<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2003

                         Commission file number 0-20008

                             FORGENT NETWORKS, INC.

A DELAWARE CORPORATION                            IRS EMPLOYER ID NO. 74-2415696

                               108 WILD BASIN ROAD
                               AUSTIN, TEXAS 78746
                                 (512) 437-2700

The registrant 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
has been subject to such filing requirements for the past 90 days. The
registrant is not an accelerated filer as defined in Rule 12b-2 of the Act.

At June 4, 2003 the registrant had outstanding 24,582,351 shares of its Common
Stock, $0.01 par value.

<PAGE>

                             FORGENT NETWORKS, INC.
                           CONSOLIDATED BALANCE SHEETS
                  (Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                      APRIL 30,         JULY 31,
                                                                                         2003            2002
                                                                                         ----            ----
                                                                                     (UNAUDITED)
<S>                                                                                  <C>               <C>
ASSETS
Current assets:
     Cash and equivalents                                                            $    13,647       $  17,237
     Short-term investments                                                                  701           2,715
     Accounts receivable, net of allowance for doubtful accounts
        of $1,269 and $815 at April 30, 2003 and July 31, 2002                             7,842           5,390
     Notes receivable, net of reserve of $643 and $967 at
        April 30, 2003 and July 31, 2002                                                      31             189
     Inventories                                                                             635             563
     Prepaid expenses and other current assets                                             1,004             609
                                                                                     -----------       ---------
        Total current assets                                                              23,860          26,703
Property and equipment, net                                                                5,097           5,734
Goodwill, net                                                                             13,972          15,833
Capitalized software, net                                                                  4,616           3,537
Other assets                                                                                 341             415
                                                                                     -----------       ---------
                                                                                     $    47,886       $  52,222
                                                                                     ===========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                                $     2,888       $   5,687
     Accrued compensation and benefits                                                       351           1,264
     Other accrued liabilities                                                             1,508           2,049
     Notes payable, current portion                                                          254             899
     Deferred revenue                                                                      5,730           7,047
                                                                                     -----------       ---------
        Total current liabilities                                                         10,731          16,946

Long-term liabilities:
     Deferred revenue                                                                        658           1,015
     Other long-term obligations                                                           1,140           1,983
                                                                                     -----------       ---------
        Total long-term liabilities                                                        1,798           2,998

Stockholders' equity:
     Preferred stock, $.01 par value; 10,000
        Authorized; none issued or outstanding                                                --              --
     Common stock, $.01 par value; 40,000 authorized; 25,962
        and 25,755 shares issued; 24,579 and 24,880 shares
        outstanding at April 30, 2003 and July 31, 2002, respectively                        259             257
     Treasury stock, 1,383 and 875 issued at April 30, 2003
        and July 31, 2002, respectively                                                   (3,707)         (2,857)
     Additional paid-in capital                                                          263,557         263,334
     Accumulated deficit                                                                (224,048)       (228,011)
     Unearned compensation                                                                   (47)           (227)
     Accumulated other comprehensive income                                                 (657)           (218)
                                                                                     -----------       ---------
        Total stockholders' equity                                                        35,357          32,278
                                                                                     -----------       ---------
                                                                                     $    47,886       $  52,222
                                                                                     ===========       =========
</TABLE>

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

                                       2
<PAGE>

                             FORGENT NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                    FOR THE                 FOR THE
                                                               THREE MONTHS ENDED      NINE MONTHS ENDED
                                                                   APRIL 30,                APRIL 30,
                                                                2003        2002        2003        2002
                                                                ----        ----        ----        ----
                                                                  (UNAUDITED)             (UNAUDITED)
<S>                                                           <C>         <C>         <C>         <C>
REVENUES:
     Software and professional services                       $  1,134    $    852    $  3,379    $  1,309
     Intellectual property licensing                            12,150      15,000      25,618      15,000
     Services and other                                          3,823       6,465      13,141      20,694
                                                              --------    --------    --------    --------
        Total revenues                                          17,107      22,317      42,138      37,003

COST OF SALES:
     Software and professional services                            945         411       2,418       3,406
     Intellectual property licensing                             6,075       6,600      12,809       6,600
     Services and other                                          2,790       3,598       9,008      12,195
                                                              --------    --------    --------    --------
        Total cost of sales                                      9,810      10,609      24,235      22,201

GROSS MARGIN                                                     7,297      11,708      17,903      14,802

OPERATING EXPENSE:
     Selling, general and administrative                         3,524       2,926      10,878       8,539
     Research and development                                      901         567       2,784       2,026
     Impairment of assets                                        1,211       5,967         712       5,967
     Restructuring expense                                          --          --          --         818
                                                              --------    --------    --------    --------
        Total operating expenses                                 5,636       9,460      14,374      17,350

INCOME (LOSS) FROM OPERATIONS                                    1,661       2,248       3,529      (2,548)

OTHER INCOME (EXPENSE):
     Interest income                                                48          53         187         237
     Gain on investment                                             --          --          --       1,670
     Interest expense and other                                     75         169         351         106
                                                              --------    --------    --------    --------
        Total other income (expense)                               123         222         538       2,013

INCOME (LOSS) FROM CONTINUING
     OPERATIONS, BEFORE INCOME TAXES                             1,784       2,470       4,067        (535)
     Provision for income taxes                                    (61)        177        (104)        177
INCOME (LOSS) FROM CONTINUING OPERATIONS                         1,723       2,647       3,963        (358)

     Loss from discontinued operations, net of income taxes         --        (166)         --      (8,028)
     Loss on disposal, net of income taxes                          --          --          --        (255)
                                                              --------    --------    --------    ---------
LOSS FROM DISCONTINUED
     OPERATIONS, NET OF INCOME TAXES                                --        (166)         --      (8,283)
                                                              --------    --------    --------    --------

NET INCOME (LOSS)                                             $  1,723    $  2,481    $  3,963    $ (8,641)
                                                              ========    ========    ========    ========

BASIC AND DILUTED INCOME (LOSS) PER SHARE:
     Income (loss) from continuing operations                 $   0.07    $   0.11    $   0.16    $  (0.02)
                                                              ========    ========    ========    ========
     Income (loss) from discontinued operations               $   0.00    $  (0.01)   $   0.00    $  (0.33)
                                                              ========    ========    ========    ========
     Net income (loss)                                        $   0.07    $   0.10    $   0.16    $  (0.35)
                                                              ========    ========    ========    ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
     Basic                                                      24,629      24,761      24,693      24,807
     Diluted                                                    24,715      25,373      25,144      24,807
</TABLE>

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

                                       3
<PAGE>

                             FORGENT NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                          FOR THE NINE MONTHS ENDED
                                                                                 APRIL 30,
                                                                              2003        2002
                                                                              ----        ----
                                                                                 (UNAUDITED)
<S>                                                                         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Income (loss) from continuing operations                               $  3,963    $   (358)
     Adjustments to reconcile net income (loss)
     to net cash (used in) provided by operations:
         Depreciation and amortization                                         2,793       3,689
         Provision for doubtful accounts receivable                              659          12
         Amortization of unearned compensation                                   201          76
         Foreign currency translation (gain) loss                               (457)        178
         (Gain) loss on sale of fixed assets                                     (14)         58
         Asset impairment                                                        712       8,348
         Sale of accounts receivable                                              --       8,297
         Increase in accounts receivable                                      (3,053)     (8,414)
         Decrease in notes receivable                                             36          --
         Increase in inventories                                                 (72)       (909)
         (Increase) decrease in prepaid expenses and other current assets       (395)        147
         Decrease in accounts payable                                         (2,280)     (3,575)
         Decrease in other accrued liabilities                                (1,980)     (2,633)
         Decrease in deferred revenues                                        (1,651)     (1,617)
                                                                            --------    --------
              Net cash (used in) provided by operating activities             (1,538)      3,299
                                                                            --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net sales of short-term investments                                       2,014       2,613
     Net purchases of property and equipment                                    (921)       (664)
     Collection of notes receivable                                               74         245
     Increase in capitalized software                                         (2,202)     (2,989)
     Increase in other assets                                                    (45)        (43)
                                                                            --------    --------
              Net cash used in investing activities                           (1,080)       (838)
                                                                            --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from issuance of stock                                         212         797
     Purchase of treasury stock                                                 (858)     (1,757)
     Proceeds from notes payable                                                 254         544
     Payments on notes payable                                                  (599)       (464)
                                                                            --------    --------

              Net cash used in financing activities                             (991)       (880)
                                                                            --------    --------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
     Net cash used in discontinued operations                                     --      (3,929)

Effect of translation exchange rates on cash                                      19        (173)
                                                                            --------    --------

Net decrease in cash and equivalents                                          (3,590)     (2,521)

Cash and equivalents at beginning of period                                   17,237      15,848
                                                                            --------    --------
Cash and equivalents at end of period                                       $ 13,647    $ 13,327
                                                                            ========    ========
</TABLE>

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

                                       4
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

NOTE 1 - GENERAL AND BASIS OF FINANCIAL STATEMENTS

         The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and accordingly, do not include all information and
footnotes required under accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, these
interim financial statements contain all adjustments, consisting of normal,
recurring adjustments, necessary for a fair presentation of the financial
position of Forgent Networks, Inc. ("Forgent" or the "Company") as of April 30,
2003 and July 31, 2002 and the results of operations for the three and nine
months ended April 30, 2003 and April 30, 2002, and the cash flows for the nine
months ended April 30, 2003 and April 30, 2002. The results for interim periods
are not necessarily indicative of results for a full fiscal year.

         Please note that for comparability purposes a reclassification was made
on the Company's originally filed Form 10-K for the fiscal year ended July 31,
2002, which is reflected in the Company's Form 10-K/A-2 for the same fiscal
period, in the Company's Form 10-Q/A for the fiscal quarter ended October 31,
2002, as well as in the Company's Form 10-Q/A for the fiscal quarter ended
January 31, 2003.

NOTE 2 - BUSINESS DISPOSITION

         On January 6, 2003, Forgent signed a definitive purchase agreement to
sell the operations and substantially all of the assets of its videoconferencing
hardware services business, based in King of Prussia, Pennsylvania, to an
affiliate of Gores Technology Group ("Gores"), a privately held international
acquisition and management firm, in order to focus solely on growing its
software and professional services and its intellectual property licensing
businesses. The acquisition agreement calls for Gores to pay Forgent
approximately $16,000, consisting of $8,000 in cash, which may be adjusted
downward if any purchase price adjustments are required, and the assumption of
substantially all of the liabilities associated with Forgent's videoconferencing
hardware services business. As of April 30, 2003, these liabilities are
estimated to be approximately $8,000, but may vary by the time of closing. In
addition, Gores is required to place an additional $2,000 of cash in escrow.
These escrowed funds are to be distributed to the Company in the future pursuant
to the terms of the definitive purchase agreement, less an amount of cash
equaling (i) purchase price adjustments required if the net assets transferred
by the Company to Gores on the closing date are less than $3,800 and/or the
deferred revenue assumed by Gores on the closing date is greater than $7,600,
and (ii) indemnity claims payable by the Company. Details of this transaction
and other important information are set forth in the Company's proxy statement
for fiscal year 2002. Management does not anticipate any purchase price
adjustments or indemnity claims payable. Approximately 78% of the liabilities to
be assumed represents deferred revenue and the remaining 22% represents certain
identified accounts payable and capital lease obligations. The assets sold
include accounts receivable, inventory, fixed assets, and certain prepaid
assets. The transaction is subject to approval by the Company's shareholders and
other customary conditions. Forgent and Gores will also execute co-marketing and
reseller agreements, allowing both companies to provide software,
software-related services and hardware services to their customers and
prospects.

         The divestiture is a strategic move that is designed to enable Forgent
to focus on growing its software and professional services and its intellectual
property licensing businesses, increasing its cash balances, improving its gross
margins and reducing its operating expenses. Customers of Forgent's
videoconferencing hardware services business should also benefit from the
divestiture by having a service provider focused on services as its primary
business.

         On May 29, 2003, Forgent entered into an amendment with Gores to the
purchase agreement to extend the deadline for closing the transaction to July 3,
2003, which is the scheduled annual shareholders meeting date. The amendment
requires Forgent to pay an extension fee, up to an aggregate amount of $400,
which is payable upon closing. Management believes the extension fee is
appropriate and necessary to finalize the divestiture of its videoconferencing
hardware services business, which is expected to be concluded during the fourth
fiscal quarter of 2003. Management also anticipates that Gores will retain
approximately 70 employees currently employed by

                                       5
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

Forgent's videoconferencing hardware services business. Once the sale of the
videoconferencing hardware services business is finalized, Forgent will employ
approximately 95 employees.

NOTE 3 - DISCONTINUED OPERATIONS

         In April 2002, Forgent sold inventory and certain other assets related
to its integration business to SPL Integrated Solutions ("SPL"), a leading
nationwide integrator that designs and installs large-display videoconferencing
systems and fully integrated multimedia systems for corporations, educational
institutions and government agencies. SPL currently provides all of the
integration services for Forgent and Forgent became the exclusive service
provider for SPL, thus allowing each company to strengthen and to significantly
expand its individual core services while complementing each others' product
offerings. As a result of the sale of its integration business, Forgent received
$150 in cash and a $282 note receivable from SPL. SPL absorbed 15 members of
Forgent's Professional Services Integration team and re-located to Forgent's
facility in King of Prussia, Pennsylvania, where the combined team of engineers
and technicians manage and execute the delivery of audio-video system
integration and support. The assets related to the integration business were
sold for approximately their net book value and thus an immaterial amount of
gain was recorded during the third quarter of fiscal 2002. The sale allowed
Forgent to focus its strengths and resources on growing its software business
while still providing multimedia systems to its customers through SPL. As of
April 30, 2003, the balance on the note receivable from SPL was $31.

         After receiving approval from the Company's shareholders during its
2001 annual meeting, Forgent finalized the sale of its Products business unit,
including the VTEL name, on January 23, 2002 in order to devote its energies and
resources to the development of Forgent's software business. The sale of the
operations and substantially all of the assets used in the Products business
unit was made to VTEL Products Corporation ("VTEL"), a privately held company
created by the former Vice-President of Manufacturing of the Products business
unit and two other senior management members of the Products business unit. As a
result, the Company received cash of $500, a 90-day subordinated promissory
note, bearing interest at an annual rate of five percent, for $967, a 5-year
subordinated promissory note, bearing interest at an annual rate of five
percent, for $5,000 and 1,045 shares of common stock, representing 19.9% of the
new company's fully diluted equity. Additionally, Forgent and VTEL entered into
a general license agreement, in which VTEL was granted certain non-exclusive
rights in and to certain patents, software, proprietary know-how, and
information of the Company that was used in the daily operations of the Products
business unit. The group of management who purchased the products division (now
referred to as VTEL) put up $500 of their own money at the closing. In addition,
VTEL also received a $750 line of credit from a bank, which was not guaranteed
by Forgent. The facilities lease was signed over to VTEL, which was accepted by
the landlord with no further obligations by Forgent. Furthermore, Forgent did
not remain contingently liable for performance on existing contracts or future
contracts entered into by the newly formed entity. The Company does not have any
continuing involvement in the go-forward operations of VTEL. It does not have
veto power or any means to exercise influence over the operations of that
company. The Company has made no guarantees with respect to any business matters
as they relate to VTEL nor are there any situations whereby the Company would be
required to reassume any obligations of VTEL. Due to uncertainties regarding
VTEL's future business, Forgent fully reserved its equity interest in VTEL.

         As a result of the sales of the products and integration businesses,
the Company has presented these businesses as discontinued operations on the
accompanying consolidated financial statements. For the three and nine months
ended April 30, 2002, the Company recorded a $166 and $8,283 loss for its
discontinued operations, respectively. Since the products and integration
businesses were sold during fiscal 2002, no income or losses were recorded for
discontinued operations for the three and nine months ended April 30, 2003.

                                       6
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

NOTE 4 - ACQUISITIONS

         As approved by each company's board of directors, Forgent acquired
certain assets and liabilities in a purchase business combination structured as
an asset purchase of Global Scheduling Solutions, Inc., a global provider of
enterprise conference room scheduling and resource management solutions, on June
4, 2002. This business combination was completed in order for Forgent to expand
the quality and reach of its existing enterprise software sales and marketing
efforts and to acquire an enterprise scheduling software solution to complement
its existing Video Network Platform solution.

         Forgent agreed to pay Global Scheduling Solutions, Inc. a combination
of $3,750 in cash, $250 held in escrow for representations and warranties, and
$700 tied to certain future contingent "earn-out" payments and the assumption of
certain liabilities. The $700 liability was dependent upon the purchased assets
generating a certain level of net revenue between April 2002 and September 2002.
The acquisition was accounted for as a purchase of assets. Accordingly, the
purchase price was allocated to tangible and identifiable intangible assets
acquired based on their estimated fair values at the date of acquisition.
Approximately $5,229 was recorded as goodwill, which represents the excess of
total cost over tangible and intangible assets acquired. Forgent continues to
market Global Scheduling Solutions, Inc.'s acquired flagship product, Global
Scheduling System, an industry leading web-based application that combines the
management of large-scale meeting environments and all necessary resources and
services while reducing the cost and time associated with such management. As a
result of the acquisition, Forgent became a leading vendor that provides
complete one-stop video network scheduling, launching, monitoring and management
solution.

         During the quarter ended January 31, 2003, management settled the
contingent liability and paid Global Scheduling Solutions, Inc. $375. As part of
the settlement, the $250 held in escrow was relieved. Therefore, the related
goodwill was adjusted for the remaining contingent liability of $325 and the
$250 escrow. Additionally, the related goodwill was adjusted for $45 as a result
of finalizing the valuation of the assets acquired and liabilities assumed. As
of January 31, 2003, the Company no longer had any liabilities owed to Global
Scheduling Solutions, Inc.

NOTE 5 - IMPAIRMENT OF ASSETS

         During the three months ended April 30, 2003, Forgent believed that the
ongoing difficult economic environment and the associated negative impact on the
Company's software business represented an indicator of a possible impairment of
the Company's software business. Therefore, the Company was required to perform
an impairment analysis in accordance with Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" to determine the fair
value of the assets and liabilities of its software business. As a result of
this analysis, Forgent recorded a $1,331 impairment of its goodwill related to
its acquisition of the assets of Global Scheduling, Inc. This impairment was
recorded as part of continuing operations on the Company's consolidated
statement of operations.

         As a result of the sale of its products business unit during fiscal
2002, Forgent received two subordinated promissory notes from VTEL Products
Corporation ("VTEL"). VTEL did not remit payment on its first subordinated
promissory note due in April 2002, as stipulated in the sales agreement. As a
result of this default and due to the uncertainty in collecting the two
outstanding notes from VTEL, the Company recorded a $5,967 charge for the
reserve of both notes from VTEL during the third fiscal quarter of 2002. This
charge was recorded as part of continuing operations for the three and nine
months ended April 30, 2002. However, management is continuing its efforts on
collecting these outstanding notes receivables despite the low probability of
collection. During the quarter ended October 31, 2002, management agreed with
VTEL's management to offset Forgent's accounts payable to VTEL with its accounts
receivable and notes receivable from VTEL. The net $499 Forgent liability was
partially offset with the note in default, thus relieving $499 of the reserve on
the notes receivable. Similarly, during the quarter ended April 30, 2003,
management agreed with VTEL's management to offset Forgent's accounts payable to
VTEL with the outstanding notes receivable and interest receivable from VTEL,
thus relieving an additional $120 of the reserve on the notes receivable. The
reductions in reserve on the VTEL notes receivables were accounted for as

                                       7
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

part of continuing operations on the Company's consolidated statement of
operations. No cash was exchanged with these transactions.

         Initially, management intended to further develop its video streaming
technology, which is a server application with the abilities to create video
e-mail programs and to store streamed video for later non-real time playback, as
an added feature to its current VNP software. Based upon customer feedback
regarding the VNP software during the second quarter of fiscal 2002, customers
did not need these advanced features but desired fundamental network management
applications with more robust device level support and value added network level
instrumentation for ISDN and IP networks to enable them to understand and
monitor how well their networks are performing. Therefore, management reviewed
its capitalized software development costs and determined the video streaming
technology would not be used in the development of VNP. As a result, the $2,381
million capitalized software development costs associated with this technology
was impaired and was reported as part of cost of sales during the nine months
ended April 30, 2002.

NOTE 6 - COMPREHENSIVE INCOME (LOSS)

         In accordance with the disclosure requirements of SFAS No. 130,
"Reporting Comprehensive Income", the Company's comprehensive income (loss) is
comprised of net income (loss), foreign currency translation adjustments and
unrealized gains and losses on short-term investments held as available-for-sale
securities. Comprehensive income for the three and nine months ended April 30,
2003 was $1,603 and $3,525, respectively. Comprehensive income for the three
months ended April 30, 2002 was $2,304 and comprehensive loss for the nine
months ended April 30, 2002 was $10,255. Other comprehensive income for the
three months and nine months ended April 30, 2003 and for the three months
ended April 30, 2002 was $120, $438 and $177 respectively which represents
foreign currency translation adjustments. Other comprehensive income for the
nine months ended April 30, 2002 was $1,614 which represents foreign currency
translation adjustments of $73 and unrealized gain on short-term investments of
$1,541.

NOTE 7 - RESTRUCTURING ACTIVITIES

         In August 2001, the Company restructured its organization, which
involved the termination of 65 employees, or 17% of the workforce, who were
assisted with outplacement support and severance. The reduction affected 16
employees in Austin, Texas, 30 employees in King of Prussia, Pennsylvania, and
19 employees in remote and international locations. The restructuring was the
result of eliminating certain business elements that did not contribute to
Forgent's software and professional services and intellectual property licensing
businesses as well as efforts to increase efficiencies and to significantly
reduce administrative costs. All of the employees were terminated and the
Company recorded a one-time charge of $818 in the first quarter of fiscal 2002
for the restructuring. All of the involuntary termination benefits were paid in
fiscal 2002.

NOTE 8 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

         On August 31, 2000 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 requires the recognition of all derivatives as
either assets or liabilities on the Consolidated Balance Sheet with changes in
fair value recorded in the Consolidated Statement of Operations.

         The accounting for changes in fair value of a derivative depends upon
whether it has been designated in a hedging relationship and, further, on the
type of hedging relationship pursuant to SFAS No. 133. Changes in the fair value
of derivatives not designated in a hedging relationship are recognized each
period in earnings. Hedging relationships are established pursuant to the
Company's risk management policies, and are initially and regularly evaluated to
determine whether they are expected to be, and have been, highly effective
hedges. If a derivative ceases to be a highly effective hedge, hedge accounting
is discontinued prospectively, and future changes in the fair value of the
derivative is recognized in earnings each period. For derivatives designated as
hedges of the variability of cash flows related to a recognized asset or
liability (cash flow hedges), the effective portion of the change in fair value
of the derivatives is reported in other comprehensive income and reclassified
into earnings in the period in

                                       8
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

which the hedged items affect earnings. Gains or losses deferred in accumulated
other comprehensive income associated with terminated derivatives remain in
accumulated other comprehensive income until the hedged items affect earnings.
Forecasted transactions designated as the hedged items in cash flow hedges are
regularly evaluated to assess that they continue to be probable of occurring,
and if the forecasted transactions are no longer probable of occurring, any gain
or loss deferred in accumulated other comprehensive income is recognized in
earnings currently.

         The Company utilized derivatives designated as cash flow hedges to
ensure a minimum level of cash flows as related to its investment in the Polycom
stock. The amount of ineffectiveness with respect to these cash flow hedges was
not material. During the three months ended October 31, 2001, the remaining 77
shares of Polycom were sold under a cash flow hedge and $1.7 million was
reclassed from other comprehensive income to earnings.

NOTE 9 - RECENT ACCOUNTING PRONOUNCEMENTS

         In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities," which requires that a company that controls
another entity through interests other than voting interests should consolidate
such controlled entity. FIN No. 46 applies to variable interest entities
created after January 31, 2003, and is effective for interim periods beginning
after June 15, 2003 for existing variable interest entities. As the Company has
no material exposures to special purpose entities or other off-balance sheet
arrangements, the Company anticipates that the effects of adopting FIN No. 46
will not be material to its consolidated financial statements.

         In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting
for Stock-Based Compensation--Transition and Disclosure", which amends SFAS No.
123, "Accounting for Stock-Based Compensation". SFAS No. 148 provides
alternative methods of transition for a voluntary change to a fair value based
method of accounting for stock-based compensation. SFAS No. 148 also amends the
disclosure requirements of SFAS No. 123 to require additional disclosures in
both annual and interim financial statements regarding the effects of
stock-based compensation. Forgent adopted the disclosure provisions of SFAS No.
148 effective the beginning of the third quarter of fiscal year 2003. The
adoption of SFAS No. 148 had no impact on the Company's financial position or
results of operations.

         In November 2002, the FASB reached a consensus on EITF Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables" ("Issue
00-21"). Issue 00-21 sets out criteria for whether revenue can be recognized
separately from other deliverables in a multiple deliverable arrangement. The
criteria consider whether the delivered item has stand-alone value to the
customer, whether the fair value of the delivered item can be reliably
determined and the right of returns for the delivered item. Forgent is required
to adopt Issue 00-21 beginning August 1, 2003 and management is currently
assessing the impact of Issue 00-21 on its consolidated financial statements.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 addresses accounting for
restructuring costs and supersedes previous accounting guidance, principally
Emerging Issues Task Force ("EITF") No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that the
liability associated with exit or disposal activities be recognized when the
liability is incurred. As a contrast under EITF 94-3, a liability for an exit
cost is recognized when a Company commits to an exit plan. SFAS No. 146 also
establishes that a liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing and amount of recognizing
restructuring costs. The Company will adopt the provisions of this statement for
any restructuring activities initiated after December 31, 2002. No such
activities were initiated during the nine months ended April 30, 2003.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," as well as the accounting and reporting provisions
relating to the disposal of a segment of a business as required by Accounting
Principles Board No. 30. Effective August 1, 2002, the Company adopted SFAS No.
144, which did not have a significant impact on its financial statements.

NOTE 10 - STOCK BASED COMPENSATION

         The Company follows Accounting Principles Board Opinion 25, "Accounting
for Stock Issued to Employees" and related interpretations in accounting for
stock option grants. As required by SFAS No. 123 and SFAS No. 148, Forgent has
determined pro forma net income and net income per common share as if
compensation

                                       9
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

costs had been determined based on the fair value of the options granted to
employees and then recognized ratably over the vesting period. The fair value of
stock option grants has been estimated at the date of grant using the
Black-Scholes option pricing model. Had the compensation costs been recognized
as prescribed by SFAS No. 123, net income and basic and diluted earnings per
share would have changed to the pro forma amounts shown below:

<TABLE>
<CAPTION>
                                                            FOR THE                  FOR THE
                                                       THREE MONTHS ENDED       NINE MONTHS ENDED
                                                           APRIL 30,                 APRIL 30,
                                                        2003        2002        2003          2002
                                                          (UNAUDITED)               (UNAUDITED)
<S>                                                   <C>         <C>         <C>          <C>
Net earnings (loss)
     Net earnings (loss) as reported                  $ 1,723     $ 2,481     $  3,963     $  (8,641)

     Add: Stock-based employee compensation
     expense included in reported net earnings
     (loss), net of related tax effects               $     -     $     -     $      2     $       -

     Deduct: Stock-based employee
     compensation expense determined under fair
     value-based method for all awards, net of
     related tax effects                              $  (521)    $  (360)    $ (1,652)    $  (1,212)

     Pro forma                                        $ 1,202     $ 2,121     $  2,313     $  (9,853)

Basic earning (loss) per common share:
     As reported                                      $  0.07     $  0.10     $   0.16     $   (0.35)
     Pro forma                                        $  0.05     $  0.09     $   0.09     $   (0.40)
Diluted earnings (loss) per common share:
     As reported                                      $  0.07     $  0.10     $   0.16     $   (0.35)
     Pro forma                                        $  0.05     $  0.08     $   0.09     $   (0.40)

</TABLE>

The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary, to reflect market conditions and
experience.

NOTE 11 - SEGMENT INFORMATION

         Currently, the Company operates in three distinct segments: software
and professional services, intellectual property licensing, and services and
other. Forgent's software and professional services business provides customers
with enterprise meeting automation software as well as software customization,
installation, training, network consulting, hardware devices, and other
comprehensive related services. Forgent's intellectual property licensing
business is currently focused on generating licensing revenues relating to the
Company's data compression technology embodied in U.S. Patent No. 4,698,672 and
its foreign counterparts. The Company's services and other segment helps
companies maximize their video communications investments through maintenance,
hardware installation, technical support and resident engineer services.

         The Company evaluates the performance as well as the financial results
of its segments. Included in the segment operating income (loss) is an
allocation of certain corporate operating expenses. The prior year's segment
information has been restated to present the Company's reportable segments as
they are currently defined. The

                                       10
<PAGE>

                             FORGENT NETWORKS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
           (Amounts in thousands, except per share and employee data
                            unless otherwise noted)

Company does not identify assets or capital expenditures by reportable segments.
Additionally, the Chief Executive Officer and Chief Financial Officer do not
evaluate the business groups based on these criteria.

         The table below presents segment information about revenue from
unaffiliated customers, gross margins, and operating income (loss) for the three
and nine months ended April 30, 2003 and 2002:

<TABLE>
<CAPTION>
                                                        SOFTWARE &     INTELLECTUAL
                                                       PROFESSIONAL      PROPERTY       SERVICES
                                                         SERVICES        LICENSING       & OTHER       TOTAL
                                                       ------------    ------------     --------       -----
<S>                                                    <C>             <C>              <C>           <C>
FOR THE THREE-MONTH PERIOD ENDING APRIL 30, 2003
Revenues from unaffiliated customers                     $  1,134        $ 12,150       $  3,823      $ 17,107
Gross margin                                                  189           6,075          1,033         7,297
Operating (loss) income                                    (3,597)          5,291            (33)        1,661

FOR THE THREE-MONTH PERIOD ENDING APRIL 30, 2002
Revenues from unaffiliated customers                     $    852        $ 15,000       $  6,465      $ 22,317
Gross margin                                                  441           8,400          2,867        11,708
Operating (loss) income                                    (8,186)          8,311          2,123         2,248

FOR THE NINE-MONTH PERIOD ENDING APRIL 30, 2003
Revenues from unaffiliated customers                     $  3,379        $ 25,618       $ 13,141      $ 42,138
Gross margin                                                  961          12,809          4,133        17,903
Operating (loss) income                                    (8,715)         10,965          1,279         3,529

FOR THE NINE-MONTH PERIOD ENDING APRIL 30, 2002
Revenues from unaffiliated customers                     $  1,309        $ 15,000       $ 20,694      $ 37,003
Gross margin                                               (2,097)          8,400          8,499        14,802
Operating (loss) income                                   (15,694)          8,023          5,123        (2,548)
</TABLE>

                                       11
<PAGE>

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

         The following review of Forgent's financial position as of April 30,
2003 and July 31, 2002 and for the three and nine months ended April 30, 2003
and 2002 should be read in conjunction with the Company's 2002 Annual Report on
Form 10-K and 2002 Amended Annual Report on Form 10-K/A-2 filed with the
Securities and Exchange Commission.

RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated the percentage
of total revenues represented by certain items in Forgent's Consolidated
Statements of Operations:

<TABLE>
<CAPTION>
                                                FOR THE THREE       FOR THE NINE
                                                 MONTHS ENDED       MONTHS ENDED
                                                  APRIL 30,          APRIL 30,
                                                2003     2002      2003     2002
                                                ----     ----      ----     ----
<S>                                             <C>      <C>       <C>      <C>
Software and professional services revenues       7%       4%        8%       4%
Intellectual property licensing revenues         71       67        61       40
Services and other revenues                      22       29        31       56
Gross margin                                     43       52        42       40
Selling, general and administrative              21       13        26       23
Research and development                          5        3         7        5
Impairment of assets                              7       27         2       16
Restructuring expense                            --       --        --        2
Total operating expenses                         33       42        34       47
Other income, net                                 1        1         1        5
Income (loss) from continuing operations         10       12         9       (1)
Loss from discontinued operations                --       (1)       --      (22)
Net income (loss)                                10%      11%        9%     (23)%
</TABLE>

THREE AND NINE MONTHS ENDED APRIL 30, 2003 AND 2002

         REVENUES. Revenues for the three months ended April 30, 2003 were $17.1
million, a decrease of $5.2 million, or 23%, from the $22.3 million reported for
the three months ended April 30, 2002. Revenues for the nine months ended April
30, 2003 were $42.1 million, an increase of $5.1 million, or 14%, from the $37.0
million reported for the nine months ended April 30, 2002. Consolidated revenues
represent the combined revenues including sale of Forgent's enterprise meeting
automation software, software customization, installation and training, network
consulting, hardware, maintenance services, multi-vendor products and other
comprehensive professional services as well as royalties received from licensing
the Company's intellectual property. Consolidated revenues do not include any
revenues from Forgent's discontinued products business, which manufactured and
sold endpoint systems or the Company's discontinued integration business, which
provided customized videoconferencing solutions.

         Software and professional services revenues increased by $0.3 million,
or 33%, to $1.1 million for the quarter ended April 30, 2003 from $0.8 million
for the quarter ended April 30, 2002. Software and professional services
revenues increased by $2.1 million, or 158%, to $3.4 million for the nine months
ended April 30, 2003 from $1.3 million for the nine months ended April 30, 2002.
Software and professional services revenues as a percentage of total revenues
were 7% and 4% for the three months ended April 30, 2003 and 2002, respectively.
Software and professional services revenues as a percentage of total revenues
were 8% and 4% for the nine months ended April 30, 2003 and 2002, respectively.
Revenues from this line of business include sales of Forgent's Video Network
Platform ("VNP"), Global Scheduling System ("GSS"), and VideoWorks, which is a
bundling of Forgent's software products and may include hardware, depending on
customer preference. Also included are professional services, and royalties. VNP
is an enterprise-class network management software product designed to monitor
and manage multi-protocol, multi-vendor video networks from a central location,
thus improving ease-of-use, reliability, and manageability of video
communications. GSS is a web-based scheduling application that helps
organizations plan,

                                       12
<PAGE>

execute, and manage their meeting environments effectively and efficiently.
Forgent's professional services include software customization, installation and
training, and network consulting services to evaluate and analyze customers'
networks as well as to test networks for manageability, interoperability, and
optimum connectivity.

         The $0.3 million increase during the three months ended April 30, 2003
and the $2.1 million increase during the nine months ended April 30, 2003 as
compared to the related periods in fiscal 2002 are due to increases in sales of
software licenses during fiscal 2003. Included in the fiscal 2003 revenues are
sales of the GSS software. During the three months ended April 30, 2002, the
Company sold one GSS license as a reseller for Global Scheduling Solutions, Inc.
Since the Company did not acquire GSS until the fourth quarter of fiscal year
2002, no other software revenues were generated through sales of the GSS
software during the three and nine months ended April 30, 2002.

         Software and professional services revenues for the three months ended
April 30, 2003 increased 10% as compared to the three months ended January 31,
2003. Despite the continued slow down in spending by corporate IT departments,
the change in the Company's sales commission system and the sales organization's
focus on prioritized sales contributed to this increase in software and
professional services revenues during the third fiscal quarter. Based on
customer feedback, Forgent expanded the functionalities of its award-winning
Video Network Platform ("VNP") and Global Scheduling System ("GSS") and is
developing its new flagship product, Forgent ALLIANCE(TM) ("ALLIANCE"). Forgent
intends to introduce its ALLIANCE enterprise meeting automation solution in the
summer. Although Forgent will not generate significant software and professional
services revenues related to ALLIANCE until the next fiscal year, management
anticipates that there will be enough sales opportunities, irrespective of the
availability of ALLIANCE, to reproduce similar software and professional
services revenues in the fourth fiscal quarter as were generated in the third
fiscal quarter.

         Intellectual property licensing revenues decreased by $2.8 million, or
19%, to $12.2 million for the quarter ended April 30, 2003 from $15.0 million
for the quarter ended April 30, 2002. Intellectual property licensing revenues
increased by $10.6 million, or 71%, to $25.6 million for the nine months ended
April 30, 2003 from $15.0 million for the nine months ended April 30, 2002.
Intellectual property licensing revenues as a percentage of total revenues were
71% and 67% for the three months ended April 30, 2003 and 2002, respectively.
Intellectual property licensing revenues as a percentage of total revenues were
61% and 41% for the nine months ended April 30, 2003 and 2002, respectively.
These licensing revenues relate to one-time intellectual property licensing
agreements with companies for Forgent's data compression technology embodied in
U.S. Patent No. 4,698,672 (the "672" patent) and its foreign counterparts. The
Company does not anticipate any additional intellectual property revenue from
these companies but it continues to actively seek licenses with other users of
its intellectual property. As of April 30, 2003, the Company had $4.7 million in
accounts receivable related to its intellectual property licensing revenues
generated during the third fiscal quarter. Management anticipates collecting
these receivables during the fourth fiscal quarter.

         The Company's Patent Licensing Program continued its success during the
third fiscal quarter of 2003, marking the fifth consecutive quarter that Forgent
has generated intellectual property licensing revenues. To date, Forgent has
achieved $56.8 million in revenues from these licensing agreements, which have
been concluded in Japan, South Korea, and the United States and cover several
fields of use including printing devices, digital imaging, cellular phones,
digital cameras, and copying machines. The Company continues to actively seek
new licenses and put more companies on notice by extending the '672 patent's
global reach and broadening its field of use. Although there continues to be
uncertainty and risk related to the Company's Patent Licensing Program,
management anticipates generating revenues from its intellectual property
licensing segment during the next fiscal quarter. Forgent's Patent Licensing
Program involves risks inherent in licensing intellectual property, including
risks of protracted delays, possible legal challenges that would lead to
disruption or curtailment of the licensing program, increasing expenditures
associated with pursuit of the program, and other risks that could adversely
affect the Company's licensing program. Additionally, the U.S. patent, which has
generated the intellectual property licensing revenues, expires in October 2006
and its foreign counterparts expire in September 2007. There can be no assurance
that the Company will be able to continue to effectively license its technology
to others.

         Services and other revenues decreased by $2.6 million, or 41%, to $3.8
million for the quarter ended April 30, 2003 from $6.4 million for the quarter
ended April 30, 2002. Services and other revenues decreased by $7.6

                                       13
<PAGE>

million, or 36%, to $13.1 million for the nine months ended April 30, 2003 from
$20.7 million for the nine months ended April 30, 2002. Services and other
revenues as a percentage of total revenues were 22% and 29% for the three months
ended April 30, 2003 and 2002, respectively. Services and other revenues as a
percentage of total revenues were 31% and 56% for the nine months ended April
30, 2003 and 2002, respectively. Services and other revenues include the
maintenance and support of thousands of endpoints and bridges under maintenance
agreements, as well as sales of a variety of third-party manufactured equipment
through the Company's Multi-Vendor Partners Program ("MVP"). Approximately 71%
of the $2.6 million decline in services and other revenues during the three
months ended April 30, 2003 as compared to the three months ended April 30, 2002
is due to the decrease in service revenues and approximately 29% of the decrease
is due to fewer sales from MVP. Similarly, approximately 67% of the $7.6 million
decline in services and other revenues during the nine months ended April 30,
2003 as compared to the nine months ended April 30, 2002 is due to the decrease
in service revenues and approximately 33% of the decrease is due to fewer sales
from MVP. The decreases in service revenues are primarily the result of
decreases in the renewal rate of service contracts for VTEL products. As a
vendor-neutral service provider, offering installation, technical support, and
maintenance to a wide array of videoconferencing devices, including endpoints,
multipoint control units, gateways, gatekeepers, and traditional network
switches and routers, Forgent attempted to offset the decrease in renewal of
VTEL contracts with service contracts for other third party products. However,
the service contract sales for third party products have not been sufficient to
recover the decline in service revenues from VTEL contract renewals. Management
anticipates relatively little change in service and other revenues during the
fourth fiscal quarter.

         GROSS MARGIN. Gross margins decreased $4.4 million, or 38%, to $7.3
million for the three months ended April 30, 2003 from $11.7 million for the
three months ended April 30, 2002. Gross margins increased $3.1 million, or 21%,
to $17.9 million for the nine months ended April 30, 2003 from $14.8 million for
the nine months ended April 30, 2002. Gross margin as a percentage of total
revenues was 43% and 52% for the three months ended April 30, 2003 and 2002,
respectively. Gross margin as a percentage of total revenues was 42% and 40% for
the nine months ended April 30, 2003 and 2002, respectively.

         The Company's total gross margins decreased $4.4 million during the
quarter ended April 30, 2003 as compared to the quarter ended April 30, 2002 due
primarily to two reasons. First, $2.3 million of the decrease resulted from less
licensing revenues during the three months ended April 30, 2003 and a related
increase in cost of sales. The cost of sales on the intellectual property
licensing business relates to the legal fees incurred on successfully achieving
licensing revenues. The contingent legal fees are based on a percentage of the
licensing revenues received on signed agreements and are paid to Jenkens &
Gilchrist, P.C. ("Jenkens & Gilchrist"), a national law firm. The percentage
payment to Jenkens & Gilchrist was set based on a sliding scale that began
during the quarter ended April 30, 2002 at 35% and increased to 50% based on the
aggregate recoveries achieved. Therefore, intellectual property licensing gross
margins as a percentage of revenue was 56% for the quarter ended April 30, 2002
as compared to 50% for the quarter ended April 30, 2003. Because of the inherent
risks in technology licensing, including the October 2006 expiration of the U.S.
patent which has generated the licensing revenues and the September 2007
expiration of the patent's foreign counterparts, total gross margins could be
adversely affected in the future if licensing revenues decline.

         Second, $1.8 million of the decrease for the three months ended April
30, 2003 as compared to the three months ended April 30, 2002 resulted from a
decline in gross margins from the services and other segment. The costs
associated with the services and other business are labor intensive and
relatively fixed, which causes gross margins to be directly affected by the
level of revenue generated primarily from new and renewed service contracts. The
$2.6 million decrease in services and other revenues for the quarter ended April
30, 2003 as compared to the quarter ended April 30, 2002 directly contributed to
the decrease in the gross margins. Total gross margins and gross margins as a
percentage of revenues from the services and other segment also decreased as
compared to the previous fiscal quarter. Forgent will continue to manage the
videoconferencing hardware services business in an effort to maintain revenue
and gross margin levels consistent with the three months ended April 30, 2003,
until the divestiture of this business line is consummated.

         For the three months ended April 30, 2003, approximately 59% of the
cost of sales associated with the software and professional services business
resulted from the amortization of the Company's capitalized software development
costs and compensation. Thus, the cost of sales from this line of business is
relatively fixed, and the

                                       14
<PAGE>

revenues generated from the software and professional services segment directly
affect the related gross margins. Despite a 10% increase in software and
professional services revenues during the quarter ended April 30, 2003 as
compared to the previous fiscal quarter, software and professional services
gross margins declined during the third fiscal quarter due to higher cost of
sales as a result of a higher sales mix of VideoWorks.

         The $3.1 million increase in gross margins for the nine months ended
April 30, 2003 as compared to the nine months ended April 30, 2002 was due
primarily to a $4.4 million increase in gross margins resulting from patent
licensing revenues and $2.4 million increase in gross margins in the 2003 period
resulting from the impairment of capitalized software development costs during
the nine months ended April 30, 2002. The impairment was recorded as cost of
sales from the software and professional services segment. These increases were
offset by a $4.4 million decrease in gross margins from the services and other
segment for the nine months ended April 30, 2003 as compared to the nine months
ended April 30, 2002. The $2.4 million impairment of capitalized software
development costs during the three months ended January 31, 2002 was associated
with the Company's video streaming technology. Initially, management intended to
further develop its video streaming technology, which is a server application
with the abilities to create video e-mail programs and to store streamed video
for later non-real time playback as an added feature to its VNP software. Based
upon customer feedback regarding the VNP software during the second quarter of
fiscal 2002, customers did not need these advanced features but desired
fundamental network management applications with more robust device level
support and valued added network level instrumentation for ISDN and IP networks
to enable them to understand and monitor how well their networks were
performing. Therefore, management determined the video streaming technology
would not be used in the development of VNP and impaired $2.4 million of the
related capitalized software development costs.

         SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative ("SG&A") expenses increased by $0.6 million, or 20%, to $3.5
million for the quarter ended April 30, 2003 from $2.9 million for the quarter
ended April 30, 2002. SG&A expenses increased by $2.3 million, or 27%, to $10.8
million for the nine months ended April 30, 2003 from $8.5 million for the nine
months ended April 30, 2002. SG&A expenses as a percentage of revenues were 21%
and 13% for the three months ended April 30, 2003 and 2002, respectively, and
were 26% and 23% for the nine months ended April 30, 2003 and 2002,
respectively.

         The $0.6 million increase in SG&A expenses during the three months
ended April 30, 2003, as compared to the three months ended April 30, 2002, is
due primarily to a $0.5 million increase in expenses related to the Patent
Licensing Program. The $2.3 million increase in SG&A expenses during the nine
months ended April 30, 2003, as compared to the nine months ended April 30,
2002, is due primarily to a $1.1 million increase in expenses related to the
Patent Licensing Program, a $0.7 million increase in bad debt expenses, and a
$0.9 million increase in expenses related to personnel and consultants within
the sales organization.

         During the three and nine months ended April 30, 2003, Forgent's Patent
Licensing Program incurred increased consulting expenses, international travel
expenses and other associated expenses as compared to the related periods ending
April 30, 2002. In view of the expanded scope of the Patent License Program and
correspondingly, the increased effort involved to grow licensing revenues,
management anticipates additional expenses to be incurred related to obtaining
additional licensing revenues from the Patent Licensing Program. Forgent's
Patent Licensing Program involves risks inherent in licensing intellectual
property, including risks of protracted delays, possible legal challenges that
would lead to disruption or curtailment of the licensing program, increasing
expenditures associated with pursuit of the program, and other risks that could
adversely affect the Company's licensing program. Additionally, the U.S. patent,
which has generated the intellectual property licensing revenues, expires in
October 2006 and its foreign counterparts expire in September 2007. There can be
no assurance that the Company will be able to continue to effectively license
its technology to others.

         The aging of certain outstanding accounts receivables from the services
and other segment accounts for the $0.7 million increase in bad debt expenses
incurred during the nine months ended April 30, 2003, as compared to the nine
months ended April 30, 2002. No bad debt expense was incurred for the software
and professional services segment or the intellectual property licensing segment
during the nine months ended April 30, 2003. Forgent is currently working with
its customers to resolve potential issues in order to attempt to collect these
outstanding

                                       15
<PAGE>
receivables. These accounts receivables are part of the assets being sold as
part of the divestiture of videoconferencing hardware service business.

         When Forgent acquired certain assets and liabilities of Global
Scheduling Systems Inc. during the fourth fiscal quarter of 2002, Forgent's
sales force more than doubled. Additionally, Forgent hired a Senior
Vice-President of Sales during the first fiscal quarter of 2003. These
additional personnel, among a few other sales hires and sales consultants,
account for the increase in sales and marketing expenses during the nine months
ended April 30, 2003.

         With the anticipated introduction of Forgent's new flagship product,
Forgent ALLIANCE(TM), management anticipates increased marketing expenses in
order to heighten market awareness of the Company's enterprise meeting
automation solutions. Based on customers' responses to ALLIANCE's capabilities
thus far, management also anticipates additional expenses related to the
Company's sales organization as Forgent expands its sales capabilities to
support sales and marketing of ALLIANCE, once it is made available. However,
Forgent will continue to endeavor to further decrease any unnecessary SG&A
expenses that do not directly support the generation of revenues for the
Company. However, the Company will make every effort to ensure that such
reductions in unnecessary SG&A expenses will not impact the Company's ability to
engage with its customers.

         RESEARCH AND DEVELOPMENT. Research and development ("R&D") expenses
increased by $0.3 million, or 59%, to $0.9 million for the quarter ended April
30, 2003 from $0.6 million for the quarter ended April 30, 2002. R&D expenses
increased by $0.8 million, or 37%, to $2.8 million for the nine months ended
April 30, 2003 from $2.0 million for the nine months ended April 30, 2002. R&D
as a percentage of revenues were 5% and 3% for the three months ended April 30,
2003 and 2002, respectively, and were 7% and 5% for the nine months ended April
30, 2003 and 2002, respectively.

         The $0.3 million increase in R&D expenses during the three months ended
April 30, 2003, as compared to the three months ended April 30, 2002, is due
primarily to more expenditures being invested in developing the Company's
enterprise meeting automation software under the new brand name Forgent
ALLIANCE(TM). Approximately 52% of the $0.8 million increase in R&D expenses
during the nine months ended April 30, 2003, as compared to the nine months
ended April 30, 2002, is due to expenses, incurred primarily during the first
fiscal quarter, related to solving complications with the then newly acquired
GSS software. Approximately 44% of the $0.8 million increase is due to expenses
incurred to further develop Forgent's ALLIANCE(TM) suite of software products.
R&D expenses related to the GSS software and ALLIANCE products incurred during
the nine months ended April 30, 2003 were not incurred during the nine months
ended April 30, 2002.

         Leveraging its expertise in videoconferencing, the Company developed an
enterprise software product for video network management. Forgent has since
evolved beyond this single focus to address management of meeting environments.
Based on customer feedback, Forgent expanded the functionalities of its
award-winning Video Network Platform ("VNP") and Global Scheduling System
("GSS") and is developing its new flagship product, Forgent ALLIANCE(TM).
ALLIANCE is an enterprise meeting automation solution that provides unified
scheduling, rich media automation, and management of meeting logistics to
eliminate inefficiencies associated with the set up and execution of meetings,
thus reducing meeting time and costs as well as potentially increasing
productivity and expediting the decision making process. The ALLIANCE software
suite consists of two software products, ALLIANCE SCHEDULER(TM) and ALLIANCE
MEDIA MANAGER(TM), each with optional add-on modules. ALLIANCE SCHEDULER(TM)
replaces multiple point scheduling tools and manual processes currently used and
schedules facilities, rich media communications, catering, equipment,
technicians, and other meeting services via a single request through interfaces
such as corporate standards Microsoft(R) Outlook(R) and Lotus Notes, or a web
browser. ALLIANCE MEDIA MANAGER(TM) configures all media components of a
conference also via a single meeting request by interpreting user requests for
rich-media resources, selecting and scheduling the appropriate devices and
services, automatically launching the audio and video conferences as requested,
and providing ongoing monitoring to detect and recover if problems occur. The
ALLIANCE software suite, which will remain vendor neutral and support
conferencing tools from all leading manufacturers, will be made available to the
general public starting in July 2003. In the fall of 2003, added functionality
to be designed for ALLIANCE MEDIA MANAGER(TM) is anticipated to be able to
provide its capabilities for web conferencing.

                                       16
<PAGE>

         The R&D expenses are net of $0.6 million and $2.2 million capitalized
during the three and nine months ended April 30, 2003, respectively, as compared
to $1.1 million and $3.0 million capitalized during the three and nine months
ended April 30, 2002. Software development costs are capitalized after a product
is determined to be technologically feasible and is in the process of being
developed for market. At the time the product is released for sale, the
capitalized software is amortized over the estimated economic life of the
related projects, generally three years. The software development costs
capitalized during the three months ended April 30, 2003 are related to the
continued efforts on enhancing Forgent's GSS, renamed as ALLIANCE SCHEDULER(TM),
and Forgent's VNP, renamed as ALLIANCE MEDIA MANAGER(TM). As of April 30, 2003,
approximately 85% of the Company's capitalized software development costs
related to efforts on designing Forgent's ALLIANCE MEDIA MANAGER(TM) and the
remaining 15% related to efforts on developing Forgent's ALLIANCE SCHEDULER
(TM).

         During the three months ended April 30, 2003, Forgent filed patent
applications covering seven new enterprise meeting automation technologies with
the United States Patent and Trademark Office. During the third fiscal quarter,
Forgent received notice from the United States Patent and Trademark Office that
four of its patent applications, including applications related to Forgent's
enterprise software business, have successfully completed the application
process and will be granted upon receipt of the required fees to be paid during
the fourth fiscal quarter. Forgent holds approximately forty issued patents
related to videoconferencing, data compression, video mail and other technology
developed or acquired by the Company.

         Forgent's ability to successfully develop enterprise meeting automation
solutions to enable enterprise collaboration networks is a significant factor in
the Company's success. As Forgent further develops its research and development
strategy, management anticipates additional costs associated with the recruiting
and retention of engineering professionals as well as costs associated with
accelerating product delivery schedules. Management will attempt to maintain
research and development expenses at reasonable levels in terms of percentage of
revenue.

         IMPAIRMENT OF ASSETS. During the three months ended April 30, 2003,
Forgent believed that the ongoing difficult economic environment and the
associated negative impact on the Company's software business represented an
indicator of a possible impairment on the Company's software business.
Therefore, the Company was required to perform an impairment analysis in
accordance with Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" to determine the fair value of the assets and
liabilities of its software business. As a result of this analysis, Forgent
recorded a $1.3 million impairment of its goodwill related to its acquisition of
the assets of Global Scheduling Solutions, Inc. This impairment was recorded as
part of continuing operations on the Company's consolidated statement of
operations.

         As a result of the sale of its products business unit during fiscal
2002, Forgent received two subordinated promissory notes from VTEL Products
Corporation ("VTEL"). VTEL did not remit payment on its first subordinated
promissory note due in April 2002, as stipulated in the sales agreement. As a
result of this default and due to the uncertainty in collecting the two
outstanding notes from VTEL, the Company recorded a $6.0 million charge for the
reserve of both notes from VTEL during the third fiscal quarter of 2002. This
charge was recorded as part of continuing operations for the three and nine
months ended April 30, 2002. However, management is continuing its efforts on
collecting these outstanding notes receivables despite the low probability of
collection. During the quarter ended October 31, 2002, management agreed with
VTEL's management to offset Forgent's accounts payable to VTEL with its accounts
receivable and notes receivable from VTEL. The net $0.5 million Forgent
liability was partially offset with the note in default, thus relieving $0.5
million of the reserve on the notes receivable. Similarly, during the quarter
ended April 30, 2003, management offset Forgent's accounts payable to VTEL with
the outstanding notes receivable and interest receivable from VTEL, thus
relieving an additional $0.1 million of the reserve on the notes receivable. The
reductions in reserve on the VTEL notes receivables were accounted for as part
of continuing operations on the Company's consolidated statement of operations.
No cash was exchanged with these transactions.

                                       17
<PAGE>

         Initially, management intended to further develop its video streaming
technology, which is a server application with the abilities to create video
e-mail programs and to store streamed video for later non-real time playback, as
an added feature to its current VNP software. Based upon customer feedback
regarding the VNP software during the second quarter of fiscal 2002, customers
did not need these advanced features but desired fundamental network management
applications with more robust device level support and value added network level
instrumentation for ISDN and IP networks to enable them to understand and
monitor how well their networks are performing. Therefore, management reviewed
its capitalized software development costs and determined the video streaming
technology would not be used in the development of VNP. As a result, the $2.4
million capitalized software development costs associated with this technology
was impaired and was reported as part of cost of sales during the nine months
ended April 30, 2002.

         RESTRUCTURING EXPENSE. In August 2001, the Company restructured its
organization, which involved the termination of 65 employees, or 17% of the
workforce, who were assisted with outplacement support and severance. The
reduction affected 16 employees in Austin, Texas, 30 employees in King of
Prussia, Pennsylvania, and 19 employees in remote and international locations.
The restructuring was the result of eliminating certain business elements that
did not contribute to Forgent's core competencies as well as efforts to increase
efficiencies and to significantly reduce administrative costs. All of the
employees were terminated and the Company recorded a one-time charge of $0.8
million in the first quarter of fiscal 2002 for the restructuring. All of the
involuntary termination benefits were paid in fiscal year 2002.

         OTHER INCOME (EXPENSE). Other income decreased by $0.1 million, or 45%,
to $0.1 million for the quarter ended April 30, 2003 from $0.2 million in other
income for the quarter ended April 30, 2002. Other income decreased by $1.5
million, or 73%, to $0.5 million for the nine months ended April 30, 2003 from
$2.0 million for the nine months ended April 30, 2002. Other income as a
percentage of revenues were 1% and 1% for the three months ended April 30, 2003
and 2002, respectively, and were 1% and 5% for the nine months ended April 30,
2003 and 2002, respectively. The $1.5 million decrease during the nine months
ended April 30, 2003 is due primarily to the 76,625 shares of Polycom common
stock that were sold under a cash flow hedge, resulting in a $1.7 million
realized gain for the first fiscal quarter of 2002. The Company no longer had
any investment in Polycom as of October 31, 2001.

         LOSS FROM DISCONTINUED OPERATIONS. During fiscal year 2002, the Company
sold the operations and substantially all of the assets of its VTEL products
business, including the VTEL name, to VTEL Products Corporation and the
operations and assets of its integration business to SPL Integrated Solutions.
Accordingly, the products and integration businesses have been accounted for and
presented as discontinued operations in the consolidated financial statements.

         Loss from discontinued operations was $0.2 million and $8.3 million for
the three and nine months ended April 30, 2002, respectively. Loss from
discontinued operations was 1% and 22% of total revenues for the three and nine
months ended April 30, 2002, respectively. Since the products and integration
businesses were sold during fiscal 2002, no income or losses were recorded for
discontinued operations for the three and nine months ended April 30, 2003.

         NET INCOME (LOSS). Forgent generated net income of $1.7 million, or
$0.07 per share, during the quarter ended April 30, 2003, as compared to a net
income of $2.5 million, or $0.10 per share, during the quarter ended April 30,
2002. Forgent generated net income of $4.0 million, or $0.16 per share, for the
nine months ended April 30, 2003, as compared to a net loss of $8.6 million, or
$0.35 per share, for the nine months ended April 30, 2002. Net income as a
percentage of total revenues was 10% and 11% for the three months ended April
30, 2003 and 2002, respectively. Net income (loss) as a percentage of total
revenues was 9% and (23%) for the nine months ended April 30, 2003 and 2002,
respectively.

         Net income decreased by $0.8 million or 31% during the three months
ended April 30, 2003 as compared to the three months ended April 30, 2002. The
decrease is due primarily to $4.4 million decrease in total gross margins, which
was offset by a $3.8 million decrease in total operating expenses. Net income
increased by $12.6 million or 146% during the nine months ended April 30, 2003
as compared to the nine months ended April 30, 2002.

                                       18
<PAGE>

The increase is due primarily to $8.3 million improvement in earnings from
discontinued operations, $3.1 million improvement in total gross margins and
$3.0 million decrease in total operating expenses.

         During the three months ended April 30, 2003, as compared to the prior
fiscal quarter, Forgent grew revenues from intellectual property licensing by
approximately 67% to $12.2 million, grew revenues from software and professional
services by approximately 10% to $1.1 million, and improved earnings per share
by $0.02. The third fiscal quarter also marked Forgent's fifth consecutive
quarter of intellectual property licensing revenues and profitability.
Additionally, the Company is finalizing the sale its videoconferencing hardware
services business, thus eliminating efforts required to improve operations
unrelated to Forgent's core competencies, and is making significant progress in
developing its ALLIANCE(TM) software suite to meet customer needs and
expectations. The Company's efforts are focused on becoming an enterprise
meeting automation software company that delivers complete enterprise solutions
for the entire meeting environment. However, uncertainties and challenges
remain, and there can be no assurance that the Company can successfully grow its
revenues or maintain profitability.

LIQUIDITY AND CAPITAL RESOURCES

         On April 30, 2003, Forgent had working capital of $13.1 million, the
highest working capital level in the last seven quarters. Working capital
includes the Company's principal source of liquidity, which consisted of $14.3
million in cash, cash equivalents and short-term investments. During the three
months ended April 30, 2003, the Company grew its working capital by 23% over
the previous fiscal quarter.

         Cash used in operating activities was $1.5 million for the nine months
ended April 30, 2003 due to $4.0 million in net income, and $3.5 million of
non-cash depreciation, amortization and impairment expenses, which were offset
by a $3.1 million increase in accounts receivable, and a $5.9 million decrease
in accounts payable, other accrued liabilities, and deferred revenues. Cash
provided by operating activities was $3.3 million for the nine months ended
April 30, 2002 due to $12.0 million of non-cash depreciation, amortization and
impairment expenses, and the sale of $8.3 million in accounts receivable, which
were offset by a $8.4 million increase in accounts receivable, a $0.9 million
increase in inventories, and a $7.8 million decrease in accounts payable, other
accrued liabilities, and deferred revenues.

         During the nine months ended April 30, 2003, the Company collected $8.1
million in royalties from its intellectual Property Licensing Program, net of
contingent legal fees paid, and anticipates collecting additional royalties in
future quarters, including $4.7 million, net of contingent legal fees paid,
related to licensing revenues generated during the third fiscal quarter. In
addition to the anticipated cash to be received from additional licensing
revenues in the next fiscal quarter and the next fiscal year under the Company's
Patent Licensing Program, management expects to receive a significant amount of
cash upon closing the sale of the videoconferencing hardware service business.
These significant sources of cash will strengthen the Company's cash position
and provide funding for further developing and growing the Company's software
and professional services operations. Management plans to strategically utilize
this positive cash flow to invest further in developing Forgent's enterprise
meeting automation software products as well as exploring other opportunities
for growing the software business through acquisitions. However, risks and
uncertainties remain as to the timing of the receipts of licensing revenues due,
in part, to the inherent nature of a patent licensing program. Therefore, there
is no assurance that the Company will continue to preserve its cash balances,
and it is possible that the Company's business demands may lead to cash
utilization at levels greater than recently experienced due to investments in
research and development, uncertainties inherent in a patent licensing program,
increased expense levels and other factors.

         Cash used in investing activities was $1.1 million for the nine months
ended April 30, 2003 due to the $2.2 million capitalization of software
development costs and $0.9 million in purchases of property and equipment, which
were offset by $2.0 million in net sales of short-term investments. Cash used in
investing activities was $0.8 million for the nine months ended April 30, 2002
due primarily to the $3.0 million capitalization of software development and
$0.7 million in purchases of property and equipment, which was offset by $2.6
million net sales of short-term investments. Approximately 68% of the net
purchases of property and equipment made during the nine months ended April 30,
2003 related to spare equipment purchased for servicing maintenance contracts in
the videoconferencing hardware services business. These assets, along with other
designated fixed assets, will be sold with the divestiture of the
videoconferencing hardware services business during the fourth fiscal quarter.
During the

                                       19
<PAGE>

first fiscal quarter of 2002, Forgent sold its remaining investment in Polycom,
resulting in a net cash inflow of $1.8 million, which significantly contributed
to decreasing the cash used in investing activities during the nine months ended
April 30, 2002.

         Cash used in financing activities was $1.0 million for the nine months
ended April 30, 2003 due primarily to the $0.9 million purchase of treasury
stock. Cash used in financing activities was $0.9 million for the nine months
ended April 30, 2002 due largely to the $1.8 million purchase of treasury stock,
which was offset by $0.8 million net proceeds from the issuance of stock. In
fiscal 2001 Forgent announced a stock repurchase program to purchase up to two
million shares of the Company's common stock. During the first fiscal quarter of
2003, Forgent's board of directors approved the repurchase of an additional one
million shares of the Company's common stock. During the nine months ended April
30, 2003, the Company repurchased 507,886 shares for $0.9 million, bringing the
total number of shares repurchased to date to 1.4 million shares. Depending on
the Company's cash position, market conditions, and other factors, management
will periodically assess repurchasing additional shares in fiscal 2003. During
the nine months ended April 30, 2002 Forgent entered into a three-year note
payable of $0.5 million for the purchase of the Company's new accounting system.
At April 30, 2003, Forgent did not have a line of credit in place. Based on the
Company's current cash position and the significant cash inflows generated from
the intellectual Property Licensing Program, management does not expect to
obtain any line of credit during the current fiscal year.

         As of April 30, 2003, Forgent's future minimum lease payments under
non-cancellable leases and payments on its notes payables are as follows (in
thousands):

<TABLE>
<CAPTION>
                             REMAINING
                               2003         2004       2005       2006       2007    THEREAFTER      TOTAL
<S>                          <C>           <C>        <C>        <C>        <C>      <C>            <C>
Operating lease obligations    1,172       4,404      4,308      4,169      3,411      18,892       36,356
Capital lease obligations        106          90         23                                            219
Notes payable obligations         69         276        156         30                                 531
                             -------       -----      -----      -----      -----    --------       ------
                               1,347       4,770      4,487      4,199      3,411      18,892       37,106
                             =======       =====      =====      =====      =====    ========       ======
</TABLE>

Forgent may periodically make other commitments and thus become subject to other
contractual obligations. However, management believes these commitments and
contractual obligations are routine in nature and incidental to the Company's
operations.

LEGAL MATTERS

         Forgent is the defendant or plaintiff in various actions that arose in
the normal course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse affect on the
Company's financial condition or results of operations.

         In late February 2003, the Company received a letter from legal counsel
for the independent executrix of the Estate of Gordon Matthews, asserting that
the Company was obligated to pay the independent executrix of the Estate of
Gordon Matthews for the asserted value of services claimed to have been rendered
by Mr. Matthews in connection with his alleged involvement in the Company's
Patent Licensing Program. In late February 2003, the Company initiated an action
in the 261st District Court in Travis County Texas, styled Forgent Networks,
Inc. v. Monika Matthews, et al, for the purposes of declaring that the Company
has no obligation to the defendant. In that action, the defendant has filed a
counter claim asserting that the independent executrix of the Estate of Gordon
Matthews is entitled to recover in quantum meruit for the reasonable value of
the work and services claimed to have been provided by Gordon Matthews, a former
member of the Board of Directors and consultant to the Company, which the
defendant asserts is at least $5 million. The Company does not believe the
counter claim has merit and intends to continue to vigorously pursue declaratory
relief from the court that no liability is due to the independent executrix of
the Estate of Gordon Matthews.

                                       20
<PAGE>

CRITICAL ACCOUNTING POLICIES

         The consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and include
the accounts of Forgent's wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in the
consolidation. Preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Management periodically
evaluates estimates used in the preparation of the financial statements for
continued reasonableness. Appropriate adjustments, if any, to the estimates used
are made prospectively based upon such periodic evaluation.

         Management believes the following represent Forgent's critical
accounting policies:

REVENUE RECOGNITION

         The Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectibility is probable. The Company recognizes revenue in accordance with
Statement of Position ("SOP") 97-2, "Software Revenue Recognition," as amended
by SOP 98-4 and SOP 98-9, and Securities and Exchange Commission Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements."

         The Company does not recognize revenue for agreements with rights of
return, refundable fees, cancellation rights or acceptance clauses until such
rights of return, refund or cancellation have expired or acceptance has
occurred. The Company's arrangements with resellers do not allow for any rights
of return.

         Software and professional service revenue consists of license and
service fees. License fee revenue is earned through the licensing or right to
use the Company's software and from the sale of specific software products.
Service fee income is earned through the sale of maintenance and technical
support, training, and installation services related to the sale of the software
products. The Company allocates the total fee to the various elements based on
the relative fair values of the elements specific to the Company. The Company
determines the fair value of each element in the arrangement based on
vendor-specific objective evidence ("VSOE") of fair value. When VSOE of fair
value for the license element is not available, license revenue is recognized
using the residual method. Under the residual method, the contract value is
first allocated to the undelivered elements (maintenance and service elements)
based upon their VSOE of fair value; the remaining contract value, including any
discount, is allocated to the delivered element. For maintenance, VSOE of fair
value is based upon the renewal rate specified in each contract, which is in
accordance with the Company's standard price list. For training and installation
services, VSOE of fair value is based upon the rates charged for these services
when sold separately. Revenue allocated to maintenance and technical support is
recognized ratably over the maintenance term (typically one year). Revenue
allocated to training is recognized as the services are performed. Revenue
allocated to installation is recognized upon completion of these services due to
their short-term nature. The Company's training and installation services are
not essential to the functionality of its products as (1) such services are
available from other vendors and (2) the Company has sufficient experience in
providing such services. For instances in which VSOE cannot be determined for
undelivered elements, and these undelivered elements do not provide significant
customization or modification of the Company's software product, Forgent
recognizes the entire contract amount ratably over the period during which the
services are expected to be performed.

         Intellectual property licensing revenue is derived from the Company's
Patent Licensing Program, which is currently focused on generating licensing
revenues relating to the Company's data compression technology embodied in U.S.
Patent No. 4,698,672, and its foreign counterparts. Gross intellectual property
licensing revenue is recognized at the time a license agreement has been
executed and related costs are recorded as cost of sales. The cost of sales on
the intellectual property licensing business relates to the legal fees incurred
on successfully achieving licensing revenues. The contingent legal fees are
based on a percentage of the licensing revenues received and are paid to Jenkens
& Gilchrist, P.C., a national law firm. The percentage payment to this law firm
was set based on a

                                       21
<PAGE>

sliding scale that began at 35% and increased to 50% based on the aggregate
recoveries achieved. Future percentage payments will be 50% of license receipts
per the agreement with this firm.

         Service and other revenues consist of legacy service programs that
provide maintenance, technical support, installation and resident engineering
services to companies that deploy video networks. Services and other revenues
are recognized ratably over the term of the service agreement, as there is no
discernible pattern of service delivery.

         Deferred revenue includes amounts received from customers in excess of
revenue recognized, and is comprised of deferred maintenance, service and other
revenue. Deferred revenues are recognized in the statement of operations over
the terms of the arrangements, primarily ranging from one to three years.

CREDIT POLICY

         The Company reviews potential customers' credit ratings to evaluate
customers' ability to pay an obligation within the payment term, which is net
thirty days. When payment is reasonably assured, and no known barriers exist to
legally enforcing the payment, the Company extends credit to customers, not to
exceed 10% of their net worth. An account is placed on "Credit Hold" if it is
thirty days past due or a placed order exceeds the credit limit, and may be
placed on "Credit Hold" sooner if circumstances warrant. The Company follows its
credit policy consistently and constantly monitors all of its delinquent
accounts for indications of uncollectibility.

SOFTWARE DEVELOPMENT COSTS

         Costs incurred in connection with the development of software products
are accounted for in accordance with Statement of Financial Accounting Standards
("SFAS") No. 86, "Accounting for the Costs of Computer Software to Be Sold,
Leased or Otherwise Marketed." Costs incurred prior to the establishment of
technological feasibility are charged to research and development expense.
Amortization of capitalized software begins upon initial product shipment.
Software development costs are amortized over the estimated life of the related
product (generally thirty-six months), using the straight-line method.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

         The Company maintains an allowance for doubtful accounts to estimate
losses from uncollectable customer receivables. This estimate is based in the
aggregate, on historical collection experience, age of receivables and general
economic conditions. It also considers individual customers' payment experience,
credit-worthiness and age of receivable balances.

IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

         The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets" on August 1, 2001 and
thus is required to review the carrying value of goodwill and other intangible
assets annually. Forgent also reviews goodwill and other intangibles for
possible impairment whenever specific events warrant. Events that may create an
impairment review include, but are not limited to: significant and sustained
decline in the Company's stock price or market capitalization; significant
underperformance of operating units; significant changes in market conditions
and trends. If a review event has occurred, the value of the goodwill or
intangible is compared to the estimate of future cash flows, and if required, an
impairment is recorded.

RISK FACTORS

         There are many factors that affect the Company's business, prospects
and the results of its operations, some of which are beyond the control of the
Company. The following is a discussion of some of these and other important risk
factors that may cause the actual results of the Company's operations in future
periods to differ materially from those currently expected or desired. The risks
described below are not the only ones facing the Company. Additional risks not
presently known to management or that are currently believed to be immaterial
may also affect the Company's business prospects and results of operations.

                                       22
<PAGE>

GENERAL ECONOMIC AND INDUSTRY CONDITIONS

         Any adverse change in general economic, business or industry conditions
could have a material adverse effect on the Company's business, prospects and
financial performance if those conditions caused customers or potential
customers to reduce or delay their investments in software and professional
services. Due to the current economic circumstances affecting U.S. businesses,
there has been a slow down in capital spending, which adversely affects the
willingness of companies to purchase enterprise meeting automation software
products and professional services. If this slow down is prolonged, current
economic conditions could have a continued adverse effect on the demand for the
Company's products and services and could result in declining revenue and
earnings growth rates for the Company.

TECHNOLOGICAL CHANGES AND PRODUCT TRANSITIONS

         The technology industry is characterized by continuing improvements in
technology, which results in the frequent introduction of new products, short
product life cycles and continual improvement in product price/performance
characteristics. These improvements could render the Company's products
noncompetitive, if the Company fails to anticipate and respond effectively to
these improvements and new product introductions. While the Company believes
that its experience in the videoconferencing industry affords it a competitive
advantage over some of its competitors, rapid changes in technology present some
of the greatest challenges and risks for any software and technology-based
company.

SALES CYCLE

         Forgent has a long sales cycle because it generally takes time to
educate potential customers regarding the use and benefits of its software
applications. The long sales cycle makes it difficult to predict the quarter in
which sales may fall. Because the Company's expense levels are relatively fixed,
the shift of sales from one quarter to a later quarter will adversely affect
results in operations in an affected quarter, as the Company would not be able
to adjust its expense levels to match fluctuations in revenues. If the Company
failed to meet expectations by shareholders, analysts or others as to products
sales anticipated in any particular quarter, the market price of the Company's
stock may significantly decrease.

PRODUCT IMPLEMENTATION

         The Company recognizes a portion of its revenue from product sales upon
implementation of its software, and the timing of product implementation could
cause significant variability in product license revenues and operating results
for any particular period.

NEW BUSINESS MODEL

         In accordance with its reorganization efforts previously described, the
Company is currently transitioning its business and realigning its strategic
focus towards a new core market, software and professional services. Internal
changes resulting from the business restructuring announced during 2002 are
complete, but many factors may negatively impact the Company's ability to
implement its strategic focus, including the ability or possible inability to
manage the implementation and development of its new software and professional
service business, sustain the productivity of Forgent's workforce and retain key
employees, manage operating expenses and quickly respond to and recover from
unforeseen events associated with the reorganization. The Company may be
required by market conditions and other factors to undertake additional
restructuring efforts in the future. Forgent's business, results of operations
or financial condition could be materially adversely affected if it is unable to
manage the implementation and development of its new business strategy, sustain
the productivity of its workforce and retain key employees, manage its operating
expenses or quickly respond to and recover from unforeseen events associated
with any future restructuring efforts.

                                       23
<PAGE>

LIMITED OPERATING HISTORY

         Despite being founded in 1985, Forgent has a limited operating history
because of the Company's recent transition to a software and professional
services company. As a result of its limited operating history, Forgent cannot
forecast revenue and operating expenses based on historical results. The
Company's ability to forecast accurate quarterly revenue is limited because
Forgent's software products have a long sales cycle that makes it difficult to
predict the quarter in which sales will occur. The Company's business, operating
results and financial condition will be materially adversely affected if
revenues do not meet projections and if results in a given quarter do not meet
expectations.

COMPETITION AND NEW ENTRANTS

         The Company may encounter new entrants or competition from competitors
in some or all aspects of its business. The Company competes on the basis of
price, technology availability, performance, quality, reliability, service and
support. The Company believes that its experience and business model creates a
competitive advantage over its competitors. However, there can be no assurance
that the Company will be able to maintain this advantage. Many of the Company's
current and possibly future competitors have greater resources than the Company
and therefore, may be able to compete more effectively on price and other terms.

SOFTWARE MARKETING AND SALES

         Forgent's software products are relatively new to the market and as
such, have limited market awareness and to date, limited sales. Forgent's VNP
software product was introduced in the fall of 2001, and Forgent acquired GSS in
June 2002. The Company's new ALLIANCE product is expected to ship in July 2003.
Forgent's future success will be dependent in significant part on its ability to
generate demand for its software products and professional services. To this
end, Forgent's direct and indirect sales operations must increase market
awareness of its products and services to generate increased revenue. The
Company's products and services require a sophisticated sales effort targeted at
the senior management of its prospective customers. All new hires will require
training and will take time to achieve full productivity. Forgent cannot be
certain that its new hires will become as productive as necessary or that it
will be able to hire enough qualified individuals or retain existing employees
in the future. The Company cannot be certain that it will be successful in its
efforts to market and sell its products, and if it is not successful in building
greater market awareness and generating increased sales, future results of
operations will be adversely affected.

SOFTWARE AND PROFESSIONAL SERVICES DEVELOPMENT

         Forgent expects that its future financial performance will depend
significantly on revenue from existing and future enterprise meeting automation
software products and the related tools that the Company plans to develop, which
is subject to significant risks. There are significant risks inherent in a new
product introduction. Market acceptance of future products will depend on
continued market development for collaboration management. Forgent cannot be
certain that its existing or future products offerings, such as ALLIANCE, which
is expected to ship in July 2003, will meet customer performance needs or
expectations when shipped or that it will be free of significant software
defects or bugs. If the Company's products do not meet customer needs or
expectations, for whatever reason, the Company's sales would be adversely
affected and further, upgrading or enhancing the product could be costly and
time consuming.

LICENSE PROGRAM

         The Company's intellectual property licensing revenues are difficult to
predict. The Company's Patent Licensing Program involves risks inherent in
licensing intellectual property, including risks of protracted delays, possible
legal challenges that would lead to disruption or curtailment of the program,
increasing expenditures associated with the pursuit of the program, and other
risks that could adversely affect the Company's licensing program. Thus, there
can be no assurance that the Company will be able to continue to license its
technology to others. If the Company fails to meet the expectations of public
market analysts or investors, the market price of Forgent's common stock may
decrease significantly. Quarterly operating results may fail to meet these
expectations for a number of reasons, including the unwillingness of targeted
licensees to license the Company's technology, the

                                       24
<PAGE>

inability of licensees to pay the license and other fees, a decline in the
demand for the Company's patented technology, higher than expected operating
expenses, and license delays due to legal and other factors.

PATENTS AND TRADEMARKS

         The Company's success and ability to compete are substantially
dependent on its proprietary technology and trademarks. The Company seeks to
protect these assets through a combination of patent, copyright, trade secret,
and trademark laws, as well as confidentiality procedures and contractual
provisions. These legal protections afford only limited protection and
enforcement of these rights may be time consuming and expensive. Furthermore,
despite best efforts, the Company may be unable to prevent third parties from
infringing upon or misappropriating its intellectual property. Also, competitors
may independently develop similar, but not infringing, technology, duplicate
products, or design around the Company's patents or other intellectual property.

         The Company's patent applications or trademark registrations may not be
approved. Moreover, even if approved, the resulting patents or trademarks may
not provide Forgent with any competitive advantage or may be challenged by third
parties. If challenged, patents might not be upheld or claims could be narrowed.
Any litigation surrounding the Company's rights could force Forgent to divert
important financial and other resources away from business operations.

ACQUISITION INTEGRATION

         The Company has made, and may continue to evaluate and make, strategic
acquisitions in public and privately held technology companies. Because some of
these companies may be early-stage ventures with either unproven business
models, products that are not yet fully developed or products that have not yet
achieved market acceptance, these transactions are inherently risky. Many
factors outside of the Company's control determine whether or not the Company's
investments will be successful. Such factors include the ability of a company to
obtain additional private equity financing, to access the public capital
markets, to affect a sale or merger, or to achieve commercial success with its
products or services. Accordingly, there can be no assurances that any of the
Company's investments will be successful or that the Company will be able to
recover the amount invested.

DIVESTITURE TRANSACTIONS

         As a result Forgent's transition to a software and professional
services company, it has substantially completed a program to divest certain
non-core assets, including a videoconferencing endpoint manufacturing business
as well as other related businesses. There can be no assurance that, having
fully divested such non-core operations, Forgent will be able to achieve greater
or any profitability, strengthen its core operations or compete more effectively
in existing markets. In addition, the Company continues to evaluate the
profitability realized or likely to be realized by its existing businesses and
operations, and Forgent reviews from a strategic standpoint, which, if any, of
its businesses or operations should be divested. Entering into, evaluating or
consummating divestiture transactions may entail risks and uncertainties in
addition to those which may result from the divestiture-related change in the
Company's business operations, including but not limited to extraordinary
transaction costs, unknown indemnification liabilities and unforeseen
administrative complications, any of which could result in reduced revenues,
increased charges, or post-transaction administrative costs or could otherwise
have a material adverse effect on Forgent's business, financial condition or
results of operations.

         Due to the risk factors noted above and elsewhere in the Management's
Discussion and Analysis of Financial Condition and Results of Operations,
Forgent's past earnings and stock price have been, and future earnings and stock
price potentially may be, subject to significant volatility, particularly on a
quarterly basis. Past financial performance should not be considered a reliable
indicator of future performance and investors are cautioned in using historical
trends to anticipate results or trends in future periods. Any shortfall in
revenues or earnings from the levels anticipated by securities analysts could
have an immediate and significant effect on the trading price of the Company's
common stock in any given period.

                                       25
<PAGE>

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS

         Certain portions of this report contain forward-looking statements that
reflect the Company's current expectations regarding future results of
operations, economic performance, financial condition and achievements. Whenever
possible, Forgent attempted to identify these forward-looking statements with
the words "believes," "estimates," "plans," "expects," "anticipates" and other
similar expressions. These statements reflect management's current plans and
expectations that rely on a number of assumptions and estimates that are subject
to risks and uncertainties including, but not limited to rapid changes in
technology, unexpected changes in customer order patterns, the intensity of
competition, economic conditions, pricing pressures, interest rates
fluctuations, changes in the capital markets, litigation involving intellectual
property and other matters, changes in tax and other laws and governmental rules
applicable to Forgent's business and other risks indicated in Forgent's filings
with the Securities and Exchange Commission. These risks and uncertainties are
beyond the Company's control, and in many cases, management cannot predict all
of the risks and uncertainties that could cause actual results to differ
materially from those indicated by the forward-looking statements.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's primary market risk exposure relates to interest rate
risk and foreign currency exchange fluctuations. Forgent's interest income is
sensitive to changes in U.S. interest rates. However, due to the short-term
nature of the Company's investments, Forgent does not consider these risks to be
significant. The Company previously invested in Accord Networks ("Accord") an
Israeli-based manufacturer of networking equipment. In June of 2000, Accord
filed an initial public offering on the NASDAQ stock exchange in which the
Company was apportioned 1.3 million shares. In February 2001, Accord was
acquired by Polycom Inc. ("Polycom") and Forgent's investment in Accord
converted to 399,000 shares of Polycom. The Company sold 246,000 shares and then
entered into a cash flow hedge to ensure a minimum level of cash flow from the
153,000 remaining shares. The settlement of these hedges and related shares of
Polycom occurred in July and October 2001. During the three months ended October
31, 2001, the remaining Polycom shares were sold under a cash flow hedge,
realizing $1.7 million in gain and $1.8 million in net cash flows. As of October
31, 2001, the Company no longer had market risks related to the Polycom stock.

         Forgent's objective in managing its exposure to foreign currency
exchange rate fluctuations is to reduce the impact of adverse fluctuations in
earnings and cash flows associated with foreign currency exchange rate changes.
Accordingly, the Company historically utilized forward contracts to hedge its
foreign currency exposure on firm commitments denominated in the Euro and
Australian dollar. As of April 30, 2003 and April 30, 2002, the Company held no
foreign currency contracts. Due to the Company's reduction in international
offices and related reduction in foreign exchange risks, management does not
anticipate any additional foreign currency hedges.

         For additional Quantitative and Qualitative Disclosures about Market
Risk reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, in the Company's Annual Report on Form 10-K/A-2
for the year ended July 31, 2002, as amended.

ITEM 4.   CONTROLS AND PROCEDURES

         Under the supervision and with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, management of the Company has
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rule 13a-14(c) and Rule 15d-14 under the Securities Exchange Act
of 1934) as of a date within 90 days prior to the filing date of this report.
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the date of the evaluation, the Company's
disclosure controls and procedures are effective in timely alerting them to the
material information relating to the Company required to be included in its
periodic filings with the Securities and Exchange Commission.

         During the period covered by this report, there were no significant
changes in the Company's internal controls or, to management's knowledge, in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.

                                       26
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

         Forgent is the defendant or plaintiff in various actions that arose in
the normal course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse affect on our
financial condition or results of operations.

         In late February 2003, the Company received a letter from legal counsel
for the independent executrix of the Estate of Gordon Matthews, asserting that
the Company was obligated to pay the independent executrix of the Estate of
Gordon Matthews for the asserted value of services claimed to have been rendered
by Mr. Matthews in connection with his alleged involvement in the Company's
Patent Licensing Program. In late February 2003, the Company initiated an action
in the 261st District Court in Travis County Texas, styled Forgent Networks,
Inc. v. Monika Matthews, et al, for the purposes of declaring that the Company
has no obligation to the defendant. In that action, the defendant has filed a
counter claim asserting that the independent executrix of the Estate of Gordon
Matthews is entitled to recover in quantum meruit for the reasonable value of
the work and services claimed to have been provided by Gordon Matthews, a former
member of the Board of Directors and consultant to the Company, which the
defendant asserts is at least $5 million. The Company does not believe the
counter claim has merit and intends to continue to vigorously pursue declaratory
relief from the court that no liability is due to the independent executrix of
the Estate of Gordon Matthews.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

        None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

        None

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

        None

ITEM 5.   OTHER INFORMATION

        None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

   (a)Exhibits:

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

   (b)Reports on Form 8-K:

          On May 29, 2003 the registrant filed a report on Form 8-K announcing
     the Company's financial results for the quarter ended April 30, 2003 by
     issuing a press release.

                                      * * *

                                       27
<PAGE>

                                   SIGNATURES

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

                                                        FORGENT NETWORKS, INC.

June 16, 2003                                    By:    /s/ RICHARD N. SNYDER
                                                        -----------------------
                                                            Richard N. Snyder
                                                        Chief Executive Officer

                                                 By:    /s/ JAY C. PETERSON
                                                        -----------------------
                                                            Jay C. Peterson
                                                        Chief Financial Officer

                                       28
<PAGE>

                             FORGENT NETWORKS, INC.
                                 APRIL 30, 2003
                                 CERTIFICATIONS

I, Richard N. Snyder, Chief Executive Officer of Forgent Networks, Inc., certify
that:

1.    I have reviewed this quarterly report on Form 10-Q of Forgent Networks,
      Inc. ("Registrant");

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations, and cash
      flows of the Registrant as of, and for, the periods presented in this
      quarterly report;

4.    The Registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the Registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the Registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date.

5.    The Registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation, to the Registrant's auditors and the audit
      committee of the Registrant's board of directors:

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the Registrant's ability to
            record, process, summarize and report financial data and have
            identified for the Registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the Registrant's
            internal controls; and

6.    The Registrant's other certifying officer and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

                                                /s/ RICHARD N. SNYDER
                                                ---------------------------
                                                Richard N. Snyder
                                                Chief Executive Officer
                                                June 16, 2003

                                       29
<PAGE>

                             FORGENT NETWORKS, INC.
                                 APRIL 30, 2003
                                 CERTIFICATIONS

I, Jay C. Peterson, Chief Financial Officer of Forgent Networks, Inc., certify
that:

1.    I have reviewed this quarterly report on Form 10-Q of Forgent Networks,
      Inc. ("Registrant");

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations, and cash
      flows of the Registrant as of, and for, the periods presented in this
      quarterly report;

4.    The Registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the Registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the Registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date.

5.    The Registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation, to the Registrant's auditors and the audit
      committee of the Registrant's board of directors:

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the Registrant's ability to
            record, process, summarize and report financial data and have
            identified for the Registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the Registrant's
            internal controls; and

6.    The Registrant's other certifying officer and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

                                                /s/ JAY C. PETERSON
                                                --------------------------
                                                Jay C. Peterson
                                                Chief Financial Officer
                                                June 16, 2003

                                       30
<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<S>          <C>

 99.1        Certification pursuant to 18 U.S.C. Section 1350, as adopted
             pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>