<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-K/A

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934
     For the fiscal year ended December 31, 1998, 
          or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934
     For the transition period from            to

                       Commission file number 0-3035

                         COGNITRONICS CORPORATION  
          (Exact name of registrant as specified in its charter)

                  NEW YORK                        13-1953544      
      (State or other jurisdiction of           (I.R.S. Employer    
       incorporation or organization)          Identification No.)

     3 Corporate Drive, Danbury, Connecticut            06810  
    (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code (203) 830-3400

Securities registered pursuant to Section 12(b) of the Act:
                                                                   
                                                  Name of each exchange on
                  Title of each class                 which registered     
                  -------------------             ------------------------
       Common Stock, par value $0.20 per share     American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:     None

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months and (2) has been subject to such filing 
requirements for at least the past 90 days.  Yes   x       No       

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 
of Regulation S-K is not contained herein, and will not be contained, to the 
best of registrant's knowledge, in definitive proxy or information statements 
incorporated by reference in Part III of this Form 10-K. [   ]

The aggregate market value of the voting stock held by non-affiliates of the 
registrant as of March 1, 1999:

            Common Stock, par value $0.20 per share -- $28,849,000

The number of shares outstanding of each of the issuer's classes of common 
stock as of March 1, 1999:

          Common Stock, par value $0.20 per share -- 3,680,923 shares

Documents incorporated by reference:   Portions of the Proxy Statement for the 
annual meeting of stockholders to be held on May 13, 1999 are incorporated by 
reference into Part III.
<PAGE>   2
                              TABLE OF CONTENTS
                                    PART II
ItemPage

 8.     Financial Statements and Supplementary Data                       3

                                    PART IV

14.     Exhibits, Financial Statement Schedules, and Reports
           on Form 8-K                                                   21








McIAS is a trademark of Cognitronics Corporation.
UNIX is a registered trademark of Santa Cruz Operation, Inc.

<PAGE>  3
                                    PART II

Item 8.  Financial Statements and Supplementary Data
                                    QUARTERLY FINANCIAL DATA (UNAUDITED)
                                   (in thousands except per share amounts)
1998                           First        Second        Third        Fourth 
                               -----        ------        -----        ------
Sales                         $7,540        $7,069       $7,029        $7,279
Gross profit                   4,211         3,955        3,901         3,767
Net income                     1,196         1,189        1,114         1,190
Net income per share:                                                      
    Basic                       $.32          $.32         $.30          $.32
    Diluted                     $.30          $.30         $.28          $.30
Common Stock price range:                                                  
    High                      $21          $18 3/8      $14 1/4           $12
    Low                        15 1/8       12 9/16       8                 7
                                                                         
1997                           First        Second        Third        Fourth
                               -----        ------        -----        ------
Sales                         $5,548        $9,645       $7,245        $7,083
Gross profit                   2,895         5,406        3,818         3,704
Net income                       504         1,614          941           563
Net income per share:                                                     
    Basic                       $.15          $.47         $.27          $.16
    Diluted                     $.14          $.42         $.24          $.14
Common Stock price range:
    High                      $5 3/8       $11 3/4      $19 1/8       $21 3/4
    Low                      3 11/16        4 9/16       11 7/16      13 11/16
     Included in the fourth quarter of 1998 is $100,000 (net of tax - $.02 per 
basic share and diluted share) related to interest income on tax refunds.  In 
addition, the effective tax rate for the fourth quarter of 1998 was 28.5% versus
the estimated effective rate of 38.3% for the first nine months of 1998 and 25%
for the fourth quarter of 1997.

     Included in the fourth quarter of 1997 is $915,000 (net of tax - $572,000,
$.16 per basic share and $.14 per diluted share) for settlement costs and legal
fees related to class action litigation.  An Order and Final Judgement
approving the settlement was issued in 1998.
     The above financial information should be read in conjunction with the 
Consolidated Financial Statements, including the notes thereto.
<PAGE>  4
                        Report of Independent Auditors

Stockholders and Board of Directors
Cognitronics Corporation

We have audited the accompanying consolidated balance sheets of Cognitronics 
Corporation and subsidiaries as of December 31, 1998 and 1997, and the related 
consolidated statements of income and comprehensive income, stockholders' 
equity, and cash flows for each of the three years in the period ended 
December 31, 1998.  These financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an opinion on these 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement.  An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements.  An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation.  We believe that our audits provide a reasonable basis 
for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Cognitronics 
Corporation and subsidiaries at December 31, 1998 and 1997, and the 
consolidated results of their operations and their cash flows for each of the 
three years in the period ended December 31, 1998, in conformity with 
generally accepted accounting principles.


                                          /s/ ERNST & YOUNG LLP


Stamford, Connecticut                         
March 5,  1999


<PAGE>  5
CONSOLIDATED BALANCE SHEETS
COGNITRONICS CORPORATION AND SUBSIDIARIES
(dollars in thousands)                                                       
                                                              December 31,
                                                           1998         1997  
                                                           ----         ----
ASSETS                                                                      
CURRENT ASSETS                                                              
  Cash and cash equivalents                             $ 6,991      $ 4,188
  Marketable securities                                   4,400        3,900
  Accounts receivable, less allowances of $44 and $38     4,972        4,300
  Inventories                                             5,012        4,386 
  Deferred income taxes                                     858        1,023 
  Other current assets                                      766        1,050 
                                                        -------      -------
          TOTAL CURRENT ASSETS                           22,999       18,847 
PROPERTY, PLANT AND EQUIPMENT, net                        1,334        1,223 
GOODWILL, less amortization of $2,061 and $1,729          1,316        1,648
DEFERRED INCOME TAXES                                       809          769 
OTHER ASSETS                                                622          636 
                                                        -------      -------
                                                        $27,080      $23,123 
                                                        =======      =======
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES                                                          
  Accounts payable                                      $ 1,603      $ 2,378 
  Accrued compensation and benefits                       1,066        1,051 
  Income taxes payable                                      974          317 
  Current maturities of debt                                112          114 
  Other accrued expenses                                    963        1,875 
                                                        -------      -------
          TOTAL CURRENT LIABILITIES                       4,718        5,735
                                                                        
LONG-TERM DEBT                                              140          111 
OTHER NON-CURRENT LIABILITIES                             2,189        2,263 
                                                                           
COMMITMENTS AND CONTINGENCIES (Note I)                                      
                                                                             
STOCKHOLDERS' EQUITY                                                       
  Common Stock, par value $.20 a share; authorized                           
     10,000,000 shares; issued 3,732,023 and                                
     3,667,351 shares                                       746          733
  Additional paid-in capital                             13,628       13,209 
  Retained earnings                                       5,733        1,067
  Cumulative other comprehensive income                     166           24
  Unearned compensation                                    (239)         (19)
                                                        -------      -------    
                                                         20,034       15,014 
     Less cost of 100 common shares in treasury              (1) 
                                                        -------      -------
          TOTAL STOCKHOLDERS' EQUITY                     20,033       15,014 
                                                        -------      -------
                                                        $27,080      $23,123
                                                        =======      =======

The accompanying notes to consolidated financial statements are an integral 
part of these statements.
<PAGE>  6
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
COGNITRONICS CORPORATION AND SUBSIDIARIES
(in thousands except per share data)                                       
                                                  Year ended December 31, 
                                                1998       1997        1996   
                                                ----       ----        ----
SALES                                        $28,917    $29,521     $17,343 
COSTS AND EXPENSES                                                        
     Cost of products sold                    13,083     13,698       8,227 
     Research and development                  1,997      1,807       1,600 
     Selling, general and administrative       6,564      6,972       5,394 
     Amortization of goodwill                    332        333         332 
     Class action litigation                                956 
     Other (income) expense, net                (404)      (165)        (80)
                                             -------    -------     -------
                                              21,572     23,601      15,473 
                                             -------    -------     -------
     Income before income taxes                7,345      5,920       1,870 
PROVISION FOR INCOME TAXES                     2,656      2,298         771
                                             -------    -------     -------
NET INCOME                                     4,689      3,622       1,099
     Currency translation adjustment             142       (153)        248 
                                             -------    -------     -------
COMPREHENSIVE INCOME                         $ 4,831    $ 3,469     $ 1,347 
NET INCOME PER SHARE:
    Basic                                      $1.27      $1.04        $.32 
    Diluted                                    $1.17       $.93        $.31 
<PAGE>  7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1996, 1997 and 1998
(dollars in thousands)
<TABLE>
                                     Common Stock      Additional                  Compre-    Unearned    Treasury
                                 Shares                  Paid-In     Retained      hensive    Compensa-     Shares 
                               Outstanding   Amount     Capital     Earnings      Income       tion        Amount   
<S>                             <C>           <C>      <C>          <C>           <C>         <C>            <C>
Balance at January 1, 1996       3,437,936     $687     $12,146      $(3,453)      $(71)       $(265)         $ 0 
Shares issued pursuant to                                                                                                
      employee stock plans          37,637        8         104                                  109 
Currency translation adjustment                                                     248 
Net income                                                             1,099
                                 ---------     ----     -------      -------       ----        -----          ---
Balance at December 31, 1996     3,475,573      695      12,250       (2,354)       177         (156)           0
Shares issued pursuant to
      employee stock plans         211,388       42       1,129                                  137      
Shares returned to pay statutory
      withholding tax              (19,610)      (4)       (170)        (201)
Currency translation adjustment                                                    (153)
Net income                                                             3,622  
                                 ---------     ----     -------       ------       ----        -----          ---
Balance at December 31, 1997     3,667,351      733      13,209        1,067         24          (19)           0
Shares issued pursuant to                                                  
      employee stock plans          32,334        7         369                                 (220)     
Shares returned to pay statutory                                            
      withholding tax               (3,867)      (1)        (29)         (23)               
Repurchase of common shares                                                                                    (1)
Exercise of Warrants                36,205        7          79                 
Currency translation adjustment                                                     142 
Net income                                                             4,689                          
                                 ---------      ----    -------      -------       ----        -----          ---
Balance at December 31, 1998     3,732,023      $746    $13,628      $ 5,733       $166        $(239)         $(1)
                                 =========      ====    =======      =======       ====        =====          ===
</TABLE>
The accompanying notes to consolidated financial statements are an integral 
part of these statements.
<PAGE>  8
CONSOLIDATED STATEMENTS OF CASH FLOWS
COGNITRONICS CORPORATION AND SUBSIDIARIES
(in thousands)                                     Year ended  December 31,    
                                                 1998         1997        1996  
                                                 ----         ----        ----
OPERATING ACTIVITIES
  Net income                                    $4,689      $3,622      $1,099
  Adjustments to reconcile net income to                                   
    net cash provided by operating                                         
    activities:                                                            
      Income tax expense                         2,656       2,298        771  
      Depreciation and amortization                769         758        690
      Loss on disposition of  assets                 6           3         62
      Shares issued as compensation                 40         188        109
      Net (increase) decrease in:                                             
        Accounts receivable                       (605)       (750)      (667)
        Inventories                               (569)       (602)      (741)
        Other assets                               284        (459)        15  
      Net increase (decrease) in:                        
        Accounts payable                           (802)       732         904 
        Accrued compensation and benefits           (60)       191         (78)
        Other accrued expenses                     (793)     1,218         (19)
                                                 ------     ------      ------
                                                  5,615      7,199       2,145
     Income taxes paid                           (1,956)    (2,712)       (974)
                                                 ------     ------      ------
 NET CASH PROVIDED BY OPERATING ACTIVITIES        3,659      4,487       1,171 
                                                 ------     ------      ------
INVESTING ACTIVITIES                                                           
     Purchase of marketable securities           (3,700)    (5,750)     (1,200)
     Sale of marketable securities                3,200      3,050 
     Proceeds from disposition of assets             24        387          24
     Additions to property, plant and equipment    (539)      (381)       (846)
     Purchase of software licenses                            (528)   
                                                  ------    ------      ------
 NET CASH USED BY INVESTING ACTIVITIES            (1,015)   (3,222)     (2,022)
                                                  ------    ------      ------
FINANCING ACTIVITIES                                                        
     Principal payments on debt                     (174)     (433)       (213)
     Issuance of debt                                196       210         192 
     Shares issued pursuant to employee                                    
       stock plans                                    22       611          93
     Shares issued pursuant to warrants               86                       
     Shares repurchased for treasury                  (1)                       
     Shares returned to pay statutory                                        
       withholding tax upon vesting of                                       
       restricted stock                              (53)     (375)  
                                                  ------    ------      ------
  NET CASH PROVIDED BY FINANCING ACTIVITIES           76        13          72 
                                                  ------    ------      ------
EFFECT OF EXCHANGE RATE DIFFERENCES                   83       (59)         80
                                                  ------     ------      ------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   2,803     1,219        (699)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR      4,188     2,969       3,668 
                                                  ------    ------      ------
CASH AND CASH EQUIVALENTS - END OF YEAR           $6,991    $4,188      $2,969

The accompanying notes to consolidated financial statements are an integral 
part of these statements.
<PAGE>  9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COGNITRONICS CORPORATION AND SUBSIDIARIES

Note A.  Summary of Significant Accounting Policies

Organization.  The Company designs, manufactures and markets voice processing 
products in the United States and, through a subsidiary, distributes call 
management and voice processing equipment in Europe.

Risks and Uncertainties.  A major portion of the Company's domestic revenues 
is generated by sales to two customers, and a significant portion of its 
European distributorship revenue comes from one customer.  The loss of any of 
these customers would have a material adverse impact on the Company. The 
Company's receivables are primarily from major, well-established companies in 
the telecommunications industry, and at December 31, 1998, three such 
companies accounted for 35% of the Company's accounts receivable.  In 
addition, 39% of the Company's accounts receivable were supported by a letter 
of credit.  The Company's markets are subject to rapid technological change 
and frequent introduction of new products. The Company's products are similar 
to those manufactured, or capable of being manufactured, by a number of 
companies, some of which are well-established with financial, personnel and 
technical resources substantially larger than those of the Company. The 
Company's ability to compete in the future depends on its ability to maintain 
the technological and performance advantages of its current products and to 
introduce new products and applications that achieve market acceptance.

Principles of Consolidation.  The financial statements include the accounts of 
the Company and its subsidiaries, all of which are wholly-owned. Intercompany 
accounts and transactions have been eliminated in consolidation.

Revenue.  Revenue is recognized when products are shipped or when services are 
rendered.

Use of Estimates.   The preparation of the financial statements in conformity 
with generally accepted accounting principals requires management to make 
estimates and assumptions that affect the amounts reported in the financial 
statements and accompanying notes. Actual results could differ from those 
estimates.

Fair Value of Financial Instruments.  The carrying amounts of the Company's 
financial instruments (trade receivables/payables and other short-term and 
long-term debt) due to their terms and maturities approximate fair value.

Cash and Cash Equivalents.  The Company considers financial instruments with a 
maturity of three months or less from the date of purchase to be cash 
equivalents. At December 31, 1998, essentially all of the Company's cash and 
cash equivalent balances were with three financial institutions.

Marketable Securities.  Marketable securities are classified as available for
sale and are reported at cost.  Due to their short maturities and/or reset 
provisions, their carrying value approximates fair value.

Inventories.  Inventories are stated at the lower of cost (first-in, first-out 
method) or market.

Property, Plant and Equipment.  Property, plant and equipment is carried at 
cost less allowances for depreciation, computed in accordance with the 
straight-line method based on estimated useful lives.  The estimated lives for 
machinery and equipment are 5 to 12 years and for furniture and fixtures 4 to 
<PAGE>  10
10 years.

Foreign Exchange.  Results of operations for the Company's foreign subsidiary 
were  translated into U.S. dollars using average exchange rates during the 
period, while assets and liabilities were translated using current rates at 
the end of the period.

Stock Based Compensation. The Company grants stock options for a fixed number 
of shares to employees with an exercise price equal to the fair value at the 
date of grant. The Company  accounts for stock option grants in accordance 
with Accounting Principles Board ("APB")  Opinion No. 25, "Accounting for 
Stock Issued to Employees", and therefore recognizes no compensation expense 
for stock options granted.   In 1996, the Company adopted the disclosure 
provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, 
"Accounting for Stock-Based Compensation" (see Note J). 

Income Per Share.  In December 1997, the Company adopted SFAS No. 128 and 
restated prior periods.  Under this statement, primary and fully diluted 
earnings per share were replaced with basic and diluted earnings per share, 
respectively.  In computing basic earnings per share, the dilutive effect of 
stock options and warrants are excluded, whereas for diluted earnings per 
share they are included.  The shares used in the basic earnings per share 
calculations were 3,695,203, 3,488,943 and 3,382,603 and in the diluted 
earnings per share were 3,995,385, 3,893,210 and 3,585,269 for 1998, 1997 and 
1996, respectively.

Goodwill.  The Company has classified as goodwill the cost in excess of fair 
value of the net assets of companies acquired in purchase transactions. 
Goodwill is amortized using the straight-line method over its estimated useful 
life (10 years). Goodwill in excess of associated expected operating cash 
flows is considered to be impaired and is written down to fair value.

Note B. Valuation and Qualifying Accounts

The allowance for doubtful accounts was increased (decreased) by $24,000, 
$(12,000) and $35,000 in 1998, 1997 and 1996, respectively, by (credits) 
charges to costs and expenses.  The Company wrote off uncollectible accounts, 
net of recoveries, of  $18,000, $53,000 and $15,000 in 1998 and 1997 and 1996, 
respectively.

Note C.  Inventories (in thousands):
                                                          1998        1997 
                                                          ----        ----
Finished and in process                                 $3,998      $3,450
Materials and purchased parts                            1,014         936
                                                        ------      ------
                                                        $5,012      $4,386
                                                        ======      ======
Note D.  Property, Plant and Equipment (in thousands):
                                                          1998         1997 
                                                          ----         ----
Machinery and equipment                                 $1,780       $1,383
Furniture and fixtures                                   1,777        1,755
                                                         -----        -----
                                                         3,557        3,138
Less allowances for depreciation                         2,223        1,915
                                                        ------       ------
                                                        $1,334       $1,223
                                                        ======       ======
<PAGE>  11
Note E.  Other Non-current Liabilities (in thousands):
                                                           1998        1997 
                                                           ----        ----
Accrued officers' supplemental pension                  $   630     $   667
Accrued deferred compensation                               316         324
Accrued pension                                             647         670
Accrued postretirement benefit                              778         778
                                                         ------      ------
                                                          2,371       2,439
Less current portion                                        182         176
                                                         ------      ------
                                                         $2,189      $2,263
                                                         ======      ======

Note F.  Debt and Credit Arrangements

During 1998, the Company increased its line of credit from $2 million to $6 
million.  The line of credit matures in July, 1999. Borrowings under this 
arrangement are subject to various financial covenants, are due on demand, are 
based on the amount of eligible accounts receivable and inventory, as defined, 
bear interest at the prime rate and are secured by substantially all of the 
Company's assets. In 1998 and 1997, no amounts were borrowed under the 
Company's lines of credit.

Dacon Electronics Plc has a bank line of credit of $165,000 expiring in 1999.  
During 1998 and 1997, no amounts were borrowed under this facility.


Long term debt (in thousands):                                                  
                                                              1998     1997
                                                              ----     ----
   Installment finance agreements, interest at 8% to 12%
     per annum expiring through 2003                          $252     $225
   Less current maturities of debt                             112      114
                                                              ----     ----
                                                              $140     $111
                                                              ====     ====
Payments on the installment finance agreements in each of the five years in 
the period ending December 31, 2003 are $112,000, $50,000, $43,000, $35,000 and
$12,000, respectively.
    
Interest of $42,000, $53,000 and $63,000 was paid in 1998, 1997 and 1996, 
respectively.

Note G.  Income Taxes

At December 31, 1998, the consolidated retained earnings included 
approximately $1.7 million of retained earnings applicable to Dacon 
Electronics Plc, a foreign subsidiary. If the undistributed earnings were 
remitted, any resulting federal tax would be substantially reduced by foreign 
tax credits.

The components of the provision (benefit) for income taxes for the years ended 
December 31 are as follows (in thousands):
<PAGE>  12                                                                  
                                                    1998      1997      1996 
Current:                                            ----      ----      ----
     Federal                                      $1,565    $2,023      $359
     Foreign                                         377       310       480 
     State                                           370       310        71
                                                  ------    ------      ----
                Total current                      2,312     2,643       910 
                                                  ------    ------      ----
Deferred:
     Federal                                         344      (345)     (135)
     Foreign                                             
     State                                                                (4)
                                                  ------    ------      ----
                Total deferred                       344      (345)     (139)
                                                  ------    ------      ----
                                                  $2,656    $2,298      $771 
                                                  ======    ======      ====
Not reflected in the 1998, 1997 and 1996 tax provisions are $94,000, $509,000 
and $19,000, respectively,  of income tax benefits related to employee stock 
plans; such amounts were credited to additional paid-in capital.

Domestic and foreign pretax income for the years ended December 31 are as 
follows (in thousands):
                                              1998         1997         1996 
                                              ----         ----         ----
Domestic operations                         $6,025       $5,313      $   815
Foreign Operations                           1,320          607        1,055 
                                            ------       ------       ------
                                            $7,345       $5,920       $1,870 
                                            ======       ======       ======
Deferred income taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities for financial reporting 
purposes and amounts used for income tax purposes. Significant components of 
the Company's deferred tax liabilities and assets as of December 31, 1998 and 
1997 are as follows (in thousands):
                                                             1998        1997 
                                                             ----        ----
Deferred tax liabilities                                  $    79     $    42 
                                                          -------     -------
Deferred tax assets:                                                        
     Inventory valuation                                      700         705 
     Accrued liabilities and employee benefits                313         649 
     Accrued deferred compensation                            351         368 
     Other post-retirement benefits                           296         296 
     Separate return federal operating loss carryforwards
          expiring in 2008 and 2009                           445         445
     Other                                                     86          57 
                                                           ------      ------
          Total deferred tax assets                         2,191       2,520 
     Valuation allowance                                     (445)       (686)
                                                           ------      ------
                                                            1,746       1,834 
                                                           ------      ------
                    Net deferred tax assets                $1,667      $1,792 
                                                           ======      ======
Valuation allowance at January 1                           $ (686)     $ (646)
Credited (charged) to tax expense                              22         (40)
Reclassified to taxes payable                                 219           
                                                           ------      ------
Valuation allowance at December 31                         $ (445)     $ (686)
                                                           ======      ======
<PAGE>  13
A reconciliation of the statutory federal income tax rate to the effective tax 
rate on income for the years ended December 31, are as follows:
                                                1998       1997        1996  
                                                ----       ----        ----
Statutory federal income tax rate               34.0%      34.0%       34.0%
State income taxes, net of federal tax benefit   3.6        3.5         2.4
Lower foreign tax rate                          (1.0)      (0.2)       (0.8) 
Research & Development Credit                   (1.6)      (0.7)       (1.8)
Nontaxable interest income                      (0.7)      (0.4)
Goodwill amortization                            1.5        1.9         6.0 
Other                                            0.4        0.7         1.4     
                                                ----       ----        ----
                                                36.2%      38.8%       41.2%
                                                ====       ====        ====
Note H.  Other (Income) Expense, Net (in thousands):
                                                    Year Ended December 31, 
                                                   1998      1997      1996 
Interest expense                                 $   73      $ 74      $ 82 
Interest income                                    (477)     (239)     (164)
Foreign exchange gain                                                     2 
                                                 -----      -----      ----
                                                 $(404)     $(165)     $(80)
                                                 =====      =====      ====
Note I. Commitments

Leases.  Total rental expense amounted to $465,000 in 1998, $449,000 in 1997 
and $377,000 in 1996.  Future annual payments for long-term noncancellable 
leases for each of the five years in the period ending December 31, 2003 are 
approximately $502,000,  $473,000, $370,000, $260,000 and $216,000, 
respectively, and no amounts thereafter.

Pension Plan.  The Company and its domestic subsidiaries have a defined 
benefit pension plan covering substantially all employees. The benefits are 
based on years of service and the employee's compensation.   No additional 
service cost benefits were earned subsequent to June 30, 1994.  The Company's 
funding policy is to contribute amounts to the plan sufficient to meet the 
minimum funding requirements set forth in the Employee Retirement Income 
Security Act of 1974, plus such additional amounts as the Company may 
determine to be appropriate from time to time.

The components of net cost of the plan for the years ended December 31 are as 
follows (in thousands):
                                                    1998      1997      1996 
                                                    ----      ----      ----
Interest cost on projected benefit obligation       $115      $103      $103 
Actual return on plan assets                        (120)     (170)     (117)
Net amortization and deferral                         31        77        24 
                                                    ----      ----      ----
     Net periodic pension cost                      $ 26      $ 10      $ 10 
                                                    ====      ====      ====

The following table sets forth the plan's funded status and the accrued 
pension liability recognized in the Company's Consolidated Balance Sheets at 
December 31 (in thousands):
<PAGE>  14
                                                              1998        1997
                                                              ----        ----
Projected benefit obligation for services rendered to date        
  Beginning of year                                         $1,542      $1,412
     (Gain)loss due to change in estimates                     227          57
     Interest cost                                             115         103
     Less benefits paid                                       (111)       (108)
     Obligation (gain)loss                                       0          78
                                                            ------       -----
  End of year                                               $1,773      $1,542 
                                                            ------      ------
Plan assets at fair value
  Beginning of year                                          1,200       1,085
     Actual return on plan assets                              120         169 
     Contribution                                               49          54 
     Benefits paid                                            (111)       (108)
                                                            ------      ------
  End of year                                                1,258       1,200
                                                            ------      ------
Plan assets less than projected benefit obligation            (515)       (342)
Unrecognized net asset, less accumulated amortization
  of $156 and $148                                             (25)        (33)
Unrecognized net gain                                         (107)       (295)
                                                            ------      ------
Accrued pension liability (included in other non-current                 
liabilities)                                                $ (647)     $ (670)
                                                            ======      ======
The discount rate used in determining the projected benefit obligation was 
6.75% in 1998 and 1997.  The expected long-term rate of return on plan assets 
used in determining the net periodic pension cost was 7% for all years 
presented.  In 1998, the Company changed the mortality assumptions causing an 
increase in benefit obligations and a decrease in unrecognized gain of 
$227,000.

The plan assets at December 31, 1998 and 1997 were principally invested in 
corporate debt and equity securities.


401(k) Retirement Plan.  The Company has a defined contribution plan covering 
substantially all domestic employees. The Company's contribution is based upon 
the participants' contributions. The expense was $52,000, $40,000 and $32,000 
in 1998, 1997 and 1996, respectively.


Officers' Supplemental Pension Plan.  The Company has an unfunded, 
noncontributory defined benefit pension plan covering certain retired 
officers.

The components of net pension cost of the plan for the years ended December 31 
are as follows (in thousands):
                                                     1998      1997      1996 
                                                     ----      ----      ----
Interest cost on projected benefit obligation         $35       $39       $40
Amortization of actuarial gains                        (3)       (6)       (7)
                                                      ---       ---       ---
Net periodic pension cost                             $32       $33       $33 
                                                      ===       ===       ===

The following table sets forth the plan's status and the accrued pension 
<PAGE>  15
liability recognized in the Company's Consolidated Balance Sheets at December 
31 (in thousands):
                                                              1998       1997 
                                                              ----       ----
Projected benefit obligations                                               
  Balance at beginning of period                              $548       $577 
     Loss on change in estimates                                30 
     Interest expense                                           35         39 
     Less benefits paid                                        (70)       (68)
                                                              ----       ----
  Balance at end of period                                    $543       $548 
Unrecognized net gain                                           87        119
                                                              ----       ----
Accrued pension liability (included in other non-current
  liabilities)                                                $630       $667
                                                              ====       ====
The discount rates used in determining the projected benefit obligation was 
6.75% in 1998 and 7.25% in 1997 and 1996.  All participants are retired and 
receiving benefits under the Plan and therefore future increases in 
compensation are not applicable.

Other Postretirement Benefit Plans.  In addition to the Company's pension 
plans, the Company has a contributory, unfunded defined benefit plan providing 
certain health care benefits for domestic employees who retired prior to March 
31, 1996. The participants' contributions are adjusted periodically and are 
based on age and length of service at time of retirement. The assumed rate of 
increase in the per capita cost of covered benefits was 7.8% decreasing to 6% 
after 6 years. Increasing the health care cost trend rate by one percentage 
point each year would increase the accumulated postretirement benefit 
obligation by $52,000 at December 31, 1998 and the aggregate service and 
interest cost component of net periodic postretirement benefit cost for 1998 
by $3,000.  The corresponding impact for a 1% decrease are $(47,000) and 
($3,000), respectively.  The weighted average discount rate used in 
determining the net periodic postretirement benefit cost and accumulated 
benefit obligation was 7.0% for all periods presented.

The following sets forth the plan's status and accrued post-retirement benefit 
liability recognized in the Company's Consolidated Balance Sheets at December 
31 (in thousands):
                                                               1998      1997 
                                                               ----      ----
Actuarial present value of accumulated postretirement                        
  benefit obligation:                                          $635      $526 
Unrecognized net gain                                           143       252 
                                                               ----      ----
Accrued postretirement benefit liability (included in
  other non-current liabilities)                               $778      $778 
                                                               ====      ====

The components of post-retirement benefit cost for the years ended December 
31, are as follows (in thousands):

                                                   1998       1997      1996 
                                                   ----       ----      ----
          Interest cost                             $42        $36       $44 
          Net amortization                           (8)       (18)       (6)
                                                    ---        ---       ---
                Net periodic cost                   $34        $18       $38 
                                                    ===        ===       ===
<PAGE>  16
Deferred Compensation. At December 31, 1998 and 1997, the liability relating 
to a deferred compensation arrangement between the Company and a director and 
former officer of the Company was $316,000 and $324,000, respectively.

Note J.  Stock Plans

At December 31, 1998, the Company has reserved 30,349 shares of its common 
stock for grant to key employees under the 1990 Stock Option Plan. The plan 
provides for the grant, at fair market value on the date of grant, of 
nonqualified stock options and incentive stock options. Options generally 
become exercisable in three equal annual installments on a cumulative basis 
commencing six months from the date of grant and expire five years (maximum 
ten years) after the date granted.

The Company also has the 1967 Employee Stock Purchase Plan under which 34,847 
shares were reserved for grant at December 31, 1998. The purchase price is 85% 
of the fair market value of the stock on the date offered. Generally, rights 
to purchase shares under this plan expire 12 months (maximum 27 months) after 
the date of grant.

The Company also has a time accelerated restricted stock plan ("Restricted 
Stock Plan") under which 14,058 shares are available for grant. The plan 
provides for the award of shares to key employees; generally, the awards vest 
in five equal annual installments commencing two years after the date of the 
award. Vesting may be accelerated based on the achievement of certain 
financial performance goals. 

Share information pertaining to these plans is as follows:
                                               
                                                                   Restricted
                                           Option        Purchase     Stock  
                                            Plan           Plan       Plan
                                           ------        --------   ---------
Outstanding at January 1, 1996            352,932          20,156      97,300 
     Granted                               90,000          37,545
     Cancelled or expired                  (2,168)         (1,527)
     Vested
     Exercised                            (17,481)        (20,156)            
                                          -------          ------      ------
Outstanding at December 31, 1996          423,283          36,018      97,300 
     Granted                               89,500                      12,000 
     Cancelled or expired                                    (471)     (1,058)
     Vested                                                           (92,942)
     Exercised                           (164,899)        (35,547)           
                                          -------          ------      ------
Outstanding at December 31, 1997          347,884               0      15,300 
     Granted                              117,150          19,069      26,000 
     Cancelled or expired                  (1,333)              0 
     Vested                                                           (13,700)
     Exercised                             (6,334)              0             
                                          -------          ------      ------
Outstanding at December 31, 1998          457,367          19,069      27,600 
                                          =======          ======      ======

The exercise price for options granted in 1996 was $3.63, for options granted 
in 1997 ranged from $4.69 to $7.63 and for options granted in 1998 was 
$10.00.  The weighted average exercise price for the 457,367 options 
outstanding under the Option Plan is $5.12 with expiration dates ranging from 
1999 to 2003. Options were exercised under the Option Plan at weighted average 
<PAGE>  17
exercise prices of  $2.70, $2.91 and $2.97 in 1996, 1997 and 1998, respectively.
Shares exercisable under the Option Plan at December 31, 1996, 1997 and 1998 
were 224,237, 226,717 and 279,718, respectively.

Rights were granted under the Purchase Plan at an exercise price of $8.50 in 
1998 and $3.72 in 1996.  Shares were exercised under the Purchase Plan at a 
weighted average price of $2.34 in 1996 and $3.72 in 1997.

Under the Restricted Stock Plan compensation expense was $30,000, $189,000 and 
$109,000 in 1998, 1997 and 1996, respectively.

During 1998, the Company established, subject to approval by stockholders, a
stock option plan for non-employee directors and officers.  The plan provides
for an initial grant of options to purchase 2,000 shares to each participant
(12,000 in total) at $8.25, the fair market value on the date of grant, and
additional grants of 1,000 shares for each participant on August 1st of
subsequent years at the then fair market value.  At December 31, 1998, the
Company has reserved 23,000 shares of its Common Stock for grant.

The Company has elected to follow APB No. 25 and related interpretations in 
accounting for its stock option plans, and has adopted the disclosure-only 
provisions of  SFAS No. 123.  If the Company had elected to recognize 
compensation expense for the 1990 Stock Option Plan and the 1967 Stock 
Purchase Plan based on the fair value at the grant date , consistent with the 
method presented by SFAS No. 123, the pro forma net income and net income per 
share would be as follows (in thousands except per share information):
                                                       1998     1997     1996
                                                       ----     ----     ----
     Net income            As reported               $4,689   $3,622   $1,099
                                                     ======   ======   ======
                           Pro forma                 $4,442   $3,461   $1,047 
                                                     ======   ======   ======
     Net income per share  As reported      Basic     $1.27    $1.04     $.32
                                                      =====    =====     ====
                                            Diluted   $1.17    $ .93     $.31
                                                      =====    =====     ====
                           Pro forma        Basic     $1.20    $ .99     $.31
                                                      =====    =====     ====
                                            Diluted   $1.12    $ .89     $.29
                                                      =====    =====     ====
Because SFAS 123 method of accounting has only been applied to options granted 
subsequent to December 31, 1994, the resulting pro forma compensation cost may 
not be representative of that to be expected in future years.

 The fair value for the Stock Option and Stock Purchase Plans was estimated at 
the date of grant using a Black-Scholes option pricing model with the 
following weighted-average assumptions for 1998, 1997 and 1996, respectively: 
risk-free interest rates of 4.5%, 5.0% and 5.8%; no dividend yields; 
volatility factors of the expected market price of the Company's common stock 
of 0.64 in all years; and a weighted-average expected life of the option of 
3.8 years in 1998 and 4.2 years for 1997 and 1996 for the Option Plan and 9 
months for all years for the Purchase Plan.

The Black-Scholes option valuation model was developed for use in estimating 
the fair value of traded options which have no vesting restrictions and are 
fully transferable.  In addition, option valuation models require the input of 
highly subjective assumptions including the expected stock price volatility.  
Because the Company's employee stock options have characteristics 
significantly different from those of traded options, and because changes in 
<PAGE>  18
the subjective input assumptions can materially affect the fair value 
estimate, in management's opinion, the existing models do not necessarily 
provide a reliable single measure of the fair value of its employee stock 
options.

In 1998, warrants to purchase 36,205 shares of common stock at $2.375 per 
share were exercised and 13,795 expired.
<PAGE>  19
Note K.  Operations by Industry Segment and Geographic Areas

The Company operates in two segments of the voice processing industry.  In the 
United States, the Company designs, manufactures and sells equipment for use 
in telephone central offices.  In Europe (United Kingdom), the Company 
distributes equipment for use in customers' premises. Information about the 
Company's operations by segment and geographic area for the years ended 
December 31, is as follows (in thousands):
                                               1998         1997         1996
                                               ----         ----         ----
Net sales                                                                   
  United States:                                                            
    Unaffiliated customers (North America)  $20,603      $21,550      $10,051 
    Intercompany transfers                       98          186          544 
                                             ------       ------       ------
                                             20,701       21,736       10,595 
   Europe                                     8,314        7,971        7,292 
   Eliminations                                 (98)        (186)        (544)
                                            -------      -------      -------
                                            $28,917      $29,521      $17,343 
                                            =======      =======      =======
Operating profit
   United States                           $  7,247     $  7,587     $  1,977 
   Europe                                       878          594        1,067 
   Intercompany eliminations                     18           17          (58)
                                           --------     --------     --------
                                              8,143        8,198        2,986 
General corporate expenses                    1,202        2,443        1,196 
Other (income) expense, net                    (404)        (165)         (80)
                                           --------     --------     --------
Income before income taxes                 $  7,345     $  5,920     $  1,870 
                                           ========     ========     ========
Total assets
   United States                            $21,461      $17,086      $10,774 
   Europe                                     5,670        6,092        6,790 
   Intercompany eliminations                    (51)         (55)         (53)
                                            -------      -------      -------
                                            $27,080      $23,123      $17,511 
                                            =======      =======      =======
Long-lived assets
   United States                           $  1,531     $  1,395    $     874 
   Europe                                     1,757        2,144        2,970 
   Intercompany eliminations                    (16)         (32)         (37)
                                           --------     --------     --------
                                           $  3,272     $  3,507     $  3,807 
                                           ========     ========     ========
Expenditures for long-lived assets
   United States                          $     384    $     775    $     330 
   Europe                                       155          134          596 
   Intercompany eliminations                      0            0          (80)
                                          ---------    ---------    ---------
                                          $     539    $     909    $     846 
                                          =========    =========    =========
Depreciation and amortization
   United States                          $     261    $     251    $     229 
   Europe                                       525          512          473 
   Intercompany eliminations                    (17)          (5)         (12)
                                          ---------    ---------    ---------
                                          $     769    $     758    $     690 
                                          =========    =========    =========
<PAGE>  20
Gross profit margin on intercompany transfers are comparable to sales to third 
parties.  The United States operations had net sales of $6.8 million, $7.4 
million and $4.0 million in 1998, 1997 and 1996, respectively, to one major 
customer; sales of $5.2 million, $5.4 million and $.5 million in 1998, 1997 
and 1996, respectively, to another major customer; sales of $2.4 million in 
1997 and 1996 to another customer and export sales of $2.0 million in 1998 to 
another customer.  The European operations had sales of $5.2, $5.0 million 
and  $5.4 million in 1998, 1997 and 1996, respectively, to one customer.
<PAGE>  21

                                   PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)(1) and (2) and (d)  The response to this portion of Item 14 is 
submitted as a separate section beginning on page 26 of this Annual Report on 
Form 10-K/A.

     (a)(3) and (c)  The response to this portion of Item 14 is submitted as a 
separate section beginning on page 27 of this Annual Report on Form 10-K/A.

     (b) There were no reports filed on Form 8-K during the fourth quarter of 
1998. 

                              SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) of the Securities  
and Exchange Act of 1934, the registrant has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized, on April 
5, 1999.
                                                    COGNITRONICS CORPORATION
                                                            Registrant

                                               by    /s/    Garrett Sullivan 
                                                            Garrett Sullivan
                                                            Treasurer

<PAGE>  22
Form 10-K/A -- Item 14 (a) (1) and (2) and (d)

     (a)     (1)  Financial Statements

The following financial statements of the Company are included in Item 8.

Financial Statements Covered by Report of Independent Auditors:          Page

Report of Independent Auditors                                              4

Consolidated Balance Sheets, December 31, 1998 and December 31, 1997        5

Consolidated Statements of Income and Comprehensive Incomefor each
  of the three years in the period ended December 31, 1998                  6

Consolidated Statements of Stockholders' Equity for each of the
  three years in the period ended December 31, 1998                         7
      
Consolidated Statements of Cash Flows for each of the three years in
  the period ended December 31, 1998                                        8

Notes to Consolidated Financial Statements                                  9

  

     (2) and (d) Financial Statement Schedules 

Schedules for which provision is made in the applicable accounting regulation 
of the Securities and Exchange Commission are not required under the related 
instructions, are inapplicable, or the information has been included in the 
Company's financial statements. and, therefore, have been omitted.
<PAGE>  23
                            Item 14(a)(3) and (c)

                              INDEX TO EXHIBITS
     
Exhibit

3.1   Certificate of Incorporation as filed on January 2, 1962 (Exhibit 3-1-A
      to Form S-1 Registration Statement No. 2-27439 and incorporated herein
      by reference).

3.2   Amendment, dated June 28, 1965 (Exhibit 3-1-B to Form S-1 Registration 
      Statement No. 2-27439 and incorporated herein by reference).

3.3   Amendment, dated October 3, 1966 (Exhibit 3-1-C to Form S-1 Registration
      Statement No. 2-27439 and incorporated herein by reference).

3.4   Amendment, dated October 30, 1967 (Exhibit 3-1-D to Form S-1 Registration
      Statement No. 2-27439 and incorporated herein by reference).

3.5   Amendment, dated July 27, 1981 (Exhibit 3.5 to Annual Report on Form
      10-K for the fiscal year ended December 31, 1983 and incorporated herein
      by reference).

3.6   Amendment, dated September 27, 1984 (Exhibit 3.6 to Annual Report on Form
      10-K for the fiscal year ended December 31, 1984 and incorporated herein
      by reference).

3.7   Amendment dated June 13, 1988 (Exhibit 3.7 to Annual Report on Form 10-K 
      for the fiscal year ended December 31, 1988 and incorporated herein by 
      reference).

3.8   Amendment dated November 3, 1994 (Exhibit 3.8 to Annual Report on Form
      10-K for the year ended December 31, 1994 and incorporated herein by
      reference).

3.9   By-laws of the Company (Exhibit 3.9 to Annual Report on Form 10-K for the
      year ended December 31, 1994 and incorporated herein by reference).

4.    Specimen Certificate for Common Stock (Exhibit 4-1 to Form S-1
      Registration Statement No. 2-27439 and incorporated herein by reference).

10.1  1990 Stock Option Plan, as amended (Exhibit 10.1 to Annual Report on Form
      10-K for the year ended December 31, 1997 and incorporated herein by 
      reference).

10.2  Lease, dated April 30, 1993, between Seymour R.Powers and The Danbury 
      Industrial Corporation, landlord, and Cognitronics Corporation, tenant 
      (Exhibit 10.3 to Annual Report on Form 10-K for the year ended
      December 31, 1993 and incorporated herein by reference).

10.3  Form of Indemnity Agreement, dated October 27, 1986, between each Director
      (with equivalent form for each Officer) and Cognitronics Corporation
      (Exhibit 10.7 to Annual Report on Form 10-K for the year ended
      December 31, 1986 and incorporated herein by reference).  

10.4  Supplemental Pension Plan for Officers, as amended November 2, 1993 
      (Exhibit 10.6 to Annual Report on Form 10-K for the year ended 
      December 31, 1993 and incorporated herein by reference).
<PAGE>  24
Exhibit
10.5  1998 Executive Bonus Plan (attached as Exhibit 10.5 to this Annual Report
      on Form 10-K/A).

10.6  Form of Warrant Agreement dated February 9, 1995 between Cognitronics 
      Corporation and each of the former shareholders (other than Inkel) of
      Dacon Electronics Plc, granting warrants to purchase up to an aggregate
      of 50,000 shares of the Company's Common Stock (Exhibit 10.9 to Annual
      Report on Form 10-K for the year ended December 31, 1994 and incorporated
      herein by reference).

10.7  Cognitronics Corporation Restricted Stock Plan (Exhibit 10.1 to Quarterly
      Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated
      herein by reference).

10.8  Form of Executive Severance Agreement between certain officers and 
      Cognitronics Corporation (attached as Exhibit 10.8 to Annual Report on
      Form 10-K for the year ended December 31, 1997 and incorporated herein by
      reference).

10.9  Commercial Revolving Loan and Security Agreement between Cognitronics 
      Corporation and Fleet National Bank dated July 31, 1997 (Exhibit 10.1 to 
      Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
      and incorporated herein by reference).

10.10 First modification to Commercial Revolving Promissory Note and Commercial
      Revolving Loan and Security Agreement (Exhibit 10.1 to Quarterly Report
      on Form 10-Q for the quarter ended September 30, 1998 and incorporated
      herein by reference).

22.   List of subsidiaries of the Company as of December 31, 1998 (attached as
      Exhibit 22 to this Annual Report on Form 10-K/A).

23.   Consent of Independent Auditors, dated April 5, 1999 (attached as
      Exhibit 23 to this Annual Report on Form 10-K/A).