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

                                  **FORM 10-KSB/A**

         [ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

                     For the fiscal year ended June 30, 2000

        [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

          For the transition period from _____________ to _____________

                         **Commission file number 0-11730****COGNIGEN NETWORKS, INC.**
                 (Name of small business issuer in its charter)

                  COLORADO                                84-0189377
      --------------------------------                   ------------
      (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                   Identification No.)

7001 Seaview Avenue, N.W., Suite 210, Seattle, Washington     98117
---------------------------------------------------------    -------
          (Address of principal executive offices)         (Zip Code)

                                 (206) 297-6151
                           ---------------------------
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:
                                      None

         Securities registered under Section 12(g) of the Exchange Act:
                                  common stock
                                (Title of class)

   Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or 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   ____
   Check if there is no  disclosure  of  delinquent  filers in  response to
Item 405 of Regulation S-B contained in this form,  and no disclosure  will
be  contained,  to the best of the  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB.  _____

      State issuer's revenue for its most recent fiscal year:  $3,799,713

      The  aggregate  market  value of the  voting  and  non-voting  common
equity held by  non-affiliates  at October 11, 2000,  computed by reference
to the closing price on the OTC Bulletin Board was $15,963,408.

      The number of shares  outstanding of each of the issuer's  classes of
common equity on October 11, 2000, was 47,002,547.

      Transitional Small Business Disclosure Format   Yes ____    No |X|

**TABLE OF CONTENTS**

PART I

Item 1.  Description of Business.

PART II
Item 6.  Management's  Discussion  and Analysis of Financial  Condition or
         Plan of Operation.

Item 7. Financial Statements.

PART III

Item 10.  Executive Compensation.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

Item 12.  Certain Relationships and Related Transactions.

PART I

Forward Looking Statements.

      The discussion in this report  contains  forward-looking  statements,
including,  without  limitation,  statements relating to Cognigen Networks,
Inc.  and its wholly owned  subsidiary,  Cognigen  Switching  Technologies,
Inc.  ("CST").  Although we believe that the expectations  reflected in the
forward looking  statements are  reasonable,  we can give no assurance that
such   expectations   will  prove  to  be  correct.   The  forward  looking
statements  involve  risks and  uncertainties  that  affect  our  business,
financial   condition  and  results  of   operations,   including   without
limitation,  our possible  inability to obtain additional  financing,  lack
of agent growth,  the possible  loss of key  personnel,  rate changes,  fee
policy  or  application  changes,   technological   changes  and  increased
competition.  Many of  these  risks  are  beyond  our  control.  We are not
entitled  to rely on the  safe  harbor  provisions  of  Section  27A of the
Securities  Act of 1933,  as  amended,  or  Section  21E of the  Securities
Exchange Act of 1934, as amended, when making forward-looking statements.

**Item 1.  Description of Business.****BUSINESS**

      We  were  incorporated  in May  1983 in  Colorado  to  engage  in the
cellular  radio and  broadcasting  business.  In June 1988,  we changed our
name to  Silverthorne  Production  Company and commenced  operations in the
oil and gas industry.  These  operations  were  discontinued  in 1989. From
1989 to 1999,  we attempted to locate  acquisition  prospects and negotiate
an acquisition.  Our pursuit of an acquisition  did not  materialize  until
August   1999   when   we   acquired    the   assets   of    Inter-American
Telecommunications   Holding  Corporation  ("ITHC").  The  acquisition  was
accounted for as a reverse acquisition.

      We  currently   operate  in  two  distinct  channels  of  direct  and
indirect  sales of  telecommunications  and personal  technology  services.
The  first  is  a  multi-faceted  network  marketing  organization,   which
utilizes the Internet as a platform to provide  customers  and  subscribers
with a variety of  telecommunications  and  technology  based  products and
services.   Through  a  network   of   approximately   65,000   independent
representatives,  we sell  direct  or  facilitate  the sale of third  party
products  and  services  to more than  275,000  customers  and  subscribers
worldwide.  Products  such as  discount  domestic  and  international  long
distance   services,   prepaid   calling   cards   and   paging,   wireless
communications,  computers and Internet-based  telecommunications  products
make  up a  major  portion  of  our  product  suite.  We  have  contractual
agreements  with a  wide  variety  of  product  and  service  vendors  that
provide us with a  commission  percentage  of any sale made  through one of
our  supported  web  sites.  Our  web-based  marketing  division  sells the
products and services of industry leaders such as AT&T,  WorldCom,  Sprint,
Verizon  and  Qwest.  We  provide  these  services   through  our  Internet
marketing  division,  which  represents  a  majority  of  our  distribution
power. The second is a recently  acquired,  facilities based,  national and
international  telecommunications  services  provider,  CST, which provides
this same  customer  base and other  direct  clients with a wide variety of
discount  international,   phone  card  and  private  switching  telephonic
services.

      In the mid  1990's  we  recognized  the  marketing  potential  of the
Internet  and  formed  what we  believe  is one of the first  companies  to
create  a  marketing  operation  based  exclusively  on the  Internet.  The
initial  concept,  which  remains  the  foundation  of our  growth,  was to
expand  marketing   potential  by  increasing  the  number  of  independent
representatives  working  within our  corporate  network  while at the same
time  continuing  to increase  the number of  products  and  services  that
these  representatives  could  provide to our worldwide  customer  base. To
facilitate  the  manageable  growth  of  this  network  and to be  able  to
provide the  representatives  with the support and marketing edge necessary
for success,  we developed  and deployed the "self  replicating"  web page.
This  proprietary   technology   automatically   created  a  high  content,
personalized  set of e-commerce web pages for each new  representative,  at
the  time  the   representative   becomes   a   member   of  our   network.
Additionally,  a 7 x 24 Internet  accessible  "private  site" is  instantly
created  for the new  representative.  Each  representative  can  view  the
representative's   records,  activity  and  account  status  on  which  the
representative  is  working.   The  private  site  also  contains  customer
detail status,  recommended  training  sources,  frequently asked questions
("FAQs")  and  representative  benefits.  We also  adopted  a  strategy  of
enabling each  representative  to sell  telecommunications  services and to
recruit  new  representatives.   The  original  representative  receives  a
sales commission  override on sales generated by the  representatives  thus
recruited.  Our commission  structure and plan enables our  representatives
to  earn  money   without  the   necessity  of   developing  a  subordinate
representative   base.   Lately,   we  have  been  adding  3,000  to  4,000
representatives  each month.  Over the past 18 months,  we have  observed a
positive    contribution    correlation   between   the   number   of   our
representatives and our revenue.

      In addition to the  Internet-based  representative  network and CST's
direct  sales  efforts,  we are engaged in an effort to develop and support
a  variety  of  affiliate  program  offerings.  In  these  programs,  large
affiliate  organizations  such as industry service  providers and a variety
of membership  or club related  businesses  can be utilized for  commission
sharing.  We currently  have  contracts for these  programs that  represent
affiliate/affinity  populations in excess of 600,000  potential  buyers. As
in any program of this nature,  actual  participation and buying rates will
be a small subset of the target  audience,  but higher than  non-affiliated
web surfers.

      CST is licensed by the Federal  Communications  Commission ("FCC") as
a   global    facilities-based/global    resale   services   national   and
international  carrier.  CST provides  our  customer  base and other direct
clients  with a wide  variety  of  discount  international,  phone card and
private  switching  telephonic   services.   CST,  through  its  multi-mode
enhanced  services   platform,   provides  its  customers  with  discounted
domestic  and   international   long   distance   voice  and  fax  service,
international  direct dialing,  domestic and international  prepaid calling
cards and  international  toll-free  access.  CST markets these services to
small and medium sized  businesses  and  residential  customers  throughout
the  world.  CST has three  fully  programmable  Cisco  Summa  Four  VCO/4K
multi-protocol  circuit switches,  with a combined  capability of more than
60 million  minutes of traffic per month,  at its  headquarters in San Luis
Obispo,   California.   With  additional   modest   enhancement  and  CST's
incumbent   technology,   we  are  well  positioned  to  deliver  the  next
generation  of  enhanced  packet  telephony  services  to  both  individual
subscribers  and  enterprise  clients.   Targeted   functionalities   would
include  services  such  as:  VOIP,  unified  messaging,   voice  and  data
conferencing and integrated wireless applications.

**Competition**

      We compete  with all of the  companies  for whom we sell  products as
an   agent,   a   number   of   companies   that   are   network   marketed
telecommunication  companies,  switching  companies  and with all providers
who retail  telecommunications  and personal  communications  products over
the  Internet.  Many  of  our  competitors  are  larger  and  have  greater
capital resources than do we.

**Regulation**

      We are not currently  subject to any  governmental  regulations as an
Internet marketer of  telecommunications  and technology based products and
services.  CST is  regulated  by the  FCC as a  Section  214  domestic  and
international facilities based carrier.

**Employees**

      As of October 11, 2000,  we had 18 full time  employees  and fourteen
part-time  employees.  In addition,  as of October 11,  2000,  we had three
consultants.

**Item 6.  Management's Discussion and Analysis or Plan of Operations****Overview**
      Prior  to July 1,  1999 we were a  publicly  held  shell  that had no
operations.  On August 20, 1999 we  acquired  all of the net assets of ITHC
in  exchange  for up to  49,041,397  shares  of  our  common  stock.  These
assets   primarily   consisted   of  the   operating   assets  of  Cognigen
Corporation  that had  previously  been  acquired  on July 1, 1999 by ITHC.
On April  14,  2000 we  acquired  all of the stock of CST in  exchange  for
2,041,445  shares of our common stock.  These  acquisitions  transformed us
into a thriving  telecommunications  company with  specialties  in the sale
through the  Internet of calling  cards,  various  local and long  distance
services and discount  circuit  switched  telecommunications  services.  We
also provide innovative custom designed service plans.

     ITHC was incorporated on July 24, 1998 in Delaware. Since its inception,
ITHC had  directed  its efforts toward the  acquisition of assets that would
allow it to be engaged in direct and multilevel  agency  marketing  and sale
of long distance service and products as well as the switching and transport
of voice, fax and data telephone and internet traffic and related  services.
On July 1, 1999, ITHC  acquired  the  net  assets of Cognigen Corporation in
exchange for 5,500 shares of  ITHC's  common  stock  and a  note  payable of
$300,000. Cognigen Corporation was actively marketing long distance telephone
services over the Internet.

      On July 12, 2000 we amended our Articles of  Incorporation  to change
our name from Silverthorne Production Company to Cognigen Networks, Inc.

**Results of Operations**

      ITHC was a  developmental  stage  company from its  inception on July
24, 1998  through  June 30,  1999.  During this stage,  ITHC  generated  no
revenues and  incurred  only minimal  operational  costs.  ITHC focused its
efforts on the pursuit of the  acquisition  of business  opportunities.  On
July 1,  1999,  ITHC  completed  the  acquisition  of all the net assets of
Cognigen  Corporation  in  a  transaction  accounted  for  as  a  purchase.
Additionally,  in a  transaction  accounted  for as a reverse  acquisition,
ITHC  acquired  control  of  us.  We  were  a  non-operating  public  shell
corporation.  As no  operations  existed  for ITHC for the year  ended June
30, 1999, no meaningful comparisons can be made.

      For  purposes of this  Management's  Discussion  and Analysis or Plan
of Operation,  we believe that a discussion  regarding the major components
of our  results  of  operations  for the  year  ended  June 30,  2000  will
provide a more meaningful basis for analysis.

**Fiscal Year Ended June 30, 2000**

Total  revenue  for the year  ended  June 30,  2000 was  $3,779,713,  which
consisted of  $1,138,165  of prepaid  calling card  revenue,  and marketing
commissions  of  $2,598,008  related to  commissions  received for sales of
telecommunication  products  through  links  provided  from  our web  site.
These  revenue  streams  were  acquired  in  connection  with the  Cognigen
Corporation  acquisition.  We also  generated  other  revenue  of  $63,540,
which  relates  primarily  to  long  distance   telecommunication   revenue
generated  through  callback  services  for two and a half  months from our
acquisition of CST.

      Our  operating  costs  consist of prepaid  cards and pins of $950,727
related  to  the  cost  of  service   provided  by  third  party  carriers.
Marketing   commissions  of  $1,657,195  are  commissions  paid  to  agents
associated with the  telecommunications  product sales commissions received
by us through our web site links.

      Selling,  general and administrative  (SG&A) expenses were $8,734,444
for the year  ended  June  30,  2000.  Non-cash  stock  based  compensation
charges of  $6,052,004  are  included in SG&A  expenses  and are related to
stock  issued  to  employees  for  services  valued  at  $30,000  and stock
options issued to  non-employees  for services  valued at $6,022,004  using
the  Black-Scholes  option  pricing  model.  The remainder of SG&A expenses
includes  salaries,  consulting  and other  professional  fees,  travel and
related  costs,  and rents for our three offices.  Our management  believes
that our current  infrastructure  can support  increases in capacity of two
to three times  current  sales  levels  without  having to add  significant
additional  costs.  There  can be no  assurances  that  we will  not  incur
significant additional SG&A costs as a result of future growth.

      Depreciation  and  amortization  was $561,510 for the year ended June
30, 2000 and consists of depreciation  on furniture and  telecommunications
equipment  and  amortization  of goodwill  and  customer  databases.  These
costs are a direct result of our business acquisitions during the year.

      Interest  expense  was  $144,492  for the year  ended  June 30,  2000
resulting in an increase  from June 30, 1999 of $76,678,  which is a direct
result of  additional  debt  assumed in our  business  acquisitions  during
the year.

**Fiscal Year Ended June 30, 1999**

      During  the  fiscal  year  ended  June 30,  1999,  we  engaged  in no
significant  operations other than the search for, and  identification  and
evaluation of,  possible  acquisition  candidates.  No revenue was received
by us during  the fiscal  year.  We  realized a net loss of $51,283  during
the fiscal year ended June 30, 1999.

**Liquidity and Capital Resources**

We have funded our  operations  to date from the sale of common  stock.  At
June 30,  2000 we had cash and cash  equivalents  of  $717,344  and working
capital of $734,152.

Cash used by us for  operating  activities  during  the year ended June 30,
2000 was  $2,167,135.  Additional  sources and uses of cash during the year
ended  June  30,  2000  include  net  proceeds  of  $5,140,087  from  stock
issuances,   debt  and  capital   lease   payments  of   $1,090,914,capital
expenditures  of $400,594  and  acquisition  costs of  $745,100  related to
businesses acquired during the year.

We  currently  have three notes  payable and  various  capital  leases with
total  outstanding  balances of $943,703 at June 30, 2000. Two of the notes
are  due  July  1,  2001  and  one  is  due  February  12,  2001.  We  have
maturities  of  capital  leases  and notes  payable  of  $421,551  required
during the next twelve months

Cash  generated  from  operations  was not  sufficient  to meet our working
capital  requirements  for the year  ended  June 30,  2000,  and may not be
sufficient to meet our working  capital  requirements  for the  foreseeable
future.  As a result,  we are exploring  various  bridge  financing  and/or
additional  equity financing to meet current operating  requirements  until
operations can generate  sufficient cash to become  self-sustaining.  There
can be no  assurances  that we will be able to  secure  additional  debt or
equity  financing or that  operations  will produce  adequate cash flows to
allow  us to  meet  all  of our  future  obligations.  However,  management
believes  that we will be  successful  in producing  sufficient  cash flows
from all collective sources to continue for the next twelve months.

We have no  significant  planned  capital  expenditures  covering  the next
twelve months.

We  maintain  two  customer  databases   containing   archived  names  with
historical  records of long distance  telecommunication  service users,  to
which we  intend to  devote  substantial  efforts  during  the next  twelve
months to  transform  these names into  active CST  customer  accounts.  We
have  been in  negotiations  with a  telemarketing  firm to  assist  in the
transformation  of these  names into  active  accounts.  We  anticipate  an
initial  cost of  approximately  $93,000 for these  telemarketing  services
and have  received  a verbal  commitment  from a third  party to  assist in
funding these telemarketing costs, as necessary.

We  have  also  entered  into an  option  agreement  with a  joint  venture
consisting of the sellers of the customer  databases,  which  provides that
if certain  targeted levels of active  customers cannot be transformed from
the  databases,  we have has the option to have our original  investment in
these  databases be refunded  through the forgiveness of the remaining debt
outstanding  and the return of our shares.  We believe this  agreement is a
major step in protecting the  recoverability of our original  investment in
these databases.

**Item 7. Financial Statements.**

      Reference is made to the financial  statements,  the reports  thereon
and the notes  thereto  included  as a part of this  Annual  Report on Form
10-KSB,  which  financial  statements,  reports and notes are  incorporated
herein by reference.

**COGNIGEN NETWORKS, INC.

                              Financial Statements
                                  June 30, 2000****COGNIGEN NETWORKS, INC.****Table of Contents**

Independent Auditors' Reports

Consolidated Financial Statements

      Consolidated Balance Sheet

      Consolidated Statements of Operations

      Consolidated Statements of Stockholders' Equity

      Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

**INDEPENDENT AUDITORS' REPORT**

To the Board of Directors and Stockholders
Cognigen Networks, Inc.
Seattle, Washington

We have audited the accompanying  consolidated  balance sheet of Cognigen  Networks,
Inc. and subsidiary as of June 30, 2000, and the related consolidated  statements of
operations,  stockholders'  equity  and cash  flows for the year then  ended.  These
consolidated   financial   statements  are  the   responsibility  of  the  Company's
management.  Our  responsibility  is to express  an  opinion  on these  consolidated
financial statements based on our audit.

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

In our opinion,  the  consolidated  financial  statements  referred to above present
fairly, in all material respects, the financial position of Cognigen Networks,  Inc.
and  subsidiaries as of June 30, 2000, and the results of their operations and their
cash  flows  for  the  year  then  ended,  in  conformity  with  generally  accepted
accounting principles.

The  Company  has  corrected  a  previous  error  in the 2000  financial  statements
relating to the amortization of its customer lists as described in Note 3.

                                                /s/Ehrhardt Keefe Steiner & Hottman PC
                                                Ehrhardt Keefe Steiner & Hottman PC

August 25, 2000, except Note 13,
 as to which the date is October 10, 2000
Denver, Colorado

**REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS**

The Board of Directors
Inter-American Telecommunications
 Holding Corporation
Seattle, Washington

We have audited the accompanying consolidated statements of operations,  cash flows,
and changes in  stockholders'  equity for the period from inception  (July 24, 1998)
through June 30, 1999 of Inter-American  Telecommunications  Holding  Corporation (a
development  stage company).  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 audit.

We conducted our audit 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 included  examining,  on a test basis,  evidence  supporting
the amounts and  disclosures  in the  financial  statements.  An audit also included
assessing  the  accounting   principles  used  and  significant  estimates  made  by
management,  as well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the  consolidated  financial  statements  referred to above present
fairly, in all material respects,  the consolidated  results of its operations,  its
cash flows and its changes in  stockholders'  equity for the period  from  inception
(July  24,  1998)  through  June 30,  1999 in  conformity  with  generally  accepted
accounting principles.

Denver, Colorado
January 20, 2000

                                                              /s/ Comiskey & Company
                                                                  Comiskey & Company
                                                            **PROFESSIONAL CORPORATION****COGNIGEN NETWORKS, INC.

                           Consolidated Balance Sheet
                                  June 30, 2000
                                   (Restated)****Assets**
Current assets
    Cash ........................................................     $    717,344
    Accounts receivable, net of allowance for doubtful accounts
     of $5,000 ..................................................           61,046
    Commissions receivable, net of allowance for doubtful
     accounts of $25,000 ........................................          538,163
    Employee receivable .........................................            1,661
    Inventory ...................................................          133,486
    Other current assets ........................................          417,028
    Deferred tax asset - current                                              --
                                                                      ------------
          Total current assets ..................................        1,868,728
                                                                      ------------

Property, plant and equipment, net of accumulated depreciation
 of $363,121 ....................................................          486,291
                                                                      ------------

Other assets
    Deposits and other assets ...................................           88,552
    Goodwill, net of $154,917 of amortization ...................        3,655,017
    Customer databases, net of $300,000 of amortization .........        1,000,000
    Deferred tax asset - non current ............................             --
                                                                      ------------
          Total other assets ....................................        4,743,569
                                                                      ------------

Total assets ....................................................     $  7,098,588
                                                                      ============
                 **Liabilities and Stockholders' (Deficit) Equity**

Current liabilities
    Accounts payable ............................................     $     97,420
    Other accrued liabilities ...................................          108,324
    Interest payable ............................................          239,421
    Commissions payable .........................................          326,681
    Payroll taxes payable .......................................           21,179
    Current portion of capital leases ...........................          106,551
    Current portion of notes payable ............................          315,000
                                                                      ------------
          Total current liabilities .............................        1,214,576

Long-term portion of capital leases .............................           12,152
Long-term portion of notes payable ..............................          510,000
                                                                      ------------
          Total liabilities .....................................        1,736,728

Commitments and Contingencies

Stockholders' (deficit) equity
  Common stock $.001 par value, 50,000,000 shares
   authorized; 46,980,547 issued and outstanding at
   June 30, 2000, and 37,298,444 to be issued
   shares (2000) ................................................           84,278
    Additional paid-in capital ..................................       13,594,051
    Accumulated deficit .........................................       (8,316,469)
                                                                      ------------
          Total stockholders' (deficit) equity ..................        5,361,860
                                                                      ------------

Total liabilities and stockholders' (deficit) equity ............     $  7,098,588
                                                                      ============

                See notes to consolidated financial statements.

**COGNIGEN NETWORKS, INC.

                      Consolidated Statements of Operations**

                                                    For the Years Ended
                                                          June 30,
                                              ------------------------------
                                                   1999             2000
                                              -------------     ------------
                                                                  (Restated)
Revenue
    Prepaid cards and pins ..............     $       --        $  1,138,165
    Marketing commissions ...............             --           2,598,008
    Other ...............................             --              63,540
                                              ------------      ------------
          Total revenue .................             --           3,799,713
                                              ------------      ------------

Operating expenses
    Prepaid cards and pins ..............             --             950,727
    Marketing commissions ...............             --           1,657,195
    Selling, general and administrative .             --           8,734,444
    Depreciation and amortization .......             --             561,510
                                              ------------      ------------
          Total operating expenses ......             --          11,903,876
                                              ------------      ------------

Loss from operations ....................             --          (8,104,163)

Interest expense ........................          (67,814)         (144,492)
                                              ------------      ------------

Loss before income taxes ................          (67,814)       (8,248,655)

Income taxes ............................           16,531           (16,531)
                                              ------------      ------------

Net loss ................................     $    (51,283)     $ (8,265,186)
                                              ============      ============

Loss per common share - basic and diluted     $       --        $      (0.11)
                                              ============      ============

Weighted average number of common shares
outstanding - basic and diluted .........       11,377,137        78,549,437
                                              ============      ============

                See notes to consolidated financial statements.

**COGNIGEN NETWORKS, INC.****Consolidated Statements of Stockholders' Equity**
                      From July 24, 1998 through June 30, 2000

                                                                                                                 Total
                                                                Common Stock         Additional                Stockholders'
                                                          -------------------------    Paid-in    Accumulated   (Deficit)
                                                            Shares         Amount      Capital      Deficit      Equity
                                                          -----------   -----------  -----------  -----------  -----------

Balance July 24, 1998 (inception)                                  -    $       -    $       -    $       -    $       -

Common stock issued for intangible assets                  11,377,137           20           -            -            20

Net loss for the period July 24, 1998 to June 30, 1999             -            -            -       (51,283)     (51,283)
                                                          -----------   -----------  -----------  -----------  -----------

Balance June 30, 1999                                      11,377,137           20           -       (51,283)     (51,263)

Stock issued in connection with Cognigen acquisition
 and employment agreements                                 42,664,260           55       30,000           -        30,055

Reverse acquisition                                        15,757,047       69,723     (261,957)          -      (192,234)

Common stock issued for cash net of $727,474 in expenses   12,489,102       12,489    5,127,598           -     5,140,087

Value of options issued for services                               -            -     6,022,004           -     6,022,004

Retirement of stock at cost                                   (50,000)         (50)     (18,950)                  (19,000)

Stock issued in connection with  acquisition of Cognigen    2,041,445        2,041    2,695,356           -     2,697,397
 Switching

Net loss                                                           -            -            -    (8,265,186)  (8,265,186)
                                                          -----------   -----------  -----------  -----------  -----------

Balance at June 30, 2000                                   84,278,991   $   84,278  $13,594,051  $(8,316,469)  $5,361,860
                                                          ===========   ===========  ===========  ===========  ===========

                See notes to consolidated financial statements.

**COGNIGEN NETWORKS, INC.****Consolidated Statements of Cash Flows**

                                                                           June 30,
                                                           1999              2000
                                                       ------------      ------------
                                                                       (Restated)
Cash flows from operating activities
  Net loss .......................................     $   (51,283)     $(8,265,186)
                                                       -----------      -----------
  Adjustments to reconcile net loss to net cash
   provided by operating activities
  Depreciation and amortization ..................            --            561,510
  Stock options granted to non-employees and stock
   issued to employees for services ..............            --          6,052,004
  Deferred taxes .................................         (16,531)          16,531
  Changes in assets and liabilities
   Receivables ...................................            --            218,461
   Commission receivable .........................            --           (484,149)
   Inventory .....................................            --           (108,410)
   Other current assets ..........................            --           (340,120)
   Accounts payable ..............................            --             53,276
   Other accrued expenses ........................          67,814          218,919
   Other assets ..................................            --            (89,971)
                                                       -----------      -----------
                                                            51,283        6,098,051
                                                       -----------      -----------
     Net cash used in operations .................            --         (2,167,135)
                                                       -----------      -----------

Cash flows from investing activities
  Capital expenditures ...........................            --           (400,594)
  Cash paid in business acquisitions net of cash .
   acquired .....................................             --           (555,100)
                                                       -----------      -----------
    Net cash used in investing activities .......             --           (955,694)
                                                       -----------      -----------

Cash flows from financing activities
  Net proceeds from stock issuance ...............            --          5,140,087
  Distribution related to reverse acquisition ....            --           (190,000)
  Payments on notes payable ......................            --         (1,090,000)
  Payment on capital leases ......................            --               (914)
  Retirement of stock ............................            --            (19,000)
                                                       -----------      -----------
     Net cash used in financing activities .......            --          3,840,173
                                                       -----------      -----------

Net increase in cash .............................            --            717,344

Cash and cash equivalents - beginning of period ..            --               --
                                                       -----------      -----------

Cash and cash equivalents - end of period ........     $      --        $   717,344
                                                       ===========      ===========

Cash paid for interest was $19,834 (2000) and $0 (1999).
Cash paid for income taxes was $0 in 2000 and 1999.

Non-cash investing and financing activities (Note 9).

                See notes to consolidated financial statements.

**COGNIGEN NETWORKS, INC.****Notes to Consolidated Financial Statements****Note 1 - Description of Business and Summary of Significant Accounting Policies**

The Company was  incorporated  in May 1983 in the State of Colorado to engage in the
cellular radio and broadcasting  business and to engage in any other lawful activity
permitted  under  Colorado  law.  In June  1988,  the  Company  changed  its name to
Silverthorne  Production Company  (Silverthorne) and commenced operations in the oil
and  gas  industry.   These  operations  were  discontinued  in  1989.  Since  1989,
Silverthorne  has  attempted  to  locate  acquisition  prospects  and  negotiate  an
acquisition.  Silverthorne's  pursuit of an acquisition  did not  materialize  until
August 20, 1999,    with   the   purchase   of   the   assets   of    Inter-American
Telecommunications  Holding Corporation (ITHC), which was accounted for as a reverse
acquisition.  The surviving  entity changed its name to Cognigen  Networks,  Inc. in
July 12, 2000.

Cognigen  Networks,  Inc.  (the  Company) is engaged in the  business  of  providing
telecommunications  products  and  services  to  worldwide  markets.  The  Company's
activities   include  selling  prepaid  calling  cards,   providing  call  switching
services,  and Internet  marketing  of  telecommunications  products  and  services,
pagers, and computers.

Principles of Consolidation

These  consolidated  financial  statements  include the  accounts of  Inter-American
Telecommunications  Corporation (ITHC),  Cognigen  Corporation  (Cognigen),  and the
Company.  Also  included  are the  accounts  and results of  operations  of Cognigen
Switching  Technologies,  Inc.  (Cognigen  Switching)  from April 15,  2000  through
year-end.   All  significant   intercompany  balances  and  transactions  have  been
eliminated in consolidation.

The  comparative  June 30, 1999,  financial  statements  reflect those of ITHC,  the
accounting  acquirer,  in  the  reverse  acquisition  (Note  8).  ITHC  was  in  the
development stage in prior years.

Cash and Cash Equivalents

For  purposes of reporting  cash flows,  cash and cash  equivalents  include cash on
hand and in checking  and savings  accounts at financial  institutions.  On occasion
these balances exceed  federally  insured limits.  At June 30, 2000, the Company had
approximately $709,000 in excess of federally insured limits.

Inventories

Inventory  consists  of  advertising  supplies  and prepaid  calling  cards held for
resale and is valued at the lower of cost or  market.  Calling  cards are  purchased
from a variety of vendors at a  discount  from the face  value.  Excise tax of 3% of
the face value is paid at the time of purchase.  When the calling card is sold,  the
excise tax is collected and offset against the prepaid excise tax.

Property and Equipment

Property  and  equipment  are stated at cost.  Depreciation  is  provided  using the
straight-line  method  for  financial  reporting  purposes  at  rates  based  on the
following estimated useful lives:

                                                               Years
                                                             --------

    Furniture and fixtures                                     3 - 7
    Computer equipment                                         3 - 5
    Equipment                                                  3 - 5
    Leasehold improvements                                     3 - 5
    Capitalized software                                       3 - 5

Software  developed  to  support  the  self-replicating  Web  pages  used to  market
telecommunication  services and administer agents' sales and related commissions has
been  capitalized  according to the  provisions of AICPA  Statement of Position 98-1
"Accounting for Costs of Computer Software Developed or Obtained for Internal Use".

Intangible Assets

Intangible  assets  are  stated  at  cost  and  consist  of  goodwill  and  customer
databases.  Goodwill is amortized  using the  straight-line  method over five years.
Customer databases will be amortized over five years.

Valuation of Long-Lived Assets

The Company assesses  valuation of long-lived assets in accordance with Statement of
Financial  Accounting  Standards  (SFAS) No. 121,  Accounting  for the Impairment of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  disposed  of.  The  Company
periodically  evaluates the carrying value of long-lived assets to be held and used,
including  goodwill  and other  intangible  assets,  when  events and  circumstances
warrant  such a review.  The  carrying  value of a  long-lived  asset is  considered
impaired when the anticipated  undiscounted  cash flow from such asset is separately
identifiable  and is  less  than  its  carrying  value.  In  that  event,  a loss is
recognized  based on the amount by which the carrying  value exceeds the fair market
value of the long-lived asset.  Fair market value is determined  primarily using the
anticipated cash flows discounted at a rate commensurate with the risk involved.

Commissions Receivable

Commissions  receivable  represent amounts due from providers for  telecommunication
services  used  by  subscribers.  Typically  providers  pay  commissions  due to the
Company  forty-five  days  after  the  usage  month-end  to allow  for  billing  and
collection.

An  allowance  for  doubtful  accounts  of $0 and $25,000 at June 30, 1999 and 2000,
respectively,  has  been  established  by  the  Company  to  provide  for  potential
uncollectible  accounts  and  is  deemed  to be  adequate  by  management  based  on
historical results.

Commissions Payable

Commissions  payable  represent  amounts due to agents as commission  related to the
usage for which the Company is due commission  income from its providers.  It is the
Company's  policy to pay commissions to its agents only after receiving  commissions
due from its providers.  This policy results in approximately  two months commission
payable at any point in time.

Income Taxes

The Company uses the asset and  liability  method of  accounting  for income  taxes.
Under the asset and  liability  method,  deferred  tax  assets and  liabilities  are
recognized for the future tax consequences  attributable to differences  between the
financial  statement  carrying  amounts of existing assets and liabilities and their
respective  tax basis.  Deferred  tax  assets and  liabilities  are  measured  using
enacted tax rates  expected to be recovered  or settled.  The effect on deferred tax
assets  and  liabilities  of a change  in tax rates is  recognized  in income in the
period that includes the enactment date.

Revenue Recognition

The Company records commission income when the underlying  telecommunication service
is rendered.  Commission income does not include amounts paid separately to carriers
for telecommunication services provided.

Calling card revenue is recorded when the calling  cards are shipped.  The Company's
policy is to delay shipment of calling cards for a two-week  period after receipt of
cash to allow for  processing.  This delay  results in  deferred  revenue,  which is
recorded as a liability  until the calling  cards are shipped.  Calling card revenue
includes amounts paid for the cost of the  telecommunications  services  provided by
third-party carriers.

Revenue from long distance phone services is recorded when services are rendered.

Use of Estimates

The  preparation of consolidated  financial  statements in conformity with generally
accepted   accounting   principles   requires   management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets  and  liabilities  and
disclosure  of contingent  assets and  liabilities  at the date of the  consolidated
financial  statements and the reported  amounts of revenues and expenses  during the
reporting period.  Actual results could differ from those estimates.

Loss Per Share

Loss per  common  share  has been  computed  by  dividing  net loss by the  weighted
average  number of shares of common  stock  outstanding  during the  period.  Shares
issued  in  the  initial   capitalization  of  the  Company  have  been  treated  as
outstanding since inception.

Advertising Costs

Advertising  costs are expensed as incurred.  Total  advertising costs for the years
ended June 30, 2000 and 1999, were $200,127 and $0, respectively.

Recently Issued Accounting Pronouncements

SFAS No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging  Activities"
requires  companies  to  record  derivatives  on the  balance  sheet  as  assets  or
liabilities,  measured at fair market value.  Gains or losses resulting from changes
in the values of those  derivatives  are  accounted  for depending on the use of the
derivative  and whether it qualifies  for hedge  accounting.  The key  criterion for
hedge  accounting  is that the  hedging  relationship  must be highly  effective  in
achieving  offsetting  changes  in  fair  value  or  cash  flows.  SFAS  No.  133 is
effective for fiscal years beginning after June 15,  2000.  Management believes that
the  adoption  of SFAS  No.  133  will  have no  material  effect  on the  Company's
financial statements.

In March 2000, the FASB issued FASB  Interpretation  No. 44, "Accounting for Certain
Transactions  Involving Stock  Compensation" ("FIN 44"), which was effective July 1,
2000, except that certain conclusions in this  Interpretation,  which cover specific
events that occur after either  December 15, 1998 or January 12, 2000 are recognized
on a  prospective  basis  from  July 1,  2000.  This  Interpretation  clarifies  the
application  of APB  Opinion  25 for  certain  issues  related  to stock  issued  to
employees.  The Company believes its existing stock based compensation  policies and
procedures are in compliance with FIN 44, and therefore,  the adoption of FIN 44 had
no material impact on the Company's  financial  condition,  results of operations or
cash flows.

In December  1999,  the  Securities  and Exchange  Commission  ("SEC")  issued Staff
Accounting  Bulletin  ("SAB") 101,  which  provides  guidance on applying  generally
accepted accounting  principles to selected revenue  recognition issues.  Management
believes that the Company's revenue recognition  policies are in accordance with SAB
101.

**Note 2 - Basis of Presentation**

All common  stock  share  amounts  have been  retroactively  adjusted to reflect the
ratio of shares issued by the Company in connection with the reverse  acquisition of
ITHC  (Note 7).  The ratio of shares  issued of  5,688.57  shares of the  Company to
each share of ITHC stock represents  54,041,397 newly issued shares and shares to be
issued in exchange for 9,500 shares of ITHC common stock.

All per  share  amounts  reflect  the  37,298,444  shares  the  Company  has a legal
obligation  to issue in the future in  connection  with the reverse  acquisition  of
ITHC, and have been treated as outstanding from the date of acquisition (Note 12).

**Note 3 - Amortization of Customer Databases**

The Company  changed  its method of  amortizing  customer  databases  during  fiscal
2000.  Previously  the  Company  did not begin to amortize  its  customer  databases
until the  migration  of these  names into  active  customers  had  begun.  However,
effective July 1, 1999 as a result of the significant  uncertainties surrounding the
commencement  of the migration  process,  the Company has reflected  amortization of
these databases over their estimated  remaining  useful lives of 4.33 years (through
November 1, 2003).  The effects of this  correction on previously  reported  amounts
was as follows:

                                               Net             Loss        Stockholders'
                                              Loss          Per Share          Equity
                                           -----------     ------------     -------------

June 30, 2000, as previously reported      $(7,965,186)    $   (.10)        $ 5,661,860

Correction to amortization expense            (300,000)        (.01)           (300,000)
                                           -----------     ------------     -------------

June 30, 2000, as adjusted                 $(8,265,186)    $   (.11)        $ 5,361,860
                                           ===========     ============     =============

The effect of this correction on previously  reported  quarterly amounts was $75,000
of additional amortization expense as follows:

                                               Net             Loss        Stockholders'
                                              Loss          Per Share          Equity
                                           -----------     ------------     -------------

Three months ended  September 30, 1999,
 as reported                               $(6,270,675)    $   (.26)        $   206,896
                                           ===========     ============     =============

Three months ended  September 30, 1999,
 as adjusted                               $(6,345,675)    $   (.26)        $   131,896
                                           ===========     ============     =============

Three months  ended  December 31, 1999,
 as reported                               $  (347,414)    $   (.01)        $ 4,132,413
                                           ===========     ============     =============

Three months  ended  December 31, 1999,
 as adjusted                               $  (422,414)    $   (.01)        $ 3,982,413
                                           ===========     ============     =============

Six months ended  December 31, 1999, as
 reported                                  $(6,618,089)    $   (.23)        $ 4,132,413
                                           ===========     ============     =============

Six months ended  December 31, 1999, as
 adjusted                                  $(6,768,089)    $   (.24)        $ 3,982,413
                                           ===========     ============     =============

Three months  ended March 31, 2000,  as
 reported                                  $  (527,989)    $   (.01)        $ 3,617,291
                                           ===========     ============     =============

Three months  ended March 31, 2000,  as
 adjusted                                  $  (602,989)    $   (.01)        $ 3,392,291
                                           ===========     ============     =============

Nine months  ended March 31,  2000,  as
 reported                                  $(7,146,078)    $   (.09)        $ 3,617,291
                                           ===========     ============     =============

Nine months  ended March 31,  2000,  as
 adjusted                                  $(7,371,078)    $   (.10)        $ 3,392,291
                                           ===========     ============     =============

**Note 4 - Property and Equipment**

Property and Equipment consists of the following:
                                                             June 30,
                                                               2000
                                                           ------------

    Furniture and fixtures                                 $    19,063
    Computer equipment                                         137,905
    Equipment                                                  373,281
    Leasehold Improvements                                     180,996
    Software                                                   138,167
                                                           ------------
                                                               849,412
    Less accumulated depreciation                             (363,121)
                                                           ------------

           Total                                           $   486,291
                                                           ============

**Note 5 - Notes Payable**

Notes payable consists of the following:
                                                                      June 30,
                                                            --------------------------
                                                                1999             2000
                                                            ----------      ----------
8%  unsecured  promissory  notes  payable  to a  related
 entity,  principal  and interest  due upon  maturity at
 July 1, 2000.                                              $  500,000      $  200,000

8%  unsecured  promissory  note  payable  to  a  related
 entity,  principal  and interest  due upon  maturity at
 July 1, 2000.                                                 800,000         310,000

Subsequent  to year-end,  the above notes were  extended
 to July 1, 2001.

12%  secured   promissory  note  payable  to  a  related
 entity,  principal  and interest  due upon  maturity at
 February 12, 2001.                                                 -          315,000
                                                            ----------      ----------
                                                             1,300,000         825,000
Less current portion                                          (700,000)       (315,000)
                                                            ----------      ----------

                                                            $  600,000      $  510,000
                                                            ==========      ==========

**Note 6 - Capital Lease Obligations**

The Company leases certain  equipment under  non-cancelable  lease  agreements.  The
monthly payments on these leases range from $332 to $7,227,  including interest, and
these leases  expire in various  years  through  2003.  The property  under  capital
leases as of June 30, 2000, has a cost of $266,378 and  accumulated  depreciation of
$185,953.

The future minimum lease payments under capital leases and the net present values
of the future minimum lease payments are as follows:

      Year Ending June 30,                                     Amount
      --------------------                                 ------------

            2001                                           $   114,417
            2002                                                13,024
            2003                                                 3,372
                                                           ------------
            Total                                              130,813
            Less amount representing interest                  (12,110)
                                                           ------------
            Present value of minimum lease payments            118,703
            Less current portion                              (106,551)
                                                           ------------

            Long-term capital lease obligation             $    12,152
                                                           ============

**Note 7 - Income Taxes**

Deferred tax liabilities and assets are determined  based on the difference  between
the financial  statement assets and liabilities and tax basis assets and liabilities
using the tax  rates in effect  for the year in which  the  differences  occur.  The
measurement  of deferred tax assets is reduced,  if necessary,  by the amount of any
tax benefits that, based on available evidence, are not expected to be realized.

The components of the provision for income tax expense (benefit) are as follows:

                                                                      June 30,
                                                             ------------------------
                                                                1999            2000
                                                             -----------     --------

   Current                                                   $      -        $      -
   Deferred                                                    (16,531)         16,531
                                                             ---------       ---------

                                                             $ (16,531)      $  16,531
                                                             =========       =========

The deferred  income tax assets and  liabilities  result  primarily  from  differing
depreciation  and  amortization  periods of certain  assets,  provision for doubtful
accounts,   provision  for  product  returns  and  allowances,  net  operating  loss
carryforwards  and the  recognition  of certain  expenses  for  financial  statement
purposes and not for tax purposes.  The Company has approximately  $1,913,000 of net
operating loss carryforwards, which expire through 2020 if unused.

The net current and long-term  deferred tax liabilities in the accompanying  balance
sheet include the following items:

                                                                      June 30,
                                                             ------------------------
                                                                1999            2000
                                                             -----------     --------

   Current deferred tax asset                               $       -       $    9,325
   Current deferred tax liability                                   -               -
   Valuation allowance                                              -           (9,325)
                                                             ===========     =========

                                                            $       -       $       -
                                                             -----------     --------

   Long-term deferred tax asset                             $   16,531      $  713,487
   Long-term deferred tax liability                                 -               -
   Valuation allowance                                              -         (713,487)
                                                             -----------     --------

                                                            $   16,531      $       -
                                                             ===========     =========

Rate Reconciliation

The  reconciliation  of  income  tax  expense  (benefit)  by  applying  the  Federal
statutory rates to the Company's effective income tax rate is as follows:

                                                                      June 30,
                                                             ------------------------
                                                                1999            2000
                                                             -----------     --------

Federal statutory rate                                           (25.0)%         (34.0)%
State tax on income, net of federal income tax benefit            (3.3)           (3.3)
Nondeductible expenses                                             3.9            28.1
Valuation allowance                                                 -              9.4
                                                             -----------     --------

                                                                 (24.4)%           0.2%
                                                             ===========     ========

**Note 8 - Business Acquisitions**Acquisition of Customer Databases

On  November  4,  1998,  ITHC  acquired  a customer  database  of 54,034  individual
subscribers  from  TelKiosk  Inc.  (TelKiosk)  in exchange  for 500  (2,844,285,  as
adjusted),  shares of ITHC common  stock,  and a $500,000  promissory  note  payable
November 4, 1999 (and  subsequently  extended until July 1, 2001 as to the remaining
balance  due).  TelKiosk is  partially  owned by a former  officer  and  director of
ITHC. This is an  electronically  archived database  containing  54,034  individual,
comma-delimited  records of  residential  and  business  accounts  of long  distance
telephone  subscribers  using  the  callback  or   call-reorigination   system.  The
domiciles  of these  accounts  are  located  primarily  outside  the United  States,
including Japan, Italy, France,  Argentina,  Brazil,  Spain, Israel,  Russia and CIS
countries,  Guatemala,  Venezuela and  Singapore.  The customers in the database use
primarily U.S. origination - foreign termination callback long distance services.

Also on November 4, 1998,  ITHC  acquired a customer  database of 41,415  individual
subscribers  from Combined  Telecommunications  Consultancy,  Ltd. (CTC) in exchange
for 1,000  (5,688,570,  as  adjusted),  shares of ITHC common  stock and an $800,000
promissory note payable  November 4, 1999 (and  subsequently  extended until July 1,
2001 as to the remaining  balance due).  CTC is partially  owned by a former officer
and  director  of  ITHC.  This is an  electronically  archived  database  containing
41,415 individual,  comma-delimited  records of residential and business accounts of
long  distance  telephone  subscribers.  The  domiciles  of these  accounts  are all
located  within the  United  States.  Approximately  90% of these  accounts  have an
affinity  to a foreign  country,  and the  accounts  are held by persons of Russian,
Romanian,  Czech,  Slovakian,  Slovenian,  Polish,  Bulgarian,  German, Japanese and
Filipino national origin.

These  customer  databases were  originally  compiled in October 1998. The databases
were originally  purchased by CTC and Telkiosk in an arm's length  transaction  from
an   independent   international   long   distance   reseller  and   customer   base
consolidator.  The customer  databases were acquired in connection  with the initial
capitalization  of ITHC with the customer  databases  being  recorded at  $1,300,000
representing  predecessor  cost. The Company's  plans for the  solicitation  process
are  currently  underway and the Company  entered into an option  agreement  with an
entity  formed by the sellers of its customer  databases  (Note 13).  The  agreement
provides  that if the Company has not been able to  establish  at least 5,000 active
telecommunications  subscribers from the combined  databases by March 30,  2001, the
entity will repurchase the customer  databases from the Company allowing the Company
to recover its investment in these databases.

Total shares issued in connection with the  acquisition of these customer  databases
and the  initial  capitalization  of  ITHC  were  2,000  (11,377,140  as  adjusted),
including 500  (2,844,285 as adjusted)  shares issued to ITC in connection  with its
anticipated  backroom support function.  The 2,000  (unadjusted)  shares issued were
recorded at their nominal par value ($.001) of $20.

Cognigen Acquisition

On July 1, 1999,  ITHC entered into an  agreement  with  Cognigen to purchase all of
Cognigen's net assets.  The purchase price included  31,286,894 shares, as adjusted,
of ITHC common stock and a $300,000  note payable.  Additionally,  ITHC entered into
a four-year employment contract with the founder of Cognigen,  which provides for an
annual base salary of $175,000.  The  transaction  was  accounted for as a purchase.
ITHC acquired net assets of $86,285 and recorded goodwill of $213,770.  The goodwill
is being amortized over a life of 5 years.

Reverse Acquisition

On August 20, 1999, the Company  completed the  acquisition of all of the net assets
of ITHC in exchange for up to 49,041,397  shares of the Company's  common stock. For
financial  statement  purposes,  this business  combination  was accounted for as an
additional  capitalization  of ITHC (a  reverse  acquisition  in which  ITHC was the
accounting  acquirer).  ITHC is considered  the surviving  entity and the historical
financial  statements  prior to the  acquisition  are those of ITHC.  The 15,757,047
shares  reflected in the statement of  stockholders'  equity reflect those shares of
Company's common stock  outstanding  immediately  prior to the reverse  acquisition.
The  Company's net book value prior to the  transaction  was $0. The issuance of the
stock must be  completed in two  closings  due to the limited  amount of  authorized
stock  available for issuance  under the Company's  articles of  incorporation.  The
first  closing  resulted in the issuance of  11,742,953  shares while the  remaining
37,298,444  shares will be issued after the authorized number of shares is increased
or after a reverse stock split is effected.  The Company issued  5,000,000 shares of
the Company's  common stock as finders' fees in connection  with the  transaction to
unrelated  individuals.  The shares  were valued at  $1,900,000,  or $.38 per share,
and reported on a net basis in additional paid-in-capital.

Additionally on August 20, 1999, ITHC purchased  12,602,431  shares of the Company's
common  stock for a price of $190,000  from  certain  existing  shareholders  of the
Company.  This  was  recorded  as a charge  to  paid-in  capital  in the  amount  of
$190,000.

The Company is the legal  survivor and changed its name to Cognigen  Networks,  Inc.
in July 2000.

Cognigen Switching Acquisition

On April  15,  2000,  the  Company  purchased  the  outstanding  stock  of  Cognigen
Switching  (f.k.a.  Aquila  International  Telecommunications,  Inc.) for  2,041,445
shares and  $590,000 in previous  cash  advances to Cognigen  Switching  for a total
purchase  price of  $3,287,397.  This  transaction  was accounted for as a purchase.
Intangible   assets  acquired  are  amortized  over  five  years.   The  results  of
operations  have  been  included  from  the  date  of  acquisition  forward  in  the
accompanying financial statements.

Purchase Price Allocation and Pro Forma Results

The combined  aggregate  purchase  price of the  Company's  acquisition  of Cognigen
Switching  $(3,287,397)  and Cognigen  $(300,055)  have been allocated to the assets
acquired  and  liabilities  assumed  based on the fair market  values on the date of
acquisition, as follows:

   Cash                                                     $   34,900
   Accounts receivable                                         318,521
   Property and equipment                                      205,777
   Goodwill - Cognigen                                         213,770
   Goodwill - Cognigen Switching                             3,596,164
   Deposits and other                                          103,719
   Accounts payable                                            (41,910)
   Accrued expenses                                           (408,872)
   Debt                                                       (434,617)
                                                            ----------

                                                            $3,587,452
                                                            ==========

The following  table  depicts the unaudited pro forma results of the Company  giving
effect to the  Company's  two  acquisitions  in 1999 and 2000 as if they occurred on
July 1, 1998. The unaudited pro forma  information is not necessarily  indicative of
the results of  operations  of the Company  had these  acquisitions  occurred at the
beginning  of the  years  presented,  nor is it  necessarily  indicative  of  future
results.

                                                                      June 30,
                                                             ---------------------------
                                                                1999            2000
                                                             -----------     -----------
                                                            (unaudited)

Revenue                                                     $ 1,808,939      $ 4,033,864
                                                            ===========      ===========

Net loss                                                    $(1,600,073)     $(9,017,938)
                                                            ===========      ===========

Loss per share                                              $      (.05)     $      (.11)
                                                            ===========      ===========

**Note 9 - Stockholders' Equity**Stock Issuances

In  connection  with certain ITHC  executive  employment  agreements  11,377,366  as
adjusted  shares  of ITHC  stock  valued  at  $30,000  were  issued in July 1999 for
services  provided by those key employees.  In addition,  31,286,894  shares of ITHC
stock were  issued in  connection  with the  acquisition  of the assets of  Cognigen
(Note 7).

During the 6 months ended December 31, 1999, the Company received  subscriptions for
12,489,102  shares  of the  Company's  common  stock at  prices  of $0.38  per share
(11,562,302  shares) and $1.60 per share  (926,800  shares)  from  various  persons.
These shares were issued by March 31, 2000.  The Company  agreed to pay a fee of 12%
of the total  proceeds  received  from the sale of the common stock to a distributor
and issue warrants to purchase up to a maximum of 1,500,000  shares of the Company's
common stock to various  persons in connection  with the sales.  These warrants were
valued at  $347,400  based on a value of $.23 per  warrant.  This fee was  accounted
for as a cost of the  sale of  those  common  shares.  The  Company  paid a total of
$727,474  related  to the  total  fee due and  other  expenses  associated  with the
offering.

Stock Options

In August 1999,  the Company  issued  32,400,000  options  entitling  the holders to
purchase  the  Company's  common  stock at  $0.46  per  share.  The  options  vested
immediately  and  expire  five  years from the date  issued.  Most of these  options
cannot be  exercised  until the  Company  amends it  articles  of  incorporation  or
affects  a  reverse  split  of its  common  stock so that it has  sufficient  shares
available  for issuance  upon the  exercise of these  options.  26,000,000  of these
options were issued to non-employees for various professional  services provided (of
which  12,000,000  were  issued to a trust of which the  founder  is a  beneficiary)
while the  remaining  options were issued to employees  and  directors.  The Company
has adopted the  disclosure-only  provisions  of Statement  of Financial  Accounting
Standards  No. 123,  "Accounting  for  Stock-Based  Compensation."  Accordingly,  no
compensation  cost has been recognized for the stock options issued to employees and
directors.  $6,022,004 of  compensation  expense was recorded in connection with the
options granted to  non-employees  based on a value of $.23 per option.  Assumptions
used in the valuation of stock  options  include  volatility of 109%,  3-year lives,
dividend yield of 0% and a risk-free rate of 5.5%.  The weighted  average  remaining
lives are 2.17 years with weighted average exercise prices of $.46.

The Company has adopted the  disclosure-only  provisions  of  Statement of Financial
Accounting  Standards  (SFAS) No. 123,  "Accounting for  Stock-Based  Compensation."
Accordingly,  no  compensation  cost has been  recognized for stock options  issued.
Had  compensation  cost for the Company's stock options issued been determined based
on the fair value at the grant date for awards  consistent  with the  provisions  of
SFAS No. 123, the  Company's  net loss and loss per share would have been  increased
to the pro forma amounts indicated below:

                                                                      June 30,
                                                             ---------------------------
                                                                1999            2000
                                                             -----------     -----------

Net loss - as reported                                       $(51,283)       $(8,265,180)
Net loss - pro forma                                         $(51,283)       $(9,777,529)
Basic loss per share - as reported                           $   (0.0)       $     (0.11)
Basic loss per share - pro forma                             $   (0.0)       $     (0.12)

**Note 10 - Non-Cash Investing and Financing Activities**

During the year ended June 30, 2000:

The Company  acquired net assets of $86,230 and  recorded  goodwill in the amount of
$213,770 by issuing a note for $300,000 in  connection  with a business  acquisition
(Note 8).

The  Company  acquired  the  outstanding  common  stock  of a  business  by  issuing
2,041,445 shares valued at $2,697,397 and paying cash of $590,000 (Note 8).

During the year ended June 30, 1999:

The Company  issued notes  totaling  $1,300,000  in exchange  for two  long-distance
telephone subscriber databases valued at $1,300,000 (Note 8).

**Note 11 - Operating Leases**

The Company leases office space under operating lease agreements,  which provide for
aggregate monthly payments of $11,274 and expire through March 2003.

        Year Ending June 30,                                    Amount
        --------------------                                   --------

               2001                                            $ 87,688
               2002                                              62,049
               2003                                              12,514
                                                               --------

                                                               $162,251
                                                               ========

Rent expense under these  operating  leases totaled  $59,478 and $0 during the years
ended June 30, 2000 and 1999, respectively.

**Note 12 - Commitments and Contingencies**Commitments*Employment Agreements*

During  the year  ended  June 30,  2000,  the  Company  entered  into an  employment
agreement with one key employee.  This  employment  agreement runs over a three-year
period  starting in October of 1999 and provides  for an annual  salary of $125,000.
If the Company  terminates the agreement  without cause it would be obligated to pay
all remaining amounts under the remaining terms of the contract.

In August of 2000, the Company  entered into additional  employment  agreements with
other key  employees.  Under  these  agreements,  the  employees  are paid an annual
salary ranging from $100,000 to $120,000,  receive  bonuses of $100,000 each,  which
have been pre-paid and are earned  prorata over the two-year terms of the agreements
and the  agreements  are  subject to  termination  with cause (as  defined).  If the
employee  terminates  the  employee's  agreement  without  cause  or if the  Company
terminates  the  agreement  with cause,  the employee  would be obligated to pay all
remaining amounts due under the remaining terms of the agreement.

*Consulting Agreements*

The Company also has consulting  agreements with two individuals,  which provide for
annual  compensation  of  $175,000  and  $120,000  and have  terms of four and three
years, respectively.

Contingencies

The  Company  has an  obligation  to issue  37,298,444  shares  of  common  stock in
connection  with the reverse  acquisition  described in Note 7. The Company also has
32,400,000  stock  options and  warrants to purchase up to  1,500,000  shares of the
Company's  common  stock   outstanding.   Currently,   the  Company  does  not  have
sufficient  authorized  capital to legally issue these additional common shares. The
holders of options and  warrants  and those  entitled to receive  shares in a second
future  closing are aware of the Company's lack of authorized  capital.  The Company
is  using  its  best  efforts  to  obtain  shareholder  approval  at  a  meeting  of
shareholders  to increase the  authorized  capital of the Company.  Management  does
not believe this  condition  will have a material  adverse  effect as the  Company's
financial condition.

**Note 13 - Subsequent Events**Investment in Customer Databases

In October 2000, the Company entered into an option  agreement with an entity formed
by the  sellers  of its  customer  databases  described  in  Note 8.  The  agreement
provides  that if the Company has not been able to  establish  at least 5,000 active
telecommunication  subscribers  from the combined  databases by March 30, 2001,  the
Company has the option to require the entity to  repurchase  the customer  databases
from the Company in an amount not below its original  investment  in such  databases
through the  forgiveness  of any  outstanding  remaining  debt and accrued  interest
which  totaled  approximately  $604,000 at October  2000,  with the remainder of the
balance  made up by the return of  Company  shares  held by the  sellers at the then
market value.  This  agreement was reached in an effort by management to protect the
Company  and  its  shareholders  interests  in  such  customer  databases.   If  the
transformation  of at least 5,000 names into active  customers is not reached by the
Company,  the  Company  will be able to recover  its  original  investment  in these
databases  collectively.  Management  of the Company  believes it will be successful
in the activation of at least 5,000  customer  names.  Management  believes that the
signing of this  agreement  was a positive  step in protecting  the  investment  the
Company and its shareholders have made in acquiring these databases.

PART III
**Item 10.  Executive Compensation.**

      The following table provides  certain  information  pertaining to the
compensation  we and our  subsidiary  paid  during  our last  three  fiscal
years for  services  rendered  by David L.  Jackson,  Jimmy L.  Boswell and
Darrell  H.  Hughes,  all of whom were our  chief  executive  officers  for
certain periods during our fiscal year ended June 30, 2000.

**Annual Compensation**
                                                                         Long Term
                                                                       Compensation
                                                                          Awards
                                                                       -------------
                           Fiscal                            Other
                            Year                            Annual       Securities
    Name and                Ended                            Compen-      Underlying        All Other
Principal Position         June 30   Salary($)    Bonus($)   sation($)    Options(#)     Compensation($)
------------------        ---------  ---------   ---------  ----------   -----------    ----------------

David L. Jackson             2000    $ 29,000      --  --     --  --     1,600,000(a)      $24,000(b)
President and                1999      --  --      --  --     --  --        --  --           --  --
Treasurer until              1998      --  --      --  --     --  --        --  --           --  --
August 20, 1999
and Vice
President and
Secretary
thereafter

Jimmy L. Boswell             2000    $103,333      --  --     --   --    1,600,000(a)        --   --
President and                1999      --  --      --  --     --   --       --  --           --   --
Chief                        1998      --  --      --  --     --   --       --  --           --   --
Operating
Officer from
August 20, 1999,
through June 30,
2000

Darrell H. Hughes            2000    $ 88,542      --  --     --   --    1,600,000(a)        --  --
President since              1999      --  --      --  --     --   --       --  --           --  --
July 2000 and Chief          1998      --  --      --  --     --   --       --  --           --  --
Executive Officer since
October 13, 1999

      (a)   On August 25, 1999,  Messrs.  Jackson,  Boswell and Hughes were
each  granted  a  five-year  option  to  purchase  1,600,000  shares of our
common  stock at an  exercise  price of $0.46.  Each  option  is  currently
exercisable.  However,  we do not have a  sufficient  number  of  shares of
our common stock  authorized  for such persons to be able to exercise their
options.  We plan to hold a  shareholders  meeting  in the next few  months
to propose the adoption of an  amendment  to our Articles of  Incorporation
to  increase  the  number of shares of common  stock we are  authorized  to
issue.

      (b)   The $24,000 was paid as  consulting  fees prior to the time Mr.
Jackson became one of our employees.

**Option Grants To Executive Officers**

      The  following  table  sets  forth  the  individual  grants  of stock
options  made by us during our last  fiscal  year ended June 30,  2000,  to
Messrs. Jackson, Boswell and Hughes:

**Number of     Percent of
                     Securities   Total Options
                     Underlying    Granted to
                      Options     Employees in
        Name          Granted      Fiscal Year        Exercise Price     Expiration Date**
------------------  ------------  --------------    ------------------  ----------------

David L. Jackson    1,600,000             25%             $0.46             8/25/2004

Jimmy L. Boswell    1,600,000             25%             $0.46             8/25/2004

Darrell H. Hughes   1,600,000             25%             $0.46             8/25/2004

      The  following  table  provides   information  with  respect  to  the
unexercised  options to purchase our common stock held by Messrs.  Jackson,
Boswell and Hughes as of June 30, 2000, the end of our last fiscal year:

                    **Number of Securities
                   Underlying Unexercised
                   Options at Fiscal Year    Value of Unexercised In-the-Money
                            End                 Options at Fiscal Year End
      Name        Exercisable/Unexercisable    Exercisable/Unexercisable(1)**
----------------  -------------------------  ----------------------------------

David L. Jackson       1,600,000 / 0                   $864,000 / $0

Jimmy L. Boswell       1,600,000 / 0                   $864,000 / $0

Darrell H. Hughes      1,600,000 / 0                   $864,000 / $0

      (1)   Calculated by multiplying  the difference  between the exercise
price and the  closing  bid  price of $1.00  per share on June 30,  2000 by
the applicable  number shares.  Does not give  consideration to commissions
or other expenses of sale.

      Messrs.  Jackson,  Boswell and Hughes did not exercise any options to
purchase  shares of our common  stock during the fiscal year ended June 30,
2000.

**Stock Option Plan**

      We plan to adopt an incentive  and  non-statutory  option  plan.  The
plan will  authorize  the granting of options to our  officers,  directors,
employees and consultants to purchase shares of our common stock.

**Item 11.  Security Ownership of Certain Beneficial Owners and Management.**

      The  following  table sets forth as of October 11,  2000,  the number
of shares of our  outstanding  common stock  beneficially  owned by each of
our current  directors,  sets forth the number of shares of our outstanding
common stock  beneficially  owned by all of our current executive  officers
and  directors  as a group,  and sets  forth  the  number  of shares of our
outstanding  common stock owned by each person who owned of record,  or was
known to own  beneficially,  more  than  five  percent  of the  outstanding
shares of our common stock:

                                 **Amount and Nature of
                                     Beneficial
Name and Address                     Ownership (1)             Percent of Class**
----------------------------     ---------------------       ------------------

Jimmy L. Boswell                  2,618,468(2)                     5.4%
Suite 304
3220 South Higuera Street
San Luis Obispo, CA 93401

Troy D. Carl                          -                            0.0%
6751-B Academy Road, N.E.
Albuquerque, New Mexico 87109

Darrell H. Hughes
Suite 210                         4,148,883(3)                     8.5%
7001 Seaview Avenue N.W.
Seattle, WA 98117

David L. Jackson                  2,460,471(4)                     5.1%
3707 Calle Cortejo
Rancho Santa Fe, CA 92091

David G. Lucas                    2,618,468(5)                     5.4%
Suite 304
3220 South Higuera Street
San Luis Obispo, CA  93401

All current executive officers
and directors as a group
(5 persons)                      11,846,290(6)                    22.2%
persons)

Cognigen Corporation
2608 Second Avenue, Suite 108    13,492,864(7)                    28.7%
Seattle, Washington 98121

Kevin E. Anderson
2608 Second Avenue, Suite 108    24,492,864(8)                    42.2%
Seattle, Washington 98120

Anderson Family Trust #1
2608 Second Avenue, Suite 108    24,492,864(8)(9)                 42.2%
Seattle, Washington 98120

Peter Tilyou
2608 Second Avenue, Suite 108    28,492,656(10)(11)                42.2%
Seattle, Washington 98120

      (1)...Except as  indicated  below,  each  person  has sole and voting
and/or investment power over the shares listed.

      (2)...Includes  1,600,000  shares  underlying an option.  Mr. Boswell
currently  owns  approximately  2.6% of the  outstanding  common  stock  of
ITHC.  Pursuant  to the terms of the  agreement  whereby  we  acquired  the
assets of ITHC, ITHC will be entitled to receive  37,298,444  shares of our
common stock.  At this time,  we do not have a sufficient  number of shares
of common stock  authorized  to issue the  37,298,444  shares of our common
stock  to ITHC.  We plan to hold a  shareholders'  meeting  in the next few
months  to  propose  the  adoption  of an  amendment  to  our  Articles  of
Incorporation  to increase our  authorized  common stock.  Mr. Boswell does
not have sole or shared voting and/or  investment  power over the shares of
our  common  stock  that  will be  owned by ITHC.  Therefore,  Mr.  Boswell
disclaims  beneficial  ownership of the  approximate  981,535 shares of our
common  stock  that  will be  represented  by Mr.  Boswell's  ownership  of
approximately  2.6% of the  outstanding  common stock of ITHC.  The 981,535
shares are not included in the above table.

      (3)...Includes  1,600,000  shares  underlying  an option.  Mr. Hughes
currently  owns  approximately  10.5% of the  outstanding  common  stock of
ITHC.  Pursuant  to the terms of the  agreement  whereby  we  acquired  the
assets of ITHC, ITHC will be entitled to receive  37,298,444  shares of our
common stock.  At this time,  we do not have a sufficient  number of shares
of common stock  authorized  to issue the  37,298,444  shares of our common
stock  to ITHC.  We plan to hold a  shareholders'  meeting  in the next few
months  to  propose  the  adoption  of an  amendment  to  our  Articles  of
Incorporation  to increase our  authorized  common  stock.  Mr. Hughes does
not have sole or shared voting and/or  investment  power over the shares of
our  common  stock  that  will be  owned  by ITHC.  Therefore,  Mr.  Hughes
disclaims beneficial  ownership of the approximate  3,926,150 shares of our
common  stock  that  will  be  represented  by  Mr.  Hughes'  ownership  of
approximately   10.5%  of  the  outstanding   common  stock  of  ITHC.  The
3,926,150 shares are not included in the above table.

      (4)...Includes  1,600,000  shares  underlying an option.  Mr. Jackson
currently  owns  approximately  3.5% of the  outstanding  common  stock  of
ITHC.  Pursuant  to the terms of the  agreement  whereby  we  acquired  the
assets of ITHC, ITHC will be entitled to receive  37,298,444  shares of our
common stock.  At this time,  we do not have a sufficient  number of shares
of common stock  authorized  to issue the  37,298,444  shares of our common
stock  to ITHC.  We plan to hold a  shareholders'  meeting  in the next few
months  to  propose  the  adoption  of an  amendment  to  our  Articles  of
Incorporation  to increase our  authorized  common stock.  Mr. Jackson does
not have sole or shared voting and/or  investment  power over the shares of
our  common  stock  that  will be  owned by ITHC.  Therefore,  Mr.  Jackson
disclaims beneficial  ownership of the approximate  1,295,629 shares of our
common  stock  that  will be  represented  by  Mr. Jackson's  ownership  of
approximately   3.5%  of  the   outstanding   common  stock  of  ITHC.  The
1,295,629 shares are not included in the above table.

      (5)...Includes  1,600,000  shares  underlying  an option.  Mr.  Lucas
currently  owns  approximately  2.6% of the  outstanding  common  stock  of
ITHC.  Pursuant  to the terms of the  agreement  whereby  we  acquired  the
assets of ITHC, ITHC will be entitled to receive  37,298,444  shares of our
common stock.  At this time,  we do not have a sufficient  number of shares
of common stock  authorized  to issue the  37,298,444  shares of our common
stock  to ITHC.  We plan to hold a  shareholders'  meeting  in the next few
months  to  propose  the  adoption  of an  amendment  to  our  Articles  of
Incorporation  to increase  our  authorized  common  stock.  Mr. Lucas does
not have sole or shared voting and/or  investment  power over the shares of
our  common  stock  that  will be  owned  by  ITHC.  Therefore,  Mr.  Lucas
disclaims  beneficial  ownership of the  approximate  981,535 shares of our
common  stock  that  will  be  represented  by  Mr.  Lucas's  ownership  of
approximately  2.6% of the  outstanding  common stock of ITHC.  The 981,535
shares are not included in the above table.

      (6)...Includes the shares specified in the above footnotes.

      (7)...Cognigen  Corporation  currently  owns  approximately  57.9% of
the  outstanding  common  stock  of  ITHC.  Pursuant  to the  terms  of the
agreement  whereby we  acquired  the assets of ITHC,  ITHC will be entitled
to receive  37,298,444  shares of our  common  stock.  At this time,  we do
not have a  sufficient  number  of shares of  common  stock  authorized  to
issue the  37,298,444  shares of our common stock to ITHC.  We plan to hold
a  shareholders'  meeting in the next few months to propose the adoption of
an amendment to our Articles of  Incorporation  to increase our  authorized
common  stock.  Cognigen  Corporation  will be deemed to  beneficially  own
the  37,298,444  shares of our  common  stock that will be  represented  by
Cognigen   Corporation's   ownership   of   approximately   57.9%   of  the
outstanding  common stock of ITHC. The  37,298,444  shares are not included
in the above table.

      (8)...Includes   the  shares  owned  by  Cognigen   Corporation   and
11,000,000  shares of our common  stock  underlying  an option owned by the
Anderson  Family  Trust  #1.  Kevin E.  Anderson  has the sole  voting  and
investment  power  over  the  shares  of our  common  stock  owned by ITHC.
Kevin E.  Anderson and members of his family are the  beneficiaries  of the
Anderson   Family   Trust  #1  which  owns   approximately   98.9%  of  the
outstanding   common  stock  of  Cognigen   Corporation.   Therefore,   Mr.
Anderson may be deemed to  beneficially  own the  13,290,864  shares of our
common stock that Cognigen Corporation may be deemed to beneficially own.

      (9)...Represents  the  24,290,864  shares that Kevin E.  Anderson may
be deemed to beneficially own.

      (10)..Includes  the shares  owned by the  Anderson  Family  Trust #1,
915,080  shares owned by  Telkiosk,  Inc.,  750,000  shares  underlying  an
option   owned  by   Telkiosk,   1,288,712   shares   owned   by   Combined
Telecommunications   Consultancy,   Ltd.   ("CTC")  and  1,000,000   shares
underlying an option owned by CTC.  Peter Tilyou is the sole  trustee,  but
not  a  beneficiary,   of  the  Anderson   Family  Trust  #1.  As  managing
officer/director   of  CTC  and   Telkiosk,   Mr.  Tilyou  has  voting  and
investment  power over the shares of our common  stock  beneficially  owned
by CTC and  Telkiosk.  Mr.  Tilyou  is the  beneficial  owner of 33% of the
outstanding shares of Telkiosk and 25% of the outstanding shares of CTC.

      (11)..The  information  pertaining  to the shares of our common stock
beneficially  owned by CTC and Telkiosk and the  information  pertaining to
Peter  Tilyou's  relationship  to both and to the Anderson  Family Trust #1
is based on our  shareholder  records  and  information  provided  to us by
Peter Tilyou.

 ............On August  20,  1999,  we  completed  the first  closing of the
acquisition  of all of the  assets  of  ITHC  in  exchange  for  29,242,953
shares of our common  stock.  On  December  27,  1999,  we agreed with ITHC
that the  total  number  of  shares  of our  common  stock  that were to be
issued at the first closing was  11,742,953  shares rather than  29,242,953
shares and the total  number of shares to be issued at the  second  closing
was  37,298,444  shares.  Further,  we and ITHC made it clear  that we were
acquiring  all of the assets and  assuming all of the  liabilities  of ITHC
as of August 20, 1999.

      As a  result  of  ITHC's  receipt  of the  11,742,953  shares  of our
common  stock and a previous  purchase of  12,602,431  shares of our common
stock by ITHC  from  David L.  Jackson,  Patricia  A.  Jackson,  Karrie  R.
Jackson  and  Eric  J.  Sunsvold  for  a  total  of  $190,000,  ITHC  owned
24,345,384  shares,  or  what  would  have  been  approximately  75% of our
outstanding  shares of common  stock on August  20,  1999.  We loaned  ITHC
$190,000  to  purchase  the  12,602,431  shares.  The loan has not yet been
repaid.  In May 2000,  ITHC  distributed  the remaining  24,195,384  shares
pro rata to its shareholders.

      The second  closing  between us and ITHC will be held at such time as
we have enough  additional  shares  authorized  to complete the issuance of
the  additional  37,298,444  shares to ITHC. We  understand  that ITHC will
then distribute the 37,298,444 shares pro rata to its shareholders.

      The assets of ITHC  consisted  of  electronically  archived  customer
databases  consisting of approximately  95,000  individual  residential and
business  long-distance  telephone  service  subscriber  accounts;  agency,
reseller  and  other  agreements  and  contracts  ITHC had  with  carriers,
switched   resellers,   unswitched   resellers,   consolidators   or  other
providers of  long-distance  and local telephone  service;  ITHC's accounts
receivable,   commissions  receivable,   future  commissions  that  may  be
payable  from  any  of  the  carriers,   switched   resellers,   unswitched
resellers,  consolidators  or other  providers of  long-distance  and local
telephone  service;  ITHC's  computer  software,  proprietary  programs and
applications,   computers,   monitors,   peripherals,   printers,  copiers,
telephone  PABX systems,  office  furniture and  fixtures,  office  leases;
customer  data  bases,  customer  lists and print  and  electronic  records
relating  to  customers;   ITHC's   inventories   and  orders  for  prepaid
telephone cards;  ITHC's new accounts;  ITHC's websites,  pages,  links and
agreements  as  well  as  ITHC's  Internet  domains  and  email  addresses;
agreements  with ITHC's agents and subagents;  exclusive use and control of
the name "Cognigen" and its attendant  copyright,  trade name and trademark
and  service  mark  registrations;  ITHC's  intellectual  property;  ITHC's
lines  of  credit  with   carriers,   prepaid  card   providers,   switched
resellers,   switchless   resellers  and  other   providers  of  local  and
long-distance  phone service,  ITHC's cash and all of the outstanding stock
of   Inter-American   Telecommunications   Corporation,   a   non-operating
subsidiary of ITHC.

      ITHC,  which was  incorporated  in July 1998,  acquired the assets it
transferred  to us for a total of  $1,600,000 in  promissory  notes,  which
were  assumed  by us,  and  7,500  shares  of  ITHC's  common  stock.  ITHC
originally  acquired  the  assets  in 1998  and  1999  from  Inter-American
Telecommunications  Corporation,  Telkiosk,  CTC and Cognigen  Corporation,
all of which were incorporated in 1998.

      ITHC, through Cognigen  Corporation,  its e-commerce division,  was a
major  marketer of  long-distance  telecommunications  services.  Operating
on the Internet via thousands of Web sites,  Cognigen  Corporation marketed
both domestic and  international  long-distance  telephone  service as well
as  prepaid  calling  cards  through  a  network  of  approximately  40,000
independent agents to approximately 157,000 subscribers worldwide.

      On August 20, 1999,  and on December  27, 1999,  Jimmy L. Boswell and
David G. Lucas were  directors,  officers and owners of less than 5% of the
outstanding  common stock of ITHC.  Further,  on August 20, 1999,  David L.
Jackson  and his wife were our sole  directors  and  officers.  On December
27,  1999,  David L.  Jackson was a director of ITHC and owned less than 5%
of  the  outstanding  common  stock  of  ITHC.  As of  December  27,  1999,
Darrell H. Hughes was an officer of ITHC and owned  approximately  10.5% of
the  outstanding  common stock of ITHC.  As of August 20,  1999,  and as of
December 27,  1999,  Cognigen  Corporation  owned  approximately  64.7% and
57.9%,   respectively,   of  the   outstanding   common   stock   of  ITHC,
Inter-American  Telecommunications  Corp.  and  Telkiosk,  Inc.  each owned
approximately  5.9%  and  5.3%,  respectively,  of the  outstanding  common
stock of ITHC,  and CTC owned  approximately  7.9% and 7.1%,  respectively,
of the  outstanding  common stock of ITHC.  As of August 20,  1999,  and as
of December  27,  1999,  Kevin E.  Anderson,  through the  Anderson  Family
Trust #1 which owns  approximately  98.9% of the  outstanding  common stock
of  Cognigen  Corporation,  controlled  us and  ITHC.  Peter  Tilyou is the
sole trustee of the Anderson  Family Trust #1 but is not a  beneficiary  of
the trust.

       We believe  that the  transaction  between  us and ITHC on  December
27,  1999,  at which  time we may be deemed to have  been  affiliated  with
ITHC,  was at  least  as  fair  to us as we  could  have  obtained  from an
unaffiliated  third  party.  We  did  not  obtain  a  fairness  opinion  in
connection  with the August 20,  1999 or  December  27,  1999  transactions
with ITHC.

      On  September  14,  1999,  Peter  Tilyou,  pursuant to the  authority
previously  granted  to him by  ITHC,  amended  an  agreement  dated  as of
September  1, 1999  between  ITHC and CCRI Corp.  The  agreement  specified
the  compensation  CCRI Corp.  was to receive for assisting ITHC in raising
capital.  The amendment  provided that CCRI Corp.  would receive a bonus of
200,000 shares of our common stock.  Of the 200,000  shares,  50,000 shares
were to be  unrestricted.  It was later  determined  that CCRI Corp.  would
assist us in raising  additional  capital and that ITHC would not raise any
capital.  When CCRI Corp. did assist us in raising additional  capital,  we
felt obligated to provide CCRI Corp. with the  compensation  and bonus that
ITHC had agreed to pay.  We were unable on  November  10 and 11,  1999,  to
provide the 50,000  shares of our  unrestricted  common  stock for delivery
to the two persons  affiliated with CCRI Corp. As an  accommodation  to us,
Peter  Tilyou,   as  Managing   Director  of  Combined   Telecommunications
Consultancy,   Ltd.   ("CTC"),   arranged   for  CTC  to   deliver   50,000
unrestricted  shares  of our  common  stock to the two  persons  affiliated
with CCRI  Corp.  In May  2000,  Peter  Tilyou  on behalf of CTC  requested
that we  reimburse  CTC for the value of the  50,000  shares of our  common
stock.  The  reimbursement  request  was based upon the  closing  prices of
our common  stock on November  10 and 11,  1999.  A total of  $175,000  was
paid to CTC.

      We  also  believe  that  the  transaction  between  us and CTC was at
least as fair to us as we could have  obtained  from an  independent  third
party.

      On  August  25,  1999,  we  granted  five-year  options  to  purchase
approximately  32,400,000  shares of our common stock at $0.46 per share to
various  persons   including  the  Anderson  Family  Trust  #1  (12,000,000
shares)  which is  affiliated  with us and of which Kevin E.  Anderson  and
his  family  are  the  sole  beneficiaries,  Jimmy  L.  Boswell  (1,600,000
shares),  CTC (4,000,000  shares),  Darrell H. Hughes  (1,600,000  shares),
Inter-American   Telecommunications   Corp.  (800,000  shares),   David  L.
Jackson  (1,600,000   shares),   David  G.  Lucas  (1,600,000  shares)  and
Telkiosk, Inc. (800,000 shares).

      On July  22,  1999,  ITHC  and CST  entered  into a  Carrier  Service
Agreement that was assumed by us in connection  with the  acquisition by us
of  all  of  the  assets  of  ITHC.  Under  the  terms  of  the  three-year
agreement,  ITHC  agreed  to  migrate  to CST  domestic  and  international
dial-around   and  callback  long  distance   subscribers   pursuant  to  a
telemarketing  campaign to be conducted with ITHC's  personnel.  CST agreed
to  provide  office  space,  long  distance  telephone  service,  PABX  and
telephone  handsets,  at  its  cost,  to  support  up to  12  telemarketing
personnel   and   workstations.   ITHC  agreed  to  provide  the   computer
terminals  and  peripherals,   furniture  and  fixtures  required  for  the
telemarketing  personnel.  CST also  agreed  to  provide  customer  service
personnel.  CST agreed to charge ITHC a rate to each  destination  equal to
CST's  cost  plus 15%.  The rate  charged  by CST  included  all  switching
services.   CST  also  agreed  to  provide  all   accounting   services  in
connection  with the  agreement.  All accounts sent to CST by ITHC remained
the  property  of  ITHC.  ITHC  provided  CST  with  advance   payments  of
approximately   $570,000  to  help  cover  CST's  cost  in  providing  long
distance   services  for   telemarketing,   customer  service  and  carrier
transport for the accounts of ITHC that migrate to CST.

      On  April  25,  2000,  the CST  shareholders  transferred  all of the
outstanding  CST shares of common  stock to us in  exchange  for a total of
2,041,445  shares of our common  stock.  The number of shares of our common
stock  issued  to the CST  shareholders  in  exchange  for CTS  shares  was
determined  by  negotiations  between  CST's  shareholders  and us and  was
based on the market  price of our  common  stock,  which on April 25,  2000
had a closing  price of $1.00 per share,  the fact our common  stock issued
in the  exchange  was not to be  registered  and  estimates of the value of
CST's  assets,  staff,  technology,   revenue-producing   capabilities  and
physical  location.  CST's assets that were  acquired by us pursuant to the
exchange  included a facility  lease,  equipment  leases and CST's customer
base.

      Jimmy  L.  Boswell  was  our  President  and  is our  Executive  Vice
President  and  Chief  Operating  Officer  and is  Chairman  of the  Board,
President and Chief  Executive  Officer of CST. Mr.  Boswell was one of the
CST shareholders.  Prior to the exchange,  Mr. Boswell  beneficially  owned
approximately  18.7%  of the CST  shares.  Pursuant  to the  exchange,  Mr.
Boswell   received   381,750  shares  of  our  common  stock.   Immediately
following  the  exchange,   Mr.  Boswell  beneficially  owned  a  total  of
1,981,750   shares  of  our  common  stock,   including   1,600,000  shares
underlying  an option.  In  addition,  a  promissory  note in the amount of
approximately  $87,547.50  that  was  payable  to Mr.  Boswell  by CST  was
terminated as a part of the exchange.

      David G. Lucas is our  Treasurer and Chief  Financial  Officer and is
a Director,  Vice  President and Chief  Financial  Office of CST. Mr. Lucas
was  one  of  the  CST  shareholders.  Prior  to  the  exchange,  Mr. Lucas
beneficially  owned  approximately  18.7% of the CST  shares.  Pursuant  to
exchange,   Mr.  Lucas  received   381,750  shares  of  our  common  stock.
Immediately  following the exchange,  Mr. Lucas  beneficially owned a total
of  1,981,750  shares  of our  common  stock,  including  1,600,000  shares
underlying  an option.  In  addition,  a  promissory  note in the amount of
approximately  $49,176.92  that  was  payable  to  Mr.  Lucas  by  CST  was
terminated as a part of the exchange.

      Two of the  other CST  shareholders  were our  employees.  Otherwise,
the other CST shareholders had no affiliation with us.

      We believe that the transaction  between us and the CST  shareholders
was at least as fair to us as we could have obtained  from an  unaffiliated
party.  We did not  obtain  a  fairness  opinion  in  connection  with  the
transaction.

      On October 11,  2000,  we entered  into an  agreement  with JVTEL,  a
joint  venture  between  Telkiosk and CTC, that gives us the option to sell
to  JVTEL  a  database  of  off-shore   and  domestic   telephone   service
subscribers  that we  acquired  from  ITHC.  According  to the terms of the
agreement,  in the event that we have not  activated  a minimum of 5,000 of
the  accounts by March 30,  2001,  we have the option to sell the  accounts
to  JVTEL  for  $1,300,000.  The  $1,300,000  will  be  paid  to us in such
number of shares of our  common  stock  that is equal to  $1,300,000,  less
the  forgiveness  of debt and  interest  due to JVTEL  on March  30,  2001,
divided by the closing bid price of our common stock on March 30, 2001.

      We have  employment  agreements  with  Jimmy L.  Boswell,  Darrell H.
Hughes and David G. Lucas  pursuant to which they are paid annual  salaries
of  $120,000,  $125,000  and $90,000,  respectively.  In addition,  Messrs.
Boswell  and  Lucas,  who have  employment  agreements  that  commenced  on
August 1,  2000,  and that  terminate  on July 31,  2000,  were  each  paid
$100,000  as  an  initial  bonus  in  connection   with  their   employment
agreements.  The  initial  bonus is deemed  earned on a pro rata basis over
the two-year  period of each  employment  agreement in the amount of $4,167
per  month.  An  early  termination  of the  employment  agreements  by the
employees  without  cause or by us with cause  obligates  the  employees to
return  the  unearned   portions  of  their  initial   bonuses  to  us.  In
addition,  between  December  1999 and March  31,  2000,  we paid  David L.
Jackson a fee of $6,000 per month for  providing  services  to us. On April
1,  2000,  David L.  Jackson  became  one of our  employees  with an annual
salary  of  $120,000.  We  also  have  assumed  agreements  with  Kevin  E.
Anderson and Peter Tilyou  pursuant to which Kevin E. Anderson  Consulting,
Inc.  and CTC are paid or are to be paid  consulting  fees of  $14,583  and
$10,000 per month, respectively.

**SIGNATURES**

      In  accordance  with  Section 13 or 15(d) of the  Exchange  Act,  the
registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

Dated:  January 18, 2001
                                          **COGNIGEN NETWORKS, INC.**

                                          /s/ Darrell H. Hughes
                                          ---------------------------------
                                          Darrell H.  Hughes,  Chairman  of
                                          the  Board,  President  and Chief
                                          Executive Officer

                                          /s/ David G. Lucas
                                          ---------------------------------
                                          David G. Lucas
                                          Treasurer, Chief Financial
                                          Officer and Principal
                                          Accounting Officer

      In  accordance  with the Exchange Act, this report has been signed by
the following  persons on behalf of the  registrant  and in the  capacities
and on the dates indicated.

      **SIGNATURE                           TITLE                 DATE**
     ------------------                  ------------       ------------------

      /s/ Jimmy L. Boswell
      --------------------
      Jimmy L. Boswell                    Director          January 18, 2001

      /s/ Troy D. Carl
      --------------------
      Troy D. Carl                        Director          January 18, 2001

      /s/ Darrell H. Hughes
      --------------------
      Darrell H. Hughes                   Director          January 18, 2001

      /s/ David L. Jackson
      --------------------
      David L. Jackson                    Director          January 18, 2001

      /s/ David G. Lucas
      --------------------
      David G. Lucas                      Director          January 18, 2001
```