Cognigen Goes Public, Quietly

Posted: 11/1999

Cognigen Goes Public, Quietly
By Jill Collins

Although Seattle-based Cognigen Communications, an Internet marketer of long distance
telecommunications services, went public Aug. 19, it didn’t do it the old-fashioned way.

"We performed a reverse merger rather than going through the usual nightmare of an
IPO (initial public offering)," says Cognigen founder and President Kevin Anderson.
"We acquired a small public company and folded ourselves into it."

Cognigen and its parent holding company, Seattle-based Inter-American
Telecommunications Holding Corp. (ITHC), announced the consummation of a stock-for-assets
agreement that resulted in the acquisition of an 85 percent interest in Denver-based
Silverthorne Production Co. Anderson’s family is the majority stockholder in ITHC, which
acquired Cognigen’s assets in preparation for the acquisition of Silverthorne. It is a
complex transaction, essentially a reverse merger, with the end result of Cognigen
becoming part of Silverthorne, and ITHC becoming the majority stockholder of Silverthorne.

"Silverthorne was essentially a ‘shell’ with a good past track record, a tax-loss
carry-forward and no current business interests," Anderson explains. "We wanted
to become a public company, and the principals of Silverthorne wanted a major business
opportunity. They met our needs, and we met theirs."

Cognigen chose this route to become a public company, "quickly [and] without all
of the hoopla," Anderson says. Of course, the disadvantage of becoming a public
company in this manner, he adds, is that his company lost the opportunity for publicity.
"There has been very little published other than on the Internet about our
company," Anderson says.

Cognigen markets its telephony products through its network of 36,000 agents and
subagents by providing them with individual, customized, full-featured websites. Cognigen
claims to sell more than $3 million per month of long distance services and prepaid
calling cards provisioned by 17 companies, soon to be 20.

Through its acquisition of Silverthorne, Cognigen hopes to increase its net operating
margin by establishing direct relationships with primary carriers, using enhanced volume
buying power and developing its own switching capacity. As of yet, however, the stock
price of Silverthorne has not changed significantly.

Silverthorne will call a shareholder meeting as soon as possible to consider a 1-for-4
reverse stock split, issuance of preferred shares, the election of a new board of
directors and a corporate name change. Regarding the name change, Anderson expects the
name will be Cognigen and have a change of symbol possibly to CNGN; however, that decision
is in the hands of the shareholders. Since the acquisition has been completed, the company
also will seek listing of its common stock with NASDAQ.