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

# FORM
10-QSB/A

# (X)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For
the quarterly period ended September 30, 2004

# OR

# (  )
TRANSITION REPORT UNDER SECTION 13 OR 15(d)OF THE EXCHANGE ACTFor 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 |           
|incorporation or organization)  |           

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 BANKRUPTCYPROCEEDINGS 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  October 30, 2004
|----------------------------- | --------------------------------
|Common Stock, $.001 par value |                                 

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

---

# COGNIGEN
NETWORKS, INC.

# Commission
File Number: 0-11730Quarter Ended September 30, 2004

# FORM
10-QSB/A

|Part I - FINANCIAL INFORMATION                                       |  |         | 
|-------------------------------------------------------------------- |  | ------- | 
|Item 1.  Consolidated Financial Statements                           | 
|Unaudited Consolidated Statements of Operations                      |  | Page 2  | 
|Consolidated Balance Sheets                                          |  | Page 3  | 
|Unaudited Consolidated Statement of Changes in Stockholders Deficit |  | Page 4  | 
|Unaudited Consolidated Statements of Cash Flows                      |  | Page 5  | 
|Notes to Unaudited Consolidated Financial Statements                 |  | Page 7  | 
|Item 2.  Managements Discussion and Analysis or Plan of Operation   |  | Page 12 | 
|Item 3.  Controls and Procedures                                     |  | Page 15 | 
|Part II - OTHER INFORMATION                                          | 
|Item 1.  Legal Proceedings                                           |  | Page 16 | 
|Item 6.  Exhibits and Reports on Form 8-K                            |  | Page 16 | 
|Signatures                                                           |  | Page 17 | 

---

COGNIGEN
NETWORKS, INC.Unaudited Consolidated Statements of Operations

Part I -
Financial Information

Item 1.
Financial Statements

|                                         | Three Months EndedSeptember 30, |                
|---------------------------------------- | ------------------------------- | ---------------
|
|
|Revenue                                  |                                 |                
|Marketing commissions                    |                                 | $ 1,246,221    
|Telecommunications                       |                                 | 1,498,623      
|Other                                    |                                 | --             
|                                         |                                 |                
|Total revenue                            |                                 | 2,744,844      
|                                         |                                 |                
|Operating expenses                       |                                
|Marketing commissions                    |                                 | 854,056        
|Telecommunications                       |                                 | 860,635        
|Selling, general and administrative      |                                 | 767,500        
|Depreciation and amortization            |                                 | 5,023          
|                                         |                                 |                
|Total operating expenses                 |                                 | 2,487,214      
|                                         |                                 |                
|Income (loss) from operations            |                                 | 257,630        
|Interest expense                         |                                 | (13,268        
|                                         |                                 |                
|Income (loss) before income taxes        |                                 | 244,362        
|Income taxes                             |                                 | --             
|                                         |                                 |                
|Net income (loss)                        |                                 | 244,362        
|Preferred dividends                      |                                 | (10,000        
|                                         |                                 |                
|Net income (loss) attributable to        |                                
|common shareholders                      |                                 | $    234,362   
|                                         |                                 |                
|                                         |                                 |                
|Income (loss) per common share-          |                                
|basic and diluted                        |                                 | $           .03
|                                         |                                 |                
|                                         |                                 |                
|Weighted average number of common shares |                                
|outstanding - basic and diluted          |                                 | 8,753,972      
|                                         |                                 |                
|                                         |                                 |                

See notes to
unaudited consolidated financial statements.

-2-

---

COGNIGEN
NETWORKS, INC.Consolidated Balance Sheets

|                                                                           | September 30,2004 | June 30,2004  
|-------------------------------------------------------------------------- | ----------------- | --------------
|
|Assets                                                                     |                   |               
|Current assets                                                             |                  
|Cash                                                                       |                   | $      132,177
|Accounts receivable, net                                                   |                   | 498,621       
|Commissions receivable, net                                                |                   | 782,974       
|Inventory                                                                  |                   | 13,639        
|Other current assets                                                       |                   | 50,400        
|                                                                           |                   |               
|Total current assets                                                       |                   | 1,477,811     
|                                                                           |                   |               
|Non-current assets                                                         |                  
|Property, plant and equipment, net                                         |                   | 17,314        
|Deposits and other assets                                                  |                   | 85,937        
|                                                                           |                   |               
|Total non-current assets                                                   |                   | 103,251       
|                                                                           |                   |               
|Total assets                                                               |                   | $   1,581,062 
|                                                                           |                   |               
|                                                                           |                   |               
|Liabilities and Stockholders Deficit                                      |                  
|Current liabilities                                                        |                  
|Accounts payable                                                           |                   | $      645,813
|Accrued liabilities                                                        |                   | 344,544       
|Commissions payable                                                        |                   | 812,407       
|Current portion of deferred commissions                                    |                   | 511,200       
|Receivables financing arrangement                                          |                   | 270,725       
|Other current liabilities                                                  |                   | 9,532         
|                                                                           |                   |               
|Total current liabilities                                                  |                   | 2,594,221     
|Deferred commissions less current portion                                  |                   | 114,799       
|Other long-term liabilities, including accrued dividends                   |                   | 77,703        
|                                                                           |                   |               
|Total liabilities                                                          |                   | 2,786,723     
|                                                                           |                   |               
|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       
|Common stock $.001 par value, 300,000,000 shares authorized; 8,753,972     |                  
|issued and outstanding as of  September 30, 2004 and June 30, 2004         |                   | 8,754         
|Additional paid-in capital                                                 |                   | 11,954,331    
|Accumulated deficit                                                        |                   | (13,618,746   
|                                                                           |                   |               
|Total stockholders deficit                                                |                   | (1,205,661    
|                                                                           |                   |               
|Total liabilities and stockholders deficit                                |                   | $   1,581,062 
|                                                                           |                   |               
|                                                                           |                   |               

See notes to
unaudited consolidated financial statements.

-3-

---

COGNIGEN
NETWORKS, INC.Unaudited Consolidated Statements of Changes in Stockholders Deficit
September 30, 2004

|                               | Preferred Stock | Common Stock | AdditionalPaid-in | Accumulated | TotalStockholders |           | 
|------------------------------ | --------------- | ------------ | ----------------- | ----------- | ------------------ | --------- | 
|
|Balances at July 1, 2004       |                 | 500,000      |                   | $450,000    |                    | 8,753,972 | 
|Net income                     |                 | --           |                   | --          |                    | --        | 
|Dividends on preferred stock   |                 | --           |                   | --          |                    | --        | 
|                               |                 |              |                   |             |                    |           | 
|Balances at September 30, 2004 |                 | 500,000      |                   | $450,000    |                    | 8,753,972 | 
|                               |                 |              |                   |             |                    |           | 
|                               |                 |              |                   |             |                    |           | 

See notes to
unaudited consolidated financial statements.

-4-

---

COGNIGEN
NETWORKS, INC.Unaudited Consolidated Statements of Cash Flows

|                                                                   | Three Months EndedSeptember 30, |          
|------------------------------------------------------------------ | ------------------------------- | ---------
|
|
|Cash flows from operating activities                               |                                 |          
|Net income (loss)                                                  |                                 | $ 244,362
|                                                                   |                                 |          
|Adjustments to reconcile net income (loss) to net cash provided by |                                
|operating activities:                                              |                                
|Depreciation and amortization                                      |                                 | 5,023    
|Bad debt expense                                                   |                                 | 15,960   
|Other                                                              |                                 | --       
|Changes in assets and liabilities:                                 |                                
|Accounts receivable                                                |                                 | (33,489  
|Commissions receivable, net                                        |                                 | (9,806   
|Inventory                                                          |                                 | 1,904    
|Deposits and other assets                                          |                                 | (23,703  
|Accounts payable                                                   |                                 | (24,603  
|Commissions payable                                                |                                 | 678      
|Accrued liabilities                                                |                                 | (99,554  
|Other current liabilities                                          |                                 | 7,894    
|Other                                                              |                                 | (688     
|                                                                   |                                 |          
|                                                                   |                                 | (160,384 
|                                                                   |                                 |          
|Net cash provided by operations                                    |                                 | 83,978   
|                                                                   |                                 |          
|Cash flows from investing activities                               |                                
|Capital expenditures                                               |                                 | (5,490   
|Increase in notes receivable                                       |                                 | --       
|                                                                   |                                 |          
|Net cash used in investing activities                              |                                 | (5,490   
|                                                                   |                                 |          
|Cash flows from financing activities                               |                                
|Payments on deferred commissions                                   |                                 | (122,547 
|Decrease in receivables financing arrangement                      |                                 | (37,375  
|Payment on notes payable                                           |                                 | --       
|                                                                   |                                 |          
|Net cash used in financing activities                              |                                 | (159,922 
|                                                                   |                                 |          
|Net decrease in cash and cash equivalents                          |                                 | (81,434  
|Cash and cash equivalents-beginning of period                      |                                 | 213,611  
|                                                                   |                                 |          
|Cash and cash equivalents-end of period                            |                                 | $ 132,177
|                                                                   |                                 |          
|                                                                   |                                 |          

See notes to
unaudited consolidated financial statements.

-5-

---

COGNIGEN
NETWORKS, INC.Unaudited Consolidated Statements of Cash Flows, Continued

Supplemental
Disclosures of Cash Flow Information and Non-Cash Transactions

Cash
payments for interest expense during the three months ended September 30, 2004
and 2003 were $13,268 and $25,000, respectively.

The
Company accrued dividends on Preferred Stock during the three months ended
September 30, 2004 and 2003 of $10,000 and $10,000, respectively.

See notes to
unaudited consolidated financial statements.

-6-

---

COGNIGEN
NETWORKS, INC.Notes to Unaudited Consolidated Financial StatementsSeptember 30, 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 months ended September 30, 2004 and 2003, respectively,
(b) the unaudited consolidated balance sheet as of September 30, 2004 and (c)
the unaudited consolidated statements of cash flows for the three months ended
September 30, 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 months ended
September 30, 2004. The Company has net operating loss carryforwards to offset
taxable income in this period.

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.

-7-

---

COGNIGEN
NETWORKS, INC.Notes to Unaudited Consolidated Financial StatementsSeptember 30, 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 months ended September 30, 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 September 30, 2004, the
remaining balance of deferred commissions payable was $625,999. The Company has
classified $511,200 as an estimate of the current portion of this agreement
based on historical commissions. After the $625,999 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 $122,547 for the three months ended September
30, 2004 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 $122,547. The Company does not anticipate
recording these payments as marketing commissions expense until sometime in the
year ending June 30, 2006.

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

Note
3 Note Receivable

As of
September 30, 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. This note was acquired by the Company in October 2002 as part
of the agreement dated October 17, 2002 with Stanford Financial Group Company,
Inc. (Stanford Financial) described in more detail in Note 6, Stockholders
Deficit. 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 and the remaining
balance of approximately $320,000 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.

-8-

---

COGNIGEN
NETWORKS, INC.Notes to Unaudited Consolidated Financial StatementsSeptember 30, 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. As of September 30, 2004, $474,149 had
been funded under the Funding Agreement and Termination Agreement. Due to
questions of recoverability of this amount and the remaining commitments 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 September 30, 2004 is
$270,725. 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 65% 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) to Stanford Venture Capital Holdings, Inc., an
affiliate of Stanford Financial Group of Houston, Texas, for $500,000. 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. 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 a third-party consultant as a finders
fee.

-9-

---

COGNIGEN
NETWORKS, INC.Notes to Unaudited Consolidated Financial StatementsSeptember 30, 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 accrued for dividends of $10,000 and $10,000 for the three
months ended September 30, 2004 and 2003, respectively.

As
part of the agreement dated October 17, 2002 discussed above, Stanford Financial
agreed to transfer to the Company, an approximate 32% interest in Miami based
American Communications, a private company, in exchange for 400,000 shares of
the Companys common stock, two-year warrants to purchase 150,000 shares of
the Companys common stock at an exercise price of $.50 per share and
five-year warrants to purchase 350,000 shares of the Companys common stock
at an exercise price of $.75 per share. This transaction was completed on
February 5, 2003 and the warrants were issued. The two-year warrants to purchase
150,000 shares expired unexercised in October 2004.

On
February 3, 2003, the Company entered into a letter of intent with David Stone
and Harry Gorlovezky, members of American Communications, pursuant to which
Messrs. Stone and Gorlovezky indicated their intent to purchase the approximate
32% interest in American Communications that the Company acquired from Stanford
Financial for a cash consideration of $22,500. In addition, Messrs. Stone and
Gorlovezky had the right, until June 10, 2003, to purchase the $300,000
Promissory Note and Agreement due in October 2004 for a purchase price of
$77,500 in cash. The $22,500 was received and the 32% interest in American
Communications was delivered to Messrs. Stone and Gorlovezky. The option to
purchase the $300,000 Promissory Note and Agreement was not exercised and the
Company agreed to accept $100,000 plus $2,000 in attorneys fees for full
satisfaction of the Promissory Note if paid by July 2004. See Note 3.

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 three months ended September 30, 2004, the Company did not grant to any
employee, options to purchase shares of common stock of the Company.

As of
September 30, 2004, the number of stock options outstanding under the Plan was
475,000.

As of
September 30, 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
September 30, 2004, there were 1,200,000 warrants outstanding that were
exercisable into shares of common stock of the Company. In October 2004, 150,000
of these warrants that were exercisable at $.75 per share expired unexercised.

-10-

---

COGNIGEN
NETWORKS, INC.Notes to Unaudited Consolidated Financial StatementsSeptember 30, 2004

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 is 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.

As
part of the closing, CST entered into a new note with a then existing lender
representing approximately $223,000 in debt. All options to purchase common
stock of the Company issued to CST employees were terminated except for the
option to purchase 200,000 shares of the Companys common stock owned by
Jimmy L. Boswell which option expired in August 2004 and was exercisable at
$3.68 per share.

Jimmy L.
Boswell is the  President  and a Director  of CST.  David G. Lucas is the former  chief
financial  officer and a Director of  CST.  Reginald  W.  Einkauf  and John D.  Miller
are former  officers  and  Directors  of CST.  Mr.  Boswell  and Mr.  Lucas are former
officers and Directors of the Company.  The Principals and another person sold all of the
outstanding  stock of CST to the Company for  shares of the Company's common stock in
April 2000.

In
conjunction with the Stock for Stock Exchange Agreement, goodwill with a net
book value of $2,893,029 was written off. With consideration of approximately
$26,000, calculated using the Black Scholes method of calculation for the
200,000 warrants, goodwill of $2,893,029 and $168,448 in negative equity that
was assumed by the Principals, and the 800,000 shares of the Companys
common stock that were repurchased from the Principals valued at $.31 per share,
the Company recorded a loss of $2,502,583 on this transaction that was included
in the statement of operations for the year ended June 30, 2004.

-11-

---

# COGNIGEN
NETWORKS, INC.

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

Overview

Cognigen
Networks, Inc. (we) is 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 sixteen months. In addition to being
historically successful at representing and selling the services and products of
outside vendors, we are now 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
generated 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 had
net income of $244,362 for the three months ended September 30, 2004. This net
income in large part was derived from our actions taken during the past nine
months 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 September 30, 2004 Compared to Three Months Ended September 30, 2003

Total
revenue for the three months ended September 30, 2004 was $2,744,844 compared to
$2,726,072 for 2003. Marketing commissions revenue was $1,246,221 for 2004
compared to $1,495,454 for the prior year. Telecommunications revenue was
$1,498,623 for 2004 as compared to $1,223,242 for the prior year.

Marketing
commissions revenue for 2004 decreased $249,233 from that of 2003 or 17%. This
decrease reflects a trend that began in our first quarter of fiscal 2003 and
continued into fiscal 2004. We believe this trend was in large part a result of
the lack of new product opportunities for our agents, inadequate customer
service and partly from our strategic transition previously explained. We have
entered into agreements to market additional and new products that were and
remain very consumer desirable. 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 has helped
stabilize marketing commissions revenue.

-12-

---

# COGNIGEN
NETWORKS, INC.

Telecommunications
revenue increased $275,381 for 2004 compared to 2003, or 23%. This increase
resulted from a net increase in telecommunications revenue from new proprietary
products and services being sold. Our proprietary customer base increased by
approximately 15,000 customers. A large portion of those proprietary customers
are small business or dedicated customers who have entered into service
contracts with us for usually one to two year periods and who represent higher
months usage than most residential customers. Part of the decrease in
proprietary products and services resulted from our sale of CST to its
principals effective February 1, 2004. As part of the sale, CST maintained
approximately $70,000 in monthly telecommunications revenue, approximately 50%
from a conferencing product it switches through its facilities based switch and
another 50% from a customer base which receives no new customers but is
primarily a billing service based customer.

Marketing
commissions expense decreased from $1,002,483 for 2003 to $854,056 for 2004, a
decrease of $148,427 or 15%. This decrease correlates to the decrease in
marketing commissions revenue explained above. 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 $122,547. We do not anticipate recording these payments as marketing
commissions expense until sometime in the year ending June 30, 2006.

Telecommunications
expense increased from $703,430 for 2003 to $860,635 for 2004 or an increase of
157,205 or 22%. This increase is primarily a result of our strategic transition
to sell more proprietary products and services. These products and services
include those generated through our Intandem created relations which are paid at
higher commission rates than those paid on marketing commissions revenue.

Selling,
general and administrative expenses decreased $411,819 for 2004 compared to
2003, or 35%. This decrease is largely attributed to decreases in consulting,
legal and accounting fees of $163,263, salaries and related benefits of
$151,294, advertising of $31,024, and travel expenses of $23,361 In addition,
net decreases of between $70,000 to $80,000 occurred because of the sale of CST.
The net decreases from the CST transaction were from the reduction in salaries,
benefits and other operating expenses offset by fees paid to CST under the MSA
agreement.

The
decrease in depreciation and amortization of $18,213 results from the sale of
CST previously explained.

Interest
expense for 2004 of $13,268 is consistent with that for 2003 of $10,504.

Liquidity
and Capital Resources

We
have historically funded our operations primarily from sales of securities and
operations. As of September 30, 2004 we had cash and cash equivalents of
$132,177 and negative working capital of $1,116,410. Cash provided by operations
during the three months ended September 30, 2004 was $83,978. Cash used in
financing activities of $159,922 included the payment of deferred commissions of
$122,547 and a decrease in the receivables financing arrangement of $37,375.

-13-

---

# COGNIGEN
NETWORKS, INC.

We
have a balance outstanding under a receivables financing arrangement as of
September 30, 2004 of $270,725. 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 65%, 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.

Cash
flows generated from operations and from our receivables financing arrangement
were sufficient to meet our working capital requirements for the three months
ended September 30, 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. 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.

-14-

---

# COGNIGEN
NETWORKS, INC.

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

(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.

-15-

---

# COGNIGEN
NETWORKS, INC.

# 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.

Item
6.Exhibits and Reports on Form 8-K

(a)  
Exhibits

|31.1 |  | Certification
of President and 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 President and 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
|---- |  | ---------------------------------------------------------------------------------------------------

(b)  
Reports on Form 8-K

| | On
September 23, 2004, we filed a Current Report on form 8-K, dated September 21,  2004.
Under Item 2, we stated that we had issued a news release announcing our  audited
financial results for the year ended June 30, 2004. The news release was  included as an
exhibit under Item 9.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-16-

---

# 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       | 
|Thomas S. Smith               | 
|President and Chief Executive | 
|Officer                       | 
|By: /s/ Gary L. Cook          | 
|Gary L. Cook                  | 
|Chief Financial Officer       | 

-17-

---

# COGNIGEN
NETWORKS, INC.

EXHIBIT INDEX

|31.1 |  | Certification
of President and 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 President and 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
|---- |  | ---------------------------------------------------------------------------------------------------

---