SecProbe.io

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                               ION Networks, Inc.
                             120 Corporate Boulevard
                           South Plainfield, NJ 07080

                                  July 29, 2005

Ms. Barbara C. Jacobs
Assistant Director
US Securities and Exchange Commission
Division of Corporation Finance-Mail Stop 4-6
Washington DC 20549

Via Edgar Correspondence and Federal Express

                 Re:  ION Networks, Inc
                      Amendment No. 3 to the Registration Statement on Form SB-2
                      SEC File No. 333-124274

                      Form 10-KSB for the fiscal year ended December 31,
                      2004, as amended SEC File No. 0-13117

Dear Ms. Jacobs:

     Reference is made to your comment letter dated July 25, 2005, addressed to
Norman E. Corn, and relating to Amendment No. 2 to the Registration Statement on
Form SB-2 (the "Registration Statement"), the Form 10-KSB of ION Networks, Inc.
(the "Company") for the fiscal year ended December 31, 2004, as amended (the
"10-KSB").

     We are filing via the EDGAR system our response to the comment in your
letter related to the above referenced registration and reports. The numbered
paragraphs in this letter correspond to the numbered paragraph in your comment
letter. To the extent indicated, we propose to amend our registration and Form
10-KSB in accordance with our response.

     In addition, we are amending the registration statement to add 1,781,582
shares of common stock, all of which are owned by selling stockholders. These
selling stockholders purchased such shares in a private placement completed in
February 2002. The shares were subsequently registered by the Company on a Form
S-3 registration statement which was declared effective by the SEC. The S-3
registration statement has since lapsed, and the selling stockholders have
requested that the Company include the shares in this registration statement.
These selling stockholders were already listed in the selling stockholders'
table with respect to shares they purchased in a private placement completed in
March 2005, as well as shares underlying warrants which were issued both in the
February 2002 and March 2005 private placements.

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     We have amended the registration statement, including the selling
stockholders' section, to reflect the addition of these 1,781,582 shares of
common stock. For your convenience, enclosed are two marked copies of the
registration statement and two clean copies of the registration statement and
amendment to Form 10-KSB.

     Please call if you have any questions or further comments.

                                            Very truly yours,

                                            Patrick E. Delaney
                                            Chief Financial Officer

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FORM SB-2
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FORM 10-KSB/A
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Note 2 Summary of Significant Accounting Policies
-------------------------------------------------

Revenue Recognition, page 44
----------------------------

     1.   In response to your comment letter dated July 25, 2005. ION believes
          that it has correctly recognized revenue derived from the sales of
          PRIISMS software packages based on the specific conditions as defined
          in Statement of Position 97-2 Software Revenue Recognition dated
          October 27, 1997 in the Conclusion section under Basic Principles
          paragraph .08. The following explanation of the individual revenue
          recognition criteria are presented in order to clarify that ION
          Network's policy of recognizing all revenue related to the sale of
          PRIISMS software when shipped is appropriate.

          ION's software products are sold as finished software packages for a
          one-time up-front license fee, which permits the customer to utilize
          the software pursuant to the terms of a license. Other than during an
          initial 90-day warranty period from the date of shipment, the
          purchaser is entitled to no upgrades/enhancements or services, which
          in anyway would take on the attributes of multi-element arrangement.
          The customer, at its option, may purchase an annual maintenance
          program from the Company which would permit it to receive
          upgrades/enhancements or services as part of the maintenance program.
          Maintenance revenue is billed in advance and recognized ratably over
          the term of the maintenance agreement.

          Delivery is considered to occur when the product is shipped by ION to
          the customer. This is the same criteria that the Company uses for its
          hardware products. This is evidenced by normal shipping documents and
          invoices.

          The one-time license fee is fixed and determinable as evidenced by the
          receipt from the customer of a Purchase Order, which outlines the
          customer's request to purchase a PRIISMS software package at a
          specific price to be shipped to a specific destination on or about a
          specific date with specific payment terms, 30 to 60 days. The Company
          either accepts or rejects the Purchase Order. If the Company accepts
          the Purchase Order it packages the product with appropriate
          documentation and ships it to the customer. At this point, with the
          exception of the 90-day warranty period, the transaction is complete
          pending receipt of payment from the customer.

          The collectibility of ION's billed revenue has been fully disclosed in
          our periodic financial reports. During the past two years, the Company
          has had very little bad debt and no bad debts have been recognized
          from the sales of PRIISMS products.

          The Company sells the package as a complete product and does not offer
          refunds or discounts if the customer does not utilize the product to
          its full potential.

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     Based on all of the elements of SOP 97-2 ION believes that its revenue
recognition policy is correct and does not require restatement. However, in
order to respond to your request for further clarification we have expanded our
disclosure for Revenue Recognition Policy in Amendment No. 3 to the Registration
Statement on Form SB-2 (the "Registration Statement"), the Form 10-KSB of ION
Networks, Inc. (the "Company") for the fiscal year ended December 31, 2004, as
amended (the "10-KSB"). In addition, based on conversations with your staff ION
will strongly consider expanding the disclosure and reporting of product
segmentation information in future filings.

     For your convenience presented below are our prior disclosure and amended
disclosure for revenue recognition:

Prior Disclosure

The Company recognizes revenue from product sales to end users, value-added
resellers (VARs) and original equipment manufacturers (OEMs) upon shipment if no
significant vendor obligations exist and collectibility is probable. We do not
offer our customers the right to return products, however the Company records
warranty costs at the time revenue is recognized. Management estimates the
anticipated warranty costs but actual results could differ from those estimates.
Maintenance contracts are sold separately and maintenance revenue is recognized
on a straight-line basis over the period the service is provided, generally one
year.

Amended Disclosure

The Company recognizes revenue from product sales of hardware and software to
end-users, value added resellers (VARs) and original equipment manufacturers
(OEMs) upon shipment if no significant vendor obligations exist and
collectibility is probable. The Company does not offer customers the right to
return products, however the Company records warranty costs at the time revenue
is recognized. Management estimates the anticipated warranty costs but actual
results could differ from those estimates.

In addition, the Company sells internally developed stand-alone finished
software packages ("PRIISMS Software"), which permit end-users to monitor,
secure and administer voice and data communications networks. The software
packages permit the customer to utilize the PRIISMS software pursuant to the
terms of the license. Other than during an initial ninety-day warranty period
from the date of shipment, the purchaser is not entitled to
upgrades/enhancements or services that can be attributable to a multi-element
arrangement. In addition, the customer does not have any rights to exchange or
return the software. Since the software package sale does not require
significant production, modification or customization, the Company recognizes
revenue at such time the product is shipped and collectibility is probable in
accordance with the accounting guidance of under Statement of Position 97-2,
"Software Revenue Recognition".

The Company sells separate customer maintenance contracts and maintenance
revenue is recognized on a straight-line basis over the period the service is
provided, generally one year. On some occasions, maintenance is provided on a
time and material basis in which case revenue is recognized upon shipment of the
repaired item.
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