Cognigen Networks Approves Corporate Restructuring Activities and Management Changes
Englewood, Colorado, October 23 2007/PRNewswire-First Call/ -- Cognigen Networks, Inc. (OTC Bulletin Board: CGNW), an Internet-enabled marketer of communications services and technology solutions, announced today the approval of several corporate restructuring activities that the company believes will help improve its financial position, enabling the company to move forward with additional organizational changes and growth opportunities. The approvals included the conversions of outstanding debt and liabilities, owed to several parties, to shares of Cognigen's common stock. As a result of the conversions, BayHill Capital, a previous investor in Cognigen, now owns 46% of the company’s outstanding common stock.
Additionally, James H. Shapiro resigned as a member of the Board of Directors. Robert K. Bench, a managing member of BayHill Capital, was nominated for and will fill this vacant position. Mr. Bench will also be nominated by the Board to become the company’s Chief Executive Officer. Mr. Gary Cook, the company’s Chief Financial Officer, who has also been the Acting Chief Executive Officer, will resign as Acting Chief Executive Officer.
Mr. Cook remarked, "Bob Bench brings tremendous operational and financial experience to Cognigen and has a great understanding of the small public company environment. Bob has held senior leadership positions at several publicly traded companies throughout his career and he will play a key role in strengthening Cognigen's position in the market."
Prior to BayHill Capital’s conversion of certain promissory notes into common stock, which gave them 46% of the issued and outstanding common shares, Cognigen's preferred stock held by Stanford Venture Capital Holdings, Inc. was automatically converted into common stock. In addition, several of Cognigen's Board of Directors agreed to exchange fees and salary, owed to them by the company, for shares of common stock.
Regarding the series of notes, fees and salary conversions into common stock, Mr. Bench stated: "We believe that these conversions will have a positive result on our efforts to strengthen our balance sheet and give added confidence, to our business partners and marketing channel, of our commitment to support our resellers and build shareholder value. Our intent is to establish an overall financial position that reflects the positive success of our core businesses and that can support our plans to grow the company."
Other corporate restructuring events included the approval and announcement of the sale of Cognigen's CBSi subsidiary to Anza Borrego Partners. The decision to sell the ownership of CBSi was based on Cognigen's intent to focus resources and attention on building its core Internet marketing business. Mr. Cook commented: "We believe CBSi has the potential to be an exciting business in the future, but we chose to reduce investments in non-core businesses and shift investment and attention back to our core, well-established Internet marketing, and revenue generating business lines. This refocus will also allow the company to concentrate its efforts on simplifying its capital structure and using its cash flow to strengthen its balance sheet, and to support its agent sales channel, which is critical to the company’s future growth.
Details of the activities mentioned above can be found in the related 8-K released earlier today.
About Cognigen
Cognigen Networks, Inc., offers a wide range of telecommunication services and related technology products via its Web site, http://.www.cognigen.net. Cognigen's robust marketing engine harnesses distribution channels featuring a prominent Internet presence, a network of independent agents and several affiliate groups, each having their own customized Web site. Cognigen's agent-initiated sales, as well as those generated directly off its main website, are fulfilled via proprietary software utilizing the Internet. Cognigen sells as a master agent the services of industry leaders such as Time Warner Cable, New Edge Networks, Vinculum Communications, AccuLinq, Inphonic Cellular, ShopForT1-Telarus, IBN Tel, Pioneer Telephone, OPEX, PowerNet Global and UniTel. Since September of 1999, Cognigen has sold, on behalf of its vendors and for its own account, services and products to approximately 880,000 customers worldwide.
In addition to historical statements, the information set forth herein contains forward-looking statements, including, without limitation, statements relating to Cognigen Networks, Inc. (the "Company") and the anticipated terms and conditions of a proposed private placement transaction (and related transactions and activities) which the Company has not yet commenced negotiating and which may never occur. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect the Company’s business, financial condition and results of operations, including without limitation, the Company’s inability to obtain additional financing, the Company’s possible lack of producing agent growth, the Company’s possible lack of revenue growth, the Company’s possible inability to add new products and services that generate increased sales, the Company’s possible lack of cash flows, the Company’s possible loss of key personnel, the possibility of telecommunications rate changes and technological changes, and the possibility of increased competition. Many of these risks are beyond the Company’s control. The Company is not entitled to rely on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or Section 2lE of the Securities Exchange Act of 1934, as amended, when making forward- looking statements.
