##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington D.C. 20549
      FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File
    No. 0-29154
  IONA Technologies PLC(Exact name of Registrant as
    specified in its charter)
  Ireland

N/A(Jurisdiction of incorporation
    or organization)

(IRS Employer Identification
    No.)   The IONA Building
 Shelbourne Road, Ballsbridge
 Dublin 4, Ireland
 (Address of Principal Executive
    Offices)
 Telephone Number: +353 1 6372000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredOrdinary Shares, 0.0025 Par Value Per Share

Irish Stock Exchange
    NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act: None
    Yes o     No þ
    Yes o     No þ
    Yes þ     No o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2
  Yes o     No þ
     DOCUMENTS INCORPORATED BY
    REFERENCE
  Form 10-K Form 10-K,
    ** Excludes an aggregate of
    272,418 ordinary shares issuable as of March 3, 2008
    pursuant to contractual obligations of the registrant.




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This annual report on
    Form 10-K
    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, our,
    the Company or IONA 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 1.4603 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,
    2007.




---



##### 



TABLE OF
    CONTENTS
   
 PagePART I





1Item 1.


BUSINESS


1Item 1A.


RISK FACTORS


7Item 1B.


UNRESOLVED STAFF COMMENTS


18Item 2.


PROPERTIES


18Item 3.


LEGAL PROCEEDINGS


18Item 4.


SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


19PART II





19Item 5.


MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


19Item 6.


SELECTED FINANCIAL DATA


22Item 7.


MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


23Item 7A.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


39Item 8.


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


41Item 9.


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


74Item 9A.


CONTROLS AND PROCEDURES


74Item 9B.


OTHER INFORMATION


74PART III





75Item 10.


DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


75Item 11.


EXECUTIVE COMPENSATION


75Item 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


75Item 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


75Item 14.


PRINCIPAL ACCOUNTING FEES AND SERVICES


75PART IV





75Item 15.


EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


75SIGNATURES


76EX-10.5 Second Amendment dated 9/6/2005 to Lease dated 3/2/1999EX-10.14 Form of Phantom Share Unit AgreementEX-10.16 First Amendment to Non-Executive Directors Change in Control Plan, dated 11/29/2007EX-10.18 Form of First Amendment to Change of Control AgreementEX-10.20 Zotto Amended and Restated Employment AgreementEX-21.1 Active Subsidiaries of IONA Technologies PLCEX-23.1 Consent of Independent Registered Public Accounting FirmEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEO and CFO




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##### Table of Contents



FACTORS
    THAT MAY AFFECT FUTURE RESULTS
  This Annual Report on
    Form 10-K
    contains forward-looking statements within the meaning of the
    safe harbor provisions of the Private Securities
    Litigation Reform Act of 1995 about our business and 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 revenue,
    operating income (loss), net income (loss) per ordinary share
    and per ADS, products and services, sources of liquidity,
    markets, anticipated tax rates, 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 7
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations, Item 7A
    Quantitative and Qualitative Disclosures about Market
    Risk, Item 1A Risk Factors and our other
    reports filed with the Securities and Exchange Commission, or
    SEC. We disclaim any obligation to update any forward-looking
    statements contained herein after the date of this Annual
    Report.
 PART I  Form 10-K, Form 10-K, Form 10-Q Form 8-K, Form 20-F Form 6-K.
  Item 1.
    Business  History
    and Development of the Company
  About
    IONA
    781-902-8000.
  ® ® tm tm ®
  Overview
   -1-




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Industry
    Background
          Strategy
     -2-




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Products
    Artix
    
    Artix ESB:  Artix ESB, a leading enterprise
    service bus, or ESB, provides the basis for a SOA by
    service-enabling IT systems using a lightweight, distributed,
    pluggable-architecture designed for interoperability and
    performance.
    Artix Registry/Repository:  Artix
    Registry/Repository enables the policy-driven design,
    development and deployment of services into a distributed SOA
    infrastructure.
    Artix Orchestration:  Artix Orchestration
    facilitates the composition of business-oriented services from a
    set of smaller technical services encouraging greater reuse of
    these services throughout an organization.
    Artix Data Services:  Artix Data Services is a
    model-driven data services development tool and runtime that
    enforces the validity of data sent between applications while
    improving developer efficiency.
    Artix Mainframe:  Artix Mainframe is a
    service-enablement engine that extends mainframe systems to
    integrate with off-host systems without the additional expense
    of running all applications on the mainframe.  Orbix
    FUSE
   -3-




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
    FUSE ESB:  FUSE ESB is a certified release of
    Apache ServiceMix and provides a standardized methodology,
    server and tools to deploy integration components, freeing
    architects from the dependencies that have traditionally locked
    enterprises into proprietary middleware stacks.
    FUSE Message Broker:  FUSE Message Broker is a
    certified release of Apache ActiveMQ, a high performance
    solution for reliable messaging to cost-effectively move data
    across a heterogeneous IT environment.
    FUSE Services Framework:  FUSE Services
    Framework is a certified release of Apache CXF, a services
    framework that simplifies the process of exposing existing Java
    code as a Web service or writing new Web services so
    organizations can use and reuse new and existing enterprise
    services.
    FUSE Mediation Router:  FUSE Mediation Router
    is a certified release of Apache Camel that connects systems and
    services quickly by implementing the widely used Enterprise
    Integration Patterns (EIP).
    FUSE HQ:  FUSE HQ is a SOA management and
    monitoring system based on Hyperic HQ Enterprise and is
    available as a part of any IONA open source support subscription.  Services
    on-site
  Product
    Development and Management
       -4-




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Customers
    Financial

Telecom

Government

ManufacturingCredit Suisse Group

AT&T

N.A.S.A.

Lockheed MartinGAD

Beijing Mobile

National Geospatial-Intelligence Agency

ToshibaJPMorgan Chase

Ericsson

Poste Italiane

RaytheonRaymond James

Nokia

National Diet Library (Japan)

The Boeing CompanyReuters

O2

The Boeing CompanyAXA Group

Sprint/NextelDZ Bank

Fujitsu TelecommunicationsZurich

Aepona
    3 Italy     Sales and
    Marketing
          Competition
   -5-




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
    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, including open source software
    projects and products;
    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.  Intellectual
    Property
         -6-




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Employees
    Government
    Regulations
      Financial
    Information about Segments and Principal Markets
    Seasonality
    and Raw Materials
    Available
    Information
  Form 10-K Form 20-F Form 6-K www.iona.com Form 10-K, Form 10-Q, Form 8-K www.iona.com
  Item 1A.
    Risk
    Factors  A decline
    in information technology spending may result in a decrease in
    our revenue or lower growth rates.
   -7-




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Our
    lengthy and variable sales cycle makes it difficult to predict
    our operating results.
    
    alternative approaches to integration of enterprise applications;
    competitive product offerings and pricing;
    limited internal resources and purchasing priorities; and
    rapidly changing software technologies and standards.    We may
    experience fluctuations in quarterly revenue that could
    adversely impact our operating results.
      
    similarly to others in the software industry, a significant
    number of our prospective customers decide whether to enter into
    license agreements with us within the last month of each quarter
    in the hope of obtaining more favorable terms;
    difficulty predicting the size and timing of customer orders due
    to our lengthy and variable sales cycle and our customers
    often lengthy internal approval and expenditure authorization
    processes;
    the demand for our products may change;
    customers may unexpectedly postpone orders due to changes in
    their strategic priorities, project objectives, budget or
    personnel; -8-




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
    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 revenue under our revenue recognition
    policies.    We have
    experienced significant variations in operating results 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 in
    support of new computing models including SOA.
      Our open
    source offerings may never become profitable or achieve
    widespread acceptance.
     -9-




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If we
    fail to keep pace with rapidly evolving technology and changing
    customer needs, our business will suffer.
    The loss
    of one or more major customers could materially and adversely
    affect our results of operations and financial
    condition.
    We derive
    a significant amount of revenue from customers in a limited
    number of industries and our business and results of operations
    could be adversely affected by significant changes in those
    industries.
   -10-




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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 may be
    unable to attract and retain highly qualified
    personnel.
    Potential
    defects or errors in our software products could cause our
    revenue to decrease, cause us to lose customers, damage our
    reputation, expose us to litigation and harm our revenues or
    earnings.
    
    loss of customers;
    damage to our reputation;
    loss or delay of market acceptance or revenue;
    increased service or warranty costs; or
    legal action by our customers.    If we do
    not manage our expenses and geographically dispersed operations
    successfully, we may be unable to respond to changing market
    conditions.
   -11-




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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
    currently derive most of our revenue from a limited number of
    products.
    If we do
    not successfully expand and manage our direct sales force and
    other distribution channels, we may not be able to increase our
    revenue.
   -12-




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
    disputes and channel conflict regarding marketing strategy,
    exclusive territories and customer relationships that could
    negatively affect our business or result in costly litigation;
    increased promotion of competing IT integration
    solutions; and
    abrupt discontinuation of their relationships with us or support
    for our products or services.      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;
    enterprise service bus software; and
    open source software projects and products.    
    the demand for our products;
    the development of software by others 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 attract, retain and motivate
    key personnel.   -13-




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We face
    various risks associated with our international operations that
    could cause our operating results to suffer.
    
    fluctuations in currency exchange rates that could make our
    products more expensive in certain countries;
    fluctuations in currency exchange rates that could cause our
    expenses to be higher then anticipated;
    political unrest, war or terrorism in various jurisdictions;
    unexpected changes in regulatory requirements, tariffs and other
    trade barriers that reduce the flexibility of our business
    operations;
    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 difficulties in
    collecting accounts receivable; and
    differing laws affecting the enforceability of our intellectual
    property rights resulting in the potential loss of our
    proprietary information.    Acquisitions
    may be necessary for the continued growth of our business. We
    may be unable to identify or complete suitable acquisitions, and
    any acquisitions we do complete may create business difficulties
    or be dilutive to our current shareholders.
   -14-




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
    the negative effects of the acquisition on our financial and
    strategic position and reputation;
    the failure of an acquired business to further our strategies;
    the failure of the acquisition to result in expected benefits,
    which may include benefits relating to enhanced revenues,
    technology, human resources, costs savings, operating
    efficiencies and other synergies;
    the difficulty and cost of integrating the acquired business,
    including costs and delays in implementing common systems and
    procedures and costs and delays caused by communication
    difficulties or geographic distances between sites;
    the assumption of liabilities of the acquired business,
    including debt and litigation-related liabilities;
    the impairment of acquired assets;
    the diversion of our managements attention from other
    business concerns;
    the impairment of relationships with customers or suppliers of
    the acquired business or our customers or suppliers;
    the loss of key employees of the acquired company; and
    the incompatibility of business cultures.    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.
   -15-




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The
    rights of shareholders in Irish corporations may be more limited
    than the rights of shareholders in
    U.S. corporations.
    We have a
    limited ability to protect our intellectual property rights, and
    others could obtain and use our technology without our
    authorization.
    If we are
    unable to obtain rights, or lose existing rights, to use and
    incorporate third-party technology into our products, we may
    have to stop selling and shipping products and incur significant
    development or license expenses to develop or otherwise obtain
    replacement technology.
    
    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.
   -16-




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
    disclose our source code;
    discontinue the use of certain processes;
    cease the use and sale of infringing products and services;
    pay damages;
    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.    Regulatory
    compliance, including the cost of complying with legislative
    actions and potential new accounting pronouncements, may result
    in increased costs that would affect our future financial
    position and results of operations. We have already incurred,
    and will continue to incur, significant increased costs
    associated with our compliance with the internal controls
    requirements of the Sarbanes-Oxley Act of 2002.
      Form 10-Q Form 8-K.
 -17-




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We have
    recently undertaken cost reduction actions. Any failure by us to
    execute planned cost reductions successfully may have an adverse
    effect on our sales, profitability and results of
    operations.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Sublet & AvailableLocation

Total Space

Occupied Space

for Sublet Space

Lease Expiration

Right to TerminateDublin, Ireland


55,900



21,400



34,500



July 31, 2023



July 31, 2013Waltham, Massachusetts


30,331



30,331







July 31, 2011



     Item 3.
    Legal
    Proceedings   -18-




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Item 4.
    Submission
    of Matters to A Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
      High

LowYear Ended December 31, 2006First Quarter

$
4.60


$
2.86Second Quarter

$
4.75


$
3.82Third Quarter

$
4.64


$
3.87Fourth Quarter

$
5.70


$
4.11Year Ended December 31, 2007First Quarter

$
6.35


$
4.72Second Quarter

$
6.30


$
5.00Third Quarter

$
5.65


$
3.02Fourth Quarter

$
5.28


$
2.73       High

LowYear Ended December 31, 2006First Quarter


3.55



2.32Second Quarter


3.70



3.00Third Quarter


3.60



3.10Fourth Quarter


4.52



3.30Year Ended December 31, 2007First Quarter


4.60



3.69Second Quarter


4.65



3.76Third Quarter


4.10



2.37Fourth Quarter


3.09



2.20  -19-




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Holders
    of Record
    Dividends
    Equity
    Compensation Plan Information
    (C)(A)

(B)

Number ofNumber of

Weighted-

SecuritiesSecurities to be

Average

RemainingIssued Upon

Exercise

Available forExercise of

Price of

FutureOutstanding

Outstanding

IssuanceOptions,

Options,

Under EquityWarrants and

Warrants

CompensationPlan Category

Rights

and Rights

Plans(1)Equity compensation plans approved by security holders


8,211,664


$
4.72



2,865,169Equity compensation plans not approved by security holders










8,211,664


$
4.72



2,865,169     (1)
    
    Excludes 8,211,664 ordinary shares to be issued (subject to
    vesting) upon the exercise of outstanding options and rights as
    set forth in column (A) above, such shares may become
    available for future issuance if they are forfeited, cancelled,
    held back upon exercise of an option or settlement of an award
    to cover the exercise price or tax withholding, reacquired by
    the Company prior to vesting or otherwise terminated (other than
    by exercise). -20-




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Stock
    Performance Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    IONA Technologies, The NASDAQ Composite Index
    And The NASDAQ Computer Index
  
  *
    
    $100 invested on 12/31/02 in stock or index-including
    reinvestment of dividends.   2002


2003


2004


2005


2006


2007IONA Technologies



100.00




175.79




177.19




103.51




172.63




114.39NASDAQ Composite



100.00




149.75




164.64




168.60




187.83




205.22NASDAQ Computer



100.00




146.51




150.85




158.21




170.08




206.99   Source:
  Note:  This graph shall not be deemed
    filed for purposes of Section 18 of the
    Securities and Exchange Act of 1934, as amended, or otherwise
    subject to the liabilities of that section nor shall it be
    deemed incorporated by reference in any filing under the
    Securities Act of 1933, as amended, or the Securities and
    Exchange Act of 1934, as amended, regardless of any general
    incorporation language in such filing
 -21-




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Item 6.
    Selected
    Financial Data    Year Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Consolidated Statement of Operations Data:Revenue:Product revenue

$
38,842


$
42,056


$
33,630


$
30,735


$
35,737Service revenue


38,818



35,782



33,176



37,284



38,453Total revenue


77,660



77,838



66,806



68,019



74,190Cost of revenue:Cost of product revenue


841



523



636



435



949Cost of service revenue


14,611



13,220



11,684



11,790



14,275Total cost of revenue


15,452



13,743



12,320



12,225



15,224Gross profit


62,208



64,095



54,486



55,794



58,966Operating expenses:Research and development


20,016



15,946



15,848



17,204



27,134Sales and marketing


31,687



33,221



30,293



29,263



41,180General and administrative


12,744



12,375



9,287



8,808



10,590Amortization of intangible and other assets


163







94



374



374Restructuring


1,233







(189
)






20,525Adjustment of acquisition liabilities














(600
)


Impairment of other assets and property and equipment


















3,271Total operating expenses


65,843



61,542



55,333



55,049



103,074(Loss) income from operations


(3,635
)


2,553



(847
)


745



(44,108
)Interest income, net


2,040



1,738



825



286



483Net exchange (loss) gain


(143
)


(559
)


99



(273
)


337(Loss) income before (benefit) provision for income taxes


(1,738
)


3,732



77



758



(43,288
)(Benefit) provision for income taxes


(1,000
)


1,212



920



566



948Net (loss) income

$
(738
)

$
2,520


$
(843
)

$
192


$
(44,236
)Basic net (loss) income per ordinary share and per ADS

$
(0.02
)

$
0.07


$
(0.02
)

$
0.01


$
(1.33
)Shares used in computing basic net (loss) income per ordinary
    share and per ADS


36,329



35,648



35,139



34,570



33,335Diluted net (loss) income per ordinary share and per ADS

$
(0.02
)

$
0.07


$
(0.02
)

$
0.01


$
(1.33
)Shares used in computing diluted net (loss) income per ordinary
    share and per ADS


36,329



36,269



35,139



36,333



33,335   -22-




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At December 31,2007

2006

2005

2004

2003(In thousands, except per share data)Consolidated Balance Sheet Data:Cash, cash equivalents, restricted cash and marketable securities

$
56,481


$
53,964


$
52,116


$
59,915


$
56,649Working capital

$
37,968


$
42,769


$
33,384


$
32,085


$
30,417Total assets

$
86,296


$
77,128


$
71,518


$
79,943


$
89,859Ordinary shares (number)


36,532



35,930



35,360



34,804



34,006Ordinary share value (par value)

$
101


$
99


$
98


$
96


$
94Total shareholders equity

$
49,551


$
43,797


$
35,241


$
34,962


$
33,112Dividends declared per share

$



$



$



$



$
     Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
        
    Revenue growth provides an important guide to our overall
    business growth and the success of our sales and marketing
    efforts;
    Gross margin is an indicator of our offering mix, competitive
    pricing pressures and the cost of our operations;
    Growth in our Artix product revenue is an indicator of the
    success of our focused sales efforts;
    Earnings per share is an indicator of our overall performance;
    Liquidity and cash flows is an indicator of our management of
    our balance sheet and expenses; and
    Growth in our FUSE open source services revenue is an indicator
    of market acceptance of our introductory offerings.  Acquisitions
   -23-




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    
    Revenue Recognition;
    Allowances for Doubtful Accounts;
    Share-Based Compensation;
    Accounting for Income Taxes;
    Goodwill and Intangible Assets;
    Restructuring; and
    Foreign Currency.    Revenue
    Recognition
  97-2, Software Revenue Recognition SOP 98-4 SOP 98-9
   -24-




---



##### Table of Contents




    we enter into a legally binding arrangement with a customer for
    the license of software;
    delivery has occurred;
    the customer fee is fixed or determinable; and
    collection is probable.      
    Support contracts are regularly sold on a stand-alone basis to
    customers that choose to renew the support contract beyond the
    initial term. Support contract pricing is based on established
    list pricing. The renewal purchases at consistent pricing
    provide the basis for VSOE on the support contracts. Support
    revenue is recognized ratably over the contract support term.
    Consulting contracts are regularly sold on a stand-alone basis
    to customers requesting these services. Consulting contract
    pricing is at a flat daily rate and customers purchase an
    appropriate number of service days. The consulting services
    delivered on a stand-alone basis at consistent pricing provide
    the basis for VSOE on the consulting contracts. Consulting
    revenue is recognized as the services are performed.         -25-




---



##### Table of Contents



Allowances
    for Doubtful Accounts
    Share-Based
    Compensation
  Share-Based Payment,
  Accounting
    for Stock Issued to Employees, Accounting for Share-based Compensation,
       -26-




---



##### Table of Contents



Accounting
    for Income Taxes
           -27-




---



##### Table of Contents



Goodwill
    and Intangible Assets
  Goodwill and Other Intangible Assets seven-day
  Restructuring
   -28-




---



##### Table of Contents



Foreign
    Currency
    Recent
    Accounting Pronouncements
  Fair Value Measurements,
  The Fair Value Option for Financial
    Assets and Financial Liabilities Including an amendment of FASB
    Statement No. 115,
 -29-




---



##### Table of Contents



Business Combinations
  Noncontrolling Interests in Consolidated
    Financial Statementsan amendment of Accounting Research
    Bulletin (ARB) No. 51
 -30-




---



##### Table of Contents



Results
    of Operations
    Year Ended December 31,2007

2006

2005Revenue:Product revenue


50.0
%


54.0
%


50.3
%Service revenue


50.0



46.0



49.7Total revenue


100.0



100.0



100.0Cost of revenue:Cost of product revenue


1.1



0.7



1.0Cost of service revenue


18.8



17.0



17.5Total cost of revenue


19.9



17.7



18.5Gross margin


80.1



82.3



81.5Operating expenses:Research and development


25.8



20.5



23.7Sales and marketing


40.8



42.7



45.3General and administrative


16.4



15.9



13.9Amortization of intangible and other assets


0.2







0.1Restructuring


1.6







(0.3
)Total operating expenses


84.8



79.1



82.7(Loss) income from operations


(4.7
)


3.3



(1.2
)Interest income, net


2.6



2.2



1.2Net exchange (loss) gain


(0.2
)


(0.7
)


0.1(Loss) income before (benefit) provision for income taxes


(2.3
)


4.8



0.1(Benefit) provision for income taxes


(1.3
)


1.6



1.4Net (loss) income


(1.0
)%


3.2
%


(1.3
)%Gross margin:Product (as a percentage of product revenue)


97.8
%


98.8
%


98.1
%Service (as a percentage of service revenue)


62.4
%


63.1
%


64.8
%   Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Total
    Revenue
    Year Ended December 31,% of





% of2007


Total


2006


Total


% Change($ in millions)Americas

$
42.9



55.2
%

$
42.7



54.9
%


0.5
%Europe, Middle East and Africa


25.1



32.3
%


22.7



29.2
%


10.6
%Asia-Pacific Rim


9.7



12.5
%


12.4



15.9
%


(21.8
)%Total revenue

$
77.7






$
77.8







(0.2
)%  -31-




---



##### Table of Contents



Year Ended December 31,2007


2006


% Change($ in millions)Product revenue

$
38.9


$
42.0



(7.6
)%Service revenue


38.8



35.8



8.5Total revenue

$
77.7


$
77.8



(0.2
)%       Cost
    of Product Revenue
  Year Ended December 31,2007

2006

% Change($ in millions)Cost of product revenue

$
0.8


$
0.5



60.8
%Gross margin


97.8
%


98.8
%     Cost
    of Service Revenue
  Year Ended December 31,2007

2006

% Change($ in millions)Cost of service revenue

$
14.6


$
13.2



10.5
%Gross margin


62.4
%


63.1
%    -32-




---



##### Table of Contents



Research
    and Development
  Year Ended December 31,2007

2006

% Change($ in millions)Research and development

$
20.0


$
15.9



25.5
%Percentage of revenue


25.8
%


20.5
%     Sales
    and Marketing
  Year Ended December 31,2007

2006

% Change($ in millions)Sales and marketing

$
31.7


$
33.2



(4.6
)%Percentage of revenue


40.8
%


42.7
%     General
    and Administrative
  Year Ended December 31,2007

2006

% Change($ in millions)General and administrative

$
12.7


$
12.4



3.0
%Percentage of revenue


16.4
%


15.9
%     Amortization
    of Intangible and Other Assets
   -33-




---



##### Table of Contents



Restructuring
      Interest
    Income, Net
    Net
    Exchange Loss
    (Benefit)
    Provision for Income Taxes
     -34-




---



##### Table of Contents



Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Total
    Revenue
    Year Ended December 31,% of





% of2006


Total


2005


Total


% Change($ in millions)Americas

$
42.7



54.9
%

$
32.2



48.2
%


32.6
%Europe, Middle East and Africa


22.7



29.2
%


26.0



38.9
%


(12.7
)%Asia-Pacific Rim


12.4



15.9
%


8.6



12.9
%


44.7
%Total revenue

$
77.8






$
66.8







16.5
%     Year Ended December 31,2006


2005


% Change($ in millions)Product revenue

$
42.0


$
33.6



25.1
%Service revenue


35.8



33.2



7.9Total revenue

$
77.8


$
66.8



16.5
%     Cost
    of Product Revenue
  Year Ended December 31,2006

2005

% Change($ in millions)Cost of product revenue

$
0.5


$
0.6



(17.8
)%Gross margin


98.8
%


98.1
%    -35-




---



##### Table of Contents



Cost
    of Service Revenue
  Year Ended December 31,2006

2005

% Change($ in millions)Cost of service revenue

$
13.2


$
11.7



13.1
%Gross margin


63.1
%


64.8
%     Research
    and Development
  Year Ended December 31,2006

2005

% Change($ in millions)Research and development

$
15.9


$
15.8



0.6
%Percentage of revenue


20.5
%


23.7
%     Sales
    and Marketing
  Year Ended December 31,2006

2005

% Change($ in millions)Sales and marketing

$
33.2


$
30.3



9.7
%Percentage of revenue


42.7
%


45.3
%     General
    and Administrative
  Year Ended December 31,2006

2005

% Change($ in millions)General and administrative

$
12.4


$
9.3



33.3
%Percentage of revenue


15.9
%


13.9
%    -36-




---



##### Table of Contents



Amortization
    of Intangible and Other Assets
    Restructuring
    Interest
    Income, Net
    Net
    Exchange (Loss) Gain
    Provision
    for Income Taxes
      Exposure
    to Currency Fluctuations
   -37-




---



##### Table of Contents



Liquidity
    and Capital Resources
      2007


2006


2005($ in thousands)Cash and equivalents, beginning of period

$
37,569


$
27,936


$
33,250Net cash provided by (used in) operating activities


12,917



968



(5,267
)Net cash (used in) provided by investing activities


(30,495
)


7,246



(1,169
)Net cash provided by financing activities


1,776



1,419



1,122Cash and equivalents, end of period

$
21,767


$
37,569


$
27,936            -38-




---



##### Table of Contents



Payment Due by PeriodLess Than

1-3

3-5

More ThanContractual Obligations

Total

1 Year

Years

Years

5 Years($ in thousands)Operating Lease Obligations

$
24,411


$
5,542


$
9,769


$
7,187


$
1,913       Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   -39-




---



##### Table of Contents



-40-




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReports of Independent Registered Public
    Accounting Firm


42Consolidated Balance Sheets at December 31,
    2007 and 2006


44Consolidated Statements of Operations for each of
    the three years in the period ended December 31, 2007


45Consolidated Statements of Cash Flows for each of
    the three years in the period ended December 31, 2007


46Consolidated Statements of Changes in
    Shareholders Equity for each of the three years in the
    period ended December 31, 2007


47Notes to Consolidated Financial Statements


48   -41-




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               
    -42-




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  
    -43-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  CONSOLIDATED BALANCE SHEETS
 (U.S. dollars in thousands, except share and per share
    data)
  December 31,2007

2006ASSETSCurrent assets:Cash and cash equivalents

$
21,767


$
37,569Restricted cash (Note 5)


200



295Marketable securities (Note 2 and 19)


34,514



16,100Accounts receivable, net of allowance for doubtful accounts of
    $583 at December 31, 2007 and $653 at December 31, 2006


12,378



18,421Prepaid expenses


2,138



1,524Deferred tax assetcurrent


888



Other current assets


190



220Total current assets


72,075



74,129Property and equipment, net (Note 8)


2,644



2,859Goodwill (Note 3)


7,521



Intangible assets, net (Note 3)


2,628



Deferred tax asset, non-current


1,040



Other assets, net


388



140Total assets

$
86,296


$
77,128LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,470


$
957Accrued payroll and related expenses


4,946



7,109Deferred revenue


15,931



12,288Other accrued liabilities (Note 6)


11,760



11,006Total current liabilities


34,107



31,360Long-term deferred revenue


1,317



976Other liabilities (Note 4)


1,321



995Commitments and contingencies






Redeemable preference shares,  0.0025 par value,
    101,250,000 shares authorized; None issued and outstanding
    (Note 9)






Shareholders equity:Ordinary shares,  0.0025 par value;
    150,000,000 shares authorized; 36,531,565 and
    35,929,627 shares issued and outstanding at
    December 31, 2007 and 2006, respectively (Note 9)


101



99Additional paid-in capital


508,474



501,992Accumulated deficit


(459,032
)


(458,294
)Accumulated other comprehensive income


8



Total shareholders equity


49,551



43,797Total liabilities and shareholders equity

$
86,296


$
77,128     -44-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  CONSOLIDATED STATEMENTS OF OPERATIONS
 (U.S. dollars in thousands, except share and per share
    data)
  Year Ended December 31,2007


2006


2005Revenue:Product revenue

$
38,842


$
42,056


$
33,630Service revenue


38,818



35,782



33,176Total revenue (Note 14)


77,660



77,838



66,806Cost of Revenue:Cost of product revenue


841



523



636Cost of service revenue


14,611



13,220



11,684Total cost of revenue


15,452



13,743



12,320Gross profit


62,208



64,095



54,486Operating expenses:Research and development


20,016



15,946



15,848Sales and marketing


31,687



33,221



30,293General and administrative


12,744



12,375



9,287Amortization of intangible and other assets


163







94Restructuring (Note 4)


1,233







(189
)Total operating expenses


65,843



61,542



55,333(Loss) income from operations


(3,635
)


2,553



(847
)Interest income, net


2,040



1,738



825Net exchange (loss) gain


(143
)


(559
)


99(Loss) income before (benefit) provision for income taxes


(1,738
)


3,732



77(Benefit) provision for income taxes (Note 13)


(1,000
)


1,212



920Net (loss) income

$
(738
)

$
2,520


$
(843
)Basic net (loss) income per ordinary share and per ADS

$
(0.02
)

$
0.07


$
(0.02
)Shares used in computing basic net (loss) income per ordinary
    share and per ADS


36,329



35,648



35,139Diluted net (loss) income per ordinary share and per ADS

$
(0.02
)

$
0.07


$
(0.02
)Shares used in computing diluted net (loss) income per ordinary
    share and per ADS (Note 12)


36,329



36,269



35,139    -45-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (U.S. dollars in thousands)
  Year Ended December 31,2007


2006


2005CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income

$
(738
)

$
2,520


$
(843
)Adjustments to reconcile net (loss) income to net cash provided
    by (used in) operating activities:Depreciation and amortization


2,392



2,007



2,356Deferred taxes


(1,928
)






Share-based compensation


4,708



4,617



Provision for doubtful accounts


14



88



(333
)Loss (profit) on marketable securities


18



(233
)


(199
)Loss on disposal of property and equipment


47



1



4Changes in operating assets and liabilities, net of effect from
    acquisitions:Restricted cash deposits


95



200



3,000Purchase of marketable securities






(8,927
)


(33,291
)Sale of marketable securities






8,700



32,975Accounts receivable


6,029



(6,186
)


(32
)Prepaid expenses


(608
)


509



(430
)Other assets


(243
)


618



230Accounts payable


513



(1,449
)


(196
)Accrued payroll and related expenses


(2,212
)


1,724



(149
)Other liabilities


1,080



597



(5,216
)Deferred revenue


3,750



(3,818
)


(3,143
)Net cash provided by (used in) operating activities


12,917



968



(5,267
)CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment


(1,493
)


(799
)


(1,169
)Acquisitions


(10,578
)






Purchase of marketable securities


(69,961
)


(58,163
)


Sale of marketable securities


51,537



66,208



Net cash (used in) provided by investing activities


(30,495
)


7,246



(1,169
)CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of shares, net of issuance costs


1,776



1,419



1,122Net cash provided by financing activities


1,776



1,419



1,122NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(15,802
)


9,633



(5,314
)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


37,569



27,936



33,250CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
21,767


$
37,569


$
27,936SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Income taxes paid

$
627


$
1,312


$
263     -46-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  CONSOLIDATED STATEMENTS OF CHANGES IN
    SHAREHOLDERS EQUITY
 (U.S. dollars in thousands, except share data)
  AccumulatedAdditional





Other


TotalNumber of


Share


Paid-in


Accumulated


Comprehensive


ShareholdersShares


Capital


Capital


Deficit


Income


EquityBalance at December 31, 2004


34,803,601


$
96


$
494,837


$
(459,971
)

$



$
34,962Employee share purchase plan (Note 11)


173,473



1



425











426Issuance of ordinary shares on exercise of options (Note 10)


383,464



1



695











696Net loss














(843
)






(843
)Balance at December 31, 2005


35,360,538



98



495,957



(460,814
)






35,241Employee share purchase plan (Note 11)


172,729







473











473Issuance of ordinary shares on exercise of options (Note 10)


396,360



1



945











946Share-based compensation (Note 10)










4,617











4,617Net income














2,520







2,520Balance at December 31, 2006


35,929,627



99



501,992



(458,294
)






43,797Employee share purchase plan (Note 11)


176,817



1



612











613Issuance of ordinary shares on exercise of options (Note 10)


425,121



1



1,162











1,163Share-based compensation (Note 10)










4,708











4,708Net unrealized gains on marketable securities


















8



8Net loss














(738
)






(738
)Balance at December 31, 2007


36,531,565


$
101


$
508,474


$
(459,032
)

$
8


$
49,551    -47-




---



##### 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 2006
    Foreign
    Currency Translation
  Foreign Currency Translation,
  Revenue
    Recognition
  97-2, Software Revenue Recognition SOP 98-4 SOP 98-9 SOP 97-2.
   -48-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  SOP 97-2,
  
    persuasive evidence of an arrangement exists;
    delivery has occurred;
    customer fee is fixed or determinable; and
    collection is probable.      
    Support contracts are regularly sold on a stand-alone basis to
    customers that choose to renew the support contract beyond the
    initial term. Support contract pricing is based on established
    list pricing. The renewal purchases at consistent pricing
    provide the basis for VSOE on the support contracts. Support
    revenue is recognized ratably over the contract term.
    Consulting contracts are regularly sold on a stand-alone basis
    to customers requesting these services. Consulting contract
    pricing is at a daily flat rate and customers purchase an
    appropriate number of service days. The consulting services
    delivered on a stand-alone basis at consistent pricing provide
    the basis for VSOE on the consulting contracts. Consulting
    revenue is recognized as the services are performed.       -49-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounts
    Receivable
    Allowances
    for Doubtful Accounts
      Balance at





Balance atBeginning of

Additions



End ofPeriod

(Reversals)

Deductions(1)

PeriodYear ended December 31, 2007

$
653


$
14


$
(84
)

$
583Year ended December 31, 2006

$
740


$
88


$
(175
)

$
653Year ended December 31, 2005

$
1,073


$
(333
)





$
740     (1)
    
    Actual write-offs of uncollectible accounts receivable.  Cost of
    Revenue
    Cash
    Equivalents
   -50-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Financial
    Instruments
    Marketable
    Securities
  Accounting for Certain
    Investments in Debt and Equity Securities,
  Research
    and Development
  Accounting for
    the Costs of Computer Software to be Sold, Leased or Otherwise
    Marketed,
  Goodwill
    and Intangible Assets
  Goodwill and Other
    Intangible Assets, seven-day
   -51-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Property
    and Equipment
    Computer equipment

3 yearsLeasehold improvements

4 to 15 yearsOffice equipment

5 yearsFurniture and fixtures

3 to 10 years     Software
    Development Costs
  98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use (SOP 98-1). SOP 98-1,
    Concentration
    of Credit Risk
     -52-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Subsequent Events
  Compensated
    Absences
  Accounting for Compensated
    Absences
  Accounting
    for Income Taxes
  Accounting for Income Taxes,
  Share-Based
    Compensation
    Share-Based Payment, Accounting for Stock Issued to Employees
  Accounting for Share-based Compensation
 -53-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedDecember 31,2005Net loss, as reported

$
(843
)Add: Share-based compensation expense included in reported net
    loss, net of related tax effects


Deduct: Total share-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects


(11,516
)Pro forma net loss

$
(12,359
)Net loss per share:Basic and dilutedas reported

$
(0.02
)Basic and dilutedpro forma

$
(0.35
)   Defined
    Contribution Plans
    Advertising
    and Promotion Expense
    Comprehensive
    Income (Loss)
  Reporting Comprehensive Income,
  2007


2006Net (loss) income

$
(738
)

$
2,520Other comprehensive income:Unrealized holding gains arising during period


8



Less: reclassification adjustment for gains realized in net
    (loss) income






Net unrealized gains on investments


8



Total comprehensive (loss) income

$
(730
)

$
2,520   Reclassifications
   -54-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
  Fair Value Measurements,
  The Fair Value Option for Financial
    Assets and Financial Liabilities Including an amendment of FASB
    Statement No. 115,
  Business Combinations
  Noncontrolling Interests in Consolidated
    Financial Statementsan amendment of Accounting Research
    Bulletin (ARB) No. 51
 -55-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2.
    Marketable
    Securities  Subsequent Events
  As of December 31, 2007Gross


GrossAmortized


Unrealized


Unrealized


MarketCost


Gains


Losses


Value(U.S. dollars in thousands)Auction rate securities

$
20,000


$



$



$
20,000Fixed income securities


8,000



8







8,008Commercial paper


6,506











6,506Total marketable securities

$
34,506


$
8


$



$
34,514   As of December 31, 2006Gross


GrossAmortized


Unrealized


Unrealized


MarketCost


Gains


Losses


Value(U.S. dollars in thousands)Corporate bonds

$



$



$



$
Auction rate securities


16,100











16,100Total marketable securities

$
16,100


$



$



$
16,100       2006


2005(U.S. dollars in thousands)Unrealized loss at beginning of year

$
(39
)

$
(139
)Included in net (loss) income for the year


39



100Unrealized income (loss) at end of year

$



$
(39
)   3.
    Acquisitions   -56-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Business
    Combinations Goodwill and Other Intangible Assets
    Tangible Assets:Property and equipment





$
39Indefinite Lived Intangible Assets:Goodwill






4,683Amortizable intangible assets:Technology


2,350Customer relationships


230Non-competition agreements


130Total amortizable intangible assets


2,710



2,710LiabilitiesCurrent liabilities






(49
)Deferred revenue






(97
)Total purchase price allocation





$
7,286  -57-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Tangible Assets:Property and equipment





$
15Prepaid expenses






6Indefinite Lived Intangible Assets:Goodwill






2,838Amortizable intangible assets:Customer relationships


500Non-competition agreements


70Total amortizable intangible assets


570



570LiabilitiesDeferred revenue






(137
)Total purchase price allocation





$
3,292       2007

2006(U.S. dollars in thousands, except per share data)Revenue

$
77,867


$
78,486Net (loss) income


(931
)


1,049Earnings (loss) per share, basic and diluted

$
(0.03
)

$
0.03    -58-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        December 31, 2007Gross





NetAmortization


Carrying


Accumulated


CarryingPeriod (Years)


Amount


Amortization


AmountGoodwill





$
7,521


$



$
7,521Intangible assetsTechnology


4



2,350



(489
)


1,861Customer relationships


5



730



(111
)


619Non-competition agreements


3



200



(52
)


148Amortizable intangible assets






3,280



(652
)


2,628Total goodwill and intangible assets





$
10,801


$
(652
)

$
10,149     2008

2009

2010

2011

2012Amortization expense

$
800


$
800


$
747


$
244


$
37   4.
    Restructuring  Subsequent Events
       -59-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ExcessFacilities


Severance





Total(U.S. dollars in thousands)Balance at December 31, 2004

$
7,571


$
361






$
7,932Cash outlays in 2005


(5,527
)


(264
)






(5,791
)2005 adjustments in estimates


(92
)


(97
)






(189
)Balance at December 31, 2005


1,952











1,9522006 charges


207











207Cash outlays in 2006


(645
)










(645
)2006 adjustments in estimates


(207
)










(207
)Balance at December 31, 2006


1,307











1,3072007 charges


1,233











1,233Cash outlays in 2007


(149
)










(149
)Balance at December 31, 2007

$
2,391


$







$
2,391       5.
    Restricted
    Cash   -60-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Other
    Accrued Liabilities    As of December 31,2007


2006(U.S. dollars in thousands)Income and other taxes payable

$
4,657


$
4,775Other


7,103



6,231Total other accrued liabilities

$
11,760


$
11,006   7.
    Operating
    Lease Commitments    Future Lease


Future RentalYear Ending December 31,

Payments


Income2008

$
5,542


$
1,1182009


5,077



4152010


4,692



3492011


3,861



3492012


3,326



348Thereafter


1,913



174Total

$
24,411


$
2,753     8.
    Property
    and Equipment, Net    As of December 31,2007


2006(U.S. dollars in thousands)Computer equipment

$
12,226


$
12,534Leasehold improvements


6,705



6,545Office equipment


677



647Furniture and fixtures


901



780Total property and equipment

$
20,509


$
20,506Accumulated depreciation


(17,865
)


(17,647
)Total property and equipment, net

$
2,644


$
2,859  -61-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    9.
    Redeemable
    Preference Shares and Shareholders Equity        10.
    Share-Based
    Compensation Plans   -62-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Availablefor FuturePlan

Authorized

Outstanding

Grants1997 Share Option Scheme


12,900,000



6,199,042



2006 Share Incentive Plan


4,000,000
#


1,635,800



2,865,1691997 Director Share Option Scheme


500,000



351,000



Genesis Development Corporation 1997 Stock Option Plan



**


228



Netfish Technologies, Inc. 1999 Stock Option Plan



**


25,594



17,400,000



8,211,664



2,865,169     #
    
    Includes 672,681 shares, as of December 31, 2007, from
    the 1997 Share Option Scheme and 1997 Director Share
    Option Scheme that were forfeited, cancelled, held back upon
    exercise of an option or settlement of an award to cover the
    exercise price or tax withholding, reacquired by IONA prior to
    vesting, satisfied without the issuance of shares or otherwise
    terminated (other than by exercise).**
    
    In connection with acquisitions of Genesis Development
    Corporation and Netfish Technologies, Inc., or Netfish, all of
    the outstanding share options for these plans were converted
    into options to purchase IONAs ordinary shares.  Share
    Options
    As of Year Ended December 31,2007


2006


2005Number


Weighted


Number


Weighted


Number


Weightedof


Average


of


Average


of


AverageOptions


Exercise Price


Options


Exercise Price


Options


Exercise PriceOutstandingbeginning of period


7,533,559


$
4.81



6,621,645


$
4.81



5,605,339


$
4.93Granted


1,449,500



5.19



1,814,550



4.15



2,469,850



4.05Forfeitures


(559,324
)


6.73



(506,276
)


4.52



(1,070,080
)


4.67Exercised


(425,121
)


2.74



(396,360
)


2.36



(383,464
)


2.06Outstandingend of period


7,998,614


$
4.84



7,533,559


$
4.81



6,621,645


$
4.81Exercisable at end of period


4,910,380


$
5.01



3,832,783


$
5.42



2,715,672


$
5.74  -63-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options Outstanding


Options ExercisableWeighted











WeightedAverage


Weighted








Average


WeightedRemaining


Average


Aggregate





Remaining


Average


AggregateRange of

Number of


Contractual Life


Exercise


Intrinsic


Number of


Contractual Life


Exercise


IntrinsicExercise Prices

Shares


(Years)


Price


Value


Shares


(Years)


Price


Value$1.99 - $ 3.50


2,826



6.4


$
2.79


$
1,359



2,239



6.1


$
2.70


$
1,269$3.51 - $ 5.00


1,991



8.0



4.14







898



7.7



4.19



$5.01 - $ 6.50


2,224



7.9



5.45







826



6.6



5.34



$6.51 - $ 8.00


792



5.9



7.33







781



5.9



7.33



$8.01 - $74.50


166



2.5



28.09







166



2.5



28.09



Total


7,999



7.1


$
4.84


$
1,359



4,910



6.3


$
5.01


$
1,269     Phantom
    Share Units
    2007WeightedNumber of


Average FairShares


ValueGranted


221,300


$
5.33Vested






Forfeitures


(8,250
)


5.33Outstandingend of period


213,050


$
5.33Exercisableend of period






    -64-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Valuation
    and Expense Information under SFAS 123R
    2007

2006

2005Risk-free interest rate


4.6
%


5.0
%


4.4
%Expected dividend yield










Expected volatility


66.9
%


75.3
%


77.0
%Expected life (years)


3.83



3.26



3.89         2007

2006

2005Risk-free interest rate


4.7%



4.8%



2.0%Expected dividend yield










Expected volatility


53.0%



75.1%



78.0%Expected life


6 months



6 months



6 months     11.  1999
    Employee Share Purchase Plan
   -65-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Net
    (Loss) Income Per Ordinary Share and ADS    Year Ended December 31,2007


2006


2005(In thousands, except per share data)Numerator:Numerator for basic and diluted net (loss) income per ordinary
    share and ADS (loss) income available to ordinary
    shareholders

$
(738
)

$
2,520


$
(843
)Denominator:Denominator for basic net (loss) income per ordinary and ADS
    shareweighted average ordinary shares and ADS


36,329



35,648



35,139Effect of employee share options






621



Denominator for diluted net (loss) income per ordinary share and
    ADS


36,329



36,269



35,139Basic net (loss) income per ordinary share and ADS

$
(0.02
)

$
0.07


$
(0.02
)Diluted net (loss) income per ordinary share and ADS

$
(0.02
)

$
0.07


$
(0.02
)     13.
    Income
    Taxes    Year Ended December 31,2007


2006


2005(U.S. dollars in thousands)Ireland*

$
(5,648
)

$
238


$
(2,717
)Rest of World


3,910



3,494



2,794Total

$
(1,738
)

$
3,732


$
77     *
    
    Domestic -66-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended December 31,2007


2006


2005(U.S. dollars in thousands)Current:Ireland

$
467


$
520


$
448Rest of World


461



692



472Total current


928



1,212



920Deferred:Ireland










Rest of World


(1,928
)






Total deferred


(1,928
)






Total (benefit) provision for income taxes

$
(1,000
)

$
1,212


$
920     Year Ended December 31,2007


2006


2005(U.S. dollars in thousands)Income taxes computed at the Irish statutory income tax rate of
    12.5%

$
(217
)

$
467


$
10State tax, net of federal benefit


60



42



Income (loss) from Irish manufacturing operations at lower rates


141



(134
)


123Operating losses not utilized


129







490Operating losses utilized


(717
)


(1,273
)


(1,548
)Income (loss) subject to different rates of tax


1,085



1,123



1,736Income not subject to tax


(238
)


(201
)


(106
)Non-deductible expenses


529



770



101Change in the valuation allowance


(1,928
)






Other items


156



418



114Total (benefit) provision for income taxes

$
(1,000
)

$
1,212


$
920     Year Ended December 31,2007


2006


2005(U.S. dollars in thousands)Deferred tax assets:Principally net operating loss carryforwards

$
40,887


$
59,473


$
60,884Other


1,668



1,651



1,156Total deferred tax assets


42,555



61,124



62,040Valuation allowance


(40,627
)


(61,124
)


(62,040
)Net deferred tax assets

$
1,928


$



$
  -67-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for
    Income Taxes,
           -68-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for
    Uncertainty in Income Taxes,
        Balance, January 1, 2007

$
1.1Increases and (decreases) for tax positions taken during a prior
    period


Increases and (decreases) for tax positions taken during the
    current period


0.1Decreases relating to settlements


Decreases resulting from the expiration of the statute of
    limitations


(0.1
)Balance, December 31, 2007

$
1.1    -69-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14.
    Industry
    and Geographic Information  Disclosures About
    Segments of an Enterprise and Related Information,
    Year Ended December 31,2007

2006

2005Artix


33
%


26
%


14
%Orbix


65
%


74
%


86
%Fuse


2
%






     Revenue
    by Geographic Region:
  Year Ended December 31,2007


2006


2005(U.S. dollars in thousands)Americas

$
42,930


$
42,680


$
32,199Europe, Middle East and Africa


25,066



22,680



25,982Asia-Pacific Rim


9,664



12,478



8,625Consolidated total

$
77,660


$
77,838


$
66,806     Long
    Lived Assets by Geographic Region:
  As of December 31,2007


2006


2005(U.S. dollars in thousands)Country of DomicileIreland

$
11,353


$
1,777


$
2,417Foreign CountriesAmericas


2,072



947



1,228Rest of Europe, Middle East and Africa


76



38



52Asia-Pacific Rim


720



237



387Consolidated total

$
14,221


$
2,999


$
4,084  -70-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Related
    Party Transactions            16.
    Contingencies   -71-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    Guarantees      18.
    Quarterly
    Financial Information (Unaudited)  Q1

Q2

Q3

Q42007

2007

2007

2007

Total(In thousands, except per share data)Revenue

$
15,582


$
19,770


$
24,213


$
18,095


$
77,660Gross profit

$
11,947


$
15,892


$
20,373


$
14,485


$
62,697Net (loss) income

$
(2,848
)

$
(1,212
)

$
3,129


$
193


$
(738
)Basic net (loss) income per ordinary share and per ADS

$
(0.08
)

$
(0.03
)

$
0.09


$
0.01


$
(0.02
)Diluted net (loss) income per ordinary share and per ADS

$
(0.08
)

$
(0.03
)

$
0.08


$
0.01


$
(0.02
)   Q1

Q2

Q3

Q42006

2006

2006

2006

Total(In thousands, except per share data)Revenue

$
17,004


$
17,722


$
20,325


$
22,787


$
77,838Gross profit

$
13,603


$
14,336


$
16,849


$
19,307


$
64,095Net (loss) income

$
(621
)

$
(232
)

$
497


$
2,876


$
2,520Basic net (loss) income per ordinary share and per ADS

$
(0.02
)

$
(0.01
)

$
0.01


$
0.08


$
0.07Diluted net (loss) income per ordinary share and per ADS

$
(0.02
)

$
(0.01
)

$
0.01


$
0.08


$
0.07   19.
    Subsequent
    Events (Unaudited)   -72-




---



##### Table of Contents



IONA
    TECHNOLOGIES PLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     -73-




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)
    Disclosure
    Controls and Procedures  Rule 13a-15(e) 15d-15(e))
  (b)  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
      (c)
    Changes
    in Internal Control over Financial Reporting  Rule 13a-15 Rule 15d-15
  Item 9B.
    Other
    Information   -74-




---



##### Table of Contents



PART III    Item 10.
    Directors,
    Executive Officers and Corporate Governance    Form 20-F www.iona.com 781-902-8000. Regulation S-K www.iona.com
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits and
    Financial Statement Schedules  Form 10-K:
                       -75-




---



##### Table of Contents



SIGNATURES    IONA TECHNOLOGIES PLC
  By:
    /s/  Peter
    M. Zotto  Peter M. Zotto
 Chief Executive
    Officer
    Signature

Title/s/  Peter
    M. ZottoPeter
    M. Zotto

Chief Executive Officer and Director(Principal Executive Officer)/s/  Christopher
    M. MirabileChristopher
    M. Mirabile

Chief Financial Officer(Principal Financial Officer)/s/  Barbara
    BrandonBarbara
    Brandon

Corporate Controller(Controller)/s/  Kevin
    MeliaKevin
    Melia

Chairman of the Board/s/  Christopher
    J. HornChristopher
    J. Horn

Vice Chairman of the Board/s/  Sean
    BakerSean
    Baker

Director/s/  Ivor
    KennyIvor
    Kenny

Director/s/  James
    D. MaikranzJames
    D. Maikranz

Director/s/  Bruce
    J. RyanBruce
    J. Ryan

Director/s/  Francesco
    ViolanteFrancesco
    Violante

Director  -76-




---



##### Table of Contents



Exhibit Index
  Form 10-K.
  Exhibit No.

Description of Exhibit3
.1

Restated Articles of Association, as amended, of IONA
    Technologies PLC(1)3
.2

Memorandum of Association, as amended, of IONA Technologies
    PLC(2)4
.1

Specimen Certificate representing ordinary shares(2)4
.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(3)4
.5

Description of American Depositary Receipts(3)10
.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.(4)10
.2

Lease dated July 31, 1998, by and between AIB Custodial
    Nominees Limited and IONA Technologies PLC(4)10
.3

Lease dated March 2, 1999, by and between Boston Properties
    Limited Partnership and IONA Technologies, Inc.(4)10
.4

First Amendment dated August 1, 2005 to Lease dated
    March 2, 1999, by and between Boston Properties Limited
    Partnership and IONA Technologies, Inc.(5)10
.5*

Second Amendment dated September 6, 2005 to Lease dated
    March 2, 1999, by and between Boston Properties Limited
    Partnership and IONA Technologies, Inc.10
.6

1997 Share Option Scheme, as amended(6)10
.7

1997 Director Share Option Scheme(2)10
.8

1999 Employee Share Purchase Plan, as amended(1)10
.9

Genesis Development Corporation 1997 Stock Option Plan(6)10
.10

Netfish Technologies, Inc. 1999 Stock Option Plan(7)10
.11

2006 Share Incentive Plan(8)10
.12

Form of Share Option Agreement(11)10
.13

Form of Non-Qualified Option Agreement(11)10
.14*

Form of Phantom Share Unit Agreement10
.15

Non-Executive Directors Change in Control Plan(9)10
.16*

First Amendment to Non-Executive Directors Change in Control
    Plan, dated November 29, 200710
.17

Form of Change of Control Agreement by and among IONA
    Technologies, Inc., IONA Technologies PLC and each of the
    executive officers of IONA Technologies PLC(9)10
.18*

Form of First Amendment to Change of Control Agreement by and
    among IONA Technologies, Inc., IONA Technologies PLC and each of
    the executive officers of IONA Technologies PLC10
.19

Employment Agreement by and between Peter M. Zotto and IONA
    Technologies PLC dated as of April 14, 2005(10)10
.20*

Amended and Restated Employment Agreement by and between Peter
    M. Zotto and IONA Technologies PLC dated effective
    April 14, 200810
.21

Indemnification Agreement by and between IONA Technologies PLC
    and Robert McBride dated as of December 19, 2005(5)10
.22

Senior Management Team Bonus Plan(12)21
.1*

Active Subsidiaries of IONA Technologies PLC23
.1*

Consent of Independent Registered Public Accounting Firm




---



##### Table of Contents



Exhibit No.

Description of Exhibit31
.1*

Certification of Principal Executive Officer required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2*

Certification of Principal Financial Officer required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1**

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     
    
    This exhibit is a management contract or compensatory plan or
    arrangement required to be filed as an exhibit pursuant to
    Item 15(a) of
    Form 10-K.*
    
    Filed herewith.**
    
    Furnished herewith.(1)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-8 (File
    No. 333-11384).(2)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-8 (File
    No. 333-06850).(3)
    
    Incorporated by reference to the Companys Annual Report on
    Form 20-F
    for the fiscal year ended December 31, 2003 (File
    No. 0-29154).(4)
    
    Incorporated by reference to the Companys Annual Report on
    Form 20-F
    for the year ended December 31, 2000 (File
    No. 0-29154).(5)
    
    Incorporated by reference to the Companys Annual Report on
    Form 20-F
    for the year ended December 31, 2005 (File
    No. 0-29154).(6)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-8 (File
    No. 333-12326).(7)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-8 (File
    No. 333-13494).(8)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-8 (File
    No. 333-137364).(9)
    
    Incorporated by reference to the Companys Annual Report on
    Form 20-F
    for the year ended December 31, 2002 (File
    No. 0-29154).(10)
    
    Incorporated by reference to the Companys Annual Report on
    Form 20-F
    for the year ended December 31, 2004 (File
    No. 0-29154).(11)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 26, 2008.(12)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 21, 2008.