UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB/A

(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2004

OR

(  ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from _________ to _________

Commission File Number 0-11730

COGNIGEN NETWORKS, INC.
(Exact name of small business issuer as specified in its charter)

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

6405 218^th Street SW, Suite 305
Mountlake Terrace, WA 98043
(Address of principal executive offices)

(425) 329-2300
(Issuer’s Telephone number)

N/A
______________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

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 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 [   ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.   Yes  [   ]    No   [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Class	Outstanding at January 31, 2005
Common Stock, $.001 par value	8,753,972

Transitional Small Business Disclosure Format (Check one):    Yes  [   ]     No   [X]

COGNIGEN NETWORKS, INC.

Commission File Number: 0-11730
Quarter Ended December 31, 2004

FORM 10-QSB/A

Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets	Page 2
Unaudited Consolidated Statements of Operations	Page 3
Unaudited Consolidated Statements of Cash Flows	Page 4
Notes to Unaudited Consolidated Financial Statements	Page 5
Item 2. Management’s Discussion and Analysis or Plan of Operation	Page 10
Item 3. Controls and Procedures	Page 14
Part II - OTHER INFORMATION
Item 1. Legal Proceedings	Page 16
Item 4. Submission of Matters to a Vote of Security Holders	Page 16
Item 6. Exhibits	Page 17
Signatures	Page 20

COGNIGEN NETWORKS, INC.
Consolidated Balance Sheets

Part I - Financial Information

Item 1. Financial Statements

	December 31, 2004		June 30, 2004
	Unaudited
Assets
Current assets
Cash	$      155,365		$      213,611
Accounts receivable, net	476,701		481,092
Commissions receivable, net	806,939		773,168
Inventory	8,903		15,543
Other current assets	41,231		52,210
Total current assets	1,489,139		1,535,624
Non-current assets
Property, plant and equipment, net	14,024		16,847
Deposits and other assets	49,151		60,424
Total non-current assets	63,175		77,271
Total assets	$   1,552,314		$   1,612,895
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$      606,861		$      670,416
Accrued liabilities	327,188		444,098
Commissions payable	823,456		811,729
Current portion of deferred commissions	500,398		511,200
Receivables financing arrangement	199,900		308,100
Other current liabilities	--		1,638
Total current liabilities	2,457,803		2,747,181
Deferred commissions less current portion	--		237,346
Other long-term liabilities	1,030		68,391
Total liabilities	2,458,833		3,052,918
Stockholders’ deficit
Preferred stock no par value, 20,000,000 shares authorized, 500,000 shares
issued and outstanding, $1.00 per share liquidation preference	450,000		450,000
Common stock $.001 par value, 300,000,000 shares authorized; 8,753,972
issued and outstanding as of December 31, 2004 and June 30, 2004	8,754		8,754
Additional paid-in capital	11,954,331		11,954,331
Accumulated deficit	(13,319,604	)	(13,853,108	)
Total stockholders’ deficit	(906,519	)	(1,440,023	)
Total liabilities and stockholders’ deficit	$   1,552,314		$   1,612,895

See notes to unaudited consolidated financial statements.

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COGNIGEN NETWORKS, INC.
Unaudited Consolidated Statements of Operations

	Three Months Ended December 31,				Six Months Ended December 31,
	2004		2003		2004		2003
	Unaudited		Unaudited		Unaudited		Unaudited
Revenue
Marketing commissions	$ 1,369,035		$ 1,229,612		$ 2,615,256		$ 2,622,971
Telecommunications	1,550,833		1,594,118		3,049,456		2,817,360
Other	--		(6,944	)	--		432
Total revenue	2,919,868		2,816,786		5,664,712		5,440,763
Operating expenses
Commissions:
Marketing	707,834		554,768		1,338,248		1,291,668
Telecommunications	230,333		189,213		453,975		352,701
Telecommunications	830,744		797,253		1,691,379		1,500,683
Selling, general and administrative	914,227		1,005,298		1,681,727		2,184,617
Depreciation and amortization	3,292		21,565		8,315		44,801
Total operating expenses	2,686,430		2,568,097		5,173,644		5,374,470
Income from operations	233,438		248,689		491,068		66,293
Interest expense	(12,518	)	(11,706	)	(25,786	)	(22,210	)
Income before income taxes	220,920		236,983		465,282		44,083
Income taxes	--		--		--		--
Net income	220,920		236,983		465,282		44,083
Preferred dividends	(10,000	)	(10,000	)	(20,000	)	(20,000	)
Net income attributable to
common shareholders	$    210,920		$    226,983		$    445,282		$      24,083
Income per common share-
basic and diluted	$           .02		$           .02		$           .05		$           .00
Weighted average number of common shares
outstanding:
Basic	8,753,972		9,553,972		8,753,972		9,553,972
Diluted	8,759,100		9,553,972		8,759,100		9,553,972

See notes to unaudited consolidated financial statements.

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COGNIGEN NETWORKS, INC.
Unaudited Consolidated Statements of Cash Flows

	Six Months Ended December 31,
	2004		2003
	Unaudited		Unaudited
Cash flows from operating activities
Net income	$ 465,282		$   44,083
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization	8,315		44,801
Bad debt expense	120,289		41,660
Changes in assets and liabilities:
Accounts receivable	(115,898	)	(352,727	)
Commissions receivable, net	(33,771	)	28,583
Inventory	6,640		13,294
Deposits and other assets	10,979		3,323
Accounts payable	(63,555	)	148,783
Commissions payable	11,727		(784	)
Accrued liabilities	(116,910	)	60,743
Other current liabilities	(1,638	)	(33,477	)
Other	12,134		19,461
	(161,688	)	(26,340	)
Net cash provided by operations	303,594		17,743
Cash flows from investing activities
Capital expenditures	(5,492	)	(2,746	)
Increase in investments to Intandem	--		(214,647	)
Net cash used in investing activities	(5,492	)	(217,393	)
Cash flows from financing activities
Payments on deferred commissions	(248,148	)	(260,845	)
Decrease in receivables financing arrangement	(108,200	)	--
Proceeds from notes payable	--		85,475
Payment on notes payable	--		(25,000	)
Net cash used in financing activities	(356,348	)	(200,370	)
Net decrease in cash and cash equivalents	(58,246	)	(400,020	)
Cash and cash equivalents-beginning of period	213,611		412,992
Cash and cash equivalents-end of period	$ 155,365		$   12,972

Supplemental Disclosures of Cash Flow Information and Non-Cash Transactions

Cash payments for interest expense during the six months ended December 31, 2004 and 2003 were $25,786 and $25,000, respectively.

See notes to unaudited consolidated financial statements.

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COGNIGEN NETWORKS, INC.

Notes to Unaudited Consolidated Financial Statements
December 31, 2004

Note 1 – Description of Business

Cognigen Networks, Inc. (the Company) was incorporated in May 1983 in the State of Colorado to engage in the cellular radio and broadcasting business and to engage in any other lawful activity permitted under Colorado law. In June 1988, the Company changed its name to Silverthorne Production Company (Silverthorne) and commenced operations in the oil and gas industry. These operations were discontinued in 1989. Between 1989 and 1999, Silverthorne attempted to locate acquisition prospects and negotiate an acquisition. Silverthorne’s pursuit of an acquisition did not materialize until August, 1999, with the acquisition of the assets of Inter-American Telecommunications Holding Corporation (ITHC), which was accounted for as a reverse acquisition. The surviving entity changed its name to Cognigen Networks, Inc. on July 12, 2000.

The Company is an Internet and relationship enabled marketer of long distance telephone and personal communications services. Revenue is generated in two ways. First, marketing commissions revenue is generated from a number of vendors who are represented on the Company’s agent web sites and for whom the Company sells their products and services via contractual agreements. Second, telecommunications revenue is generated through sales of the Company’s proprietary products and services through the Company’s agent web sites.

Note 2 – Summary of Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of Cognigen Networks, Inc. and its subsidiaries, Cognigen Switching Technologies, Inc. (CST) through January 31, 2004 and Intandem Communications Corp. (Intandem) since February 1, 2004. See Note 8 regarding information regarding the sale of CST and Note 4 for information on Intandem. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, have been made to (a) the unaudited consolidated statements of operations for the three and six months ended December 31, 2004 and 2003, respectively, (b) the unaudited consolidated balance sheet as of December 31, 2004 and (c) the unaudited consolidated statements of cash flows for the six months ended December 31, 2004 and 2003, respectively, in order to make the financial statements not misleading.

The Company has not recorded a provision for income taxes for the three and six months ended December 31, 2004 and 2003. The Company has net operating loss carryforwards to offset taxable income in these periods.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for financial statements. For further information, refer to the audited consolidated financial statements and notes thereto for the year ended June 30, 2004, included in the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.

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COGNIGEN NETWORKS, INC.

Notes to Unaudited Consolidated Financial Statements
December 31, 2004

Note 2 – Summary of Significant Accounting Policies (continued)

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The results for the three and six months ended December 31, 2004 may not necessarily be indicative of the results for the fiscal year ending June 30, 2005.

On November 21, 2001, the Company entered into a Stock Redemption Agreement with a stockholder, in which the stockholder agreed to sell to the Company 2,712,501 shares of the Company’s common stock, at approximately $.77 per share, which approximated market value, in exchange for potential future commissions of $2,088,622 on certain customers, as defined in the agreement. The shares were purchased in December 2001. Deferred commissions payable are being paid out based upon commissions earned as defined in the agreement. The agreement does not guarantee that commissions will be earned. As of December 31, 2004, the remaining balance of deferred commissions payable was $500,398. The Company has classified the entire balance as current based on historical commissions. After the $500,398 of deferred commissions has been earned and paid to the stockholder, commissions will continue to be paid to the stockholder and recorded as marketing commissions expense in the statement of operations. Had the payments of $125,601 and $248,148 for the three and six months ended December 31, 2004, respectively, been recorded as marketing commissions expense instead of a reduction of deferred commissions payable on the balance sheet, marketing commissions expense would have been higher by $125,601 and $248,148. The Company does not anticipate recording these payments as marketing commissions expense until sometime in the year ending June 30, 2006.

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COGNIGEN NETWORKS, INC.

Notes to Unaudited Consolidated Financial Statements
December 31, 2004

The following presents a proforma table of certain statement of operations accounts for the three and six months ended December 31, 2004 that reflect the increase in commissions expense had the payments to the stockholder, described in the preceding paragraph, during these periods been accounted for as commissions expense rather than a reduction to deferred commissions payable.

	Pro Forma Three Months Ended December 31, 2004	Pro Form Six Months Ended December 31, 2004
Total revenue	$2,919,868	$5,664,712
Operating expenses:
Marketing commissions	1,063,768	2,040,371
Telecommunications	830,744	1,691,379
Selling, general and administrative	914,227	1,681,727
Depreciation and amortization	3,292	8,315
Total operating expenses	2,812,031	5,421,792
Income from operations	$   107,837	$   242,920
Net income attributable to common shareholders	$     85,319	$   197,134
Income per common share - basic and diluted	$          .01	$          .02

Certain amounts in prior consolidated financial statements have been reclassified to conform to the current presentation.

Note 3 –Note Receivable

As of December 31, 2004, the Company has a note receivable outstanding with a net book value of zero from American Communications, LLC (formerly known as American Internet Communications, LLC) in accordance with a $300,000 Promissory Note and Agreement due in October 2004, originally recorded on the balance sheet at $77,500. This note bears interest at 12% payable annually, is secured by the personal guaranty of the principals of American Communications, and was due October 4, 2004. The Company agreed to payment on the note of $100,000 plus $2,000 in attorneys’ fees as full satisfaction of the note, if paid by July 2004. All but $20,000 was paid by the due date which put the agreement in default and the $80,000 received was applied to interest on the original note. Subsequently, $21,000 was received and applied to interest outstanding. The remaining balance of approximately $300,000 remains due and in default. The Company has filed a lawsuit against American Communications and the two guarantors of the note to attempt to collect the remaining balance due.

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COGNIGEN NETWORKS, INC.

Notes to Unaudited Consolidated Financial Statements
December 31, 2004

Note 4 – Acquisition of Intandem

On April 1, 2003, the Company and certain principals of Intandem entered into an agreement (Funding Agreement) pursuant to which the Company agreed to provide up to $448,093 in a series of loans to Intandem. Effective February 1, 2004, by mutual agreement of the principals of Intandem and the Company, the Funding Agreement was terminated and a separate agreement, the Termination of Funding Agreement and Settlement Agreement (Termination Agreement), was entered into.

The Termination Agreement provided that the Company would convert notes receivable outstanding at the time of $387,399 into 100% of the outstanding stock of Intandem in exchange for payments of $10,000 per month for eight months, assumption of up to approximately $45,000 in liabilities, cancellation of all employment contracts of the Intandem principals and cancellation of options to purchase common stock of the Company. All required amounts have been funded under the Funding Agreement and Termination Agreement. Due to questions of recoverability of amounts funded under the Termination Agreement, a provision of $494,149 was taken in the statement of operations in the year ended June 30, 2004.

In conjunction with the transaction with InTandem, a consultant was to be paid, under its consulting agreement with the Company, a commission that was being negotiated with the Company. In October 2004, the Company and consultant agreed that $20,000 of a combination of stock and cash was owed by the Company to the consultant in connection with the Intandem transaction. However, because we bought Intandem, the consultant agreed to waive this commission.

Note 5 –Receivables Financing Arrangement

The balance of receivables financing arrangement as of December 31, 2004 is $199,900. This represents the amount of commissions receivable that have been sold under an Accounts Receivable Purchase Agreement (Receivables Purchase Agreement) with a bank. The Receivables Purchase Agreement provides for up to $1,250,000 in commissions receivable to be used as collateral for advances under the Receivables Purchase Agreement, of which 75% of the commissions receivable balances are available in cash advances to the Company. Interest charges are 1.3% per month on the commissions receivable balances used as collateral.

Note 6 –Stockholders’ Deficit

On October 17, 2002, the Company issued 500,000 shares of 8% Convertible Series A Preferred Stock (Preferred Stock). Each share of the Preferred Stock is convertible, at the option of the holder, into one share of the Company’s common stock for a period of five years. At that time, the Preferred Stock is automatically converted to common stock. The Preferred Stock does not have voting rights and has a liquidation preference of $1.00 per share.

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COGNIGEN NETWORKS, INC.

Notes to Unaudited Consolidated Financial Statements
December 31, 2004

Note 6 –Stockholders’ Deficit (continued)

Dividends on the Preferred Stock are cumulative at the rate of 8% per annum of the liquidation value, $1.00 per share, are payable in cash, when and if declared by the Board of Directors, and are preferential to any other junior securities, as defined. The Company has not accrued for dividends on the balance sheet for the Preferred Stock as the Board of Directors has not declared dividends. As of December 31, 2004, total undeclared cumulative dividends that would have been payable if declared was $88,222.

Note 7 — Stock Options and Warrants

The Company has established the 2001 Incentive and Non-statutory Stock Option Plan (the Plan), which authorizes the issuance of up to 625,000 shares of the Company’s common stock. The Plan will remain in effect until 2011 unless terminated earlier by an action of the Board. All employees, board members and consultants of the Company are eligible to receive options under the Plan at the discretion of the Board. Options issued under the Plan vest according to the individual option agreement for each grantee.

During the six months ended December 31, 2004 and 2003, the Company granted 10,000 and zero options, respectively, to employees to purchase shares of common stock of the Company. The prior year options that were grated vested 5,000 immediately and 5,000 in one year, were exercisable at market value and expired five years from the date of grant.

As of December 31, 2004, the number of stock options outstanding under the Plan was 475,000.

As of December 31, 2004, the number of stock options outstanding not under any plan was 25,000. 1,000,000 options exercisable at $3.68 per share expired in August 2004.

As of December 31, 2004, there were 1,050,000 warrants outstanding that were exercisable into shares of common stock of the Company. In October 2004, 150,000 warrants that were exercisable at $.50 per share expired unexercised.

Note 8 – Stock for Stock Exchange Agreement

On May 12, 2004, after approval by the Board of Directors, the Company entered into a Stock for Stock Exchange Agreement with Jimmy L. Boswell, David G. Lucas, Reginald W. Einkauf and John D. Miller (collectively the Principals) pursuant to which the Principals agreed to exchange with the Company a total of 800,000 shares of the Company’s common stock owned by the Principals for all of the outstanding common stock of the Company’s wholly-owned subsidiary, CST, and warrants to purchase 200,000 shares of the Company’s common stock effective February 1, 2004. The closing occurred on May 21, 2004. At the closing CST entered into a Master Services Agreement (MSA) to provide the Company with telecommunications rating, billing, provisioning, customer care, commissioning and database management for a fee. The MSA was effective February 1, 2004 and goes for one year periods unless terminated by either party at the end of each period with a 30 day notice.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

We are an Internet and relationship enabled marketer of long distance telephone and personal communications services. We earn revenue in two ways. First, we earn commissions revenue from a number of outside vendors whom we represent on our agent web sites and sell their products and services via contractual agreements. Second, we earn telecommunications revenue through sales of our own proprietary products and services through our agent web sites.

We made a major strategic transition in our business profile and delivery of products and services over the past nineteen months. In addition to earning commissions on the sale of the services and products of outside vendors, we are now selling more of our own proprietary branded products and services. Because we show the total revenue for these customers, not just a commission on the revenue of outside vendors products and services, we generate approximately five to seven times as much revenue on an equivalent customer usage. Our profit margins on our own proprietary products and services are somewhat less compared to the profit margins we recognize from selling products and services of our outside vendors but our overall net income can be much higher because there is five to seven times as much revenue.

Through the acquisition of multiple state licenses, billing capability and new distribution channels, we can grow revenue, maintain closer contact with our customers, and control bottom line retention and contribution to a greater degree on sales of our own proprietary products and services.

We had net income of $220,920 and $465,282 for the three and six months ended December 31, 2004. This net income in large part was derived from our actions taken during the past year to reduce costs and to diversify our product line. We are undertaking other initiatives aimed at providing our agents with more attractive and competitive product offerings, improving our proprietary products and services, and expanding our vendor relationships.

Three Months Ended December 31, 2004 Compared to Three Months Ended December 31, 2003

Total revenue for the three months ended December 31, 2004 was $2,919,868 compared to $2,816,786 for 2003. Marketing commissions revenue was $1,369,035 for 2004 compared to $1,229,612 for the prior year. Telecommunications revenue was $1,550,833 for 2004 as compared to $1,594,118 for the prior year.

Marketing commissions revenue for 2004 increased $139,423 from that of 2003 or 11%. This increase reflects initiatives we have taken to increase marketing commissions revenue. We have entered into agreements to market additional and new products that are in demand. We have also emphasized customer service reducing our response time to customer inquiries and order verification. Marketing additional and new products and better customer service have helped increase marketing commissions revenue.

-10-

Telecommunications revenue decreased $43,285 for 2004 compared to 2003, or 3%. This decrease resulted from an increase in telecommunications revenue from the sale of new proprietary products and services offset by a decrease resulting from the sale of our former subsidiary Cognigen Switching Technologies, Inc. (CST). Our proprietary customer base increased by approximately 4,500 customers when comparing this quarter to that of the prior year. This increase, however, was offset by a decrease in proprietary products and services resulting from our sale of CST effective February 1, 2004. As part of the sale, CST maintained approximately $70,000 in monthly telecommunications revenue and the related customers that use these products and services.

Marketing commissions expense increased from $544,768 for 2003 to $707,834 for 2004, an increase of $153,066, or 28%. This increase correlates to an increase in marketing commissions revenue explained above. The higher percentage increase in marketing commissions expense compared to the increase in marketing commissions revenue results from a difference in product mix between the periods.

Telecommunications commissions expense increased from $189,213 for 2003 to $230,333 for 2004, an increase of $41,120. This increase is a result of a change in mix of the sale of these proprietary products and services resulting from the loss of the CST products and services which were paid a lower commission rate. In addition, commissions expense being paid to Intandem agents is higher currently than in the prior year, which is a result of the mix of products and services being sold by these agents.

Had the payments to a shareholder described in Note 2 to the Consolidated Financial Statements been recorded as marketing commissions expense instead of a reduction of deferred commissions payable on the balance sheet, marketing commissions expense would have been higher by $125,601, therefore reducing net income by this same amount. We do not anticipate recording these payments as marketing commissions expense until sometime in the year ending June 30, 2006.

Telecommunications expense, or carrier costs, increased from $797,253 for 2003 to $830,744 for 2004, or an increase of $33,491, or 4%. This increase is largely related to higher carrier costs.

Our operating profit margin, defined as revenue less commissions expenses and telecommunications carrier costs, has decreased for 2004 compared to 2003 by $124,595 or 10%. This decrease results from mix changes in both our commission revenue and our telecommunications revenue to higher commission products and services and from higher carrier costs on telecommunications revenue.

Selling, general and administrative expenses decreased $91,071 for 2004 compared to 2003, or 9%. This decrease is largely attributed to decreases in legal fees and salaries and related benefits expenses of approximately $313,000. The decrease in salaries and related benefits is $288,769 of this decrease and is largely attributed to the sale of CST. This decrease is offset by fees paid to CST for servicing our telecommunications customers of $152,451 for 2004. Bad debt expense increased $86,758 over the prior year due to the increased number of proprietary customer accounts.

The decrease in depreciation and amortization of $18,273 results from the sale of CST previously explained.

Interest expense for 2004 of $12,518 is consistent with that for 2003 of $11,706.

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Six Months Ended December 31, 2004 Compared to Six Months Ended December 31, 2003

Total revenue for the six months ended December 31, 2004 was $5,664,712 compared to $5,440,763 for 2003. Marketing commissions revenue was $2,615,256 for 2004 compared to $2,622,971 for the prior year. Telecommunications revenue was $3,049,456 for 2004 as compared to $2,817,360 for the prior year.

Marketing commissions revenue for 2004 decreased $7,715 from that of 2003. The second quarter of fiscal 2005 contributed increased commissions revenue compared to the same quarter for fiscal 2004. The second quarter activity helped compensate for a decrease in marketing commissions revenue for the first quarter compared to the same period in the prior year, as a result of initiatives we have taken to increase marketing commissions revenue. We have entered into agreements to market additional and new products that are in demand. We have also emphasized customer service reducing our response time to customer inquiries and order verification. Marketing additional and new products and better customer service have helped increase marketing commissions revenue.

Telecommunications revenue increased $232,096 for 2004 compared to 2003, or 8%. This increase resulted from an increase in telecommunications revenue from new proprietary products and services being sold, offset by the transfer of some revenue to CST in their sale mentioned below. Our proprietary customer base increased by approximately 6,800 customers when comparing this period to that of the prior year, again partially offset by the transfer of some products and their customers resulting from our sale of CST effective February 1, 2004. As part of the sale, CST maintained approximately $70,000 in monthly telecommunications revenue and the related customers that use these products and services.

Marketing commissions expense increased from $1,291,668 for 2003 to $1,338,248 for 2004, an increase of $46,580, or 4%. This increase is a result of a change in mix of products and services being sold.

Telecommunications commissions expense increased from $352,701 for 2003 to $453,975 for 2004, an increase of $101,274, or 29%. This increase is a result of an increase in the mix to higher telecommunications services resulting from the transfer of some services to CST noted above In addition, commissions expense being paid to Intandem agents is higher currently than in the prior year, due to the mix of products and services being sold by these agents.

Had the payments to a shareholder described in Note 2 to the Consolidated Financial Statements been recorded as marketing commissions expense instead of a reduction of deferred commissions payable on the balance sheet, marketing commissions expense would have been higher by $248,148, therefore reducing net income by this same amount. We do not anticipate recording these payments as marketing commissions expense until sometime in the year ending June 30, 2006.

Our operating profit margin, defined as revenue less commissions and telecommunications expenses, has decreased for 2004 compared to 2003 by $94,601, or 4%. . This decrease results from mix changes in both our commission revenue and our telecommunications revenue to higher commission products and services and from higher carrier cost on telecommunications revenue.

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Telecommunications expense or carrier costs increased from $1,500,683 for 2003 to $1,691,379 for 2004 or an increase of $190,696 or 13%. This increase is primarily a result of increased carrier costs and the mix change resulting from certain products and services transferred to CST as noted above.

Selling, general and administrative expenses decreased $502,890 for 2004 compared to 2003, or 23%. This decrease is largely attributed to decreases in legal fees and salaries and related benefits expenses of approximately $780,000. The decrease in salaries and related benefits is $618,732 of this decrease and is largely attributed to the sale of CST. This decrease is offset by fees paid to CST for servicing our telecommunications customers of $281,483 for 2004. Bad debt expense increased $78,629 over the prior year due to the increased number of proprietary customer accounts.

The decrease in depreciation and amortization of $36,486 results from the sale of CST previously explained.

Interest expense for 2004 of $25,786 is consistent with that for 2003 of $22,210.

Liquidity and Capital Resources

We have historically funded our operations primarily from sales of securities and operations. As of December 31, 2004 we had cash and cash equivalents of $155,365 and negative working capital of $968,664. Cash provided by operations during the six months ended December 31, 2004 was $303,594. Cash used in financing activities of $356,348 included the payment of deferred commissions of $248,148 and a decrease in the receivables financing arrangement of $108,200.

We have a balance outstanding under a receivables financing arrangement as of December 31, 2004 of $199,900. This represents the amount of marketing commissions receivable that have been sold under an Accounts Receivable Purchase Agreement (Receivables Purchase Agreement) with a bank. The Receivables Purchase Agreement provides for up to $1,250,000 in marketing commissions receivable to be used as collateral for advances under the Receivables Purchase Agreement of which 75% of the marketing commissions receivable balances are available in cash advances to the Company. Interest charges are 1.3% per month on the marketing commissions receivable balances used as collateral. After one year, the Receivables Purchase Agreement is from year to year unless terminated in writing by either party. The Company is in compliance with the terms and conditions of the Receivables Purchase Agreement.

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Cash flows generated from operations and from our receivables financing arrangement were sufficient to meet our working capital requirements for the six months ended December 31, 2004, but may not be sufficient to meet our working capital requirements for the foreseeable future or provide for expansion opportunities. Currently, we are slowly reducing our average balances outstanding under our receivables financing arrangement. We have reduced costs and expenses by reducing personnel, reducing or eliminating unwarranted expenses and have sold CST, our former subsidiary, which all combined have increased our cash flows in excess of $50,000 per month from certain levels in 2004. We are looking at various financing and equity opportunities to provide additional working capital or for expansion opportunities and continue to identify costs and expenses that can be reduced or eliminated. There can be no assurance we will be able to secure additional debt or equity financing, that we will be able to reduce or eliminate more costs and expenses or that cash flows from operations will produce adequate cash flow to enable us to meet all of our future obligations or to be able to expand. However, we believe that we will be successful in producing sufficient cash flows from all collective sources to continue for at least the next twelve months.

Forward Looking Statements

Certain of the information discussed herein, and in particular in this section entitled “Management’s Discussion and Analysis or Plan of Operation,” contains forward looking statements that involve risks and uncertainties that might adversely affect our operating results in the future in a material way. Such risks and uncertainties include, without limitation, our possible inability to become certified as a reseller in all jurisdictions in which we apply, the possibility that our proprietary customer base will not grow as we expect, our possible inability to obtain additional financing, the possible lack of producing agent growth, our possible lack of revenue growth, our possible inability to add new products and services that generate increased sales, our possible lack of cash flows, our possible loss of key personnel, the possibility of telecommunication rate changes and technological changes and the possibility of increased competition. Many of these risks are beyond our control. We are not entitled to rely on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or Section 21E of the Securities Exchange Act of 1934 as amended, when making forward-looking statements.

Item 3.  Controls and Procedures

     (a)   Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures were effective.

In preparing our audit for the year ended June 30, 2004, our auditors identified potential deficiencies within our internal control framework which have the potential to result in a material control weakness. These potential control deficiencies relate to the manner in which we process transactions to record telecommunications revenue and related accounts receivable as our current processes and procedures require substantive manual intervention, estimation and reliance on several sources of information that are not integrated with our accounting system.

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In addition, our Chief Financial Officer oversees our accounting and general internal control process. We are not such that we can afford the luxury of having other financial accounting minded management members at his level that would help either crosscheck or advise in the accounting or financial reporting process. Although, our Chief Financial Officer is constantly involved in consultation with peers in the field of accounting and reporting, this situation could potentially result in a material control weakness.

After reviewing these potential control deficiencies, we do not believe they constitute material control weaknesses.

     (b)   Changes in internal controls.

There were no changes made in our internal controls over financial reporting during the period covered by this report or, to our knowledge, in other factors that could affect these controls subsequent to the date of their evaluation.

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Part II – Other Information

Item 1. Legal Proceedings

In September 2004, we filed a lawsuit against American Communications LLC (American Communications), David Stone (Stone) and Harry Gorlovesky (Gorlovesky) in the Circuit Court of the Twentieth Judicial Circuit in and for Dade County, Florida. In our complaint, we allege (1) that American Communications breached a settlement agreement by not making all of the $100,000 of payments required thereunder to payoff a promissory note and agreement for $300,000 that was assigned to and is owed to us and we demanded judgment of $334,119 on the promissory note and agreement plus interest from May 10, 2004: (2) that we are owed $81,000 for a dishonored check of $20,000 written as the last payment due under the settlement agreement and (3) that Stone and Gorlovesky guaranteed the promissory note and agreement and must pay the amount due under the promissory note and agreement plus our attorneys fees, cost and expenses in collecting on the promissory note and agreement. American Communications and Stone and Gorlovesky have filed answers denying the claims in our complaint and setting forth certain affirmative defenses which we have denied.

In October 2004, American Communications issued us a check for $21,000 as a complete settlement of our claims. We returned the check to the attorney for American Communications and subsequently sent a letter to the attorney for American Communications stating that the check was not a complete settlement. The attorney for American Communications never signed the letter. We deposited the check in February 2005. The $21,000 will be reduced by any attorneys fees that we have to pay our attorney. We will dismiss the claim for the dishonored check and might have to argue that, by depositing the $21,000 check, we did not waive our other claims.

Item 4. Submission of Matters to a Vote of Security Holders

At our annual meeting of shareholders held on December 6, 2004, for which did not solicit proxies from shareholders, the following items were approved, as indicated by the vote stated following each item:

The first sentence of Article III, Section 2 of the bylaws was amended by adding the words “or by the shareholders” to the end thereof;

The third paragraph of Article III, Section 2 of the bylaws was amended to read, “By June 1, 2005, a majority of the board of directors must be independent as that term is defined by the rules of the American Stock Exchange LLC or by the rules of The NASDAQ Stock Market, whichever has the most lenient rules.”;

The last paragraph of Article III, Section 11, of the bylaws was amended by adding the following sentences thereto: “The Chairman of the Audit Committee may not be a member of the Compensation Committee. The Chairman of the Compensation Committee may not be a member of the Audit Committee. The provisions of the last two sentences may only be amended by a vote of the shareholders.”; and

Two new sentences were added to the beginning of Article IV, Section 5 of the bylaws which read as follows. “The directors shall appoint from among their members a director to serve as chairman of the board of directors. This provision of the bylaws may only be amended by a vote of the shareholders.”

For - 4,828,673 (all present at the meeting) Against - None

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That the number of directors to be voted on at the meeting be reduced to six.

For - 4,828,673 (all present at the meeting). Against - None

The following persons were unanimously elected directors: Gary L. Cook, David L. Jackson, Christopher R. Seelbach, Robert B. Segal, James H. Shapiro and Thomas S. Smith to serve until the next Annual Meeting of Shareholders or until their successors are elected and qualify.

For - 4,828,673 (all present at the meeting). Against - None

Item 6. Exhibits

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).

2.2 Stock for Stock Exchange Agreement dated May 12, 2004 by and among Jimmy L. Boswell, David G. Lucas, Reginald W. Einkauf and John D. Miller (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 3, 2004).

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 28, 2004 (incorporated by reference to Exhibit 3 to our Current Report on Form 8-K filed on January 3, 2005).

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).

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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 2001 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 (incorporated by reference to Exhibit 10.11 to our amended Annual Report on Form 10-KSB/A for the year ended June 30, 2003).

10.12 Modified Supplemental Consulting Engagement letter dated March 4, 2003, between us and Kevin Anderson (incorporated by reference to Exhibit 10.12 to our amended Annual Report on Form 10-KSB/A for the year ended June 30, 2003).

10.13 Extension of Modified Supplemental Consulting Engagement Agreement dated February 9, 2004 between us and Kevin Anderson Consulting, Inc. (incorporated by reference to Exhibit 2.1 to our Quarterly Report on Form 10-QSB for the Quarter ended December 31, 2003).

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10.14 Termination of Funding Agreement and Settlement Agreement dated February 5, 2004 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-QSB for the Quarter ended December 31, 2003).

10.15 Amendment dated September 9, 2004, to Consulting Engagement Agreement between us and Combined Telecommunications Consultancy, Ltd. (incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

10.16 Accounts Receivable Purchase Agreement dated December 26, 2003, between us and Silicon Valley Bank (incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

10.17 Accounts Receivable Purchase Modification Agreement dated November 22, 2004 between us and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 to our current report on form 8-K filed on December 10, 2004).

14.1 Code of Business Conduct and Ethics. (incorporated by reference to Exhibit 14.1 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

21 Subsidiaries (incorporated by reference to Exhibit 21 to our Annual Report on Form 10-KSB/A for the year ended June 30, 2004).

31.1 Certification of Chief Executive Officer required by Rule 13a-14(a)

31.2 Certification of Chief Financial Officer required by Rule 13a-14(a)

32.1 Certification of Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002

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COGNIGEN NETWORKS, INC.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COGNIGEN NETWORKS, INC.

By: /s/ Thomas S. Smith	Date: September 7, 2005
Thomas S. Smith
President and Chief Executive
Officer
By: /s/ Gary L. Cook	Date: September 7, 2005
Gary L. Cook
Chief Financial Officer

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COGNIGEN NETWORKS, INC.

EXHIBIT INDEX

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).

2.2 Stock for Stock Exchange Agreement dated May 12, 2004 by and among Jimmy L. Boswell, David G. Lucas, Reginald W. Einkauf and John D. Miller (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 3, 2004).

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 28, 2004 (incorporated by reference to Exhibit 3 to our Current Report on Form 8-K filed on January 3, 2005).

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).

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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 2001 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 (incorporated by reference to Exhibit 10.11 to our amended Annual Report on Form 10-KSB/A for the year ended June 30, 2003).

10.12 Modified Supplemental Consulting Engagement letter dated March 4, 2003, between us and Kevin Anderson (incorporated by reference to Exhibit 10.12 to our amended Annual Report on Form 10-KSB/A for the year ended June 30, 2003).

10.13 Extension of Modified Supplemental Consulting Engagement Agreement dated February 9, 2004 between us and Kevin Anderson Consulting, Inc. (incorporated by reference to Exhibit 2.1 to our Quarterly Report on Form 10-QSB for the Quarter ended December 31, 2003).

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10.14 Termination of Funding Agreement and Settlement Agreement dated February 5, 2004 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-QSB for the Quarter ended December 31, 2003).

10.15 Amendment dated September 9, 2004, to Consulting Engagement Agreement between us and Combined Telecommunications Consultancy, Ltd. (incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

10.16 Accounts Receivable Purchase Agreement dated December 26, 2003, between us and Silicon Valley Bank (incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

10.17 Accounts Receivable Purchase Modification Agreement dated November 22, 2004 between us and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 to our current report on form 8-K filed on December 10, 2004).

14.1 Code of Business Conduct and Ethics. (incorporated by reference to Exhibit 14.1 to our Annual Report on Form 10-KSB for the year ended June 30, 2004).

21 Subsidiaries (incorporated by reference to Exhibit 21 to our Annual Report on Form 10-KSB/A for the year ended June 30, 2004).

31.1 Certification of Chief Executive Officer required by Rule 13a-14(a)

31.2 Certification of Chief Financial Officer required by Rule 13a-14(a)

32.1 Certification of Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002

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