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

For the Quarterly Period Ended September 30, 2004

OR

o

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

Delaware

52-2337274

(State of Incorporation)

(I.R.S. Employer
Identification Number)

PART I
FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets of Cogent Communications Group, Inc., and Subsidiaries as of December 31, 2003 and September 30, 2004

Condensed Consolidated Statements of Operations of Cogent Communications Group, Inc., and Subsidiaries for the Three Months Ended September 30, 2003 and September 30, 2004

Condensed Consolidated Statements of Operations of Cogent Communications Group, Inc., and Subsidiaries for the Nine Months Ended September 30, 2003 and September 30, 2004

Condensed Consolidated Statements of Cash Flows of Cogent Communications Group, Inc., and Subsidiaries for the Nine Months Ended September 30, 2003 and September 30, 2004

Notes to Interim Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II
OTHER INFORMATION

Item 1.

Legal Proceedings

Item 4.

Submission of Matters to a Vote of Security Holders

Item 6.

Exhibits and Reports on Form 8-K

SIGNATURES

CERTIFICATIONS

December 31,
2003

September 30,
2004

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

7,875

$

8,796

Short term investments ($753 and $601 restricted, respectively)

4,115

601

Accounts receivable, net of allowance for doubtful accounts of $2,868 and $3,408, respectively

5,066

10,582

Accounts receivable — related party

—

1,709

Prepaid expenses and other current assets

905

3,952

Total current assets

17,961

25,640

Property and equipment:

Property and equipment

400,097

463,317

Accumulated depreciation and amortization

(85,691

)

(123,690

)

Total property and equipment, net

314,406

339,627

Intangible assets:

Intangible assets

26,780

28,549

Accumulated amortization

(18,671

)

(25,502

)

Total intangible assets, net

8,109

3,047

Other assets ($1,608 and $1,564 restricted, respectively)

3,964

4,949

Total assets

$

344,440

$

373,263

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

7,296

$

13,014

Accounts payable—related party

—

1,409

Accrued liabilities

7,885

15,066

Current maturities, capital lease obligations

3,646

5,799

Total current liabilities

18,827

35,288

Amended and Restated Cisco Note

17,842

17,842

Convertible subordinated notes, net of discount of $6,084 and $5,326

4,107

4,865

Capital lease obligations, net of current

58,107

102,955

Other long-term liabilities

803

2,533

Total liabilities

99,686

163,483

Commitments and contingencies:

Stockholders’ equity:

Convertible preferred stock, Series F, $0.001 par value; 11,000 shares authorized, issued, and outstanding; liquidation preference of $29,100

10,904

10,904

Convertible preferred stock, Series G, $0.001 par value; 41,030 shares authorized, issued and outstanding; liquidation preference of $123,090

40,787

40,787

Convertible preferred stock, Series H, $0.001 par value; 84,001 shares authorized; 53,372 and 46,499 shares issued and outstanding, respectively; liquidation preference of $7,845

45,990

45,039

Convertible preferred stock, Series I, $0.001 par value; 3,000 shares authorized, 2,575 shares issued and outstanding at September 30, 2004; liquidation preference of $7,725

—

2,545

Convertible preferred stock, Series J, $0.001 par value; 3,891 shares authorized, issued and outstanding at September 30, 2004; liquidation preference of $58,365

—

19,421

Convertible preferred stock, Series K, $0.001 par value; 2,600 shares authorized, issued and outstanding at September 30, 2004; liquidation preference of $7,800

—

2,588

Convertible preferred stock, Series L, $0.001 par value; 185 shares authorized, issued and outstanding at September 30, 2004; liquidation preference of $2,781

—

927

Common stock, $0.001 par value; 600,000,000 shares authorized; 13,071,340 and 16,338,992 shares outstanding, respectively

14

16

Additional paid-in capital

232,461

236,179

Deferred compensation

(32,680

)

(26,412

)

Stock purchase warrants

764

764

Treasury stock, 1,229,235 shares

(90

)

(90

)

Accumulated other comprehensive income

628

572

Accumulated deficit

(54,024

)

(123,460

)

Total stockholders’ equity

244,754

209,780

Total liabilities and stockholders’ equity

$

344,440

$

373,263

Three Months Ended
September 30, 2003

Three Months Ended
September 30, 2004

(Unaudited)

(Unaudited)

Net service revenue (none and $496 from related party, respectively)

$

15,148

$

21,736

Operating expenses:

Network operations (including $53 and $207 of amortization of deferred compensation, respectively, and none and $230 to related party, respectively, exclusive of amounts shown separately)

12,067

14,510

Selling, general, and administrative (including $702 and $2,753 of amortization of deferred compensation, respectively, and $1,025 and $432 of allowance for doubtful accounts expense, respectively)

7,014

11,842

Restructuring charge

—

1,396

Terminated public offering costs

—

779

Depreciation and amortization

11,968

13,369

Total operating expenses

31,049