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Cognigen Networks, Inc. 8-22-2005 SEC Correspondence

August 22, 2005

United States
Securities and Exchange Commission
Mail Stop 0407
450 Fifth Street, N.W.
Washington,
D.C. 20549

     Re:

      Amended
Filings for Cognigen Networks, Inc.
Form 10-KSB for the fiscal year ended June 30, 2004

     Form
10-QSB for the quarter ended December 31, 2004
File No. 000-11730

Ladies and
Gentlemen:

With
respect to your latest letter to us dated July 20, 2005 we respond to you as
follows:

Form
10-KSB for the year ended June 30, 2004 and Forms 10-QSB for the quarters ended
September 30, 2004 and December 31, 2004

Part II,
Item 8A. Controls and Procedures

1. We
have attached our proposed amended filings of the Forms 10-KSB for the year
ended June 30, 2004, and Forms 10-QSB for the quarters ended September 30, 2004
and December 31, 2005, incorporating your suggestions. We also confirm to you
that there has been no change in our internal control over financial reporting
that occurred in our fourth fiscal quarter in 2004, our fiscal quarter ended
September 30, 2004, or our fiscal quarter ended December 31, 2004. that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

Form 10-QSB
for the quarter ended March 31, 2005

We
have also attached our proposed amended filing of the Form 10-QSB for the
quarter ended March 31, 2005 incorporating your suggested changes.

2. Our
certifying officers do not believe that potential control deficiencies
constitute material weaknesses because of the number of compensating internal
controls already in place. However, we are a small company and due to the fact
that we have a limited number of employees, we are not able to have proper
segregation of duties. We are aware that the Committee of Sponsoring Organizations of the
Treadway Commission is going to issue its report on
internal controls structures for small companies around the middle of September
2005. It is possible that after reviewing this report and after our independent
auditors perform a Section 404 test, we will conclude that due to the fact that we do
not have proper segregation of duties, some of the issues that we believe are
compensating internal controls are not sufficient to mitigate the lack of
segregation of duties. Thus, we might be deemed to have material weaknesses in
our internal control structure.

3.There
has been no change in internal control over financial reporting that occurred
during our fiscal quarter ended March 31, 2005 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

Once
you have had a chance to review this information, please contact us at
720-895-1912 with any questions or further suggestions you may have.

     Sincerely,

/s/ Gary L. Cook
Senior Vice President and
Chief Financial Officer
Cognigen Networks, Inc.

AMENDED
FORM 10-KSB

U.S.
SECURITIES AND EXCHANGE COMMISSION  Washington, D.C. 20549

FORM
10-KSB/A

     [X]

      ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the
fiscal year ended June 30, 2004

     [   ]

      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

     84-1089377

     (State or other jurisdiction of

     (I.R.S. Employer

     incorporation or organization)

     Identification No.)

6405 - 218th Street, S.W., Suite 305

     Mountlake Terrace, Washington

     98043

     (Address of principal executive offices)

     (Zip Code)

Issuer’s telephone number:  (425) 329-2300

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: $10,735,099

     The
aggregate market value of the voting and non-voting common equity held by
non-affiliates at September 2, 2004, computed by reference to the last sale
price of $0.17 per share on the OTC Bulletin Board, was $332,747.

     The
number of shares outstanding of each of the issuer’s classes of common
equity on September 2, 2004, was 8,753,972.

Documents
Incorporated by Reference

     The
information required by Items 9 through 12 and Item 14 is incorporated by
reference to our definitive proxy statement or definitive information statement
that we plan to file in connection with our next Annual Meeting of Shareholders
involving the election of directors. We plan to file the definitive proxy or
definitive information statement with the Commission on or before October 28,
2004.

     Transitional
Small Business Disclosure Format     Yes    [   ]     No  [X]

TABLE OF
CONTENTS

          PART I

     3

Item 1
     Description of Business
     3

     Item 2
     Description of Property
     7

     Item 3
     Legal Proceedings
     8

     Item 4
     Submission of Matters to a Vote of Security Holders
     8

     PART II

     8

Item 5
     Market for Common Equity and Related Stockholder Matters
     8

     Item 6
     Management’s Discussion and Analysis or Plan of Operation
     10

     Item 7
     Financial Statements
     17

     Item 8
     Changes In and Disagreements with Accountants on

     Accounting and Financial Disclosure
     18

     Item 8A
     Controls and Procedures

     Item 8B
     Other Information
     18

     PART III

     19

Item 9
     Directors, Executive Officers, Promoters and Control

     Persons; Compliance with Section 16(a) of the Exchange Act
     19

     Item 10
     Executive Compensation
     21

     Item 11
     Security Ownership of Certain Beneficial Owners and

     Management and Related Stockholder Matters
     24

     Item 12
     Certain Relationships and Related Transactions
     27

     Item 13
     Exhibits and Reports on Form 8-K
     31

     Item 14
     Principal Accountant Fees and Services
     33

^

2

PART I

Forward-Looking
Statements.

     The
discussion in this report contains forward-looking statements, including,
without limitation, statements relating to our wholly owned subsidiary and us.
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 become
certified as a reseller in all jurisdictions in which we apply, the possibility
that our proprietary customer base will not grow as we expect, our possible
inability to obtain additional financing, the possible lack of producing agent
growth, our possible lack of revenue growth, our possible inability to add new
products and services that generate increased sales, our possible lack of cash
flows, our possible loss of key personnel, the possibility of telecommunication
rate changes and technological changes and the possibility of increased
competition. Many of these risks are beyond our control. We are not entitled to
rely on the safe harbor provisions of Section 27A of the Securities Act of 1933,
as amended, or Section 21E of the Securities Exchange Act of 1934, as amended,
when making forward looking statements.

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 changed our name to
Cognigen Networks, Inc. on July 12, 2000.

     We
currently sell telecommunications and personal technology services through
multifaceted sales and marketing organizations that utilize 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 independent agents, we have sold our own proprietary products and services or
sold as agent third party or outside vendor products and services to customers
and subscribers worldwide. Domestic and international long distance services
make up a major portion of our sales with prepaid calling cards and paging,
wireless communications, computers and Internet-based telecommunications
products and other products in our sales mix. We sell our own proprietary
products and services and , as agent, have contractual agreements with a variety
of product and service vendors that provide us with a commission percentage of
any sales made through one of our supported web sites. As agent, our web-based
marketing division sells the products and services of industry leaders such as
AT&T Wireless, Broadvox, CNM Network, Nextel, PowerNetGlobal, Sprint, Talk
America, T-Mobil, Verizon and Z-tel. Our operations partially are dependent on
our affiliations with third party providers of the products and services that
our agents sell. These third party providers own the rights to sell these
products and services. Our ability to offer these products and services is
dependent on our agreements with providers being renewed and not terminated. The
non-renewal or termination of a substantial number of these agreements would
have a material adverse effect on our financial condition and results of
operations. Our marketing engine is fueled by distribution channels through an
Internet presence and through our corps of independent agents and affiliate
groups each with their own customized Web site.

3

     In
the mid 1990‘s, our predecessor recognized the marketing potential of the
Internet and formed what we believe was one of the first companies to create a
marketing operation based exclusively on the Internet. The initial concept was
to expand marketing potential by increasing the number of independent agents
working within our corporate network while at the same time continuing to
increase the number of products and services that these agents could provide to
our worldwide customer base. To facilitate the manageable growth of this network
and to be able to provide the agents with the support and marketing edge
necessary for success, we developed and deployed the “self
replicating” web page. This proprietary technology automatically creates a
high content, personalized set of e-commerce web pages for each new agent, at
the time the agent becomes a member of our network. Additionally, an Internet
accessible “private site” is instantly created for the new agent. Each
agent can view the agent’s records, activity and account status on which
the agent is working. The private site also contains customer detail status,
recommended training sources, frequently asked questions and agent benefits. We
also adopted a strategy of enabling each agent to sell telecommunications
services and to recruit new agents. Generally, the original agent receives a
sales commission override on sales generated by the agents thus recruited. Our
commission structure and plan enables our agents to earn money without the
necessity of developing a subordinate agent base. Our revenue is dependent on
sales by our independent agents. The failure of these agents to achieve
sustained sales will materially adversely affect our financial condition and
results of operations.

     We
use self-replicating web page technology to run our web-based operations. If
another technology becomes the preferred industry standard, we may be at a
competitive disadvantage which, in turn, may require us to make changes at
substantially increased costs. If our technology becomes obsolete at some time
in the future and we are unable to change to an alternate technology in a cost
effective manner, it could materially adversely affect our financial conditions
and results of operations.

     As
of June 30, 2004, we had made advances of $454,149 to Intandem Communications
Corp. (Intandem). On April 1, 2003, we and certain principals of Intandem
entered into an agreement (Funding Agreement) pursuant to which we agreed to
provide up to $448,093 in a series of loans to Intandem. Effective February 1,
2004, by mutual agreement of the principals of Intandem and us, the Funding
Agreement was terminated and a separate agreement, the Termination of Funding
Agreement and Settlement Agreement (Termination Agreement), was entered into.

     The
Termination Agreement provided that we would convert the notes receivable of
$387,399 into 100% of the outstanding stock of Intandem in exchange for payments
of $10,000 per month for eight months, assumption of up to approximately $45,000
in liabilities, cancellation of all employment contracts of the Intandem
principals and cancellation of options to purchase our common stock. As of the
date of the Termination Agreement, $414,149 had been funded under the Funding
Agreement. Due to questions of recoverability of this amount and the remaining
commitments under the Termination Agreement, a provision of $494,149 has been
taken in the statement of operations. This provision represents the $414,149
funding through the date of the Termination Agreement plus an estimate of
remaining commitments under the Termination Agreement which approximated $80,000
at the time. Approximately $60,000 remains in accrued liabilities as of June 30,
2004, related to estimated futures expenses relating to the Termination
Agreement.

4

     In
conjunction with the Funding Agreement, a consultant was to be paid, under his
consulting agreement with us, a commission that was being negotiated with us.
The commission amount had not yet been determined when questions of
recoverability arose and a provision to write off funded amounts was included in
the statement of operations. It is anticipated that the majority of any
commission paid will be from future Intandem cash flows, if any, in a
combination of cash and some of our common stock, but this can not be assured or
estimated at this time.

     On
May 12, 2004, after approval by the Board of Directors, we entered into a Stock
for Stock Exchange Agreement with Jimmy L. Boswell, David G. Lucas, Reginald W.
Einkauf and John D. Miller (collectively the Principals) pursuant to which the
Principals agreed to exchange with us a total of 800,000 shares of our common
stock owned by the Principals for all of the outstanding common stock of our
wholly-owned subsidiary, Cognigen Switching Technologies, Inc. (CST), and
warrants to purchase 200,000 shares of our common stock at $.3015 per share
effective February 1, 2004. The closing occurred on May 21, 2004. At the closing
CST entered into a Master Services Agreement (MSA) to provide us with
telecommunications rati