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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 OCTOBER 31, 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.

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

At December 3, 2003 the registrant had outstanding 24,655,774 shares of its
Common Stock, $0.01 par value.





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TABLE OF CONTENTS



|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                   | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                   | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION                       
|                                                   | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                                   | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                                                   | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                   | ITEM 5. OTHER INFORMATION                                                                    
|                                                   | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                        
|INDEX TO EXHIBITS                                 
|EX-31.1 Certification Pursuant to Section 302     
|EX-31.2 Certification Pursuant to Section 302     
|EX-32.1 Certification Pursuant to 18 USC Sec. 1350
|EX-32.2 Certification Pursuant to 18 USC Sec. 1350



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

|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |          |   |       |        | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------------------------- | --------------------------- | - | ----------- | ------ | -------- | - | ----- | ------ | 
|                                     |                                                                                                                                                                            |   |                             |                             |   | OCTOBER 31, |        | JULY 31,
|                                     |                                                                                                                                                                            |   |                             |                             |   | 2003        |        | 2003    
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            |   |                             |                             |   | (UNAUDITED) |        |          |   |      
|ASSETS                               |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|Current Assets:                      |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     | Cash and equivalents, including restricted cash of $650 and $730
at October 31, 2003 and July 31, 2003, respectively                                                       |   | $                           | 19,439                      |   |             | $      | 21,201   |  
|                                     | Short-term investments                                                                                                                                                     |   |                             | 7,032                       |   |             |        | 3,845    |  
|                                     | Accounts receivable, net of allowance for doubtful accounts of
$11 and $0 at October 31, 2003 and July 31, 2003                                                            |   |                             | 1,245                       |   |             |        | 9,457    |  
|                                     | Notes receivable, net of reserve of $710 and $639 at October
31, 2003 and July 31, 2003                                                                                    |   |                             | 75                          |   |             |        | 74       |  
|                                     | Prepaid expenses and other current assets                                                                                                                                  |   |                             | 640                         |   |             |        | 415      |  
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            |   |                             | Total Current Assets        |   |             | 28,431 |          |   |       | 34,992 | 
|Property and equipment, net          |                                                                                                                                                                            |   | 3,981                       |                             |   |             | 2,158  |         
|Intangible assets, net               |                                                                                                                                                                            |   | 5,451                       |                             |   |             | 5,042  |         
|Capitalized software, net            |                                                                                                                                                                            |   | 4,779                       |                             |   |             | 4,827  |         
|Other assets                         |                                                                                                                                                                            |   | 433                         |                             |   |             | 230    |         
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |          |  
|                                     |                                                                                                                                                                            | $ | 43,075                      |                             |   | $           | 47,249 |         
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|Current Liabilities:                 |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     | Accounts payable                                                                                                                                                           |   | $                           | 1,745                       |   |             | $      | 3,178    |  
|                                     | Accrued compensation and benefits                                                                                                                                          |   |                             | 635                         |   |             |        | 683      |  
|                                     | Other accrued liabilities                                                                                                                                                  |   |                             | 1,732                       |   |             |        | 1,661    |  
|                                     | Notes payable, current position                                                                                                                                            |   |                             | 352                         |   |             |        | 323      |  
|                                     | Deferred revenue                                                                                                                                                           |   |                             | 434                         |   |             |        | 281      |  
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            |   |                             | Total Current Liabilities   |   |             | 4,898  |          |   |       | 6,126  | 
|Long-Term Liabilities:               |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            |   | Deferred revenue            |                             |   | 82          |        |          |   | 59    |       
|                                     |                                                                                                                                                                            |   | Other long-term obligations |                             |   | 1,523       |        |          |   | 1,810 |       
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            |   |                             | Total Long-Term Liabilities |   |             | 1,605  |          |   |       | 1,869  | 
|Stockholders equity:                |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     | Preferred stock, $.01 par value; 10,000 Authorized;
none issued or outstanding                                                                                             |   |                             |                            |   |             |        |         |  
|                                     | Common stock, $.01 par value; 40,000 authorized; 26,338 and
26,172 shares issued; 24,617 and 24,588 shares outstanding at
October 31, 2003 and July 31, 2003, respectively |   |                             | 263                         |   |             |        | 261      |  
|                                     | Treasury stock, 1,721 and 1,584 issued at October 31, 2003 and
July 31, 2003, respectively                                                                                 |   |                             | (4,685                      | ) |             |        | (4,231   | )
|                                     | Additional paid-in capital                                                                                                                                                 |   |                             | 264,151                     |   |             |        | 263,875  |  
|                                     | Accumulated deficit                                                                                                                                                        |   |                             | (222,514                    | ) |             |        | (219,991 | )
|                                     | Unearned compensation                                                                                                                                                      |   |                             | (13                         | ) |             |        | (28      | )
|                                     | Accumulated other comprehensive income                                                                                                                                     |   |                             | (630                        | ) |             |        | (632     | )
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |          |  
|                                     |                                                                                                                                                                            |   |                             | Total Stockholders Equity  |   |             | 36,572 |          |   |       | 39,254 | 
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         
|                                     |                                                                                                                                                                            | $ | 43,075                      |                             |   | $           | 47,249 |         
|                                     |                                                                                                                                                                            |   |                             |                             |   |             |        |         

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

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

|                                                     |                                                                          |                                 |        |                   |       |      |       |        |       | 
|---------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------- | ------ | ----------------- | ----- | ---- | ----- | ------ | ----- | 
|                                                     |                                                                          |                                 |        | FOR THE THREE    
|                                                     |                                                                          |                                 |        | MONTHS           
|                                                     |                                                                          |                                 |        | ENDED OCTOBER 31,
|                                                     |                                                                          |                                 |        | 2003              |       | 2002
|                                                     |                                                                          |                                 |        |                   |       |     
|                                                     |                                                                          |                                 |        | (UNAUDITED)      
|REVENUES:                                            |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Software & professional services                                         |                                 | $      | 999               |       |      | $     | 1,214  |      
|                                                     | Intellectual property licensing                                          |                                 |        | 2,850             |       |      |       | 6,213  |      
|                                                     | Other                                                                    |                                 |        | 22                |       |      |       | 382    |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     |                                                                          | Total Revenues                  |        |                   | 3,871 |      |       |        | 7,809 | 
|COST OF SALES:                                       |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Software & professional services                                         |                                 |        | 851               |       |      |       | 733    |      
|                                                     | Intellectual property licensing                                          |                                 |        | 1,425             |       |      |       | 3,106  |      
|                                                     | Other                                                                    |                                 |        | 24                |       |      |       | 384    |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     |                                                                          | Total Cost of Sales             |        |                   | 2,300 |      |       |        | 4,223 | 
|GROSS MARGIN                                         |                                                                          |                                 | 1,571  |                   |       |      | 3,586 |       
|OPERATING EXPENSES:                                  |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Selling, general and administrative                                      |                                 |        | 3,033             |       |      |       | 3,043  |      
|                                                     | Research and development                                                 |                                 |        | 1,084             |       |      |       | 1,172  |      
|                                                     | Amortization of intangible assets                                        |                                 |        | 4                 |       |      |       |       |      
|                                                     | Impairment of assets                                                     |                                 |        |                  |       |      |       | (499   | )    
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     |                                                                          | Total Operating Expenses        |        |                   | 4,121 |      |       |        | 3,716 | 
|LOSS FROM OPERATIONS                                 |                                                                          |                                 | (2,550 | )                 |       |      | (130  | )     
|OTHER INCOME AND EXPENSES:                           |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Interest income                                                          |                                 |        | 62                |       |      |       | 57     |      
|                                                     | Other                                                                    |                                 |        | (45               | )     |      |       |       |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     |                                                                          | Total Other Income and Expenses |        |                   | 17    |      |       |        | 57    | 
|LOSS FROM CONTINUING OPERATIONS,
BEFORE INCOME TAXES |                                                                          |                                 | (2,533 | )                 |       |      | (73   | )     
|                                                     | Provision for income taxes                                               |                                 |        |                  |       |      |       | 1      |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|LOSS FROM CONTINUING OPERATIONS                      |                                                                          |                                 | (2,533 | )                 |       |      | (72   | )     
|                                                     | Income from discontinued operations, net of income taxes                 |                                 |        | 10                |       |      |       | 997    |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|NET (LOSS) INCOME                                    |                                                                          | $                               | (2,523 | )                 |       | $    | 925   |       
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|BASIC AND DILUTED (LOSS) INCOME PER SHARE:           |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | (Loss) income per share from continuing operations - basic and diluted   |                                 | $      | (0.10             | )     |      | $     | 0.00   |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | (Loss) income per share from discontinued operations - basic and
diluted |                                 | $      | 0.00              |       |      | $     | 0.04   |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Net (loss) income per share - basic and diluted                          |                                 | $      | (0.10             | )     |      | $     | 0.04   |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|WEIGHTED AVERAGE SHARE OUTSTANDING:                  |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Basic                                                                    |                                 |        | 24,600            |       |      |       | 24,771 |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       
|                                                     | Diluted                                                                  |                                 |        | 24,600            |       |      |       | 25,286 |      
|                                                     |                                                                          |                                 |        |                   |       |      |       |       

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

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

|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |      |      |        |        |  
|-------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------------------------------- | --------------------------------------------------- | ----- | ----------------- | ------ | ---- | ---- | ------ | ------ | -
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       | FOR THE THREE    
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       | MONTHS           
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       | ENDED OCTOBER 31,
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       | 2003              |        | 2002
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       | (UNAUDITED)      
|CASH FLOWS FROM OPERATING ACTIVITIES:        |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             | Loss from continuing operations                                                 |                                                        | $                                                                       | (2,533                                              | )     |                   | $      | (72  | )   
|                                             | Adjustments to reconcile net loss to net cash provided by
(used in) operations: |                                                        |                                                                         |                                                     |       |                   |        |      |     
|                                             |                                                                                 | Depreciation and amortization                          |                                                                         |                                                     | 835   |                   |        |      | 487  |       
|                                             |                                                                                 | Amortization of leasehold advance and lease impairment |                                                                         |                                                     | (284  | )                 |        |      | (428 | )     
|                                             |                                                                                 | Provision for doubtful accounts                        |                                                                         |                                                     | (5    | )                 |        |      |     |       
|                                             |                                                                                 | Impairment of assets                                   |                                                                         |                                                     |      |                   |        |      | (499 | )     
|                                             |                                                                                 | Amortization of unearned compensation                  |                                                                         |                                                     | 15    |                   |        |      | 96   |       
|                                             |                                                                                 | Foreign currency translation gain                      |                                                                         |                                                     |      |                   |        |      | (14  | )     
|                                             |                                                                                 | Gain on sale of fixed assets                           |                                                                         |                                                     |      |                   |        |      | (31  | )     
|                                             |                                                                                 | Sale of accounts receivable                            |                                                                         |                                                     | 1,746 |                   |        |      |     |       
|                                             |                                                                                 | Changes in operating assets and liabilities:           |                                                                         |                                                     |       |                   |        |      |      |       
|                                             |                                                                                 |                                                        | Decrease (increase) in accounts receivable                              |                                                     |       | 6,663             |        |      |      | (3,085 | )     
|                                             |                                                                                 |                                                        | Increase in notes receivable                                            |                                                     |       | (4                | )      |      |      |       |       
|                                             |                                                                                 |                                                        | Decrease in inventories                                                 |                                                     |       |                  |        |      |      | 9      |       
|                                             |                                                                                 |                                                        | Increase in prepaid expenses and other current assets                   |                                                     |       | (223              | )      |      |      | (287   | )     
|                                             |                                                                                 |                                                        | Decrease in accounts payable                                            |                                                     |       | (1,478            | )      |      |      | (1,218 | )     
|                                             |                                                                                 |                                                        | (Decrease) increase in accrued expenses and other
long-term obligations |                                                     |       | (53               | )      |      |      | 612    |       
|                                             |                                                                                 |                                                        | Increase in deferred revenues                                           |                                                     |       | 143               |        |      |      | 15     |       
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             |                                                                                 |                                                        |                                                                         | Net cash provided by (used in) operating activities |       |                   | 4,822  |      |      |        | (4,415 | )
|CASH FLOWS FROM INVESTING ACTIVITIES:        |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             | Net (purchases) sales of short-term investments                                 |                                                        |                                                                         | (3,187                                              | )     |                   |        | 6    |     
|                                             | Net purchases of property and equipment                                         |                                                        |                                                                         | (464                                                | )     |                   |        | (28  | )   
|                                             | Collection of notes receivable                                                  |                                                        |                                                                         |                                                    |       |                   |        | 45   |     
|                                             | Increase in capitalized software                                                |                                                        |                                                                         | (522                                                | )     |                   |        | (795 | )   
|                                             | Increase in other assets                                                        |                                                        |                                                                         | (200                                                | )     |                   |        |     |     
|                                             | Purchase of Network Simplicity Software Inc.                                    |                                                        |                                                                         | (1,965                                              | )     |                   |        |     |     
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             |                                                                                 |                                                        |                                                                         | Net cash used in investing activities               |       |                   | (6,338 | )    |      |        | (772   | )
|CASH FLOWS FROM FINANCING ACTIVITIES:        |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             | Net proceeds from issuance of stock                                             |                                                        |                                                                         | 278                                                 |       |                   |        | 82   |     
|                                             | Purchase of treasury stock                                                      |                                                        |                                                                         | (454                                                | )     |                   |        | (651 | )   
|                                             | Proceeds from notes payable                                                     |                                                        |                                                                         | 84                                                  |       |                   |        | 50   |     
|                                             | Payments on notes payable and capital leases                                    |                                                        |                                                                         | (166                                                | )     |                   |        | (201 | )   
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             |                                                                                 |                                                        |                                                                         | Net cash used in financing activities               |       |                   | (258   | )    |      |        | (720   | )
|CASH FLOWS FROM DISCONTINUED OPERATIONS:     |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|                                             |                                                                                 |                                                        |                                                                         | Net cash provided by discontinued operations        |       |                   | 10     |      |      |        | 560    |  
|Effect of translation exchange rates on cash |                                                                                 |                                                        | 2                                                                       |                                                     |       |                   | 4      |     
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|Net decrease in cash and equivalents         |                                                                                 |                                                        | (1,762                                                                  | )                                                   |       |                   | (5,343 | )   
|Cash and equivalents at beginning of period  |                                                                                 |                                                        | 21,201                                                                  |                                                     |       |                   | 17,237 |     
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     
|Cash and equivalents at end of period        |                                                                                 | $                                                      | 19,439                                                                  |                                                     |       | $                 | 11,894 |     
|                                             |                                                                                 |                                                        |                                                                         |                                                     |       |                   |        |     

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

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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 principals 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 October
31, 2003 and July 31, 2003 and the results of operations and cash flows for the
three months ended October 31, 2003 and 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-Q for the fiscal quarter ended October
31, 2002 which is reflected in the Companys Form 10-Q/A for the same fiscal
period.

NOTE 2 - ACQUISITIONS

As approved by each companys board of directors and finalized on October
6, 2003, Forgent acquired certain assets and the operations of Network
Simplicity Software Inc. (Network Simplicity), a privately held provider of
web-based scheduling solutions for the small to medium business market.
Network Simplicitys flagship product, Meeting Room Manager, is a web-based
room and people scheduling application, which allows ease-of-use and rapid
deployment for businesses to manage their scheduling resources globally via the
Internet or through intranet sites. Another Network Simplicity product, Visual
Asset Manager, is a network and web-based solution that allows businesses to
effectively track and manage their assets, including computers, printers,
software, and employees. These acquired software products, targeted for small
to medium businesses, complement Forgents current ALLIANCE software suite,
which is focused on high-end enterprises. Additionally, Network Simplicitys
distribution model is based on telesales and web-based sales, which also
complements ALLIANCEs direct distribution model. This strategic acquisition
allows the Company to extend its current meeting automation software product
offerings and to expand its market opportunities into the small to medium
business market.

Forgent
purchased Network Simplicity for approximately $3,315, consisting
of $2,115 in cash and assumed liabilities, and up to
$1,200 in potential future cash considerations. The $2,115 represents the
amount currently recorded as the purchase price of the acquisition, which was
accounted for as a purchase of assets. The additional $1,200 tied to future
contingencies will be recorded as additional purchase price when, and if, the
amounts are paid. Accordingly, the purchase price was allocated to the
tangible and identifiable intangible assets acquired based on their estimated
fair values at the date of acquisition. The following table shows the amounts
assigned to each major asset and liability class as of the date of acquisition:

|                         |                   |   |       |       | 
|------------------------ | ----------------- | - | ----- | ----- | 
|Cash                     |                   | $ | 55    |      
|Accounts receivable, net |                   |   | 137   |      
|Prepaid expenses         |                   |   | 3     |      
|Fixed assets             |                   |   | 37    |      
|Intangible assets        |                   |   | 425   |      
|Acquired software        |                   |   | 1,570 |      
|                         |                   |   |       |      
|                         | Total Assets      |   | $     | 2,227 | 
|                         |                   |   |       |      
|Accounts payable         |                   | $ | 15    |      
|Accrued liabilities      |                   |   | 64    |      
|Deferred revenue         |                   |   | 33    |      
|                         |                   |   |       |      
|                         | Total Liabilities |   | $     | 112   | 
|                         |                   |   |       |      

As a result of the acquisition, Network Simplicitys results of operations
since October 6, 2003 have been included in the Companys Consolidated
Statement of Operations for the three months ended October 31, 2003.

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

In acquiring Network Simplicity, Forgents workforce grew by ten
employees. The founder of Network Simplicity now serves as Forgents
Vice-President  Network Simplicity, and the Network Simplicity workforce will
remain based in Richmond, British Columbia, Canada. As of December 9, 2003, the
Company employed approximately 103 employees.

NOTE 3 - DISCONTINUED OPERATIONS

On July 3, 2003, Forgent sold substantially all of the assets of its
videoconferencing hardware services business (Services Business), based in
King of Prussia, Pennsylvania, to an affiliate of Gores Technology Group
(Gores), a privately held international acquisition and management firm. The
divestiture was a strategic move designed to enable Forgent to focus on growing
its software and professional services business, growing its intellectual
property licensing business, increasing its cash balances, improving its
overall gross margin and reducing its operating expenses. The assets sold
included accounts receivable, inventory, fixed assets, certain prepaid assets,
and goodwill. As consideration for the sale of the Services Business, the
Company received $7,350 in cash, which was net of a $400 transaction extension
fee, and the assumption of substantially all of the Services Business
liabilities, including deferred maintenance revenue, identified accounts
payable, and capital lease obligations.

An additional $2,250 in cash was held for possible purchase price
adjustments and indemnity claims. These funds will be distributed to the
Company pursuant to the terms of the definitive purchase agreement,
after any required adjustments are made if the net assets transferred
by the Company to Gores on July 3, 2003 are determined to be less
than $3,800 and/or the deferred revenue assumed by Gores on July 3,
2003 is determined to be greater than $7,600. Details of this transaction and other important information are set
forth in the Companys proxy statement for fiscal year 2002. Forgent cannot
provide any assurances that it will receive some or any of the held funds.

Forgent assigned its lease for approximately six thousand square feet of
office space in Kennesaw, Georgia to Gores, which was accepted by the landlord
with no further obligations by Forgent. This office space was utilized as a
sales office for the Services Business. Furthermore, Forgent did not remain
contingently liable for performance on existing contracts or future contracts
entered into by Gores. The Company does not have any continuing involvement in
the go-forward operations of the Services Business.

In connection with the sale of the Services Business, Forgent and Gores
entered into a transition services agreement, whereby the Company will provide,
for a fee at actual cost, certain transition services for Gores related to the
assets acquired and liabilities assumed in the sale. Forgent and Gores also
entered into a reseller agreement, whereby Gores may resell the Companys
software products, and a co-marketing arrangement, whereby the Company will
receive a commission for referring videoconferencing related service business
to Gores. Gores retained approximately 70 employees employed by the Services
Business.

As a result of the sale of the Services Business, the Company has
presented this business as discontinued operations on the accompanying
consolidated financial statements, and recorded $997 in income for its
discontinued operations for the three months ended October 31, 2002. The $10
in income recorded from discontinued operations during the three months ended
October 31, 2003 represents the residual activity related to the $1,954 loss on
disposal of the Services Business recorded for the fiscal year ended July 31,
2003. The Company did not conduct any business from this business line during
the three months ended October 31, 2003.

NOTE 4 - SALE OF ACCOUNTS RECEIVABLE

During the three months ended October 31, 2003, the Company sold $1,746 of
its outstanding accounts receivable, without any recourse. Silicon Valley Bank
purchased the assets at face value, less fees of approximately 1.2% of the face
value of the accounts receivable sold and a one-time annual set-up fee of $10.
The Company received proceeds from Silicon Valley Bank of $1,713.

Under the provisions of SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a transfer
of receivables may be accounted for as a sale if the following three conditions
are met: (1) the transferred assets are isolated from the transferor, (2) the
transferee has the right to pledge or sell the transferred assets, and (3) the
transferor does not maintain control over the transferred assets.

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

Accordingly, the Company recorded the transfer of the accounts receivable as a
sale of assets, excluded the related receivables from the Consolidated Balance
Sheet and recorded related expenses of $24 for the quarter ended October 31,
2003.

NOTE 5 - ASSET IMPAIRMENT

When Forgent sold its products business segment during fiscal year 2002,
it received two subordinated promissory notes from VTEL Products Corporation
(VTEL). Due to the defaulted payment on the first subordinated promissory
note due in April 2002 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 fiscal year 2002. During the first
fiscal quarter of 2003, management agreed with VTELs management to offset
Forgents accounts payable to VTEL with its accounts receivable and notes
receivable from VTEL. Forgents liability was fully offset with the accounts
receivable and partially offset with the note in default, thus relieving $499
of the reserve on the notes receivable. Since the initial $5,967 charge to
reserve the VTEL notes receivable was reported as part of the asset impairment
from continuing operations, the related reduction of the reserves is also
reported as part of the asset impairment from continuing operations. No cash
was exchanged with this transaction.

NOTE 6 - COMPREHENSIVE INCOME (LOSS)

In accordance with the disclosure requirements of SFAS No. 130, Reporting
Comprehensive Income, the Companys other 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 loss for the three months ended
October 31, 2003 was $2,521 and comprehensive income for the three months ended
October 31, 2002 was $1,155.

NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities, in an
effort to expand upon and strengthen existing accounting guidance that
addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity. Interpretation 46 requires the
primary beneficiary, an entity that is subject to a majority of the risk of
loss from the variable interest entitys (VIE) activity or is entitled to
receive a majority of the VIEs residual returns or both, to consolidate that
VIE. The interpretation also requires disclosure about VIEs that a company is
not required to consolidate but in which it has a significant variable
interest. Interpretation 46 is effective for all new VIEs created or acquired
after January 31, 2003. For VIEs created prior to February 1, 2003, the
provisions of Interpretation 46 must be applied for the first interim or annual
period beginning after June 15, 2003. The Company did not have a variable
interest in any VIEs as of October 31, 2003 and therefore the adoption of these
provisions has no material impact on its financial position or results of
operations.

In May 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity. This Statement requires that
certain financial instruments with characteristics of both liabilities and
equity be classified as a liability. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, or otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Forgent adopted the provisions of SFAS No. 150 effective the beginning
of the first quarter of fiscal year 2004. As of October 31, 2003, the Company
had no such financial instruments. Therefore, the adoption of SFAS No. 150 had
no impact on the Companys financial position or results of operations.

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

NOTE 8 - 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 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 multiple 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:

|                                          |                                                                                                                                       |  |                    |        |      |  |   |      |  
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ---- | -
|                                          |                                                                                                                                       |  | FOR THE           
|                                          |                                                                                                                                       |  | THREE MONTHS ENDED
|                                          |                                                                                                                                       |  | OCTOBER 31,       
|                                          |                                                                                                                                       |  | 2003               |        | 2002
|                                          |                                                                                                                                       |  | (UNAUDITED)       
|Net (loss) earnings                       |                                                                                                                                       |  |                    |        |      |  |   |     
|                                          | Net (loss) earnings as reported                                                                                                       |  | $                  | (2,523 | )    |  | $ | 925  |  
|                                          | Add: Stock-based employee compensation
expense included in reported net (loss)
earnings, net of related tax effects                   |  | $                  | 15     |      |  | $ | 96   |  
|                                          | Deduct: Stock-based employee
compensation expense determined under fair
value-based method for all awards, net of
related tax effects |  | $                  | (393   | )    |  | $ | (564 | )
|                                          | Pro forma                                                                                                                             |  | $                  | (2,901 | )    |  | $ | 457  |  
|Basic (loss) earnings per common share:   |                                                                                                                                       |  |                    |        |      |  |   |     
|                                          | As reported                                                                                                                           |  | $                  | (0.10  | )    |  | $ | 0.04 |  
|                                          | Pro forma                                                                                                                             |  | $                  | (0.12  | )    |  | $ | 0.02 |  
|Diluted (loss) earnings per common share: |                                                                                                                                       |  |                    |        |      |  |   |     
|                                          | As reported                                                                                                                           |  | $                  | (0.10  | )    |  | $ | 0.04 |  
|                                          | Pro forma                                                                                                                             |  | $                  | (0.12  | )    |  | $ | 0.02 |  

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

NOTE 9 - SEGMENT INFORMATION

Currently, the Company operates in two distinct segments: software and
professional services, and intellectual property licensing. Forgents software
and professional services business provides customers with meeting automation
software as well as add-on software customization, installation and training,
network consulting, hardware, software maintenance services, 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 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 years segment
information has been restated to present the Companys reportable segments as
they are currently defined. The Company does not identify assets or capital
expenditures by reportable segments. Additionally, the Chief Executive Officer
and Chief Financial Officer do not evaluate the segments based on these
criteria.

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

The table below presents segment information about revenue from
unaffiliated customers, gross margins, and operating income (loss) for the
three months ended October 31, 2003 and 2002:

|                                                   |  |              |        |           |  |              |       |  |  |   |        |  
|-------------------------------------------------- |  | ------------ | ------ | --------- |  | ------------ | ----- |  |  | - | ------ | -
|                                                   |  |              |        |           |  | Intellectual |       |  |  |  
|                                                   |  | Software &   |        | Property  |  |              |       | 
|                                                   |  | Professional |        | Licensing |  |              |       | 
|                                                   |  | Services     |        | & Other   |  | Total       
|                                                   |  |              |        |           |  |             
|For the Three Month Period Ending October 31, 2003 |  |              |        |           |  |              |       |  |  |   |        |  
|Revenues from unaffiliated customers               |  | $            | 999    |           |  | $            | 2,872 |  |  | $ | 3,871  |  
|Gross margin                                       |  |              | 148    |           |  |              | 1,423 |  |  |   | 1,571  |  
|Operating (loss) income                            |  |              | (3,157 | )         |  |              | 607   |  |  |   | (2,550 | )
|For the Three Month Period Ending October 31, 2002 |  |              |        |           |  |              |       |  |  |   |        |  
|Revenues from unaffiliated customers               |  | $            | 1,214  |           |  | $            | 6,595 |  |  | $ | 7,809  |  
|Gross margin                                       |  |              | 481    |           |  |              | 3,105 |  |  |   | 3,586  |  
|Operating (loss) income                            |  |              | (2,783 | )         |  |              | 2,653 |  |  |   | (130   | )

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following review of Forgents financial position as of October 31,
2003 and July 31, 2003 and for the three months ended October 31, 2003 and 2002
should be read in conjunction with the Companys 2003 Annual Report on Form
10-K and Form 10-K/A 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:

|                                            |  |               |     |      |  |  |    |  
|------------------------------------------- |  | ------------- | --- | ---- |  |  | -- | -
|                                            |  | FOR THE THREE
|                                            |  | MONTHS ENDED 
|                                            |  | OCTOBER 31,  
|                                            |  | 2003          |     | 2002
|                                            |  |               |     |     
|Software and professional services revenues |  |               | 26  | %    |  |  | 15 | %
|Intellectual property licensing revenues    |  |               | 73  |      |  |  | 80 |  
|Other revenues                              |  |               | 1   |      |  |  | 5  |  
|Gross margin                                |  |               | 41  |      |  |  | 46 |  
|Selling, general and administrative         |  |               | 78  |      |  |  | 39 |  
|Research and development                    |  |               | 28  |      |  |  | 15 |  
|Impairment of assets                        |  |               |    |      |  |  | (6 | )
|Total operating expenses                    |  |               | 106 |      |  |  | 48 |  
|Other income, net                           |  |               |    |      |  |  | 1  |  
|Loss from continuing operations             |  |               | (65 | )    |  |  | (1 | )
|Income from discontinued operations         |  |               |    |      |  |  | 13 |  
|Net (loss) income                           |  |               | (65 | %)   |  |  | 12 | %

THREE MONTHS ENDED OCTOBER 31, 2003 AND 2002

REVENUES. Revenues for the three months ended October 31, 2003 were $3.9
million, a decrease of $3.9 million, or 50%, from the $7.8 million reported for
the three months ended October 31, 2002. Consolidated revenues represent the
combined revenues including sales of Forgents meeting automation software,
add-on software customization, installation and training, network consulting,
hardware, software maintenance services, 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 videoconferencing hardware services business, which
provided hardware maintenance, installation, technical support and resident
engineer services (see Note 3, in the accompanying financial statements).

Software and professional services revenues were $1.0 million and $1.2
million for the three months ended October 31, 2003 and 2002, respectively.
Software and professional services revenues as a percentage of total revenues
were 26% and 16% for the three months ended October 31, 2003 and 2002,
respectively. Revenues from this line of business include sales of Forgents
ALLIANCE SCHEDULER (SCHEDULER), ALLIANCE MEDIA MANAGER (MEDIA MANAGER),
and the newly acquired software products from Network Simplicity Software Inc.
(Network Simplicity), Meeting Room Manager and Visual Asset Manager. Also
included are professional services, software maintenance and royalties.

SCHEDULER, the enhanced product based on Forgents Global Scheduling
System, streamlines conference scheduling, reduces conflicts associated with
complex meetings, and empowers users to schedule meetings easily and without
significant investment in additional training, by augmenting existing
calendaring applications such as Microsoft Outlook® and Lotus Notes®. MEDIA
MANAGER is a multi-vendor, multi-protocol media management platform, based on
Forgents Video Network Platform, that monitors and manages rich media
communications and network devices from multiple vendors through a Common
Operating Environment, and overcomes the related ease-of-use, reliability, and
manageability problems of rich media technologies. Meeting Room Manager
(MRM) is a web-based room and people scheduling application targeted at the
small to medium business market. MRM is designed to be easy to use and easy to
deploy. Visual Asset Manager is a network and

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web-based solution that allows small to medium businesses to effectively
track and manage their assets, including computers, printers, software, and
employees. Forgents professional services offerings include add-on software
customization, installation and training, and network consulting services.

During the first fiscal quarter, Forgent continued to focus on customers
in targeted industries, primarily Banking and Financial Services,
Pharmaceutical, Legal, and Government. Despite the $0.2 million decrease in
software and professional services revenues during the three months ended
October 31, 2003, as compared to the three months ended October 31, 2002,
Forgents strategy of pursuing certain large enterprises in more sophisticated
markets is achieving results as reflected in an increase in ALLIANCEs average
selling price. Additionally, management believes the acquisition of Network
Simplicity will be an accretive acquisition in the near term as the Company
broadens its market and adds new customers within the small to medium business
market. As more ALLIANCE customers complete the lengthy sales cycle and as the
Companys software products gain momentum in the marketplace, management
anticipates software and professional services revenues to increase in the
second fiscal quarter.

Intellectual property licensing revenues were $2.9 million and $6.2
million for the three months ended October 31, 2003 and 2002, respectively.
Intellectual property licensing revenues as a percentage of total revenues were
74% and 80% for the three months ended October 31, 2003 and 2002, respectively.
The first fiscal quarter of 2004 marks the seventh consecutive quarter that
Forgent has generated licensing revenues. As of October 31, 2003, the Companys
Patent Licensing Program has generated $82.9 million in aggregate licensing
revenues. 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 and its foreign counterparts. The Company
does not anticipate any additional intellectual property revenue from these
companies but it continues to actively seek new licenses and put more companies
on notice by broadening its field of use to cover several fields including
printing devices, scanners, DVD players, personal computers, digital cameras,
certain video cameras, cell phones, rendering software and other technologies.
Although the timing of signing the license agreements continues to pose
forecasting challenges, which inevitably causes peaks and valleys in the
program, management anticipates its Patent Licensing Program will generate
additional intellectual property licensing revenues during the remaining
quarters of fiscal year 2004 as well as throughout fiscal year 2005. However,
Forgents licensing program involves risks inherent in technology licensing,
including risks of protracted delays, possible legal challenges that would lead
to the 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 licensing revenues, expires in October 2006 and
its foreign counterparts expire in September 2007. Thus, there can be no
assurance that the Company will be able to continue to effectively license its
technology to others.

Other revenues were $22 thousand and $0.4 million for the three months
ended October 31, 2003 and 2002, respectively. Other revenues as a percentage
of total revenues were 1% and 5% for the three months ended October 31, 2003
and 2002, respectively. During the three months ended October 31, 2003 and
2002, the Company subcontracted several integration projects to SPL Integrated
Solutions (SPL), which had purchased Forgents integration business during
fiscal year 2002. As a result of these subcontracts, Forgent recorded $22
thousand and $0.4 million in other revenue during the first fiscal quarters of
2003 and 2002, respectively. As of October 31, 2003, Forgent no longer
subcontracted any integration projects to SPL and referred all of its
integration customers directly to SPL.

GROSS MARGIN. Gross margins for the three months ended October 31, 2003
were $1.6 million, a decrease of $2.0 million, or 56%, from the $3.6 million
reported for the three months ended October 31, 2002. Gross margins as a
percentage of total revenues were 41% and 46% for the three months ended
October 31, 2003 and 2002, respectively.

The $2.0 million decrease in the Companys total gross margin during the
quarter ended October 31, 2003 as compared to the quarter ended October 31,
2002 is due primarily to the $1.7 million decrease in gross margin resulting
from the patent license agreements obtained during the first fiscal quarter.
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, a national
law firm. The percentage payment to Jenkens & Gilchrist is 50% of license
receipts per the agreement with Jenkens & Gilchrist. 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

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the September 2007 expiration of the patents foreign counterparts, total
gross margins could be adversely affected in the future if licensing revenues
decline.

The costs associated with the software and professional services business
result primarily from the amortization of the Companys capitalized and
purchased software development costs and compensation expenses. Thus, the cost
of sales from this line of business is relatively fixed. During the three
months ended October 31, 2003, the amortization of software development costs
and compensation expenses represented 92.6% of this segments total cost of
sales. For the three months ended October 31, 2002, the amortization of
software development costs and compensation expenses represented 55.9% of this
segments total cost of sales. This increase in the relatively fixed costs is
due to the additional amortization of previously capitalized software
development costs associated with Forgents software products released for sale
after October 31, 2002 and the additional amortization of the purchased
software development costs resulting from the Network Simplicity acquisition.
Therefore, the increase in the fixed component of the cost of sales, coupled
with the decline in software and professional services revenues, resulted in a
decrease in this segments gross margin during the three months ended October
31, 2003 as compared to the three months ended October 31, 2002. Since
revenues generated from the software and professional services business
directly affect gross margins, and since management anticipates growing
revenues for this segment in the second fiscal quarter, gross margins from
software and professional services are expected to improve during the second
fiscal quarter.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the three months ended October 31, 2003 were $3.0 million, a
decrease of $10 thousand, from the $3.0 million reported for the three months
ended October 31, 2002. Selling, general and administrative (SG&A) expenses
as a percentage of revenues were 78% and 39% for the three months ended October
31, 2003 and 2002, respectively.

Although the change in total SG&A expenses was minimal, Forgents sales
expenses during the three months ended October 31, 2003 increased by $0.2
million, or 14%, over the three months ended October 31, 2002. In focusing on
its sales efforts, Forgent continues to concentrate on customers in targeted
industries, improve its professional direct sales force, and continue
partnering with world-class companies. Additionally, with the acquisition of
Network Simplicity in October 2003, Forgent is redeploying some of its existing
telemarketing sales resources to sell its newest meeting automation software
products in the small to medium business markets where the Company is
witnessing increased spending and where the sales cycle is significantly
shorter. Management will continue to monitor expenses related to the Companys
sales organization and make adjustments, if necessary, to its sales
capabilities to support the sale of its software products.

The increase in sales expenses during the three months ended October 31,
2003 was offset by decreases in other SG&A expenses. Management continues to
evaluate and reduce all unproductive infrastructure expenses such as
underutilized office space, equipment leases, and underutilized assets.
Management plans to use these cost savings to invest in its sales efforts, as
well as its marketing efforts in order to heighten market awareness of the
Companys meeting automation solutions. Additionally, management anticipates
additional expenses related to the Sarbanes-Oxley Act requirements but believes
it can continue to manage SG&A costs to cover these additional expenses.
However, Forgents endeavor to further decrease any unnecessary SG&A expenses
that do not directly support the generation of revenues for the Company will
not impact the Companys ability to engage with its customers.

RESEARCH AND DEVELOPMENT. Research and development expenses for the three
months ended October 31, 2003 were $1.1 million, a decrease of $0.1 million, or
8%, from the $1.2 million reported for the three months ended October 31, 2002.
Research and development (R&D) expenses as a percentage of revenues were 28%
and 15% for the three months ended October 31, 2003 and 2002, respectively.

During the three months ended October 31, 2003, Forgent continued its
efforts on enhancing its ALLIANCE software suite. During the first fiscal
quarter, the Company released ALLIANCE 4.1. This release added several
enhancements to ALLIANCE 4.0, which was launched in July 2003. These
enhancements included the ability to support new audio and video devices, the
ability to create more sophisticated reports, the ability to delegate
scheduling responsibilities, enhanced international dialing rules, and improved
Microsoft Exchange synchronization. In addition to releasing ALLIANCE 4.1,
Forgent also began developing its next release, ALLIANCE 4.2. ALLIANCE 4.2
integrates web conferencing services into the ALLIANCE meeting automation
platform, thus automating the ability for users to add web conferencing to
their meetings. With this enhanced solution, organizations can integrate their
choice of web and audio conferencing into a single scheduling process

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within their current calendaring environment, thus minimizing additional
training costs. It also allows users to view all attendees and rooms
availabilities with a single glance in order to schedule meetings quickly and
easily. Another key feature of ALLIANCE 4.2 allows for a single conference to
be connected by multiple cascaded bridges in order to connect multiple
participants who would otherwise not all fit on one bridge or would be too
costly to be serviced by one bridge. ALLIANCEs new key features not only
increase the efficiencies related to scheduling and automating meetings but
also assist in further decreasing related telecommunication expenses. ALLIANCE
4.2 was released to the general public in December 2003.

The R&D expenses are net of $0.5 million and $0.8 million capitalized
during the three months ended October 31, 2003 and October 31, 2002,
respectively. 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 project, generally three years. As of October 31, 2003, approximately
72.4% of the Companys net capitalized software development costs related to
efforts on developing MEDIA MANAGER and approximately 27.6% related to efforts
on developing SCHEDULER.

During the three months ended October 31, 2003, Forgent filed two new
patent applications with the United States Patent and Trademark Office. Forgent
currently has approximately forty-six of its intellectual property technologies
on file with the United States Patent and Trademark Office. During the first
fiscal quarter, the United States Patent and Trademark Office issued the
Company two new patents, bringing the Companys total issued patents count to
forty-four. These patents, which comprise Forgents intellectual property
portfolio, relate to meeting automation, videoconferencing, data compression,
video mail, and other technologies developed or acquired by Forgent.

Forgents ability to successfully develop innovative meeting automation
solutions is a significant factor in the Companys success. Management will
attempt to maintain research and development expenses at reasonable levels in
terms of percentage of revenue.

AMORTIZATION
OF INTANGIBLE ASSETS. Amortization expenses for the three
months ended October 31, 2003 were $4 thousand and relate to the amortization
of certain identified intangible assets purchased from Network Simplicity in
October 2003. No amortization expenses were recorded for the three months
ended October 31, 2002.

IMPAIRMENT OF ASSETS. When Forgent sold its products business segment
during fiscal year 2002, it received two subordinated promissory notes from
VTEL Products Corporation (VTEL). Due to the defaulted payment on the first
subordinated promissory note due in April 2002 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 fiscal year 2002.
During the first fiscal quarter of 2003, management agreed with VTELs
management to offset Forgents accounts payable to VTEL with its accounts
receivable and notes receivable from VTEL. Forgents liability was fully offset
with the accounts receivable and partially offset with the note in default,
thus relieving $0.5 million of the reserve on the notes receivable. Since the
initial $6.0 million charge to reserve the VTEL notes receivable was reported
as part of the asset impairment from continuing operations, the related
reduction of the reserves is also reported as part of the asset impairment from
continuing operations. No cash was exchanged with this transaction.

OTHER INCOME. Other income for the three months ended October 31, 2003 was
$17 thousand, a decrease of $40 thousand, or 70%, from the $57 thousand
reported for the three months ended October 31, 2002. Other income as a
percentage of revenues were 0% and 1% for the three months ended October 31,
2003 and 2002, respectively. The decrease is due primarily to the $24 thousand
in fees paid to Silicon Valley Bank, resulting from the sale of Forgents
accounts receivable during the three months ended October 31, 2003. No such
sale occurred during the three months ended October 31, 2002.

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INCOME FROM DISCONTINUED OPERATIONS. Income from discontinued operations
for the three months ended October 31, 2003 was $10 thousand, a decrease of
$1.0 million, or 99%, from the $1.0 million reported for the three months ended
October 31, 2002. Income from discontinued operations as a percentage of
revenues were 0% and 13% for the three months ended October 31, 2003 and 2002,
respectively.

During the fourth fiscal quarter of 2003, the Company sold the operations
and assets of its videoconferencing hardware services business to an affiliate
of Gores Technology Group (Gores). Accordingly, the videoconferencing
hardware service business has been accounted for and presented as discontinued
operations in the consolidated financial statements. Income from discontinued
operations was $1.0 million for the three months ended October 31, 2002. The
$10 thousand in income recorded from discontinued operations during the three
months ended October 31, 2003 represents a true-up of the $2.0 million loss on
disposal of the videoconferencing hardware service business recorded for the
fiscal year ended July 31, 2003. The Company did not conduct any business from
this business line during the three months ended October 31, 2003.

NET INCOME (LOSS). Forgent generated a net loss of $2.5 million, or $0.10
per share, during the three months ended October 31, 2003 compared to a net
income of $0.9 million, or $0.04 per share, during the three months ended
October 31, 2002. Net income (loss) as a percentage of
total revenues was
(65%) and 12% for the three months ended October 31, 2003 and 2002,
respectively. The $3.5 million decrease in the Companys net income is
primarily attributable to the $2.0 million decrease in gross margin and the
$1.0 million decrease in income from discontinued operations.

During the three months ended October 31, 2003 Forgent acquired Network
Simplicity to strengthen its market position in the small to medium business
sector. Forgents Patent Licensing Program generated additional revenues and
earnings and continues to provide positive cash flow for the Companys
stability and growth. During the first fiscal quarter, Forgent also reduced
operating expenses from the previous quarter, and maintained healthy cash and
working capital balances. Despite the on-going difficult economic business
environment in which companies continue to minimize capital expenditures, these
significant milestones provide evidence that Forgent is an emerging software
company focused on delivering high-value solutions to the marketplace in order
to advance the Companys financial results towards growth and profitability.
However, uncertainties and challenges remain, and there can be no assurance
that the Company can successfully grow its revenues or return to profitability.

LIQUIDITY AND CAPITAL RESOURCES

On
October 31, 2003, Forgent had working capital of $23.5 million,
including $26.5 million in cash, cash equivalents and short-term investments.
Cash provided by operating activities was $4.8 million for the three months
ended October 31, 2003 due primarily to a $6.7 million decrease in accounts
receivable and the sale of $1.7 million in accounts receivable, which were
offset by the $2.5 million in net loss and a $1.5 million decrease in accounts
payable. Cash used in operating activities was $4.4 million for the three
months ended October 31, 2002 due primarily to a $3.1 million increase in
accounts receivable and a $1.2 million decrease in accounts payable. During the
three months ended October 31, 2003, the Company sold $1.7 million of its
outstanding accounts receivable, without any recourse. Silicon Valley Bank
purchased the accounts receivable at face value, less fees of approximately
1.2% of the face value of the accounts receivable sold and a one-time annual
set-up fee of $10 thousand. The Company received proceeds from Silicon Valley
Bank of $1.7 million. As a result of the sale of the accounts receivable, the
Company excluded the related receivables from the Consolidated Balance Sheet
and recorded related expenses of $24 thousand for the three months ended
October 31, 2003. During the three months ended October 31, 2003, Forgent
collected $8.3 million in accounts receivable related to its Patent Licensing
Program. These collections, the sale of the accounts receivable, and the
diligent collection of the Companys other accounts receivable led to the
Companys days sales outstanding to decrease by 6 days over the previous
quarter to 29 days, the lowest in recent history. Forgent continues to
conscientiously collect all of its outstanding receivables, which is evident by
its minimal allowance for doubtful accounts.

Cash used in investing activities was $6.3 million for the three months
ended October 31, 2003 due largely to $3.2 million in net purchases of
short-term investments and $2.0 million paid related to the purchase of Network
Simplicity. Cash used in investing activities was $0.8 million for the three
months ended October 31, 2002 due primarily to $0.8 million in capitalization
of software development costs. During the three months ended October 31, 2003,
the Company increased its purchases in short-term investments with maturities
greater than 90 days in order to capitalize on its cash balances. As of
October 31, 2003, approximately 50.5% of Forgents short-term investments had
maturities of less than six months and the other short-term investments mature
within one year.

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As of October 31, 2003, the Company leased computers, equipment, and
office space under non-cancelable operating leases that expire at various dates
through 2013. Certain leases obligate the Company to pay property taxes,
maintenance and insurance. The Company also has several capital leases for
computer and office equipment. Additionally, the Company used the proceeds
from its notes payable to purchase computers and various equipment. Amounts
payable under these leases and notes payable are as follows:

|                    |  |                 |        |         |  |         |     |       |  |   |     |  |  |   |        | 
|------------------- |  | --------------- | ------ | ------- |  | ------- | --- | ----- |  | - | --- |  |  | - | ------ | 
|                    |  | Amounts Payable
|                    |  | (in thousands) 
|                    |  | Operating       |        | Capital |  | Notes   |     |       |  |  
|Fiscal Year Ending: |  | Leases          |        | Leases  |  | Payable |     | Total
|Remaining 2004      |  | $               | 3,272  |         |  | $       | 108 |       |  | $ | 286 |  |  | $ | 3,666  | 
|2005                |  |                 | 4,298  |         |  |         | 6   |       |  |   | 261 |  |  |   | 4,565  | 
|2006                |  |                 | 4,156  |         |  |         |    |       |  |   | 134 |  |  |   | 4,290  | 
|2007                |  |                 | 3,446  |         |  |         |    |       |  |   | 7   |  |  |   | 3,453  | 
|2008                |  |                 | 3,370  |         |  |         |    |       |  |   |    |  |  |   | 3,370  | 
|Thereafter          |  |                 | 15,497 |         |  |         |    |       |  |   |    |  |  |   | 15,497 | 
|                    |  |                 |        |         |  |         |     |       |  |   |     |  |  |   |        | 
|Total               |  | $               | 34,039 |         |  | $       | 114 |       |  | $ | 688 |  |  | $ | 34,841 | 
|                    |  |                 |        |         |  |         |     |       |  |   |     |  |  |   |        | 

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.

Cash used in financing activities was $0.3 million for the three months
ended October 31, 2003 due primarily to $0.5 million in purchases of treasury
stock, which was offset by $0.2 million in proceeds received from the issuance
of stock. Cash used in financing activities was $0.7 million for the three
months ended October 31, 2002 due primarily to $0.7 million in purchases of
treasury stock. In fiscal 2001 Forgent announced a stock repurchase program to
purchase up to two million 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 stock. During the three
months ended October 31, 2003, the Company repurchased 137,085 shares for $0.5
million, bringing the total number of shares repurchased to date to 1.7 million
shares. Management will continue to evaluate repurchasing additional shares in
fiscal 2004, depending on the Companys cash position, market conditions, and
other factors.

As of October 31, 2003, Forgent increased its cash, cash equivalents, and
short-term investments balance by $1.4 million, or 5.7%, over the previous
quarter ending July 31, 2003. This increase occurred even though the Company
expended $2.0 million of cash during the first fiscal quarter as part of the
purchase of Network Simplicity. Forgents principal sources of liquidity at
October 31, 2003 consisted of $26.5 million of cash, cash equivalents, and
short-term investments, and the ability to generate cash from its intellectual
property licensing business. This ability to generate cash is subject to
certain risks as discussed under Risk Factors  License Program below. As
previously stated above, however, there remain risks and uncertainties as to
the timing of the receipts of license fees due, in part, to the inherent nature
of a patent licensing program. Management plans to strategically utilize this
positive cashflow to invest further in developing Forgents meeting automation
software and to explore more opportunities for growing the business. However,
there is no assurance that the Company will be able to continue to limit its
cash consumption and 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, increased
expense levels, and other factors.

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 the 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

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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, installation, and other professional services related to the sale of
Forgents meeting automation software. 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. 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 installation and
training 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 its 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 license
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 signed agreements. The contingent legal
fees are based on a percentage of the licensing revenues received on signed
agreements and are paid to 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. Future percentage payments will be 50%
of license receipts per the agreement with Jenkens & Gilchrist.

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 Consolidated Statement of
Operations over the terms of the arrangements, primarily ranging from one to
three years.

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.
Software development costs are capitalized after a

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product is determined to be technologically feasible and is in the process
of being developed for market. 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.

Impairment of Goodwill and Intangible Assets

The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets
on August 1, 2001 and thus is required to review the carrying value of its
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 asset 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, but not all, 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. 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.

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 cause customers or potential
customers to reduce or delay their investments in meeting automation software
and related professional services. Due to the recent economic circumstances
affecting U.S. businesses, there has been a slow-down in capital spending,
which adversely affects the willingness of companies to purchase software
products and professional services. If this slow-down in capital spending is
prolonged, 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.

License Program

The Companys intellectual property licensing revenues are difficult to
predict. The Companys Patent Licensing Program involves risks inherent in
technology licensing, 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 or inability
of licensees to pay for 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.

Meeting Automation Software Development

Forgent expects that its future financial performance will depend
significantly on revenue from its existing and future software products and the
related products that the Company plans to develop, which is subject to
significant risks. There are significant risks inherent in any new product
introduction, such as with Forgents ALLIANCE software products and its Network
Simplicity software products. Market acceptance of these and future products
will depend on continued market development for the meeting management market.
Forgent cannot be certain that its existing or future products offerings will
meet customer performance needs or expectations when shipped or that they 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. Such upgrades or enhancements could
have an adverse affect on the Companys results of operations.

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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 over the past few years as a provider of meeting automation
software and professional services and its prior 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.

Software Marketing and Sales

Forgents first enterprise software product was introduced in the fall of
2001, and as such, it has limited market awareness. Since that time Forgent has
enhanced this product through internal development and acquisitions. The
Companys future success will be dependent in significant part on its ability
to generate demand for its meeting automation software products and
professional services. To this end, Forgents direct and indirect sales
operations must increase market awareness of its products to generate increased
revenue. Several of 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.

Sales Cycle

Forgent has a long sales cycle for several of its products since it
generally takes time to educate potential customers regarding the use and
benefits of its enterprise meeting automation software solutions. 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 of operations
in an affected quarter, since 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 software sales
anticipated in any particular quarter, the market price of the Companys stock
may significantly decrease.

Limited Operating History

Although founded in 1985, Forgent has a limited operating history in its
current lines of business because of the Companys recent transition to a
provider of meeting automation software and professional services and a
licensor of intellectual property. As a result of this limited operating
history, Forgent cannot forecast revenue and operating expenses based on
historical results. The Companys ability to forecast quarterly revenue
accurately 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
and because of the relative unpredictability of its intellectual property
licensing revenues. 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.

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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.

Additionally, 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.

New Business Model

The Company has transitioned its business and has realigned its strategic
focus towards two core business lines: meeting automation software and
professional services and intellectual property licensing. Many factors may
negatively impact the Companys ability to implement its strategic focus,
including the ability or possible inability to manage the development of its
meeting automation software, manage the development of its Patent Licensing
Program, sustain the productivity of Forgents workforce, retain key employees,
and manage operating expenses. The Company may be required by market conditions
and other factors to undertake 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 development of its business
strategy, sustain the productivity of its workforce, retain key employees, or
manage its operating expenses.

Acquisition Integration

The Company has made, and may continue to evaluate and make, strategic
acquisitions in public and privately held technology companies. Since some of
these companies may be early-stage ventures with unproven business models,
products that are not yet fully developed or products that have not yet
achieved market acceptance, these acquisitions 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 the Company
to obtain additional private equity financing, access the public capital
markets, affect a sale or merger, or achieve commercial success with its
products or services. Additionally, the Company may encounter difficulties in
integrating an acquired companys workforce, technologies, or product lines.
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 amounts
invested.

Divestiture Transactions

As a result of Forgents transition to a provider of meeting automation
software and professional services and licensor of intellectual property, the
Company has substantially completed a program to divest certain non-core
operations, including a videoconferencing endpoint manufacturing business, an
integration business, and a videoconferencing hardware services business. There
can be no assurance that, having 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 that is likely to
be realized by its existing businesses and operations. 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

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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 revenue 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.

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 rate 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.
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. 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 for the year ended July 31, 2003.




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.

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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 $5.0 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:
| | --- |  | ---------



| | 31.1 |  | Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                               
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------
|
| | 31.2 |  | Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                               
|
| | 32.1 |  | Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
| | 32.2 |  | Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002



| | (b) |  | Reports on Form 8-K:                                                                                                                                                       
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | On December 3, 2003 the registrant filed a report on Form 8-K
announcing the Companys financial results for the quarter ended
October 31, 2003 by issuing a press release.

21



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##### Table of Contents






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.
|                  |  |                        |  |                        
|December 15, 2003 |  | By:                    |  | /s/ RICHARD N. SNYDER  
|                  |  |                        |  |                        
|                  |  |                        |  | Richard N. Snyder      
|                  |  |                        |  | Chief Executive Officer
|                  |  |                        |  |                        
|December 15, 2003 |  | By:                    |  | /s/ JAY C. PETERSON    
|                  |  |                        |  |                        
|                  |  |                        |  | Jay C. Peterson        
|                  |  |                        |  | Chief Financial Officer





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##### Table of Contents






INDEX TO EXHIBITS

|        |  |                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                       
|NUMBER  |  | DESCRIPTION                                                                                                           
|        |  |                                                                                                                       
|31.1    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|        |  |                                                                                                                       
|31.2    |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|        |  |                                                                                                                       
|32.1    |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                       
|32.2    |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002