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

                              FORM 10-Q

[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the
       Securities Exchange Act of 1934

For the quarterly period ended June 30, 2006
                                  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 1-8496

                       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          06810-4130
(Address of principal executive offices)         (Zip Code)

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

        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 (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.         Yes    x        No
        Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, or a non-accelerated
filer.  See definition of "accelerated filer and large accelerated
filer" in Rule 12b-2 of the Exchange Act.  (Check one): Large
accelerated filer ___  Accelerated filer ___  Non-Accelerated filer   x

        Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
                                       Yes             No   x

        The Registrant has 6,706,125 shares of Common Stock, $.20
par value per share outstanding at June 30, 2006.




                        Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

                  COGNITRONICS CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (dollars in thousands)
                                              June 30,       December 31,
                                               2006              2005
                                             --------       ------------
                                           (Unaudited)          (Note)
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                 $ 1,725           $ 1,750
  Marketable securities                       3,571             6,370
  Accounts receivable, net                    1,563             3,565
  Inventories                                 1,967             2,245
  Other current assets                          289               137
                                            -------           -------
      TOTAL CURRENT ASSETS                    9,115            14,067
LOANS TO OFFICERS                             1,173             2,029
PROPERTY, PLANT AND EQUIPMENT, NET            1,188             1,208
OTHER ASSETS, NET                             3,681             3,901
                                            -------           -------
                                            $15,157           $21,205
                                            =======           =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                          $   266           $   814
  Notes payable                                 300               300
  Accrued compensation and benefits           1,764             1,817
  Deferred service revenue                      971             2,976
  Income taxes payable                          486               405
  Other accrued expenses                        812               504
                                            -------           -------
      TOTAL CURRENT LIABILITIES               4,599             6,816

NON-CURRENT LIABILITIES                         329               374

STOCKHOLDERS' EQUITY
  Common Stock, par value $.20 per share,
    authorized 20,000,000 shares;
    issued 7,016,583 shares                   1,403             1,403
  Additional paid-in capital                 15,156            15,498
  Accumulated deficit                        (4,567)           (1,281)
  Accumulative other comprehensive loss        (580)             (580)
  Unearned compensation                         (72)             (156)
                                            -------           -------
                                             11,340            14,884
  Less cost of 310,458 and 111,142
    common shares in treasury                (1,111)             (869)
                                            -------           -------
     TOTAL STOCKHOLDERS' EQUITY              10,229            14,015
                                            -------           -------
                                            $15,157           $21,205
                                            =======           =======

See Note to Condensed Consolidated Financial Statements.



                  COGNITRONICS CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  AND COMPREHENSIVE INCOME(LOSS) (UNAUDITED)
               (dollars in thousands except per share amounts)

                                  Three Months Ended    Six Months Ended
                                       June 30,             June 30,
                                  ------------------    ----------------
                                    2006     2005         2006      2005
                                    ----     ----         ----      ----
REVENUES
  Sales                           $ 1,159   $   717    $ 4,221   $ 2,178
  Service                             417       337        820       597
                                  -------   -------    -------   -------
                                    1,576     1,054      5,041     2,775
COST OF REVENUES                    1,465       701      2,944     1,371
                                  -------   -------    -------   -------
  Gross profit                        111       353      2,097     1,404
OTHER COSTS AND EXPENSES:
  Research and development          1,451       791      2,881     1,509
  Selling, general and
     administrative                 1,291       866      2,688     1,738
  Other (income)expense, net          (74)      (78)      (180)     (134)
                                  -------   -------    -------   -------
  Loss before income taxes         (2,557)   (1,226)    (3,292)   (1,709)
PROVISION FOR INCOME TAXES             15        15         30        30
                                  -------   -------    -------   -------
  Loss from continuing
    operations                     (2,572)   (1,241)    (3,322)   (1,739)
  Loss from discontinued
    operations, net of tax                    (454)                 (711)
  Cumulative effect of change in
    accounting principle,
      net of tax                                            36
                                  -------   -------    -------   -------
NET LOSS                           (2,572)   (1,695)    (3,286)   (2,450)
Currency translation adjustment                 (46)                 (25)
                                  -------   -------    -------   -------
COMPREHENSIVE LOSS                $(2,572)  $(1,741)   $(3,286)  $(2,475)
                                  =======   =======    =======   =======
LOSS PER BASIC AND DILUTED SHARE:
  Continuing operations            $(0.36)   $(0.22)    $(0.47)   $(0.31)
  Discontinued operations                     (0.08)               (0.13)
  Cumulative effect of change
    in accounting principle,
      net of tax                                          0.01
                                   ------    ------     ------    ------
  Net loss                         $(0.36)   $(0.30)    $(0.46)   $(0.43)
                                   ======    ======     ======    ======
Weighted average number of
  basic and diluted shares
    outstanding:                7,058,257 5,653,173  7,104,496 5,643,571
                                ========= =========  ========= =========
See Note to Condensed Consolidated Financial Statements.

                  COGNITRONICS CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                            (dollars in thousands)

                                                     Six Months Ended
                                                         June 30,
                                                     ----------------
                                                     2006         2005
NET CASH PROVIDED(USED) BY                           ----         ----
   OPERATING ACTIVITIES                           $(2,689)      $1,873
                                                  -------       ------
INVESTING ACTIVITIES
  Purchase of marketable securities                (2,800)      (5,529)
  Sales of marketable securities                    5,599        4,325
  Repayment of officers' loans			      887
  Additions to property, plant and
    equipment                                       (234)         (19)
                                                  -------       ------
     NET CASH PROVIDED(USED) BY
      INVESTING ACTIVITIES                          3,452       (1,223)
                                                  -------       ------
FINANCING ACTIVITIES
  Repurchase of shares					     (788)
  Shares issued pursuant to
    employee stock plans                                0           30
                                                  -------       ------
    NET CASH PROVIDED BY
      FINANCING ACTIVITIES                           (788)          30
                                                  -------       ------
CASH PROVIDED(USED) BY DISCONTINUED
  OPERATIONS                                            0            0
                                                  -------       ------
INCREASE(DECREASE)IN CASH AND
  CASH EQUIVALENTS                                    (25)         680
CASH AND CASH EQUIVALENTS - BEGINNING
   OF PERIOD                                        1,750        2,222
                                                  -------       ------
CASH AND CASH EQUIVALENTS - END OF PERIOD          $1,725       $2,902
                                                  =======       ======
INCOME TAXES PAID                                  $    3       $    2
                                                   ======       ======
INTEREST PAID                                      $    0       $    0
                                                   ======       ======


See Note to Condensed Consolidated Financial Statements.












                  COGNITRONICS CORPORATION AND SUBSIDIARIES
       NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                June 30, 2006

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month  and
six-month periods ended June 30, 2006 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2006. The
balance sheet at December 31, 2005 has been derived from the audited
consolidated financial statements at that date. For further information,
refer to the consolidated financial statements and footnotes thereto and the
quarterly financial data included in the Company's Annual Report on Form
10-K for the year ended December 31, 2005.

Inventories (in thousands):
                                         June 30,           December 31,
                                           2006                2005
                                         -------            -----------
Finished and in process                  $1,341              $1,571
Materials and purchased parts               626                 674
                                         ------              ------
                                         $1,967              $2,245
                                         ======              ======

Non-Current Liabilities (in thousands):

                                         June 30,            December 31,
                                           2006                 2005
                                         -------             -----------
Accrued supplemental pension plan        $  287               $  313
Accrued deferred compensation               157                  176
Accrued pension expense                     770                  775
                                         ------               ------
                                          1,214                1,264
   Less current portion included in
   accrued compensation and benefits        885                  890
                                         ------               ------
                                         $  329               $  374
                                         ======               ======

Income Per Share

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.  For all periods presented, options and warrants were
anti-dilutive and therefore were not included in the determination of net
loss per share.


Stock-Based Compensation

Effective January 1, 2006, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 123(R) ("SFAS No. 123(R))",
"Share-Based Payment," which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of SFAS No. 123(R),
share-based compensation cost is measured at the grant date, based on the
fair value of the award, and is recognized as an expense over the employee's
requisite service period (generally the vesting period of the equity grant).
Prior to January 1, 2006, the Company accounted for share-based compensation
to employees in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. The
Company also followed the disclosure requirements of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). The Company elected to adopt the modified prospective
transition method as provided by SFAS No. 123(R) and, accordingly, financial
statement amounts for the prior periods presented in this Form 10-Q have not
been restated to reflect the fair value method of expensing share-based
compensation.

The Company has recognized compensation expense for its restricted stock
grants. Upon adoption of SFAS 123(R), using the modified prospective method,
the Company recognized a benefit of $36,000  as a cumulative effect of a
change in accounting principle resulting from the requirement to estimate
forfeitures of the Company's restricted stock grants at the date of grant
instead of recognizing them as incurred. The estimated forfeiture rate was
applied to the previously recorded compensation expense of the Company's
unvested restricted stock in determining the cumulative effect of a change
in accounting principle. The cumulative benefit, net of tax, increased both
basic and diluted earnings per share by $0.01 for the six-month period ended
June 30, 2006.

SFAS 123(R) requires all share-based payments to employees, including grants
of employee stock options, to be recognized as compensation expense over the
service period (generally the vesting period) in the consolidated financial
statements based on their fair values. For options with graded vesting, the
Company values the stock option grants and recognizes compensation expense
as if each vesting portion of the award was a separate award. Under the
modified prospective method, awards that were granted, modified, or settled
on or after January 1, 2006 are measured and accounted for in accordance
with SFAS 123R. Unvested equity-classified awards that were granted prior to
January 1, 2006 will continue to be accounted for in accordance with SFAS
123, except that compensation expense for all such awards is recognized in
the results of operations over the remaining vesting periods. The impact of
forfeitures that may occur prior to vesting is also estimated and considered
in the amount recognized.

The Company has stock-based compensation plans under which directors,
officers and other eligible employees receive stock options and other
equity-based awards. The plans provide for the grant of stock options and
restricted stock awards.

Stock options are granted with an exercise price equal to the market value
of a share of common stock on the date of grant. Stock options generally
expire in 10 years and vest over thirty months.

Restricted stock awards generally vest over four to six years.

The following table summarizes stock option activity:
                      Inducement           1990 Stock           Directors'
                       Options            Option Plan          Option Plan
                      ----------          -----------          ------------

                            Weighted             Weighted           Weighted
                             Average              Average            Average
                            Exercise             Exercise           Exercise
                   Shares     Price     Shares    Price     Shares   Price
                   ------   --------    ------   --------   ------  --------

Outstanding
at December
31, 2005           705,000    $2.55  1,090,219    $3.95    158,750    $3.59
Granted            130,000    $2.97                          2,500    $3.05
Exercised                              (65,868)   $1.71
Forfeited/
expired           (215,000)   $2.55   (133,799)   $5.51   (11,000)   $12.34
                   -------           ---------            -------
Outstanding
at June 30, 2006   620,000    $2.64    890,552    $3.89   150,250     $2.94
                   =======           =========            =======

Shares
available for
future grant                           142,314             37,250

Weighted
average
remaining term     9.41 years         7.37 years          7.33 years

Intrinsic value:
  Outstanding           $0            $226,000            $35,000
  Exercisable           $0            $226,000            $35,000

In 2006, 37,706 shares of stock were used to exercise 65,868 options with
An intrinsic value of $82,000.

The intrinsic value for stock options is calculated based on the exercise
price of the underlying awards and the market price of our common stock as
of the reporting date.

On January 2, 2006, 395,000 common shares, which were granted in 2002,
vested.  The total value of the restricted stock award, at the date of grant,
was $612,000  and was based on the market price of $1.55 per share.

In addition, the Company has a Restricted Stock Plan, the activity of which
is summarized as follows:

                                                Weighted Average
                                    Shares     Grant Date Fair Value

     Unvested as of
       December 31, 2005           182,450                $2.58
     Granted                             -
     Vested                        (17,300)               $5.99
     Forfeited                     (28,700)               $2.52
                                   -------
     Unvested as of
       June 30, 2006               136,450                $2.16
                                   =======
     Shares available
       for future grant             51,600
                                   =======
The following table summarizes the pro forma effect of stock-based
compensation as if the fair value method of accounting for stock
compensation had been applied for the three-month and six-month periods
ended June 30, 2005 (in thousands except per share amounts):

                                       Three Months Ended   Six Months Ended
                                         June 30, 2005       June 30, 2005
                                       ------------------   ----------------
 Net loss, as reported                     $(1,695)            $(2,450)
   Add: Stock-based compensation
      included therein                          82                 165
   Deduct: Total stock-based compensation
      under the fair value method             (121)               (266)
                                           -------             -------
Pro forma net loss                         $(1,734)            $(2,551)
                                           =======             =======
   Loss per share applicable to
     common shareowners:
   As reported: Basic and diluted           $(0.30)             $(0.43)
                                            ======              ======
   Pro forma: Basic and diluted             $(0.31)             $(0.45)
                                            ======              ======

The following table summarizes the components and classification of
stock-based compensation expense included in the Statements of Operations (in
thousands):

                                    Three Months Ended    Six Months Ended
                                        June 30 ,             June 30,
                                    ------------------    ----------------
                                      2006     2005        2006     2005
                                      ----     ----        ----     ----
     Stock options                    $146     $           $390     $
     Restricted stock                   21       78          50      157
     Other                               0        4           0        8
                                      ----     ----        ----     ----
     Total stock-based compensation   $167     $ 82        $440     $165
                                      ====     ====        ====     ====


     Cost of revenues                 $ 14     $  7        $ 26     $ 14
     Selling, general and
       administrative                   86       63         233      127
     Research and development           67       12         181       24
                                      ----     ----        ----     ----
     Total stock-based
       compensation expense           $167     $ 82        $440     $165
                                      ====     ====        ====     ====
As a result of adopting FAS 123(R), the Company's loss before income taxes
and loss from continuing operations for the three months and six months ended
June 30, 2006 is $146,000 and $390,000, respectively, larger than if it had
continued to account for share-based compensation under APB 25. Basic and
diluted loss per share from continuing operations for the three months and
six months ended June 30, 2006 would have been $(0.34) and $(0.41),
respectively, if the Company had not adopted FAS 123(R), compared to
reported basic and diluted loss from continuing operations per share of
$(0.36) and $(0.47), respectively.

No tax benefits were attributed to the stock-based compensation expense
because a valuation allowance is maintained for substantially all net
deferred tax assets. We elected to adopt the alternative method of
calculating the historical pool of windfall tax benefits as permitted by
FASB Staff Position (FSP) No. SFAS 123(R)-3, "Transition Election Related to
Accounting for the Tax Effects of Share-Based Payment Awards." This is a
simplified method to determine the pool of windfall tax benefits that is
used in determining the tax effects of stock compensation in the results of
operations and cash flow reporting for awards that were outstanding as of
the adoption of SFAS 123(R).

The Company estimates the fair value of stock options using the
Black-Scholes valuation model. Key input assumptions used to estimate the
fair value of stock options include the exercise price of the award, the
expected option term, the expected volatility of the Company's stock over
the option's expected term, the risk-free interest rate over the option's
expected term, and the Company's expected annual dividend yield. The Company
believes that the valuation technique and the approach utilized to develop
the underlying assumptions are appropriate in calculating the fair values of
the Company's stock options granted during the six months ended June 30, 2006.
Estimates of fair value are not intended to predict actual future events or
the value ultimately realized by persons who receive equity awards. The
following table summarizes the assumptions used to compute the weighted
average fair value of stock option grants of $1.10 and $1.26, respectively,
for the three-month and six-month periods ended June 30, 2006.

                                   Three Months     Six Months

     Weight Average Fair Value       $1.10             $1.26
     Dividend yield                   0.0%              0.0%
     Weighted average volatility     54.6%             54.0%
     Risk-free interest rate          4.9%              4.7%
     Expected holding period
       (in years)                     2.5               2.96


No dividend yield was assumed because the Company has never paid a cash
dividend.

The weighted average volatility for the current period was developed using
historical volatility.

The risk-free interest rate was developed using the U.S. Treasury yield for
periods equal to the expected life of the options on the grant date. An
increase in the risk-free interest rate will increase stock compensation
expense.

The expected holding period was developed after considering vesting
schedules, life of the option, historical experience and estimates of
future exercise behavior patterns. An increase in this assumption will
increase stock compensation expense.

SFAS 123R requires the recognition of stock-based compensation for the
number of awards that are ultimately expected to vest. As a result, for most
awards, recognized stock compensation was reduced for estimated forfeitures
prior to vesting primarily based on historical annual forfeiture rates of
approximately 5%. Estimated forfeitures will be reassessed in subsequent
periods and may change based on new facts and circumstances. Prior to
January 1, 2006, actual forfeitures were accounted for as they occurred for
purposes of required pro forma stock compensation disclosures.

As of June 30, 2006, approximately $.4 million of unrecognized stock
compensation related to unvested awards (net of estimated forfeitures) is
expected to be recognized over a weighted-average period of 1.2 years.

In addition, for the purpose of the Statement of Cash Flows, the realization
of tax benefits in excess of amounts recognized for financial reporting
purposes will be recognized as a financing activity rather than an operating
activity as in the past.

Pension Plan

The Company has a defined benefit pension plan. 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 periodic benefit cost of the plan for the three and
six months ended June 30 are as follows (in thousands):

                                    Three Months Ended    Six Months Ended
                                          June 30,            June 30,
                                    ------------------    ----------------
                                       2006      2005        2006     2005
                                       ----      ----        ----     ----
Interest cost on projected
  benefit obligation                    $19       $22         $42      $45
Expected return on plan assets          (18)      (14)        (33)     (29)
Amortization of net loss                 14         8          21       15
                                        ---       ---         ---      ---
     Net periodic pension cost          $15       $16         $30      $31
                                        ===       ===         ===      ===
In 2006, the Company applied to the Pension Benefit Guarantee Corporation
and the Internal Revenue Service for permission to terminate this plan.
As a result, the Company intends to contribute approximately $800,000 in
2006 to this plan and $1,870,000 in benefit payments are expected to be paid
in 2006.  When the Company terminates the plan, it will recognize an expense
of approximately $709,000.

Acquisition

On November 18, 2005, the Company acquired ThinkEngine Networks, Inc.  The
following are unaudited pro forma results for the three-month and six-month
periods ended June 30, 2005 as if the acquisition had taken place at the
beginning of the period (amounts in thousands):
                                        Three Months    Six Months
                                        ------------    ----------
Revenues                                     $ 1,648       $ 3,582
                                             =======       =======
Loss from continuing operations              $(1,856)      $(3,367)
                                             =======       =======
Net loss                                     $(2,310)      $(4,078)
                                             =======       =======

Loss per share:
Loss from continuing operations                $(.27)        $(.50)
                                               =====         =====
Net loss                                       $(.34)        $(.60)
                                               =====         =====

Reclassifications

Certain prior period amounts have been reclassified to conform to the
presentation for discontinued operations required by Statement of Financial
Accounting Standards ("SFAS") No. 144 resulting from the discontinued
operations of the Company's former UK subsidiary (see below).

Discontinued Operations

On December 22, 2005, the Company sold its UK subsidiary, Dacon Electronics,
Plc ("Dacon") in an arms length transaction to a company owned by its former
Vice President of European Operations.  As a result, the Company has
reclassified the revenues and expenses related to Dacon's operations as
discontinued operations in its Consolidated Statement of Operations and
Comprehensive Income.

Summary results for discontinued operations for the three-month and
six-month periods ended June 30, 2005 are as follows (in thousands).

                                        Three Months    Six Months
                                        ------------    ----------
Revenue                                     $  581        $1,589
Operating costs and expenses                 1,035         2,300
                                            ------        ------
Operating loss                              $ (454)       $ (711)
                                            ======        ======
Loss from discontinued operations           $ (454)       $ (711)
                                            ======        ======


Related Party Transaction

During the six-month period ended June 30, 2006, former officers of the
Company repaid loans and accumulated interest, aggregating approximately
$788,000 using 242,790 shares of the Company's common stock.





Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Certain Factors That May Affect Future Results

The following information, including, without limitation, the Quantitative
and Qualitative Disclosures About Market Risk that are not historical facts,
may be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934.  These statements generally are characterized by the use of terms such
as "believe", "expect" "will" and "may".  Although the Company believes that
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, the Company's actual results could differ materially
from those set forth in the forward-looking statements.  Factors that might
cause such a difference include, but are not limited to, variability of
sales volume from quarter to quarter, product demand, pricing, market
acceptance, litigation, risk of dependence on significant customers and
third party suppliers, intellectual property rights, risks in product and
technology development and other risk factors detailed in this Quarterly
Report on Form 10-Q, the Company's Form 10-K for the year ended December 31,
2005 and in the Company's other Securities and Exchange Commission filings.

Results of Operations

The Company reported losses from continuing operations of $2.6 million,
$(0.36) per basic and diluted share, and $3.3 million, $(0.47) per basic
and diluted share, for the three-month and six-month periods ended June 30,
2006, respectively, versus losses of $1.2 million and $1.7 million,
respectively, in the prior year periods. Included in the results from
operations for the three months and six months ended June 30, 2006 was $.1
million and $.4 million, respectively, of expense related to the expensing
of stock options.  Net loss was $2.6 million and $3.3 million for the three
and six-month periods ended June 30, 2006 versus $1.7 million and $2.5
million, respectively, in the prior year periods.

In response to a continuing shift in the wireline segment of the
telecommunications market resulting in increasing emphasis on capital
investment in next generation services and build-out of the fiber optic
infrastructure and a decreasing amount of available capital investment
funding for the legacy wireline operations, impacting the demand for the
Company's CX Media Servers, the Company has reduced and reassigned
personnel.  Reflecting the increased demand for next generation voice
services and conferencing solutions, additional resources are being added to
sales, marketing and R&D efforts supporting the VSR1000 product, including
personnel reassigned from supporting the CX Media Server products.

As a result of the reduction in personnel, the Company recorded a charge of
approximately $.3 million in the quarter ended June 30, 2006 and will
generate future annual savings resulting from these actions of
approximately $2 million.

Consolidated revenues for the quarter ended June 30, 2006 increased $.5
million, or 50%, from the prior year period.  Revenues increased $.4 million
due to the inclusion of ThinkEngine Networks, Inc. ("ThinkEngine") acquired
in November of 2005.  Consolidated revenues of $5 million for the six months
ended June 30, 2006 increased $2.3 million (82%) from the prior year period.

Revenues increased due to increased product sales of $1.9 million of
equipment shipped to a telecommunication service provider in 2005 and
recognized as a sale in the current year and $.9 million due to the
inclusion of ThinkEngine, offset, in part, by lower sales of $.7 million to
a world-wide telecommunication system integrator.

The gross margin percentage was approximately 7% in the quarter ended June
30, 2006 versus 33% in the prior year.  Included in cost of revenues for the
three and six months ended June 30, 2006 are contract cancellation fees of
$.4 million, amortization of intangibles of $.1 million and $.2 million,
respectively, and provision for obsolescence of $.1 million in both periods.
There were no similar charges in the prior year periods.

Research and development expense increased $.7 million (83%) and $1.4
million (91%), respectively, for the three-month and six-month periods ended
June 30, 2006 as compared to the prior year's periods primarily due to the
inclusion of ThinkEngine ($.6 million and $1.1 million, respectively), the
expensing of stock options ($.1 million and $.2 million, respectively) and
severance costs  ($.2 million in both periods).

Selling, general and administrative expense increased $.4 million (49%) and
$1 million (54%) for the three and six-month periods ended June 30, 2006,
respectively, primarily due to the inclusion of ThinkEngine ($.2 million and
$.5 million, respectively), the expensing of stock options ($.1 million and
$.2 million, respectively) and severance expense ($.1 million in both periods).

Other (income) expense, for the six months ended June 30, 2006, increased due
to higher interest earned on cash balances and marketable securities,
reflecting higher interest rates, offset, in part, by lower balances.

No tax benefit was provided for the losses incurred in 2006 since the
Company cannot determine that the realization of the net deferred tax asset
is more likely than not.

Liquidity and Sources of Capital

Net cash used by operations for the six months ended June 30, 2006 was $2.6
million versus cash provided by operations of $1.9 million in the comparable
period of 2005; this variance from the prior year is primarily attributable
to increased loss from continuing operations and the decrease in accounts
receivable of $3.1 million in the 2005 period versus a $2 million decrease
in the 2006 period.  The cash provided by investing activities of $2.6
million in 2006 reflects net sales of marketable securities.

Working capital and the ratio of current assets to current liabilities was
$4.5 million and 2.0:1 at June 30, 2006 compared to $7.2 million and 2.1:1
at December 31, 2005.


During the remainder of 2006, the Company anticipates contributing $.8
million to its defined benefit pension plan and purchasing $.1 million of
equipment.  Management believes that the cash flow from operations, its cash
and cash equivalents and marketable securities will be sufficient to meet
these needs in 2006.  However, to meet its longer-term capital needs, the
Company may in the future be required to seek new sources of debt or equity
financing or may  seek to sell certain Company assets.  The Company may also
be required to further reduce operating costs in order to meet its
obligations.  The Company's ability to fund its operations is heavily
dependent on the growth of its revenues over current levels to achieve
profitable operations.  No assurance can be given that management's
initiatives will be successful or that any such additional sources of
financing will be available on acceptable terms or at all.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company does not use derivative financial instruments.  The Company has
Marketable Securities, which are exposed to changes in interest rates.  Due
to the term of these securities and/or their variable rate provisions, a
change in interest rates would not have a material impact on their value.

Item 4.  CONTROLS AND PROCEDURES

Cognitronics Corporation's management, including the Chief Executive Officer
and Chief Financial Officer, have conducted an evaluation of the
effectiveness of disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14.  Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the disclosure controls and
procedures are effective as of the end of the period covered by this report
in ensuring that all material information required to be disclosed in this
quarterly report and all information required to be disclosed by the Company
under the Securities Exchange Act of 1934 has been made known to them in a
timely fashion.  During the three months ended June 30, 2006, there were no
changes in the Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting.


                         Part II.  OTHER INFORMATION

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company, on April 3, 2006, granted to an employee inducement options
to purchase 35,000 shares of the Company's Common Stock at an exercise
price of $3.05, and, on June 12, 2006, granted to an employee inducement
options to purchase 40,000 shares of the Company's Common Stock at an
exercise price of $2.81.  The options become exercisable over a 30-month
period in three installments (the soonest being 6 months from date of
grant) and expire 10 years from date of grant.  The issuance of inducement
options was not registered under the Securities Act in reliance
on the exceptions set forth in Section 4(2) of the Securities Act.

In May of 2006, the Company accepted 32,869 shares of its Common Stock
(valued at $2.95 a share) in repayment of loans to officers of $97,000.
















Item 6.  EXHIBITS
     Index to Exhibits
     Exhibit

     31.1 Certification of the Chief Executive Officer Pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.

     31.2 Certification of the Chief Financial Officer Pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002.

     32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C.
          Section 1350 as Adopted Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

     32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C.
          Section 1350 as Adopted Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.


                                  SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                       COGNITRONICS CORPORATION
                                        Registrant



Date: August 14, 2006                 By /s/ Garrett Sullivan
                                         Garrett Sullivan, Treasurer
                                         and Chief Financial Officer