<PAGE>

                                  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 QUARTER ENDED SEPTEMBER 30, 2001

                                       OR

[ ]     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                     (I.R.S. EMPLOYER
       INCORPORATION OR ORGANIZATION)                   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 such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [] No [X]

     As of December 5, 2001, Registrant had 46,234,761 shares of common stock
issued and outstanding.


<PAGE>



                                TABLE OF CONTENTS

              SAGENT TECHNOLOGY, INC. QUARTERLY REPORT ON FORM 10-Q
                     FOR THE PERIOD ENDED SEPTEMBER 30, 2001

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                 PAGE NO.
                                                                                                 --------
<S>      <C>                                                                                     <C>
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 Unaudited Condensed Consolidated Financial Statements                              6
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations      11
Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                 22

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                          22
Item 2.  Changes in Securities and Use of Proceeds                                                  23
Item 6.  Exhibits and Reports on Form 8-K                                                           24
SIGNATURES                                                                                          25
INDEX TO EXHIBITS                                                                                   26
</TABLE>


                                       2
<PAGE>



                         PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             SAGENT TECHNOLOGY, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                 SEPTEMBER 30,   DECEMBER 31,
                                                                                     2001           2000
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
Assets
Current assets:

    Cash and cash equivalents                                                    $     19,117    $      6,372
    Accounts receivable, net of allowance for doubtful accounts of $1,760
       in 2001 and $4,968 in 2000                                                      12,481          14,667
    Other current assets                                                                4,485           6,261
                                                                                 ------------    ------------
             Total current assets                                                      36,083          27,300
Property and equipment, net                                                             6,832           5,718
Goodwill, net                                                                           6,989           7,323
Notes receivable from officers                                                          2,973           3,151
Other assets                                                                            1,779           2,595
                                                                                 ------------    ------------
             Total assets                                                        $     54,656    $     46,087
                                                                                 ============    ============
Liabilities and Stockholders' Equity
Current liabilities:

    Accounts payable                                                             $      3,221    $      3,296
    Accrued liabilities                                                                 6,343           5,842
    Deferred revenue                                                                    7,860           8,352
    Current portion of capital lease obligations                                        2,390           1,037
                                                                                 ------------    ------------
             Total current liabilities                                                 19,814          18,527
Deferred rent                                                                             157             245
Long-term portion of capital lease obligations                                          1,922             650
                                                                                 ------------    ------------
             Total liabilities                                                         21,893          19,422
                                                                                 ------------    ------------
Stockholders' equity:
    Common stock, par value $.001 per share; authorized: 70,000 shares in
       September 30, 2001 and December 31, 2000; Issued and outstanding 46,006
       and 29,829 at September 30, 2001 and December 31,2000, respectively                 46              30
    Additional paid-in capital                                                        133,450          97,354
    Deferred stock compensation                                                        (1,239)         (1,566)
    Notes receivable from stockholders                                                 (2,521)         (2,423)
    Accumulated other comprehensive income                                                195             211
    Accumulated deficit                                                               (97,168)        (66,941)
                                                                                 ------------    ------------
             Total stockholders' equity                                                32,763          26,665
                                                                                 ------------    ------------
             Total liabilities and stockholders' equity                          $     54,656    $     46,087
                                                                                 ============    ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                       3
<PAGE>


                             SAGENT TECHNOLOGY, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED                NINE MONTHS ENDED
                                                      SEPTEMBER 30,                     SEPTEMBER 30,
                                              -----------------------------     -----------------------------
                                                  2001             2000             2001             2000
                                              ------------     ------------     ------------     ------------
<S>                                           <C>              <C>              <C>              <C>
Revenue:
    License                                   $      5,860     $      7,823     $     17,329     $     27,513
    Service                                          5,588            5,996           16,944           18,346
                                              ------------     ------------     ------------     ------------
       Total net revenue                            11,448           13,819           34,273           45,859
                                              ------------     ------------     ------------     ------------
Cost of revenue:
    License                                          1,594              573            3,345            1,716
    Service                                          2,527            2,990            8,517            7,465
                                              ------------     ------------     ------------     ------------
       Total cost of revenue                         4,121            3,563           11,862            9,181
                                              ------------     ------------     ------------     ------------
Gross profit                                         7,327           10,256           22,411           36,678
                                              ------------     ------------     ------------     ------------
Operating expenses:
    Sales and marketing                             10,090            9,768           28,373           27,741
    Research and development                         3,273            4,525           10,679           12,818
    General and administrative                       4,670            4,047           11,493            8,140
    Merger and integration charge (credit)              --              368               --           (2,318)
    Asset impairment                                 1,636               --            1,636               --
                                              ------------     ------------     ------------     ------------
       Total operating expenses                     19,669           18,708           52,181           46,381
                                              ------------     ------------     ------------     ------------
Loss from operations                               (12,342)          (8,452)         (29,770)          (9,703)
Other income (expenses), net                          (166)             270             (148)           1,052
                                              ------------     ------------     ------------     ------------
Net loss before income taxes                       (12,508)          (8,182)         (29,918)          (8,651)
Provision for income taxes                             252              199              309              216
                                              ------------     ------------     ------------     ------------
Net loss                                      $    (12,760)    $     (8,381)         (30,227)          (8,867)
                                              ============     ============     ============     ============
Basic and diluted net loss per share          $      (0.31)    $      (0.29)    $      (0.82)    $      (0.31)
                                              ============     ============     ============     ============
Shares used in computing basic and diluted
    net loss per share                              41,146           28,490           37,035           28,358
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.



                                       4
<PAGE>


                             SAGENT TECHNOLOGY, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                     -----------------------------
                                                                                         2001             2000
                                                                                     ------------     ------------
<S>                                                                                  <C>              <C>
Cash flows from operations:
Net loss                                                                             $    (30,227)    $     (8,867)
  Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization                                                            4,796            3,927
   Asset impairment                                                                         1,636               --
   Bad debt expense                                                                         2,289            2,064
   Stock-based employee compensation                                                          649               60
   Accrued interest on notes receivable from officers                                        (164)              --
   Officer notes forgiven                                                                     243               --
   Share of losses in equity investment                                                        --               50
   Change in operating assets and liabilities:
      Accounts receivable                                                                     748           (3,552)
      Other current assets                                                                    845           (5,676)
      Other assets                                                                            421           (2,994)
      Accounts payable                                                                       (231)           1,605
      Accrued liabilities                                                                    (248)          (2,173)
      Deferred revenue                                                                       (834)             254
      Deferred rent                                                                           (88)              --
      Accrued merger costs                                                                     --           (4,109)
                                                                                     ------------     ------------
Net cash used in operating activities                                                     (20,165)         (19,411)
                                                                                     ------------     ------------
Cash flows from investing activities:
  Sale of marketable securities                                                                --           58,061
  Purchase of marketable securities                                                            --          (39,667)
  Acquisition of Sagent do Brazil and others                                                   --           (1,166)
  Cash acquired in purchase of Sagent Asia/Pacific Pte. Ltd                                 2,298               --
  Other business acquisitions, net of cash acquired                                           (88)            (900)
  Purchases of property and equipment                                                        (505)          (5,250)
  Proceeds from sale of acquired technology                                                    50               --
  Proceeds from disposal of property and equipment                                             --            1,210
                                                                                     ------------     ------------
Net cash provided by investing activities                                                   1,755           12,288
                                                                                     ------------     ------------
Cash flows from financing activities:
  Payments of principal under capital lease obligations                                    (1,145)            (346)
  Proceeds from issuance of common stock                                                   32,281            1,781
  Proceeds from exercise of stock options                                                      35            1,118
                                                                                     ------------     ------------
Net cash provided by financing activities                                                  31,171            2,553
                                                                                     ------------     ------------
Effect of exchange rate changes on cash                                                       (16)             149
                                                                                     ------------     ------------
Net increase (decrease) in cash and cash equivalents                                       12,745           (4,421)
Cash and cash equivalents, beginning of the period                                          6,372           15,910
                                                                                     ------------     ------------
Cash and cash equivalents, end of the period                                         $     19,117     $     11,489
                                                                                     ============     ============
Supplemental disclosure of cash flow information:
  Cash payments for interest                                                         $        470     $        108
  Cash payments for taxes                                                            $        133     $        203
Supplemental disclosure of non-cash investing and financing activity:

  Issuance of common stock to Sagent do Brazil                                       $         --     $        500
  Equipment acquired under capital leases                                            $      3,770     $      1,277
  Warrants issued in connection with private placement                               $      1,355               --
  Issuance of common stock to acquire additional interest in Sagent Asia/Pte Ltd.    $      3,475               --
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.



                                       5
<PAGE>



                             SAGENT TECHNOLOGY, INC.
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except where noted)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS.

Sagent Technology, Inc., (Sagent), develops, markets and supports software
designed to address organizations' information access, analysis and delivery
needs.

BASIS OF PRESENTATION.

The 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 year amounts have been reclassified to conform to the current year
presentation. In the opinion of management, the 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, 2001 and
December 31, 2000, the operating results for the three and nine months ended
September 30, 2001 and 2000 and cash flows for the nine months ended September
30, 2001 and 2000. These financial statements and notes should be read in
conjunction with Sagent's audited financial statements and notes thereto for the
year ended December 31, 2000, included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission on April 6, 2001. The
results of operations for the three and nine months ended September 30, 2001 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2001.

In November 2001, the Company discovered that certain sales orders were invalid.
The Company undertook an investigation which determined that the invalid sales
orders were limited to software licenses to certain government agencies
submitted by one employee in the Fairfax, Va. office. As a result, the condensed
consolidated financial statements included in the Quarterly Reports on Form 10-Q
filed on May 15, 2001 and August 14, 2001 were restated to remove the effect of
the invalid sales orders. The results of operations set forth in this report for
the nine months ended September 30, 2001, reflect such restated financial
information.

PRINCIPLES OF CONSOLIDATION.

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

USE OF ESTIMATES.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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 revenues and expenses during the reporting period. Actual results
could differ from those estimates.

FOREIGN CURRENCY TRANSLATION

The local currency is the functional currency of the majority of Sagent's
subsidiaries. Assets and liabilities are translated into U.S. dollars at
exchange rates in effect at the balance sheet date, and income and expense items
are translated at average rates for the period. Gains or losses from foreign
currency translation adjustments are included in "Accumulated other
comprehensive income".

CASH AND CASH EQUIVALENTS.



                                       6
<PAGE>


Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less at the time of purchase. Sagent's cash
equivalents at September 30, 2001 and December 31, 2000 consisted of deposits in
domestic and foreign banks and money market funds.

IMPAIRMENT OF LONG-LIVED ASSETS

Sagent reviews long-lived assets, including goodwill, for impairment whenever
events or changes in business circumstances indicate that the carrying amount of
the assets may not be fully recoverable or that the useful lives of other assets
are no longer appropriate. Each impairment test is based on a comparison of the
undiscounted cash flows to the recorded value of the asset. If an impairment is
indicated, the asset is written down to its net realizable value. During the
nine months ended September 30, 2001, there was $412 impairment of goodwill and
long-lived assets.

BUSINESS RISK AND CONCENTRATION OF CREDIT RISK.

Financial instruments which potentially subject Sagent to concentrations of
credit risk consist primarily of trade accounts receivable. Sagent maintains
allowances for potential credit losses on trade accounts receivable and such
losses to date have been within management's expectations. There were no
customers with balances due to Sagent in excess of 10% of aggregate accounts
receivable at September 30, 2001 or September 30, 2000.

REVENUE RECOGNITION.

Revenue consists principally of fees for licenses of Sagent's software products,
maintenance, consulting, and training. Sagent recognizes revenue using the
residual method in accordance with Statement of Position 97-2 (SOP 97-2),
"Software Revenue Recognition," as amended by SOP 98-9, "Modification of SOP
97-2, Software Revenue Recognition with Respect to Certain Transactions." Under
the residual method, revenue is recognized in a multiple element arrangement in
which Company-specific objective evidence of fair value exists for all of the
undelivered elements in the arrangement, but does not exist for one or more of
the delivered elements in the arrangement. Sagent's specific objective evidence
of fair value of maintenance and other services is based on Sagent's customary
pricing for such maintenance and/or services when sold separately. At the outset
of the arrangement with the customer, Sagent defers revenue for the fair value
of its undelivered elements (e.g., maintenance, consulting, and training) and
recognizes revenue for the remainder of the arrangement fee attributable to the
elements initially delivered in the arrangement (i.e., software product) when
the basic criteria in SOP 97-2 have been met. If such evidence of fair value for
each undelivered element of the arrangement does not exist, all revenue from the
arrangement is deferred until such time that evidence of fair value does exist
or until all elements of the arrangement are delivered.

When Sagent carries the risks and rewards of ownership, collection, delivery and
return on its dealings with its distributors and agents, at the outset of the
transaction Sagent recognizes revenue on a gross basis based on the guidelines
of SAB 101 and EITF 99-19. Sagent reviews each transaction on an individual
basis to determine whether it meets the appropriate criteria. The distributors'
fees, on these transactions, are reflected in the Sales and Marketing Expenses.

Under SOP 97-2, revenue attributable to an element in a customer arrangement is
recognized when persuasive evidence of an arrangement exists, delivery has
occurred, the fee is fixed or determinable, collectibility is probable, and the
arrangement does not require services that are essential to the functionality of
the software. If at the outset of the customer arrangement, the Company
determines that the arrangement fee is not fixed or determinable, revenue is
recognized when the arrangement fee becomes due and payable. If at the outset of
the customer arrangement, Sagent determines that collectibility is not probable;
revenue is recognized as the arrangement fee is collected.

Sagent's specific policies for recognition of license revenues and services
revenues are as follows:

License revenue. Sagent recognizes revenue from sales of software licenses to
end users upon: determination that persuasive evidence of an arrangement exists;
delivery of the software to a customer; determination that collection of a fixed
or determinable license fee is probable; and determination that no undelivered
services are essential to the functionality of the licensed software. If
consulting services are essential to the functionality of the licensed software,
then both the license revenue and the consulting service revenue are recognized
as the services are performed. The Company's arrangements generally do not
include services that are essential to the functionality of the software.


                                       7
<PAGE>


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 of the Company have been satisfied.
However, if the contract stipulates a non-refundable royalty payment to be paid
in advance of any resales, revenue is recognized upon execution of the contract.

Service revenue. Maintenance contracts generally call for the Company 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 it is determined that the
Company has fulfilled its obligations resulting from the services contract.

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

SOFTWARE DEVELOPMENT COSTS

Software development costs are included in product development and are expensed
as incurred. After technological feasibility is established, material software
development costs are capitalized in accordance with SFAS No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed."
The period between achieving technological feasibility, which Sagent has defined
as the establishment of a working model, typically occurring when the beta
testing commences, and the general availability of such software has been short,
and software development costs qualifying for capitalization have been
insignificant.

NET INCOME (LOSS) PER SHARE.

Basic net income (loss) per share is computed by dividing the net income (loss)
available to common stockholders for the period by the weighted average number
of common shares outstanding during the period. Diluted net income (loss) per
share is computed by dividing the net income (loss) for the period by the
weighted average number of common and common equivalent shares outstanding
during the period. Options, warrants and convertible preferred stock are not
included in the computation of diluted net income (loss) per share for those
periods in which Sagent incurred a loss because the effect would be
antidilutive.

NOTE 2. COMPREHENSIVE LOSS

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, 2001 and 2000,
respectively.

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                          SEPTEMBER 30,                     SEPTEMBER 30,
                                                  -----------------------------     -----------------------------
                                                      2001             2000             2001             2000
                                                  ------------     ------------     ------------     ------------
<S>                                               <C>              <C>              <C>              <C>
Net loss                                          $    (12,760)    $     (8,381)    $    (30,227)    $     (8,867)
   Other comprehensive income (loss)
       Foreign currency translation adjustment              48                2              (16)             149
                                                  ------------     ------------     ------------     ------------
   Comprehensive loss                             $    (12,712)    $     (8,379)    $    (30,243)    $     (8,718)
                                                  ============     =============    ============     ============
</TABLE>

NOTE 3. ASSET IMPAIRMENTS

During the three months ended September 30, 2001, the Company recorded an asset
impairment charge of $1,636 that consisted of $361 reduction in the carrying
value of goodwill, $1,187 impairment of prepaid data center services, and $88 of
other losses related to the closing of a remote facility.

NOTE 4. GOODWILL

Goodwill is comprised of the following:

<TABLE>
<CAPTION>
                                               USEFUL       SEPTEMBER 30,   DECEMBER 31,
                                                LIFE            2001            2000
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
        Goodwill, net:
            Sagent UK                                  5    $      1,926    $      2,496
            Sagent France S.A                          5             700             863
            Sagent GmbH                                5           1,935           2,378
</TABLE>

                                       8
<PAGE>

<TABLE>
<S>                                         <C>             <C>             <C>
            Sagent do Brazil                           5             801             971
            Smarter Software, Inc.                     2              88             615
            Sagent Asia/Pacific Pte. Ltd               5           1,369              --
            Sagent Benelux                             5             170              --
                                                            ------------    ------------
                                                            $      6,989    $      7,323
                                                            ============    ============
</TABLE>

In August 2001, Sagent sold the Smarter Software customer list for $50 cash and
future royalty of $88 recoverable within eighteen months following the date of
the contract. As a result of this transaction, the Smarter Software goodwill was
considered to be partially impaired and Sagent incurred an asset impairment
charge of $361 during the three months ended September 30, 2001.

NOTE 5. OTHER ASSETS

Other assets is comprised of the following:

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30,   DECEMBER 31,
                                                              2001            2000
                                                          ------------    ------------
<S>                                                       <C>             <C>
        Other assets:
            Investment in Sagent Asia/Pacific Pte. Ltd    $         --    $        830
            Investment in NetAcumen                                759             759
            Deposits                                               790             942
            Other                                                  230              64
                                                          ------------    ------------
                                                          $      1,779    $      2,595
                                                          ============    ============
</TABLE>

The investment in NetAcumen is accounted for under the cost method. Investment
in Sagent Asia/Pacific Pte. Ltd., a joint venture between Sagent and eGlobal,
was accounted for under the equity method as of December 31, 2000. Sagent's
ownership interest in NetAcumen, Inc. was 8.7% as of September 30, 2001 and
December 31, 2000. Sagent's ownership interest in Sagent Asia/Pacific Pte. Ltd.
become 53% (see Note 6), and 19.99% as of September 30, 2001 and December 31,
2000 respectively. There were no sales to NetAcumen for the nine months ended
September 30, 2001 and 2000.

NOTE 6. INVESTMENT IN SUBSIDIARIES

On January 19, 2001, Sagent acquired an additional 33% interest in Sagent
Asia/Pacific Pte. Ltd from eGlobal, a privately held company that specializes in
distribution of technology services in Singapore. In consideration for 950
shares of Sagent's common stock, valued at $3.5 million, Sagent received an
additional 2,113 common shares of Sagent Asia/Pacific Pte. Ltd. This brings the
total interest of Sagent in Sagent Asia/Pacific Pte. Ltd to 53%. The acquisition
was recorded under the purchase method of accounting. In connection with the
acquisition, Sagent recorded goodwill of $1,516, which is being amortized on a
straight-line basis over a period of five years and acquired net assets of
approximately $2,790 consisting primarily of cash and accounts receivable. The
results of operations for Sagent Asia/Pacific Pte. Ltd. have been included in
our consolidated results from the date of the acquisition. No minority interest
in the losses of Sagent Asia/Pacific has been recognized because the minority
interest holders are not required to make additional capital contributions.

On April 9, 2001, Sagent acquired 100% interest in Sagent Benelux for cash of
$100 and the assignment of a portion of Sagent's outstanding accounts receivable
valued at $200 to the Selling Shareholders. The acquisition was recorded under
the purchase method of accounting. In connection with the acquisition, Sagent
recorded goodwill of $197, which is being amortized on a straight-line basis
over a period of five years. The results of operations of Sagent Benelux have
been included in our consolidated results from the date of the acquisition.

NOTE 7. PRIVATE PLACEMENT

In February 2001, Sagent completed a private placement of approximately 5,750
shares of its common stock and received proceeds of $16,047, net of $628 in
offering costs. In connection with the private placement, Sagent also issued to
certain placement agents warrants to purchase 210 shares of Sagent's common
stock with an estimated fair value of $469, which has been included in
additional paid-in capital. This estimated fair value was calculated using the
Black-Scholes option pricing model with the following factors and assumptions :
expected volatility of 130%, contractual life of 5 years, stock price of $2.78
on the date of grant, exercise price of $2.90, and risk free interest rate of 5%
per annum.



                                       9
<PAGE>


In August 2001, Sagent completed a private placement of approximately 9,115
shares of its common stock and received proceeds of $15,842, net of $981 in
offering costs. In connection with the private placement, Sagent also issued to
certain placement agents warrants to purchase 456 shares of Sagent's common
stock with an estimated fair value of $886, which has been included in
additional paid-in capital. This estimated fair value was calculated using the
Black-Scholes option pricing model with the following factors and assumptions :
expected volatility of 135.8%, contractual life of 4 years, stock price of $2.27
on the date of grant, exercise price of $1.84, and risk free interest rate of
4.13% per annum.

NOTE 8. LITIGATION

From October 20, 2000 to November 27, 2000, several class action lawsuits were
filed in the United States District Court on behalf of the individual investors
who purchased Sagent common stock between October 21, 1999 and April 18, 2000.
The claims allege that we misrepresented our prospects for 1999 and the first
quarter of 2000. Thereafter, the court consolidated the complaints and selected
a lead plaintiff and counsel. A consolidated amended complaint was filed in
April 2001.

The defendants filed a motion to dismiss the consolidated amended complaint. On
September 28, 2001, the court granted the defendants' motion, and gave the
plaintiffs leave to amend the complaint.

On November 17, 2000, a derivative lawsuit was filed by a purported Sagent
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 complaints name certain of our present and former officers and
directors as defendants. The Hu complaint also names an investment bank retained
by us and an employee of that firm as defendants. We have also been named as a
nominal defendant. The principal allegation of the complaints is that the
defendants breached their fiduciary duties to us. In July 2001, the two cases
were coordinated for pretrial purposes in the Superior Court of California for
the County of Santa Clara.

Sagent filed a motion to dismiss the Fanucci complaint, on the ground that,
among other things, the plaintiff had failed to make a pre-suit demand on the
board of directors as required by Delaware law. The officer and director
defendants joined in that motion, and also moved to dismiss on the grounds that
the complaint fails to allege the asserted causes of action against the
individual defendants. Similar motions were filed concerning the Hu complaint.

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 investors who purchased Sagent common stock between May 11, 2001 and November
28, 2001. The complaints allege that Sagent and certain of its officers and
directors violated the Securities Exchange Act of 1934. The complaints allege
that during the class period, the defendants caused Sagent's shares to trade at
artificially inflated levels through the issuance of false and misleading
financial statements.

NOTE 9. LOANS TO OFFICERS

At September 30, 2001 and December 30, 2000, loans to officers represent
five-year promissory notes to key executives. These promissory notes are full
recourse. For the nine months ended September 30, 2001, Sagent has forgiven a
total $243 from the balance due from two of the officers. Such amounts have been
recorded in general and administrative expense. $749 of the outstanding loans
will be forgiven during the remaining life of the note, contingent upon the
continued employment of the officer.

NOTE 10. COMMITMENTS

Sagent leases various facilities under noncancelable operating leases and has
acquired certain computer and other equipment under capital lease obligations
which are collateralized by the related assets. Future minimum lease payments
under these commitments at September 30, 2001 are as follows:


<TABLE>
<CAPTION>
                                                  OPERATING LEASES    CAPITAL LEASES
                                                  ----------------    --------------
<S>                                               <C>                 <C>
        Remaining 2001                             $          763     $        1,170
        2002                                                2,733              2,832
        2003                                                1,926              1,093
</TABLE>


                                       10
<PAGE>



<TABLE>
<S>                                                <C>                <C>
        2004                                                  505                 23
        Thereafter                                            104                 13
                                                   --------------     --------------
        Total minimum lease payments               $        6,031     $        5,131
                                                   ==============
        Less: amount representing interest                                      (819)
                                                                      --------------
        Present value of minimum lease payments                       $        4,312
        Current portion                                                        2,390
                                                                      --------------
        Long-term portion                                             $        1,922
                                                                      ==============
</TABLE>

NOTE 11. SUBSEQUENT EVENTS

In November 2001, Sagent entered into a $5 million line of credit agreement with
a financial institution collateralized by the assets of Sagent. The line
consists of advances against eligible accounts receivable in an aggregate amount
not to exceed the lesser of, the committed revolving line of the borrowing base,
less any outstanding letters of credit, foreign exchange contracts, or any other
extension of credit by the financial institution. Advances against the revolving
line bear interest at a rate equal to 1% above the Prime Rate. The line of
credit expires on October 5, 2002.

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS 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 "Factors That May Affect
Future Results" 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.

In November 2001, the Company discovered that certain sales orders were invalid.
The Company undertook and investigation which determined that the invalid sales
orders were limited to software licenses to certain government agencies
submitted by one employee in the Washington D.C. office. As a result, the
unaudited condensed consolidated financial statements included in the Quarterly
Reports on Form 10-Q filed on May 15, 2001 and August 14, 2001 were restated to
remove the effect of the invalid sales orders. To the extent the following
discussion and analysis refers to financial results for the nine months ended
September 30, 2001, such discussion and analysis refers to such results as so
revised.

OVERVIEW

We provide business intelligence solutions that enable enterprises to win,
retain, and grow new customers and improve operational effectiveness. 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. We refer to our products as business intelligence solutions because
they enable organizations to rapidly make more informed, intelligent decisions
and to spread that ability across the enterprise.

Revenue

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

We derive our revenue from license fees for software products and fees for
services relating to the software products, including consulting, training,
software and data updates, technical support and real-time marketing services
over the Internet.



                                       11
<PAGE>


We recognize revenue from sales of software licenses to end users upon:
determination that persuasive evidence of an arrangement exists; delivery of the
software to a customer; determination that collection of a fixed or determinable
license fee is probable; and determination that no undelivered services are
essential to the functionality of the licensed software.

If consulting services are essential to the functionality of the licensed
software, then both the license revenue and the consulting service revenue are
recognized as the services are performed. Our arrangements regarding sales of
software licenses generally do not include services that are essential to the
functionality of the software.

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.

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 the Company has fulfilled
our obligations resulting from the services contract.

Statement of Position, 97-2, "Software Revenue Recognition" (SOP 97-2) was
issued in 1997 by the American Institute of Certified Public Accountants (AICPA)
and amended by Statements of Position 98-4 and 98-9. We adopted SOP 97-2
effective January 1, 1998. Based on our reading and interpretation of SOP's
97-2, 98-4 and 98-9, we believe our current revenue recognition policies and
practices are consistent with SOP's 97-2, 98-4, and 98-9.

RESULTS OF OPERATIONS

The following tables set forth for the periods presented, certain data, from our
unaudited condensed consolidated statements of operations, including data as a
percentage and dollar amount of total revenue. The information contained in the
tables below should be read in conjunction with the Unaudited Condensed
Consolidated Financial Statements and Notes thereto included elsewhere in this
quarterly report on Form 10-Q.

TABLE I: DATA PRESENTED AS A PERCENTAGE OF TOTAL REVENUE

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                SEPTEMBER 30,                      SEPTEMBER 30,
                                                      ------------------------------      ------------------------------
                                                           2001              2000              2001              2000
                                                      ------------      ------------      ------------      ------------
<S>                                                   <C>               <C>               <C>               <C>
        Revenue:
            License                                             51%               57%               51%               60%
            Service                                             49                43                49                40
                                                      ------------      ------------      ------------      ------------
               Total net revenue                               100               100               100               100
                                                      ------------      ------------      ------------      ------------
        Cost of revenue:
            License                                             14                 4                10                 4
            Service                                             22                22                25                16
                                                      ------------      ------------      ------------      ------------
               Total cost of revenue                            36                26                35                20
                                                      ------------      ------------      ------------      ------------
        Gross profit                                            64                74                65                80
                                                      ------------      ------------      ------------      ------------
        Operating expenses:
            Sales and marketing                                 88                71                83                60
            Research and development                            29                33                31                28
            General and administrative                          41                29                33                18
            Merger and integration charge (credit)              --                 3                --                (5)
            Asset impairment                                    14                --                 5                --
                                                      ------------      ------------      ------------      ------------
               Total operating expenses                        172               136               152               101
                                                      ------------      ------------      ------------      ------------
        Loss from operations                                  (108)              (62)              (87)              (21)
        Other income (expenses), net                            (1)                2                 0                 2
                                                      ------------      ------------      ------------      ------------
        Net loss before income taxes                          (109)              (60)              (87)              (19)
        Provision for income taxes                               2                 1                 1                 0
                                                      ------------      ------------      ------------      ------------
        Net loss                                              (111)%             (61)%             (88)%             (19)%
                                                      ============      ============      ============      ============
</TABLE>

TABLE II: DATA PRESENTED IN DOLLAR AMOUNT (IN THOUSANDS)



                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED               NINE MONTHS ENDED
                                                               SEPTEMBER 30,                    SEPTEMBER 30,
                                                      -----------------------------     -----------------------------
                                                          2001             2000             2001             2000
                                                      ------------     ------------     ------------     ------------
<S>                                                   <C>              <C>              <C>              <C>
        Revenue:
            License                                   $      5,860     $      7,823     $     17,329     $     27,513
            Service                                          5,588            5,996           16,944           18,346
                                                      ------------     ------------     ------------     ------------
               Total net revenue                            11,448           13,819           34,273           45,859
                                                      ------------     ------------     ------------     ------------
        Cost of revenue:
            License                                          1,594              573            3,345            1,716
            Service                                          2,527            2,990            8,517            7,465
                                                      ------------     ------------     ------------     ------------
               Total cost of revenue                         4,121            3,563           11,862            9,181
                                                      ------------     ------------     ------------     ------------
        Gross profit                                         7,327           10,256           22,411           36,678
                                                      ------------     ------------     ------------     ------------
        Operating expenses:
            Sales and marketing                             10,090            9,768           28,373           27,741
            Research and development                         3,273            4,525           10,679           12,818
            General and administrative                       4,670            4,047           11,493            8,140
            Merger and integration charge (credit)              --              368               --           (2,318)
            Asset impairment                                 1,636               --            1,636               --
                                                      ------------     ------------     ------------     ------------
               Total operating expenses                     19,669           18,708           52,181           46,381
                                                      ------------     ------------     ------------     ------------
        Loss from operations                               (12,342)          (8,452)         (29,770)          (9,703)
        Other income (expenses), net                          (166)             270             (148)           1,052
                                                      ------------     ------------     ------------     ------------
        Net loss before income taxes                       (12,508)          (8,182)         (29,918)          (8,651)
        Provision for income taxes                             252              199              309              216
                                                      ------------     ------------     ------------     ------------
        Net loss                                      $    (12,760)    $     (8,381)         (30,227)          (8,867)
                                                      ============     ============     ============     ============
</TABLE>

Revenue

Total revenue decreased 17% to $11.4 million for the three months ended
September 30, 2001 from $13.8 million for the corresponding period in 2000. For
the nine months ended September 30, 2001, total revenue decreased 25% to $34.3
million from $45.9 million for the corresponding period in 2000. We believe that
the decrease in revenue during the three and nine months ended September 30,
2001 is primarily attributed to a slower domestic market demand for software
products in a generally weakened economic and information technology purchasing
environment.

International revenue increased 131% to $3.7 million for the three months ended
September 30, 2001 from $1.6 million for the corresponding period in 2000, and
increased 67% to $9.2 million for the nine months ended September 30, 2001 from
$5.5 million for the corresponding period in 2000. This increase is attributed
mainly to expansion of our international operations with new subsidiaries added
in the Benelux region, Australia, Mexico, and the Asia Pacific region as well as
stronger overseas market demand for our products.

License revenue decreased 25% to $5.9 million for the three months ended
September 30, 2001 from $7.8 million for the corresponding period in 2000. For
the nine months ended September 30, 2001, license revenue decreased 37% to $17.3
million from $27.5 million for the corresponding period in 2000. We believe that
the decrease in license revenue during the three and nine months ended September
30, 2001 is primarily attributed to a slower domestic market demand.

Service revenue decreased 7% to $5.6 million for the three months ended
September 30, 2001 from $6.0 million for the corresponding period in 2000. For
the nine months ended September 30, 2001, service revenue decreased 7% to $17.0
million from $18.3 million for the corresponding period in 2000.

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED              NINE MONTHS ENDED
                                             SEPTEMBER 30,                   SEPTEMBER 30,
                                     ----------------------------    ----------------------------
                                         2001            2000            2001            2000
                                     ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>
        Service:
            Maintenance              $      2,702    $      2,036    $      7,738    $      5,745
            Professional Services           2,886           3,960           9,206          12,601
                                     ------------    ------------    ------------    ------------
        Total service revenue        $      5,588    $      5,996    $     16,944    $     18,346
                                     ============    ============    ============    ============
</TABLE>

Maintenance revenue increased by 33% to $2.7 million for the three months ended
September 30, 2000 from $2.0 million for the corresponding period in 2000,
maintenance revenue increased by 35% to $7.7 million for the nine months ended
September 30, 2001 from $5.7 million for the corresponding period in 2000. The
increase in maintenance revenue was due to new licenses and renewal of



                                       13
<PAGE>

the maintenance for existing customers. Professional services decreased by 28%
to $2.9 million for the three month ended September 30, 2001 from $4.0 million
for the corresponding period in 2000, professional services revenue decreased by
27% to $9.2 million for the nine months ended September 30, 2001 from $12.6
million for the corresponding period in 2000. Decreases in professional services
revenue were due to declines in consulting and training services attributed to a
slow down in the economy and a decline in new license revenue.

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 $1.6 million and $0.6 million for the three months ended September 30,
2001 and 2000, respectively, representing 27% and 8% of license revenue for the
three months ended September 30, 2001 and 2000, respectively. Our cost of
license revenue was $3.3 million and $1.7 million for the nine months ended
September 30, 2001 and 2000 respectively, representing 19% and 6% of license
revenue for the nine months ended September 30, 2001 and 2000, respectively. The
increase as a percentage of license revenue during the three and nine months
ended September 30, 2001, was primarily due to non-recoverable royalty
prepayments of $0.6 million recognized during the nine months period ended
September 30, 2001, as we do not expect to utilize these prepayments. Further,
Sagent incurred additional royalty costs due to the integration of new
technology acquired from third parties.

Cost of service consists primarily of personnel costs associated with providing
software maintenance, technical support, training and consulting services. Our
cost of service revenue was $2.5 million and $3.0 million for the three months
ended September 30, 2001 and 2000, respectively, representing 45% and 50% of
service revenue for the three months ended September 30, 2001 and 2000,
respectively. Our cost of service revenue was $8.5 million and $7.5 million for
the nine months ended September 30, 2001 and 2000, respectively, representing
50% and 41% of service revenue for the nine months ended September 30, 2001 and
2000, respectively. The increase in absolute dollar amount during the three and
nine months ended September 30, 2001 were due primarily to outsourcing a portion
of our professional services related to online and marketing services of $0.3
million and the increase as a percentage of total revenue was primarily due to
lower utilization of professional services consultants.

Gross Profit

Gross profit declined to 64% for the three months ended September 30, 2001 from
74% for the same period in the prior year. Our gross profit declined to 65% for
the nine months ended September 30, 2001 from 80% for the same period in the
prior year. The decline during the three and nine months ended September 30,
2001 was mainly attributed to lower revenue and an increase in the cost of
revenue for license and service revenue.

Sales and Marketing

Sales and marketing expenses consist primarily of compensation, travel,
marketing programs, branch sales facilities, and distributors' commission. Sales
and marketing expenses increased 3% to $10.1 million for the three months ended
September 30, 2001 from $9.8 million for the three months ended September 30,
2000. The increase was due to additional distributors fees of $0.3 million and
additional marketing programs of $0.2 million during the three months ended
September 30, 2001. For the nine months ended September 30, 2001, sales and
marketing expenses increased 3% to $28.4 million from $27.7 million for the same
nine months in the prior year. Sales and marketing expenses represented 88% and
71% of total net revenue for three months ended September 30, 2001 and 2000.
Sales and marketing expenses represented 83% and 60% of total net revenue for
the nine months ended September 30, 2001, and 2000, respectively. The increase
for the three and nine months ended September 30, 2001 was due primarily to our
efforts to grow our net revenue worldwide; as a result, we increased our sales
force, domestically; while internationally, we acquired subsidiaries in the Asia
Pacific region, the Benelux region, Australia, and Mexico.

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, quality assurance, testing and facilities.
Research and development expenses decreased 28% to $3.3 million for the three
months ended September 30, 2001 from $4.5 million for the three months ended
September 30, 2000. For the nine months ended September 30, 2001, research and
development expenses decreased 17% to $10.7 million from $12.8 million for the
same nine months in the prior year. Research and development expenses
represented 29% and 33% of total net revenue for the three months ended
September 30, 2001 and 2000, respectively. Research and development expenses
represented 31% and 28% of total net revenue for nine months ended September 30,
2001, and 2000. The decline in absolute dollar amount in research and
development expenses for the three and nine months ended September 30, 2001 was
attributable to cost


                                       14
<PAGE>


cutting measures, including a reduction in headcount and controlling
discretionary spending to align the total expenses with our revenue. We expect a
moderate increase in the absolute dollar amount for research and development
expenditures in the future.

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, bad debt expenses, and amortization of goodwill. General and
administrative expenses increased 15% to $4.7 million for the three months ended
September 30, 2001 from $4.1 million for the three months ended September 30,
2000. The increase in absolute dollar amount and an increase as percentage of
total net revenue were due primarily to an increase of $0.3 million in executive
compensation expense and an increase of $0.3 million in goodwill amortization
expenses. During the nine month period ended September 30, 2001, general and
administrative expenses increased 41% to $11.5 million from $8.1 million for the
same nine months in the prior year. General and administrative expenses
represented 41% and 29% of total net revenue for the three months ended
September 30, 2001 and 2000, respectively. General and administrative expenses
represented 33% and 18% of total net revenue for the nine months ended September
30, 2001, and 2000, respectively. The increase in absolute dollar amount and an
increase as a percentage of total net revenue during the nine months ended
September 30, 2001 were primarily due to an increase in executive compensation
of $0.9 million, amortization of goodwill and depreciation expenses related to
capital leases and other tangible assets of $0.9 million, and legal and
accounting related services of $1.0 million.

Asset Impairment

Asset impairment charge of $1.6 million consisted of $0.3 million reduction in
the carrying value of goodwill, $1.2 million impairment of prepayments for data
center services, and $0.1 million of other losses related to the closing of a
remote facility.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, we had cash and cash equivalents totaling $19.1 million,
an increase of $12.7 million from December 31, 2000. Since inception, we have
funded our operations primarily by private sales of equity securities, the use
of equipment leases and the initial public offering of our common stock in April
1999, and not from cash generated by our business.

In February 2001, we completed a private placement of approximately 5.8 million
shares of our common stock and received proceeds of $16.0 million, net of $0.6
million in offering costs. In connection with the private placement, we also
issued to certain placement agents warrants to purchase 210,093 shares of our
common stock.

In August 2001, we completed a second private placement of approximately 9.1
million shares of our common stock and received proceeds of $15.8 million, net
of $1.0 million in offering costs. In connection with the private placement, we
also issued to certain placement agents warrants to purchase 455,769 shares of
our common stock.

Net cash used in operating activities was $20.2 million and $19.4 million for
the nine months ended September 30, 2001 and 2000, respectively.

In November 2001, Sagent entered into a $5 million line of credit agreement with
a financial institution collateralized by the assets of Sagent. The line
consists of advances against eligible accounts receivable in an aggregate amount
not to exceed the lesser of, the committed revolving line of the borrowing base,
less any outstanding letters of credit, foreign currency exchange contracts, or
any other extension of credit by the financial institution. Advances against the
revolving line bear interest at a rate equal to 1% above the prime rate. The
line of credit expires on October 5, 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes a new model for
accounting for derivatives and hedging activities which supercedes and amends a
number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized in the balance sheet at their fair market value and
the corresponding derivative gains or losses be either reported in the statement
of operations or as a deferred item depending on the type of hedge relationship
that exists with respect to any derivatives. Sagent adopted SFAS No. 133 in its
quarter ended March 31, 2001. The adoption of the SFAS No. 133 has not had


                                       15
<PAGE>


a material effect on the Sagent's consolidated results of operations or
financial position for the three or nine months ended September 30, 2001.

In October 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement supercedes and replaces the guidance in Statement 125, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (SFAS 125 or Statement 125). SFAS No. 140 provides accounting and
reporting guidance for transfers and servicing of financial assets and
extinguishments of liabilities. The provisions of SFAS No. 140 are effective for
transactions entered into after March 31, 2001. The adoption of SFAS No. 140 has
not had a material effect on Sagent's consolidated financial statements.

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against this criteria and may result in certain intangibles being
subsumed into goodwill, or alternatively, amounts initially recorded as goodwill
maybe separately identified and recognized apart from goodwill. SFAS No. 142
requires the use of a non-amortization approach to account for purchased
goodwill and certain intangibles. Under a non-amortization approach, goodwill
and certain intangibles will not be amortized into results of operations, but
instead would be reviewed for impairment and written down and charged to results
of operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than its fair value. The provisions for each
statement, which apply to goodwill and intangible assets acquired prior to June
30, 2001, will be adopted by the Company on January 1, 2002.

Sagent anticipates that future amortization of goodwill and other intangibles
associated with our acquisitions will continue on a straight-line basis for the
remaining three months of 2001, and will amount to approximately $540. Beginning
January 1, 2002, Sagent will adopt SFAS 141 and SFAS 142. At that time, Sagent
will perform the first of the required impairment tests of goodwill. The effects
of these tests on the earnings and financial position of Sagent has not been
determined. Amortization of goodwill during the nine months ended September 30,
2001 and 2000 was $1.6 million and $1.4 million, respectively.

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No.143, "Accounting for Asset Retirement
Obligations." SFAS No. 143. requires an enterprise to record the fair value of
an asset retirement obligation as a liability in the period in which it incurs a
legal obligation associated with the retirement of a tangible long- lived asset.
Since the requirement is to recognize the obligation when incurred, approaches
that have been used in the past to accrue the asset retirement obligation over
the life of the asset are no longer acceptable. Statement No. 143 also requires
the enterprise to record the contra to the initial obligation as an increase to
the carrying amount of the related long-lived asset (i.e., the associated asset
retirement costs) and to depreciate that cost over the remaining useful life of
the asset. The liability is changed at the end of each period to reflect the
passage of time (i.e., accretion expense) and changes in the estimated future
cash flows underlying the initial fair value measurement. The provision of SFAS
No. 143 is effective for fiscal years beginning after June 15, 2002. We do not
expect the adoption of SFAS No. 143 to have a material effect on Sagent's
consolidated results of operations or financial position.

In October 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No.144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses the
financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 144
also supersedes the accounting and reporting provisions of APB Opinion No.30,
"Reporting the Results of Operations - Reporting the Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of business. The provision will be
effective for fiscal years beginning after December 15, 2001 and interim periods
within those fiscal periods. The Company plans to adopt the provision on January
1, 2002. We do not expect the adoption of SFAS No. 144 to have a material effect
on Sagent's consolidated results of operations or financial position.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

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 quarterly report on Form 10-Q, in your
decision to buy or continue to hold our common stock. 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.


                                       16
<PAGE>



THE RESTATEMENT OF OUR FINANCIAL RESULTS MAY HARM OUR BUSINESS AND RESULT IN A
FURTHER DECLINE IN THE MARKET PRICE FOR OUR COMMON STOCK.

On November 28, 2001, we announced that we were revising our reported revenues
for the first nine months of 2001 as a result of an internal investigation into
the validity of sales orders to various government agencies. Our investigation
confirmed that sales orders totaling approximately $5 million booked by one of
our employees were invalid. As a result, we have filed Form 10-Q/A's for the
periods ended March 31, 2001 and June 30, 2001 with financial statements
restated to remove the effect of the invalid sales orders.

As a result of the restatement, Sagent has been named in additional shareholder
lawsuits. These lawsuits could seriously harm our business and financial
condition. In particular, the lawsuits could harm our relationships with
existing customers and our ability to obtain new customers. The continued
defense of the lawsuits also could result in the diversion of our management's
time and attention away from business operations, which could harm our business.
Negative developments with respect to the lawsuits could cause our stock price
to decline significantly. In addition, although we are unable to determine the
amount, if any, that we may be required to pay in connection with the resolution
of these lawsuits by settlement or otherwise, the size of any such payment could
seriously harm our financial condition. The complaints generally allege that we
and the other named defendants made false or misleading statements of material
facts about our financial results during 2001. The complaints, in general, do
not specify the amount of damages that plaintiffs seek. As a result, we are
unable to estimate the possible range of damages that might be incurred as a
result of the lawsuits. We have not set aside any financial reserves relating to
potential damages associated with any of these lawsuits.

OUR COMMON STOCK MAY BE DELISTED FROM THE NASDAQ STOCK MARKET.

On November 21, 2001, we were notified by the NASDAQ Listing Qualifications
Department that we were subject to Nasdaq delisting procedures as a result of
our failure to timely file this Report on Form 10-Q. This report was not filed
in a timely fashion due to the previously discussed investigation of certain
sales orders. Since November 26, 2001, our trading symbol has been appended with
an "E." We are working cooperatively with the Nasdaq staff and have obtained an
oral hearing with the Nasdaq Listing Qualifications Panel to be held on December
20, 2001. At the hearing, we will need to demonstrate to the satisfaction of the
panel our ability to sustain long-term compliance with all of the Nasdaq listing
criteria, including the timely filing of annual and quarterly reports. If we are
not able to demonstrate such ability, our common stock will likely be delisted
from the Nasdaq National Market.

WE HAVE A HISTORY OF LOSSES, AND WE MAY NOT ACHIEVE PROFITABILITY IN THE FUTURE.

For the nine months ended September 30, 2001, we incurred net losses of $30.2
million. We incurred net losses of $23.7 million, $12.1 million, and $15.1
million for the years ended December 31, 2000, 1999 and 1998, respectively. As
of September 30, 2001, we had an accumulated deficit of $97.2 million. We cannot
assure you that we will achieve profitability, and if we do achieve
profitability, that we will be able to sustain profitability.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE TO FUND OUR OPERATIONS.

Since our inception, we have funded our operations primarily through sales of
equity securities, and not from cash generated by our business. During the last
nine months, we have completed two separate private offerings of our common
stock. In February 2001, we sold 5.8 million shares of our common stock to a
group of private investors, raising approximately $16.0 million in net proceeds.
In August 2001, we completed the sale of 9.1 million shares of our common stock
to a group of private investors, netting approximately $15.8 million in
proceeds.

Although we believe that our current cash and cash equivalents and any net cash
provided by operations will be sufficient to meet anticipated cash needs for the
next twelve months, a net revenue shortfall could require us to reduce
operations or raise additional funds through equity or debt financings. We
cannot assure you any equity or debt financing will be available to us on
favorable terms, if at all, or that if available, such financing will not be
dilutive to our stockholders. If we are unable to raise additional capital, we
will take actions to conserve our cash balances, including significantly
reducing our operating expenses, downsizing our staff and closing existing
branch offices, all of which could have a material adverse effect on our
business, financial condition and our ability to reduce losses or generate
profits.

VARIATIONS IN OUR QUARTERLY OPERATING RESULTS DUE TO SUCH FACTORS AS CHANGES IN
DEMAND FOR OUR PRODUCTS AND CHANGES IN OUR MIX OF REVENUES MAY CAUSE OUR STOCK
PRICE TO DECLINE.


                                       17
<PAGE>



We expect our quarterly operating results to fluctuate. We therefore believe
that quarter-to-quarter comparisons of our operating results may not be a good
indication of our future performance, and you should not rely on them to predict
our future performance or the future performance of our stock price. Our
short-term expense levels are relatively fixed and are based on our expectations
of future revenues. A shortfall of revenue from our expectations could result in
the impairment of our assets or cause us to incur restructuring charges. As a
result, a reduction in revenue in a quarter may harm our operating results for
that quarter. In the past, our operating results have fallen below the
expectations of market analysts and investors. If we fall short of market
expectations in future quarters, the price of our common stock may fall. Factors
that may cause our operating results to fluctuate on a quarterly basis include:

    -   varying size, timing and contractual terms of orders for our products;

    -   lengthy sales cycles associated with our products;

    -   changes in the mix of revenue attributable to higher-margin product
        license revenue as opposed to lower-margin service revenue;

    -   customers' decisions to defer orders or implementations, particularly
        large orders or implementations, from one quarter to the next;

    -   announcements or introductions of new products by our competitors,

    -   our ability to hire, train and retain sufficient engineering,
        consulting, training and sales staff; and

    -   subcontracting to more expensive consulting organizations to help
        provide implementation, support and training services when our own
        capacity is constrained.

A SLOWING ECONOMY AND REDUCTIONS IN INFORMATION TECHNOLOGY SPENDING MAY
NEGATIVELY AFFECT OUR REVENUES.

Our revenues may be negatively affected by the increasingly uncertain economic
conditions both in the market generally and in our industry. The terrorist acts
of September 11, 2001 and subsequent terrorist activities have further
contributed to an uncertain economic environment and we cannot predict the
impact of these events, or of any related military action, on our customers or
business. Due to the general economic uncertainty, some companies may further
reduce their budgets for spending on information technology and communications
equipment. If the economy continues to slow, some companies may reduce their
budgets for spending on information technology and business software. As a
consequence, our sales cycle may become longer with some customers, and other
prospective customers may postpone, reduce, or even forego the purchase of our
products and services, which could negatively affect our revenues.

ENTERPRISE BUSINESS INTELLIGENCE SOFTWARE MARKETS MAY NOT GROW.

Since all of our revenues are attributable to the sale of enterprise business
intelligence software and related maintenance, consulting and training services,
if the market for enterprise intelligence software does not grow, our business
will not grow. We expect enterprise business intelligence software and services
to account for substantially all of our revenue for the foreseeable future.
Although demand for enterprise business intelligence software has grown in
recent years, the market may not continue to grow or, even if the market does
grow, businesses may not adopt our products.

IF WE FAIL TO EXPAND OUR DIRECT AND INDIRECT SALES CHANNELS, WE WILL NOT BE ABLE
TO INCREASE REVENUES.

In order to grow our business, we need to increase market awareness and sales of
our products and services. To achieve this goal, we need to increase both our
direct and indirect sales channels. If we fail to do so, this failure could harm
our ability to increase revenues. We currently receive a significant portion of
our revenues from direct sales, but we intend to increase sales through indirect
sales channels in the future.

We intend to derive more revenues from indirect sales channels by selling our
software through value-added resellers (VARs) and original equipment
manufacturers (OEMs). These VARs and OEMs offer our software products to their
customers together with


                                       18
<PAGE>


consulting and implementation services or integrate our software solutions with
other software. Our ability to increase our revenues is dependent on entering
into relationships with these VARs and OEMs.

We expect as part of our strategy to increase international sales principally
through both direct and indirect sales. Our ability to develop and maintain
direct and indirect channels will significantly affect our ability to penetrate
international markets.

PENDING LITIGATION COULD HARM OUR BUSINESS.

From October 20, 2000 to November 27, 2000, several class action lawsuits were
filed in the United States District Court on behalf of the individual investors
who purchased our common stock between October 21, 1999 and April 18, 2000. The
claims allege that we misrepresented our prospects for 1999 and the first
quarter of 2000. Thereafter, the court consolidated the complaints and selected
a lead plaintiff and counsel. A consolidated amended complaint was filed in
April 2001.

The defendants filed a motion to dismiss the consolidated amended complaint. On
September 28, 2001, the court granted the defendants' motion, and gave the
plaintiffs leave to amend the complaint.

On November 17, 2000, a derivative lawsuit was filed by a purported Sagent
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 complaints name certain of our present and former officers and
directors as defendants. The Hu complaint also names an investment bank retained
by us and an employee of that firm as defendants. We have also been named as a
nominal defendant. The principal allegation of the complaints is that the
defendants breached their fiduciary duties to us. In July 2001, the two cases
were coordinated for pretrial purposes in the Superior Court of California for
the County of Santa Clara.

Sagent filed a motion to dismiss the Fanucci complaint, on the ground that,
among other things, the plaintiff had failed to make a pre-suit demand on the
board of directors as required by Delaware law. The officer and director
defendants joined in that motion, and also moved to dismiss on the grounds that
the complaint fails to allege the asserted causes of action against the
individual defendants. Similar motions were filed concerning the Hu complaint.

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 investors who purchased Sagent common stock between May 11, 2001 and November
28, 2001. The complaints allege that Sagent and certain of its officers and
directors violated the Securities Exchange Act of 1934. The complaints allege
that during the class period, the defendants caused Sagent's shares to trade at
artificially inflated levels through the issuance of false and misleading
financial statements.

WE HAVE A RELATIVELY NEW MANAGEMENT TEAM AND THERE IS NO GUARANTEE THAT THEY
WILL BE SUCCESSFUL IN GROWING OUR BUSINESS.

Our management team has not been with us for a significant length of time. Ben
C. Barnes, our Chief Executive Officer, joined us in August 2000, replacing
founder Ken Gardner. Steven Springsteel, our Chief Financial Officer, joined us
in November 2001. Jack Peters, Senior Vice President, Sales -- Americas,
Marketing, Arthur Parker, President/General Manager -- Europe, Middle East and
Africa and Larry Scroggins, Senior Vice President, Business Development, and
Richard Ghiossi, Chief Marketing Officer joined us in September 2000, November
2000, January 2001, February 2001, and November 2001 respectively. Most of
these employees serve "at-will" and may elect to pursue other opportunities at
any time. If our management team is unable to work effectively together to
accomplish our business objectives, our ability to grow our business could be
severely impaired.

IF WE DO NOT KEEP PACE WITH TECHNOLOGICAL CHANGE, OUR PRODUCTS MAY BE RENDERED
OBSOLETE AND OUR BUSINESS MAY FAIL.

Our industry is characterized by rapid technological change, changes in customer
requirements, frequent new product introductions and enhancements and emerging
industry standards. In order to achieve broad customer acceptance, our products
must be compatible with major software and e-commerce applications and operating
systems. We must continually modify and enhance our products to keep pace with
changes in these applications and systems. If our products were to be
incompatible with popular new systems or applications, our business would be
significantly harmed. In addition, the development of entirely new technologies
replacing existing software could lead to new competitive products that have
better performance or lower prices than our products and could render our
products obsolete.


                                       19
<PAGE>



Delays or problems in the installation or implementation of our new releases may
cause customers to forego purchases of our products to purchase those of our
competitors.

OUR MARKETS ARE HIGHLY COMPETITIVE AND COMPETITION COULD HARM OUR ABILITY TO
SELL PRODUCTS AND SERVICES AND REDUCE OUR MARKET SHARE.

Competition could seriously harm our ability to sell additional software and
maintenance and support renewals on prices and terms favorable to us.
Additionally, if we cannot compete effectively, we may lose market share. The
markets for our products are intensely competitive and subject to rapidly
changing technology. We compete against providers of decision support software,
data warehousing software and enterprise application software. We also compete
with providers of e-Business software, which allows for the electronic delivery
of products and services that enable commerce among businesses and end users.
Companies in each of these areas may expand their technologies or acquire
companies to support greater enterprise intelligence functionality and
capability, particularly in the areas of query response time and the ability to
support large numbers of users. We may also face competition from vendors of
products and turnkey solutions for e-Business applications that include Internet
based information functionality.

Many of our competitors have longer operating histories, significantly greater
financial, technical, marketing or other resources, or greater name recognition
than we do. Our competitors may be able to respond more quickly than we can to
new or emerging technologies and changes in customer requirements.

WE RELY, IN PART, ON EQUITY INCENTIVES TO ATTRACT AND RETAIN EMPLOYEES, AND THE
PERFORMANCE OF OUR STOCK PRICE MAY IMPAIR OUR ABILITY TO ATTRACT AND RETAIN
QUALIFIED PERSONNEL.

The market price of our common stock has fluctuated substantially since our
initial public offering in April 1999, and has experienced a significant decline
since the first quarter of 2000. We have relied historically on our ability to
attract and retain employees using equity incentives, and any perception by
potential or existing employees that our equity incentives are less attractive
could harm our ability to attract and retain qualified employees.

WE RELY ON MARKETING, TECHNOLOGY AND DISTRIBUTION RELATIONSHIPS THAT MAY
GENERALLY BE TERMINATED AT ANY TIME, AND IF OUR CURRENT AND FUTURE RELATIONSHIPS
ARE NOT SUCCESSFUL, OUR GROWTH MAY BE LIMITED.

We rely on marketing and technology relationships with a variety of companies
that, in part, generate leads for the sale of our products. These marketing and
technology relationships include relationships with:

    -   system integrators and consulting firms;

    -   vendors of e-commerce and Internet software;

    -   vendors of software designed for customer relationship management or for
        management of organizations' operational information;

    -   vendors of key technology and platforms;

    -   demographic data providers; and

    -   an application service provider and an Internet hoster.

If we cannot maintain successful marketing and technology relationships or
cannot enter into additional marketing and technology relationships, we may have
difficulty expanding the sales of our products and our growth may be limited.

IF WE LOSE KEY LICENSES WE MAY BE REQUIRED TO DEVELOP OR LICENSE ALTERNATIVES
WHICH MAY CAUSE DELAYS OR REDUCTIONS IN SALES.

We rely on software that we have licensed from Opalis S.A. to perform key
functions of our Sagent Automation product that automates common tasks in
managing data. We also rely on software we have licensed from Microsoft
Corporation to allow users to


                                       20
<PAGE>


be able to customize the user interface provided by our Sagent Design Studio
product. These licenses may not continue to be available to us on commercially
reasonable terms. The loss of either of these licenses could result in delays or
reductions of shipments of our product suite until equivalent software could be
developed, identified, licensed and integrated. If customers require the
automation and/or the user interface customization features when licenses for
either of those are not available, they may delay or decline to purchase our
product suite.

FAILURE OF COMMERCIAL USERS TO ACCEPT INTERNET SOLUTIONS COULD LIMIT OUR FUTURE
GROWTH.

A key element of our strategy is to offer users the ability to access, analyze
and report information from a data server through a Web browser. Our growth may
be limited if businesses do not accept Internet solutions or perceive them to be
cost-effective. Continued viability of the Internet depends on several factors,
including:

    -   Third parties' abilities to develop new enabling technologies in a
        timely manner;

    -   The Internet's ability to handle increased activity;

    -   The Internet's ability to operate as a fast, reliable and secure
        network; and

    -   Potential changes in government regulation.

Moreover, critical issues concerning the commercial use of the Internet,
including data corruption, cost, ease of use, accessibility and quality of
service, remain unresolved and may negatively affect commerce and communication
on the Internet. These issues will need to be addressed in order for the market
for our products and services to grow.

WE HAVE EXPANDED OUR INTERNATIONAL OPERATIONS BUT MAY ENCOUNTER A NUMBER OF
PROBLEMS IN MANAGING OVERSEAS OPERATIONS, WHICH COULD LIMIT OUR FUTURE GROWTH.

We may not be able to successfully market, sell, deliver and support our
products and services internationally. Our failure to manage our international
operations effectively could limit the future growth of our business.
International sales represented approximately 13% of our total net revenue for
the year ended December 31, 2000 and 24% for the first nine months ended
September 30, 2001. We conduct our international sales through local
subsidiaries in the United Kingdom, Germany, France, Japan, Brazil, the
Asia/Pacific, the Benelux Region, and Australia and through distributor
relationships in South Africa and Iberica, Spain. The expansion of our existing
international operations and entry into additional international markets will
require management attention and significant financial resources.

WE HAVE BEEN, AND MAY BE SUBJECT TO FUTURE, INTELLECTUAL PROPERTY INFRINGEMENT
CLAIMS.

We may be subject, from time to time, to claims that we are infringing the
intellectual property rights of others. Any litigation regarding intellectual
property rights may be costly to defend or settle, and may divert the attention
of our management and key personnel from our business operations. The complexity
of the technology involved and the uncertainty of intellectual property
litigation increase these risks. Claims of intellectual property infringement
might also require us to enter into costly royalty or license agreements. In
December 2000, we settled an infringement claim brought by Timeline, Inc. Under
the terms of the settlement, we paid Timeline $600,000 and issued 600,000 shares
of our common stock to Timeline. We may be subject to similar or more costly
claims in the future or may become subject to an injunction against use of our
products. A successful claim of patent or other intellectual property
infringement against us would have an immediate material adverse effect on our
business and financial condition.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, THIS INABILITY
COULD WEAKEN OUR COMPETITIVE POSITION, REDUCE OUR REVENUE AND INCREASE OUR
COSTS.

Our success depends in large part on our proprietary technology. We rely on a
combination of copyright, trademark and trade secrets, confidentiality
procedures and licensing arrangements to establish and protect our proprietary
rights. We may be required to spend significant resources to monitor and police
our intellectual property rights. If we fail to successfully enforce our
intellectual property rights, our competitive position may be harmed.

Other software providers could copy or otherwise obtain and use our products or
technology without authorization. They also could develop similar technology
independently which may infringe our proprietary rights. We may not be able to
detect infringement and


                                       21
<PAGE>

may lose a competitive position in the market before we do so. In addition,
competitors may design around our technology or develop competing technologies.
The laws of some foreign countries do not protect proprietary rights to the same
extent as do the laws of the United States.

IF WE DISCOVER SOFTWARE DEFECTS WE MAY HAVE PRODUCT-RELATED LIABILITIES WHICH
MAY LEAD TO LOSS OF REVENUE OR DELAY IN MARKET ACCEPTANCE FOR OUR PRODUCTS.

Our software products are internally complex and may contain errors, defects or
failures, especially when first introduced or when new versions are released. We
test our products extensively prior to releasing them; however, in the past we
have discovered software errors in some of our products after their
introduction. Despite extensive testing, we may not be able to detect and
correct errors in products or releases before commencing commercial shipments,
which may result in loss of revenue or delays in market acceptance.

Our license agreements with our customers typically contain provisions designed
to limit our exposure to potential product liability claims. All domestic and
international jurisdictions may not enforce these limitations. Although we have
not experienced any product liability claims to date, we may encounter such
claims in the future. Product liability claims, whether or not successful,
brought against us could divert the attention of management and key personnel
and could be expensive to defend.

WE HAVE ANTI-TAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION OF OUR
COMPANY.

Provisions of our certificate of incorporation, bylaws, other agreements and
Delaware law could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders. Our board of directors
could choose not to negotiate with an acquirer that it did not feel was in the
strategic interests of our company. If the acquirer was discouraged from
offering to acquire us, or prevented from successfully completing a hostile
acquisition by the anti-takeover measures, you could lose the opportunity to
sell your shares at a favorable price.

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 That May Affect Results."

INTEREST RATE RISK

At September 30, 2001 we had cash and cash equivalents totaling $19.1 million.
If market interest rates decline, then our interest income would decline
accordingly.

FOREIGN CURRENCY EXCHANGE RATE RISK

Substantially all of our revenue recognized to date has been denominated in U.S.
dollars and a significant portion of such revenue has been realized outside of
the United States. To the extent that we engage in international sales
denominated in U.S. dollars, an increase in the value of the U.S. dollar
relative to foreign currencies could make our products less competitive in
international markets. We have not entered into any forward contracts to
purchase or sell foreign currencies. Although we will continue to monitor our
exposure to currency fluctuations, and, when appropriate, may use financial
hedging techniques in the future to minimize the effect of these fluctuations,
we cannot assure you that exchange rate fluctuations will not harm our business
in the future.

EQUITY PRICE RISK

We do not own any significant public company equity investments. Therefore, we
believe we are not currently exposed to any direct equity price risk.

                          PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From October 20, 2000 to November 27, 2000, several class action lawsuits were
filed in the United States District Court on behalf of the individual investors
who purchased our common stock between October 21, 1999 and April 18, 2000. The
claims allege that we


                                       22
<PAGE>


misrepresented our prospects for 1999 and the first quarter of 2000. Thereafter,
the court consolidated the complaints and selected a lead plaintiff and counsel.
A consolidated amended complaint was filed in April 2001.

The defendants filed a motion to dismiss the consolidated amended complaint. On
September 28, 2001, the court granted the defendants' motion, and gave the
plaintiffs leave to amend the complaint.

On November 17, 2000, a derivative lawsuit was filed by a purported Sagent
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 complaints name certain of our present and former officers and
directors as defendants. The Hu complaint also names an investment bank retained
by us and an employee of that firm as defendants. We have also been named as a
nominal defendant. The principal allegation of the complaints is that the
defendants breached their fiduciary duties to us. In July 2001, the two cases
were coordinated for pretrial purposes in the Superior Court of California for
the County of Santa Clara.

Sagent filed a motion to dismiss the Fanucci complaint, on the ground that,
among other things, the plaintiff had failed to make a pre-suit demand on the
board of directors as required by Delaware law. The officer and director
defendants joined in that motion, and also moved to dismiss on the grounds that
the complaint fails to allege the asserted causes of action against the
individual defendants. Similar motions were filed concerning the Hu complaint.

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 investors who purchased Sagent common stock between May 11, 2001 and November
28, 2001. The complaints allege that Sagent and certain of its officers and
directors violated the Securities Exchange Act of 1934. The complaints allege
that during the class period, the defendants caused Sagent's shares to trade at
artificially inflated levels through the issuance of false and misleading
financial statements.

From time to time, we may be involved in litigation relating to claims arising
in the ordinary course of business. We establish reserves for such claims when a
loss is probable and the amount of such loss is reasonably estimable. As of
September 30, 2001, no such claims were probable and reasonably estimable.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(c) Recent Sales of Unregistered Securities.


In August 2001, we sold an aggregate of 9,115 shares of our unregistered common
stock at a price per share of $1.84 to certain investors for an aggregate cash
consideration of approximately $15.8 million, net of $1.0 million in offering
costs. In connection with such sale, we also issued to certain placement agents
in consideration of services rendered warrants to purchase 455,769 shares of our
unregistered common stock at an exercise price of $1.84 per share. We relied
upon Regulation D, Rule 506, of the Securities Act in connection with the sale
of the shares and the issuance of the warrants. The sale of shares of common
stock and the issuance of the warrants were made in compliance with all the
terms of Rule 501 and 502 of Regulation D.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION.

Not applicable.



                                       23
<PAGE>


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

    Sagent filed a Form 8-K on August 7, 2001, relating to the closing of the
sale of 9.1 million shares of its common stock for an average price of $1.84 in
a private placement.



                                       24
<PAGE>


                                   SIGNATURES

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

                                   SAGENT TECHNOLOGY, INC.



Dated: December 10, 2001           /s/    Steven R. Springsteel
                                   ---------------------------------------------
                                   Steven R. Springsteel
                                   Executive Vice President,
                                   Finance & Administration and
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)



                                       25
<PAGE>


                                INDEX TO EXHIBITS

     NUMBER                                TITLE
     ------                                -----

      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(1)          Sixth Amended and Restated Registration Rights Agreement,
                      dated as of February 24, 1998, between the Registrant and
                      the parties named therein.

      4.3(1)          Common Stock Registration Rights Agreement, dated as of
                      September 14, 1998, between the Registrant and Robert
                      Hawk.

      4.4(1)          Common Stock Rights Agreement dated February 15, 2001
                      between the Registrant and the parties named therein.

      4.5(1)          Registration Rights Agreement dated January 19, 2001
                      between the Registrant and eGlobal Technology Holding
                      Limited.

      4.6(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)          Amended and Restated 1995 Stock Plan and related
                      agreements.

     10.3(1)          1998 Stock Plan and related agreements.

     10.4(1)          1999 Employee Stock Purchase Plan and related agreements.

     10.5(1)          1999 Director Option Plan and related agreements.

     10.6(1)          Master Equipment Lease Agreement, dated August 7, 1995,
                      between the Registrant and Lighthouse Capital Partners,
                      L.P.

     10.7(1)          Master Lease Agreement, dated as of September 26, 1998,
                      between the Registrant and Dell Financial Services L.P.

     10.8(1)          Loan and Security Agreement, dated as of July 16, 1997,
                      between the Registrant and Venture Banking Group, a
                      division of Cupertino National Bank, and amendments
                      thereto.

     10.9(1)          Standard Office Lease, dated June 1, 1998, by and between
                      the Registrant and Asset Growth Partners, Ltd., and the
                      First Amendment thereto.

     10.10(1)+        Development and Licensing Agreement, dated January 22,
                      1997, between the Registrant and Abacus Concepts, Inc.

     10.11(1)+        Microsoft License and Distribution Agreement, dated August
                      23, 1996, between the Registrant and Microsoft
                      Corporation.

     10.12(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.

     10.13(1)         Form of Sagent Technology, Inc. End User Software License
                      Agreement.

     10.14(1)+        OEM Software License Agreement, effective March 31, 1998,
                      between the Registrant and Siebel Systems, Inc.

     10.15(1)         Form of Sagent Technology, Inc. Software Maintenance and
                      Technical Support Agreement.

     10.16(1)         Form of Sagent Technology, Inc. Agreement for Consulting
                      Services.

     10.17(1)         Form of Sagent Technology, Inc. Agreement for
                      Subcontractor Consulting Services.

     10.18(1)         Form of Evaluation Agreement.

     10.19(1)         Note, dated February 1, 1998, of W. Virginia Walker.

     10.20(1)         Note, dated February 1, 1998, of W. Virginia Walker.

     10.21(1)+        Solution Provider Agreement, effective June 27, 1997,
                      between the Registrant and Unisys Corporation.

     10.22(1)         Executive Change of Control Policy.

     10.23(1)+        Software License and Services Agreement, dated March 31,
                      1998, between the Registrant and Siebel Systems, Inc.



                                       26
<PAGE>



     10.24(1)         Common Stock Purchase Agreement, dated February 28, 1999,
                      between the Registrant and Klaus S. Luft.

     10.25(1)         Notes, dated February 5, 1999, between the Registrant and
                      Tom Lounibos.

     10.26(1)         Note, dated March 15, 1999, of Kenneth C. Holcomb.

     10.27(1)         Nonexclusive International Software Value Added Reseller
                      ("VAR") Agreement, dated December 8, 1997, between the
                      Registrant and Opalis S.A.

     10.28(2)         Employment Agreement dated August 4, 2000 between the
                      Registrant and Ben C. Barnes.

     10.29(2)         Offer letter dated May 9, 2000 between the Registrant and
                      David Eliff.

     10.30(2)         Note dated October 4, 2000 between the Registrant and Paul
                      Wray.

     10.31(2)         Common Stock Purchase Agreement dated February 15, 2001
                      between the Registrant and the parties named therein.

     10.32(3)         Service Agreement, dated January 1, 2001, between the
                      Registrant and Arthur Parker.

     10.33(4)         Stock Purchase Agreement dated July 23, 2001 between the
                      Registrant and the parties named therein.

----------

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

    +   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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