##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington D.C. 20549


FORM 20-F


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934


|                                                |  |                                
|----------------------------------------------- |  | -------------------------------
|For the Fiscal Year Ended
    December 31, 2004 |  | Commission File
    No. 0-29154

IONA Technologies PLC


(Exact name of Registrant as specified in its charter and
translation of Registrants name into English)


Ireland


(Jurisdiction of incorporation or organization)


The IONA Building


Shelbourne Road, Ballsbridge


Dublin 4, Ireland


(Address of principal executive offices)


Securities registered pursuant to Section 12(b) of the
Act: None


Securities registered pursuant to Section 12(g) of the
Act:


Ordinary Shares,
0.0025 Par
Value Per Share


(Title of Class)


Securities for which there is a reporting obligation pursuant
to Section 15(d) of the
Act:     None


Indicate number of shares outstanding of each of the
issuers


classes of capital or common stock as of December 31,
2004:


34,521,218* Ordinary Shares,
0.0025 Par
Value






X




X










---



##### Table of Contents



This annual report on Form 20-F was not prepared for
filing in Ireland in compliance with Irish law or the listing
rules of the Irish Stock Exchange.


Unless otherwise provided herein or required by the context,
references to we, us, IONA
or the Company in this annual report shall mean IONA
Technologies PLC and its world-wide subsidiaries,
collectively.


We have a secondary listing on the Irish Stock Exchange. For
this reason, we are not subject to the same ongoing regulatory
requirements as those which would apply to an Irish company with
a primary listing on the Irish Stock Exchange, including the
requirement that certain transactions require the approval of
shareholders. For further information, shareholders should
consult their own financial advisor.


Our financial statements are presented in U.S. dollars
and are prepared in accordance with United States generally
accepted accounting principles. All references in this annual
report to dollars and $ are to
U.S. dollars, and all references to euro or
  are to European Union euro. Except as
otherwise stated herein, all monetary amounts in this annual
report have been presented in dollars.


Except for amounts contained in or derived from our
Consolidated Financial Statements and unless otherwise
indicated, all conversions of amounts herein from euro to
dollars have been made at an exchange rate of 1.3538 dollars to
one euro, based upon the noon buying rate in New York City for
cable transfers in foreign currencies for customs purposes by
the Federal Reserve Bank of New York as of December 31,
2004.


The terms Orbix® and IONA® used in this annual
report are our registered trademarks. The term
Artix tm   is a registered
trademark of the Object Management Group, Inc. in the United
States and other countries.
J2EE tm  sm is a registered trademark of JBoss,
Inc. All other trademarks appearing in this annual report are
the property of their respective holders.




---



##### Table of Contents










TABLE OF CONTENTS


|        |  |                                                                           |  |      |    | 
|------- |  | ------------------------------------------------------------------------- |  | ---- | -- | 
|        |  |                                                                           |  | Page
|        |  |                                                                           |  |     
|ITEM 1. |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
    AND ADVISORS                 |  |      | 1  | 
|       
|ITEM 2. |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                   |  |      | 1  | 
|       
|ITEM 3. |  | KEY INFORMATION                                                           |  |      | 2  | 
|        |  | A.  Selected Financial Data                                               |  |      | 2  | 
|        |  | B.  Capitalization and
    Indebtedness                                   |  |      | 3  | 
|        |  | C.  Reasons for the Offer and Use
    of Proceeds                         |  |      | 3  | 
|        |  | D.  Risk Factors                                                          |  |      | 3  | 
|       
|ITEM 4. |  | INFORMATION ON THE COMPANY                                                |  |      | 12 | 
|        |  | A.  History and Development of
    the Company                            |  |      | 12 | 
|        |  | B.  Business Overview                                                     |  |      | 12 | 
|        |  | C.  Organizational Structure                                              |  |      | 19 | 
|        |  | D.  Property and Equipment                                                |  |      | 20 | 
|       
|ITEM 5. |  | OPERATING AND FINANCIAL REVIEW AND
    PROSPECTS                          |  |      | 21 | 
|        |  | A.  Operating Results                                                     |  |      | 21 | 
|        |  | B.  Liquidity and Capital
    Resources                                   |  |      | 34 | 
|        |  | C.  Research and Development,
    Patents and Licenses, etc.              |  |      | 35 | 
|        |  | D.  Trend Information                                                     |  |      | 35 | 
|        |  | E.  Off-Balance Sheet
    Arrangements                                    |  |      | 36 | 
|        |  | F.  Tabular Disclosure of
    Contractual Obligations                     |  |      | 36 | 
|        |  | G.  Safe Harbor                                                           |  |      | 36 | 
|       
|ITEM 6. |  | DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES                            |  |      | 37 | 
|        |  | A.  Directors and Senior
    Management                                   |  |      | 37 | 
|        |  | B.  Compensation                                                          |  |      | 40 | 
|        |  | C.  Board Practices                                                       |  |      | 42 | 
|        |  | D.  Employees                                                             |  |      | 44 | 
|        |  | E.  Share Ownership                                                       |  |      | 44 | 
|       
|ITEM 7. |  | MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS                     |  |      | 48 | 
|        |  | A.  Major Shareholders                                                    |  |      | 48 | 
|        |  | B.  Related Party Transactions                                            |  |      | 48 | 
|        |  | C.  Interests of Experts and
    Counsel                                  |  |      | 49 | 
|       
|ITEM 8. |  | FINANCIAL INFORMATION                                                     |  |      | 49 | 
|        |  | A.  Consolidated Financial
    Statements and Other Financial Information |  |      | 49 | 
|        |  | B.  Significant Changes                                                   |  |      | 49 | 
|       
|ITEM 9. |  | THE OFFER AND LISTING                                                     |  |      | 50 | 
|        |  | A.  Offer and Listing Details                                             |  |      | 50 | 
|        |  | B.  Plan of Distribution                                                  |  |      | 51 | 
|        |  | C.  Markets                                                               |  |      | 51 | 
|        |  | D.  Selling Shareholders                                                  |  |      | 51 | 
|        |  | E.  Dilution                                                              |  |      | 51 | 
|        |  | F.  Expenses of the Issue                                                 |  |      | 51 | 



---



##### Table of Contents



|                                                                 |  |                                                                                  |  |      |    | 
|---------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                 |  |                                                                                  |  | Page
|                                                                 |  |                                                                                  |  |     
|ITEM 10.                                                         |  | ADDITIONAL INFORMATION                                                           |  |      | 52 | 
|                                                                 |  | A.  Share Capital                                                                |  |      | 52 | 
|                                                                 |  | B.  Memorandum and Articles of
    Associations                                  |  |      | 52 | 
|                                                                 |  | C.  Material Contracts                                                           |  |      | 52 | 
|                                                                 |  | D.  Exchange Controls                                                            |  |      | 53 | 
|                                                                 |  | E.  Taxation                                                                     |  |      | 53 | 
|                                                                 |  | F.  Dividends and Paying
    Agents                                              |  |      | 62 | 
|                                                                 |  | G.  Statements by Experts                                                        |  |      | 62 | 
|                                                                 |  | H.  Documents on Display                                                         |  |      | 62 | 
|                                                                 |  | I.  Subsidiary Information                                                       |  |      | 62 | 
|                                                                
|ITEM 11.                                                         |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK                   |  |      | 62 | 
|                                                                
|ITEM 12.                                                         |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES                       |  |      | 62 | 
|                                                                
|ITEM 13.                                                         |  | DEFAULTS, DIVIDENDS ARREARAGES AND
    DELINQUENCIES                             |  |      | 63 | 
|                                                                
|ITEM 14.                                                         |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF
    SECURITY HOLDERS AND USE OF PROCEEDS |  |      | 63 | 
|                                                                
|ITEM 15.                                                         |  | CONTROLS AND PROCEDURES                                                          |  |      | 63 | 
|                                                                
|ITEM 16.                                                         |  | [RESERVED]                                                                       |  |      | 63 | 
|                                                                
|ITEM 16A.                                                        |  | AUDIT COMMITTEE FINANCIAL EXPERT                                                 |  |      | 63 | 
|                                                                
|ITEM 16B.                                                        |  | CODE OF ETHICS                                                                   |  |      | 63 | 
|                                                                
|ITEM 16C.                                                        |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                           |  |      | 64 | 
|                                                                
|ITEM 16D.                                                        |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR
    AUDIT COMMITTEE                    |  |      | 65 | 
|                                                                
|ITEM 16E.                                                        |  | PURCHASE OF EQUITY SECURITIES BY THE ISSUER
    AND AFFILIATED PURCHASE          |  |      | 65 | 
|                                                                
|ITEM 17.                                                         |  | FINANCIAL STATEMENTS                                                             |  |      | 66 | 
|                                                                
|ITEM 18.                                                         |  | FINANCIAL STATEMENTS                                                             |  |      | 66 | 
|                                                                
|ITEM 19.                                                         |  | EXHIBITS                                                                         |  |      |    | 
|Ex-4.14 Employment Agreement - Peter M. Zotto                   
|Ex-8.1 Active Subsidiaries of IONA Technologies PLC             
|Ex-12.1 Certification of Principal Executive Officer            
|Ex-12.2 Certification of Principal Financial Officer            
|Ex-13.1 Section 906 Certification of C.E.O.                     
|Ex-13.2 Section 906 Certification of C.F.O.                     
|Ex-15.1 Consent of Independent Registered Public Accounting Firm





---



##### Table of Contents



This annual report, and other reports, proxy statements and
other communications to shareholders, as well as oral statements
made by our officers or agents, contain forward-looking
statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995 that relate to future events or our future financial
performance. In some cases, you can identify forward-looking
statements by terminology, such as may,
will, should, could,
expect, plan, anticipate,
believe, estimate, project,
predict, intend, potential,
or continue or the negative of such terms or other
comparable terminology, although not all forward-looking
statements contain such terms. In addition, these
forward-looking statements include, but are not limited to,
statements regarding, among other things, our future revenues,
operating income (loss), net income (loss) per ordinary share
and per ADS, products and services, sources of liquidity,
markets and plans and objectives of management. Such statements
are neither promises nor guarantees but rather are subject to a
number of risks and uncertainties which could cause actual
results to differ materially from those described in the
forward-looking statements. Factors that may cause such
variation are discussed in Item 5 Operating and
Financial Review and Prospects, Item 3.D. Risk
Factors and our reports filed with the Securities and
Exchange Commission.


PART I







|        |                                                          
|------- | ---------------------------------------------------------
|Item 1. | Identity of Directors,
    Senior Management and Advisors








|        |                                            
|------- | -------------------------------------------
|Item 2. | Offer Statistics and
    Expected Timetable



-1-



---



##### Table of Contents








|        |                    
|------- | -------------------
|Item 3. | Key
    Information






|   |                        
|-- | -----------------------
|A. | Selected Financial Data



|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |         |         | 
|------------------------------------------- | ------------------------------------------------ | ------------------------------------- | ---- | ------ | ------ | ---- | ------- | ------ | ------- | ---- | -------- | ------- | ------- |  | ------- | ------- | ------- |  | ------ | ------- | ------- | 
|                                            |                                                  | Year Ended December 31,              
|                                            |                                                  |                                      
|                                            |                                                  | 2004                                  |      | 2003   |        | 2002 |         | 2001   |         | 2000
|                                            |                                                  |                                       |      |        |        |      |         |        |         |     
|                                            |                                                  | (In thousands, except per share data)
|Consolidated Statement of Operations Data:  |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|Revenue:                                    |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            | Product revenue                                  |                                       | $    | 30,735 |        |      | $       | 35,737 |         |      | $        | 73,452  |         |  | $       | 118,178 |         |  | $      | 105,533 |        
|                                            | Service revenue                                  |                                       |      | 37,284 |        |      |         | 38,453 |         |      |          | 49,778  |         |  |         | 62,526  |         |  |        | 47,530  |        
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            |                                                  | Total revenue                         |      |        | 68,019 |      |         |        | 74,190  |      |          |         | 123,230 |  |         |         | 180,704 |  |        |         | 153,063 | 
|Cost of revenue:                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            | Cost of product revenue                          |                                       |      | 231    |        |      |         | 527    |         |      |          | 1,685   |         |  |         | 3,190   |         |  |        | 3,457   |        
|                                            | Cost of service revenue                          |                                       |      | 11,790 |        |      |         | 14,275 |         |      |          | 25,458  |         |  |         | 34,926  |         |  |        | 26,484  |        
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            |                                                  | Total cost of revenue                 |      |        | 12,021 |      |         |        | 14,802  |      |          |         | 27,143  |  |         |         | 38,116  |  |        |         | 29,941  | 
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            |                                                  | Gross profit                          |      |        | 55,998 |      |         |        | 59,388  |      |          |         | 96,087  |  |         |         | 142,588 |  |        |         | 123,122 | 
|Operating expenses:                         |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            | In-process research and development              |                                       |      |       |        |      |         |       |         |      |          |        |         |  |         | 3,600   |         |  |        |        |        
|                                            | Research and development                         |                                       |      | 17,204 |        |      |         | 27,134 |         |      |          | 38,256  |         |  |         | 40,260  |         |  |        | 26,906  |        
|                                            | Sales and marketing                              |                                       |      | 29,526 |        |      |         | 41,500 |         |      |          | 72,888  |         |  |         | 88,419  |         |  |        | 63,669  |        
|                                            | General and administrative                       |                                       |      | 8,545  |        |      |         | 10,270 |         |      |          | 13,252  |         |  |         | 15,318  |         |  |        | 12,046  |        
|                                            | Amortization of other non-current assets         |                                       |      | 578    |        |      |         | 796    |         |      |          | 10,115  |         |  |         | 14,151  |         |  |        | 2,858   |        
|                                            | Amortization of goodwill                         |                                       |      |       |        |      |         |       |         |      |          |        |         |  |         | 61,403  |         |  |        | 4,973   |        
|                                            | Restructuring                                    |                                       |      |       |        |      |         | 20,525 |         |      |          | 20,763  |         |  |         | 5,705   |         |  |        |        |        
|                                            | Impairment of goodwill                           |                                       |      |       |        |      |         |       |         |      |          | 276,808 |         |  |         |        |         |  |        |        |        
|                                            | Adjustment of acquisition liabilities            |                                       |      | (600   | )      |      |         |       |         |      |          |        |         |  |         |        |         |  |        |        |        
|                                            | Impairment of intangible assets and fixed assets |                                       |      |       |        |      |         | 3,271  |         |      |          | 32,336  |         |  |         |        |         |  |        |        |        
|                                            | Settlement of litigation                         |                                       |      |       |        |      |         |       |         |      |          |        |         |  |         |        |         |  |        | 1,350   |        
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|                                            |                                                  | Total operating expenses              |      |        | 55,253 |      |         |        | 103,496 |      |          |         | 464,418 |  |         |         | 228,856 |  |        |         | 111,802 | 
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        
|Income (loss) from operations               |                                                  |                                       | 745  |        |        |      | (44,108 | )      |         |      | (368,331 | )       |         |  | (86,268 | )       |         |  | 11,320 |        
|Interest income, net                        |                                                  |                                       | 286  |        |        |      | 483     |        |         |      | 1,069    |         |         |  | 2,504   |         |         |  | 4,116  |        
|Net exchange (loss) gain                    |                                                  |                                       | (273 | )      |        |      | 337     |        |         |      | (502     | )       |         |  | (468    | )       |         |  | (384   | )      
|Gain on sale of investment and other income |                                                  |                                       |     |        |        |      |        |        |         |      |         |         |         |  | 164     |         |         |  | 1,912  |        
|                                            |                                                  |                                       |      |        |        |      |         |        |         |      |          |         |         |  |         |         |         |  |        |        

-2-



---



##### Table of Contents



|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|------------------------------------------------------------------------------------- |  | ------------------------------------- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | -------- | - |  | - | ------- | - |  | - | ------ | 
|                                                                                      |  | Year Ended December 31,              
|                                                                                      |  |                                      
|                                                                                      |  | 2004                                  |        | 2003 |  | 2002 |         | 2001 |  | 2000
|                                                                                      |  |                                       |        |      |  |      |         |      |  |     
|                                                                                      |  | (In thousands, except per share data)
|Income (loss) before provision for (benefit of) income taxes                          |  |                                       | 758    |      |  |      | (43,288 | )    |  |      | (367,764 | ) |  |   | (84,068 | ) |  |   | 16,964 | 
|Provision for (benefit of) income taxes                                               |  |                                       | 566    |      |  |      | 948     |      |  |      | 1,543    |   |  |   | (568    | ) |  |   | 2,799  | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|Net income (loss)                                                                     |  | $                                     | 192    |      |  | $    | (44,236 | )    |  | $    | (369,307 | ) |  | $ | (83,500 | ) |  | $ | 14,165 | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|Basic net income (loss) per Ordinary Share and per ADS                                |  | $                                     | 0.01   |      |  | $    | (1.33   | )    |  | $    | (11.58   | ) |  | $ | (3.27   | ) |  | $ | 0.67   | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|Shares used in computing basic net income (loss) per Ordinary
    Share and per ADS   |  |                                       | 34,570 |      |  |      | 33,335  |      |  |      | 31,890   |   |  |   | 25,556  |   |  |   | 21,177 | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|Diluted net income (loss) per Ordinary Share and per ADS                              |  | $                                     | 0.01   |      |  | $    | (1.33   | )    |  | $    | (11.58   | ) |  | $ | (3.27   | ) |  | $ | 0.60   | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 
|Shares used in computing diluted net income (loss) per Ordinary
    Share and per ADS |  |                                       | 36,333 |      |  |      | 33,335  |      |  |      | 31,890   |   |  |   | 25,556  |   |  |   | 23,520 | 
|                                                                                      |  |                                       |        |      |  |      |         |      |  |      |          |   |  |   |         |   |  |   |        | 

|                                                                  |  |                                       |        |      |  |      |        |      |  |      |         |  |  |   |         |  |  |   |         | 
|----------------------------------------------------------------- |  | ------------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                                  |  | At December 31,                      
|                                                                  |  |                                      
|                                                                  |  | 2004                                  |        | 2003 |  | 2002 |        | 2001 |  | 2000
|                                                                  |  |                                       |        |      |  |      |        |      |  |     
|                                                                  |  | (In thousands, except per share data)
|Consolidated Balance Sheet Data:                                  |  |                                       |        |      |  |      |        |      |  |      |         |  |  |   |         |  |  |   |         | 
|Cash, cash equivalents, restricted cash and marketable securities |  | $                                     | 59,915 |      |  | $    | 56,649 |      |  | $    | 81,650  |  |  | $ | 53,697  |  |  | $ | 95,640  | 
|Working capital                                                   |  | $                                     | 32,085 |      |  | $    | 30,417 |      |  | $    | 63,766  |  |  | $ | 40,262  |  |  | $ | 99,234  | 
|Total assets                                                      |  | $                                     | 80,826 |      |  | $    | 90,038 |      |  | $    | 131,604 |  |  | $ | 437,698 |  |  | $ | 202,559 | 
|Ordinary Shares (number)                                          |  |                                       | 34,804 |      |  |      | 34,006 |      |  |      | 32,835  |  |  |   | 27,817  |  |  |   | 21,990  | 
|Ordinary Share value (par value)                                  |  | $                                     | 96     |      |  | $    | 94     |      |  | $    | 91      |  |  | $ | 80      |  |  | $ | 66      | 
|Total shareholders equity                                        |  | $                                     | 34,962 |      |  | $    | 33,112 |      |  | $    | 74,905  |  |  | $ | 375,766 |  |  | $ | 151,307 | 






|   |                                
|-- | -------------------------------
|B. | Capitalization and Indebtedness








|   |                                          
|-- | -----------------------------------------
|C. | Reasons for the Offer and Use of Proceeds








|   |             
|-- | ------------
|D. | Risk Factors

A further decline in information technology spending may
result in a decrease in our revenues or lower growth rates.




-3-



---



##### Table of Contents





Our lengthy and variable sales cycle makes it difficult to
predict our operating results.






| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | reduced demand for our products or for integration software
    generally;                                        
|
| |  | introduction of products by our competitors;                                                                      
|
| |  | lower prices offered by our competitors;                                                                          
|
| |  | changes in budgets and purchasing priorities; and                                                                 
|
| |  | changes by prospective customers in their approach with respect
    to the integration of enterprise applications.

We may experience fluctuations in quarterly revenue that
could adversely impact our operating results.








| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a significant number of our prospective customers decide whether
    to enter into license agreements with us within the last month
    of each quarter;                                                                                                         
|
| |  | the size of transactions can vary significantly;                                                                                                                                                                                                                 
|
| |  | the demand for our products may change;                                                                                                                                                                                                                          
|
| |  | customers may unexpectedly postpone orders due to changes in
    their strategic priorities, project objectives, budget or
    personnel;                                                                                                                        
|
| |  | customer evaluations and purchasing processes vary significantly
    from company to company, and a customers internal approval
    and expenditure authorization process can be difficult and time
    consuming to complete, even after selection of a vendor;
|
| |  | the number, timing and significance of product enhancements and
    new product announcements by us and our competitors may affect
    purchase decisions; and                                                                                                   
|
| |  | we may have to defer revenues under our revenue recognition
    policies.                                                                                                                                                                                        



-4-



---



##### Table of Contents



We have experienced significant variations in profitability
and anticipate that we will continue to do so in the future.




Our future revenue depends upon the evolution and adoption of
Web services and related integration and infrastructure
solutions.






If we fail to keep pace with rapidly evolving technology and
changing customer needs, our business will suffer.




Potential defects in our products or our failure to provide
services for our customers could cause our sales to decrease,
cause us to lose customers and damage our reputation.






| |   |                                             
| | - | --------------------------------------------
| |  | loss of customers;                          
|
| |  | injury to our reputation;                   
|
| |  | loss or delay of market acceptance or sales;
|
| |  | increased service or warranty costs; or     
|
| |  | legal action by our customers.              

-5-



---



##### Table of Contents





If we do not manage our expenses and geographically dispersed
operations successfully, we may be unable to respond to changing
market conditions.






We may be required to delay the recognition of revenue until
future periods which could adversely impact our operating
results.






| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | we are required to accept extended payment terms;                                                  
|
| |  | the transaction involves contingent payment terms or fees;                                         
|
| |  | the transaction involves acceptance criteria or there are
    identified product-related issues; or
|
| |  | license agreements include products that are under development
    or other undelivered elements.  



We depend on large transactions to derive a significant
portion of our revenue, and the delay or loss of any large
customer order could adversely affect our quarterly or annual
operating results.




We currently derive most of our revenue from a limited number
of our products.




-6-



---



##### Table of Contents





If we do not successfully expand and manage our direct sales
force and other distribution channels, we may not be able to
increase our sales.




Our inability to create and preserve relationships with
software vendors, system integrators or other third parties that
market and sell our products could reduce our revenues.






We operate in highly competitive markets and we may be unable
to compete successfully.








| |   |                                             
| | - | --------------------------------------------
| |  | enterprise infrastructure software;         
|
| |  | enterprise application integration software;
|
| |  | Web services integration software;          

-7-



---



##### Table of Contents





| |   |                                            
| | - | -------------------------------------------
| |  | enterprise service bus software (ESB); and 
|
| |  | open source software projects and products.





| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | the demand for our products;                                                                 
|
| |  | the development by others of software that is competitive with
    our products;             
|
| |  | the price at which others offer comparable products;                                         
|
| |  | the ability of our competitors to respond effectively to
    customer needs;                 
|
| |  | the ability of our competitors to market their products
    aggressively and effectively; and
|
| |  | the ability of our competitors to hire, retain and motivate key
    personnel.               





If we are unable to attract and retain highly qualified
personnel, our future results would be adversely affected.




We face various risks associated with our international
operations that could cause our operating results to suffer.






| |   |                                                            
| | - | -----------------------------------------------------------
| |  | fluctuations in currency exchange rates;                   
|
| |  | political and economic conditions in various jurisdictions;

-8-



---



##### Table of Contents





| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | unexpected changes in regulatory requirements, tariffs and other
    trade barriers;                                                                  
|
| |  | failure to enter into relationships with local resellers, system
    integrators or other third party vendors, or to introduce
    localized products;
|
| |  | difficulties in staffing and managing foreign operations;                                                                                             
|
| |  | longer accounts receivable payment cycles; and                                                                                                        
|
| |  | differing laws affecting the enforceability of intellectual
    property rights and product liability.                                                



We may be unable to identify or complete suitable
acquisitions, and any acquisitions we do complete may create
business difficulties or dilute our shareholders.




If our effective tax rate increases, our business and
financial results would be adversely impacted.




Our U.S. holders of our ordinary shares or ADSs could
suffer adverse tax consequences if we are characterized as a
passive foreign investment company.




The rights of shareholders in Irish corporations may be more
limited than the rights of shareholders in
U.S. corporations.




-9-



---



##### Table of Contents





We have a limited ability to protect our intellectual
property rights, and others could obtain and use our technology
without our authorization.




If we do not have the right to use third-party technology, we
may have to stop selling and shipping products and incur
significant development or license expenses.






| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | stop using the third-party technology;                                                                                                                                  
|
| |  | stop selling and shipping our products in which the third-party
    technology is used; or                                                                              
|
| |  | incur significant expenses to identify and obtain replacement
    technology or develop similar technology or to obtain a new
    license to the third-party technology.



We may be exposed to significant liability if we infringe
upon the intellectual property or proprietary rights of
others.






| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | discontinue the use of certain processes;                                                              
|
| |  | cease the use and sale of infringing products and services;                                            
|
| |  | expend significant resources to develop non-infringing
    technology;                                 
|
| |  | obtain licenses to competing technology; or                                                            
|
| |  | indemnify customers under certain clauses relating to
    intellectual property rights in our licenses.



-10-



---



##### Table of Contents



Changes in the accounting treatment of stock options could
adversely affect our results of operations.


Share-Based Payment Accounting
for Stock Issued to Employees, Accounting for Stock-Based Compensation.


Legislative actions, higher insurance costs and potential new
accounting pronouncements may affect our future financial
position and results of operations.




-11-



---



##### Table of Contents








|        |                               
|------- | ------------------------------
|Item 4. | Information on the
    Company






|   |                                       
|-- | --------------------------------------
|A. | History and Development of the Company



| |                  
| | -----------------
| | About the Company







| |                                               
| | ----------------------------------------------
| | Important Company Events and Company Takeovers





| |                    
| | -------------------
| | Certain Investments










|   |                  
|-- | -----------------
|B. | Business Overview

Overview






-12-



---



##### Table of Contents





Industry Background








CORBA.


Web services.




-13-



---



##### Table of Contents



Service-oriented Architecture.




IONAs Opportunity














Strategy






| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maintain Technological Leadership. We have a history of
    technological leadership and dedication to continuous product
    improvement. Our CORBA-based Orbix product family is the leading
    enterprise CORBA solution. Our Web services-based Artix product
    family continues the Orbix

-14-



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | tradition by addressing the integration and mobile computing
    needs of large IT organizations through high performance,
    standards-based solutions. We will continue to invest heavily in
    research and development. By promoting and embracing existing
    and emerging industry standards, we intend to facilitate the
    broad acceptance of our products. We may acquire businesses,
    products or technologies that we believe will enhance and expand
    our current product offerings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Expand Our Customer Base, While Retaining Our Existing
    Customers. Many of our customers are large companies in a
    variety of industries that are deeply invested in both our
    products and our architectural approach to integration. The
    strategic importance of our products allows us, working with our
    partners, to develop strong relationships with our
    customers key technology decision makers. In addition, our
    strategic selling approach facilitates broad adoption of our
    products throughout a customers IT organization. All of
    these factors combine to represent an opportunity for us to
    continue to present new generations of technology solutions to
    our enterprise customers in the telecommunications, government
    and financial services industries. At the same time, the broader
    popularity of Web services gives us an opportunity to go outside
    of our traditional customer base to attract new customers with
    complex, costly and heterogeneous computing environments. We
    believe these new customers are interested in the reductions in
    IT cost and complexity that Web services and SOA can deliver. We
    also believe these new customers will find our traditional
    architectural approach, combined with our new generation of Web
    services integration solutions, compelling and competitive.
|
| |  | Leverage and Expand Strategic Alliances. We understand
    that relationships with leading software and other technology
    vendors, as well as system integrators, create opportunities to
    gain customers in broader markets than those otherwise available
    to us. We are focused on leveraging our established
    relationships and forging new alliances to enhance our
    marketing, selling and implementation initiatives. We believe
    that many of these vendors and system integrators seek to
    partner with strong infrastructure technology providers that
    will enable them to more rapidly satisfy customer needs. We have
    existing relationships with leading software and technology
    vendors, such as Sun Microsystems, JBoss, Business Objects and
    Manugistics, and global system integrators, such as BearingPoint
    and Computer Sciences Corporation (CSC). We believe that these
    relationships better enable us to sell additional products to
    our existing customer base, acquire new customers and enhance
    our market presence.                                                                                                                                                                                                                                                                                                           

Products




Artix








-15-



---



##### Table of Contents







Orbix








Services








Product Development and Management




-16-



---



##### Table of Contents





Customers




|                     |  |                    |  |                                        
|-------------------- |  | ------------------ |  | ---------------------------------------
|Financial            |  | Telecom            |  | Government                             
|                     |  |                    |  |                                        
|Credit Suisse Group  |  | BellSouth          |  | Department of Homeland Security        
|JPMorgan Chase       |  | SBC                |  | National Geospatial-Intelligence Agency
|Lehman Brothers      |  | AT&T               |  | U.S. Dept. of Transportation           
|Winterthur Insurance |  | Nokia              |  | N.A.S.A.                               
|Reuters              |  | Marconi
    Sprint |  | U.S. Environmental Protection Agency   





Sales and Marketing












-17-



---



##### Table of Contents



Competition










| |   |                                                     
| | - | ----------------------------------------------------
| |  | Enterprise application infrastructure providers;    
|
| |  | Enterprise application integration software vendors;
|
| |  | Web services integration companies;                 
|
| |  | Enterprise service bus (ESB) vendors;               
|
| |  | open source software projects and products.         





| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | Potential customers perception of our market leadership in
    a demanding and fast-moving technology environment;
|
| |  | Our continued conformity to industry standards, and
    customers ongoing preference for standards-based products;
|
| |  | Breadth of product offerings;                                                                                      
|
| |  | Product features and functionality;                                                                                
|
| |  | Product ease-of-adoption and ease-of-use;                                                                          
|
| |  | Product quality;                                                                                                   
|
| |  | Our customer service and support;                                                                                  
|
| |  | Security, reliability, availability and other enterprise
    qualities of service;                                 
|
| |  | Product and service pricing; and                                                                                   
|
| |  | Our reputation and financial viability.                                                                            

Patents and Proprietary Technology






-18-



---



##### Table of Contents









Employees




Legal Proceedings




Government Regulations






Principal Markets




Seasonality and Raw Materials









|   |                         
|-- | ------------------------
|C. | Organizational Structure



-19-



---



##### Table of Contents










|   |                       
|-- | ----------------------
|D. | Property and Equipment



-20-



---



##### Table of Contents








|        |                                                 
|------- | ------------------------------------------------
|Item 5. | Operating and Financial
    Review and Prospects

The following discussion and analysis of financial condition
and results of operations should be read in conjunction with the
Consolidated Financial Statements for the periods specified and
associated notes included in Item 3.A. Selected
Financial Data. The following discussion and analysis of
financial condition and results of operations contains
forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation
Reform Act of 1995 that relate to future events or our future
financial performance. In some cases, you can identify
forward-looking statements by terminology, such as
may, will, should,
could, expect, plan,
anticipate, believe,
estimate, project, predict,
intend, potential, or
continue or the negative of such terms or other
comparable terminology, although not all forward-looking
statements contain such terms. In addition, these
forward-looking statements include, but are not limited to,
statements regarding, among other things, our plans, objectives,
expectations and intentions. These forward-looking statements
are neither promises nor guarantees but rather are subject to a
number of risks and uncertainties which could cause actual
results to differ materially from those described in the
forward-looking statements, including risks and uncertainties
relating to IONAs cost reduction efforts; the launch of
IONAs integration software; growth in market demand for
Web services and integration; IONAs sales model; volume,
timing and seasonal patterns of product sales; impact of
competitive products and pricing; development, launch and market
acceptance of new and improved products; the integration of any
future acquisitions; undetected errors in software; and general
economic conditions, including their effect on the acquisition
of new accounts and the time required to close sales
transactions. Further reference should be made to Item 3.D.
Risk Factors.







|   |                  
|-- | -----------------
|A. | Operating Results

Overview










-21-



---



##### Table of Contents









Impact of Acquisitions










-22-



---



##### Table of Contents







Critical Accounting Policies and Estimates






| |   |                                            
| | - | -------------------------------------------
| |  | Revenue Recognition;                       
|
| |  | Restructuring Charge;                      
|
| |  | Allowances for Doubtful Accounts;          
|
| |  | Legal Contingencies;                       
|
| |  | Accounting for Income Taxes;               
|
| |  | Impairment of Other Non-Current Assets; and
|
| |  | Foreign Currency.                          



-23-



---



##### Table of Contents





| |                    
| | -------------------
| | Revenue Recognition

















| |                     
| | --------------------
| | Restructuring Charge



-24-



---



##### Table of Contents











| |                                 
| | --------------------------------
| | Allowances for Doubtful Accounts





| |                    
| | -------------------
| | Legal Contingencies





| |                            
| | ---------------------------
| | Accounting for Income Taxes



-25-



---



##### Table of Contents











| |                                       
| | --------------------------------------
| | Impairment of Other Non-Current Assets





| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | significant underperformance relative to expected historical or
    projected future operating results;          
|
| |  | significant changes in the manner of our use of the acquired
    assets or the strategy for our overall business;
|
| |  | significant negative industry or economic trends;                                                                
|
| |  | significant decline in our stock price for a sustained
    period; and                                           
|
| |  | significant decline in our market capitalization relative to net
    book value.                                 





| |                 
| | ----------------
| | Foreign Currency



-26-



---



##### Table of Contents





Taxation




Recent Accounting Pronouncements


Share-Based Payment




-27-



---



##### Table of Contents



Results of Operations




|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |        |       | 
|----------------------------- | ------------------------------------------------ | ------------------------ | --- | ---- | ----- | ---- | ----- | ----- | ----- |  | ------ | ------ | ----- | 
|                              |                                                  | Year Ended December 31, 
|                              |                                                  |                         
|                              |                                                  | 2004                     |     | 2003 |       | 2002
|                              |                                                  |                          |     |      |       |     
|Revenue:                      |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Product revenue                                  |                          |     | 45.2 | %     |      |       | 48.2  | %     |  |        | 59.6   | %    
|                              | Service revenue                                  |                          |     | 54.8 |       |      |       | 51.8  |       |  |        | 40.4   |      
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              |                                                  | Total revenue            |     |      | 100.0 |      |       |       | 100.0 |  |        |        | 100.0 | 
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|Cost of revenue:              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Cost of product revenue                          |                          |     | 0.4  |       |      |       | 0.7   |       |  |        | 1.4    |      
|                              | Cost of service revenue                          |                          |     | 17.3 |       |      |       | 19.3  |       |  |        | 20.6   |      
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              |                                                  | Total cost of revenue    |     |      | 17.7  |      |       |       | 20.0  |  |        |        | 22.0  | 
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              |                                                  | Gross profit             |     |      | 82.3  |      |       |       | 80.0  |  |        |        | 78.0  | 
|Operating expenses:           |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Research and development                         |                          |     | 25.3 |       |      |       | 36.6  |       |  |        | 31.0   |      
|                              | Sales and marketing                              |                          |     | 43.4 |       |      |       | 55.9  |       |  |        | 59.1   |      
|                              | General and administrative                       |                          |     | 12.6 |       |      |       | 13.8  |       |  |        | 10.8   |      
|                              | Amortization of other non-current assets         |                          |     | 0.8  |       |      |       | 1.1   |       |  |        | 8.2    |      
|                              | Restructuring                                    |                          |     |     |       |      |       | 27.7  |       |  |        | 16.9   |      
|                              | Impairment of goodwill                           |                          |     |     |       |      |       |      |       |  |        | 224.6  |      
|                              | Adjustment of acquisition liabilities            |                          |     | (0.9 | )     |      |       |      |       |  |        |       |      
|                              | Impairment of intangible assets and fixed assets |                          |     |     |       |      |       | 4.4   |       |  |        | 26.3   |      
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              |                                                  | Total operating expenses |     |      | 81.2  |      |       |       | 139.5 |  |        |        | 376.9 | 
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|Income (loss) from operations |                                                  |                          | 1.1 |      |       |      | (59.5 | )     |       |  | (298.9 | )     
|                              | Interest income, net                             |                          |     | 0.4  |       |      |       | 0.7   |       |  |        | 0.9    |      
|                              | Net exchange (loss) gain                         |                          |     | (0.4 | )     |      |       | 0.5   |       |  |        | (0.4   | )    
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Income (loss) before provision for income taxes  |                          |     | 1.1  |       |      |       | (58.3 | )     |  |        | (298.4 | )    
|                              | Provision for income taxes                       |                          |     | 0.8  |       |      |       | 1.3   |       |  |        | 1.3    |      
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Net income (loss)                                |                          |     | 0.3  | %     |      |       | (59.6 | )%    |  |        | (299.7 | )%   
|                              |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|Gross profit:                 |                                                  |                          |     |      |       |      |       |       |       |  |        |       
|                              | Product (as a percentage of product revenue)     |                          |     | 99.2 | %     |      |       | 98.5  | %     |  |        | 97.7   | %    
|                              | Service (as a percentage of service revenue)     |                          |     | 68.4 | %     |      |       | 62.9  | %     |  |        | 48.9   | %    

Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003




| |              
| | -------------
| | Total Revenue



Product Revenue.


Service Revenue.


-28-



---



##### Table of Contents







| |                
| | ---------------
| | Cost of Revenue

Cost of Product Revenue.


Cost of Service Revenue.




| |                   
| | ------------------
| | Operating Expenses

Research and Development.


Sales and Marketing.


General and Administrative.


-29-



---



##### Table of Contents





Amortization of Other Non-Current Assets.




Restructuring.




Adjustment of Acquisition Liabilities.


Impairment of Intangible Assets and Fixed Assets.




| |                              
| | -----------------------------
| | Income (Loss) from Operations





| |                  
| | -----------------
| | Other Income, Net



-30-



---



##### Table of Contents







| |             
| | ------------
| | Income Taxes





Year Ended December 31, 2003 Compared to Year Ended
December 31, 2002




| |              
| | -------------
| | Total Revenue



Product Revenue.


Service Revenue.




| |                
| | ---------------
| | Cost of Revenue

Cost of Product Revenue.


Cost of Service Revenue.




| |                   
| | ------------------
| | Operating Expenses

Research and Development.


-31-



---



##### Table of Contents





Sales and Marketing.


General and Administrative.


Amortization of Other Non-Current Assets.






Restructuring.




-32-



---



##### Table of Contents





Impairment of Goodwill.


Impairment of Intangible Assets and Fixed Assets.






| |                              
| | -----------------------------
| | Income (Loss) from Operations





| |                  
| | -----------------
| | Other Income, Net







| |             
| | ------------
| | Income Taxes





-33-



---



##### Table of Contents





| |                                  
| | ---------------------------------
| | Exposure to Currency Fluctuations








|   |                                
|-- | -------------------------------
|B. | Liquidity and Capital Resources













-34-



---



##### Table of Contents


















|   |                                                         
|-- | --------------------------------------------------------
|C. | Research and Development, Patents and Licenses,
    etc.










|   |                  
|-- | -----------------
|D. | Trend Information



-35-



---



##### Table of Contents








|   |                               
|-- | ------------------------------
|E. | Off-Balance Sheet Arrangements








|   |                                              
|-- | ---------------------------------------------
|F. | Tabular Disclosure of Contractual Obligations



|                            |  |                             |        |           |  |       |       |       |  |           |       |  |  |   |       |  |  |   |        | 
|--------------------------- |  | --------------------------- | ------ | --------- |  | ----- | ----- | ----- |  | --------- | ----- |  |  | - | ----- |  |  | - | ------ | 
|                            |  | Payment Due by period      
|                            |  |                            
|                            |  |                             |        | Less than |  | 1-3   |       | 3-5   |  | More than
|Contractual Obligations     |  | Total                       |        | 1 Year    |  | Years |       | Years |  | 5 Years  
|                            |  |                             |        |           |  |       |       |       |  |          
|                            |  | (U.S. dollars in thousands)
|Operating Lease Obligations |  | $                           | 32,564 |           |  | $     | 6,725 |       |  | $         | 8,462 |  |  | $ | 6,479 |  |  | $ | 10,898 | 










|   |            
|-- | -----------
|G. | Safe Harbor



-36-



---



##### Table of Contents








|        |                                               
|------- | ----------------------------------------------
|Item 6. | Directors, Senior
    Management and Employees






|   |                                
|-- | -------------------------------
|A. | Directors and Senior Management



|                         |  |     |    |          |  |  |                                       | 
|------------------------ |  | --- | -- | -------- |  |  | ------------------------------------- | 
|Name                     |  | Age |    | Position
|                         |  |     |    |         
|Kevin Melia            |  |     | 57 |          |  |  | Chairman of the Board                 | 
|Christopher J. Horn      |  |     | 48 |          |  |  | Vice Chairman of the Board            | 
|Peter M. Zotto+          |  |     | 60 |          |  |  | Chief Executive Officer and Director  | 
|Daniel Demmer+           |  |     | 40 |          |  |  | Chief Financial Officer               | 
|Eric Newcomer+           |  |     | 50 |          |  |  | Chief Technology Officer              | 
|Christopher M. Mirabile+ |  |     | 38 |          |  |  | General Counsel and Secretary         | 
|Lawrence E. Alston, Jr.+ |  |     | 43 |          |  |  | Vice President of Marketing           | 
|William McMurray+        |  |     | 43 |          |  |  | Vice President of Worldwide Sales     | 
|Sean Baker               |  |     | 46 |          |  |  | Chief Scientific Officer and Director | 
|William Burgess         |  |     | 58 |          |  |  | Non-Executive Director                | 
|John Conroy            |  |     | 45 |          |  |  | Non-Executive Director                | 
|Ivor Kenny*             |  |     | 75 |          |  |  | Non-Executive Director                | 
|James D. Maikranz*       |  |     | 59 |          |  |  | Non-Executive Director                | 
|Francesco Violante*      |  |     | 54 |          |  |  | Non-Executive Director                | 






|  |                                                                                            
|- | -------------------------------------------------------------------------------------------
| | Member of Audit Committee                                                                  
| 
|* | Member of Compensation Committee                                                           
| 
| | Member of Nominating and Corporate Governance Committee                                    
| 
|+ | Designated as an executive officer of IONA by the Board of
    Directors on April 14, 2005.

Kevin Melia


Christopher J. Horn


Peter M. Zotto


-37-



---



##### Table of Contents





Daniel Demmer


Eric Newcomer Understanding SOA with Web Services  Understanding Web
Services Principles of Transaction Processing


Christopher M. Mirabile


Lawrence E. Alston, Jr.


William McMurray


-38-



---



##### Table of Contents



Sean Baker


William Burgess


John Conroy


Ivor Kenny


James D. Maikranz


Francesco Violante


-39-



---



##### Table of Contents








|   |             
|-- | ------------
|B. | Compensation



|                                                                |  |            |           |          |  |                        |         |                     |  |  |           |  |  |   |        | 
|--------------------------------------------------------------- |  | ---------- | --------- | -------- |  | ---------------------- | ------- | ------------------- |  |  | --------- |  |  | - | ------ | 
|                                                                |  |            |           |          |  | Long-Term Compensation
|                                                                |  |            |           |          |  |                       
|                                                                |  |            |           |          |  | Number of              |         | Pension Retirement 
|                                                                |  | Salary and |           |          |  | Securities Underlying  |         | and                
|                                                                |  | Fees($)    |           | Bonus($) |  | Options(#)             |         | Similar Benefits($)
|                                                                |  |            |           |          |  |                        |         |                    
|All directors and executive officers as a group (12 persons)(1) |  | $          | 1,783,312 |          |  | $                      | 547,240 |                     |  |  | 1,398,330 |  |  | $ | 69,998 | 






|    |                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These amounts do not include compensation paid to persons who
    were not designated as an executive officer of IONA at any time
    during the fiscal year ended December 31, 2004.



|                    |  |        |         |       |  |            |         |       |  |   |         |  |  |   |         | 
|------------------- |  | ------ | ------- | ----- |  | ---------- | ------- | ----- |  | - | ------- |  |  | - | ------- | 
|                    |  |        |         |       |  | Directors |         |      
|Name                |  | Salary |         | Bonus |  | Fees       |         | Total
|                    |  |        |         |       |  |            |         |      
|Kevin Melia         |  |        |        |       |  |            |        |       |  | $ | 160,500 |  |  | $ | 160,500 | 
|Christopher J. Horn |  | $      | 309,654 |       |  | $          | 150,293 |       |  |   |        |  |  | $ | 459,947 | 
|Peter Zotto(1)      |  | $      | 240,000 |       |  | $          | 112,000 |       |  |   |        |  |  | $ | 352,000 | 
|Sean Baker          |  | $      | 101,983 |       |  | $          | 15,000  |       |  |   |        |  |  | $ | 116,983 | 
|William Burgess     |  |        |        |       |  |            |        |       |  | $ | 63,000  |  |  | $ | 63,000  | 
|John Conroy         |  |        |        |       |  |            |        |       |  | $ | 60,000  |  |  | $ | 60,000  | 
|Ivor Kenny          |  |        |        |       |  |            |        |       |  | $ | 69,000  |  |  | $ | 69,000  | 
|James D. Maikranz   |  |        |        |       |  |            |        |       |  | $ | 49,500  |  |  | $ | 49,500  | 
|Francesco Violante  |  |        |        |       |  |            |        |       |  | $ | 57,000  |  |  | $ | 57,000  | 






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(1) | Mr. Zotto was appointed as our Chief Executive Officer and
    a Director on April 14, 2005.





-40-



---



##### Table of Contents







|                        |  |                      |        |           |  |                 |           |  |  |  |      | 
|----------------------- |  | -------------------- | ------ | --------- |  | --------------- | --------- |  |  |  | ---- | 
|                        |  | Number of Options    |        | Exercise  |  |                
|                        |  | To Purchase Ordinary |        | Price Per |  |                
|Name(1)                 |  | Shares Granted       |        | Share     |  | Expiration Date
|                        |  |                      |        |           |  |                
|Kevin Melia             |  |                      | 21,000 |           |  | $               | 3.42      |  |  |  | 2014 | 
|Christopher J. Horn     |  |                      |       |           |  |                 |          |  |  |  |     | 
|Peter M. Zotto          |  |                      | 70,000 |           |  | $               | 3.26      |  |  |  | 2014 | 
|Daniel Demmer           |  |                      | 80,000 |           |  | $               | 3.26-7.33 |  |  |  | 2014 | 
|Eric Newcomer           |  |                      | 55,000 |           |  | $               | 3.26-7.33 |  |  |  | 2014 | 
|Sean Baker              |  |                      | 18,000 |           |  | $               | 3.26-7.33 |  |  |  | 2014 | 
|Christopher M. Mirabile |  |                      | 55,000 |           |  | $               | 3.26-7.33 |  |  |  | 2014 | 
|William Burgess         |  |                      | 3,000  |           |  | $               | 3.42      |  |  |  | 2014 | 
|John Conroy             |  |                      | 3,000  |           |  | $               | 3.42      |  |  |  | 2014 | 
|Ivor Kenny              |  |                      | 21,000 |           |  | $               | 3.42      |  |  |  | 2014 | 
|James D. Maikranz       |  |                      | 3,000  |           |  | $               | 3.42      |  |  |  | 2014 | 
|Francesco Violante      |  |                      | 21,000 |           |  | $               | 3.42      |  |  |  | 2014 | 






|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This table does not include options granted to persons who were
    not designated as an executive officer of IONA at any time
    during the fiscal year ended December 31, 2004.



-41-



---



##### Table of Contents








|   |                
|-- | ---------------
|C. | Board Practices



|                        |  |                          |  |                        |                |                     |  |               
|----------------------- |  | ------------------------ |  | ---------------------- | -------------- | ------------------- |  | --------------
|                        |  |                          |  |                        |                | Termination/Renewal
|Name                    |  | Office(s) Held           |  | Commencement of Office |                | Date of Office(1)  
|                        |  |                          |  |                        |                |                    
|Kevin Melia             |  | Non-Executive Director   |  |                        | May 1994       |                     |  | 2005          
|                        |  | Chairman                 |  |                        | May 2003       |                     |  | Not applicable
|Christopher J. Horn(2)  |  | Director                 |  |                        | March 1991     |                     |  | May 2006      
|                        |  | Chief Executive Officer  |  |                        | May 2003       |                     |  | Not applicable
|Peter M. Zotto(3)       |  | President                |  |                        | October 2004   |                     |  | Not applicable
|                        |  | Chief Operating Officer  |  |                        | October 2003   |                     |  | Not applicable
|Daniel Demmer           |  | Chief Financial Officer  |  |                        | May 2000       |                     |  | Not applicable
|Eric Newcomer           |  | Chief Technology Officer |  |                        | April 2002     |                     |  | Not applicable
|Sean Baker              |  | Director                 |  |                        | March 1991     |                     |  | 2005          
|                        |  | Chief Scientific Officer |  |                        | May 2003       |                     |  | Not applicable
|Christopher M. Mirabile |  | General Counsel          |  |                        | September 2003 |                     |  | Not applicable
|                        |  | Secretary                |  |                        | September 2003 |                     |  | Not applicable
|William Burgess         |  | Non-Executive Director   |  |                        | January 2003   |                     |  | 2006          
|John Conroy             |  | Non-Executive Director   |  |                        | May 2001       |                     |  | 2006          
|Ivor Kenny              |  | Non-Executive Director   |  |                        | August 1999    |                     |  | 2007          
|James D. Maikranz       |  | Non-Executive Director   |  |                        | July 2001      |                     |  | 2005          
|Francesco Violante      |  | Non-Executive Director   |  |                        | May 2001       |                     |  | 2007          






|    |                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Unless otherwise indicated, the date of termination or renewal
    is the date of our Annual General Meeting in the calendar year
    listed. On April 14, 2005, our Board of Directors
    designated our executive officers to include only those
    individuals listed as executive officers in Item 6.A. above.
|   
|(2) | On April 14, 2005, Dr. Horn appointed non-executive
    Vice Chairman of our Board of Directors and resigned as our
    Chief Executive Officer.                                                                                                                                                                    
|   
|(3) | On April 14, 2005, Mr. Zotto was appointed our Chief
    Executive Officer and a Director.                                                                                                                                                                                                                          



-42-



---



##### Table of Contents











| |                 
| | ----------------
| | Board Committees

Audit Committee.


Compensation Committee.


Nominating and Corporate Governance Committee.


-43-



---



##### Table of Contents










|   |          
|-- | ---------
|D. | Employees





|                                   |       |                    |     |      |  |      |     |     |  |  |     |     | 
|---------------------------------- | ----- | ------------------ | --- | ---- |  | ---- | --- | --- |  |  | --- | --- | 
|                                   |       | As of December 31,
|                                   |       |                   
|                                   |       | 2004               |     | 2003 |  | 2002
|                                   |       |                    |     |      |  |     
|Product Development and Management |       |                    | 131 |      |  |      | 123 |     |  |  | 197 |    
|Services                           |       |                    | 53  |      |  |      | 62  |     |  |  | 102 |    
|Marketing                          |       |                    | 17  |      |  |      | 18  |     |  |  | 25  |    
|Sales                              |       |                    | 93  |      |  |      | 97  |     |  |  | 209 |    
|Finance and Administration         |       |                    | 52  |      |  |      | 53  |     |  |  | 95  |    
|                                   |       |                    |     |      |  |      |     |     |  |  |     |    
|                                   | Total |                    |     | 346  |  |      |     | 353 |  |  |     | 628 | 
|                                   |       |                    |     |      |  |      |     |     |  |  |     |    






|   |                
|-- | ---------------
|E. | Share Ownership



|                        |  |              |           |               |  |                 |      |                |  |                 |         |  |  |   |             |  |  |  |           | 
|----------------------- |  | ------------ | --------- | ------------- |  | --------------- | ---- | -------------- |  | --------------- | ------- |  |  | - | ----------- |  |  |  | --------- | 
|                        |  | Number of    |           |               |  | Number of       |      |                |  |                
|                        |  | Ordinary     |           | Percentage of |  | Ordinary Shares |      |                |  |                
|                        |  | Shares       |           | Outstanding   |  | Which May be    |      | Range of       |  |                
|                        |  | Beneficially |           | Ordinary      |  | Acquired Under  |      | Exercise Price |  | Expiration Date
|Name                    |  | Owned        |           | Shares(1)     |  | Option Schemes  |      | of Options     |  | of Options     
|                        |  |              |           |               |  |                 |      |                |  |                
|Kevin Melia             |  |              | 24,444    |               |  |                 | *    |                |  |                 | 184,250 |  |  | $ | 2.25-74.50  |  |  |  | 2009-2014 | 
|Christopher J. Horn(2)  |  |              | 2,338,414 |               |  |                 | 6.73 | %              |  |                 | 200     |  |  | $ | 13.63-18.75 |  |  |  | 2008-2009 | 
|Peter M. Zotto(3)       |  |              |          |               |  |                 |     |                |  |                 | 620,000 |  |  | $ | 3.00-5.30   |  |  |  | 2013-2015 | 
|Daniel Demmer           |  |              | 11,000    |               |  |                 |     |                |  |                 | 264,113 |  |  | $ | 1.99-7.33   |  |  |  | 2013-2015 | 
|Eric Newcomer           |  |              | 5,234     |               |  |                 | *    |                |  |                 | 169,632 |  |  | $ | 1.99-7.33   |  |  |  | 2013-2015 | 
|Sean Baker              |  |              | 1,170,885 |               |  |                 | 3.37 | %              |  |                 | 77,700  |  |  | $ | 1.99-7.33   |  |  |  | 2008-2014 | 
|Christopher M. Mirabile |  |              | 200       |               |  |                 | *    |                |  |                 | 142,101 |  |  | $ | 1.99-7.33   |  |  |  | 2013-2015 | 
|John Conroy             |  |              | 18,000    |               |  |                 | *    |                |  |                 | 57,000  |  |  | $ | 2.25-43.15  |  |  |  | 2011-2014 | 
|Ivor Kenny              |  |              | 11,800    |               |  |                 | *    |                |  |                 | 74,334  |  |  | $ | 2.25-74.50  |  |  |  | 2009-2014 | 
|James Maikranz          |  |              |          |               |  |                 |     |                |  |                 | 39,000  |  |  | $ | 2.25-33.80  |  |  |  | 2011-2014 | 
|Francesco Violante      |  |              | 1,300     |               |  |                 | *    |                |  |                 | 57,000  |  |  | $ | 2.25-43.15  |  |  |  | 2011-2014 | 
|William Burgess         |  |              | 5,000     |               |  |                 | *    |                |  |                 | 33,000  |  |  | $ | 3.27-3.42   |  |  |  | 2013-2014 | 






| |   |                                                        
| | - | -------------------------------------------------------
| | * | Represents less than 1% of outstanding ordinary shares.



|    |                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The percentage of outstanding ordinary shares is based on
    34,764,765 ordinary shares outstanding as of April 30,
    2005, which excludes an aggregate of up to 282,383 ordinary
    shares issuable as of April 30, 2005 to the former Netfish
    shareholders prior to reduction for indemnification payments to
    which we may be entitled.
|   
|(2) | Dr. Horn resigned as our Chief Executive Officer on
    April 14, 2005.                                                                                                                                                                                                                                                                              
|   
|(3) | Mr. Zotto was appointed as our Chief Executive Officer and
    a Director on April 14, 2005.                                                                                                                                                                                                                                                         

-44-



---



##### Table of Contents







| |                              
| | -----------------------------
| | Executive Share Option Scheme





| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | within seven years of the date of grant;                                                                                                                    
|
| |  | twelve months after the death of an optionee; or                                                                                                            
|
| |  | prior to termination of the optionees employment for any
    reason, although our Board of Directors has discretion to delay
    lapse in individual cases.





| |                         
| | ------------------------
| | 1997 Share Option Scheme







| |   |                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the number of shares subject to each option;                                                                                                                                                                                                                                                                                                                 
|
| |  | the date the option becomes exercisable;                                                                                                                                                                                                                                                                                                                     
|
| |  | the exercise price of the option (which in the case of an
    incentive stock option cannot be less than the market price of
    the ordinary shares as of the date of grant or, in the case of
    an employee holding more than 10% of the combined voting power
    of IONA, 110% of the market price of the ordinary shares as of
    the date of grant);
|
| |  | the duration of the option; and                                                                                                                                                                                                                                                                                                                              
|
| |  | the time, manner and form of payment upon exercise of an option.                                                                                                                                                                                                                                                                                             





| |                                  
| | ---------------------------------
| | 1997 Director Share Option Scheme



-45-



---



##### Table of Contents







| |                                                           
| | ----------------------------------------------------------
| | Genesis Development Corporation 1997 Stock Option
    Plan





| |                                                 
| | ------------------------------------------------
| | Object-Oriented Concepts, Inc. Stock Option Plan





| |                                                  
| | -------------------------------------------------
| | Netfish Technologies, Inc. 1999 Stock Option Plan





| |                                  
| | ---------------------------------
| | 1999 Employee Share Purchase Plan



-46-



---



##### Table of Contents





-47-



---



##### Table of Contents








|        |                                                      
|------- | -----------------------------------------------------
|Item 7. | Major Shareholders and
    Related Party Transactions






|   |                   
|-- | ------------------
|A. | Major Shareholders







|                                                     |  |                    |           |                    |  |  |      |  
|---------------------------------------------------- |  | ------------------ | --------- | ------------------ |  |  | ---- | -
|                                                     |  | Number of          |           | Percentage of     
|                                                     |  | Ordinary Shares    |           | Ordinary Shares   
|Name of Beneficial Owner                             |  | Beneficially Owned |           | Beneficially Owned
|                                                     |  |                    |           |                   
|Christopher J. Horn(1)                               |  |                    | 2,338,614 |                    |  |  | 6.73 | %
|Schroder Investment Management International Ltd.(2) |  |                    | 3,389,090 |                    |  |  | 9.75 | %
|Gartmore Investment Limited(3)                       |  |                    | 2,053,475 |                    |  |  | 5.91 | %






|    |                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 200 ordinary shares subject to outstanding share
    options that are exercisable within the 60-day period following
    April 30, 2005.                                                                                                                    
|   
|(2) | Schroder Investments Management International Ltd. filed a
    Schedule 13G on February 11, 2005, in which Schroder
    Investments Management International Ltd. reported that it
    beneficially owned an aggregate of 3,389,090 ADRs as of
    December 31, 2004.
|   
|(3) | Gartmore Investment Limited reported to us on August 30,
    2004 that it and its affiliates, Gartmore Fund Managers and
    Gartmore Global Partners, beneficially owned an aggregate of
    2,053,475 ADRs as of August 25, 2004.                                  












|   |                           
|-- | --------------------------
|B. | Related Party Transactions



-48-



---



##### Table of Contents










|   |                                 
|-- | --------------------------------
|C. | Interests of Experts and Counsel








|        |                          
|------- | -------------------------
|Item 8. | Financial
    Information






|   |                                                                      
|-- | ---------------------------------------------------------------------
|A. | Consolidated Financial Statements and Other Financial
    Information



Legal Proceedings




Dividend Distribution Policy









|   |                    
|-- | -------------------
|B. | Significant Changes



-49-



---



##### Table of Contents








|        |                          
|------- | -------------------------
|Item 9. | The Offer and
    Listing






|   |                          
|-- | -------------------------
|A. | Offer and Listing Details



| |                         
| | ------------------------
| | Market Price Information



|                             |                |      |        |      |  |   |       |      | 
|---------------------------- | -------------- | ---- | ------ | ---- |  | - | ----- | ---- | 
|                             |                | High |        | Low 
|                             |                |      |        |     
|Year Ended December 31, 2000 |                |     | 106.00 |      |  |  | 40.64 |     
|Year Ended December 31, 2001 |                |     | 73.50  |      |  |  | 8.30  |     
|Year Ended December 31, 2002 |                |     | 29.75  |      |  |  | 1.70  |     
|Year Ended December 31, 2003 |                |     | 4.95   |      |  |  | 1.27  |     
|Year Ended December 31, 2004 |                |     | 7.54   |      |  |  | 2.32  |     
|Year Ended December 31, 2003 |                |      |        |      |  |   |       |     
|                             | First Quarter  |      |       | 3.15 |  |   |      | 1.80 | 
|                             | Second Quarter |      |       | 2.15 |  |   |      | 1.27 | 
|                             | Third Quarter  |      |       | 3.00 |  |   |      | 1.80 | 
|                             | Fourth Quarter |      |       | 4.95 |  |   |      | 2.20 | 
|Year Ended December 31, 2004 |                |      |        |      |  |   |       |     
|                             | First Quarter  |      |       | 7.54 |  |   |      | 4.17 | 
|                             | Second Quarter |      |       | 7.50 |  |   |      | 3.40 | 
|                             | Third Quarter  |      |       | 4.00 |  |   |      | 2.32 | 
|                             | Fourth Quarter |      |       | 4.22 |  |   |      | 3.00 | 
|Year Ended December 31, 2005 |                |      |        |      |  |   |       |     
|                             | First Quarter  |      |       | 4.80 |  |   |      | 2.90 | 
|Month Ended                  |                |      |        |      |  |   |       |     
|                             | November 2004  |      |       | 4.22 |  |   |      | 3.02 | 
|                             | December 2004  |      |       | 4.00 |  |   |      | 3.70 | 
|                             | January 2005   |      |       | 4.45 |  |   |      | 3.70 | 
|                             | February 2005  |      |       | 4.80 |  |   |      | 3.60 | 
|                             | March 2005     |      |       | 3.75 |  |   |      | 2.90 | 
|                             | April 2005     |      |       | 3.21 |  |   |      | 2.36 | 



|                             |  |      |        |     |  |   |       | 
|---------------------------- |  | ---- | ------ | --- |  | - | ----- | 
|                             |  | High |        | Low
|                             |  |      |        |    
|Year Ended December 31, 2000 |  | $    | 102.00 |     |  | $ | 38.00 | 
|Year Ended December 31, 2001 |  | $    | 66.44  |     |  | $ | 6.90  | 
|Year Ended December 31, 2002 |  | $    | 27.14  |     |  | $ | 1.65  | 
|Year Ended December 31, 2003 |  | $    | 5.90   |     |  | $ | 1.23  | 

-50-



---



##### Table of Contents



|                             |                |      |      |       |  |   |      |      | 
|---------------------------- | -------------- | ---- | ---- | ----- |  | - | ---- | ---- | 
|                             |                | High |      | Low  
|                             |                |      |      |      
|Year Ended December 31, 2004 |                | $    | 9.46 |       |  | $ | 2.50 |     
|Year Ended December 31, 2003 |                |      |      |       |  |   |      |     
|                             | First Quarter  |      | $    | 3.44  |  |   | $    | 1.97 | 
|                             | Second Quarter |      | $    | 2.65  |  |   | $    | 1.23 | 
|                             | Third Quarter  |      | $    | 3.542 |  |   | $    | 2.00 | 
|                             | Fourth Quarter |      | $    | 5.90  |  |   | $    | 2.40 | 
|Year Ended December 31, 2004 |                |      |      |       |  |   |      |     
|                             | First Quarter  |      | $    | 9.46  |  |   | $    | 5.01 | 
|                             | Second Quarter |      | $    | 9.19  |  |   | $    | 3.96 | 
|                             | Third Quarter  |      | $    | 4.87  |  |   | $    | 2.50 | 
|                             | Fourth Quarter |      | $    | 5.55  |  |   | $    | 3.69 | 
|Year Ended December 31, 2005 |                |      |      |       |  |   |      |     
|                             | First Quarter  |      | $    | 5.95  |  |   | $    | 3.75 | 
|Month Ended                  |                |      |      |       |  |   |      |     
|                             | November 2004  |      | $    | 5.55  |  |   | $    | 3.76 | 
|                             | December 2004  |      | $    | 5.50  |  |   | $    | 4.80 | 
|                             | January 2005   |      | $    | 5.70  |  |   | $    | 4.50 | 
|                             | February 2005  |      | $    | 5.95  |  |   | $    | 4.71 | 
|                             | March 2005     |      | $    | 5.00  |  |   | $    | 3.75 | 
|                             | April 2005     |      | $    | 4.10  |  |   | $    | 2.96 | 






|   |                     
|-- | --------------------
|B. | Plan of Distribution








|   |        
|-- | -------
|C. | Markets








|   |                     
|-- | --------------------
|D. | Selling Shareholders








|   |         
|-- | --------
|E. | Dilution








|   |                      
|-- | ---------------------
|F. | Expenses of the Issue



-51-



---



##### Table of Contents








|         |                           
|-------- | --------------------------
|Item 10. | Additional
    Information






|   |              
|-- | -------------
|A. | Share Capital








|   |                                       
|-- | --------------------------------------
|B. | Memorandum and Articles of Association



| |                                       
| | --------------------------------------
| | Memorandum and Articles of Association





| |                                                     
| | ----------------------------------------------------
| | Nasdaq Stock Market Corporate Governance Disclosures








|   |                   
|-- | ------------------
|C. | Material Contracts







-52-



---



##### Table of Contents








|   |                  
|-- | -----------------
|D. | Exchange Controls












|   |         
|-- | --------
|E. | Taxation

Irish Tax Considerations










| |                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | HOLDERS OF ORDINARY SHARES OR ADSs ARE ADVISED TO CONSULT
    THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF IRISH
    TAXATION LAWS TO THEIR PARTICULAR CIRCUMSTANCES IN RELATION TO
    THE PURCHASE, OWNERSHIP OR DISPOSITION OF ORDINARY SHARES OR
    ADSs.



-53-



---



##### Table of Contents







|    |                                                     
|--- | ----------------------------------------------------
|(i) | Irish Tax Considerations Applicable to Irish Holders







| |                      
| | ---------------------
| | Taxation of Dividends











| |                                     
| | ------------------------------------
| | Disposals of Ordinary Shares or ADSs










-54-



---



##### Table of Contents











| |                         
| | ------------------------
| | Capital Acquisitions Tax






| |           
| | ----------
| | Stamp Duty














-55-



---



##### Table of Contents





(ii)     Irish Tax Considerations
Applicable to U.S. Holders








| |                      
| | ---------------------
| | Taxation of Dividends









| |   |                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the ADR register maintained by the Depositary shows the
    U.S. Holder as having a U.S. address on the
    register; or                                                                                                                        
|
| |  | where there is an intermediary between the Depositary and the
    beneficial holder of ADSs, the Depositary receives confirmation
    from the intermediary that the beneficial owners address
    in the intermediarys records is in the U.S.



.


-56-



---



##### Table of Contents





| |                                                      
| | -----------------------------------------------------
| | Capital Gains on Disposals of Ordinary Shares or ADSs







| |                               
| | ------------------------------
| | Irish Capital Acquisitions Tax










| |           
| | ----------
| | Stamp Duty



Certain U.S. Federal Income Tax Considerations






| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a citizen or resident of the United States, including an alien
    individual who is a lawful permanent resident of the United
    States or who meets the substantial presence residency test
    under U.S. federal income tax laws;

-57-



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a corporation (or other entity treated as a corporation for
    U.S. federal income tax purposes) that is created or
    organized under the laws of the United States, any of the fifty
    states or the District of Columbia, unless otherwise provided by
    Treasury Regulations;
|
| |  | an estate the income of which is includible in gross income for
    U.S. federal income tax purposes regardless of
    source; or                                                                                                                                                      
|
| |  | a trust, if a U.S. court is able to exercise primary
    supervision over its administration and one or more
    U.S. persons have the authority to control all substantial
    decisions of the trust.                                                                                





| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a bank, thrift, insurance company, regulated investment company,
    or other financial institution or financial service company;                                                                                 
|
| |  | a broker or dealer in securities or foreign currency;                                                                                                                                                             
|
| |  | a person who has a functional currency other than the
    U.S. dollar;                                                                                                                                            
|
| |  | a partnership or other flow-through entity (including a limited
    liability company treated as a partnership for U.S. federal
    income tax purposes);                                                         
|
| |  | an S corporation;                                                                                                                                                                                                 
|
| |  | a person subject to alternative minimum tax;                                                                                                                                                                      
|
| |  | a person who owns our ordinary shares or ADSs evidenced by ADRs
    as part of a straddle, hedging transaction, conversion
    transaction, constructive sale transaction or other
    risk-reduction transaction;
|
| |  | a tax-exempt entity;                                                                                                                                                                                              
|
| |  | investors who own (directly, indirectly or through attribution)
    10% or more of our outstanding voting shares;                                                                                                 
|
| |  | a person who has ceased to be a U.S. citizen or to be taxed
    as a resident alien; or                                                                                                                           
|
| |  | a person who acquired our ordinary shares or ADSs evidenced by
    ADRs in connection with employment or the performance of
    services generally.                                                               

This discussion does not apply to any person who is
not a U.S. Holder or to any person who does not hold
ordinary shares or ADSs.




-58-



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | U.S. HOLDERS OF OUR ORDINARY SHARES OR ADSs ARE ADVISED
    TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
    U.S. FEDERAL, STATE, LOCAL OR NON-U.S. TAX
    CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF
    ORDINARY SHARES OR ADSs APPLICABLE IN THEIR PARTICULAR TAX
    SITUATIONS.

Dividends












| |                                    
| | -----------------------------------
| | Sale, Exchange or Other Disposition



-59-



---



##### Table of Contents







| |                                   
| | ----------------------------------
| | Passive Foreign Investment Company





| |   |                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 75% or more of its gross income in a taxable year falls within
    specific categories of passive income; or                                                                                                         
|
| |  | the average percentage of its assets in a taxable year
    (ordinarily determined based on their market value) which
    produce passive income or are held for the production of passive
    income is at least 50%.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Excess distributions by us to a U.S. Holder would be taxed
    in a special way. Excess distributions are amounts
    received by a U.S. Holder with respect to our ordinary
    shares or ADSs in any taxable year that exceed 125% of the
    average distributions received by such U.S. Holder from us
    in the shorter of either the three previous years or the
    U.S. Holders holding period for the ordinary shares
    or ADSs before the current taxable year. Excess distributions
    must be allocated ratably to each day that a U.S. Holder
    has held our ordinary shares or ADSs. A U.S. Holder would
    be required to include amounts allocated to the current taxable
    year and years before we became a passive foreign investment
    company as ordinary income. In addition, amounts allocated to
    each taxable year beginning with the year we first became a
    passive foreign investment company would be taxed at the highest
    rate in effect for that year on ordinary income and the tax
    would be subject to an interest charge at the rate applicable to
    deficiencies for income tax.
|
| |  | The entire amount of gain that is realized by a U.S. Holder
    upon the sale or other disposition of our ordinary shares or
    ADSs evidenced by ADRs would also be considered an excess
    distribution and would be subject to tax as described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The adjusted tax basis in our ordinary shares or ADSs evidenced
    by ADRs acquired from a decedent who was a U.S. Holder of
    the ordinary shares or ADSs would not be increased to equal the
    fair market value of such ordinary shares or ADSs as of the date
    of the decedents death but would instead be equal to the
    decedents adjusted tax basis, if lower. A U.S. Holder
    could not avoid this result by electing to mark our ordinary
    shares or ADSs to market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



-60-



---



##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | if the fair market value of the U.S. Holders ordinary
    shares or ADSs exceeds the U.S. Holders adjusted tax
    basis in such ordinary shares or ADSs as of the close of the
    U.S. Holders taxable year, the U.S. Holder would
    recognize the amount of the excess as ordinary income;                                                                                                                                                                                  
|
| |  | if the fair market value of the U.S. Holders ordinary
    shares or ADSs is less than the U.S. Holders adjusted
    tax basis in those ordinary shares or ADSs as of the close of
    the U.S. Holders taxable year, the U.S. Holder
    might recognize the amount of the difference as ordinary loss.
    Losses would be allowed only for the amount of net mark to
    market gain previously included by the U.S. Holder under
    the election for prior taxable years; and
|
| |  | if the U.S. Holder has elected to mark our ordinary shares
    or ADSs to market for all taxable years during which the
    U.S. Holder owned our ordinary shares or ADSs and we were a
    passive foreign investment company, the excess
    distribution rules generally would not apply to the
    U.S. Holder.                                                                                                                                                               





| |                                                       
| | ------------------------------------------------------
| | Status of IONA as a Passive Foreign Investment Company





| |                                             
| | --------------------------------------------
| | Backup Withholding and Information Reporting





| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | furnish its taxpayer identification number (social security or
    employer identification number) and certify that such number is
    correct;
|
| |  | certify that such U.S. Holder is not subject to backup
    withholding; or                                                                     
|
| |  | otherwise comply with the applicable requirements of the backup
    withholding rules.                                                         



-61-



---



##### Table of Contents








|   |                            
|-- | ---------------------------
|F. | Dividends and Paying Agents








|   |                      
|-- | ---------------------
|G. | Statements by Experts








|   |                     
|-- | --------------------
|H. | Documents on Display








|   |                       
|-- | ----------------------
|I. | Subsidiary Information








|         |                                                               
|-------- | --------------------------------------------------------------
|Item 11. | Quantitative and
    Qualitative Disclosures about Market Risk

The following discussion regarding our market risk contains
forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation
Reform Act of 1995 that relate to future events or our future
financial performance. In some cases, you can identify
forward-looking statements by terminology, such as
may, will, should,
could, expect, plan,
anticipate, believe,
estimate, project, predict,
intend, potential, or
continue or the negative of such terms or other
comparable terminology, although not all forward-looking
statements contain such terms. These forward-looking statements
are neither promises nor guarantees but rather are subject to a
number of risks and uncertainties which could cause actual
results to differ materially from those described in the
forward-looking statements, including risks of exchange rate
fluctuations, interest rate fluctuations and general market
volatility, that could cause actual results to differ materially
from those discussed in the forward-looking statements.













|         |                                                           
|-------- | ----------------------------------------------------------
|Item 12. | Description of
    Securities Other than Equity Securities



-62-



---



##### Table of Contents



PART II







|         |                                                     
|-------- | ----------------------------------------------------
|Item 13. | Defaults, Dividends
    Arrearages and Delinquencies








|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|Item 14. | Material Modifications
    to the Rights of Security Holders and Use of Proceeds



| |                                             
| | --------------------------------------------
| | Use of Proceeds from Initial Public Offering



|                                                                                                    |  |   |            | 
|--------------------------------------------------------------------------------------------------- |  | - | ---------- | 
|Purchase and installation of furniture and fixtures                                                 |  | $ | 14,421,000 | 
|Purchase and installation of machinery and equipment                                                |  | $ | 33,176,000 | 
|Short-term debt instruments                                                                         |  | $ | 11,597,654 | 
|Redemption of outstanding Preference Shares and payment of
    accrued and unpaid dividends thereon |  | $ | 380,000    | 






|         |                            
|-------- | ---------------------------
|Item 15. | Controls and
    Procedures








|         |           
|-------- | ----------
|Item 16. | [Reserved]






|          |                                     
|--------- | ------------------------------------
|Item 16A. | Audit Committee
    Financial Expert








|          |                   
|--------- | ------------------
|Item 16B. | Code of
    Ethics





-63-



---



##### Table of Contents








|          |                                           
|--------- | ------------------------------------------
|Item 16C. | Principal Accountant
    Fees and Services



| |             
| | ------------
| | Auditor Fees



|                      |       |              |         |         |  |   |         |         | 
|--------------------- | ----- | ------------ | ------- | ------- |  | - | ------- | ------- | 
|                      |       | Year Ended  
|                      |       | December 31,
|                      |       |             
|                      |       | 2004         |         | 2003   
|                      |       |              |         |        
|Audit Fees(1)         |       | $            | 405,000 |         |  | $ | 390,000 |        
|Audit-Related Fees(2) |       |              | 25,000  |         |  |   | 54,000  |        
|Tax Fees(3)           |       |              | 264,000 |         |  |   | 445,000 |        
|All Other Fees(4)     |       |              |        |         |  |   |        |        
|                      | Total |              | $       | 694,000 |  |   | $       | 889,000 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit Fees are fees billed by Ernst & Young
    for professional services rendered for the audit of the annual
    financial statements or services that are normally provided in
    connection with statutory and regulatory filings or engagements,
    including the audit of our consolidated and annual financial
    statements. Audit Fees also include fees billed for statutory
    audits of IONA (including its subsidiaries); the provision of
    comfort letters and consents; and the review of documents filed
    with the SEC.  
|   
|(2) | Audit-Related Fees consist of the fees billed by
    Ernst & Young for assurance and related services that
    are reasonably related to the performance of the audit or review
    of the financial statements and not reported under Audit
    Fees. Audit-Related Fees includes fees for employee
    benefit plan audits; consultations concerning financial
    accounting and reporting standards; advisory services associated
    with our financial reporting; and translation of foreign entity
    financial statements to local GAAP.
|   
|(3) | Tax Fees include fees billed by Ernst &
    Young for professional services rendered for tax compliance, tax
    advice, and tax planning. Tax fees also includes fees for the
    review, preparation and amending of federal and local tax
    returns of the United States, Ireland and other foreign
    countries.                                                                                                                                                                                                                            
|   
|(4) | All Other Fees include fees billed by
    Ernst & Young for products and services other than the
    Audit Fees, Audit-Related Fees and Tax Fees.                                                                                                                                                                                                                                                                                                                                                                                                  



| |                                                           
| | ----------------------------------------------------------
| | Audit Committees Pre-approval Policies and
    Procedures







-64-



---



##### Table of Contents








|          |                                                              
|--------- | -------------------------------------------------------------
|Item 16D. | Exemptions from the
    Listing Standards for Audit Committee








|          |                                                                        
|--------- | -----------------------------------------------------------------------
|Item 16E. | Purchase of Equity
    Securities by the Issuer and Affiliated Purchase



-65-



---



##### Table of Contents



PART III







|         |                         
|-------- | ------------------------
|Item 17. | Financial
    Statements








|         |                         
|-------- | ------------------------
|Item 18. | Financial
    Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                                     |  |      |     | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                                                                                     |  | Page
|                                                                                                                                     |  |     
|Report of Independent Registered Public
    Accounting Firm                                                                          |  |      | F-1 | 
|Consolidated Balance Sheets at
    December 31, 2004 and 2003                                                                        |  |      | F-2 | 
|Consolidated Statements of Operations for
    each of the three years in the period ended December 31,
    2004                      |  |      | F-3 | 
|Consolidated Statements of Changes in
    Shareholders Equity for each of the three years in the
    period ended December 31, 2004 |  |      | F-4 | 
|Consolidated Statements of Cash Flows for
    each of the three years in the period ended December 31,
    2004                      |  |      | F-5 | 
|Notes to Consolidated Financial
    Statements                                                                                       |  |      | F-6 | 

-66-



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















F-1



---



##### Table of Contents



IONA TECHNOLOGIES PLC





CONSOLIDATED BALANCE SHEETS


(U.S. dollars in thousands, except share and per share
data)


|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |          |        | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ----- | -------- | ------ |  | ----- | -------- | ------ | 
|                                                                                                                                  |                                                                                                                                                                                                  | December 31,                              
|                                                                                                                                  |                                                                                                                                                                                                  |                                           
|                                                                                                                                  |                                                                                                                                                                                                  | 2004                                       |       | 2003    
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |         
|ASSETS                                                                                                                            |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|Current assets:                                                                                                                   |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  | Cash and cash equivalents                                                                                                                                                                        |                                            | $     | 25,096   |        |  | $     | 19,926   |       
|                                                                                                                                  | Restricted cash (Note 5)                                                                                                                                                                         |                                            |       | 3,495    |        |  |       | 3,745    |       
|                                                                                                                                  | Marketable securities (Note 2)                                                                                                                                                                   |                                            |       | 31,324   |        |  |       | 32,978   |       
|                                                                                                                                  | Accounts receivable, net of allowance for doubtful accounts of
    $1,073 at December 31, 2004 and $1,093 at December 31,
    2003                                                               |                                            |       | 12,912   |        |  |       | 23,255   |       
|                                                                                                                                  | Prepaid expenses                                                                                                                                                                                 |                                            |       | 1,603    |        |  |       | 2,539    |       
|                                                                                                                                  | Other assets                                                                                                                                                                                     |                                            |       | 1,104    |        |  |       | 390      |       
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  |                                                                                                                                                                                                  | Total current assets                       |       |          | 75,534 |  |       |          | 82,833 | 
|Property and equipment, net (Note 11)                                                                                             |                                                                                                                                                                                                  |                                            | 4,851 |          |        |  | 6,265 |         
|Other non-current assets, net (Note 9)                                                                                            |                                                                                                                                                                                                  |                                            | 441   |          |        |  | 940   |         
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  |                                                                                                                                                                                                  | Total assets                               |       | $        | 80,826 |  |       | $        | 90,038 | 
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                              |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|Current liabilities:                                                                                                              |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  | Accounts payable                                                                                                                                                                                 |                                            | $     | 2,602    |        |  | $     | 2,483    |       
|                                                                                                                                  | Accrued payroll and related expenses                                                                                                                                                             |                                            |       | 5,534    |        |  |       | 7,260    |       
|                                                                                                                                  | Other accrued liabilities (Note 6)                                                                                                                                                               |                                            |       | 14,134   |        |  |       | 18,763   |       
|                                                                                                                                  | Deferred revenue                                                                                                                                                                                 |                                            |       | 21,179   |        |  |       | 23,910   |       
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  |                                                                                                                                                                                                  | Total current liabilities                  |       |          | 43,449 |  |       |          | 52,416 | 
|Other non-current liabilities (Note 4)                                                                                            |                                                                                                                                                                                                  |                                            | 2,415 |          |        |  | 4,510 |         
|Redeemable Preference Shares,
    0.0025 par
    value, 101,250,000 shares authorized; None issued and
    outstanding (Note 12) |                                                                                                                                                                                                  |                                            |      |          |        |  |      |         
|Shareholders equity:                                                                                                             |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  | Ordinary Shares,
    0.0025 par
    value; 150,000,000 shares authorized; 34,803,601 and
    34,005,707 shares issued and outstanding at
    December 31, 2004 and 2003, respectively (Note 12) |                                            |       | 96       |        |  |       | 94       |       
|                                                                                                                                  | Additional paid-in capital                                                                                                                                                                       |                                            |       | 494,837  |        |  |       | 493,260  |       
|                                                                                                                                  | Accumulated deficit                                                                                                                                                                              |                                            |       | (459,971 | )      |  |       | (460,163 | )     
|                                                                                                                                  | Deferred stock-based compensation                                                                                                                                                                |                                            |       |         |        |  |       | (79      | )     
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  |                                                                                                                                                                                                  | Total shareholders equity                 |       |          | 34,962 |  |       |          | 33,112 | 
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         
|                                                                                                                                  |                                                                                                                                                                                                  | Total liabilities and shareholders equity |       | $        | 80,826 |  |       | $        | 90,038 | 
|                                                                                                                                  |                                                                                                                                                                                                  |                                            |       |          |        |  |       |         





F-2



---



##### Table of Contents



IONA TECHNOLOGIES PLC





CONSOLIDATED STATEMENTS OF OPERATIONS


(U.S. dollars in thousands, except share and per share
data)


|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |         |         | 
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | ------ | ------ | ------ | ---- | ------- | ------ | ------- | - | -------- | ------- | ------- | 
|                                                                                                     |                                                  | Year Ended December 31, 
|                                                                                                     |                                                  |                         
|                                                                                                     |                                                  | 2004                     |        | 2003   |        | 2002
|                                                                                                     |                                                  |                          |        |        |        |     
|Revenue:                                                                                             |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     | Product revenue                                  |                          | $      | 30,735 |        |      | $       | 35,737 |         |   | $        | 73,452  |        
|                                                                                                     | Service revenue                                  |                          |        | 37,284 |        |      |         | 38,453 |         |   |          | 49,778  |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     |                                                  | Total revenue (Note 17)  |        |        | 68,019 |      |         |        | 74,190  |   |          |         | 123,230 | 
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Cost of Revenue:                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     | Cost of product revenue                          |                          |        | 231    |        |      |         | 527    |         |   |          | 1,685   |        
|                                                                                                     | Cost of service revenue                          |                          |        | 11,790 |        |      |         | 14,275 |         |   |          | 25,458  |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     |                                                  | Total cost of revenue    |        |        | 12,021 |      |         |        | 14,802  |   |          |         | 27,143  | 
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     |                                                  | Gross profit             |        |        | 55,998 |      |         |        | 59,388  |   |          |         | 96,087  | 
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Operating expenses:                                                                                  |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     | Research and development                         |                          |        | 17,204 |        |      |         | 27,134 |         |   |          | 38,256  |        
|                                                                                                     | Sales and marketing                              |                          |        | 29,526 |        |      |         | 41,500 |         |   |          | 72,888  |        
|                                                                                                     | General and administrative                       |                          |        | 8,545  |        |      |         | 10,270 |         |   |          | 13,252  |        
|                                                                                                     | Amortization of other non-current assets         |                          |        | 578    |        |      |         | 796    |         |   |          | 10,115  |        
|                                                                                                     | Restructuring (Note 4)                           |                          |        |       |        |      |         | 20,525 |         |   |          | 20,763  |        
|                                                                                                     | Impairment of goodwill                           |                          |        |       |        |      |         |       |         |   |          | 276,808 |        
|                                                                                                     | Adjustment of acquisition liabilities            |                          |        | (600   | )      |      |         |       |         |   |          |        |        
|                                                                                                     | Impairment of intangible assets and fixed assets |                          |        |       |        |      |         | 3,271  |         |   |          | 32,336  |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     |                                                  | Total operating expenses |        |        | 55,253 |      |         |        | 103,496 |   |          |         | 464,418 | 
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Income (loss) from operations                                                                        |                                                  |                          | 745    |        |        |      | (44,108 | )      |         |   | (368,331 | )      
|Interest income, net                                                                                 |                                                  |                          | 286    |        |        |      | 483     |        |         |   | 1,069    |        
|Net exchange (loss) gain                                                                             |                                                  |                          | (273   | )      |        |      | 337     |        |         |   | (502     | )      
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Income (loss) before provision for income taxes (Note 16)                                            |                                                  |                          | 758    |        |        |      | (43,288 | )      |         |   | (367,764 | )      
|Provision for income taxes (Note 16)                                                                 |                                                  |                          | 566    |        |        |      | 948     |        |         |   | 1,543    |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Net income (loss)                                                                                    |                                                  | $                        | 192    |        |        | $    | (44,236 | )      |         | $ | (369,307 | )      
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Basic net income (loss) per Ordinary Share and per ADS                                               |                                                  | $                        | 0.01   |        |        | $    | (1.33   | )      |         | $ | (11.58   | )      
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Shares used in computing basic net income (loss) per Ordinary                                        |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|                                                                                                     | Share and per ADS (in thousands)                 |                          |        | 34,570 |        |      |         | 33,335 |         |   |          | 31,890  |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Diluted net income (loss) per Ordinary Share and per ADS                                             |                                                  | $                        | 0.01   |        |        | $    | (1.33   | )      |         | $ | (11.58   | )      
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        
|Shares used in computing diluted net income (loss) per Ordinary
    Share and per ADS (in thousands) |                                                  |                          | 36,333 |        |        |      | 33,335  |        |         |   | 31,890   |        
|                                                                                                     |                                                  |                          |        |        |        |      |         |        |         |   |          |        



F-3



---



##### Table of Contents



IONA TECHNOLOGIES PLC





CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


(U.S. dollars in thousands, except share data)


|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |               |  |   |          |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------------ |  | --------- | ---------- | ------- |  | ---------- | -- | ----------- |  | ------------ | ------- | ------------- |  | - | -------- | - |  | - | ------ | - |  | - | -------- | -
|                                                                                     |  |           |            |         |  | Additional |    | Accumulated |  | Deferred     |         | Total        
|                                                                                     |  | Number of |            | Share   |  | Paid-In    |    | Earnings    |  | Stock-Based  |         | Shareholders
|                                                                                     |  | Shares    |            | Capital |  | Capital    |    | (Deficit)   |  | Compensation |         | Equity       
|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |              
|Balance at December 31, 2001                                                         |  |           | 27,816,711 |         |  | $          | 80 |             |  | $            | 427,128 |               |  | $ | (46,620  | ) |  | $ | (4,822 | ) |  | $ | 375,766  |  
|Amortization of deferred stock-based compensation(a)                                 |  |           |           |         |  |            |   |             |  |              |        |               |  |   |         |   |  |   | 1,230  |   |  |   | 1,230    |  
|Employee share purchase plan                                                         |  |           | 331,205    |         |  |            | 1  |             |  |              | 1,985   |               |  |   |         |   |  |   |       |   |  |   | 1,986    |  
|Issuance of Ordinary Shares in connection with Secondary Offering                    |  |           | 4,600,000  |         |  |            | 10 |             |  |              | 65,379  |               |  |   |         |   |  |   |       |   |  |   | 65,389   |  
|Expense of Ordinary Shares issued in connection with Secondary
    Offering          |  |           |           |         |  |            |   |             |  |              | (1,997  | )             |  |   |         |   |  |   |       |   |  |   | (1,997   | )
|Issuance of Ordinary Shares in connection with acquisitions                          |  |           |           |         |  |            |   |             |  |              | 1,219   |               |  |   |         |   |  |   |       |   |  |   | 1,219    |  
|Reversal of deferred stock-based compensation on expiry or
    forfeiture of options |  |           |           |         |  |            |   |             |  |              | (3,168  | )             |  |   |         |   |  |   | 3,168  |   |  |   |         |  
|Issuance of Ordinary Shares on exercise of options, net(a)                           |  |           | 87,052     |         |  |            |   |             |  |              | 619     |               |  |   |         |   |  |   |       |   |  |   | 619      |  
|Net loss                                                                             |  |           |           |         |  |            |   |             |  |              |        |               |  |   | (369,307 | ) |  |   |       |   |  |   | (369,307 | )
|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |               |  |   |          |   |  |   |        |   |  |   |          |  
|Balance at December 31, 2002                                                         |  |           | 32,834,968 |         |  |            | 91 |             |  |              | 491,165 |               |  |   | (415,927 | ) |  |   | (424   | ) |  |   | 74,905   |  
|Amortization of deferred stock-based compensation(a)                                 |  |           |           |         |  |            |   |             |  |              |        |               |  |   |         |   |  |   | 199    |   |  |   | 199      |  
|Employee share purchase plan                                                         |  |           | 325,819    |         |  |            | 1  |             |  |              | 576     |               |  |   |         |   |  |   |       |   |  |   | 577      |  
|Reversal of deferred stock-based compensation on expiry or
    forfeiture of options |  |           |           |         |  |            |   |             |  |              | (146    | )             |  |   |         |   |  |   | 146    |   |  |   |         |  
|Issuance of Ordinary Shares on exercise of options(a)                                |  |           | 844,920    |         |  |            | 2  |             |  |              | 1,665   |               |  |   |         |   |  |   |       |   |  |   | 1,667    |  
|Net loss                                                                             |  |           |           |         |  |            |   |             |  |              |        |               |  |   | (44,236  | ) |  |   |       |   |  |   | (44,236  | )
|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |               |  |   |          |   |  |   |        |   |  |   |          |  
|Balance at December 31, 2003                                                         |  |           | 34,005,707 |         |  |            | 94 |             |  |              | 493,260 |               |  |   | (460,163 | ) |  |   | (79    | ) |  |   | 33,112   |  
|Amortization of deferred stock-based compensation(a)                                 |  |           |           |         |  |            |   |             |  |              |        |               |  |   |         |   |  |   | 38     |   |  |   | 38       |  
|Employee share purchase plan                                                         |  |           | 178,255    |         |  |            | 1  |             |  |              | 393     |               |  |   |         |   |  |   |       |   |  |   | 394      |  
|Reversal of deferred stock-based compensation on expiry or
    forfeiture of options |  |           |           |         |  |            |   |             |  |              | (41     | )             |  |   |         |   |  |   | 41     |   |  |   |         |  
|Issuance of Ordinary Shares on exercise of options(a)                                |  |           | 619,639    |         |  |            | 1  |             |  |              | 1,225   |               |  |   |         |   |  |   |       |   |  |   | 1,226    |  
|Net income                                                                           |  |           |           |         |  |            |   |             |  |              |        |               |  |   | 192      |   |  |   |       |   |  |   | 192      |  
|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |               |  |   |          |   |  |   |        |   |  |   |          |  
|Balance at December 31, 2004                                                         |  |           | 34,803,601 |         |  | $          | 96 |             |  | $            | 494,837 |               |  | $ | (459,971 | ) |  | $ |       |   |  | $ | 34,962   |  
|                                                                                     |  |           |            |         |  |            |    |             |  |              |         |               |  |   |          |   |  |   |        |   |  |   |          |  



|    |                                 
|--- | --------------------------------
|(a) | See Note 13 to these statements.



F-4



---



##### Table of Contents



IONA TECHNOLOGIES PLC





CONSOLIDATED STATEMENTS OF CASH FLOWS


(U.S. dollars in thousands)


|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |          |         |          |         |  
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------- | ------------------------------------ | --------------------------------------------------- | ------ | ------- | ------ | ------- | ------ | ------- | ------ | -------- | ------- | -------- | ------- | -
|                                                      |                                                                                                        | Year Ended December 31,                                        
|                                                      |                                                                                                        |                                                                
|                                                      |                                                                                                        | 2004                                                            |                                      | 2003                                                |        | 2002   
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                 |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      | Net income (loss)                                                                                      |                                                                 | $                                    | 192                                                 |        |         | $      | (44,236 | )      |         | $      | (369,307 | )      
|                                                      | Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities: |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |          |        
|                                                      |                                                                                                        | Depreciation and amortization                                   |                                      |                                                     | 3,060  |         |        |         | 5,462  |         |        |          | 17,717  |         
|                                                      |                                                                                                        | Stock-based compensation                                        |                                      |                                                     | 38     |         |        |         | 199    |         |        |          | 1,230   |         
|                                                      |                                                                                                        | Loss (profit) on marketable securities                          |                                      |                                                     | 138    |         |        |         | 15     |         |        |          | (204    | )       
|                                                      |                                                                                                        | Loss on disposal of property and equipment                      |                                      |                                                     | 50     |         |        |         |       |         |        |          |        |         
|                                                      |                                                                                                        | Impairment of intangible assets and fixed assets and technology |                                      |                                                     |       |         |        |         | 3,271  |         |        |          | 32,336  |         
|                                                      |                                                                                                        | Impairment of goodwill                                          |                                      |                                                     |       |         |        |         |       |         |        |          | 276,808 |         
|                                                      |                                                                                                        | Changes in operating assets and liabilities:                    |                                      |                                                     |        |         |        |         |        |         |        |          |         |         
|                                                      |                                                                                                        |                                                                 | Restricted cash deposits             |                                                     |        | 250     |        |         |        | (2,522  | )      |          |         | (145     | )      
|                                                      |                                                                                                        |                                                                 | Purchase of marketable securities    |                                                     |        | (24,284 | )      |         |        | (59,210 | )      |          |         | (145,790 | )      
|                                                      |                                                                                                        |                                                                 | Sale of marketable securities        |                                                     |        | 25,800  |        |         |        | 84,357  |        |          |         | 111,964  |        
|                                                      |                                                                                                        |                                                                 | Accounts receivable                  |                                                     |        | 10,343  |        |         |        | 6,478   |        |          |         | 14,474   |        
|                                                      |                                                                                                        |                                                                 | Prepaid expenses                     |                                                     |        | 936     |        |         |        | 1,517   |        |          |         | (165     | )      
|                                                      |                                                                                                        |                                                                 | Other assets                         |                                                     |        | (617    | )      |         |        | 1,083   |        |          |         | (519     | )      
|                                                      |                                                                                                        |                                                                 | Accounts payable                     |                                                     |        | 119     |        |         |        | 36      |        |          |         | (982     | )      
|                                                      |                                                                                                        |                                                                 | Accrued payroll and related expenses |                                                     |        | (1,726  | )      |         |        | 3,122   |        |          |         | (4,031   | )      
|                                                      |                                                                                                        |                                                                 | Other liabilities                    |                                                     |        | (6,724  | )      |         |        | (878    | )      |          |         | 6,169    |        
|                                                      |                                                                                                        |                                                                 | Deferred revenue                     |                                                     |        | (2,731  | )      |         |        | (2,053  | )      |          |         | (6,389   | )      
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      |                                                                                                        |                                                                 |                                      | Net cash provided by (used in) operating activities |        | $       | 4,844  |         |        | $       | (3,359 | )        |         | $        | (66,834 | )
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|CASH FLOWS FROM INVESTING ACTIVITIES:                 |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      |                                                                                                        | Purchase of property and equipment                              |                                      | $                                                   | (1,122 | )       |        | $       | (1,248 | )       |        | $        | (5,205  | )       
|                                                      |                                                                                                        | Purchase of other non-current assets                            |                                      |                                                     | (176   | )       |        |         | (110   | )       |        |          | (180    | )       
|                                                      |                                                                                                        | Proceeds from disposal of property and equipment                |                                      |                                                     | 4      |         |        |         | 112    |         |        |          |        |         
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      |                                                                                                        |                                                                 |                                      | Net cash used in investing activities               |        | $       | (1,294 | )       |        | $       | (1,246 | )        |         | $        | (5,385  | )
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|CASH FLOWS FROM FINANCING ACTIVITIES:                 |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      |                                                                                                        | Issuance of shares, net of issuance costs                       |                                      | $                                                   | 1,620  |         |        | $       | 2,244  |         |        | $        | 65,997  |         
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      |                                                                                                        |                                                                 |                                      | Net cash provided by financing activities           |        | $       | 1,620  |         |        | $       | 2,244  |          |         | $        | 65,997  |  
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  |                                                                                                        | $                                                               | 5,170                                |                                                     |        | $       | (2,361 | )       |        | $       | (6,222 | )       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD      |                                                                                                        |                                                                 | 19,926                               |                                                     |        |         | 22,287 |         |        |         | 28,509 |         
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|CASH AND CASH EQUIVALENTS AT END OF PERIOD            |                                                                                                        | $                                                               | 25,096                               |                                                     |        | $       | 19,926 |         |        | $       | 22,287 |         
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:     |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      | Income taxes paid                                                                                      |                                                                 | $                                    | 609                                                 |        |         | $      | 874     |        |         | $      | 938      |        
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION: |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         
|                                                      | Shares and options issued in connection with acquisitions                                              |                                                                 | $                                    |                                                    |        |         | $      |        |        |         | $      | 1,219    |        
|                                                      |                                                                                                        |                                                                 |                                      |                                                     |        |         |        |         |        |         |        |         





F-5



---



##### Table of Contents



IONA TECHNOLOGIES PLC





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                                                
|-- | ---------------------------------------------------------------
|1. | Organization and Summary of Significant Accounting
    Policies



| |             
| | ------------
| | Organization





| |                                                      
| | -----------------------------------------------------
| | Basis of Presentation and Principles of Consolidation







| |                             
| | ----------------------------
| | Companies Acts, 1963 to 2003





| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                    
| | -------------------
| | Revenue Recognition



F-6



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






| |   |                                              
| | - | ---------------------------------------------
| |  | persuasive evidence of an arrangement exists;
|
| |  | delivery has occurred;                       
|
| |  | fee is fixed or determinable; and            
|
| |  | collectibility is probable.                  









| |                                 
| | --------------------------------
| | Allowances for Doubtful Accounts



|                             |                                 |              |   |           |  |               |   |            |  |  |   |     |  |  |   |       | 
|---------------------------- | ------------------------------- | ------------ | - | --------- |  | ------------- | - | ---------- |  |  | - | --- |  |  | - | ----- | 
|                             |                                 | Balance at   |   |           |  |               |   | Balance at
|                             |                                 | Beginning of |   |           |  |               |   | End of    
|                             |                                 | Period       |   | Additions |  | Deduction (A) |   | Period    
|                             |                                 |              |   |           |  |               |   |           
|Year ended December 31, 2004 |                                 |              |   |           |  |               |   |            |  |  |   |     |  |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 1,093     |  |               | $ | 188        |  |  | $ | 208 |  |  | $ | 1,073 | 
|Year ended December 31, 2003 |                                 |              |   |           |  |               |   |            |  |  |   |     |  |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 1,132     |  |               | $ | 857        |  |  | $ | 896 |  |  | $ | 1,093 | 
|Year ended December 31, 2002 |                                 |              |   |           |  |               |   |            |  |  |   |     |  |  |   |      
|                             | Allowance for doubtful accounts |              | $ | 1,321     |  |               |   |           |  |  | $ | 189 |  |  | $ | 1,132 | 






F-7



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                
| | ---------------
| | Cost of Revenue





| |                 
| | ----------------
| | Cash Equivalents





| |                      
| | ---------------------
| | Marketable Securities





| |                         
| | ------------------------
| | Research and Development





| |         
| | --------
| | Goodwill





F-8



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                         
| | ------------------------
| | Other Non-Current Assets







| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | significant underperformance relative to expected historical or
    projected future operating results;                    
|
| |  | significant changes in the manner of the Companys use of
    the acquired assets or the strategy for our overall business;
|
| |  | significant negative industry or economic trends;                                                                          
|
| |  | significant decline in the Companys stock price for a
    sustained period; and                                           
|
| |  | significant decline in the Companys market capitalization
    relative to net book value.                                 







| |                       
| | ----------------------
| | Property and Equipment



|                       |  |  |                | 
|---------------------- |  |  | -------------- | 
|Computer equipment     |  |  | 3 years        | 
|Office equipment       |  |  | 5 years        | 
|Furniture and fixtures |  |  | 3 to 10  years | 









| |                           
| | --------------------------
| | Software Development Costs



F-9



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)








| |                             
| | ----------------------------
| | Concentration of Credit Risk







| |                     
| | --------------------
| | Compensated Absences





| |                            
| | ---------------------------
| | Accounting for Income Taxes





| |                         
| | ------------------------
| | Stock-Based Compensation





F-10



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|                        |  |      |                |      |  |      |                |   |  |  |       |  
|----------------------- |  | ---- | -------------- | ---- |  | ---- | -------------- | - |  |  | ----- | -
|                        |  | 2004 |                | 2003 |  | 2002
|                        |  |      |                |      |  |     
|Risk-free interest rate |  |      | 4.00           | %    |  |      | 4.25           | % |  |  | 4.00  | %
|Expected dividend yield |  |      |               |      |  |      |               |   |  |  |      |  
|Expected volatility     |  |      | 0.861 to 0.999 |      |  |      | 0.885 to 1.102 |   |  |  | 1.150 |  
|Expected life (years)   |  |      | 3.5 to 4       |      |  |      | 5              |   |  |  | 5     |  



|                        |  |      |                |      |  |      |                |   |  |  |           |  
|----------------------- |  | ---- | -------------- | ---- |  | ---- | -------------- | - |  |  | --------- | -
|                        |  | 2004 |                | 2003 |  | 2002
|                        |  |      |                |      |  |     
|Risk-free interest rate |  |      | 2              | %    |  |      | 2              | % |  |  | 2         | %
|Expected dividend yield |  |      |               |      |  |      |               |   |  |  |          |  
|Expected volatility     |  |      | 0.886 to 0.999 |      |  |      | 1.060 to 1.102 |   |  |  | 1.150     |  
|Expected life           |  |      | 6 months       |      |  |      | 6 months       |   |  |  | 6  months |  



|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | -------------------------------------- | ------- | ----- | - | ---- | ------- | ----- | - | - | -------- | ------ | -
|                                                                                                                                                    |                     | Year Ended December 31,               
|                                                                                                                                                    |                     |                                       
|                                                                                                                                                    |                     | 2004                                   |         | 2003  |   | 2002
|                                                                                                                                                    |                     |                                        |         |       |   |     
|                                                                                                                                                    |                     | (U.S. dollars in thousands, except per
|                                                                                                                                                    |                     | share data)                           
|Net income (loss), as reported                                                                                                                      |                     | $                                      | 192     |       |   | $    | (44,236 | )     |   | $ | (369,307 | )     
|Add: Stock-based compensation expense included in reported net
    income (loss), net of related tax effects                                        |                     |                                        | 38      |       |   |      | 199     |       |   |   | 1,230    |       
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                     |                                        | (21,299 | )     |   |      | (33,645 | )     |   |   | (59,916  | )     
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       
|Pro forma net loss                                                                                                                                  |                     | $                                      | (21,069 | )     |   | $    | (77,682 | )     |   | $ | (427,993 | )     
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       
|Net income (loss) per share:                                                                                                                        |                     |                                        |         |       |   |      |         |       |   |   |          |       
|                                                                                                                                                    | Basic-as reported   |                                        | $       | 0.01  |   |      | $       | (1.33 | ) |   | $        | (11.58 | )
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       
|                                                                                                                                                    | Basic-pro forma     |                                        | $       | (0.61 | ) |      | $       | (2.33 | ) |   | $        | (13.42 | )
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       
|                                                                                                                                                    | Diluted-as reported |                                        | $       | 0.01  |   |      | $       | (1.33 | ) |   | $        | (11.58 | )
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       
|                                                                                                                                                    | Diluted-pro forma   |                                        | $       | (0.61 | ) |      | $       | (2.33 | ) |   | $        | (13.42 | )
|                                                                                                                                                    |                     |                                        |         |       |   |      |         |       |   |   |          |       



F-11



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|                           |       |                  |    |      |  |      |     |     |  |   |     |       | 
|-------------------------- | ----- | ---------------- | -- | ---- |  | ---- | --- | --- |  | - | --- | ----- | 
|                           |       | Year Ended      
|                           |       | December 31,    
|                           |       |                 
|                           |       | 2004             |    | 2003 |  | 2002
|                           |       |                  |    |      |  |     
|                           |       | (U.S. dollars in
|                           |       | thousands)      
|Cost of services           |       | $                |   |      |  | $    |    |     |  | $ | 283 |      
|Research and development   |       |                  | 38 |      |  |      | 199 |     |  |   | 803 |      
|Sales and marketing        |       |                  |   |      |  |      |    |     |  |   | 122 |      
|General and administrative |       |                  |   |      |  |      |    |     |  |   | 22  |      
|                           |       |                  |    |      |  |      |     |     |  |   |     |      
|                           | Total |                  | $  | 38   |  |      | $   | 199 |  |   | $   | 1,230 | 
|                           |       |                  |    |      |  |      |     |     |  |   |     |      



| |                          
| | -------------------------
| | Defined Contribution Plan





| |                                  
| | ---------------------------------
| | Advertising and Promotion Expense





| |                          
| | -------------------------
| | Accounting Pronouncements

-Based Payment


F-12



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)








|   |                      
|-- | ---------------------
|2. | Marketable Securities



|                                  |                             |                             |        |             |  |        |      |      |   |   |        |        | 
|--------------------------------- | --------------------------- | --------------------------- | ------ | ----------- |  | ------ | ---- | ---- | - | - | ------ | ------ | 
|                                  |                             | As of December 31, 2004    
|                                  |                             |                            
|                                  |                             |                             |        | Unrealized  |  | Market
|                                  |                             | Cost                        |        | Gain (loss) |  | Value 
|                                  |                             |                             |        |             |  |       
|                                  |                             | (U.S. dollars in thousands)
|Commercial paper                  |                             | $                           | 8,154  |             |  | $      |     |      |   | $ | 8,154  |       
|Corporate bonds                   |                             |                             | 3,923  |             |  |        | (11  | )    |   |   | 3,912  |       
|U.S. government agency securities |                             |                             | 19,386 |             |  |        | (128 | )    |   |   | 19,258 |       
|                                  |                             |                             |        |             |  |        |      |      |   |   |        |       
|                                  | Total marketable securities |                             | $      | 31,463      |  |        | $    | (139 | ) |   | $      | 31,324 | 
|                                  |                             |                             |        |             |  |        |      |      |   |   |        |       

|                                  |                             |                             |        |             |  |        |     |     |   |   |        |        | 
|--------------------------------- | --------------------------- | --------------------------- | ------ | ----------- |  | ------ | --- | --- | - | - | ------ | ------ | 
|                                  |                             | As of December 31, 2003    
|                                  |                             |                            
|                                  |                             |                             |        | Unrealized  |  | Market
|                                  |                             | Cost                        |        | Gain (loss) |  | Value 
|                                  |                             |                             |        |             |  |       
|                                  |                             | (U.S. dollars in thousands)
|Commercial paper                  |                             | $                           | 11,591 |             |  | $      |    |     |   | $ | 11,591 |       
|Corporate bonds                   |                             |                             | 5,979  |             |  |        | 1   |     |   |   | 5,980  |       
|U.S. government agency securities |                             |                             | 15,450 |             |  |        | (43 | )   |   |   | 15,407 |       
|                                  |                             |                             |        |             |  |        |     |     |   |   |        |       
|                                  | Total marketable securities |                             | $      | 33,020      |  |        | $   | (42 | ) |   | $      | 32,978 | 
|                                  |                             |                             |        |             |  |        |     |     |   |   |        |       



|                                            |  |                             |      |      |  |      |      |   |  |   |     |  
|------------------------------------------- |  | --------------------------- | ---- | ---- |  | ---- | ---- | - |  | - | --- | -
|                                            |  | 2004                        |      | 2003 |  | 2002
|                                            |  |                             |      |      |  |     
|                                            |  | (U.S. dollars in thousands)
|Unrealized (loss) gain at beginning of year |  | $                           | (42  | )    |  | $    | 62   |   |  | $ | 102 |  
|Included in net income (loss) for the year  |  |                             | (97  | )    |  |      | (104 | ) |  |   | (40 | )
|                                            |  |                             |      |      |  |      |      |   |  |   |     |  
|Unrealized (loss) gain at end of year       |  | $                           | (139 | )    |  | $    | (42  | ) |  | $ | 62  |  
|                                            |  |                             |      |      |  |      |      |   |  |   |     |  



|   |             
|-- | ------------
|3. | Acquisitions



| |                           
| | --------------------------
| | Netfish Technologies, Inc.



F-13



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






| |                               
| | ------------------------------
| | Object-Oriented Concepts, Inc.









|   |              
|-- | -------------
|4. | Restructuring









F-14



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|                              |  |                             |        |           |  |       |         |   |  |   |         |  
|----------------------------- |  | --------------------------- | ------ | --------- |  | ----- | ------- | - |  | - | ------- | -
|                              |  | Excess Facilities           |        | Severance |  | Total
|                              |  |                             |        |           |  |      
|                              |  | (U.S. dollars in thousands)
|Balance at December 31, 2001  |  | $                           | 1,366  |           |  |       |        |   |  | $ | 1,366   |  
|2002 charges                  |  |                             | 8,512  |           |  |       | 12,251  |   |  |   | 20,763  |  
|Cash outlays in 2002          |  |                             | (2,653 | )         |  |       | (9,280  | ) |  |   | (11,933 | )
|                              |  |                             |        |           |  |       |         |   |  |   |         |  
|Balance at December 31, 2002  |  |                             | 7,225  |           |  |       | 2,971   |   |  |   | 10,196  |  
|2003 charges                  |  |                             | 9,491  |           |  |       | 11,034  |   |  |   | 20,525  |  
|Cash outlays in 2003          |  |                             | (5,676 | )         |  |       | (11,141 | ) |  |   | (16,817 | )
|                              |  |                             |        |           |  |       |         |   |  |   |         |  
|Balance at December 31, 2003  |  |                             | 11,040 |           |  |       | 2,864   |   |  |   | 13,904  |  
|2004 charges                  |  |                             |       |           |  |       | 560     |   |  |   | 560     |  
|Cash outlays in 2004          |  |                             | (3,469 | )         |  |       | (2,503  | ) |  |   | (5,972  | )
|2004 adjustments in estimates |  |                             |       |           |  |       | (560    | ) |  |   | (560    | )
|                              |  |                             |        |           |  |       |         |   |  |   |         |  
|Balance at December 31, 2004  |  | $                           | 7,571  |           |  | $     | 361     |   |  | $ | 7,932   |  
|                              |  |                             |        |           |  |       |         |   |  |   |         |  



|   |                
|-- | ---------------
|5. | Restricted Cash



F-15



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|   |                          
|-- | -------------------------
|6. | Other Accrued Liabilities



|                                |  |                    |        |      |  |   |        | 
|------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | 
|                                |  | As of December 31,
|                                |  |                   
|                                |  | 2004               |        | 2003
|                                |  |                    |        |     
|                                |  | (U.S. dollars in  
|                                |  | thousands)        
|Restructuring (Note 4)          |  | $                  | 5,517  |      |  | $ | 9,394  | 
|Income and other taxes payable  |  |                    | 3,997  |      |  |   | 3,899  | 
|Legal Costs                     |  |                    | 783    |      |  |   | 852    | 
|Other                           |  |                    | 3,837  |      |  |   | 4,618  | 
|                                |  |                    |        |      |  |   |        | 
|Total other accrued liabilities |  | $                  | 14,134 |      |  | $ | 18,763 | 
|                                |  |                    |        |      |  |   |        | 



|   |                                    
|-- | -----------------------------------
|7. | Fair Value of Financial Instruments





|                              |  |                             |        |       |  |          |        |       |  |   |        |  |  |   |        | 
|----------------------------- |  | --------------------------- | ------ | ----- |  | -------- | ------ | ----- |  | - | ------ |  |  | - | ------ | 
|                              |  | As of December 31,         
|                              |  |                            
|                              |  | 2004                        |        | 2003 
|                              |  |                             |        |      
|                              |  | (U.S. dollars in thousands)
|                              |  | Carrying                    |        | Fair  |  | Carrying |        | Fair 
|                              |  | Amount                      |        | Value |  | Amount   |        | Value
|                              |  |                             |        |       |  |          |        |      
|Non Derivatives               |  |                             |        |       |  |          |        |       |  |   |        |  |  |   |        | 
|Current assets:               |  |                             |        |       |  |          |        |       |  |   |        |  |  |   |        | 
|Cash and cash equivalents     |  | $                           | 25,096 |       |  | $        | 25,096 |       |  | $ | 19,926 |  |  | $ | 19,926 | 
|Restricted cash               |  |                             | 3,495  |       |  |          | 3,495  |       |  |   | 3,745  |  |  |   | 3,745  | 
|Marketable securitiestrading |  |                             | 31,324 |       |  |          | 31,324 |       |  |   | 32,978 |  |  |   | 32,978 | 
|Accounts receivable           |  |                             | 12,912 |       |  |          | 12,912 |       |  |   | 23,255 |  |  |   | 23,255 | 
|Current liabilities:          |  |                             |        |       |  |          |        |       |  |   |        |  |  |   |        | 
|Accounts payable              |  |                             | 2,602  |       |  |          | 2,602  |       |  |   | 2,483  |  |  |   | 2,483  | 
|Other accrued liabilities     |  |                             | 14,134 |       |  |          | 14,134 |       |  |   | 18,763 |  |  |   | 18,763 | 





|   |                            
|-- | ---------------------------
|8. | Operating Lease Commitments



F-16



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                         |                              |   |        |        | 
|------------------------ | ---------------------------- | - | ------ | ------ | 
|Year ending December 31, |                              |  
|2005                     |                              | $ | 6,725  |       
|2006                     |                              |   | 5,053  |       
|2007                     |                              |   | 3,409  |       
|2008                     |                              |   | 3,329  |       
|2009                     |                              |   | 3,150  |       
|Thereafter               |                              |   | 10,898 |       
|                         |                              |   |        |       
|                         | Total minimum lease payments |   | $      | 32,564 | 
|                         |                              |   |        |       







|   |                         
|-- | ------------------------
|9. | Other Non-Current Assets



|                                   |                                     |                    |        |       |  |   |        |       | 
|---------------------------------- | ----------------------------------- | ------------------ | ------ | ----- |  | - | ------ | ----- | 
|                                   |                                     | As of December 31,
|                                   |                                     |                   
|                                   |                                     | 2004               |        | 2003 
|                                   |                                     |                    |        |      
|                                   |                                     | (U.S. dollars in  
|                                   |                                     | thousands)        
|Purchased technology               |                                     | $                  | 3,429  |       |  | $ | 3,253  |      
|Security deposits and other assets |                                     |                    | 134    |       |  |   | 231    |      
|                                   |                                     |                    |        |       |  |   |        |      
|                                   | Total other non-current assets      |                    | $      | 3,563 |  |   | $      | 3,484 | 
|Accumulated amortization           |                                     |                    | (3,122 | )     |  |   | (2,544 | )    
|                                   |                                     |                    |        |       |  |   |        |      
|                                   | Total other non-current assets, net |                    | $      | 441   |  |   | $      | 940   | 
|                                   |                                     |                    |        |       |  |   |        |      



|    |                                                                        
|--- | -----------------------------------------------------------------------
|10. | Goodwill, Indefinite Lived Intangible, and Other Non-Current
    Assets









F-17



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                         |     |                    |        |      |  |   |        |     | 
|------------------------ | --- | ------------------ | ------ | ---- |  | - | ------ | --- | 
|                         |     | As of December 31,
|                         |     |                   
|                         |     | 2004               |        | 2003
|                         |     |                    |        |     
|                         |     | (U.S. dollars in  
|                         |     | thousands)        
|Purchased Technology     |     | $                  | 3,429  |      |  | $ | 3,373  |    
|Impairment Loss          |     |                    |       |      |  |   | (80    | )  
|Accumulated Amortization |     |                    | (3,122 | )    |  |   | (2,584 | )  
|                         |     |                    |        |      |  |   |        |    
|                         | Net |                    | $      | 307  |  |   | $      | 709 | 
|                         |     |                    |        |      |  |   |        |    





F-18



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|    |                       
|--- | ----------------------
|11. | Property and Equipment



|                         |                                   |                    |         |        |  |   |         |        | 
|------------------------ | --------------------------------- | ------------------ | ------- | ------ |  | - | ------- | ------ | 
|                         |                                   | As of December 31,
|                         |                                   |                   
|                         |                                   | 2004               |         | 2003  
|                         |                                   |                    |         |       
|                         |                                   | (U.S. dollars in  
|                         |                                   | thousands)        
|Computer equipment       |                                   | $                  | 13,762  |        |  | $ | 13,204  |       
|Office equipment         |                                   |                    | 653     |        |  |   | 648     |       
|Furniture and fixtures   |                                   |                    | 7,297   |        |  |   | 6,783   |       
|                         |                                   |                    |         |        |  |   |         |       
|                         | Total property and equipment      |                    | $       | 21,712 |  |   | $       | 20,635 | 
|Accumulated depreciation |                                   |                    | (16,861 | )      |  |   | (14,370 | )     
|                         |                                   |                    |         |        |  |   |         |       
|                         | Total property and equipment, net |                    | $       | 4,851  |  |   | $       | 6,265  | 
|                         |                                   |                    |         |        |  |   |         |       





|    |                                                      
|--- | -----------------------------------------------------
|12. | Redeemable Preference Shares and Shareholders Equity

 








|    |                    
|--- | -------------------
|13. | Share Option Scheme



F-19



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)












F-20



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                |  |                               |           |                |  |           |      |                |  |           |            |                |  |   |       |  |  |  |            |   |  |   |       | 
|------------------------------- |  | ----------------------------- | --------- | -------------- |  | --------- | ---- | -------------- |  | --------- | ---------- | -------------- |  | - | ----- |  |  |  | ---------- | - |  | - | ----- | 
|                                |  | As of Year Ended December 31,
|                                |  |                              
|                                |  | 2004                          |           | 2003           |  | 2002     
|                                |  |                               |           |                |  |          
|                                |  |                               |           | Weighted-      |  |           |      | Weighted-      |  |           |            | Weighted-     
|                                |  | Number of                     |           | Average        |  | Number of |      | Average        |  | Number of |            | Average       
|                                |  | Options                       |           | Exercise Price |  | Options   |      | Exercise Price |  | Options   |            | Exercise Price
|                                |  |                               |           |                |  |           |      |                |  |           |            |               
|Outstandingbeginning of period |  |                               | 4,103,777 |                |  | $         | 3.87 |                |  |           | 820,994    |                |  | $ | 14.57 |  |  |  | 7,465,061  |   |  | $ | 28.33 | 
|Granted                         |  |                               | 3,075,250 |                |  |           | 5.54 |                |  |           | 5,817,534  |                |  |   | 2.19  |  |  |  | 2,875,950  |   |  |   | 8.01  | 
|Forfeitures                     |  |                               | (954,049  | )              |  |           | 4.22 |                |  |           | (1,689,831 | )              |  |   | 4.21  |  |  |  | (9,432,965 | ) |  |   | 23.58 | 
|Exercised                       |  |                               | (619,639  | )              |  |           | 2.09 |                |  |           | (844,920   | )              |  |   | 1.98  |  |  |  | (87,052    | ) |  |   | 7.11  | 
|                                |  |                               |           |                |  |           |      |                |  |           |            |                |  |   |       |  |  |  |            |   |  |   |       | 
|Outstandingend of period       |  |                               | 5,605,339 |                |  | $         | 4.93 |                |  |           | 4,103,777  |                |  | $ | 3.87  |  |  |  | 820,994    |   |  | $ | 14.57 | 
|                                |  |                               |           |                |  |           |      |                |  |           |            |                |  |   |       |  |  |  |            |   |  |   |       | 
|Exercisable at end of period    |  |                               | 1,836,493 |                |  | $         | 6.41 |                |  |           | 1,171,027  |                |  | $ | 7.55  |  |  |  | 339,889    |   |  | $ | 20.55 | 
|                                |  |                               |           |                |  |           |      |                |  |           |            |                |  |   |       |  |  |  |            |   |  |   |       | 

|                                                                                                                                                                            |  |                               |      |                |  |       |      |                |  |       |      |                |  |   |      |  |  |   |      |  |  |   |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ---- | -------------- |  | ----- | ---- | -------------- |  | ----- | ---- | -------------- |  | - | ---- |  |  | - | ---- |  |  | - | ---- | 
|                                                                                                                                                                            |  | As of Year Ended December 31,
|                                                                                                                                                                            |  |                              
|                                                                                                                                                                            |  | 2004                          |      | 2003           |  | 2002 
|                                                                                                                                                                            |  |                               |      |                |  |      
|                                                                                                                                                                            |  |                               |      | Weighted-      |  |       |      | Weighted-      |  |       |      | Weighted-     
|                                                                                                                                                                            |  | Fair                          |      | Average        |  | Fair  |      | Average        |  | Fair  |      | Average       
|                                                                                                                                                                            |  | Value                         |      | Exercise Price |  | Value |      | Exercise Price |  | Value |      | Exercise Price
|                                                                                                                                                                            |  |                               |      |                |  |       |      |                |  |       |      |               
|Weighted-average fair value of options granted during the year
    for options whose exercise price equals the market price of the
    Ordinary Shares on the date of grant |  | $                             | 3.75 |                |  | $     | 5.54 |                |  | $     | 1.92 |                |  | $ | 2.19 |  |  | $ | 6.58 |  |  | $ | 8.01 | 



|                                                                |       |                     |           |                     |  |                |     |           |  |                |       |      |  |  |           |           |  |   |       |      | 
|--------------------------------------------------------------- | ----- | ------------------- | --------- | ------------------- |  | -------------- | --- | --------- |  | -------------- | ----- | ---- |  |  | --------- | --------- |  | - | ----- | ---- | 
|                                                                |       | Options Outstanding |           | Options Exercisable
|                                                                |       |                     |           |                    
|                                                                |       |                     |           | Weighted            |  |                |     |          
|                                                                |       |                     |           | Average             |  |                |     |          
|                                                                |       |                     |           | Remaining           |  | Weighted-      |     |           |  | Weighted-     
|                                                                |       | Number of           |           | Contractual Life    |  | Average        |     | Number of |  | Average       
|Exercise Price                                                  |       | Shares              |           | (in years)          |  | Exercise Price |     | Shares    |  | Exercise Price
|                                                                |       |                     |           |                     |  |                |     |           |  |               
|Less than $5.00 per share                                       |       |                     | 3,771,315 |                     |  |                | 8.8 |           |  | $              | 2.67  |      |  |  | 1,276,107 |           |  | $ | 2.37  |     
|Greater than $5.00 per share and less than $15.00 per
    share |       |                     | 1,703,783 |                     |  |                | 8.9 |           |  |                | 7.30  |      |  |  | 430,709   |           |  |   | 8.49  |     
|Greater than $15.00 per share                                   |       |                     | 130,241   |                     |  |                | 6.3 |           |  |                | 39.17 |      |  |  | 129,677   |           |  |   | 39.24 |     
|                                                                |       |                     |           |                     |  |                |     |           |  |                |       |      |  |  |           |           |  |   |       |     
|                                                                | Total |                     |           | 5,605,339           |  |                |     | 8.8       |  |                | $     | 4.93 |  |  |           | 1,836,493 |  |   | $     | 6.41 | 
|                                                                |       |                     |           |                     |  |                |     |           |  |                |       |      |  |  |           |           |  |   |       |     



|    |                                  
|--- | ---------------------------------
|14. | 1999 Employee Share Purchase Plan



F-21



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|    |                                             
|--- | --------------------------------------------
|15. | Net Income (Loss) Per Ordinary Share And ADS



|             |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |          |  
|------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | - | ------ |  | ---- | - | ------- | - |  | - | -------- | -
|             |                                                                                                                                       | Year Ended December 31,              
|             |                                                                                                                                       |                                      
|             |                                                                                                                                       | 2004                                  |   | 2003   |  | 2002
|             |                                                                                                                                       |                                       |   |        |  |     
|             |                                                                                                                                       | (In thousands, except per share data)
|Numerator:   |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|             | Numerator for basic and diluted net income (loss) per Ordinary
    Share and ADSincome (loss) available to Ordinary
    Shareholders |                                       | $ | 192    |  |      | $ | (44,236 | ) |  | $ | (369,307 | )
|             |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|Denominator: |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|             | Denominator for basic earnings per shareweighted-average
    Ordinary Shares and ADS                                                 |                                       |   | 34,570 |  |      |   | 33,335  |   |  |   | 31,890   |  
|             | Effect of employee stock options                                                                                                      |                                       |   | 1,763  |  |      |   |        |   |  |   |         |  
|             |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|             | Denominator for diluted net income (loss) per Ordinary Share and
    ADS                                                              |                                       |   | 36,333 |  |      |   | 33,335  |   |  |   | 31,890   |  
|             |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|             | Basic net income (loss) per Ordinary Share and ADS                                                                                    |                                       | $ | 0.01   |  |      | $ | (1.33   | ) |  | $ | (11.58   | )
|             |                                                                                                                                       |                                       |   |        |  |      |   |         |   |  |   |         
|             | Diluted net income (loss) per Ordinary Share and ADS                                                                                  |                                       | $ | 0.01   |  |      | $ | (1.33   | ) |  | $ | (11.58   | )





|    |             
|--- | ------------
|16. | Income Taxes



|              |       |                             |        |      |  |      |         |         |   |   |          |          |  
|------------- | ----- | --------------------------- | ------ | ---- |  | ---- | ------- | ------- | - | - | -------- | -------- | -
|              |       | Year Ended December 31,    
|              |       |                            
|              |       | 2004                        |        | 2003 |  | 2002
|              |       |                             |        |      |  |     
|              |       | (U.S. dollars in thousands)
|Ireland*      |       | $                           | (1,118 | )    |  | $    | (43,355 | )       |   | $ | (361,284 | )       
|Rest of World |       |                             | 1,876  |      |  |      | 67      |         |   |   | (6,480   | )       
|              |       |                             |        |      |  |      |         |         |   |   |          |         
|              | Total |                             | $      | 758  |  |      | $       | (43,288 | ) |   | $        | (367,764 | )
|              |       |                             |        |      |  |      |         |         |   |   |          |         






|  |         
|- | --------
|* | Domestic

F-22



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|          |               |                                  |   |      |     |      |   |     |     |  |   |       |       | 
|--------- | ------------- | -------------------------------- | - | ---- | --- | ---- | - | --- | --- |  | - | ----- | ----- | 
|          |               | Year Ended December 31,         
|          |               |                                 
|          |               | 2004                             |   | 2003 |     | 2002
|          |               |                                  |   |      |     |     
|          |               | (U.S. dollars in thousands)     
|Current:  |               |                                  |   |      |     |      |   |     |     |  |   |      
|          | Ireland       |                                  | $ | 92   |     |      | $ | 392 |     |  | $ | 126   |      
|          | Rest of World |                                  |   | 474  |     |      |   | 556 |     |  |   | 1,417 |      
|          |               |                                  |   |      |     |      |   |     |     |  |   |      
|          |               | Total current                    |   |      | 566 |      |   |     | 948 |  |   |       | 1,543 | 
|Deferred: |               |                                  |   |      |     |      |   |     |     |  |   |      
|          | Ireland       |                                  |   |     |     |      |   |    |     |  |   |      |      
|          | Rest of World |                                  |   |     |     |      |   |    |     |  |   |      |      
|          |               |                                  |   |      |     |      |   |     |     |  |   |      
|          |               | Total deferred                   |   |      |    |      |   |     |    |  |   |       |      | 
|          |               |                                  |   |      |     |      |   |     |     |  |   |      
|          |               | Total provision for income taxes |   | $    | 566 |      |   | $   | 948 |  |   | $     | 1,543 | 
|          |               |                                  |   |      |     |      |   |     |     |  |   |      



|                                                                                                                 |                                  |                             |      |      |  |      |        |     |  |   |         |       | 
|---------------------------------------------------------------------------------------------------------------- | -------------------------------- | --------------------------- | ---- | ---- |  | ---- | ------ | --- |  | - | ------- | ----- | 
|                                                                                                                 |                                  | Year Ended December 31,    
|                                                                                                                 |                                  |                            
|                                                                                                                 |                                  | 2004                        |      | 2003 |  | 2002
|                                                                                                                 |                                  |                             |      |      |  |     
|                                                                                                                 |                                  | (U.S. dollars in thousands)
|Income taxes computed at the Irish statutory income tax rate of
    12.5% for 2004, 12.5% for 2003, 16% for 2002 |                                  | $                           | 95   |      |  | $    | (5,411 | )   |  | $ | (58,842 | )    
|Income (loss) from Irish manufacturing operations benefited at
    lower rates                                   |                                  |                             | 25   |      |  |      | 1,047  |     |  |   | 2,649   |      
|Operating losses not utilized                                                                                    |                                  |                             | 192  |      |  |      | 4,952  |     |  |   | 7,759   |      
|Operating losses utilized                                                                                        |                                  |                             | (372 | )    |  |      |       |     |  |   |        |      
|Income (loss) subject to different rates of tax                                                                  |                                  |                             | 405  |      |  |      | (142   | )   |  |   | (1,803  | )    
|Income (loss) not subject to tax                                                                                 |                                  |                             | (37  | )    |  |      | (59    | )   |  |   | (163    | )    
|Non-deductible expenses                                                                                          |                                  |                             | 324  |      |  |      | 524    |     |  |   | 51,920  |      
|Other items                                                                                                      |                                  |                             | (66  | )    |  |      | 37     |     |  |   | 23      |      
|                                                                                                                 |                                  |                             |      |      |  |      |        |     |  |   |         |      
|                                                                                                                 | Total provision for income taxes |                             | $    | 566  |  |      | $      | 948 |  |   | $       | 1,543 | 
|                                                                                                                 |                                  |                             |      |      |  |      |        |     |  |   |         |      



|                          |                                  |                             |         |        |  |      |         |        |  |   |         |        | 
|------------------------- | -------------------------------- | --------------------------- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                          |                                  | Year Ended December 31,    
|                          |                                  |                            
|                          |                                  | 2004                        |         | 2003   |  | 2002
|                          |                                  |                             |         |        |  |     
|                          |                                  | (U.S. dollars in thousands)
|Deferred tax assets:      |                                  |                             |         |        |  |      |         |        |  |   |         |       
|                          | Net operating loss carryforwards |                             | $       | 55,629 |  |      | $       | 53,620 |  |   | $       | 41,690 | 
|                          |                                  |                             |         |        |  |      |         |        |  |   |         |       
|Total deferred tax assets |                                  |                             | 55,629  |        |  |      | 53,620  |        |  |   | 41,690  |       
|Valuation allowance       |                                  |                             | (55,629 | )      |  |      | (53,620 | )      |  |   | (41,690 | )     
|                          |                                  |                             |         |        |  |      |         |        |  |   |         |       
|Net deferred tax assets   |                                  | $                           |        |        |  | $    |        |        |  | $ |        |       
|                          |                                  |                             |         |        |  |      |         |        |  |   |         |       

F-23



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                             |                                                                           |                             |        |       |   |      |        |       |  |   |        |        | 
|---------------------------- | ------------------------------------------------------------------------- | --------------------------- | ------ | ----- | - | ---- | ------ | ----- |  | - | ------ | ------ | 
|                             |                                                                           | Year Ended December 31,    
|                             |                                                                           |                            
|                             |                                                                           | 2004                        |        | 2003  |   | 2002
|                             |                                                                           |                             |        |       |   |     
|                             |                                                                           | (U.S. dollars in thousands)
|Balance at beginning of year |                                                                           | $                           | 53,620 |       |   | $    | 41,690 |       |  | $ | 17,500 |       
|Additions:                   |                                                                           |                             |        |       |   |      |        |       |  |   |        |       
|                             | Charged to expense                                                        |                             |        | (180  | ) |      |        | 4,952 |  |   |        | 7,759  | 
|                             | Matching increase in tax value of disqualifying disposition               |                             |        | 720   |   |      |        | 160   |  |   |        | 1,877  | 
|                             | Revision to losses forward on resolution of certain tax
    uncertainties |                             |        | 1,469 |   |      |        | 6,818 |  |   |        |       | 
|                             | Related to preacquisition losses of Netfish                               |                             |        |      |   |      |        |      |  |   |        | 14,554 | 
|                             |                                                                           |                             |        |       |   |      |        |       |  |   |        |       
|Balance at end of year       |                                                                           | $                           | 55,629 |       |   | $    | 53,620 |       |  | $ | 41,690 |       
|                             |                                                                           |                             |        |       |   |      |        |       |  |   |        |       













F-24



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|    |                                    
|--- | -----------------------------------
|17. | Industry and Geographic Information







Revenues from external customers, all attributable to foreign
countries:


|                   |                    |                             |        |        |  |      |        |        |  |   |        |         | 
|------------------ | ------------------ | --------------------------- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------- | 
|                   |                    | Year Ended December 31,    
|                   |                    |                            
|                   |                    | 2004                        |        | 2003   |  | 2002
|                   |                    |                             |        |        |  |     
|                   |                    | (U.S. dollars in thousands)
|Americas           |                    | $                           | 34,860 |        |  | $    | 38,338 |        |  | $ | 75,472 |        
|European Countries |                    |                             | 22,804 |        |  |      | 24,657 |        |  |   | 33,696 |        
|Rest of World      |                    |                             | 10,355 |        |  |      | 11,195 |        |  |   | 14,062 |        
|                   |                    |                             |        |        |  |      |        |        |  |   |        |        
|                   | Consolidated total |                             | $      | 68,019 |  |      | $      | 74,190 |  |   | $      | 123,230 | 
|                   |                    |                             |        |        |  |      |        |        |  |   |        |        



Long Lived Assets:


|                    |               |                             |   |       |       |      |   |       |       |  |   |       |        | 
|------------------- | ------------- | --------------------------- | - | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ------ | 
|                    |               | As of December 31,         
|                    |               |                            
|                    |               | 2004                        |   | 2003  |       | 2002
|                    |               |                             |   |       |       |     
|                    |               | (U.S. dollars in thousands)
|Country of Domicile |               |                             |   |       |       |      |   |       |       |  |   |      
|                    | Ireland       |                             | $ | 3,498 |       |      | $ | 4,647 |       |  | $ | 8,213 |       
|Foreign Countries   |               |                             |   |       |       |      |   |       |       |  |   |      
|                    | Americas      |                             |   | 1,352 |       |      |   | 2,152 |       |  |   | 6,540 |       
|                    | Rest of World |                             |   | 442   |       |      |   | 406   |       |  |   | 931   |       
|                    |               |                             |   |       |       |      |   |       |       |  |   |      
|                    |               | Consolidated total          |   | $     | 5,292 |      |   | $     | 7,205 |  |   | $     | 15,684 | 
|                    |               |                             |   |       |       |      |   |       |       |  |   |      



|    |                           
|--- | --------------------------
|18. | Related Party Transactions



F-25



---



##### Table of Contents



IONA TECHNOLOGIES PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






F-26



---



##### Table of Contents








|         |         
|-------- | --------
|Item 19. | Exhibits

|            |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | ----- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description of Exhibit
|            |       |                       
|            | 1.1   |                        |  | Restated Articles of Association, as amended, of IONA
    Technologies PLC (filed as Exhibit 4.2 to IONAs
    Registration Statement on Form S-8 (File
    No. 333-11384) and incorporated herein by reference)                                                                                                                                                                                                          
|            | 1.2   |                        |  | Memorandum of Association, as amended, of IONA Technologies PLC
    (filed as Exhibit 3.3 to IONAs Registration Statement
    on Form F-1 (File No. 333-6396) and incorporated
    herein by reference)                                                                                                                                                                                                                  
|            | 2.1   |                        |  | Specimen Certificate representing Ordinary Shares (filed as
    Exhibit 4.1 to IONAs Registration Statement on
    Form F-1 (File No. 333-6396) and incorporated herein
    by reference)                                                                                                                                                                                                                                
|            | 2.2   |                        |  | Amended and Restated Deposit Agreement dated as of
    April 26, 2004, by and among IONA Technologies PLC,
    Deutsche Bank Trust Company Americas and Holders and Beneficial
    Owners of American Depositary Shares Evidenced by American
    Depositary Receipts (filed as Exhibit 2.2 to IONAs
    annual report on Form 20-F for the fiscal year ended
    December 31, 2003 and incorporated herein by reference)
|            | 4.1   |                        |  | Agreement and Plan of Reorganization dated as of
    February 14, 2001, by and among IONA Technologies PLC, NV
    Acquisition Corp. and Netfish Technologies, Inc. (filed as
    Exhibit 4.4 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                     
|            | 4.2   |                        |  | Lease dated July 31, 1998, by and between AIB Custodial
    Nominees Limited and IONA Technologies PLC (filed as
    Exhibit 4.5 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                                                                                  
|            | 4.3   |                        |  | Lease dated March 2, 1999, by and between Boston Properties
    Limited Partnership and IONA Technologies, Inc. (filed as
    Exhibit 4.6 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                                                                         
|            | 4.4  |                        |  | Executive Share Option Scheme (filed as Exhibit 10.1 to
    IONAs Registration Statement on Form F-1 (File
    No. 333-6396) and incorporated herein by reference)                                                                                                                                                                                                                                                       
|            | 4.5  |                        |  | 1997 Share Option Scheme, as amended (filed as
    Exhibit 4.4 to IONAs Registration Statement on
    Form S-8 (File No. 333-12326) and incorporated herein
    by reference)                                                                                                                                                                                                                                            
|            | 4.6  |                        |  | 1997 Director Share Option Scheme (filed as
    Exhibit 10.3 to IONAs Registration Statement on
    Form F-1 (File No. 333-6396) and incorporated herein
    by reference)                                                                                                                                                                                                                                               
|            | 4.7  |                        |  | 1999 Employee Share Purchase Plan, as amended (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-11384) and incorporated herein
    by reference)                                                                                                                                                                                                                                   
|            | 4.8  |                        |  | Genesis Development Corporation 1997 Stock Option Plan (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-12326) and incorporated herein
    by reference)                                                                                                                                                                                                                          
|            | 4.9  |                        |  | Object-Oriented Concepts, Inc. Stock Option Plan (filed as
    Exhibit 4.4 to IONAs Registration Statement on
    Form S-8 (File No. 333-13224) and incorporated herein
    by reference)                                                                                                                                                                                                                                
|            | 4.10 |                        |  | Netfish Technologies, Inc. 1999 Stock Option Plan (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-13494) and incorporated herein
    by reference)                                                                                                                                                                                                                               
|            | 4.11 |                        |  | Letter agreement regarding severance payments dated
    August 8, 2002 by and between Steven Fisch and IONA
    Technologies, Inc. (filed as Exhibit 4.11 to IONAs
    annual report on Form 20-F for the year ended
    December 31, 2002 and incorporated herein by reference)                                                                                                                                         

-67-



---



##### Table of Contents



|            |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description of Exhibit
|            |       |                       
|            | 4.12 |                        |  | Non-Executive Directors Change in Control Plan (filed as
    Exhibit 4.12 to IONAs annual report on Form 20-F
    for the year ended December 31, 2002 and incorporated
    herein by reference)                                                                                                                                                                                                                 
|            | 4.13 |                        |  | Form of Change of Control Agreement by and among IONA
    Technologies, Inc., IONA Technologies PLC and each of
    Christopher J. Horn, Peter M. Zotto, Daniel Demmer, Eric
    Newcomer, Christopher M. Mirabile, Lawrence E Alston, Jr.
    and William McMurray (filed as Exhibit 4.13 to IONAs
    annual report on Form 20-F for the year ended
    December 31, 2002 and incorporated herein by reference)
|            | 4.14 |                        |  | Employment Agreement by and between Peter M. Zotto and IONA
    Technologies PLC dated as of April 14, 2005                                                                                                                                                                                                                                                                                                       
|            | 8.1   |                        |  | Active Subsidiaries of IONA Technologies PLC                                                                                                                                                                                                                                                                                                                                                                      
|            | 11.1  |                        |  | Code of Business Conduct and Ethics (filed as Exhibit 11.1
    to IONAs annual report on Form 20-F for the fiscal
    year ended December 31, 2003 and incorporated herein by
    reference)                                                                                                                                                                                                                     
|            | 12.1  |                        |  | Certification of Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                                      
|            | 12.2  |                        |  | Certification of Principal Financial Officer                                                                                                                                                                                                                                                                                                                                                                      
|            | 13.1  |                        |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                            
|            | 13.2  |                        |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                            
|            | 15.1  |                        |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                          
|            | 15.2  |                        |  | Audit Committee Charter (filed as Exhibit 14.2 to
    IONAs annual report on Form 20-F for the fiscal year
    ended December 31, 2003 and incorporated herein by
    reference)                                                                                                                                                                                                                                 
|            | 15.3  |                        |  | Nominating and Corporate Governance Committee Charter (filed as
    Exhibit 14.3 to IONAs annual report on Form 20-F
    for the fiscal year ended December 31, 2003 and
    incorporated herein by reference)                                                                                                                                                                                                   
|            | 15.4  |                        |  | Description of American Depositary Receipts (filed as
    Exhibit 14.4 to IONAs annual report on Form 20-F
    for the fiscal year ended December 31, 2003 and
    incorporated herein by reference)                                                                                                                                                                                                             






|  |                                                                                       
|- | --------------------------------------------------------------------------------------
| | Indicates a management contract or any compensatory plan,
    contract or arrangement.

-68-



---



##### Table of Contents



SIGNATURES








|    |                    | 
|--- | ------------------ | 
|By: | /s/ Peter M. Zotto | 

|                            | 
|--------------------------- | 
|                            | 
|Peter M. Zotto              | 
|Chief Executive
    Officer | 



-69-



---



##### Table of Contents



EXHIBIT INDEX


|            |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | ----- | ---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description of Exhibit
|            |       |                       
|            | 1.1   |                        |  | Restated Articles of Association, as amended, of IONA
    Technologies PLC (filed as Exhibit 4.2 to IONAs
    Registration Statement on Form S-8 (File
    No. 333-11384) and incorporated herein by reference)                                                                                                                                                                                                          
|            | 1.2   |                        |  | Memorandum of Association, as amended, of IONA Technologies PLC
    (filed as Exhibit 3.3 to IONAs Registration Statement
    on Form F-1 (File No. 333-6396) and incorporated
    herein by reference)                                                                                                                                                                                                                  
|            | 2.1   |                        |  | Specimen Certificate representing Ordinary Shares (filed as
    Exhibit 4.1 to IONAs Registration Statement on
    Form F-1 (File No. 333-6396) and incorporated herein
    by reference)                                                                                                                                                                                                                                
|            | 2.2   |                        |  | Amended and Restated Deposit Agreement dated as of
    April 26, 2004, by and among IONA Technologies PLC,
    Deutsche Bank Trust Company Americas and Holders and Beneficial
    Owners of American Depositary Shares Evidenced by American
    Depositary Receipts (filed as Exhibit 2.2 to IONAs
    annual report on Form 20-F for the fiscal year ended
    December 31, 2003 and incorporated herein by reference)
|            | 4.1   |                        |  | Agreement and Plan of Reorganization dated as of
    February 14, 2001, by and among IONA Technologies PLC, NV
    Acquisition Corp. and Netfish Technologies, Inc. (filed as
    Exhibit 4.4 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                     
|            | 4.2   |                        |  | Lease dated July 31, 1998, by and between AIB Custodial
    Nominees Limited and IONA Technologies PLC (filed as
    Exhibit 4.5 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                                                                                  
|            | 4.3   |                        |  | Lease dated March 2, 1999, by and between Boston Properties
    Limited Partnership and IONA Technologies, Inc. (filed as
    Exhibit 4.6 to IONAs annual report on Form 20-F
    for the year ended December 31, 2000 and incorporated
    herein by reference)                                                                                                                                                         
|            | 4.4  |                        |  | Executive Share Option Scheme (filed as Exhibit 10.1 to
    IONAs Registration Statement on Form F-1 (File
    No. 333-6396) and incorporated herein by reference)                                                                                                                                                                                                                                                       
|            | 4.5  |                        |  | 1997 Share Option Scheme, as amended (filed as
    Exhibit 4.4 to IONAs Registration Statement on
    Form S-8 (File No. 333-12326) and incorporated herein
    by reference)                                                                                                                                                                                                                                            
|            | 4.6  |                        |  | 1997 Director Share Option Scheme (filed as
    Exhibit 10.3 to IONAs Registration Statement on
    Form F-1 (File No. 333-6396) and incorporated herein
    by reference)                                                                                                                                                                                                                                               
|            | 4.7  |                        |  | 1999 Employee Share Purchase Plan, as amended (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-11384) and incorporated herein
    by reference)                                                                                                                                                                                                                                   
|            | 4.8  |                        |  | Genesis Development Corporation 1997 Stock Option Plan (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-12326) and incorporated herein
    by reference)                                                                                                                                                                                                                          
|            | 4.9  |                        |  | Object-Oriented Concepts, Inc. Stock Option Plan (filed as
    Exhibit 4.4 to IONAs Registration Statement on
    Form S-8 (File No. 333-13224) and incorporated herein
    by reference)                                                                                                                                                                                                                                
|            | 4.10 |                        |  | Netfish Technologies, Inc. 1999 Stock Option Plan (filed as
    Exhibit 4.5 to IONAs Registration Statement on
    Form S-8 (File No. 333-13494) and incorporated herein
    by reference)                                                                                                                                                                                                                               
|            | 4.11 |                        |  | Letter agreement regarding severance payments dated
    August 8, 2002 by and between Steven Fisch and IONA
    Technologies, Inc. (filed as Exhibit 4.11 to IONAs
    annual report on Form 20-F for the year ended
    December 31, 2002 and incorporated herein by reference)                                                                                                                                         
|            | 4.12 |                        |  | Non-Executive Directors Change in Control Plan (filed as
    Exhibit 4.12 to IONAs annual report on Form 20-F
    for the year ended December 31, 2002 and incorporated
    herein by reference)                                                                                                                                                                                                                         



---



##### Table of Contents



|            |       |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description of Exhibit
|            |       |                       
|            | 4.13 |                        |  | Form of Change of Control Agreement by and among IONA
    Technologies, Inc., IONA Technologies PLC and each of
    Christopher J. Horn, Peter M. Zotto, Daniel Demmer, Eric
    Newcomer, Christopher M. Mirabile, Lawrence E Alston, Jr.
    and William McMurray (filed as Exhibit 4.13 to IONAs
    annual report on Form 20-F for the year ended
    December 31, 2002 and incorporated herein by reference)
|            | 4.14 |                        |  | Employment Agreement by and between Peter M. Zotto and IONA
    Technologies PLC dated as of April 14, 2005                                                                                                                                                                                                                                                                                                       
|            | 8.1   |                        |  | Active Subsidiaries of IONA Technologies PLC                                                                                                                                                                                                                                                                                                                                                                      
|            | 11.1  |                        |  | Code of Business Conduct and Ethics (filed as Exhibit 11.1
    to IONAs annual report on Form 20-F for the fiscal
    year ended December 31, 2003 and incorporated herein by
    reference)                                                                                                                                                                                                                     
|            | 12.1  |                        |  | Certification of Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                                      
|            | 12.2  |                        |  | Certification of Principal Financial Officer                                                                                                                                                                                                                                                                                                                                                                      
|            | 13.1  |                        |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                            
|            | 13.2  |                        |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                            
|            | 15.1  |                        |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                          
|            | 15.2  |                        |  | Audit Committee Charter (filed as Exhibit 14.2 to
    IONAs annual report on Form 20-F for the fiscal year
    ended December 31, 2003 and incorporated herein by
    reference)                                                                                                                                                                                                                                 
|            | 15.3  |                        |  | Nominating and Corporate Governance Committee Charter (filed as
    Exhibit 14.3 to IONAs annual report on Form 20-F
    for the fiscal year ended December 31, 2003 and
    incorporated herein by reference)                                                                                                                                                                                                   
|            | 15.4  |                        |  | Description of American Depositary Receipts (filed as
    Exhibit 14.4 to IONAs annual report on Form 20-F
    for the fiscal year ended December 31, 2003 and
    incorporated herein by reference)                                                                                                                                                                                                             






|  |                                                                                       
|- | --------------------------------------------------------------------------------------
| | Indicates a management contract or any compensatory plan,
    contract or arrangement.