form_10ksba-063003

10KSB/A 1 form_10ksba-063003.htm form_10ksba-063003

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB/A

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission file number 0-11730

COGNIGEN NETWORKS, INC.
(Name of small business issuer in its charter)

COLORADO 84-1089377
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)

7001 Seaview Avenue, N.W.,
Suite 210
Seattle, Washington 98117
------------------- ----------
(Address of principal (Zip Code)
executive offices)

Issuer's telephone number: (206) 297-6151

-------------------------------------
Securities registered under Section 12(b) of the Exchange Act:
None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock
----------------------------
(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |X| No __
---

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

State issuer's revenue for its most recent fiscal year: $10,916,272

The aggregate market value of the voting and non-voting common equity held
by non-affiliates at September 17, 2003, computed by reference to the last sale
price of $.53 per share on the OTC Bulletin Board, was $3,841,478.

The number of shares outstanding of each of the issuer's classes of common
equity on September 17, 2003, was 9,553,972.

Documents Incorporated by Reference

None

Transitional Small Business Disclosure Format Yes __ No |X|
---

TABLE OF CONTENTS

PART I
Item 1. Description of Business*
Item 2. Description of Property*
Item 3. Legal Proceedings*
Item 4. Submission of Matters to a Vote of Security Holders*

PART II
Item 5. Market for Common Equity and Related Stockholder Matters*
Item 6. Management's Discussion and Analysis or Plan of Operations*
Item 7. Financial Statements*
Item 8. Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure*
Item 8A. Controls and Procedures*

PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Item 14. Principal Accountaint Fees and Services

* The information required by Items 1 through 8 was set forth in our Annual
Report on Form 10-KSB that was filed on September 29, 2003.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

CURRENT DIRECTORS

The name, position with us, age of each of our current directors and the
period during which each of our current directors has served as one of our
directors are as follows:

Name and Position Age Director Since
----------------- --- --------------
Gary L. Cook 45 2003
Senior Vice President, Chief
Financial Officer, Treasurer and
Director
Darrell H. Hughes 58 2000
Chairman of the Board and Director,
former President and former Chief
Executive Officer
David L. Jackson 65 1995
Senior Vice President of Corporate
and Public Affairs, Secretary and
Director
Christopher R. Seelbach 64 2001
Director
James H. Shapiro 65 2002
Director

Gary L. Cook has been one of our directors since June 2003 and our Senior Vice
President, Chief Financial Officer and Treasurer since March 2003. Mr. Cook was
one of our directors from October 2002 until March 2003. From June 2002 to March
2003, Mr. Cook was an independent financial consultant. From February 1998 to
June 2002, Mr. Cook was the Secretary and Treasurer of eVision International,
Inc., which has no significant operations and formerly was a holding company,
and was Chief Financial Officer of eVision International, Inc. from September
1998 to June 2002. From 1998 to June 2002, Mr. Cook was Chief Financial Officer,
Treasurer and a Director of American Frontier Financial Corporation, a wholly
owned subsidiary of eVision International, Inc. American Frontier Financial
Corporation filed for Bankruptcy in October 2001. The bankruptcy filing was
dismissed in April 2002. From 1994 to 1996, Mr. Cook was principal of a small
business venture in which he had majority ownership, and from 1982 to 1994, was
a Senior Manager for KPMG, LLP where he managed auditing services for several
clients in various financial and other industries and developed and implemented
accounting, financial reporting and Securities and Exchange Commission reporting
systems for companies. Mr. Cook also is a director of Global Med Technologies,
Inc. Mr. Cook graduated from Brigham Young University.

Darrell H. Hughes has been one of our directors since January 2000 and has been
our Chairman of the Board since July 2000. Mr. Hughes was our President from
July 2000 to October 2003 and our Chief Executive Officer from October 1999 to
October 2003. Mr. Hughes has been the Chief Operating Officer of Business
Computer Training Institute, a regional company that provides entry-level
computer and business training, since October 2003. From April 1997 through
October 1999, Mr. Hughes was Vice President of Sales and Service with AAA
Washington, an automobile association. From October 1996 through March 1997, Mr.
Hughes was the Vice President of Engineering with ITL, a long distance telecom
company. From June 1996 through October 1996, Mr. Hughes was a Manager of
Program Development for Siemens Communications, Inc., a worldwide technology and
communications systems provider. From 1995 until 1996, Mr. Hughes was the
Director of Sales in the Northwest for Ascom Timeplex, a provider of voice,
video and data communications. Mr. Hughes graduated from the University of
Redlands.

David L. Jackson has been one of our directors since February 1995, our Senior
Vice President of Corporate and Public Affairs or our Vice President since
August 1999 and our Secretary since August 1999 and was our Treasurer from
August 1999 to July 2000, our President and Chairman of the Board from 1996 to
August 1999, our Vice President from 1995 to 1996 and our President and the
Chairman of the Board from 1990 to 1992. From August 1999 to March 2002, Mr.
Jackson was a director and the Secretary of Inter-American Telecommunications
Holding Corporation, the net assets of which we acquired in August 1999. Mr.
Jackson has been a licensed real estate broker in California since 1991. Mr.
Jackson graduated from Northwest Nazarene University and from the University of
Denver, College of Law. Mr. Jackson is an arbitrator in dispute resolution of
commercial and labor law. He has been on the roster of arbitrators of the
Federal Mediation and Conciliation Service of the United States Government since
March 1994.

Christopher R. Seelbach has been one of our directors since August 2001. From
1985 to the present, Mr. Seelbach has been President of Seelbach Associates LLC,
a management consulting firm. At various times from 1998 through May 2001, Mr.
Seelbach served as a consultant, director, Chief Operating Officer and acting
Chief Financial Officer of CallNOW.com, Inc., a telecommunications company. From
1994 to 1998, he was an independent consultant, and served as President and
Chief Executive Officer of Belcom, Inc., a COMSAT international
telecommunications investment, and President of Skysat Communications
Corporation, a wireless telecommunications systems development company. From
1992 to 1994 Mr. Seelbach was a director and Chief Operating Officer of Viatel,
Inc., an international telecommunications company. Prior to 1992, he was a
venture capitalist with Exxon Enterprises and a consultant with McKinsey &
Company. Mr. Seelbach graduated from the United States Naval Academy and
received an M.B.A. from Columbia University.

James H. Shapiro has been one of our directors since October 2002. Since 1995
Mr. Shapiro has been the Chief Executive Officer of Windermere Services Company,
a company that provides real estate services. Mr. Shapiro graduated from the
University of Washington.

EXECUTIVE OFFICERS

Our executive officers are Gary L. Cook and David L. Jackson, information
pertaining to whom is set forth under Current Directors above, and Anthony T.
Sgroi and Richard B. Rime, information pertaining to whom is set forth below.
Our executive officers are elected annually at the first meeting of the Board of
Directors held after each annual meeting of shareholders. Each executive officer
will hold office until his or her successor duly is elected and qualified, until
his or her death or resignation or until he or she shall be removed in the
manner provided by our bylaws.

There are no arrangements or understandings between any executive officer and
any other person pursuant to which any person was selected as an executive
officer.

Anthony T. Sgroi, 37, has been the President of our Cognigen Resale Division
since April 2002 and our Chief Operating Officer since September 2003. From
January 2001 to March 2002, Mr. Sgroi was the President, North America, of the
Carrier Division of Global Crossing, a telecommunications company. From January
1996 to December 2000, Mr. Sgroi was a Senior Vice President, North America, of
Frontier Communications, a telecommunications company. From March 1997 to
December 1998, Mr. Sgroi was the Director of the Eastern Region for Frontier
Communications. Mr. Sgroi was a founder of Intandem Communications Corp. in
September 2002. Mr. Sgroi graduated from the University at Buffalo School of
Management.

Richard B. Rime, 46, has been our Vice President of Sales and Marketing since
February 2003. From September 2002 to February 2003, Mr. Rime was our Managing
Director of Sales and Marketing. For over 12 years prior to September 2002, Mr.
Rime was with AAA Washington, lastly as Director of Business Development. Mr.
Rime graduated from Evergreen State College.

CONSULTANT

Kevin E. Anderson is not one of our executive officers but makes and is expected
to make a significant contribution to our business. Mr. Anderson, who is 52, has
been a consultant to us and our Board of Directors since August 1999 and the
founder and President of Cognigen Corporation and Kevin E. Anderson Consulting,
Inc. Mr. Anderson graduated from the University of California at Los Angeles.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and
directors and persons who beneficially own more than 10% of our outstanding
common stock to file reports of beneficial ownership with the Securities and
Exchange Commission and to furnish us with copies of the reports.

Based solely on a review of the Forms 3, 4 and 5 and amendments thereto
furnished to us during our fiscal year ended June 30, 2003, the persons who were
either one of our directors or officers or who beneficially owned more than 10%
of our common stock who failed to file on a timely basis reports required by
Section 16(a) of the Securities Exchange Act of 1934 were Kevin E. Anderson, the
Anderson Family Trust and Peter Tilyou, as trustee of the Anderson Family Trust,
all of whom may have failed to file their respective Forms 4 or Forms 5 during
our fiscal year ended June 30, 2003, and Richard B. Rime who was late in filing
his Form 3 during our fiscal year ended June 30, 2003.

Item 10. Executive Compensation.

EXECUTIVE COMPENSATION

The following table provides certain information pertaining to the compensation
paid by us and our subsidiaries during our last three fiscal years for services
rendered by our Chief Executive Officer and the persons who were our most highly
compensated executive officers and who received annual salary and bonus in
excess of $100,000 from us during the fiscal year ended June 30, 2003.

Summary Compensation Table
--------------------------

Long Term
Compensation
Annual Compensation Awards
------------------- ------
Fiscal
Name and Year Other Securities All Other
Principal Ended Annual Comp Underlying Compensation
Position June 30 Salary ($) Bonus ($) ($) Options (#) ($)
-------- ------- ---------- --------- ---------- ----------- -----------
Darrell H. Hughes 2003 $153,880 -- -- $10,635(b) -- -- -- --
President from 2002 $125,000(a) -- -- $24,638(b) -- -- -- --
July 2000 to 2001 $125,000 -- -- -- -- 200,000(c) -- --
October 2003 and
Chief Executive
Officer from
October 1999 to
October 2003

Jimmy L. Boswell 2003 $132,096 -- -- -- -- -- -- -- --
President and 2002 $120,000(a) -- -- -- -- -- -- -- --
Chief Operating 2001 $120,000 $100,000 -- -- 200,000(c) -- --
Officer from
August 20, 1999
to July 2000 and
Executive Vice
President and
Chief Operating
Officer from
July 2000 to
January 2003

David L. Jackson 2003 $137,096 -- -- -- -- -- -- -- --
President and 2002 $120,000(a) -- -- -- -- -- -- -- --
Treasurer until 2001 $120,000 ---- -- -- 200,000(c) -- --
August 20, 1999
and Senior Vice
President of
Corporate and
Public Affairs
and Secretary
since August 20,
1997

David G. Lucas 2003 $117,232(d) -- -- -- -- -- -- -- --
Treasurer and 2002 $101,250(a) -- -- -- -- -- -- -- --

Chief Financial 2001 $ 90,000 $100,000 -- -- 200,000(c) -- --
Office from
August 20, 1999
to March 2003

(a) We issued to Darrell H. Hughes, Jimmy L. Boswell, David L. Jackson, and
David G. Lucas, 9,376, 9,376, 9,376 and 7,032 shares of our common stock,
respectively, in lieu of cash, for approximately 20% of their salary for the
periods ending August 31, September 15, September 30, October 15, October 31 and
November 15, 2001. The number of shares of our common stock issued was based on
a value of $0.64 per share. The $0.64 per share was the last reported sale price
of our common stock on September 24, 2001.

(b) The $10,635 and the $24,638 represent the amounts Darrell H. Hughes was
reimbursed for items he was entitled to under his original employment agreement
with us. The $10,635 consists of an automobile allowance of $7,200, life
insurance premiums of $1,560 and a contribution match of $1,875 for his previous
employer's 401(k) plan. The $24,638 represents a contribution match for his
previous employer's 401(k) plan of $8,438 and an automobile allowance of $16,200
for 27 months.

(c) On August 25, 2000, Darrell H. Hughes, Jimmy L. Boswell, David L. Jackson
and David G. Lucas were each granted a five-year option to purchase 200,000
shares of our common stock at an exercise price of $3.68 per share. During
September 2001, each option held by Messrs. Hughes, Jackson and Lucas was
voluntarily surrendered without compensation by Messrs. Hughes, Jackson and
Lucas. Mr. Boswell retained his option.

(d) Includes $5,000 of consulting fees paid to Mr. Jackson.

OPTION INFORMATION PERTAINING TO EXECUTIVE OFFICERS

Option Grants in Last Fiscal Year

No options to purchase our common stock were granted by us to Darrell H. Hughes,
Jimmy L. Boswell, David L. Jackson or David G. Lucas during our last fiscal year
ended June 30, 2003.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

No options to purchase our common stock were exercised by any of our executive
officers during our fiscal year ended June 30, 2003. The following table
provides information with respect to the unexercised options to purchase our
common stock held by Jimmy L. Boswell as of June 30, 2003:

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ------------------------- ----------------------------

Jimmy L. Boswell 200,000 / 0 $ 0 / $ 0 (1)

(1) The closing price per share on June 30, 2003 was lower than the exercise
price.

COMPENSATION OF DIRECTORS

Our directors were reimbursed for reasonable out of pocket expenses incurred
related to Board duties assigned in connection with attending board meetings.
The independent directors are compensated at a rate of $1,000 per month and $500
per day per meeting attended in person and are paid $100 per month for serving
as chairman of one of our committees. In addition, we granted options to
purchase 25,000 shares of our common stock to each of our independent directors.

During the fiscal year ended June 30, 2003, we paid Gary L. Cook $20,000 in
consulting fees for providing consulting to our audit committee. The $20,000 was
in addition to $8,000 of directors fees paid to or accrued for Mr. Cook for the
year ended June 30, 2003, while he was one of our independent directors.

For the period from July 1, 2002 to June 30, 2003, we paid to or accrued for Mr.
Seelbach $10,800 in directors' fees and for serving on our committees and in
December 2002 we granted Mr. Seelbach a five year option to purchase 10,000
shares of our common stock at $0.59 per share and in June 2003 we granted Mr.
Seelbach a five year option to purchase 15,000 shares of our common stock at
$0.39 per share. From July 1, 2001, to June 30, 2002, we paid Christopher R.
Seelbach or his company, Seelbach & Associates, $25,409 in fees for Mr. Seelbach
providing consulting services to us. In addition, we paid Mr. Seelbach $224 and
$98 in agent commissions for the fiscal years ended June 30, 2003 and 2002,
respectively.

We paid to or accrued for James H. Shapiro $8,000 in directors' fees and for
serving on our committees for a period of time from October 2002, when Mr.
Shapiro first became a director, through June 30, 2003. In addition, in December
2002 we granted Mr. Shapiro a five-year option to purchase 10,000 shares of our
common stock at $0.59 per share and in June 2003 we granted Mr. Shapiro a
five-year option to purchase 15,000 shares of our common stock at $0.39 per
share.

In April 2003, we issued Joseph W. Bartlett 35,000 shares of our common stock
and granted him a five-year option to purchase 25,000 shares of our common stock
at $0.38 per share for becoming one of our directors. For the period from April
2003 to June 30, 2003, we paid to or accrued for Mr. Bartlett $2,000 in
directors' fees. Mr. Bartlett resigned as one our directors on October 2003.

EMPLOYMENT AGREEMENTS

We have no employment agreements with Darrell H. Hughes, Jimmy L. Boswell or
David L. Jackson and have no compensation plan or arrangement required to be
reported hereunder for such persons.

CONSULTING AGREEMENTS

We entered into a consulting agreement with Kevin E. Anderson Consulting, Inc.
to provide expanded consulting and technical/administrative services. Under the
consulting agreement we paid Kevin E. Anderson Consulting, Inc. $1,000 per month
to provide up to 20 hours of telecommuting consulting services. Commencing in
March 2003, we entered into a new consulting agreement with Kevin E. Anderson.
Under the consulting agreement we paid Kevin E. Anderson Consulting, Inc. for
expanded consulting and technical/administrative services at a rate of $4,000
per month commencing in January 2003 and paid approximately $700 per month of
expenses associated with his Internet T-1 connection.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.

PRINCIPAL SHAREHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth as of October 27, 2003, the number of shares of
our outstanding common stock beneficially owned by each of our current
directors, sets forth the number of shares of our outstanding common stock
beneficially owned by all of our current executive officers and directors as a
group, sets forth the number of shares of our outstanding common stock owned by
Jimmy L. Boswell and David G. Lucas, and sets forth the number of shares of our
outstanding common stock owned by each person who owned of record, or was known
to own beneficially, more than five percent of the outstanding shares of our
common stock:

Amount and Nature of
Beneficial
Name and Address Ownership(1) Percent of Class
---------------- -------------------- ----------------

Gary L. Cook 130,000(2) 1.3%
61 W. Surrey Drive
Castle Rock, CO 80108

Darrell H. Hughes 818,507 8.7%
Suite 210
7001 Seaview Avenue N.W.
Seattle, WA 98117

David L. Jackson 283,642 3.0%
1071 Oak Hill Road
Lafayette, CA 94549

Christopher R. Seelbach 40,000(3) Less than 1%
44 Woodcrest Avenue
Short Hills, NJ 07078

James H. Shapiro 25,188(4) Less than 1%
5424 Sand Point Way, N.E.
Seattle, WA 98105

All current executive 1,373,445(5) 14.0%
officers and directors as a
group (7 persons)

Jimmy L. Boswell 459,377(6) 4.7%
Suite 103A
3220 South Higuera Street
San Luis Obispo, CA 93401

David G. Lucas 257,033 2.7%
Suite 103A
3220 South Higuera Street
San Luis Obispo, CA 93401

Cognigen Corporation 25,250(7) Less than 1%
2608 Second Avenue, Suite 108
Seattle, WA 98121

Anderson Family Trust 1,158,505(7)(8) 12.1%
2608 Second Avenue, Suite 108
Seattle, WA 98120

Kevin E. Anderson 1,158,505(7)(8) 12.1%
2608 Second Avenue, Suite 108
Seattle, WA 98120

Peter Tilyou 1,158,505(9)(10) 12.1%
2608 Second Avenue, Suite 555
Seattle, WA 98121

(1) Except as indicated below, each person has sole and voting and/or
investment power over the shares listed.

(2) Represents 130,000 shares underlying two presently exercisable options.

(3) Includes 25,000 shares underlying presently exercisable options.

(4) Includes 25,000 shares underlying presently exercisable options.

(5) Includes the 180,000 shares underlying the presently exercisable options
specified in footnotes (1) through (4) above, 60,000 shares underlying an
option granted to Anthony T. Sgroi, 1,108 shares beneficially owned by
Richard B. Rime and 15,000 shares underlying an option granted to Richard
B. Rime.

(6) Includes 200,000 shares underlying a presently exercisable option.

(7) Kevin E. Anderson and members of his family are the beneficiaries of the
Anderson Family Trust, which owns approximately 98.9% of the outstanding
common stock of Cognigen Corporation. Mr. Anderson may be deemed to
beneficially own the 25,250 shares of the common stock that Cognigen
Corporation may be deemed to beneficially own.

(8) Kevin E. Anderson and members of his family are the beneficiaries of the
Anderson Family Trust. Kevin E. Anderson may be deemed to beneficially own
the shares of the owned by the Anderson Family Trust.

(9) Includes the shares owned by the Anderson Family Trust #2 and Cognigen
Corporation, all of which may be deemed to be beneficially owned by Peter
Tilyou. Mr. Tilyou is the sole trustee, but not a beneficiary of the
Anderson Family Trust.

(10) The information pertaining to the shares of common stock beneficially owned
by the Anderson Family Trust and Cognigen Corporation is based on our
shareholder records.

Stock Option Plan

We adopted an incentive and non-statutory option plan at our Annual Meeting of
Shareholders held on March 15, 2001. The plan authorizes the granting of options
to our officers, directors, employees and consultants to purchase shares of our
common stock.

The following is a table with information regarding our equity compensation
plans as of June 30, 2003:

Equity Compensation Plans
--------------------------------------------------------------------------------
Plan category Number of Weighted-average Number of
securities to exercise price of securities
be issued upon outstanding remaining
exercise of options, warrants available for
outstanding and rights future issuance
options, under equity
warrants and compensation
rights plans (excluding
(a) (b) securities
reflected in
column (a)
(c))
--------------------------------------------------------------------------------

Equity compensation
plans approved by
security holders 366,000 $0.40 259,000
--------------------------------------------------------------------------------
Equity compensation
plans not approved by
security holders 2,630,000 $1.83 -
--------------------------------------------------------------------------------
Total 2,996,000 $1.66 259,000
--------------------------------------------------------------------------------

A description of the options and warrants issued without shareholder approval is
contained in Note 7 - Stockholder's Equity - Stock Options and Warrants -
contained in our Notes to Consolidated Financial Statements that were filed as a
part of Item 7 of our 10-KSB that was previously filed.

Item 12. Certain Relationships and Related Transactions.

TRANSACTIONS WITH MANAGEMENT AND OTHERS
AND CERTAIN BUSINESS RELATIONSHIPS

Stock Redemption Agreement between us, the Anderson Family Trust, Cantara
Communications Corporation, and Kevin E. Anderson Consulting, Inc.

On December 7, 2001, we closed a transaction in which we purchased, or redeemed,
2,712,500 shares of our common stock from the Anderson Family Trust. The
Anderson Family Trust delivered shares from those owned by Cognigen Corporation,
a company 98.9 % owned by the Anderson Family Trust, to satisfy its obligation
pursuant to the transaction. Kevin E. Anderson and members of his family are the
beneficiaries of the Anderson Family Trust. Kevin E. Anderson may be deemed to
beneficially own the shares of our common stock owned by the Anderson Family
Trust.

As consideration for the share purchase, among other consideration, we
transferred to Cantara Communications Corporation, an affiliate of Kevin E.
Anderson, the rights to become the up-line for our current accounts and thereby
be entitled to commissions, fees and bonuses on our current customer accounts,
with a commission not to exceed 12% which commission was limited by various caps
through December 31, 2002. In addition, as a part of the transaction, our
agreement with Kevin E. Anderson Consulting, Inc., pursuant to which we paid
Kevin E. Anderson Consulting, Inc. consulting fees of $14,583 per month, was
cancelled and Kevin E. Anderson was retained through March 31, 2003 at the rate
of $1,000.00 per month to provide up to 20 hours telecommuting consulting
services to us per month. Also, under a separate consulting agreement we have
paid and will pay Kevin E. Anderson Consulting, Inc, an additional amount for
expanded consulting and technical/administrative services. For the years ended
June 30, 2002 and June 30, 2003 we paid Cantara Communications Corporation
$266,584 and $547,402 in commissions, respectively, and paid Kevin E. Anderson
Consulting Inc. $92,880 and $70,000, respectively. For the years ended June 30,
2002 and June 30, 2003, we also paid members of Kevin E. Anderson's family
$40,475 and $44,003 in agent commissions, respectively.

Loan from us to JVTEL

On October 11, 2000, we entered into an agreement with JVTEL, a joint venture
between Telkiosk, Inc. and Combined Telecommunications Consultancy, Ltd., whose
managing partner is Peter Tilyou, that gave us the option to sell to JVTEL a
database of off-shore and domestic telephone service subscribers that we
acquired from Inter-American Telecommunications Holding Corporation. According
to the terms of the agreement, in the event that we had not activated a minimum
of 5,000 of the accounts by March 30, 2001, we had the option to sell the
accounts to JVTEL for $1,300,000. The $1,300,000 was to be paid to us in such
number of shares of our common stock that was equal to $1,300,000, less the
forgiveness of debt and interest due to JVTEL on March 30, 2001, divided by the
closing bid price of our common stock on March 30, 2001. On March 31, 2001, we
exercised our option to sell the database to JVTEL because we had not activated
a minimum of 5,000 of the accounts. JVTEL requested and we agreed that the
purchase price of the accounts be paid by JVTEL forgiving the balance of the
debt and accrued interest in the total amount of $689,197 due from us to JVTEL
and its joint venturers and by us accepting a promissory note in the amount of
$85,803 payable on March 30, 2002, with interest at a rate of 8.5% per annum.
This loan was paid with interest on January 31, 2002.

Issuance of Common Stock to Jimmy L. Boswell, Darrell H. Hughes, David L.
Jackson and David G. Lucas

On September 24, 2001, we issued shares of our common stock, which the Board of
Directors valued at $0.64 per share, to the following named officers in the
stated amounts on the stated dates:

TO BE
DISTRIBUTED ON TO BE
SEPTEMBER 30, DISTRIBUTED ON
OFFICER TOTAL PMT 2001 NOVEMBER 15, 2001
------- --------- -------------- -----------------

Jimmy L. Boswell $ 6,000 4,688 shares 4,688 shares
Darrell H. Hughes $ 6,000 4,688 shares 4,688 shares
David L. Jackson $ 6,000 4,688 shares 4,688 shares
David G. Lucas $ 4,500 3,516 shares 3,516 shares

The above named officers had voluntarily agreed for the pay periods ending
August 31, September 15, September 30, October 15, October 31 and November 15,
2001, to accept, in lieu of a payment of cash, approximately twenty percent
(20%) of their respective salaries in our restricted common stock at the fair
market on this date, which based on the last reported sale price on September
24, 2001, was $0.64 per share.

Transaction with Intandem Communications Corp.

On April 1, 2003, we, and InTandem Communications Corp. ("Intandem"), David B.
Hurwitz ("Hurwitz"), Richard G. De Haven ("De Haven") and Anthony T. Sgroi
("Sgroi") entered into an agreement ("Funding Agreement") pursuant to which we
agreed to provide up to $448,093 in a series of loans over a period of nine
months to InTandem. Each loan is to bear interest at the rate of 7.5% per annum
and the loans are to be secured by a pledge of the outstanding InTandem common
stock. Through November 14, 2003, we had provided $367,399 in loans to InTandem.

If we make all of the loans, we have the option to convert the loans into 49% of
InTandem's outstanding common stock at any time not later than 12 months after
the last payment on all the loans has been received by us. If we do not convert
the promissory notes into InTandem common stock, InTandem's obligation to repay
the promissory notes will be discounted by a value equal to 25% of the net
income realized by us from the sale of our services through the 1+ long distance
Cognigen Resale Division ("CRD"). During the time that we are the (i) holder of
an unpaid InTandem promissory note, (ii) an InTandem shareholder or (iii) have
the right to acquire InTandem's common stock, we have the right to designate two
of the five directors on InTandem's Board of Directors. Further, the InTandem
Board of Directors has to approve every transaction by a vote of not less than
80% of InTandem's directors and a quorum of the InTandem Board of Directors has
been established as four.

If we have exercised our conversion rights on or before April 1, 2005, or the
date our conversion rights expire, whichever is later, but no earlier than April
1, 2004, we have the right to acquire the remaining 51% of Intandem or all of
the outstanding common stock of InTandem from Messrs. Hurwitz, De Haven and
Sgroi. The price that we are required to pay for such common stock is equal to
four times the gross revenue generated by InTandem for the last three months
prior to the acquisition of the InTandem common stock by us, multiplied by 51%.

Each of Messrs. Hurwitz, De Haven and Sgroi received a five-year non-qualified
stock option to purchase 60,000 shares of our common stock that is exercisable
at a price of $0.36 per share. Such options vest quarterly over a period
commencing in Apri1 2004, and will expire if InTandem fails to meet 75% of its
revenue and profit and loss projections.

As a part of the transaction, we organized the CRD. The CRD is under the
managerial authority and guidance of Mr. Sgroi, who is the President of CRD and
has entered into a four-year employment agreement with us. Mr. Sgroi reports
directly to our CEO and Board of Directors. In addition to his base salary of
$10,000 per month for the first year, $12,000 per month for the second year and
$15,000 per month for the third and fourth years, Mr. Sgroi is entitled to
incentive compensation of up to 3% in the second InTandem fiscal year, up to 2%
in the third InTandem fiscal year and up to 2% in the fourth InTandem fiscal
year of InTandem's net income. InTandem has agreed to provide consulting
services at all levels to assist CRD to fulfill its mission and responsibilities
through the overall transition of a substantial part of our sales production
from master agency status to proprietary resale revenue.

If a third party introduces a large affiliated group of subscribers to us that
requires the specialized product and service management of InTandem and we agree
to pay a gross revenue commission to that third party and its sponsoring entity
at the level of a super-agency, we have agreed to pay Messrs. Hurwitz, De Haven
and Sgroi a bonus of a 15% share of the total commission payable to the
super-agency and sponsoring entity.

Consulting Arrangements with Combined Telecommunications Consultancy, Ltd. and
Commission Payments to Telkiosk, Inc.

We also have an agreement with Combined Telecommunications Consultancy, Ltd.
("CTC"), which is owned by Peter Tilyou, pursuant to which CTC was paid
consulting fees of $10,000 per month. This agreement terminated August 31, 2002.
During the fiscal year ending June 30, 2002, we paid CTC $120,000 in consulting
fees, plus $70,000 covering indebtedness for deferred consulting fees relating
back to November 2000. In September 2002 we entered into a new agreement with
CTC pursuant to which CTC is to receive a percentage of a transaction if CTC
introduces to us and a consulting fee of $150 per hour for providing consulting
services to us. The agreement was extended through September 2004. During the
fiscal year ending June 30, 2003, we paid CTC $64,772 in consulting fees,
transaction fees and advances made for CTC on our behalf.

In conjunction with the transaction with InTandem, CTC is to be paid, under its
consulting agreement with us, a commission that is being negotiated with us.
Although, the commission amount has not yet been determined, we believe that a
majority of it is based on our exercise of the option to acquire the remaining
51% of InTandem and future cash flows generated from InTandem activities and
would be paid in the future, at the option of the consultant, either in net cash
flows from InTandem activities or our common stock.

Further, CTC is to be paid, under its consulting agreement with us, a commission
on a loan commitment that we are pursuing. The commission will be payable in
cash, our common stock, or a combination thereof.

Peter Tilyou also owns Telkiosk, Inc., which was paid $778 and $1,329 in agent
commissions for our fiscal years ended June 30, 2002 and June 30, 2003,
respectively.

Item 13. Exhibits and Reports on Form 8-K.

Exhibits and Index of Exhibits.

EXHIBIT NO. DESCRIPTION AND METHOD OF FILING
----------- ---------------------------------

2.1 Funding Agreement dated April 1, 2003, by and among us, InTandem
Communications Corp., David B. Hurwitz, Richard G. De Haven and Anthony
Sgroi (except for Schedule B-Financial Model and Schedule E-Business Plan
and Financial Statements) (incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed on April 15, 2003).

3.1 Articles of Incorporation filed on May 6, 1983 (incorporated by reference
to Exhibit 3.1 to our Annual Report on Form 10-KSB for the year ended
June 30, 2000).

3.2 Articles of Amendment to our Articles of Incorporation filed on June 23,
1988 (incorporated by reference to Exhibit 3.2 to our Annual Report on
Form 10-KSB for the year ended June 30, 2000).

3.3 Articles of Amendment to our Articles of Incorporation filed on July 12,
2000 (incorporated by reference to Exhibit 3.3 to our Annual Report on
Form 10-KSB for the year ended June 30, 2000).

3.4 Articles of Amendment to our Articles of Incorporation filed on March 16,
2001 (incorporated by reference to our Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2001).

3.5 Articles of Amendment to our Articles of Incorporation filed on October
16, 2002 (incorporated herein by reference to Exhibit 3.1 to our Current
Report on Form 8-K filed on November 4, 2002).

3.6 Bylaws as amended through December 15, 2002 (incorporated by reference to
Exhibit 3.2 to our Current Report on Form 8-K filed on November 4, 2002).

10.1 Purchase Agreement among us, Stanford Financial Group Company, Inc. and
Stanford Venture Capital Holdings, Inc. (incorporated by reference to
Exhibit 10 to our Current Report on Form 8-K filed on November 4, 2002).

10.2 Letter dated December 6, 2002, from us to eMaxDirect, LLC (incorporated
by reference to Exhibit 10 to our Current Report on Form 8-K filed on
December 10 2002).

10.3 Securities Purchase Agreement dated February 10, 2003, between us and
David Stone and Harry Gorlovezsky (incorporated by reference to Exhibit
10.1 to our Current Report on Form 8-K filed on April 24, 2003).

10.4 Option to Purchase Promissory Note and Agreement from us to David Stone
and Harry Gorlovezsky (incorporated by reference to Exhibit 10.2 to our
Current Report on Form 8-K filed on April 24, 2003).

10.5 Form of Option to Purchase Common Stock (incorporated by reference to
Exhibit 10.7 to our Annual Report on Form 10-KSB for the year ended June
30, 2000).

10.6 Incentive and Nonstatutory Stock Option Plan (incorporated by reference
to Exhibit 10 to our Quarterly Report on Form 10-QSB for the quarter
ended March 31, 2001).

10.7 Stock Redemption Agreement dated November 30, 2001 between us, the
Anderson Family Trust, Cantara Communications Corporation, Kevin E.
Anderson Consulting, Inc. (without Exhibits A and B) (incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K dated
December 18, 2001).

10.8 Training Services Framework Agreement dated May 17, 2002, between us and
e-Max Direct LLC (INCORPORATED by reference to Exhibit 10.1 to our
Current Report on Form 8-K dated filed on July 2, 2002).

10.9 Transitional Supplemental Consulting Engagement letter dated July 11,
2002, between us and Kevin E. Anderson Consulting, Inc. (incorporated by
reference to Exhibit 10.10 to our Annual Report Form 10-KSB for the year
ended June 30, 2002).

10.10 Letter Agreement dated April 19, 2002, between Cognigen Networks, Inc. and
Troy D. Carl (incorporated by reference to Exhibit 10.11 to our Annual
report on Form 10-KSB for the year ended June 30, 2002).

10.11 Consultancy Engagement Agreement dated September 9, 2002, by and between
Cognigen Networks, Inc. and Combined Telecommunications Consultancy Ltd.
and letter dated September 9, 2003 extending the Consultancy Engagement
Agreement.

10.12 Modified Supplemental Consulting Engagement letter dated March 4, 2003,
between us and Kevin Anderson.

21 Subsidiaries (incorporated by reference to Exhibit 21 to our Annual
Report on Form 10-KSB for the year ended June 30, 2001).

31.1 Certification of Chief Executive Officer required by Rule 13a-14(a)
(incorporated by Reference to Exhibit 31.1 to our Annual Report on Form
10-KSB for the year ended June 30, 2003).

31.2 Certification of Chief Financial Officer required by Rule 13a-14(a)
(incorporated by Reference to Exhibit 31.2 to our Annual Report on Form
10-KSB for the year ended June 30, 2003).

32.1 Certification of Chief Executive Officer required by Section 906 of the
Sarbanes-Oxley Act of 2002 (incorporated by Reference to Exhibit 32.1 to
our Annual Report on Form 10-KSB for the year ended June 30, 2003).

32.2 Certification of Chief Financial Officer required by Section 906 of the
Sarbanes-Oxley Act of 2002 (incorporated by Reference to Exhibit 32.2 to
our Annual Report on Form 10-KSB for the year ended June 30, 2003).

Reports on Form 8-K.

On April 15, 2003, we filed a Current Report on Form 8-K dated April 1, 2003,
describing the transaction specified in the Funding Agreement among us, InTandem
Communications Corp., David B. Hurwitz, Richard De Haven and Anthony Sgroi under
Item 5 and filing the Funding Agreement as an Exhibit under Item 7.

On April 24, 2003, we filed a Current Report on Form 8-K dated April 22, 2003,
describing the Securities Purchase Agreement and the Option to Purchase
Promissory Note and Agreement between and from us to David Stone and Harry
Gorlovezsky under Item 5 and filing the Securities Purchase Agreement and the
Option to Purchase Promissory Note as Exhibits under Item 7.

On May 19, 2003, we filed a Current Report on Form 8-K dated May 15, 2003, that
included a news release we issued on May 15, 2003, as an Exhibit under Item 7
and describing the news release under Item 12.

Item 14. Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed for professional services rendered by Ehrhardt Keefe
Steiner & Hottman PC, our independent public accountants, for the audit of
our financial statements for our fiscal years ended June 30, 2003 and 2002 and
the review of the financial statements in our Forms 10-QSB for such fiscal years
were $53,600 and $53,960, respectively.

Audit-Related Fees

The aggregate fees billed in each of our last two fiscal years ended June 30,
2003 and 2002 by Ehrhardt Keefe Steiner & Hottman & PC for assurance and
related services that were reasonably related to the performance of the audit or
review of our financial statements were $19,175 and $30,185, respectively.

Tax Fees

The aggregate fees billed for tax services rendered by Ehrhardt Keefe Steiner
& Hottman PC for tax compliance and tax advice for the two fiscal years
ended June 30, 2003 and 2002, were $1,625 and $10,244, respectively.

All Other Fees

No services were rendered by Ehrhardt Keefe Steiner & Hottman PC, other than
as listed above, for the two fiscal years ended June 30, 2003 and 2002.

The audit committee is requested to and did approve the retention of Ehrhardt
Keefe Steiner & Hottman PC and the fees and other significant compensation paid
to it for the fiscal year ended June 30, 2003.

100% of the services described above were approved by our audit committee.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: November 18, 2003

COGNIGEN NETWORKS, INC.

/s/ Anthony T. Sgroi
------------------------------------
Anthony T. Sgroi, Chief Operating Officer

/s/ Gary L. Cook
------------------------------
Gary L. Cook, Senior Vice President of Finance,
Treasurer, Chief Financial Officer and Principal
Accounting Officer

In accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ Gary L. Cook Director November 18, 2003
------------------------
Gary L. Cook

/s/ Darrell H. Hughes Director November 18, 2003
------------------------------
Darrell H. Hughes

/s/ David L. Jackson Director November 18, 2003
------------------------------
David L. Jackson

/s/ Christopher R. Seelbach Director November 18, 2003
------------------------------
Christopher R. Seelbach

/s/ James H. Shapiro Director November 18, 2003
------------------------------
James H. Shapiro

EXHIBIT INDEX