**U.S.      SECURITIES AND EXCHANGE COMMISSION **

**FORM      10-QSB/A**

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

**OF      1934 **

**[      ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      **

**OF      1934 **

**ION      NETWORKS, INC. **

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

**Transitional      Small Business Disclosure Format: **

**Yes      __ No  X **

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**EXPLANATORY      NOTE**

| §   | Item                1. 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                4 of the Financial Statements were updated to reflect additional                disclosures for restructuring, asset impairment and other credits. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Item                2: 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. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**ION      NETWORKS, INC. AND SUBSIDIARY **

**FORM      10-QSB/A **

**FOR      THE QUARTER ENDED March 31, 2005**

| **PART                    I. FINANCIAL INFORMATION**                                                                                                        |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                        |     |
|                                                                                                                                                        | **Page** |
| **Item                    1. Condensed Consolidated Financial Statements                    (Unaudited)**                                                   | **3**    |
|                                                                                                                                                        |     |
| Condensed                    Consolidated Balance Sheet as of March 31,                    2005                                                             | **4**    |
|                                                                                                                                                        |     |
| Condensed                    Consolidated Statements of                    Operations for the Three Months ended March 31, 2005 and                    2004 | **5**    |
|                                                                                                                                                        |     |
| Condensed                    Consolidated Statements of Cash                    Flows for the Three Months ended March 31, 2005 and                    2004 | **6**    |
|                                                                                                                                                        |     |
| Notes                    to Condensed Consolidated Financial                    Statements                                                                  | **7**    |
|                                                                                                                                                        |     |
| **Item                    2. Management's Discussion and Analysis or                    Plan of Operation**                                                 | **10**   |
|                                                                                                                                                        |     |
| **Item                    3. Controls and                    Procedures**                                                                                   | **12**   |
|                                                                                                                                                        |     |
| **PART                    II. OTHER INFORMATION**                                                                                                           |     |
|                                                                                                                                                        |     |
| **Item                    1. Legal                    Proceedings**                                                                                         | **13**   |
|                                                                                                                                                        |     |
| **Item                    2. Unregistered Sales of Equity Securities                    and Use of Proceeds**                                               | **13**   |
|                                                                                                                                                        |     |
| **Item                    3. Defaults Upon Senior                    Securities**                                                                           | **13**   |
|                                                                                                                                                        |          |
| **Item                    4. Submission of Matters to a Vote of                    Security Holders**                                                       | **13**   |
|                                                                                                                                                        |     |
| **Item                    5. Other Information**                                                                                                            | **13**   |
|                                                                                                                                                        |     |
| **Item                    6. Exhibits and Reports on Form                    8-K**                                                                          | **14**   |
|                                                                                                                                                        |     |
| **SIGNATURES**                                                                                                                                              | **15**   |

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**PART        I. FINANCIAL INFORMATION**

**ITEM        1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS **

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**ION        NETWORKS, INC. AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED BALANCE SHEET **

**As        of March 31, 2005**

**(Unaudited)**

| **Assets**                                                                                                                                                                                                              |   |   |        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|
|                                                                                                                                                                                                                    |   |   |        |   |
| Current                  assets                                                                                                                                                                                         |   |   |        |   |
| Cash                  and cash equivalents                                                                                                                                                                              |   | $      | 549,039     |   |
| Accounts                  receivable, less allowance for doubtful accounts of                  $16,923                                                                                                                  |   |   | 684,302     |   |
| Inventory,                  net                                                                                                                                                                                         |   |   | 575,186     |   |
| Prepaid                  expenses and other current assets                                                                                                                                                              |   |   | 76,703      |   |
| Total                  current assets                                                                                                                                                                                   |   |   | 1,885,230   |   |
| Non-current                  assets                                                                                                                                                                                     |   |   |        |   |
| Property                  and equipment, net                                                                                                                                                                            |   |   | 20,002      |   |
| Capitalized                  software, net                                                                                                                                                                              |   |   | 551,791     |   |
| Other                  assets                                                                                                                                                                                           |   |   | 12,836      |   |
| Total                  assets                                                                                                                                                                                           |   | $      | 2,469,859   |   |
|                                                                                                                                                                                                                    |   |   |        |   |
| **Liabilities                  and Stockholders’ Equity**                                                                                                                                                         |   |   |        |   |
| Current                  liabilities                                                                                                                                                                                    |   |   |        |   |
| Current                  portion of long-term debt                                                                                                                                                                      |   | $      | 2,526       |   |
| Accounts                  payable                                                                                                                                                                                       |   |   | 345,015     |   |
| Accrued                  expenses                                                                                                                                                                                       |   |   | 379,564     |   |
| Accrued                  payroll and related liabilities                                                                                                                                                                |   |   | 191,143     |   |
| Deferred                  income                                                                                                                                                                                        |   |   | 111,088     |   |
| Sales                  tax payable                                                                                                                                                                                      |   |   | 2,303       |   |
| Other                  current liabilities                                                                                                                                                                              |   |   | 10,000      |   |
| Total                  current liabilities                                                                                                                                                                              |   |   | 1,041,639   |   |
|                                                                                                                                                                                                                    |   |   |        |   |
| Long                  term liabilities                                                                                                                                                                                  |   |   |        |   |
| Convertible                  debenture                                                                                                                                                                                  |   |   | 206,384     |   |
| Long                  term debt, net of current portion                                                                                                                                                                 |   |   | 6,349       |   |
| Total                  long term liabilities                                                                                                                                                                            |   |   | 212,733     |   |
|                                                                                                                                                                                                                    |   |   |        |   |
| Commitments                  and contingencies                                                                                                                                                                          |   |   |        |   |
|                                                                                                                                                                                                                    |   |   |        |   |
| Stockholders’                  Equity                                                                                                                                                                             |   |   |        |   |
| Preferred                  stock - par value $.001 per share; authorized 1,000,000 shares;                  200,000                  shares designated Series A; 155,557 shares issued and                  outstanding |   |   | 156         |   |
| Common                  stock - par value $.001 per share; authorized 50,000,000 shares;                  27,050,044 shares issued                  and outstanding                                                     |   |   | 27,051      |   |
| Additional                  paid-in capital                                                                                                                                                                             |   |   | 44,877,158  |   |
| Accumulated                  deficit                                                                                                                                                                                    |   |   | (43,688,878 | )      |
| Total                  stockholders’ equity                                                                                                                                                                       |   |   | 1,215,487   |   |
|                                                                                                                                                                                                                    |   |   |        |   |
| Total                  liabilities and stockholders’ equity                                                                                                                                                       |   | $      | 2,469,859   |   |

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**ION        NETWORKS, INC. AND        SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENTS OF OPERATIONS **

|                                                                                                                                                                                                               |   | Three                  Months EndedMarch                  31, 2005 |       | Three                  Months EndedMarch                  31, 2004 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|------------|--------------------------------------------------------------------|--------|
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |
| Net                  sales                                                                                                                                                                                         |   | $                                                                  | 932,431    |                                                               | $      | 904,961 |   |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Cost                  of sales                                                                                                                                                                                     |   |                                                               | 244,617    |                                                               |   | 387,635 |   |
| Gross                  margin                                                                                                                                                                                      |   |                                                               | 687,814    |                                                               |   | 517,326 |   |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Research                  and development expenses                                                                                                                                                                 |   |                                                               | 154,069    |                                                               |   | 120,269 |   |
| Selling,                  general and administrative expenses, including $58,750 of non-cash                  stock                  based compensation for the three months ended March 31,                  2004 |   |                                                               | 656,427    |                                                               |   | 712,537 |   |
| Depreciation                  expense                                                                                                                                                                              |   |                                                               | 2,532      |                                                               |   | 25,245 |   |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Total                  operating expenses                                                                                                                                                                          |   |                                                               | 813,028    |                                                               |   | 858,051 |   |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Loss                  from operations                                                                                                                                                                              |   |                                                               | (125,214   | )                                                                  |   | (340,725 | ) |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Other                  income                                                                                                                                                                                      |   |                                                               | 15,339     |                                                               |   | - |   |
| Interest                  (expense)/income-related party                                                                                                                                                           |   |                                                               | (2,287     | )                                                                  |   | 19,526 |   |
| Interest                  income/(expense)                                                                                                                                                                         |   |                                                               | 134        |                                                               |   | (1,609 | ) |
|  Loss                  before income taxes                                                                                                                                                                    |   |                                                               | (112,028   | )                                                                  |   | (322,808 | ) |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Income                  tax expense                                                                                                                                                                                |   |                                                               | 272        |                                                               |   | - |   |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Net                  loss                                                                                                                                                                                          |   | $                                                                  | (112,300   | )                                                                  | $      | (322,808 | ) |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Per                  share data                                                                                                                                                                                    |   |                                                               |       |                                                               |   |   |   |
| Net                  loss per share                                                                                                                                                                                |   |                                                               |       |                                                               |   |   |   |
| Basic                  and diluted                                                                                                                                                                                 |   | $                                                                  | (0.01      | )                                                                  | $      | (0.01 | ) |
|                                                                                                                                                                                                               |   |                                                               |       |                                                               |   |   |   |
| Weighted                  average number of common shares outstanding                                                                                                                                              |   |                                                               |       |                                                               |   |   |   |
| Basic                  and diluted                                                                                                                                                                                 |   |                                                               | 22,670,940 |                                                               |   | 24,831,056 |   |

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**ION        NETWORKS, INC. AND        SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENTS OF CASH FLOWS **

|                                                                                                          |   | For                  the Three Months Ended March 31,2005 |     | For                  the Three Months Ended March 31,2004 |   |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|----------|-----------------------------------------------------------|--------|
|                                                                                                          |   |                                                      |     |                                                      |   |
| Cash                  flows from operating activities                                                         |   |                                                      |     |                                                      |   |   |   |
| Net                  loss                                                                                     |   | $                                                         | (112,300 | )                                                         | $      | (322,808 | ) |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities: |   |                                                      |     |                                                      |   |   |   |
| Depreciation                  and amortization                                                                |   |                                                      | 33,413   |                                                      |   | 115,727 |   |
| Non-cash                  stock-based compensation                                                            |   |                                                      | -        |                                                      |   | 58,750 |   |
| Notes                  receivable from officers                                                               |   |                                                      | -        |                                                      |   | (19,253 | ) |
| Interest                  on convertible debt                                                                 |   |                                                      | 2,217    |                                                      |   | - |   |
| Changes                  in operating assets and liabilities:                                                 |   |                                                      |     |                                                      |   |   |   |
| Accounts                  receivable                                                                          |   |                                                      | (107,911 | )                                                         |   | 29,026 |   |
| Other                  receivables                                                                            |   |                                                      | 2,100    |                                                      |   | - |   |
| Inventory                                                                                                     |   |                                                      | (63,760  | )                                                         |   | 178,225 |   |
| Prepaid                  expenses and other current assets                                                    |   |                                                      | 1,733    |                                                      |   | 39,055 |   |
| Other                  assets                                                                                 |   |                                                      | -        |                                                      |   | 464 |   |
| Accounts                  payable and other accrued expenses                                                  |   |                                                      | (9,588   | )                                                         |   | 36,580 |   |
| Accrued                  expenses                                                                             |   |                                                      | (10,332  | )                                                         |   | (6,614 | ) |
| Accrued                  payroll and related liabilities                                                      |   |                                                      | 31,309   |                                                      |   | 52,846 |   |
| Deferred                  income                                                                              |   |                                                      | (49,124  | )                                                         |   | 35,572 |   |
| Sales                  tax payable                                                                            |   |                                                      | (3,772   | )                                                         |   | (8,107 | ) |
| Net                  cash (used in) provided by operating activities                                          |   |                                                      | (286,015 | )                                                         |   | 189,463 |   |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Cash                  flows from investing activities                                                         |   |                                                      |     |                                                      |   |   |   |
| Acquisition                  of property and equipment                                                        |   |                                                      | (10,686  | )                                                         |   | (5,045 | ) |
| Capitalized                  software expenditures                                                            |   |                                                      | (176,321 | )                                                         |   | (37,905 | ) |
| Net                  cash used in investing activities                                                        |   |                                                      | (187,007 | )                                                         |   | (42,950 | ) |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Cash                  flows from financing activities                                                         |   |                                                      |     |                                                      |   |   |   |
| Principal                  payments on debt and capital leases                                                |   |                                                      | (376     | )                                                         |   | (23,554 | ) |
| Advances                  from related parties                                                                |   |                                                      | 110,500  |                                                      |   | - |   |
| Repayment                  of advances from related parties                                                   |   |                                                      | (110,500 | )                                                         |   | - |   |
| Proceeds                  from issuance of common stock                                                       |   |                                                      | 735,000  |                                                      |   | - |   |
| Net                  cash provided by (used in) financing activities                                          |   |                                                      | 734,624  |                                                      |   | (23,554 | ) |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Net                  increase in cash and cash equivalents                                                    |   |                                                      | 261,602  |                                                      |   | 122,959 |   |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Cash                  and cash equivalents - beginning of period                                              |   |                                                      | 287,437  |                                                      |   | 357,711 |   |
|                                                                                                          |   |                                                      |     |                                                      |   |   |   |
| Cash                  and cash equivalents - end of period                                                    |   | $                                                         | 549,039  |                                                      | $      | 480,670 |   |

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**ION        NETWORKS, INC. AND        SUBSIDIARY**

**NOTES        TO CONDENSED CONSOLIDATED **

**FINANCIAL        STATEMENTS **

**NOTE        1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS **

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

*Principles        of Consolidation *

*Capitalized        Software *

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*Net        Loss Per Share of Common Stock*

*Stock        Compensation*

*Accounting        for Stock Issued to Employees*
*"Accounting        for Stock-Based Compensation”*
* *
*Accounting        for Stock-Based Compensation - Transition and Disclosure, an amendment of        FASB        Statement No. 123,*

|   |                                                                                                           |   | Three                  months endedMarch                  31, 2005(Unaudited) |     | Three                  months endedMarch                  31, 2004(Unaudited) |   |
|--------|----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|----------|-------------------------------------------------------------------------------|--------|
|   |                                                                                                           |   |                                                                          |     |                                                                          |   |
|   | Net                  loss as reported                                                                          |   | $                                                                             | (112,300 | )                                                                             | $      | (322,808 | ) |
|   | Add:                  Stock based compensation expense included in net loss                                    |   |                                                                          | -        |                                                                          |   | 58,750 |   |
|   | Deduct:                  Stock based employee compensation determined under fair value                  method |   |                                                                          | (26,436  | )                                                                             |   | (103,718 | ) |
|   | Pro                  forma net loss                                                                            |   | $                                                                             | (138,736 | )                                                                             | $      | (367,776 | ) |
|   |                                                                                                           |   |                                                                          |     |                                                                          |   |   |   |
|   | Basic                  and diluted net loss per share of common stock                                          |   |                                                                          |     |                                                                          |   |   |   |
|   | As                  reported                                                                                   |   |                                                                          |     |                                                                          |   |   |   |
|   | Basic                  and diluted                                                                             |   | $                                                                             | (0.01    | )                                                                             | $      | (0.01 | ) |
|   | Pro                  forma                                                                                     |   |                                                                          |     |                                                                          |   |   |   |
|   | Basic                  and diluted                                                                             |   | $                                                                             | (0.01    | )                                                                             | $      | (0.02 | ) |

*Income        Taxes *

*Warranty        Costs*

----

**NOTE        3 - INVENTORY **

|                            |   |   |    |
|---------------------------------|--------|--------|---------|
| Raw                  materials  |   | $      | 189,213 |   |
| Work-in-progress                |   |   | 466     |   |
| Finished                  goods |   |   | 385,507 |   |
|                            |   |   |    |   |
|                            |   | $      | 575,186 |   |

**NOTE        4 - RESTRUCTURING, ASSET IMPAIRMENT AND OTHER CREDITS**

**NOTE        5 - STOCKHOLDERS’ EQUITY **

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

**OVERVIEW        **

**RESULTS        OF OPERATIONS **

*For        the three months ended March 31, 2005 compared to the same period in        2004*

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**FINANCIAL        CONDITION AND CAPITAL RESOURCES**

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**ITEM        3. CONTROLS AND        PROCEDURES**

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**PART        II. OTHER INFORMATION**

**ITEM        1. LEGAL PROCEEDINGS**

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

**.        **

**ITEM        3. DEFAULTS UPON SENIOR SECURITIES**

**ITEM        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY        HOLDERS**

**ITEM        5. OTHER INFORMATION**

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**ITEM        6. EXHIBITS AND REPORTS ON FORM 8-K.**

|   |    |                                                                                             |
|--------|---------|--------------------------------------------------------------------------------------------------|
|   |    |                                                                                             |
|   |    |                                                                                             |
|   | Exhibit |                                                                                             |
|   | No.     | Description                                                                                      |
|   |    |                                                                                             |
|   | 31.1    | Section                    302 Certification of the Chief Executive Officer.*                    |
|   |    |                                                                                             |
|   | 31.2    | Section                    302 Certification of the Chief Financial Officer.*                    |
|   |    |                                                                                             |
|   | 32.1    | Section                    906 Certification of the Chief Executive Officer.*                    |
|   |    |                                                                                             |
|   | 32.2    | Section                    906 Certification of the Chief Financial                    Officer.* |

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**SIGNATURES**

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

|              |                                                           |                                      |
|--------------|----------------------------------------------------------------|-------------------------------------------|
|         |                                                           |
|    |                                                      |                                 |
|         | By:                                                  | */s/                  Patrick E. Delaney* |
|         |                                                                |
|         | *Patrick                  E. Delaney, Chief Financial Officer* |

----

**Exhibit        Index**

|   |    |                                                                                         |
|--------|---------|----------------------------------------------------------------------------------------------|
|   |    |                                                                                         |
|   |    |                                                                                         |
|   | Exhibit |                                                                                         |
|   | No.     | Description                                                                                  |
|   |    |                                                                                         |
|   | 31.1    | Section                  302 Certification of the Chief Executive Officer.*                  |
|   |    |                                                                                         |
|   | 31.2    | Section                  302 Certification of the Chief Financial Officer.*                  |
|   |    |                                                                                         |
|   | 32.1    | Section                  906 Certification of the Chief Executive Officer.*                  |
|   |    |                                                                                         |
|   | 32.2    | Section                  906 Certification of the Chief Financial                  Officer.* |