations.




13





In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS
      157”). SFAS 157 provides guidance for using fair value to measure assets and
      liabilities. It also responds to investors’ requests for expanded information
      about the extent to which companies measure assets and liabilities at fair
      value, the information used to measure fair value, and the effect of fair value
      measurements on earnings. SFAS 157 applies whenever other standards require
      (or
      permit) assets or liabilities to be measured at fair value, and does not expand
      the use of fair value in any new circumstances. SFAS 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007
      and has been adopted by the Company in 2008 without material effect on the
      Company’s consolidated financial position or results of operations.





*Off-Balance
      Sheet Arrangements*




As
      of
      November 13, 2008, we did not have any off-balance sheet debt nor did we have
      any transactions, arrangements, obligations (including contingent obligations)
      or other relationships with any unconsolidated entities or other persons that
      may have a material current or future effect on financial conditions, changes
      in
      financial conditions, result of operations, liquidity, capital expenditures,
      capital resources, or significant components of revenue or
      expenses.




14


**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





Not
      Applicable.





**ITEM
      4T. CONTROLS AND PROCEDURES**





**Disclosure
      Controls and Procedures**




Prior
      to
      the filing of this report, the Company’s management carried out an evaluation,
      under the supervision and with the participation of its Chief Executive Officer
      and the Chief Financial Officer, of the effectiveness of the design and
      operation of the Company’s disclosure controls and procedures as of the end of
      the period covered by this report. Based on this evaluation, the Chief Executive
      Officer and the Chief Financial Officer concluded that the Company's controls
      and procedures were effective as of the end of the period covered by this report
      to ensure that information required to be disclosed by the Company in the
      reports filed by it under the Securities and Exchange Act of 1934, as amended,
      is recorded, processed, summarized and reported within the time periods
      specified in the SEC's rules and forms, and include controls and procedures
      designed to ensure that information required to be disclosed by the Company
      in
      such reports is accumulated and communicated to the Company's management,
      including the Chief Executive Officer and Chief Financial Officer of the
      Company, as appropriate to allow timely decisions regarding required
      disclosure.




**Changes
      to Internal Control Over Financial Reporting**




There
      are
      no changes in the Company’s internal control over financial reporting during the
      quarter ended September 30, 2008 that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting. However, as the Company sold substantially all of its
      operating assets on December 31, 2007 it has continued to utilize the accounting
      system, which was sold in the transaction, as well as certain Cryptek employees
      through mutual agreement for a period of time. During fiscal year 2008, the
      Company will continue to evaluate this relationship.




15


**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





The
      Company is not currently involved in any legal proceedings other than routine
      litigation incidental to the business.





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





On
      August
      11, 2008, the Company granted board members immediately exercisable options,
      under an option plan previously approved by stockholders, to purchase an
      aggregate of 4,500 shares of common stock with an exercise price of $0.04 for
      a
      total value of $178, based on the Black-Scholes model.





These
      grants were made without registration in reliance upon the exemption afforded
      by
      the provisions of Section 4(2) of the Securities Act of 1933, as amended (the
      “Securities Act”), and Rule 506 promulgated thereunder, based on the fact that
      the options granted were not sold or offered pursuant to general solicitation,
      and in reliance upon the “accredited investor” status of board members of the
      Company.





**ITEM
      5. OTHER INFORMATION**





On
      August
      15, 2008, Philip Levine, a director of Clacendix, Inc. (the “Company”), gave
      notice of his resignation from the Board of Directors of the Company, effective
      September 1, 2008. Until his resignation, Mr. Levine served as Chair of the
      Audit Committee of the Board of Directors. Since
      the date of Mr. Levine’s resignation, Mr. Steven Deixler has served as the
      acting Audit Committee Chairman.


16


**ITEM
      6. EXHIBITS**





31.1
            *
            Certification
                of Chief Executive Officer pursuant to Securities Exchange Act Rule
                13a-14(a)31.2
            *
            Certification
                of Chief Financial Officer pursuant to Securities Exchange Act Rule
                13a-14(a)32.1
            *
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                The Sarbanes-Oxley Act of 2002, of Chief Executive Officer32.2
            *
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                The Sarbanes-Oxley Act of 2002, of Chief Financial
                Officer





*
      Filed
      herewith




17




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**CLACENDIX,
                INC.**Date:November
                13, 2008
            
            */S/
                Norman E. Corn**Norman
                E. Corn, Chief Executive Officer*




*/S/
                Patrick E. Delaney**Patrick
                E. Delaney, Chief Financial Officer*





18


**Exhibit
      Index**





31.1
            *
            Certification
                of Chief Executive Officer pursuant to Securities Exchange Act Rule
                13a-14(a)31.2
            *
            Certification
                of Chief Financial Officer pursuant to Securities Exchange Act Rule
                13a-14(a)32.1
            *
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                The Sarbanes-Oxley Act of 2002, of Chief Executive Officer32.2
            *
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                The Sarbanes-Oxley Act of 2002, of Chief Financial
                Officer





*
      Filed
      herewith




19