UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the period ended September 30, 2003

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

For the transition period from to

Commission file number 000-25315

SAGENT TECHNOLOGY, INC.

(Exact name of Registrant as specified in its Charter)

Delaware

94-3225290

(State or Other Jurisdiction

of Incorporation or Organization)

(I.R.S. Employer

Identification Number)

800 W. El Camino Real, Suite 300

Mountain View, CA 94040

(Address of Principal Executive Offices including Zip Code)

(650) 815-3100

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 11, 2003, Registrant had 47,109,843 shares of common stock issued and outstanding.

SAGENT TECHNOLOGY, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED September 30, 2003

TABLE OF CONTENTS

		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Operations	4

	Unaudited Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 4.	Submission of matters to a vote of security holders	24

Item 6.	Exhibits and Reports on Form 8-K	24

	SIGNATURES	25

	INDEX TO EXHIBITS	26

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

SAGENT TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands except per share data)

	September 30, 2003			December 31, 2002
ASSETS
Current Assets
Cash and cash equivalents	$	6,386		$	9,711
Restricted cash		100			875
Accounts receivable, net of allowance for doubtful accounts of $1,131 in 2003 and $1,389 in 2002		5,305			6,957
Other current assets		857			2,202

Total current assets		12,648			19,745
Property and equipment, net		905			3,159
Goodwill		6,784			6,718
Notes receivable from officers		—			1,000
Other assets		136			638

Total assets	$	20,473		$	31,260

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1,938		$	2,811
Accrued liabilities		5,315			6,388
Deferred revenue		8,690			8,499
Current portion of capital lease obligation		58			1,380
Short-term debt		7,000			5,285

Total current liabilities		23,001			24,363
Other long-term liabilities		107			142

Total liabilities		23,108			24,505
Minority Interest		—			366
Stockholders’ Equity (Deficit)
Common stock, par value $.001 per share; Authorized: 70,000 shares at September 30, 2003 and December 31, 2002; Issued and outstanding: 47,110 shares at September 30, 2003 and 46,424 shares at December 31, 2002		47			46
Additional paid-in capital		135,346			135,778
Accumulated other comprehensive loss		(119	)		(46	)
Accumulated deficit		(137,909	)		(129,389	)

Total stockholders’ equity (deficit)		(2,635	)		6,389

Total liabilities and stockholders’ equity (deficit)	$	20,473		$	31,260

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAGENT TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Revenue:
License	$	4,104		$	4,549		$	11,984		$	15,444
Service		3,573			4,265			10,692			13,894

Total revenue		7,677			8,814			22,676			29,338

Cost of revenue:
License		569			303			1,624			1,390
Service		1,189			1,734			4,071			6,076
Impairment of licensed technology		—			—			—			1,240

Total cost of revenue		1,758			2,037			5,695			8,706

Gross profit		5,919			6,777			16,981			20,632

Operating expenses:
Sales and marketing		3,392			5,834			11,330			19,966
Research and development		2,148			2,581			6,628			9,283
General and administrative		1,710			1,385			4,001			3,948
Stock-based compensation		—			—			—			298
Asset impairments		—			987			—			1,001
Restructuring costs (credit)		—			4,734			(5	)		4,873

Total operating expenses		7,250			15,521			21,954			39,369

Loss from operations		(1,331	)		(8,744	)		(4,973	)		(18,737	)
Interest income (expense), net		(204	)		(10	)		(2,994	)		17
Other income (expense), net		(208	)		(251	)		(140	)		(243	)

Net loss before income taxes		(1,743	)		(9,005	)		(8,107	)		(18,963	)
Provision for income taxes		82			111			413			430

Net loss	$	(1,825	)	$	(9,116	)	$	(8,520	)	$	(19,393	)

Basic and diluted net loss per share	$	(0.04	)	$	(0.20	)	$	(0.18	)	$	(0.42	)

Shares used in computing basic and diluted net loss per share		47,110			46,303			46,742			46,234

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAGENT TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

	Nine Months Ended September 30,
	2003			2002
Cash flows from operations:
Net loss	$	(8,520	)	$	(19,393	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,999			2,370
Amortization of warrant cost		1,715			—
Accrued interest on short-term loan		143			—
Asset impairments		—			2,241
Restructuring costs		—			2,089
Net loss on disposal of property and equipment		200			85
Impairment of privately held investment		—			529
Gain from sale and collection of officer and shareholder notes		(612	)		—
Stock-based compensation		—			298
Minority interest in earnings of subsidiary		(131	)		(207	)
Changes in operating assets and liabilities:
Accounts receivable		1,652			5,199
Other current assets		1,345			723
Other assets		629			93
Accounts payable		(873	)		(618	)
Accrued liabilities		(1,073	)		(1,082	)
Deferred revenue		191			(510	)
Other long-term liabilities		(4	)		(63	)

Net cash used in operating activities		(3,339	)		(8,246	)

Cash flows from investing activities:
Purchase of property and equipment		(32	)		(120	)
Net proceeds from sale of property and equipment		97			—
Proceeds from the sale and collection of officer and shareholder notes		1,485			445
Purchase of minority interest		(300	)		—

Net cash provided by investing activities		1,250			325

Cash flows from financing activities:
Payments of principal under capital lease obligations		(1,364	)		(1,859	)
Restricted cash		775			—
Proceeds from short-term debt		7,000			—
Payments of short-term debt		(7,143	)		—
Repurchase of warrants		(500	)		—
Proceeds from exercise of stock options and warrants		69			37

Net cash used in financing activities		(1,163	)		(1,822	)

Effect of exchange rate changes		(73	)		(622	)

Net decrease in cash and cash equivalents		(3,325	)		(10,365	)

Cash and cash equivalents, beginning of the period		9,711			15,552

Cash and cash equivalents, end of the period	$	6,386		$	5,187

Supplemental disclosure of cash flow information:
Cash payments for interest	$	245		$	173
Cash payments for taxes	$	320		$	449
Supplemental disclosure of non-cash investing and financing activity:
Equipment acquired under capital leases	$	11		$	92

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAGENT TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except where noted)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Description of Business and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles on a going concern basis which assumes the realization of assets and payments of liabilities in the ordinary course of business. The accompanying financial statements do not include adjustments to reflect the effects of the asset sale or subsequent dissolution and liquidation of the Company, except as disclosed.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. Certain prior period amounts have been reclassified to conform to the current period presentation. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the Company’s financial position at September 30, 2003 and December 31, 2002, and the operating results for the three and nine months ended September 30, 2003 and 2002 and cash flows for the nine months ended September 30, 2003 and 2002. These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2002, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 17, 2003. The results of operations for the nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

Sale of Assets—Plan of Liquidation

On April 15, 2003, we entered into an Asset Purchase Agreement with Group 1 Software, Inc. Subject to the terms and conditions of the Asset Purchase Agreement, Group 1 would pay us up to $17 million, in exchange for substantially all of our assets, including all intellectual property, accounts receivable, cash on hand, certain contracts, property & equipment and other designated assets, and the assumption of specified liabilities; in addition Group 1 also acquired certain subsidiaries, namely Sagent U.K., Ltd., Sagent Technology GmbH, Sagent France, S.A., Sagent Technology Japan KK and Sagent Asia/Pacific Pte Ltd. On October 1, 2003, the asset sale contemplated by the Asset Purchase Agreement was consummated. The Company received $13 million of the purchase price in the form of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan. See Notes 6 and 10 for details on Bridge loan and the closing of the asset sale. At closing, Group 1 retained $4.0 million of the purchase price to secure our indemnification obligations under the Asset Purchase Agreement. The final consideration is subject to adjustment based upon the finalization of Sagent’s balance sheet as of the closing date. Under the terms of the Asset Purchase Agreement, Sagent retained approximate $1.5 million in cash, certain other assets and liabilities for outstanding litigation and approximately $1.2 million of accrued compensation payable to key officers.

Most employees of the Company resigned and accepted employment with Group 1.

We have agreed to indemnify Group 1 for a period of 120 days from the closing date; we will then file a certificate of dissolution with the Delaware Secretary of State to dissolve Sagent as a legal entity, complete the liquidation of our remaining assets, make provisions to satisfy our remaining obligations, and make distributions to our stockholders with the remaining available funds, if any. We expect to complete the liquidation and make an initial distribution prior to the end of the first quarter of calendar 2004.

Principles of Consolidation

The consolidated financial statements include the accounts of Sagent Technology, Inc., and its wholly owned subsidiaries, Qualitative Marketing Software, Inc. (QMS), Sagent U.K., Ltd., Sagent Technology GmbH, Sagent France, S.A., Sagent Benelux, Sagent Technology Japan KK, Sagent Asia/Pacific Pte Ltd., Sagent Australia Pty Ltd, Sagent de Brazil and Sagent de Mexico. All significant intercompany accounts and transactions have been eliminated in consolidation. In 2003, we liquidated Sagent de Brazil and Sagent de Mexico.

Use of Estimates

The preparation of 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Examples of such estimates include, but are not limited to, the accounting for litigation contingencies and the allowance for doubtful accounts, goodwill impairments, restructuring costs and related charges, and income taxes. In addition, we also analyze the collectibility of accounts receivable based on historical bad debt experience, customer credit-worthiness, the current business environment and historical experience with the customer and provide an allowance for doubtful accounts. The allowance includes specific reserves for accounts where collection is deemed to be no longer probable and a general reserve based on historical experience. Actual results could differ from those estimates.

Restricted Cash

Restricted cash as of September 30, 2003 consists of $100 held in escrow to fulfill terms of a contractual agreement which was paid out in October 2003.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk are comprised principally of cash and cash equivalents and trade accounts receivable. We invest excess cash through banks, primarily in highly liquid securities, and have investment policies and procedures that are reviewed periodically to minimize credit risk.

With respect to accounts receivable, we perform ongoing credit evaluations of our customers and generally do not require collateral. We maintain reserves for potential credit losses on customer accounts when deemed necessary. Actual credit losses to date have been within management’s expectations. At September 30, 2003 there is one customer, which accounted for 12% of accounts receivable. No customer accounted for more than 10% of accounts receivable at December 31, 2002. For the three and nine months ended September 30, 2003 or 2002, no customer accounted for more than 10% of revenue.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. Prior to January 2002, we amortized goodwill on a straight-line basis over its expected useful life ranging from one to five years.

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests in certain circumstances and written down when impaired, rather than being amortized as previous accounting standards required. We performed the goodwill impairment test as of December 31, 2002.

There was no impairment of goodwill recorded for the three and nine months ended September 30, 2003. For the three months ended September 30, 2002, we recorded $728 of goodwill impairment related to closing of the Brazil office. The total asset impairments of $1,001 presented in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2002 also included impairments of notes from shareholders.

Impairment of Long-Lived Assets

Long-lived assets and other identifiable assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Factors considered important which could trigger an impairment review include, but are not limited to, economic and industry trends, changes in our strategies in sales and marketing and research and development, changes in projected future operating results, changes in the mode of operations, the exit from facilities and significant declines in our stock price for an extended period time. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators, impairment is measured based on a projected discounted cash flow method using a discount rate commensurate with the risk inherent in our current business model.

Revenue Recognition

We license software products directly to our customers and through channel partners such as independent software vendors, resellers and distributors. Independent software vendors generally integrate our products with their applications or resell them with their products. Our other channel partners, principally resellers and distributors, sell our software products to end user customers.

We derive revenue from license fees for software products and fees for services relating to the software products, including consulting, training, software and data updates and technical support.

We recognize revenue in accordance with Statement of Position 97-2, “Software Revenue Recognition” (SOP 97-2), as amended by SOP 98-4 and 98-9 and generally recognize revenue when all of the following criteria are met: 1) persuasive evidence of an arrangement exists, 2) delivery has occurred, 3) the fee is fixed or determinable, and 4) collectibility is probable. We define each of the four criteria above as follows:

Persuasive evidence of an arrangement exists—It is our customary practice to have a written contract, which is signed by both the customer and us, or a purchase order from those customers that have previously negotiated a standard end-user license arrangement or original equipment manufacturer (OEM) arrangement, prior to recognizing revenue on an arrangement.

Delivery has occurred—Our software may be either physically or electronically delivered to the customer. For those products that we deliver physically, our standard transfer terms are FOB shipping point. For an electronic delivery of software, delivery is considered to have occurred when the customer has been provided with the access codes that allow the customer to take immediate possession of the software. If undelivered products or services exist in an arrangement that are essential to the functionality of the delivered product, delivery is not considered to have occurred until these products or services are delivered.

The fee is fixed or determinable—The fee our customers pay for products is negotiated at the outset of an arrangement. Arrangement fees are generally due within six months or less. Arrangements with payment terms extending beyond these customary payments terms are considered neither to be fixed nor determinable, and revenue from such arrangements is recognized as payments become due and payable.

Collectibility is probable—Collectibility is assessed on a customer-by-customer basis. We assess collectibility based on a number of factors, including past transaction history with the customers and their credit worthiness. New customers are subjected to a credit review process, which evaluates the customer’s financial position and ultimately their ability to pay. We obtain and review credit reports from the third-party credit reporting agencies for new customers with which we are not familiar. If we determine that collection of a fee is not probable, we defer the fee and recognize revenue at the time collection becomes probable, which is generally upon receipt of cash. The determination regarding the probability of collection ultimately relies on management judgment. If changes in conditions cause management to determine that this criteria is not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

Revenue for transactions with enterprise application vendors, OEMs, and distributors is generally recognized when the licenses are resold or utilized by the reseller and all related obligations on our part have been satisfied. However, if the contract stipulates a non-refundable royalty payment to be paid in advance of any resale, revenue is recognized upon execution of the contract, provided all other revenue recognition criteria have been met. We report the revenue generated through distributors on a gross basis only if we act as the principal in the transaction and assume the risks and rewards of ownership, such as the risk of loss for collection, delivery and returns. In these cases we reflect the distributors’ fees under sales and marketing expenses. If the above conditions do not exist, we record revenue based on the net amount retained (that is, the amount billed to the customer less the amount paid to the distributor.)

We allocate revenue on software arrangements involving multiple elements to the delivered element using the residual method. Our determination of fair value of the undelivered elements in multiple-element arrangements is based on vendor-specific objective evidence (VSOE). We sell our data and professional services separately, and have established VSOE of fair value on this basis. We have established VSOE of fair value for maintenance services for arrangements less than $1 million through selling such services separately. VSOE of fair value for maintenance services for arrangements greater than $1 million is determined based upon the customer’s contractual annual renewal rates. Accordingly, assuming all other revenue recognition criteria are met, revenue from licenses is recognized upon delivery using the residual method in accordance with SOP 98-9, and revenue from data, maintenance and professional services are recognized ratably over their respective terms.

We usually license software products on a perpetual basis. If vendor specific objective evidence does not exist for the undelivered elements of the arrangement, revenue is deferred until the earlier of a) when such evidence does exist for the undelivered elements, or b) when all elements are delivered.

Our customers may require consulting and implementation services which include evaluating their business needs, identifying the data sources necessary to meet these needs and installing the software solution in a manner that fulfills their needs. When licenses are sold together with consulting and implementation services, license fees are recognized upon shipment, provided that a) the above revenue recognition criteria are met, b) payment of the license fees is not dependent upon performance of the consulting services, c) the services do not include significant alterations to the features and functionality of the software and d) VSOE of services has been established as discussed above. To date, services have not been essential to the functionality of the software products for substantially all software agreements.

Maintenance contracts generally call for us to provide technical support and software updates and upgrades to customers. Maintenance revenue is recognized ratably over the term of the maintenance contract, generally on a straight-line basis when all revenue recognition requirements are met. Other service revenue, primarily training and consulting, is generally recognized at the time the service is performed and when it is determined that we have fulfilled our obligations resulting from the service contract.

Deferred Revenue

Deferred revenue represents amounts invoiced to customers under certain license, maintenance and service agreements for which the revenue earnings process has not been completed.

Capitalized Software

Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility in the form of a working model has been established. To date, capitalized costs for our software development have not been material.

Stock-Based Compensation

We account for stock awards issued to employees in accordance with Accounting Principles Board Opinion No. 25 (“APB 25”) “Accounting for Stock Issued to Employees” as interpreted by FASB Interpretation No. 44 (“FIN 44”) “Accounting for Certain Transactions Involving Stock Compensation” and comply with the disclosure provisions of FASB Statement No. 123 (“SFAS 123”) “Accounting for Stock-Based Compensation”. Under APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of our stock and the exercise price of the award. Stock compensation is being amortized over the vesting period on a straight-line basis. In addition, we account for stock issued to non-employees in accordance with the provisions of SFAS 123. Pursuant to SFAS 123, stock-based compensation is accounted for at the fair value of the equity instruments issued, or at the fair value of the consideration received, whichever is more reliably measurable.

Had compensation cost for our stock-based compensation awards been determined using the fair value under SFAS 123 as calculated using the Black-Scholes option pricing model, our net loss and basic and diluted net loss per share would have been increased to the pro forma amounts indicated below:

	Three Months Ended September 30,						Nine Months Ended September 30
	2003			2002			2003			2002
Net loss—as reported	$	(1,825	)	$	(9,116	)	$	(8,520	)	$	(19,393	)
Add: stock-based compensation expense included in reported net loss, net of related tax effect		—			—			—			298
Deduct: total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(639	)		(1,760	)		(3,479	)		(5,422	)

Net loss—pro forma	$	(2,464	)	$	(10,876	)	$	(11,999	)	$	(24,517	)

Basic and diluted net loss per share:
As reported	$	(0.04	)	$	(0.20	)	$	(0.18	)	$	(0.42	)

Pro forma	$	(0.05	)	$	(0.23	)	$	(0.26	)	$	(0.53	)

There were no options granted to employees during the three months ended September 30, 2003 and 2.7 million options were granted during the nine months ended September 30, 2003.

Income Taxes

We use 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 financial statement carrying amounts and the tax basis of existing assets and liabilities. We record a valuation allowance to reduce the net tax asset to an amount for which realization is more likely than not. We have recorded a valuation allowance for substantially all of our deferred tax assets, except to the extent of deferred tax liabilities, as we are presently unable to conclude that it is more likely than not that net deferred tax assets will be realized.

Guarantees

We enter into standard indemnification provisions within our software license agreements with our customers and technology partners. Pursuant to these provisions, we typically indemnify, defend and hold harmless the indemnified party for losses suffered or incurred by the indemnified party in connection with any U.S. patent, copyright or other intellectual property infringement claim by any third party with respect to our products. The term of these indemnification provisions is generally perpetual any time after execution of the license agreement. The maximum potential amount of future payments that we could be required to make under these indemnification provisions is unlimited. We have, in the past, incurred costs to defend intellectual property lawsuits.

We generally warrant that our software products will perform in all material respects in accordance with our standard published specifications. Historically, costs related to this warranty have not been significant.

We have agreements in place with our directors and officers whereby we indemnify them for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have a director and officer insurance policy, which may enable us to recover a portion of any future amounts paid.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding, net of shares subject to repurchase during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares related to options and warrants were not included in the computation of diluted net loss per share because the effect would be anti-dilutive.

NOTE 2. COMPREHENSIVE LOSS

Comprehensive income (loss) is the total of net income (loss) and all other revenue, expenses, gains and losses recorded directly in equity. Sagent’s “other comprehensive loss” consists of foreign currency translation adjustments. There was no significant tax effect on the components of other comprehensive loss for the three and nine months ended September 30, 2003 and 2002.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Net loss	$	(1,825	)	$	(9,116	)	$	(8,520	)	$	(19,393	)
Other comprehensive loss:
Foreign currency translation adjustment		(28	)		(232	)		(73	)		(622	)

Comprehensive loss	$	(1,853	)	$	(9,348	)	$	(8,593	)	$	(20,015	)

NOTE 3. OTHER CURRENT ASSETS

Other current assets consists of:

	September 30, 2003		December 31, 2002
Prepaid licenses	$	161	$	296
Deferred charges		—		669
Other		696		1,237

Total	$	857	$	2,202

Included in prepaid licenses are licensed technologies purchased from third parties, which are integrated into our products prior to deployment. These licensed technologies are being amortized ratably to cost of revenue over the term of the license, generally for a period of two to five years on either a per unit or straight-line basis.

The deferred charges of $669 as of December 31, 2002 related to closing costs and legal fees incurred in connection with short-term debt financing. For the three months ended March 31, 2003, we recognized $669 of interest expense resulting from the change in the nature of this short-term debt (see Note 6 for details), which is included in interest income (expense), net in the unaudited condensed consolidated statements of operations.

NOTE 4. GOODWILL

Goodwill is comprised of the following:

	September 30, 2003		December 31, 2002
Goodwill:
Sagent UK	$	1,746	$	1,746
Sagent France SA		645		645
Sagent GmbH		1,787		1,787
Sagent Asia/Pacific Pte. Ltd		2,455		2,389
Sagent Benelux		151		151

Total	$	6,784	$	6,718

On March 17, 2003 our Board approved the acquisition of the remaining 47% interest in Sagent Asia/Pacific Pte. Ltd. for a total purchase price of $300 plus the forgiveness of amounts owed by the minority interest holder. The transaction was completed on April 1, 2003, and resulted in an additional $66 of goodwill.

NOTE 5. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	September 30, 2003		December 31, 2002
Employee compensation and benefits	$	2,512	$	2,472
Sales and marketing		1,102		1,186
Sales taxes		185		421
Software royalties		348		1,162
Restructuring and related charges (Note 8)		134		607
Other		1,034		540

Total	$	5,315	$	6,388

Included in employee compensation and benefits is $1.2 million in accrued compensation for executives based upon change of control provisions under the terms of their employment contracts.

NOTE 6. SHORT-TERM DEBT

On April 15, 2003, we entered into an Asset Purchase Agreement with Group 1 Software, Inc. (Nasdaq: GSOF). Subject to the terms and conditions of the Asset Purchase Agreement, Group 1 will pay us up to $17 million, in exchange for substantially all of our assets, including all intellectual property, accounts receivable, cash on hand, certain contracts, property & equipment and other designated assets, and the assumption of specified liabilities. The purchase price of $17 million is payable through the cancellation of the secured bridge loans referred to below, with the remainder to be paid in cash. The purchase price of $17 million may be reduced, based on changes in the value of the acquired assets and assumed liabilities prior to the closing. On May 7, 2003, Group 1’s board of directors approved the Asset Purchase Agreement.

Concurrent with the signing of the Asset Purchase Agreement, Group 1 provided us with $5 million in bridge financing, secured by all of our assets (“Bridge Loan”). Of that amount, approximately $3.1 million was used to pay all amounts owed to CDC Software Corporation under a settlement agreement. Under the terms of the bridge financing, Group 1 agreed to lend us an additional $2 million after the Asset Purchase Agreement was approved by Group 1’s board of directors.

On April 15, 2003, Sagent and Group 1 closed on the first $5 million of the total bridge loan financing. The net proceeds to us from the $5 million loan, after settlement of $3.1 million to CDC, were approximately $1.9 million. On May 16, 2003, Sagent and Group 1 closed on the remaining $2 million of the total bridge loan financing and we received net proceeds of $2 million. The loan bears interest of 12% per annum. The principal amount of the loan was initially due and payable on July 31, 2003.

On July 31, 2003, Group 1 agreed to extend the due date of the existing loan to Sagent from July 31, 2003 to September 30, 2003 and to increase the borrowing limit of the loan from $7 million to $9 million. No additional advances were taken against the additional borrowing limit.

For the three and nine months ended September 30, 2003, we incurred interest expense of $213 and $3,010, respectively, which is included in interest income (expense), net in the unaudited condensed consolidated statements of operations. The $213 interest expense related to the bridge loan financing with Group 1. The $3,010 interest expense related to the bridge loan financing with Group 1 and the secured loan with CDC, the accretion of the loan discount attributable to the fair value of the related warrants and the amortization of deferred debt-offering charges under the secured loan with CDC.

NOTE 7. LITIGATION

From time to time, we have been subject to litigation including the pending litigation described below. Because of the uncertainties related to both the amount and range of loss on the pending litigation, in most cases management is unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess its potential liability and revise our estimates. Pending or future litigation could be costly, could cause the diversion of management’s attention and could upon resolution, have a material adverse affect on our business, result of operations, financial condition and cash flow.

In addition, we are engaged in certain legal and administrative proceedings incidental to our normal business activities and believe that these matters will not have a material adverse effect on our financial position, result of operations or cash flow.

From October 20, 2000 to November 27, 2000, several class action lawsuits were filed in the United States District Court for the Northern District of California on behalf of purchasers of our common stock between October 21, 1999 and April 18, 2000. The parties have settled the lawsuit. Our $5.5 million contribution to the settlement was funded by our directors’ and officers’ insurance carriers. On April 28, 2003, the Court approved the settlement and issued a final judgment and order of dismissal with prejudice as to all parties.

On November 17, 2000, a derivative lawsuit was filed by a purported Company shareholder in the Superior Court of California for the County of San Mateo (the “Fanucci Complaint”). On February 9, 2001, a second derivative lawsuit was filed in the Superior Court of California for the County of Santa Clara (the “Hu Complaint”). The parties have settled those lawsuits. As part of the settlements, we agreed to adopt certain corporate governance provisions and to pay $200 in attorneys’ fees and expenses to derivative plaintiffs’ counsel; the payment was funded by our directors’ and officers’ insurance carrier. The Superior Court issued a final order approving the settlements and dismissing the case with prejudice on August 5, 2003.

In October 2001, infoUSA, Inc. filed a complaint against us in the District Court of Douglas County, Nebraska, seeking amounts infoUSA claims are owed under a license agreement between Sagent and infoUSA. The parties entered into a Settlement and Mutual Release Agreement effective January 20, 2003. The Settlement Agreement called for us to pay $700 to infoUSA in full settlement of all claims, at which time the lawsuit will be dismissed. As of September 30, 2003, the remaining payout of $138 was included in accounts payable in the condensed consolidated financial statements. In accordance with the agreement, we paid $150 in January 2003, $137 in April, June and September 2003, respectively, and the remaining $138 will be paid in the fourth quarter of 2003.

In November and December 2001, several class action lawsuits were filed in the United States District Court for the Northern District of California on behalf of purchasers of our stock between May 11, 2001 and November 28, 2001. The complaints alleged that we and certain of our officers and directors violated the Securities Exchange Act of 1934 in connection with our restatement of our condensed consolidated financial statements for the first and second quarters of 2001, resulting from a fraud scheme perpetrated on us by a former employee who falsely claimed to have made sales of our products to the federal government. A consolidated complaint was filed in April 2002, and on September 11, 2002, the court dismissed the complaint with leave to amend. Thereafter, on October 16, 2002, the plaintiffs filed a notice of their intent to stand on the complaint, without further amendment. On July 18, 2003, upon the defendants’ unopposed motion, the Court issued a judgment on the merits against plaintiffs, and in favor of the Company and the officer defendants.

Beginning in February 2002, three derivative lawsuits were filed by purported Company shareholders in the United States District Court for the Northern District of California. The complaints name certain of our present and former officers and directors as defendants. The complaints allege that the defendants breached their fiduciary duties to us through the dissemination of allegedly misleading and inaccurate information. The plaintiffs filed a consolidated complaint on August 26, 2002. The defendants moved to dismiss that complaint on October 10, 2002. On August 15, 2003, the Court dismissed the complaints with leave to amend and denied motions to stay the actions without prejudice. The parties have since stipulated to dismiss all of the complaints.

Following its investigation of the circumstances that lead to the restatement of our financial statements for the first and second quarters of 2001, and the revision of our condensed consolidated financial statements for the third quarter of 2001; we entered the Department of Defense’s (“DOD”) Voluntary Disclosure Program. On June 7, 2002, we filed with the DOD a report of our investigation which revealed that a single non-officer employee was solely responsible for submitting false documents to us which purportedly showed that we had entered into contracts with the federal government, and that we had unwittingly submitted requests for payment to U.S. government agencies not knowing that the employee had fabricated those contracts in order to defraud us of various payments and benefits including commission payments.

In March 2002, we filed suit against MICROS Systems, Inc. (“MICROS”) in Santa Clara County California alleging that MICROS had breached a contract to purchase from us certain software and a related service agreement. On August 5, 2003, the US District Court for the State of Maryland granted Sagent’s motion for summary judgment in the amount of $112 plus pre-judgment interest in the amount of $11. We received $123 in September 2003.

In early 2000, we entered into a software license agreement with Mountain Energy Corporation (“MEC”). MEC filed for bankruptcy in October 2000. Subsequently, the MEC bankruptcy trustee filed a complaint against us to avoid and recover certain preferential transfers. The parties entered into a Settlement Agreement and Release Agreement effective October 29, 2003. The Settlement Agreement calls for us to pay $325 in full settlement of all claims, payable within 10 days after the Court approves the claim as final and non-appealable at which time the Complaint shall be dismissed with prejudice. As of September 30, 2003, the $325 was included in accrued liabilities in the unaudited condensed consolidated financial statements.

In late 1999, we entered into a software license agreement with Convergent Communications Services, Inc. (“CCS”). CCS filed for bankruptcy in April 19, 2001. Subsequently, the CCS bankruptcy trustee filed a complaint against us to avoid and recover certain preferential transfers. The parties entered into a Settlement Agreement effective October 28, 2003. The Settlement Agreement calls for us to pay $50 in full settlement of all claims. The $50 was paid on October 28, 2003. The parties signed and filed with the court a Stipulated Motion to Dismiss the Adversary Proceeding with Prejudice on November 14, 2003. As of September 30, 2003, the $50 was included in accrued liabilities in the unaudited condensed consolidated financial statements.

NOTE 8. RESTRUCTURING COSTS

During the second quarter of 2002, we implemented a restructuring plan, which was executed during the remainder of 2002. The major element of the restructuring plan was to terminate certain employees; as a result, we had a reduction in force of approximately 36% or 94 employees. The reductions came from all areas of our Company, and the terminations were substantially completed by December 31, 2002. Our Chief Executive Officer and President, our Executive Vice President—Sales, and Chief Marketing Officer stepped down as part of this restructuring. Further, we decided to proceed with closing several domestic sales offices and international sales offices in Brazil, Mexico and the Netherlands. We also discontinued our marketing services business due to changes in our strategy. The purpose of the restructuring was to bring operating expenses in line with net revenues with the goal of achieving cash flow breakeven in the near future and strategically focusing our Company on its core business. The restructuring was substantially completed during 2002.

As of September 30, 2003, the remaining restructuring accrual is summarized as follow:

	Severance			Lease Termination Costs			Total
Accrual balance as of December 31, 2002	$	301		$	306		$	607
Cash paid through September 30, 2003		(153	)		(172	)		(325	)
Non-cash charges applied in 2003		(143	)		0			(143	)
Non-cash credit in 2003		(5	)		0			(5	)

Accrual balance at September 30, 2003	$	0		$	134		$	134

Non-cash charges of $143 represented the application of the remaining unpaid severance benefit of a former Chief Executive Officer against his loan balance in accordance with his separation agreement made in August of 2002. We expect to pay the remaining accrual balance, primary related to the vacated leases within the next two quarters.

NOTE 9. RELATED PARTY TRANSACTIONS

Agreements and Arrangement with Former Executive Officers

Prior to August 2000, the Company made loans to certain executive officers of the Company, either in connection with their employment or for the exercise of stock options. These loans had previously been written down to amounts deemed to be realizable. During the third quarter of 2003 we collected $50 and recorded a gain for the same amount which is reflected in general and administrative expenses for the period ended September 30, 2003. During the nine months ended September 30, 2003 we collected $1,485 and recorded a gain of $612, which is reflected under general and administrative expenses in the unaudited condensed consolidated statements of operations.

NOTE 10. SUBSEQUENT EVENT

On October 1, 2003, the asset sale contemplated by the Asset Purchase Agreement was consummated. The Company received $13 million of the purchase price in the form of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan. At closing, Group 1 retained $4.0 million of the purchase price to secure our indemnification obligations under the Asset Purchase Agreement. The final consideration is subject to adjustment based upon the finalization of Sagent’s balance sheet as of the closing date. Under the terms of the Asset Purchase Agreement, Sagent retained approximate $1.5 million in cash, certain other assets and liabilities for outstanding litigation and approximately $1.2 million of accrued compensation payable to key officers.

Most employees of the Company resigned and accepted employment with Group 1.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally preceded by words that imply a future state such as “expected” or “anticipated” or imply that a particular future event or events will occur such as “will.” Investors are cautioned that all forward-looking statements involve risks and uncertainties, and that actual results could be materially different from those discussed in this report. The section below entitled “Risk Factors” and similar discussions in our other SEC reports filed with the SEC discuss some of the important risk factors that may affect our business, results of operations and financial condition. Copies of our reports filed with the SEC are available from us without charge and on the SEC’s website at www.sec.gov. You should carefully consider those risks, in addition to the other information in this report and in our other filings with the SEC, before deciding to invest in our company or to maintain or increase your investment. You should not place undue reliance on our forward-looking statements, as they are not guarantees of future results, levels of activity or performance and represent our expectations only as of the date they are made.

OVERVIEW

We offer a business intelligence software platform that allows business users and information technology (IT) departments to work together to integrate, analyze, deliver and understand information. Our technology and implementation methodology reduce the time and expense required to deploy business intelligence solutions. We develop, market, and support products and services that help businesses collect, analyze, understand, and act on customer and operational information both in batch and in real-time. Our products and services provide a way for an organization’s employees, customers, and partners to use the Internet to examine the internal data they already have and to supplement that data with external, value-added information such as demographic, geographic, or other content and data feeds.

Asset Purchase Agreement with Group 1 Software

On October 1, 2003, the asset sale contemplated by the Asset Purchase Agreement was consummated. The Company received $13.0 million of the purchase price in the form of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan. At closing, Group 1 retained $4.0 million of the purchase price to secure our indemnification obligations under the Asset Purchase Agreement. The final consideration is subject to adjustment based upon the finalization of Sagent’s balance sheet as of the closing date. Under the terms of the Asset Purchase Agreement, Sagent retained approximate $1.5 million in cash, certain other assets and liabilities for outstanding litigation and approximately $1.2 million of accrued compensation payable to key officers.

Most employees of the Company resigned and accepted employment with Group 1.

Pursuant to the terms of the Asset Purchase Agreement, Group 1 held back $4.0 million of the purchase price pending final resolution of the purchase price adjustment, which is estimated to be approximately $2.0 million, resulting in additional cash proceeds of $2 million and an adjusted purchase price of $15 million.

Plan of Liquidation

Pursuant to the amended plan of dissolution, which was approved by the shareholders at a special meeting on September 30, 2003, the Company intends to file articles of dissolution with the Secretary of State of the State of Delaware. After the articles of dissolution are filed, the Company’s operations will be limited to winding-up its business and affairs, selling certain of its other remaining assets, discharging its known liabilities, establishing a contingency reserve for payment of expenses and contingent liabilities, and distributing any remaining assets to its shareholders, all in accordance with the amended plan of dissolution.

Prior to any distribution to our stockholders, we will need to satisfy all outstanding obligations to creditors. We will also attempt to convert any non-cash assets into cash. Uncertainties as to the precise net value of our non-cash assets and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value, if any, ultimately distributable to our stockholders. The actual nature and amount of all distributions will depend in part upon our ability to convert our remaining non-cash assets into cash. We may not be successful in selling our non-cash assets, in which case we may not generate meaningful cash, if any, to return to our stockholders.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments (refer to note 1—basis of presentation) that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation of long-lived assets, intangible assets and goodwill and contingent liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the Company’s critical accounting policies are those related to revenue recognition, the allowance for doubtful accounts, valuation of long-lived assets including goodwill and contingent liabilities. Management believes these policies to be critical because they are both important to the portrayal of the Company’s financial condition and results, and they require management to make judgments and estimates about matters that are inherently uncertain. Additional information about these critical accounting policies may be found in the Company’s 2002 Form 10-K in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies.”

Revenue (amounts in thousands)

	Three Months Ended								Nine Months Ended
	9/30/03				9/30/02				9/30/03				9/30/02
	Amount		%		Amount		%		Amount		%		Amount		%
License	$	4,104	53	%	$	4,549	52	%	$	11,984	53	%	$	15,444	53	%
Service		3,573	47	%		4,265	48	%		10,692	47	%		13,894	47	%

Total Revenue	$	7,677	100	%	$	8,814	100	%	$	22,676	100	%	$	29,338	100	%

Total revenue was $7.7 and $8.8 million for the three months ended September 30, 2003 and 2002, respectively, representing a decrease of 13% or $1.1 million. For the nine months ended September 30, 2003 and 2002, total revenue was $22.7 and $29.3 million, respectively, representing a decrease of 23% or $6.6 million.

License revenue was $4.1 and $4.5 million for the three months ended September 30, 2003 and 2002, respectively, representing a decrease of 9% or $0.4 million. For the nine months ended September 30, 2003 and 2002, license revenue was $12.0 and $15.4 million, respectively, representing a decrease of 22% or $3.4 million.

Service revenue was $3.6 and $4.3 million for the three months ended September 30, 2003 and 2002, respectively, representing a decrease of 16% or 0.7 million. For the nine months ended September 30, 2003 and 2002, service revenue was $10.7 and $13.9 million, respectively, representing a decrease of 23% or $3.2 million.

During the three and nine months ended September 30, 2003 and 2002, our customers’ and potential customers purchasing decisions were impacted by, among other factors: (i) concerns about our viability, (ii) the overall weakness in the global economy, (ii) continued reductions in capital expenditures, (iii) uncertainties in the application software industry as a result of speculation of further consolidation within the industry. As a result, many of our customers and potential customers have: (i) delayed the initiation of the purchasing process, (ii) increased the evaluation time to complete a software purchase, due in part to increased competition and the uncertainty in the application software industry and our viability in particular, and/or (iii) reduced their capital expenditure budgets, thereby restricting their software purchases to well defined current needs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Revenue:
U.S.A. (Domestic)	$	4,447	$	5,665	$	13,475	$	18,376
International		3,230		3,149		9,201		10,962

Total net revenue	$	7,677	$	8,814	$	22,676	$	29,338

Our international revenue was 42% of the total revenue or $3.2 million and 36% or $3.1 million for the three months ended September 30, 2003 and 2002, respectively, representing a slight increase of $0.1 million or 3%. For the nine months ended September 30, 2003, our international revenue was 41% of total revenue or $9.2 million and 37% or $11.0 million for the corresponding revenue in 2002, representing a decrease of $1.8 million or 16%.

We expect no future revenue based on the consummation of the sale of substantially all of our assets to Group 1 Software, Inc. on October 1, 2003.

Cost of Revenue

Cost of revenue from license sales consists primarily of royalties, product packaging, shipping, media, and documentation. Our cost of revenue for license sales was $0.6 and $0.3 million for the three months ended September 30, 2003 and 2002, respectively, representing 14% and 7% of license revenue in the respective period. Our cost of revenue for license sales was $1.6 and $1.4 million for the nine months ended September 30, 2003 and 2002, respectively, representing 14% and 11% of license revenue in the respective period. Our cost of license revenue as a percentage of license revenue increased over the same period in prior year primarily due to additional third party royalties in 2003.

Cost of service revenue consists primarily of personnel costs associated with providing software maintenance, technical support, training and consulting services. Our cost of service revenue was $1.2 and $1.7 million for the three months ended September 30, 2003 and 2002, respectively, representing 33% and 41% of service revenue in the respective period. Our cost of service revenue was $4.1 and $6.1 million for the nine months ended September 30, 2003 and 2002, respectively, representing 38% and 44% of service revenue in the respective period. The decline was mainly attributed to a reduction in salary related expenses as a result of our restructuring effort implemented in 2002.

Further, during the nine months ended September 30, 2002, we booked an impairment charge of $1.2 million related to purchase technology that we no longer expected to utilize.

Gross Margin

Gross margins remained constant at 77% for the three months ended September 30, 2003 and 2002. For the nine months ended September 30, 2003, gross margin increased to 75% from 68% for the corresponding period in 2002. The consistency in gross profit percentage for the three month period was a result of our continuous effort to keep cost of revenue in line with the respective revenue generated during the period. The gross margin increase in the nine month periods was primarily due to the $1.2 million impairment charge for the purchased technology that we recognized in 2002.

Operating Expenses (Amount in thousands, percentage in terms of total revenue)

	Three Months Ended								Nine Months Ended
	9/30/03				9/30/02				9/30/03					9/30/02
	Amount		%		Amount		%		Amount			%		Amount		%
Sales and marketing	$	3,392	44	%	$	5,834	66	%	$	11,330		50	%	$	19,966	68	%
Research and development		2,148	28	%		2,581	29	%		6,628		29	%		9,283	32	%
General and administrative		1,710	22	%		1,385	16	%		4,001		18	%		3,948	13	%
Stock-based compensation		—	—			—	—			—		—			298	1	%
Asset impairments						987	11	%							1,001	3	%
Restructuring costs		—	—			4,734	54	%		(5	)	—			4,873	17	%

Total operating expenses	$	7,250	94	%	$	15,521	176	%	$	21,954		97	%	$	39,369	134	%

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs for sales commissions, sales and marketing programs, sales operations, branch sales facilities and distributor’s commissions. Sales and marketing expenses were $3.4 and $5.8 million for the three months ended September 30, 2003 and 2002, respectively, representing 44% and 66% of total revenue in the respective periods. The decline of $2.4 million or 41% was primarily attributable to a $1.5 million decrease in salary and related expenses due to a reduction in headcount from 97 to 67, a $0.5 million reduction in discretionary marketing and travel related expenses and $0.2 million decrease in facility and related expenses due to closing of several sales offices in 2002. For the nine months ended September 30, 2003, the decline of $8.7 million year over year is primarily attributable to a $4.7 million decrease in salary related expenses resulting from headcount reductions, a $1.7 million reduction in discretionary marketing and travel related expense and $1.1 million decrease in facility related expenses.

Research and Development

Research and development expenses consist primarily of personnel and related costs associated with the development of new products, the enhancement and localization of existing products and quality assurance testing. Research and development expenses were $2.1 and $2.6 million for the three months ended September 30, 2003 and 2002, respectively, representing 28% and 29% of total revenue in the respective periods. The decline of $0.5 million or 19% was primarily attributable to $0.4 million reduction in salary and related expenses due to a reduction in headcount from 45 to 42. For the nine months ended September 30, 2003, the decline of $2.7 million from the prior year is primarily attributable to a $1.9 million decrease in salary related expenses based in part on headcount reductions.

General and Administrative

General and administrative expenses consist primarily of personnel costs for finance, human resources, information systems and general management as well as legal, accounting and bad debt expenses. General and administrative expenses were $1.7 and $1.4 million for the three months ended September 30, 2003 and 2002, respectively, representing 22% and 16% of total revenue in the respective periods. The increase of $0.3 million or 21% was primarily attributed to an increase of $1.2 million for executive bonuses as a result of change of control provisions in their employment contracts, an increase of $0.2 million in proxy solicitation fees offset by a decrease of $0.4 million in facilities and related expenses and a decrease of $0.7 million in foreign exchange transaction loss. For the nine months ended September 30, 2003, general and administrative expenses remained flat compared to the same period in 2002.

Asset Impairments

For the three and nine months ended September 30, 2002, Sagent incurred impairment charges of $1.0 million, consisting of $0.7 million in goodwill and $0.3 million in reserve on shareholders’ notes due to a decline in fair market value.

Restructuring Costs

During the second quarter of 2002, we implemented a restructuring plan, which was executed during the remainder of 2002. The major element of the restructuring plan was to terminate certain employees; as a result, we had a reduction in force of approximately 36% or 94 employees. The reductions came from all areas of our Company, and the terminations were substantially completed by December 31, 2002. Our Chief Executive Officer and President, our Executive Vice President—Sales, and Chief Marketing Officer stepped down as part of this restructuring. We also proceeded with closing several domestic sales offices and international sales offices in Brazil, Mexico and the Netherlands. In addition, we discontinued our marketing services business due to changes in our strategy. The purpose of the restructuring was to bring operating expenses in line with net revenues with the goal of achieving cash flow breakeven in the future and strategically focus our Company on its core business. The restructuring was substantially completed during 2002.

For the nine months ended September 30, 2002, Sagent incurred $4.9 million in restructuring and related charges, consisting primarily of personnel and facility related costs.

Interest income (expense), net

The increase of $0.2 million in net interest expense for the three months ended September 30, 2003 compared to the same period in 2002 was due primarily to interest expense recognized from the bridge loan financing of $7 million. For the nine months ended September 30, 2003, the net increase of $3.0 million in interest expense consisted of $0.6 million interest expense recognized on the short-term debt, a $1.7 million accretion of the loan discount attributable to the fair value of related warrants and $0.7 million amortization of deferred costs.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2003, our principal source of liquidity consisted of $6.4 million of unrestricted cash and cash equivalents and $0.1 million restricted cash in the form of a money market account and certificate of deposit. Since inception, we have funded our operations primarily through private sales of equity securities, the use of equipment leases, secured loans and the initial public offering of our common stock in April 1999, not from cash generated by our business.

Net cash provided by investing activities was $1.3 million for the nine months ended September 30, 2003, which primarily was due to $1.5 million sale and collection of former officer and shareholder notes and $0.1 million proceed from sale of property and equipment offset by $0.3 million used to purchase the remaining 47% minority interest in our Asia/Pacific subsidiary. Net cash provided by investing activities was $0.3 million for the nine months ended September 30, 2002, due primarily to $0.4 million collection of notes due from shareholder offset by $0.1 million in purchases equipment.

Net cash used by financing activities was $1.2 million for the nine months ended September 30, 2003 due primarily to the repurchase of warrants and payments of capital lease obligations. Net cash used by financing activities was $1.8 million for the nine months ended September 30, 2002, due primarily to payments of capital lease obligations.

Net cash used in operating activities was $3.3 million and $8.2 million for the nine months ended September 30, 2003 and 2002, respectively. For such periods, net cash used in operating activities was primarily the result of the funding of our ongoing operations.

Accounts receivable decreased by 24% in the third quarter of 2003 compared with December 31, 2002 balance. The decrease was due primarily to reduced revenue and an aggressive collection effort in the third quarter of 2003.

The following is a summary of our future minimum payments under contractual obligations as of September 30, 2003. These commitments have been assumed by Group 1 in connection with the sale of substantially all of our assets.

(amount in millions)	Remainder Of 2003		2004		2005 and thereafter		Total
Short-term debt (see Note 6)	$	7.4	$	—	$	—	$	7.4
Capital leases		—		0.1		—		0.1
Operating leases		0.2		0.2		—		0.4
Purchase obligation		0.1		—		—		0.1
Restructuring		—		0.1		—		0.1

Total	$	7.7	$	0.4	$	—	$	8.1

We have entered into several agreements to lease facilities in California and several other states as well as in other countries in which we have sales operations. We are also under obligation to pay certain maintenance fees to third party vendors. Purchase obligations relate to our settlement of the commitments with infoUSA pertaining to software maintenance for acquired technology and data renewal contracts. Restructuring consists primarily of personnel and facility related costs for vacated operating leases.

RECENT ACCOUNTING PRONOUNCEMENTS

Consolidation of Variable Interest Entities

In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities.” This interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of certain variable interest entities where there is a controlling financial interest in a variable interest entity or where the variable interest entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. The interpretation applies immediately to variable interest entities created after January 31, 2003 and applies in the first year or interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. We do not have any ownership in any variable interest entities as of September 30, 2003. We will apply the consolidation requirement of FIN 46 in future periods if we should own an interest in any variable interest entity.

Accounting for Certain Financial Instruments

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 addresses certain financial instruments that, under previous guidance, could be accounted for as equity, but now must be classified as liabilities in statements of financial position. These financial instruments include: 1) mandatory redeemable financial instruments, 2) obligations to repurchase the issuer’s equity shares by transferring assets, and 3) obligations to issue a variable number of shares. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The implementation of SFAS No. 150 did not have a material effect on our consolidated financial statements.

RISK FACTORS

Any investment in our common stock involves a high degree of risk. You should consider carefully the following information about risks, together with the other information contained in this report, before you decide whether to buy our common stock or maintain your investment. Additional risks and uncertainties not known to us or that we now believe to be unimportant could also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline, and you may lose all of your investment.

Even though we closed the sale of assets to Group 1 Software, we cannot assure you of the amount, if any, that will be distributed to our stockholders under the plan of liquidation.

Even though the sale of assets to Group 1 is consummated, we cannot assure you that there will be a distribution of any meaningful cash to our stockholders upon our dissolution. $7.4 million of the $17 million purchase price was paid in the form of debt forgiveness. Further, the net amount of $9.6 million in cash ($5.6 million paid in October 2003 and the $4 million retained by Group 1 to secure our indemnification) is subject to reduction, possibly by a substantial amount, to account for changes in value of the transferred assets and assumed liabilities prior to closing.

We may not be able to settle all of our obligations to creditors.

We have current and future obligations to creditors. These include, without limitation, long-term contractual obligations associated with business agreements with customers, including certain product warranties, and other third parties. As part of the wind down process, we will attempt to settle our obligations with our creditors. We may not, however, succeed in doing so. If we cannot reach an agreement with a creditor concerning an obligation, that creditor may choose to bring a lawsuit against us. Any litigation could delay or even prevent us from completing the plan of dissolution. Moreover, amounts required to settle our obligations to creditors will reduce the amount of remaining capital available for distribution to stockholders.

We will continue to incur claims, liabilities and expenses, which will reduce the amount available for distribution to stockholders.

Claims, liabilities and expenses from operations (such as operating costs, salaries, directors’ and officers’ insurance, payroll and local taxes, legal, SEC, accounting and consulting fees and miscellaneous office expenses) will continue to be incurred as we wind down. These expenses will reduce the amount of assets available for ultimate distribution to stockholders. If available cash and amounts received on the sale of non-cash assets are not adequate to provide for our obligations, liabilities, expenses and claims, we may not be able to distribute meaningful cash, or any cash at all, to our stockholders.

Distribution of cash, if any, to our stockholders could be delayed.

Our Board of Directors has not established a firm timetable for distributions to our stockholders, and we are currently unable to predict the precise timing of any distribution, if any, pursuant to our wind down. The timing of distribution, if any, will depend on and could be delayed by, among other things, the timing of sales of our non-cash assets, claim settlements with creditors and the amounts paid out under warranty claims. Additionally, a creditor could seek an injunction against the making of distributions to our stockholders on the ground that the amounts to be distributed were needed to provide for the payment of our liabilities and expenses. Additionally, we could seek protection from creditors under the federal bankruptcy code. Any action of this type could delay or substantially diminish, or eliminate, the amount available for distribution to our stockholders.

If we fail to create an adequate contingency reserve for payment of our expenses and liabilities, our stockholders could be held liable for payment to our creditors of each such stockholder’s pro rata share of amounts owed to the creditors in excess of the contingency reserve, up to the amount actually distributed to such stockholder.

If the plan of dissolution is ratified and approved by our stockholders, we will file a Certificate of Dissolution with the State of Delaware dissolving Sagent. Pursuant to the Delaware General Corporation Law, we will continue to exist for three years after the dissolution becomes effective or for such longer period as the Delaware Court of Chancery shall direct, for the purpose of prosecuting and defending suits against us and enabling us gradually to close our business, to dispose of our property, to discharge our liabilities and to distribute to our stockholders any remaining assets. Under the Delaware General Corporation Law, in the event we fail to create an adequate contingency reserve for payment of our expenses and liabilities during this three-year period, each stockholder could be held liable for payment to our creditors of such stockholder’s pro rata share of amounts owed to creditors in excess of the contingency reserve, up to the amount actually distributed to such stockholder.

However, the liability of any stockholder would be limited to the amounts previously received by such stockholder from us (and from any liquidating trust or trusts) in the dissolution. Accordingly, in such event a stockholder could be required to return all distributions previously made to such stockholder. In such event, a stockholder could receive nothing from us under the plan of dissolution. Moreover, in the event a stockholder has paid taxes on amounts previously received, a repayment of all or a portion of such amount could result in a stockholder incurring a net tax cost if the stockholder’s repayment of an amount previously distributed does not cause a commensurate reduction in taxes payable. There can be no assurance that the contingency reserve established by us will be adequate to cover any expenses and liabilities.

Our stock transfer books will close on the date we file the certificate of dissolution with the Delaware Secretary of State, after which it will not be possible for stockholders to publicly trade our stock.

We intend to close our stock transfer books and discontinue recording transfers of our common stock at the close of business on the date we file the Certificate of Dissolution with the Delaware Secretary of State, referred to as the “final record date.” Thereafter, certificates representing our common stock shall not be assignable or transferable on our books except by will, intestate succession or operation of law. The proportionate interests of all of our stockholders shall be fixed on the basis of their respective stock holdings at the close of business on the final record date, and, after the final record date, any distributions made by us shall be made solely to the stockholders of record at the close of business on the final record date, except as may be necessary to reflect subsequent transfers recorded on our books as a result of any assignments by will, intestate succession or operation of law.

We will continue to incur the expenses of complying with public company reporting requirements.

We have an obligation to continue to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended, referred to as the “Exchange Act,” even though compliance with such reporting requirements is economically burdensome. In order to curtail expenses, we intend to, after filing our Certificate of Dissolution, seek relief from the Securities and Exchange Commission from the reporting requirements under the Exchange Act. We anticipate that, if such relief were granted, we would continue to file current reports on Form 8-K to disclose material events relating to our liquidation and dissolution along with any other reports that the Securities and Exchange Commission might require. However, the Securities and Exchange Commission may not grant any such relief.

We have transferred from the Nasdaq SmallCap Market to the Nasdaq Over-the-Counter Bulletin Board.

In August 2002, we received a notification from The Nasdaq Stock Market that we are out of compliance with the minimum bid price requirement of $1.00 per share set forth in Marketplace Rule 4450(a)(5). Therefore, our common stock is subject to delisting from The Nasdaq National Market. We determined to transition to the Nasdaq SmallCap Market, which would extend the period for which we would be able to regain compliance with the minimum price requirement. In September 2002, Nasdaq informed us that it has approved our application to list our common stock on the Nasdaq SmallCap Market. In November 2002, Nasdaq notified us that we met the initial listing criteria for the SmallCap Market, other than minimum bid price, and that we have until May 6, 2003 to regain compliance with the minimum bid price requirement. On May 7, 2003, Nasdaq notified us that we had until August 4, 2003 to regain compliance. The extension was granted due to our qualification with the $5 million stockholders’ equity requirement under Marketplace rule 4310(c)(2)(A) as reflected in our balance sheet as of December 31, 2003. On July 3, 2003, our common stock was delisted from the NASDAQ as a result of deficiencies relating to the listing standards for stockholders’ equity requirement of $2.5 million as reflected in our balance sheet as of March 31, 2003.

Beginning on July 3, 2003 our common stock began trading on the Nasdaq Over-The-Counter Bulletin Board (“OTCBB”). Trading on the Nasdaq OTCBB could seriously limit the liquidity of our common stock and impair our potential to raise future capital through the sale of our common stock, which could have a material adverse effect on our business. Trading on the Nasdaq OTCBB could also reduce the ability of holders of our common stock to purchase or sell shares as quickly and as inexpensively as they have done historically, and may have an adverse effect on the trading price of our common stock. Trading of our stock on the Nasdaq OTCBB could also adversely affect relationships with vendors and customers.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

The following discusses our exposure to market risk related to changes in interest rates, foreign currency exchange rates and equity prices. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors including those set forth in “Risk Factors”.

INTEREST RATE RISK

Our exposure to market risk related to changes in interest rates is primarily due to our highly liquid investments. We do not use derivative financial instruments. The primarily objective of our investment activities is to preserve principal while maximizing yields without significantly increasing risk. Our investments consist primarily of highly liquid investments and certificate of deposits. Due to the nature of our investments, we believe that there is no material interest rate risk exposure. All investments are carried at cost, which approximates market value. At September 30, 2003 and December 31, 2002, we had $6.4 million and $9.7 million, respectively, in cash and cash equivalents.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Our management evaluated, with the participation of our Chief Executive Officer and our Chief Accounting Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Accounting Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 7. Litigation of the notes to the unaudited condensed consolidated financial statements under Item 1 Part 1.

Item 2. Changes in Securities and Use of Proceeds

Item 3. Defaults upon Senior Securities. Not applicable.

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

A Special Meeting of Shareholders was held on July 15, July 22 and July 28, 2003, however a quorum was not present on any of the dates.

A Special Meeting of Shareholders was held on September 30, 2003 where a majority of the stockholders voted to approve the following three proposals:

To approve the proposed sale of all of the Sagent’s operating assets to Group 1 Software, Inc. described in more detail in the proxy statement.

To approve the Plan of Complete Liquidation and Dissolution of Sagent Technology, Inc.

Following the consummation of the asset sale in Proposal 1, to amend Sagent’s Amended and Restated Certificate of Incorporation to remove the name “Sagent”.

As of September 30, 2003, we had 47,109,843 shares of Common Stock issued and outstanding. There were present at the Meeting in person or by proxy, the holders of 27,763,964 shares of Common Stock of the Company, representing 58.93% of the total votes eligible to be cast, constituting a majority and more than a quorum of the outstanding shares entitled to vote.

The following is a record of the votes cast at the Meeting:

	FOR	AGAINST	ABSTAIN
Proposal 1	26,541,153	1,043,558	179,283
Proposal 2	26,343,090	1,237,911	182,963
Proposal 3	26,511,576	1,026,572	225,816

Item 5. Other Information. Not applicable.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

THE EXHIBITS LISTED IN THE ACCOMPANYING INDEX TO EXHIBITS ARE INCORPORATED BY REFERENCE AS PART OF THIS FORM 10-Q.

(b) Reports on Form 8-K

On August 18, 2003, we furnished a Form 8-K to report that we issued a press release reporting the second quarter 2003 financial results.

On October 7, 2003, we filed a Form 8-K to report that we issued a press release reporting that we closed the Asset Purchase Agreement with Group 1.

On October 15, 2003, we filed a Form 8-K to report that we closed the Asset Purchase Agreement with Group 1.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

SAGENT TECHNOLOGY, INC.

/s/ Andre Boisvert

Andre M. Boisvert

President and Chief Executive Officer

Dated: November 14, 2003

INDEX TO EXHIBITS

Number		Title
2.1	(10)	Asset Purchase Agreement dated April 15, 2003 between the Registrant and Group 1 Software, Inc.

3.1	(1)	Certificate of Incorporation of Registrant.

3.2	(1)	Amended and Restated Certificate of Incorporation of Registrant.

3.3	(1)	Bylaws of Registrant.

4.1	(1)	Form of Registrant’s Common Stock Certificate.

4.2	(2)	Common Stock Rights Agreement dated February 15, 2001 between the Registrant and the parties named therein.

4.3	(4)	Common Stock Rights Agreement dated July 23, 2001 between the Registrant and the parties named therein.

10.1	(1)*	Form of Indemnification Agreement entered into by Registrant with each of its directors and executive officers.

10.2	(1)*	1998 Stock Plan and related agreements.

10.3	(1)*	1999 Employee Stock Purchase Plan and related agreements.

10.4	(1)*	1999 Director Option Plan and related agreements.

10.6	(1)*	Master Equipment Lease Agreement, dated September 28, 1998 between the Registrant and Dell Financial Services, L.P.

10.7	(1)	Standard Office Lease, dated June 1, 1998, by and between the Registrant and Asset Growth Partners, Ltd., and the Amendment thereto.

10.8	(1)+	Development and Licensing Agreement, dated January 22, 1997, between the Registrant and Abacus Concepts, Inc.

10.9	(1)+	Microsoft License and Distribution Agreement, dated August 23, 1996, between the Registrant and Microsoft Corporation.

10.10	(1)+	Sagent KK Non-Exclusive Japanese Distribution Agreement, dated as of December 17, 1997, between Sagent KK Japan and Kawasaki Steel Systems R&D Corporation.

10.11	(1)	Form of Sagent Technology, Inc. End User Software License Agreement.

10.12	(1)+	OEM Software License Agreement, effective March 31, 1998, between the Registrant and Siebel Systems, Inc.

10.13	(1)	Form of Sagent Technology, Inc. Software Maintenance and Technical Support Agreement.

10.14	(1)	Form of Sagent Technology, Inc. Agreement for Consulting Services.

10.15	(1)	Form of Sagent Technology, Inc. Agreement for Subcontractor Consulting Services.

10.16	(1)	Form of Evaluation Agreement.

10.17	(1)	Notes, dated February 1, 1999 between the Registrant and Virginia Walker.

10.18	(1)	Notes, dated February 1, 1999 between the Registrant and Virginia Walker.

10.19	(1)+	Solution Provider Agreement, effective June 27, 1997, between the Registrant and Unisys Corporation.

10.20	(1)*	Executive Change of Control Policy.

10.21	(1)+	Software License and Services Agreement, dated March 31, 1998, between the Registrant and Siebel Systems, Inc.

10.24	(1)	Nonexclusive International Software Value Added Reseller (“VAR”) Agreement, dated December 8, 1997, between the Registrant and Opalis S.A.

10.25	(2)*	Employment Agreement dated August 4, 2000, between the Registrant and Ben C. Barnes.

10.27	(2)	Common Stock Purchase Agreement dated February 15, 2001, between the Registrant and the parties named therein.

10.28	(3)*	Service Agreement, dated January 1, 2001, between the Registrant and Arthur Parker.

10.29	(4)	Stock Purchase Agreement dated July 23, 2001, between the Registrant and the parties named therein.

10.31	(6)*	Offer letter dated October 31, 2001, between the Registrant and Steven R. Springsteel, and addendum dated November 16, 2001.

10.32	(6)*	Settlement Agreement and Mutual Release dated December 31, 2001, between the Registrant and Kenneth C. Gardner.

10.33	(7)*	Agreement dated July 22, 2002, between the Registrant and Steven R. Springsteel.

10.34	(7)*	Agreement dated July 22, 2002, between the Registrant and Andre M. Boisvert.

Number		Title
10.36	(7)*	Separation Agreement and Release executed on October 7, 2002, between the Registrant and Ben C. Barnes.

10.38	(8)	Investor’s Rights Agreement, dated November 1, 2002, between the Registrant and CDC Software Corporation.

10.39	(8)	Note and Warrant Purchase Agreement, dated October 24, 2002, between the Registrant and CDC Software Corporation.

10.40	(8)	Security Agreement, dated October 24, 2002, between the Registrant and CDC Software Corporation.

10.41	(8)	Security Promissory Note, dated November 1, 2002, between the Registrant and CDC Software Corporation.

10.42	(8)	Warrant, dated November 1, 2002, issued by Registrant to CDC Software Corporation.

10.43	(8)	Security Promissory Note, dated December 31, 2002, between the Registrant and CDC Software Corporation.

10.44	(8)	Warrant, dated December 31, 2002, issued by Registrant to CDC Software Corporation.

10.45	(9)	Warrant, dated November 1, 2002, issued by Registrant to Baruch Halpern and Shoshana Halpern.

10.46	(9)	Warrant, dated November 1, 2002, issued by Registrant to David Dohrmann.

10.47	(9)	Warrant, dated December 31, 2002, issued by Registrant to Baruch Halpern and Shoshana Halpern.

10.48	(9)	Warrant, dated December 31, 2002, issued by Registrant to David Dohrmann.

10.49	(11)*	Amendment to Employment Agreement dated January 20, 2003, between the Registrant and Andre M. Boisvert.

31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Accounting Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference to the exhibits to the Registrant’s Registration Statement on Form S-1 (No. 333-71369), declared effective by the Securities and Exchange Commission (SEC) on April 14, 1999.

(2)	Incorporated by reference to the exhibits to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000.

(3)	Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001.

(4)	Incorporated by reference to the exhibits to the Registrant’s Current Report on Form 8-K filed with the SEC on August 7, 2001.

(5)	Incorporated by reference to the exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on October 19, 2000.

(6)	Incorporated by reference to the exhibit to the Registrant’s Annual Report on Form 10-K filed with the SEC on April 1, 2002.

(7)	Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2002.

(8)	Incorporated by reference to the exhibit to the Registrant’s Form S-3 filed with the SEC on December 31, 2002.

(9)	Incorporated by reference to the exhibit to the Registrant’s Form S-3/A filed with the SEC on March 14, 2003.

(10)	Incorporated by reference to the exhibit to the Registrant’s Current Report on 8-K filed with the SEC on April 17, 2003.

(11)	Incorporated by reference to the exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2003.

*	Denotes management contract or compensatory plan or arrangement.

+	Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

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SAGENT TECHNOLOGY INC 10-Q