---

# UNITED
STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

# FORM
10-QSB

# (X)  
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OFTHE SECURITIES
EXCHANGE ACT OF 1934For
the quarterly period ended March 31, 2006

# 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 218th
Street SW, Suite 305Mountlake 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  [   ]

Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).  Yes  [   ]    No
[X]

# 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 atApril 30, 2006
|----------------------------- | ----------------------------
|Common Stock, $.001 par value |                             

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





---

# COGNIGEN
NETWORKS, INC.
Commission
File Number: 0-11730
Quarter
Ended March 31, 2006
FORM
10-QSB

|                                                                  | 
|----------------------------------------------------------------- | 
|Part I - FINANCIAL INFORMATION                                    | 
|Item 1. Consolidated Financial Statements                         | 
|Consolidated Balance Sheets                                       | 
|Unaudited Consolidated Statements of Operations                   | 
|Unaudited Consolidated Statements of Cash Flows                   | 
|Notes to Unaudited Consolidated Financial Statements              | 
|Item 2. Managements Discussion and Analysis or Plan of Operation | 
|Item 3. Controls and Procedures                                   | 
|Part II - OTHER INFORMATION                                       | 
|Item 6. Exhibits                                                  | 
|Signatures                                                        | 

1



---

COGNIGEN
NETWORKS, INC.
Part I  Financial Information

Item 1.
Financial Statements

# Consolidated
Balance Sheets

|                                                                           | March 31,2006 | June 30,2005   
|-------------------------------------------------------------------------- | ------------- | ---------------
|
|Assets                                                                     |               |                
|Current assets                                                             |               |                
|Cash                                                                       |               | $        68,451
|Accounts receivable, net                                                   |               | 336,714        
|Marketing commissions receivable                                           |               | 985,860        
|Current portion of deferred tax asset                                      |               | 21,628         
|Other current assets                                                       |               | 117,264        
|                                                                           |               |                
|Total current assets                                                       |               | 1,529,917      
|                                                                           |               |                
|                                                                           |               |                
|Non-current assets                                                         |               |                
|Property, plant and equipment, net                                         |               | 8,265          
|Long term portion of deferred tax asset                                    |               | 804,023        
|Deposits and other assets                                                  |               | 147,446        
|                                                                           |               |                
|Total non-current assets                                                   |               | 959,734        
|                                                                           |               |                
|                                                                           |               |                
|Total assets                                                               |               | $   2,489,651  
|                                                                           |               |                
|                                                                           |               |                
|Liabilities and Stockholders Equity                                       |               |                
|Current liabilities                                                        |               |                
|Accounts payable                                                           |               | $      537,975 
|Accrued liabilities                                                        |               | 311,361        
|Marketing commissions payable                                              |               | 837,307        
|Current portion of deferred commissions                                    |               |               
|Receivables financing arrangement                                          |               | 517,528        
|Other current liabilities                                                  |               |               
|                                                                           |               |                
|Total current liabilities                                                  |               | 2,204,171      
|                                                                           |               |                
|Other long-term liabilities                                                |               | 10,132         
|                                                                           |               |                
|Total liabilities                                                          |               | 2,214,303      
|                                                                           |               |                
|                                                                           |               |                
|Stockholders' equity                                                       |               |                
|Preferred stock no par value, 20,000,000 shares authorized, 500,000 shares |               |                
|issued and outstanding, $1.00 per share liquidation preference             |               | 450,000        
|Common stock $.001 par value, 300,000,000 shares authorized; 8,753,972     |               |                
|issued and outstanding as of  March 31, 2006 and June 30, 2005             |               | 8,754          
|Additional paid-in capital                                                 |               | 11,965,577     
|Accumulated deficit                                                        |               | (12,148,983    
|                                                                           |               |                
|Total stockholders equity                                                 |               | 275,348        
|                                                                           |               |                
|Total liabilities and stockholders equity                                 |               | $   2,489,651  
|                                                                           |               |                
|                                                                           |               |                

2



---

COGNIGEN
NETWORKS, INC.Unaudited
Consolidated Statements of Operations

|                                         | Three Months EndedMarch 31, | Nine Months EndedMarch 31, |   |                
|---------------------------------------- | --------------------------- | -------------------------- | - | ---------------
|
|
|Revenue                                  |                             |                            |   |                
|Marketing commissions                    |                             | $ 1,591,259                |   | $ 1,596,618    
|Telecommunications                       |                             | 906,563                    |   | 1,413,552      
|Other                                    |                             | 21,674                     |   |               
|                                         |                             |                            |   |                
|Total revenue                            |                             | 2,519,496                  |   | 3,010,170      
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Operating expenses                       |                             |                            |   |                
|Commissions:                             |                             |                            |   |                
|Marketing                                |                             | 1,144,777                  |   | 913,676        
|Telecommunications                       |                             | 129,611                    |   | 191,812        
|Telecommunications                       |                             | 628,334                    |   | 755,561        
|Other                                    |                             | 14,010                     |   |               
|Selling, general and administrative      |                             | 733,706                    |   | 784,201        
|Depreciation and amortization            |                             | 1,591                      |   | 3,934          
|                                         |                             |                            |   |                
|Total operating expenses                 |                             | 2,652,029                  |   | 2,649,184      
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Income (loss) from operations            |                             | (132,533                   | ) | 360,986        
|Interest expense                         |                             | (17,122                    | ) | (14,679        
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Income (loss) before income taxes        |                             | (149,655                   | ) | 346,307        
|                                         |                             |                            |   |                
|Income taxes                             |                             |                           |   |               
|                                         |                             |                            |   |                
|Net income (loss)                        |                             | (149,655                   | ) | 346,307        
|                                         |                             |                            |   |                
|Preferred dividends                      |                             | (10,000                    | ) | (10,000        
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Net income (loss) attributable to        |                             |                            |   |                
|common shareholders                      |                             | $  (159,655                | ) | $    336,307   
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Income (loss) per common share-          |                             |                            |   |                
|basic and diluted                        |                             | $         (.02             | ) | $           .04
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Weighted average number of common shares |                             |                            |   |                
|outstanding:                             |                             |                            |   |                
|Basic                                    |                             | 8,753,972                  |   | 8,753,972      
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                
|Diluted                                  |                             | 8,753,972                  |   | 8,857,049      
|                                         |                             |                            |   |                
|                                         |                             |                            |   |                

3



---

COGNIGEN
NETWORKS, INC.Unaudited
Consolidated Statements of Cash Flows

|                                                                             | Nine Months EndedMarch 31, |           
|---------------------------------------------------------------------------- | -------------------------- | ----------
|
|
|Cash flows from operating activities                                         |                            |           
|Net income (loss)                                                            |                            | $(194,233 
|                                                                             |                            |           
|Adjustments to reconcile net income (loss) to net cash provided by (used in) |                            |           
|operating activities:                                                        |                            |           
|Depreciation and amortization                                                |                            | 8,539     
|Bad debt expense                                                             |                            | 70,600    
|Issuance of stock options and warrants                                       |                            | 11,246    
|Changes in assets and liabilities:                                           |                            |           
|Accounts receivable                                                          |                            | 50,415    
|Commissions receivable, net                                                  |                            | 212,670   
|Other current assets                                                         |                            | (43,704   
|Accounts payable                                                             |                            | (28,661   
|Commissions payable                                                          |                            | (196,942  
|Accrued liabilities                                                          |                            | 65,549    
|Other current liabilities                                                    |                            | (20,350   
|Other liabilities                                                            |                            | 10,016    
|                                                                             |                            |           
|                                                                             |                            | 139,378   
|                                                                             |                            |           
|Net cash provided by (used in) operations                                    |                            | (54,855   
|                                                                             |                            |           
|                                                                             |                            |           
|Cash flows from investing activities                                         |                            |           
|Capital expenditures                                                         |                            | (897      
|Increase (decrease) other assets                                             |                            | (115,481  
|                                                                             |                            |           
|Net cash provided by (used in) investing activities                          |                            | (116,378  
|                                                                             |                            |           
|                                                                             |                            |           
|Cash flows from financing activities                                         |                            |           
|Payments on deferred commissions                                             |                            | (226,068  
|Increase (decrease) in receivables financing arrangement                     |                            | 322,528   
|                                                                             |                            |           
|Net cash provided by (used in) financing activities                          |                            | 96,460    
|                                                                             |                            |           
|                                                                             |                            |           
|Net increase (decrease) in cash and cash equivalents                         |                            | (74,773   
|                                                                             |                            |           
|Cash and cash equivalents-beginning of period                                |                            | 143,224   
|                                                                             |                            |           
|                                                                             |                            |           
|Cash and cash equivalents-end of period                                      |                            | $   68,451
|                                                                             |                            |           
|                                                                             |                            |           

Supplemental
Disclosures of Cash Flow Information and Non-Cash Transactions

Cash
payments for interest expense during the nine months ended March 31, 2006 and
2005 were $37,377 and $40,465, respectively.

4



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note
1  Description of Business

Cognigen
Networks, Inc. (the Company or Cognigen) 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 20, 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. The Companys
core products are 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.

The
Company formed a subsidiary, LowestCostMall, Inc. (LCM), in May 2005 to begin
offering customers, through its sales agent force, an online retail store. These
operations have been included as part of the consolidated operations beginning
in July 2005. LCM provides innovative online shopping of thousands of discounted
products such as office products, toys, flowers, jewelry, electronic and
household items. Revenue is generated by LCM through the sales of discounted
products and sales of memberships. The memberships enable the members to receive
even lower prices on the same discounted products.

Note 2
 Summary of Significant Accounting Policies

The
accompanying consolidated financial statements include the accounts of Cognigen
Networks, Inc. and its subsidiaries, Intandem Communications Corp. (Intandem)
since February 1, 2004 and LCM. 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 nine months ended March 31, 2006 and 2005,
respectively, (b) the unaudited consolidated balance sheet as of March 31, 2006
and (c) the unaudited consolidated statements of cash flows for the nine months
ended March 31, 2006 and 2005, respectively, in order to make the financial
statements not misleading.

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, 2005, included in the Companys Annual Report on
Form 10-KSB filed with the Securities and Exchange Commission.

5



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

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 nine months ended March 31, 2006 may not necessarily be
indicative of the results for the fiscal year ending June 30, 2006.

On
November 21, 2001, the Company entered into a Stock Redemption Agreement, as
amended, with the Anderson Family Trust (AFT), a substantial stockholder of the
Company, and Cantara Communications Corporation (Cantara) whereby AFT sold
2,712,501 shares of the Companys common stock to the Company in exchange
for the transfer by the Company to Cantara of the original Cognigen Agency and
all of its downline agents. As a result of this transaction, Cantara received
the contingent right to receive all of its direct sales commissions and
generational downline commission overrides. During the first twelve months of
the ownership by Cantara of the former Cognigen Agency, now renamed Cantara,
Cantara agreed to a capping of the commissions payable to it, thereafter
commencing January 2003, Cantara has received the full direct and generational
override commissions it is entitled to earn pursuant to the existing and current
Company commission structure applicable for all agents. Payment of commissions
to Cantara is totally contingent upon the generation of sales by it and its
downline agents and payment for the products and services sold by the
Companys customers and vendors. The sales are generated either directly by
employees of Cantara and/or its downline sub-agents. Cantara has contracted with
Kevin E. Anderson Consulting, Inc. (KEAC), a corporation owned by Kevin E,
Anderson, founder of Cognigen Communications Corporation and a beneficiary of
the AFT, to manage Cantara for a set monthly fee. AFT owns approximately 13% of
the Companys common stock. Currently, the monthly commission payment to
Cantara is approximately 11% of the total commissions paid monthly to all of the
Companys agents.

For
the nine months ended March 31, 2006 and 2005, Cognigen also paid members of
Kevin E. Andersons family approximately $44,000 and $43,000 in agent
commissions, respectively.

On December 9,
2005, the Company entered into an  agreement, as amended, with AFT and Cantara (the
Cantara Purchase Agreement).  Under the Cantara Purchase Agreement, the Company has paid
the AFT a total of  $75,000 as of March 31, 2006 and $40,000 thereafter. The Stock
Redemption  Agreement will terminate if the Company pays AFT a total of $1,500,000 by
March  15, 2010 pursuant to a schedule set forth in the Cantara Purchase Agreement, as
amended. The first payment was due March 15, 2006 but has been modified to allow
Cognigen to pay $25,000 in February 2006, $20,000 in each month of April through  August
2006 and $25,000 in September 2006 for a total of $150,000 towards the  first payment.
The remainder of the first payment or $300,000 is then due in  October 2006. Under the
Cantara Purchase Agreement, the AFT continues to receive  100% of the amount due under
the Stock Redemption Agreement until the Company  makes total payments representing the
first payment of $450,000. Thereafter, the  percentage that the AFT receives reduces as
the Company makes additional  payments. The Company has the right to prepay the
$1,500,000 at anytime and stop  all payments to the AFT under the Stock Redemption
Agreement.

6



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note 2
 Summary of Significant Accounting Policies (continued)

At the
time the Company makes payments totaling the first payment of $450,000, the
Company will also be required to enter into a two year consulting agreement with
KEAC whereby the Company and the AFT would pay KEAC $8,000 per month. The amount
that the Company would be required to pay KEAC would be based on the payments
that the Company makes to the AFT pursuant to the schedule set forth in the
Cantara Purchase Agreement. The Company has the right to extend the consulting
agreement with KEAC for an additional two years. All of this is contingent on
the Company being able to negotiate an agreement acceptable to KEAC.

Once
the Company has paid the $1,500,000 to the AFT or if the Company defaults in any
payments required by the Cantara Purchase Agreement, the Stock Redemption
Agreement will terminate. If the Company defaults in making the required
payments, the AFT will receive the percentage of the payments under the Stock
Redemption Agreement in effect on the last day of the payments actually made by
the Company to the AFT.

The
following presents statement of operations data and proforma data. The proforma
data reflect certain statement of operations accounts for the three and nine
months ended March 31, 2006 that reflect the increase in commissions expense had
the payments to the stockholder, paid under the Stock Redemption Agreement,
during these periods been accounted for as commissions expense rather than a
reduction to deferred commissions payable as it was through September 30, 2005.
Thereafter, commission expense to Cantara was reflected in the statement of
operations.

|                                    | Pro FormaThree MonthsEnded March31, 2006 | ActualThree MonthsEnded March31, 2006 | Pro FormaNine MonthsEnded March31, 2006 | ActualNine MonthsEnded March31, 2006
|----------------------------------- | ---------------------------------------- | ------------------------------------- | --------------------------------------- | ------------------------------------
|Total revenue                       |                                          | $ 2,519,496                           |                                         | $ 2,519,496                         
|                                    |                                          |                                       |                                         |                                     
|                                    |                                          |                                       |                                         |                                     
|Operating expenses:                 |                                          |                                       |                                         |                                     
|Marketing commissions               |                                          | 1,274,388                             |                                         | 1,274,388                           
|Telecommunications                  |                                          | 628,334                               |                                         | 628,334                             
|Other                               |                                          | 14,010                                |                                         | 14,010                              
|Selling, general and administrative |                                          | 733,706                               |                                         | 733,706                             
|Depreciation and amortization       |                                          | 1,591                                 |                                         | 1,591                               
|                                    |                                          |                                       |                                         |                                     
|Total operating expenses            |                                          | 2,652,029                             |                                         | 2,652,029                           
|                                    |                                          |                                       |                                         |                                     
|                                    |                                          |                                       |                                         |                                     
|Loss from operations                |                                          | $  (132,533                           | )                                       | $  (132,533                         
|                                    |                                          |                                       |                                         |                                     
|                                    |                                          |                                       |                                         |                                     

7



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note 3
Receivables Financing Arrangement

The
balance of receivables financing arrangement as of March 31, 2006 is $517,528.
This represents the amount of marketing commissions receivables that have been
pledged under an Accounts Receivable Purchase Agreement (Receivables Purchase
Agreement) with Silicon Valley 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. The bank was given a Security Agreement
in the assets of the Company including any of the Companys copyrights,
trademarks, patents and mask works, as a condition to the Receivables Purchase
Agreement. The Receivables Purchase Agreement is renewable from year to year
unless terminated in writing by either party.

Note 4
Stockholders Deficit

As of
March 31, 2006, the Company has authorized 20,000,000 shares of preferred stock.
The Company has designated 500,000 shares as 8% Convertible Series A.

On
October 17, 2002 the Company issued 500,000 shares of 8% Convertible Series A
Preferred Stock (Preferred Stock) to Stanford Venture Capital Holdings, Inc. for
$500,000. Each share of the 8% Convertible Series A 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. After five years 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. In
conjunction with the issuance of the Preferred Stock, the Company paid $30,000
in cash and issued 64,516 shares of the Companys common stock valued at
$20,000 to unaffiliated third-parties as a finders fee.

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 Board has not declared any such dividends. Because of the
cumulative nature of these dividends, if all dividends were to be declared the
balance owing would be $198,225 as of March 31, 2006.

Note 5
Stock Options and Warrants

BayHill
Agreement

On
November 22, 2005, the Company and the BayHill Group LC (BayHill) entered into
an agreement whereby BayHill agreed to provide services to assist the Company in
developing business strategies and other corporate matters, including assisting
the Company in its strategic planning activities, raising capital, finding
companies for the Company to acquire, assisting the Company in its investor
relations activities and serving in various interim management capacities as
requested. The term of the agreement was for six months. The Company gave BayHill a
notice of termination of this agreement which will end May 22, 2006.

8



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note  5
Stock Options and Warrants ( continued)

For
providing services pursuant to the agreement, the Company paid BayHill $10,000
per month for six months commencing November 22, 2005. Of the $10,000, one half
is accrued until the Company has received cumulative equity funding in amounts
greater than $1,000,000 or has acquired another business or businesses which
have at least $1,000,000 in cash.

The
Company also has agreed to grant BayHill warrants to purchase 437,500 shares of
common stock at an exercise price of $.23 per share. The warrants will vest
according to a schedule if the Company is able to meet certain parameters. The
Company has agreed to grant BayHill certain piggyback and demand registration
rights. As the agreement was terminated by the Company, warrants not vested
after one year from the date of termination will be cancelled. As of March 31,
2006, the Company has accrued $9,953 in other current liabilities for these
warrants based on a calculation using the Black Scholes Model.

Stock Option
Plan

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 nine months ended March 31, 2006, the Company granted 80,000 options to
non-employee Directors to purchase shares of common stock of the Company. The
options granted vest immediately and are exercisable at $.71 for 30,000 shares
and $.21 for 50,000 shares and expire five years from the date of grant. For the
nine months ended March 31, 2006, the Company had included $11,246 in general
administrative expenses for the issuance of these options based on a calculation
using the Black Scholes Model.

As of
March 31, 2006, the number of stock options outstanding under the Plan was
555,000.

As of
March 31, 2006, the number of stock options outstanding not under any plan was
25,000.

As of
March, 2006, there were 987,500 warrants outstanding that were exercisable into
shares of common stock of the Company, including 437,500 warrants that were
issued to BayHill. 500,000 warrants expired unexercised in November 2005.

9



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note 6
 Commitments and Contingencies

LowestCostMall

On
April 19, 2005, the Company entered into a Services Agreement with Vcommerce
Corporation pursuant to which Vcommerce has agreed to provide the Company with
the back office for an online retail store, which the Company began offering to
customers in July 2005 through its sales agent force and subsidiary,
LowestCostMall, Inc., dba, LowestCostMall.com. Pursuant to the Services
Agreement, Cognigen paid Vcommerce $20,000 upon the signing and $5,000 per month
for eight months. $20,000 remains unpaid as of March 31, 2006. In addition, the
Company is to pay Vcommerce a fee of $4,000 per month for monthly hosting
services and other fees as agreed upon by the Company. The Services Agreement
has been transferred to LowestCostMall, Inc. with a guarantee of such provisions
in the agreement by Cognigen Networks, Inc.

The
Services Agreement is in effect for 36 months with automatic renewals unless
terminated by either party. The Company has the right to terminate the Services
Agreement after the first 12 months of the term by paying Vcommerce $24,000 and
giving Vcommerce six months notice of termination during which period Vcommerce
would provide no services to the Company.

State Tax
Audit

The
State of Washington is currently performing an audit of the Companys
Washington State Business and Occupation Tax Return. The audit is in its
preliminary stages. To date, the State of Washington has initially estimated
$95,883 in taxes due by the Company from prior year tax returns. This calculated
amount was derived using estimates and allocations with which the Company does
not agree. As of March 31, 2006, the company has accrued $30,000 in current
liabilities as a potential exposure from this audit but has not completed all of
the necessary research and work to arrive at a final assessment.

Other
ContingenciesOn April 7,  2005, David L. Jackson, one of the Companys
directors and a member of the  Companys Compensation Committee, filed a complaint
with the California  Department of Fair Employment and Housing (No. E200405M1559-oo-ap)
alleging that  he was improperly terminated as an employee by the Companys Board of
Directors. Because of the costs involved in litigating this complaint, the  Company
settled with Mr. Jackson by paying Mr. Jackson $32,000 in one lump sum.  Mr. Jackson did
not specify in his complaint the amount of his alleged losses.

The
Company has granted a security interest to Global Crossing Bandwidth, Inc.
(Global Crossing) in the assets of the Company to the extent the assets relate
to services provided by Global Crossing and to the extent any amounts remain
outstanding to Global Crossing. This security interest is second to an existing
security interest by Silicon Valley Bank described in Note 3.

During the
three months ended March 31, 2006, the Company had a dispute with one of its vendors,
Customer Switching  Technologies, Inc. (CSTi), to which end CSTi claimed that the Company
was responsible for approximately $56,000 of its  past due telecommunications carrier
billings.  CSTi, in servicing of the Companys proprietary long distance accounts,
has applied a portion of the Companys customer receipts to this outstanding
balance. After initial reviews of CSTi  provided documentation of its claim,  the Company
does not agree that this past due balance is a legitimate claim or the  Companys
responsibility, nor does it agree with CSTis action to withhold the amount of
$56,000 from the Company.  As a  result, the Company has recorded a receivable for this
amount in its balance sheet.  In the event the Company is  unsuccessful in resolving this
dispute and collecting this receivable, it may have to expense this receivable in its
statement of operations in future periods.

10



---

# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note 7
 Related Party Information

Stock
Redemption Agreement between the Company, the Anderson Family Trust, Cantara
Communications Corporation, and Kevin E. Anderson Consulting, Inc.On
December 7, 2001, the Company closed a transaction in which it purchased, or
redeemed, 2,712,500 shares of the Companys common stock from the AFT. AFT
delivered shares from those owned by Cognigen Corporation, a company 98.9 %
owned by AFT, to satisfy its obligation pursuant to the transaction. Kevin E.
Anderson and members of his family are the beneficiaries of AFT. Kevin E.
Anderson may be deemed to beneficially own the shares of the Companys
common stock owned by AFT.

As
consideration for the return of the 2,712,500 shares to the Company, among other
consideration, the Company transferred to Cantara, an affiliate of Kevin E.
Anderson, the rights to become the up-line for the Companys current
accounts and thereby be entitled to commissions, fees and bonuses on the
Companys current customer accounts, with a commission not to exceed 12%,
which commissions were agreed to be capped by Cantara through December 31, 2002.
The amount of commissions, fees and bonuses that Cantara is entitled to is
totally contingent upon the generation of sales by it and its down line agents
and payment for the products and services sold by the Companys customers
and vendors. The sales are generated either directly by Cantara and/or its
down-line sub-agents. For the nine months ended March 31, 2006 and 2005, the
Company paid Cantara $393,362 and $382,384 in commissions, respectively. In
addition, as a part of the transaction, the Companys agreement with Kevin
E. Anderson Consulting, Inc., pursuant to which the Company 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
per month to provide up to 20 hours telecommuting consulting services to the
Company per month.

In
March 2003 the Company entered into a separate consulting agreement with Kevin
E. Anderson Consulting, Inc to provide expanded consulting and
technical/administrative services. For the nine months ended March 31, 2006 and
2005, the Company paid Kevin E. Anderson Consulting, Inc. $40,500 and $36,000,
respectively, pursuant to the consulting agreement. For the nine months ended
March 31, 2006 and 2005, Cognigen also paid members of Kevin E. Andersons
family approximately $44,000 and $43,000 in agent commissions, respectively.

On
December 9, 2005, the Company entered into an agreement, as amended, with AFT
and Cantara (the Cantara Purchase Agreement). Under the Cantara Purchase
Agreement, the Company has paid the AFT a total of $75,000 as of March 31, 2006
and $40,000 thereafter. The Stock Redemption Agreement will terminate if the
Company pays AFT a total of $1,500,000 by March 15, 2010 pursuant to a schedule
set forth in the Cantara Purchase Agreement, as amended. The first payment was
due March 15, 2006 but has been modified to allow Cognigen to pay $25,000 in
February 2006, $20,000 in each month of April through August 2006 and $25,000 in
September 2006 for a total of $150,000 towards the first payment. The remainer
of the first payment or $300,000 is then due in October 2006. Under the Cantara
Purchase Agreement, the AFT continues to receive 100% of the amount due under
the Stock Redemption Agreement until the Company makes total payments
representing the first payment of $450,000. Thereafter, the percentage that the
AFT receives reduces as the Company makes additional payments. The Company has
the right to prepay the $1,500,000 at anytime and stop all payments to the AFT
under the Stock Redemption Agreement.

11



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# COGNIGEN
NETWORKS, INC.
Notes to Unaudited Consolidated Financial Statements
March 31, 2006

Note 7
 Related Party Information (continued)

At the
time the Company makes payments totaling the first payment of $450,000, the
Company will also be required to enter into a two year consulting agreement with
KEAC whereby the Company and the AFT would pay KEAC $8,000 per month. The amount
that the Company would be required to pay KEAC would be based on the payments
that the Company makes to the AFT pursuant to the schedule set forth in the
Cantara Purchase Agreement. The Company has the right to extend the consulting
agreement with KEAC for an additional two years. All of this is contingent on
the Company being able to negotiate an agreement acceptable to KEAC.

Agreement
with a Former Director

In
February 2005, the Company entered into an agreement with SEGAL & Co.
Incorporated, which is controlled by Robert B. Segal, a director at the time the
Company entered into the agreement who resigned as a director in May 2005. Under
the agreement, SEGAL & Co. Incorporated is to act as a non-exclusive
financial advisor to the Company. If it was successful in raising funds on terms
acceptable to the Company, the Company was to pay SEGAL & Co. Incorporated a
financing fee of 4% of the first $5,000,000, 2% of the subsequent $10,000,000
and 1% thereafter. If SEGAL & Co. Incorporated was able to find a merger or
acquisition acceptable to the Company, it would receive 2.5% of the value of the
transaction. The agreement was for 12 months unless extended on a month to month
basis thereafter. The agreement also provided for reimbursement of approved
expenses up to $2,000 per month. This agreement expired in February 2006.

Payments to
Former Chief Executive Officer

Thomas
S. Smith resigned as the Companys Chief Executive Officer in September
2005. After Mr. Smith resigned, the Company had an oral agreement with Thomas S.
Smith pursuant to which the Company retained Mr. Smith or any law firm with
which he became associated with to provide certain legal services to the Company
on a monthly retainer of $12,500 per month. The agreement was terminable upon 60
days by written notice by either party which notice was given by the Company to
Mr. Smith on December 22, 2005.

12



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

Overview

We
are an Internet and relationship enabled marketer. Our core products are long
distance telephone and personal communications services. We have generated
revenue in two ways. First, marketing commissions revenue has been generated
from a number of vendors who are represented on our agent web sites and for whom
we sell their telecommunications and other products and services via contractual
agreements. Second, we have generated telecommunications revenue through sales
of our proprietary products and services through our agent web sites. Our
founder, Kevin E. Anderson, pioneered our Internet based long distance
telecommunication marketing opportunity in the 1990s. We have invested
millions of dollars in developing business systems for our independent agent
network around the world. To date, over 820,000 customers have purchased
telecommunication and personal technology services and products from our
websites. Each of the individuals, who are currently registered as our agents,
has a website that is replicated from the main www.ld.net site.

We
formed a subsidiary, LowestCostMall, Inc. (LCM), in May 2005 to begin offering
customers, through our sales agent force, an online retail store. These
operations have been included as part of our consolidated operations beginning
in July 2005. LCM provides innovative online shopping of thousands of discounted
products such as office products, toys, flowers, jewelry, electronic and
household items. Revenue is generated by LCM through the sales of discounted
products and sales of memberships. The membership enables the member to receive
even lower prices on the same discounted products.

In
prior years, we made a major strategic transition in our business profile and
delivery of telecommunications products and services. In addition to being
historically successful at representing and selling the telecommunications
services and products of outside vendors, we began selling multiple branded
products and services whereby the customer and account are owned by us. We refer
to these products and services as our proprietary products and services. The
most significant impact of this strategic transition is that by billing our
owned customer accounts, we generate approximately five to seven times as much
revenue compared to commission revenue we receive from vendors.

Through
the acquisition of multiple state licenses, billing capability, and new
distribution channels, we can grow revenue, maintain closer contact to our
customers, and control bottom line retention and contribution to a greater
degree. We are currently licensed to provide proprietary telecommunications
products in 47 states.

See
additional discussion of liquidity and capital resources below.

13



---

Three Months
Ended March 31, 2006 Compared to Three Months Ended March 31, 2005

Total
revenue for the three months ended March 31, 2006 was $2,519,496 compared to
$3,010,170 for 2005. Marketing commissions revenue was $1,591,259 for 2006
compared to $1,596,618 for the prior year. Telecommunications revenue was
$906,563 for 2006 as compared to $1,413,552 for the prior year.

Marketing
commissions revenue for 2006 decreased slightly by $5,359 from that of 2005, or
0%. This decrease reflects increases in sales of cellular products offset by
decreases in sales of long distance products.

Telecommunications
revenue decreased $506,989 for 2006 compared to 2005, or 36%. This decrease
results from lower sales of our proprietary products and services, as well as,
lower selling prices of those products and services due to declining long
distance rates.

Marketing
commissions expense increased from $913,676 for 2005 to $1,144,777 for 2006, an
increase of $231,101, or 25%. The higher percentage and increase in marketing
commissions expense compared to the change in marketing commissions revenue
results from a difference in product mix between the periods and the payment of
higher commission expense to certain master sales agents who have been added to
our sales agent force to increase volume and sell certain products and services
such as cellular products.

In
addition, marketing commission expense increased in October 2005 when we began
accruing payments to Cantara as marketing commissions expense. During the
quarter ended March 31, 2006, the Company expensed approximately $120,000
related to payments made to Cantara as marketing commissions. In prior quarters,
these payments were reflected as a reduction of the amounts owed to Cantara as a
result of the Stock Redemption Agreement entered into in November 2001 (see Note
2 to the Consolidated Financial Statements). Accordingly, we have reported a net
loss for the nine months ended March 31, 2006 of $194,233. If we had been able
to account for payments to Cantara in a manner similar to prior quarters, we
would have reported approximately $30,000 of net income before income taxes.
This change in accounting had no effect on our cash flows since we have been
paying approximately $120,000 to $150,000 of marketing commissions each quarter
to Cantara related to this obligation. See proforma information in Note 2 to the
Consolidated Financial Statements.

Telecommunications
commissions expense decreased from $191,812 for 2005 to $129,611 for 2006, a
decrease of $62,201, or 32%. This decrease is consistent with the decrease
described above in telecommunications revenue.

Telecommunications
expense, or carrier costs, decreased from $755,561 for 2005 to $628,334 for
2006, or a decrease of $127,227, or 17%. This decrease correlates to the
decrease in telecommunications revenue described above. The margins on our
telecommunications revenue decreased compared to the prior period reflective of
higher carrier costs and a highly competitive market for long distance customers
being driven by declining long distance rates.

Selling,
general and administrative expenses decreased $50,495 or 6% for 2006 compared to
2005. This decrease is largely attributable to lower bad debt expense on the
sales of our proprietary products.

Interest
expense for 2006 of $17,122 is consistent with that for 2005 of $14,679.

14



---

Nine Months
Ended March 31, 2006 Compared to Nine Months Ended Marchr 31, 2005

Total
revenue for the nine months ended March 31, 2006 was $7,855,396 compared to
$8,674,882 for 2005. Marketing commissions revenue was $4,835,934 for 2006
compared to $4,211,874 for the prior year. Telecommunications revenue was
$2,961,657 for 2006 as compared to $4,463,008 for the prior year.

Marketing
commissions revenue for 2006 increased $624,060 from that of 2005, or 15%. This
increase reflects increases in sales of cellular products offset by the decrease
in sales of long distance products.

Telecommunications
revenue decreased $1,501,351 for 2006 compared to 2005, or 34%. This decrease
results from lower sales of our proprietary products and services, as well as,
lower selling prices of those products and services due to declining long
distance rates.

Marketing
commissions expense increased from $2,251,924 for 2005 to $3,242,358 for 2006,
an increase of $990,434, or 44%. 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 and the
payment of higher commission expense to certain master sales agents who have
been added to our sales agent force to increase volume and sell certain products
and services such as cellular products.

In
addition, marketing commission expense increased in October 2005 when we began
accruing payments to Cantara as marketing commissions expense. During the
quarter ended March 31, 2006, the Company expensed approximately $250,000
related to payments made to Cantara as marketing commissions. In prior periods,
these payments were reflected as a reduction of the amounts owed to Cantara as a
result of the Stock Redemption Agreement entered into in November 2001 (see Note
2 to the Consolidated Financial Statements). Accordingly, we have reported a net
loss for the nine months ended March 31, 2006 of $194,233. If we had been able
to account for payments to Cantara in a manner similar to prior periods, we
would have reported approximately $30,000 of net income before income taxes.
This change in accounting had no effect on our cash flows since we have been
paying approximately $120,000 to $150,000 of marketing commissions each quarter
to Cantara related to this obligation. See proforma information in Note 2 to the
Consolidated Financial Statements.

Telecommunications
commissions expense decreased from $645,787 for 2005 to $432,501 for 2006, a
decrease of $213,286, or 33%. This decrease is consistent with the decrease
described above in telecommunications revenue.

Telecommunications
expense, or carrier costs, decreased from $2,446,940 for 2005 to $1,913,954 for
2006, or a decrease of $532,986, or 22%. This decrease correlates to the
decrease in telecommunications revenue described above. The margins on our
telecommunications revenue decreased compared to the prior period reflective of
higher carrier costs and a highly competitive market for long distance customers
being driven by declining long distance rates.

Selling,
general and administrative expenses decreased $91,073 or 4% for 2006 compared to
2005. This decrease is largely attributable to lower bad debt expense on the
sales of our proprietary products.

Interest
expense for 2006 of $37,377 is consistent with that for 2005 of $40,465.

15



---

Liquidity
and Capital Resources

We
have historically funded our operations primarily from sales of securities,
operations and our receivables financing arrangement. As of March 31, 2006 we
had cash and cash equivalents of $68,451 and negative working capital of
$674,254. Cash used by operations during the nine months ended March 31, 2006
was $54,855. Cash provided from financing activities of $96,460 included the
payment of deferred commissions of $226,068 and an increase in the receivables
financing arrangement of $322,528.

We
have a balance outstanding under a receivables financing arrangement with
Silicon Valley Bank as of March 31, 2006 of $517,528. This represents the amount
of marketing commissions receivables that have been pledged 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 us. 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. We are in compliance with the
terms and conditions of the Receivables Purchase Agreement.

Cash
flows generated from operations and from our receivables financing arrangement
were sufficient to meet our working capital requirements for the nine months
ended March 31, 2006, but may not be sufficient to meet our working capital
requirements for the foreseeable future or provide for expansion opportunities.
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 or remain certified as a reseller in all jurisdictions in which we
apply or are currently certified, 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.

16



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Item 3.     Controls
and Procedures

(a)   
Evaluation of disclosure controls and procedures.

Under
the supervision and with the participation of our management, including our
Acting Chief Executive Officer and our Chief Financial Officer, we have
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) at the end of the period covered by this report. Based
upon that evaluation, our Acting Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective.

In
preparing prior audits, 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.

In
addition, our Chief Financial Officer oversees our accounting and general
internal control process. As we have a very limited staff, we can not 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.

Our
certifying officer does not believe that the potential control deficiencies
constitute material weaknesses because of the number of compensating internal
controls already in place. However, we are a small company and due to the fact
that we have a limited number of employees, we are not able to have proper
segregation of duties. We are aware that the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission is going to issue its report on
internal controls structures for small companies. It is possible that after
reviewing this report and after our independent auditors perform a Section 404
test, we will conclude that due to the fact that we do not have proper
segregation of duties, some of the issues that we believe are compensating
internal controls are not sufficient to mitigate the lack of segregation of
duties. Thus, we might be deemed to have material weaknesses in our internal
control structure.

(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.

17



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Part
II  Other Information

Item
6.  Exhibits

EXHIBIT
NO.            DESCRIPTION AND METHOD OF FILING

|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 May 17, 2005 (incorporated by reference to Exhibit 3.(ii) to our
Current Report on Form 8-K filed on May 19, 2005).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Agreement dated November 22, 2005 between the BayHill Group LLC and us (incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on November 25, 2005).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Email dated April 21, 2006 terminating the BayHill Group LLC Agreement dated November
22, 2005 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K
filed on May 15, 2006).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Agreement dated December 9, 2005, among us, the Anderson Family Trust No. 1 and Cantara
Communications corporation ( incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on December 15, 2005).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Amendment #1 dated March 14, 2006, to Agreement dated December 9, 2005, among us, the
Anderson Family Trust No. 1 and Cantara Communications Corporation ( incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 15, 2006).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18



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EXHIBIT
NO.            DESCRIPTION AND METHOD OF FILING

|10.5 |  | Amendment #2 dated May 12, 2006, to Agreement dated December 9, 2005, among us, the
Anderson Family Trust No. 1 and Cantara Communications Corporation ( incorporated by
reference to Exhibit 10.3 to our Current Report on Form 8-K filed on May 15, 2006).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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
for the year ended June 30, 2005).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification of Acting Chief Executive Officer and Chief Financial Officer required by
Rule 13a-14(a)
|---- |  | ------------------------------------------------------------------------------------------------------

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

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.

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/ Gary L. Cook                                      | 
|Gary L. Cook                                               | 
|Acting Chief Executive Officer and Chief Financial Officer | 

19



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# EXHIBIT
INDEX

EXHIBIT
NO.            DESCRIPTION AND METHOD OF FILING

|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 May 17, 2005 (incorporated by reference to Exhibit 3.(ii) to our
Current Report on Form 8-K filed on May 19, 2005).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Agreement dated November 22, 2005 between the BayHill Group LLC and us (incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on November 25, 2005).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Email dated April 21, 2006 terminating the BayHill Group LLC Agreement dated November
22, 2005 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K
filed on May 15, 2006).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Agreement dated December 9, 2005, among us, the Anderson Family Trust No. 1 and Cantara
Communications corporation ( incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on December 15, 2005).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Amendment #1 dated March 14, 2006, to Agreement dated December 9, 2005, among us, the
Anderson Family Trust No. 1 and Cantara Communications Corporation ( incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 15, 2006).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20



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EXHIBIT
NO.            DESCRIPTION AND METHOD OF FILING

|10.5 |  | Amendment #2 dated May 12, 2006, to Agreement dated December 9, 2005, among us, the
Anderson Family Trust No. 1 and Cantara Communications Corporation ( incorporated by
reference to Exhibit 10.3 to our Current Report on Form 8-K filed on May 15, 2006).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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
for the year ended June 30, 2005).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification of Acting Chief Executive Officer and Chief Financial Officer required by
Rule 13a-14(a)
|---- |  | ------------------------------------------------------------------------------------------------------

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

21



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