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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from              to             

Commission File Number 000-25315

SAGENT TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

P.O. BOX BD, Los Altos, CA 94023

(Address of principal executive offices including zip code)

(650) 599-5846

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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

The aggregate market value of the voting stock held by non-affiliates based on closing sales price of the registrant’s common stock as reported on The Over The Counter Bulletin Board as of March 24, 2004, was approximately $4.7 million.

As of March 24, 2004, 47,109,843 shares of common stock issued and outstanding.

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SAGENT TECHNOLOGY, INC.

FORM 10-K

For The Fiscal Year Ended December 31, 2003

TABLE OF CONTENTS

“Sagent,” “Sagent Solution,” “Sagent Data Load Server,” and “Sagent Data Access Server,” are former trademarks, trade names or service marks of Sagent Technology, Inc. (“Sagent”) which were sold to Group 1 Software, Inc. as described under Item 1, Business. This annual report also contains trademarks, trade names and service marks of companies other than those formerly owned by Sagent, and these trademarks, trade names and service marks are the property of their respective holders.

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PART I

This annual report contains forward-looking statements based on the current beliefs of our management as well as assumptions made by and information currently available to our management, including statements related to the timing and amounts of the liquidation of remaining assets and expectations regarding the winding up of business and operations and dissolution. You can identify these forward-looking statements when you see us using words such as “expect,” “anticipate,” “believe,” “estimate” and other similar expressions. These forward-looking statements involve risks and uncertainties, including those described in the section entitled “Risk Factors” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. You should not place undue reliance on our forward-looking statements, as they are not guarantees of future results and represent our expectations only as of the date they are made.

Item 1. Business

Introduction

Sagent Technology, Inc., a Delaware corporation, is engaged in the process of orderly liquidation of its remaining assets, the winding up of its business and operations, and the dissolution of the Company.

On April 15, 2003, we entered into a definitive asset purchase agreement (the “Asset Purchase Agreement”) to sell substantially all of our assets to Group 1 Software, Inc. (“Group 1”).

On October 1, 2003 (the “close date”), the asset sale contemplated by the Asset Purchase Agreement was consummated. In exchange for the assets sold, including all intellectual property, accounts receivable, cash on hand, certain contracts, property and equipment and other designated assets, and the assumption of specified liabilities, the Company received $13.0 million in the form of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan. On September 30, 2003, our stockholders adopted a plan of dissolution, which includes the change of our corporate name to S Wind-Up Corporation within 180 days of the close date. Most employees of the Company accepted employment with Group 1. On March 15, 2004, Group 1 agreed to extend the date for our name change to April 15, 2004. Two executives will remain through April 15, 2004 to manage the Company’s wind down, liquidation and the first estimated distribution to the stockholders. On April 16, 2004, we will hold a final board meeting. We expect to retain a trailing director and accounting agent to manage the remaining wind down and liquidation process until early 2005, at which time a trustee will be retained to manage the remaining dissolution process.

Under the terms of the Asset Purchase Agreement, Sagent retained approximate $1.5 million in cash, certain other assets and liabilities for outstanding litigation and approximately $1.2 million of accrued compensation payable to key officers. In addition, pursuant to the terms of the Asset Purchase Agreement, Group 1 withheld $4.0 million of the purchase price pending final resolution of the net book value of assets and liabilities acquired and appropriate indemnification claims (the “purchase price adjustment”), which was finalized at $2.0 million, resulting in an adjusted purchase price of $15.0 million. On March 10, 2004, we received $1.6 million of the final $2.0 million of cash proceeds; the remaining $0.4 million in cash is being withheld for potential contingency claims and is expected to be released in the second quarter of 2004.

The asset sale resulted from a process that began in 2002, when we determined that an asset sale was in the best interest of our stockholders. That process involved consideration of various alternatives to finance the Company or sell our business. On April 14, 2003, the Board of Directors voted to approve a plan of dissolution subject to the completion of the asset sale to Group 1 and stockholder approval. On April 15, 2003, we entered into an agreement to sell substantially all of our assets to Group 1.

We held a special meeting of our stockholders on July 15, 2003, to approve the proposed asset sale and plan of dissolution. A quorum of stockholders was not present when the meeting was first convened on July 15, 2003, so we adjourned the meeting to July 21 and again to July 28, and each time failed to obtain a quorum. We reconvened the meeting on September 30, 2003 and at that time a quorum of the shares of common stock was present. At that meeting, our stockholders approved the proposals included in the proxy statement, including the asset sale, plan of dissolution and the change of our corporate name to S Windup Corporation. On that same day, we closed the asset purchase agreement.

Since that date, we have begun the process of the orderly liquidation of our remaining assets, the winding up of the business, and the dissolution of Sagent. This process is being managed by our two remaining executives under the direction of our Board of Directors. This process involves the sale and disposition of assets that were not acquired by Group 1, the settlement of liabilities and other claims that were not assumed by Group 1, and the distribution of any remaining assets to our stockholders.

On February 26, 2004, our board of directors approved an initial distribution of $0.10 for each share of stock held as of the record date of March 31, 2004 pursuant to the Plan of Liquidation and Dissolution approved by the stockholders on September 30, 2003.

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Following the closing of the asset sale, our primary asset has been cash. As of December 31, 2003, we have used approximately $0.7 million since the close date to satisfy liabilities and wind-up expenses and we expect to provide a cash reserve for potential future liabilities and expenses. The cash reserve is expected to be approximately $0.7 million.

Business Operations Prior to the Asset Sale

Prior to closing the asset sale to Group 1, we developed, marketed, and supported software products and services that helped businesses collect, analyze, understand, and act on customer and operational information both in batch and in real-time. Our software products and services provided a way for an organization’s employees, customers, and partners to use the Internet to examine the internal data they already have and to supplement that data with external, value-added information such as demographic, geographic, or other content and data feeds. We operated as a single business unit. While we no longer have active business operations, the following description of our business operations prior to the asset sale is provided to aid our reader’s understanding of our historical financial statements.

Our products fell into two major categories: software products which customers used to collect, analyze and report on data, which we refer to as the Sagent Solution products, and software products which customers used to supplement and enhance data in ways meaningful to their business model, or Centrus products. Sales of our products were generated primarily through our direct sales team and indirect sales channels such as Value Added Resellers. Our products were primarily off the shelf products which did not require customization specific to customer needs.

Sagent’s Products and Services

Prior to the closing of the asset sale to Group 1, we sold the Sagent Solution, Sagent Solution Components, Centrus and software maintenance and technical support.

Sagent Solution

Over the last seven years, most of our revenue came from the sales of our Solution product and its components. The Solution offered a complete, open and high-performance software infrastructure that allowed companies to aggressively develop custom analytic solutions that yield insight into their customers and business operations. Our Solution’s key components integrated with a growing number of data integration and information delivery tools from 3rd-party providers and us.

Sagent Solution Components

Our Sagent Data Flow Server was a multi-user application server that processed disparate sources of data and prepared it for use within analytical applications. When it was bundled with the foundation library, the Data Flow Server was sold as the Sagent Data Load Server and was used for extraction, transformation and loading (ETL). When it was bundled with the display library or Sagent Open Link, the Data Flow Server was sold as the Sagent Access Server and was used for enterprise information integration (EII) and to prepare information for use within reporting and analysis tools

We also offered other components, such as libraries which were used by customers to solve a broad variety of data integration and data analysis problems however these products did not account for a significant percentage of total revenue for the period from January 1, 2003 through September 30, 2003.

Centrus

In December 1999 we introduced Centrus via our acquisition of Qualitative Marketing Software, Inc. (QMS). Centrus provided tools for address-level geographic analysis, real-time customer matching, and name and address data-quality functions.

Services

To complement our product offering, we also offered professional consulting and training services to help customers achieve fast and full value from their implementation of the Sagent Solution or Centrus products.

Research and Development

Through the date of the asset sale to Group 1, we developed our Sagent Solution products in our Mountain View, California headquarter office and our Centrus products in our Denver, Colorado facilities.

Sales and Marketing

During the fiscal year ended December 31, 2002 and the period from January 1, 2003 through September 30, 2003, our sales and marketing efforts were primarily focused on expansion of business with existing customers and our indirect sales

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channels. During that time, our customers’ and potential customers’ purchasing decisions were impacted by, among other factors: (i) concerns about our viability, (ii) the overall weakness in the global economy, (iii) continued reductions in capital expenditures, and (iv) uncertainties in the application software industry as a result of speculation of further consolidation within the industry.

Customers

Through the date of the asset sale to Group 1, we had more than 1,500 customers throughout the world and across such diverse industries as insurance, financial services, retail, e-commerce, healthcare and telecommunications. The following were several of our larger customers: Advent Software, Inc., BKK, California Department of Justice, Department of the Army, Direct TV, Echosphere Communications, First Republic Bank, Fujitsu (Japan), Guinness, INTEC, ISID, Ltd., Iteration Software, Kawatetsu Systems, Inc., Mapquest.com, Markel (Terra Nova), Nationwide (UK), NEC Corporation, Nihon Unisys, Ltd, Schwan’s Technology Group, and Sharp Electronics Corporation.

Through the date of the asset sale to Group 1, we had no single customer during 2003 that accounted for 10% or more of our total 2003 revenues.

Competition

We considered vendors such as Informatica Corp., Brio Software, Inc., Business Objects SA, Cognos, Inc., Hummingbird, Ltd., Informatica Corp., Ascential Software Corp., Business Objects SA, and Mapinfo Corp. to be our largest competitors.

Intellectual Property

We do not have any patents at this time. On October 1, 2003, we assigned seven active patents to Group 1 Software.

Employees

We have two employees as of December 31, 2003, both of whom work from home offices.

Available Information

We have no principal office. Our website home page is located at www.swindup.com; however, the information in, or that can be accessed through our website is not part of this report. Our mailing address is P.O. Box BD, Los Altos, CA 94023. Our telephone number is (650) 599-5846.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The contents of this website is not incorporated into this filing. Further, the Company’s references to the URL for this website is intended to be an inactive textual reference only.

Item 2. Properties

We have no properties as of December 31, 2003.

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Item 3. Legal Proceedings

From time to time, we have been subject to litigation including the pending litigation described below. Because of the uncertainties related to both the amount and range of loss on the pending litigation, management is unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess its potential liability and revise our estimates. Pending or future litigation could be costly, and could upon resolution, have a material adverse affect on any estimated distribution to stockholders.

In addition, we are engaged in certain legal and administrative proceedings incidental to the liquidation of our remaining assets, the winding up of the business, and the dissolution of Sagent and believe that these matters will not have a material adverse effect on our financial position, result of operations or cash flow.

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

On November 17, 2000, a derivative lawsuit was filed by a purported Company shareholder in the Superior Court of California for the County of San Mateo (the “Fanucci Complaint”). On February 9, 2001, a second derivative lawsuit was filed in the Superior Court of California for the County of Santa Clara (the “Hu Complaint”). The parties have settled those lawsuits. As part of the settlements, we agreed to adopt certain corporate governance provisions and to pay $200,000 in attorneys’ fees and expenses to derivative plaintiffs’ counsel; the payment was funded by our director’s and officers’ insurance carrier. The Superior Court issued a final order approving the settlements and dismissing the case with prejudice on August 5, 2003.

In October 2001, infoUSA, Inc. filed a complaint against us in the District Court of Douglas County, Nebraska, seeking amounts infoUSA claims were owed under a license agreement between Sagent and infoUSA. The parties entered into a Settlement and Mutual Release Agreement effective January 20, 2003. The Settlement Agreement called for us to pay $700,000 to infoUSA in full settlement of all claims, at which time the lawsuit will be dismissed. In accordance with the agreement, we paid $150,000 in January 2003, $137,000 in April, June and September 2003, respectively, and the remaining $138,000 was paid in the fourth quarter of 2003.

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

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

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

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In March 2002, we filed suit against MICROS Systems, Inc. (“MICROS”) in Santa Clara County California alleging that MICROS had breached a contract to purchase from us certain software and a related service agreement. On August 5, 2003, the US District Court for the State of Maryland granted Sagent’s motion for summary judgment in the amount of $112,000 plus pre-judgment interest in the amount of $11,000. We received $123,000 in September 2003.

In early 2000, we entered into a software license agreement with Mountain Energy Corporation (“MEC”). MEC filed for bankruptcy in October 2000. Subsequently, the MEC bankruptcy trustee filed a complaint against us to avoid and recover certain preferential transfers. The parties entered into a Settlement Agreement and Release Agreement effective October 29, 2003. The Settlement Agreement called for us to pay $325,000 in full settlement of all claims, payable within 10 days after the Court approved the claim as final and non-appealable at which time the Complaint was dismissed with prejudice. The $325,000 was paid in full in the fourth quarter of 2003.

In late 1999, we entered into a software license agreement with Convergent Communications Services, Inc. (“CCS”). CCS filed for bankruptcy in April 19, 2001. Subsequently, the CCS bankruptcy trustee filed a complaint against us to avoid and recover certain preferential transfers. The parties entered into a Settlement Agreement effective October 28, 2003. The Settlement Agreement called for us to pay $50,000 in full settlement of all claims. The $50,000 was paid on October 28, 2003. The parties signed and filed with the court a Stipulated Motion to Dismiss the Adversary Proceeding with Prejudice on November 14, 2003.

In January 2004, Consolidated Freightways Corp. trustee filed a complaint against us to avoid and recover certain preferential transfers. Payments totaling $11,829 have been included in the complaint.

On January 28, 2004, plaintiff Comparion, Inc. (“Comparion”) filed a Complaint against Arthur N. Alderson (“Alderson”), us, and Group 1 Software, Inc. (“Group 1”) that asserted claims for breach of fiduciary duty, conversion, “fraudulent agreement,” “fraudulent bank transfer,” “fraud in contracting,” “computer forgery” in violation of O.C.G.A. § 16-9-93(d), “computer theft” in violation of O.C.G.A. § 16-9-93(a)(3), tortious interference with business relations, tortious interference with contract, breach of contract and three claims based on alleged violations of Georgia’s civil “RICO” statute (O.C.G.A. § 16-14-4(a), O.C.G.A. § 16-14-4(b), and O.C.G.A. § 16-14-4(c)). Plaintiff’s allegations did not describe which of the claims were directly specifically to Sagent.

On February 5, 2004, plaintiff Comparion, through its counsel, granted an extension of time, through and including March 22, 2004, for Sagent to answer or otherwise respond to the Complaint.

On February 16, 2004, Sagent, through its litigation counsel, directed formal notice to plaintiff Comparion and its attorney that, unless the claims were withdrawn voluntarily and in full, Sagent, pursuant to Georgia’s “abusive litigation” statute, O.C.G.A. § 51-7-84, would seek to recover its attorneys’ fees and expenses incurred in defending the suit. On February 19, 2004, Sagent and Comparion agreed in principle to a settlement that would involve plaintiff’s dismissal with prejudice of the claims against Sagent and the execution of mutual and general releases by and between Sagent and Comparion. As of March 25, 2004, Comparion, Sagent and Group 1 have agreed to the final terms of a Tri-Party Settlement Agreement and Release which only requires signature as of this date. The Tri-Party Settlement Agreement and Release requires the plaintiff to file a Voluntary Order Of Dismissal With Prejudice within five business days after execution of the Tri-Party Settlement Agreement.

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

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

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

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

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

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PART II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

Our common stock is listed for trading on the over the counter bulletin board under the symbol “SGNT.OB.” The following table lists the high and low closing sales prices of our common stock for the periods indicated.

At March 24, 2004, there were approximately 220 stockholders of record of our common stock, and the last reported sales price of our common stock was $0.10. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders requested by these record holders.

We have never declared or paid cash dividends on our common stock. Our Board of Directors presently intends to use our assets and any future earnings first to satisfy or provide for the satisfaction of our liabilities, with the balance to be distributed to our stockholders in one or more distributions through the date of final dissolution of the company. The declaration of any such distributions in the future would be subject to the discretion of the Board of Directors, which may consider such factors as our financial condition, contingent liabilities and expenses, and any contractual or other legal restrictions.

Item 6. Selected Financial Data

The following selected consolidated annual and quarterly financial data are qualified by reference to, and should be read in conjunction with, our Consolidated Financial Statements, including the Notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this annual report.

Upon the sale of substantially all of our operating assets to Group 1 on October 1, 2003, most of our employees resigned and accepted employment with Group 1 and we ceased operations. There are currently two remaining executives employed. Accordingly, a comparison of the selected financial data for the period from January 1, 2003 through September 30, 2003 should take into account the fact that the Company ceased its operations nine months after the beginning of the fiscal year ended December 31, 2002.

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On October 1, 2003, we completed the sale of substantially all of our operating assets to Group 1 and ceased preparing our financial statements on a going concern basis in accordance with accounting principles generally accepted in the United States of America. Changes in our net assets in liquidation since October 1, 2003 are as follows (in thousands):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally preceded by words that imply a future state such as “expected” or “anticipated” or imply that a particular future event or events will occur such as “will.” Investors are cautioned that all forward-looking statements involve risks and uncertainties, and that actual results could be materially different from those discussed in this report. The section below entitled “Risk Factors” and similar discussions in our other SEC reports filed with the SEC discuss some of the important risk factors that may affect our business, results of operations and financial condition. Copies of our reports filed with the SEC are available on the SEC’s website at www.sec.gov.

Upon the sale of substantially all of our operating assets to Group 1 on October 1, 2003, most of our employees resigned and accepted employment with Group 1 and we ceased operations. We cannot list here all of the risks and uncertainties that could cause our actual future financial results to differ materially from our present expectations or projections regarding estimated distribution to stockholders but we can identify many of them. For example, our future results could be affected by the cost of satisfying currently known liabilities, the need to satisfy unanticipated liabilities that might arise in the future, the expenses of

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dissolving and winding up the Company, and the price at which Sagent stock may be held or sold. It is important to remember that forward-looking statements speak only as of the date when they are made and we do not promise that we will publicly update or revise those statements whenever conditions change or future events occur. Accordingly we do not recommend that any person seeking to evaluate our Company should place undue reliance on any forward-looking statements in this report.

The following discussion and analysis should be read in conjunction with the selected financial data in Item 6 and our financial statements and the notes in Item 8.

Critical Accounting Policies and Estimates

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

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue recognition

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

We recognized revenue in accordance with Statement of Position 97-2 Software Revenue Recognition (SOP 97-2), as amended by SOP 98-4 and 98-9 and generally recognized revenue when all of the following criteria are met: 1) persuasive evidence of an arrangement existed, 2) delivery had occurred, 3) the fee was fixed or determinable, and 4) collectability was probable.

Valuation of long-lived assets

Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” became effective in 2002. Upon adoption of SFAS No. 142, we ceased to amortize any goodwill starting January 1, 2002. In lieu of amortization, we were required to perform impairment reviews of our goodwill. We assessed the impairment of long-lived assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Valuation allowances

We maintained allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Such allowances were based on historical bad debt, customer credit-worthiness, the current business environment, historical experience with the customer and the aging of the accounts receivable. The allowance includes specific reserves for accounts where collection is deemed to be no longer probable. In addition, we maintained a general reserve for invoices without specific reserves by applying a percentage based on the age category.

Contingent Liabilities

Our estimated range of liability related to some of the historical litigation had been based on claims for which we could reasonably estimate the amount and range of loss (as discussed in Item 3. Legal Proceedings). Because of the uncertainties related to both the amount and range of loss on the remaining pending litigation, we are unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess the potential liability related to our pending litigation and revise our estimates. Such revisions in our estimates of the potential liability could materially impact our financial position.

Accrued Costs of Liquidation and Effects of Change to Liquidation Basis

Pursuant to the plan of dissolution, which was approved by stockholders on September 30, 2003, we plan to file Articles of dissolution with the Secretary of State of the State of Delaware by April 15, 2004. Since October 1, 2003, our operations have been limited to winding-up our business and affairs, selling our remaining assets and discharging our known liabilities. We plan

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to distribute any remaining assets to our stockholders, all in accordance with the plan of dissolution. As a result, we changed our basis of accounting to the liquidation basis as of October 1, 2003. The accompanying statements of operations, stockholders’ equity and cash flows for the period from January 1, 2003 to September 30, 2003 and for each of the years in the two-year period ended December 31, 2002 have been presented on a going concern basis comparable to prior periods, which assumes the realization of assets and the liquidation of liabilities in the normal course of business. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their anticipated settlement amounts. Upon changing to the liquidation basis of accounting, we recorded a $8.0 million increase to net assets. Included in the adjustment to net assets recorded in connection with the change from the going-concern to the liquidation basis of accounting, we recorded $1.9 million of accrued costs of liquidation representing the estimate of the costs to be incurred during dissolution; however actual costs could vary from those estimates. Distributions ultimately made to stockholders upon liquidation will differ from the “net assets in liquidation” recorded in the accompanying Statement of Net Assets in Liquidation as a result of future operations, the sale proceeds ultimately received by us and adjustments, if any, to estimated costs of liquidation.

At December 31, 2003, the following represents the estimated costs of liquidation (in thousands):

Results of operations for the period January 1, 2003 to September 30, 2003 and fiscal years ended December 31, 2002 and 2001

The following table sets forth certain data from our consolidated statements of operations as a percentage of total revenue. The information contained in the table below should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere in this annual report. On October 1, 2003, we completed the sale of our operating assets to Group 1 and ceased preparing our financial statements on a going concern basis under generally accepted accounting principles. Accordingly, results of operations are not comparable to the year ended December 31, 2002. Results of operations do not reflect adjustments recorded upon the change to the liquidation basis of accounting.

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Revenue

Our total revenue is made up of license revenue and services revenue. Our total revenue was $22.7 million for the period from January 1, 2003 to September 30, 2003, and $37.9, and $47.4 million, for the years ended December 31, 2002 and 2001, respectively, representing a decrease of 40% or $15.1 million from 2002 to 2003 and a decrease of 20% or $9.5 million from 2001 to 2002. The decrease in revenue in the past two years was primarily due to our customers’ and potential customers’ purchasing decisions being impacted by, among other factors: (i) concerns about our viability, (ii) the overall weakness in the global economy, (iii) continued reductions in capital expenditures and (iv) uncertainties in the application software industry as a result of speculation of further consolidation within the industry. The signing of the Asset Purchase Agreement on April 15, 2003 resulted in no revenue after September 30, 2003.

License revenue was $12.0 million for the period from January 1, 2003 to September 30, 2003 and $19.8, and $25.8 million for the years ended December 31, 2002 and 2001, respectively, representing a decrease of 40% or $7.9 million from 2002 to 2003 and a decrease of 23% or $6.0 million from 2001 to 2002. The decline was mainly attributed to a reduction in the number and the size of the deals closed in 2003 due to customers concerns about our viability. During the first quarter of 2003, the call of our loan by CDC Software increased customer concerns about our viability. The signing of the Asset Purchase Agreement on April 15, 2003 resulted in no license revenue after September 30, 2003.

Service revenue was $10.7 million for the period from January 1, 2003 to September 30, 2003 and $18.0, and $21.6 million for the years ended December 31, 2002, and 2001, respectively, representing a decrease of 41% or $7.3 million from 2002 to 2003 and a decrease of 17% or $3.6 million from 2001 to 2002. The signing of the Asset Purchase Agreement on April 15, 2003 resulted in no service revenue after September 30, 2003.

Maintenance revenue was $8.2 million for the period January 1, 2003 to September 30, 2003 and $11.3, and $10.4 million for the years ended December 31, 2002, and 2001, respectively, representing a decrease of 27% or $3.1 million from 2002 to 2003 and an increase of 9% or $0.9 million from 2001 to 2002. The signing of the Asset Purchase Agreement on April 15, 2003 resulted in no maintenance revenue after September 30, 2003.

Professional services revenue was $2.5 million for the period January 1, 2003 to September 30, 2003 and $6.7, and $11.2 million for the years ended December 31, 2002, and 2001 respectively, representing a decrease of 63% or $4.3 million from 2002 to 2003 and a decrease of 40% or $4.5 million from 2001 to 2002. Decreases in professional services revenue in 2003 from 2002 were due primarily to declines in new license revenue as a result of increased customer concerns about viability. The signing of the Asset Purchase Agreement on April 15, 2003 resulted in no professional service revenue after September 30, 2003.

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Our international revenue was 30% of total revenue or $6.8 million for the period January 1, 2003 to September 30, 2003 and 38% or $14.4 million and 28% or $13.5 million of our total revenue for the years ended December 31, 2002 and 2001, respectively, representing a decrease of $7.6 million or 53% from 2002 to 2003 and increases of $0.9 million or 7% from 2001 to 2002.

Cost of Revenue

Cost of revenue from license sales consisted primarily of development costs, royalties, product packaging, shipping, media and documentation. Our cost of revenue from license sales was $1.6 million for the period January 1, 2003 to September 30, 2003 and $1.8, and $3.9 million for the years ended December 31, 2002, and 2001, respectively, representing 14%, 9%, and 15% of license revenue in the respective periods. The decrease from 2002 to the nine months in 2003 was primarily due to a decrease in fees paid to third parties for royalties as a result of fewer license deals and the signing of the Asset Purchase Agreement on April 15, 2003. The decrease from 2001 to 2002 was primarily due to reductions in headcount, and increased efficiencies in packaging, shipping, media and documentation expense as we have been providing our customers with soft copy documentation since early in 2002.

Cost of service consists primarily of personnel costs associated with providing software maintenance, technical support, training and consulting services. Cost of service was $4.1 million for the period January 1, 2003 to September 30, 2003 and $7.8, and $10.5 million for the years ended December 31, 2002, and 2001, respectively, representing 38%, 43%, and 49% of services revenue in the respective periods. The percentage decreases from 2002 to 2003 were mainly attributed to reductions in headcount year over year. The percentage decreases from 2001 to 2002 were mainly attributed to the outsourcing of data processing services and a reduction in salary related expenses during 2002.

We also incurred licensed technology impairments of $1.2 and $1.9 million in 2002 and 2001, respectively, which are included in cost of revenue, as such licensed technology was no longer expected to be utilized in our future product sales. No technology impairments were incurred in 2003.

Gross Profit

Gross profit was $17.0 million for the period January 1, 2003 to September 30, 2003 and $27.1 and $31.2 million for the years ended December 31, 2002 and 2001, respectively, representing 75%, 72% and 66% of total revenue in the respective periods. The gross profit percentage in any period can be affected significantly by volume and price concessions. The percentage increase from 2002 to 2003 and from 2001 to 2002 was mainly attributed to a higher percentage of license revenue with lower discounts.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel, commissions, travel, sales and marketing programs, and branch sales facilities. Sales and marketing expenses were $11.3 million for the period January 1, 2003 to September 30, 2003 and $24.5 and $37.4 million for the years ended December 31, 2002 and 2001, respectively, representing 50%, 65% and 79% of total revenue in the respective periods. The decline of $13.2 million or 54% from 2002 to 2003 was primarily attributable to a $11.5 million decrease in salary related expense due to our closing several domestic sales offices and international sales offices in Brazil, Mexico and the Netherlands as part of restructuring during 2002 and $0.6 million related to the discontinuation of our marketing services business in 2002 due to changes in our strategy. The signing of the Asset Purchase Agreement on April 15, 2003 also contributed to the decline in sales and marketing expenses in 2003. The decrease of $12.9 million or 34% from 2001 to 2002 resulted from a $8.9 million decrease in salary related expenses due to a reduction in headcount from 145 to 79, a $1.5 million decrease in marketing related programs, a $1.5 million decrease in facility and sales office expenses due to closing of several sales offices in 2001 and 2002, and a $0.8 million decrease in travel related expenses.

Research and Development

Research and development expenses consist primarily of personnel and related costs associated with the development of new products, the enhancement and localization of existing products, quality assurance, testing and facilities. Research and development expenses were $6.6 million for the period January 1, 2003 to September 30, 2003 and $11.7 and $13.6 million for the years ended December 31, 2002 and 2001, respectively, representing 29%, 31% and 29% of total revenue in the respective periods. The decline of $5.1 million or 43% from 2002 to 2003 was mainly attributable to the full year impact of the reduction headcount in 2002 and the signing of the Asset Purchase Agreement on April 15, 2003. The decline of $1.9 million or 14% from 2001 to 2002 was mainly attributable to $1.7 million reduction in salary and related expenses due to a reduction in headcount from 73 in 2001 to 46 in 2002, a decrease of 27 or 37% year over year.

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General and Administrative

General and administrative expenses consist primarily of personnel costs for finance, human resources, information systems and general management as well as legal, accounting and bad debt expenses. General and administrative expenses were $4.0 million for the period January 1, 2003 to September 30, 2003 and $5.7 and $13.5 million for the years ended December 31, 2002, and 2001, respectively, representing 18%, 15% and 28% of total revenue in the respective periods. The decrease of $1.7 million or 30% from 2002 to 2003 was primarily attributable to a $1.2 million reduction in legal expenses from litigation and SEC investigation, a $0.4 million decrease in facility related costs and a $1.2 million decrease in personnel and related costs due to a reduction in headcount offset by a $0.4 million recovery of a note receivable against the $1.0 million allowance taken in 2002 and a decrease of $0.7 million in foreign exchange transaction loss. The signing of the Asset Purchase Agreement on April 15, 2003 also contributed to the decline in general and administrative expenses in 2003. The decrease of $7.8 million or 58% from 2001 to 2002 was primarily attributable to a $1.3 million reduction in bad debt expenses; a $2.8 million decrease in facility related costs and a $3.6 million decrease in personnel and related costs due to a reduction in headcount of 9 or 36% from 25 to 16.

Stock-Based Compensation

In 2000, we granted restricted stock to a then current officer and recorded deferred stock-based compensation of $1.7 million, which represents the difference between the fair value of our stock and the purchase price at the date of grant. The related amortization of deferred stock-based compensation was being charged to operating expense over a four-year vesting period on a straight-line basis. Deferred stock-based compensation is presented as a reduction of stockholders’ equity. Amortization of stock-based compensation amounted to $0, $0.3 and $0.8 million for the period January 1, 2003 to September 30, 2003 and for the years ended 2002 and 2001, respectively. In the third quarter of 2002, we recorded a restructuring charge of $0.9 million representing the remaining balance of deferred stock-based compensation resulting from the acceleration of vesting of a former executive’s restricted shares under the terms of his separation agreement. As of December 31, 2002, there was no remaining deferred stock-based compensation.

Amortization of Goodwill

Amortization of goodwill was $0 million for the period January 1, 2003 to September 30, 2003 and $0 and $2.4 million for the years ended December 31, 2002 and 2001, respectively, representing 0%, 0% and 5% of total revenue in the respective periods. Goodwill represents the excess of the aggregate purchase price over the fair value of the tangible and identifiable assets we have acquired. Prior to 2002 and our adoption of SFAS No. 142 “Goodwill and Other Intangible Assets,” we amortized goodwill on a straight-line basis over a period of five years.

Asset Impairment

The asset impairment charge of $1.1 million incurred in 2002 consisted of $0.8 million goodwill impairment related to the closure of certain operations and $0.3 million reserve on stockholders’ notes.

The asset impairment charges of $3.4 million in 2001 consisted of $1.8 million reserve on stockholders’ notes, $1.2 million impairment of prepayments for data center services, $0.3 million reduction in the carrying value of goodwill, and $0.1 million of other losses related to the closing of a remote facility.

Restructuring and Related Charges

In December 2001, we implemented a restructuring plan aimed at streamlining the underlying cost structure. As part of the restructuring plan, we consolidated our Florida facility and implemented a reduction in workforce of approximately 14% or 51 employees and contractors through March 31, 2002.

During the second quarter of 2002, we implemented a new restructuring plan which was executed during the remainder of 2002. The major element of the restructuring plan was to terminate certain employees; as a result, we had a reduction in force by approximately 36% or 94 employees, which brought our total headcount to 164 worldwide. The reduction came from all areas of our Company, and the terminations were completed by December 31, 2002. Our Chief Executive Officer and President, our Executive Vice President—Sales, and Chief Marketing Officer stepped down as part of this restructuring. Further, we decided to proceed with closing several domestic sales offices and international sales offices in Brazil, Mexico and the Netherlands and also discontinued our marketing services business due to changes in our strategy. The purpose of the restructuring was to bring operating expenses in line with net revenues. The restructuring was substantially completed during 2002.

We incurred $4.6 million in restructuring and related charges for the year ended December 31, 2002, consisting primarily of personnel and facility related costs. We paid $1.9 million of the charges during the year ended December 31, 2002 and recorded $2.1 million of non-cash charges, primarily related to $1.2 million from forgiveness and impairment of loans to former executives and $0.9 million in stock compensation from the acceleration of vesting for a terminated executive. There is no accrual remaining at December 31, 2003 as Group 1 assumed the remaining restructuring liability related to vacated leased facilities.

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Interest Income

Interest income decreased to $0.06 million for the period January 1, 2003 to September 30, 2003, from $0.2 million in 2002 and $0.6 million in 2001 as a result of lower cash investment balances, lower interest rates and a shorter period in 2003.

Interest Expense

Interest expense was $3.1 million for the period January 1, 2003 to September 30, 2003 and $0.4 and $0.5 million for the years ended 2002 and 2001, respectively. The $3.1 million in interest expense consisted of $0.6 million interest expense recognized on the short-term debt, a $1.7 million accretion of the loan discount attributable to the fair value of related warrants and $0.7 million amortization of deferred costs. The costs in 2002 and 2001 were primarily due to interest attributable to the debt financing in 2002 and the capital lease arrangements in 2001.

Other Income (Expense), net

Net other income was an expense of $0.1 million for the period January 1, 2003 to September 30, 2003 compared with an expense of $0.6 million for the year ended December 31, 2002 and income of $0.8 million for the year ended December 31, 2001. Net other expense of $0.1 million for the period January 1, 2003 to September 30, 2003 consisted of a loss on the sale of fixed assets during the third quarter of 2003. The net other expense of $0.6 million in 2002 consisted of $0.3 million of foreign currency losses resulting from the closure of offices in Brazil and Mexico, $0.5 million impairment of investment in Responsys offset by recognition of $0.2 million of minority interest in the losses of Sagent Asia/Pacific. Net other income of $0.8 million in 2001 consisted of $0.4 million gain from the settlement of litigation, recognition of $0.7 million of minority interest in the losses of Sagent Asia/Pacific offset by a $0.2 million impairment of an investment in Responsys and $0.1 million in loss of disposal of long-lived assets.

Income Tax Expense

Income tax expense of $0.4 million for the period January 1, 2003 to September 30, 2003 remained relatively constant with $0.5 million for 2002 and 2001. Income tax expense consists mainly of state franchise, local tax and foreign withholding tax.

As a result of the sale of our assets to Group 1, we do not expect to utilize net operating loss carryforwards for federal and California income tax purposes at the date of the sale of assets of approximately $104.6 million and $36.7 million, respectively. The federal net operating loss carryforwards will expire, if not utilized, beginning in 2010. California net operating loss carryforwards will expire, if not utilized, beginning in 2005. As of the date of the sale, we also had available research and development credit carryforwards for federal and California income tax purposes of approximately $2.7 million and $2.6 million, respectively which we do not expect to utilize.

Liquidity and Capital Resources

On October 1, 2003, we completed the sale of substantially all of our assets to Group 1 Software, Inc. In exchange for the assets sold, including all intellectual property, accounts receivable, cash on hand, certain contracts, property and equipment and other designated assets, and the assumption of specified liabilities, the Company received $13.0 million in the form of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan.

As of December 31, 2003, our principal source of liquidity consisted of $6.1 million of cash and cash equivalents. We are engaged in the process of orderly liquidation of our remaining assets, the winding up of our business and operations, and the dissolution of the Company. During the period from January 1, 2003 to September 30, 2003, operations consumed $3.3 million of cash primarily due to losses incurred.

Net cash used by financing activities was $1.2 million for the period from January 1, 2003 to September 30, 2003 due primarily to $0.5 million repurchase of warrants and $1.4 million of payments under capital lease obligations offset by $0.8 million release of restricted cash related to a line of credit facility. Net cash provided by financing activities was $4.4 million in

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2002, due primarily from the net proceeds of $6.6 million in connection with the loan facility completed in October and December of 2002 offset by $2.2 million principal payments under capital lease obligation. Net cash provided by financing activities was $30.9 million in 2001, due primarily to the net proceeds of $32.5 million in connection with the two private placements completed in February and August of 2001.

Net cash provided by investing activities was $1.3 million for the period from January 1, 2003 to September 30, 2003, primarily due to the $1.5 million sale and collection of former officer and shareholder notes and $0.1 million proceeds from sale of property and equipment offset by $0.3 million used to purchase the remaining 47% minority interest in our Asia/Pacific subsidiary. Net cash provided by investing activities was primarily due to $0.4 million collections from stockholders’ notes in 2002 and $2.3 million cash acquired in the purchase of Sagent Asia/Pacific Pte. Ltd. in 2001.

Net cash used in operating activities was $3.3 million for the period from January 1, 2003 to September 30, 2003 and $10.3 million and $22.6 million for the years ended December 31, 2002 and 2001, respectively. For such periods, net cash used in operating activities was primarily the result of the funding of our ongoing operations.

As a result of the sale of assets to Group 1, we had no future minimum payments under contractual obligations as of the date of the asset sale of October 1, 2003.

At December 31, 2003, we had $2.4 million in liabilities and cash and cash equivalents of $6.1 million. Our cash is being used to pay our outstanding liabilities and obligations, and to establish a reserve for future liabilities and expenses. Any cash not used to satisfy liabilities and expenses will be distributed to stockholders. It is our intention to settle our outstanding obligations and sell our remaining assets as expeditiously as possible. Final dissolution of the Company and related distributions to our stockholders will occur upon obtaining final resolution of all liquidation issues. As of the date of this filing, no distributions have been made to stockholders.

Recent Accounting Pronouncements

Consolidation of Variable Interest Entities

In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities.” This interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” addresses consolidation by business enterprises of certain variable interest entities where there is a controlling financial interest in a variable interest entity or where the variable interest entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties. The interpretation applies immediately to variable interest entities created after January 31, 2003 and applies in the first year or interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The adoption of FIN 46 related to variable interests created after January 31, 2003 did not have a material effect on our financial position, results of operations, or cash flows.

Accounting for Certain Financial Instruments

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

Risk Factors

Any investment in our common stock involves a high degree of risk. You should consider carefully the following information about risks, together with the other information contained in this report, before you decide whether to buy our common stock or maintain your investment. Additional risks and uncertainties not known to us or that we now believe to be unimportant could also impair our business. If any of the following risks actually occur, our business, results of operations and financial condition could suffer significantly. As a result, the market price of our common stock could decline, and you may lose all of your investment. This section should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto, and Management’s Discussions and Analysis of Financial Condition and Results of Operations contained in this Form 10-K.

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We sold substantially all of our assets to Group 1 Software on October 1, 2003, however, we cannot assure you of the amount, if any, that will be distributed to our stockholders under the plan of liquidation.

The sale of assets to Group 1 was consummated on October 1, 2003, however we cannot assure you that there will be any meaningful distribution of cash to our stockholders upon our dissolution. The Company received $13 million consisting of $5.6 million in cash and the assumption of $7.4 million in secured loans and accrued interest payable to Group 1 under the bridge loan. At closing, Group 1 withheld $4.0 million of the purchase price pending final resolution of the net book value of assets and liabilities acquired and appropriate indemnification claims (the “purchase price adjustment”), which was finalized at $2.0 million, resulting in an adjusted purchase price of $15.0 million. On March 10, 2004, we received $1.6 million of the final $2.0 million of cash proceeds; the remaining $0.4 million in cash is being withheld for potential contingency claims.

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

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

We have current and future obligations to creditors. These include, without limitation, indemnification obligations under the Asset Purchase Agreement. As part of the wind down process, we will attempt to settle our obligations with our creditors. We may not, however, succeed in doing so. If we cannot reach an agreement with a creditor concerning an obligation, that creditor may choose to bring a lawsuit against us. Any litigation could delay or even prevent us from completing the plan of dissolution. Moreover, amounts required to settle our obligations to creditors will reduce the amount of remaining capital available for distribution to stockholders.

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

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

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

Our Board of Directors has approved an initial distribution to our stockholders as of the record date March 31, 2004, and we are currently unable to predict the precise timing of further distribution, if any, pursuant to our wind down. The timing of distribution, if any, will depend on and could be delayed by, among other things, the timing of sales of our non-cash assets, claim settlements with creditors and the amounts paid out under warranty claims. Additionally, a creditor could seek an injunction against the making of distributions to our stockholders on the ground that the amounts to be distributed were needed to provide for the payment of our liabilities and expenses. Additionally, we could seek protection from creditors under the federal bankruptcy code. Any action of this type could delay or substantially diminish, or eliminate, the amount available for distribution to our stockholders.

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

Following the plan of dissolution ratified and approved by our stockholders on September 30, 2003, we will file a Certificate of Dissolution with the State of Delaware dissolving Sagent. Pursuant to the Delaware General Corporation Law, we will continue to exist for three years after the dissolution becomes effective or for such longer period as the Delaware Court of Chancery shall direct, for the purpose of prosecuting and defending suits against us and enabling us gradually to close our business, to dispose of our property, to discharge our liabilities and to distribute to our stockholders any remaining assets. Under the Delaware General Corporation Law, in the event we fail to create an adequate contingency reserve for payment of our expenses and liabilities during this three-year period, each stockholder could be held liable for payment to our creditors of such stockholder’s pro rata share of amounts owed to creditors in excess of the contingency reserve, up to the amount actually distributed to such stockholder.

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

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

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

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

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

Pending or threatened litigation could harm our financial position.

During January 2004, we were named as a defendant in a lawsuit by Comparion, d/ka/ Yusave.com, Inc.(see Legal Proceedings). This lawsuit or any other lawsuit during the dissolution period, and the continued defense of the lawsuit could also result in additional legal expenses in the future which will reduce the amount of potential payout to stockholders. In addition, although we are unable to determine the amount, if any, that we may be required to pay in connection with the resolution of this lawsuit by settlement or otherwise, the size of any such payment could seriously harm our financial condition and the nature and amount of potential distributions.

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Item 7A. Quantitative and Qualitative Disclosure About Market Risks

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

Interest Rate Risk

Our exposure to market risk related to changes in interest rates is primarily due to our highly liquid investments. The primarily objective of our investment activities is to preserve principal for our stockholders while maximizing yields without significantly increasing risk. Our investments consist primarily of highly liquid investments. At the present time, we have no financial instruments in place to manage the impact of changes in interest rates. We estimate that a 1% increase or decrease in interest rates would have impacted our results of operations by less than $60,000 for the year ended December 31, 2003. At December 31, 2003 and 2002, we had $6.1 and $9.7 million, respectively, in cash and cash equivalents.

Foreign Currency Exchange Rate Risk

A high percentage of operations were based in the United States, and, accordingly, the majority of our transactions are denominated in U.S. Dollars. Prior to the sale of our assets to Group 1, we did have foreign-based operations where transactions were denominated in foreign currencies and were subject to exchange rate risk with respect to fluctuations in the relative value of currencies. We recorded $0.1 million in unrealized gains due to foreign currency as a result of the sale of our assets. Through December 31, 2003, we had not engaged in foreign currency hedging activities. We have assets of approximately $0.1 million at December 31, 2003 denominated in foreign currencies.

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Item 8. Financial Statements and Supplementary Data

SAGENT TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors

Sagent Technology, Inc.

We have audited the accompanying consolidated statement of net assets in liquidation of Sagent Technology, Inc. and subsidiaries as of December 31, 2003 and the related consolidated statement of changes in net assets in liquidation and stockholders’ equity for the period from October 1, 2003 to December 31, 2003. We have also audited the consolidated balance sheet as of December 31, 2002, and the consolidated statements of operations, stockholders’ equity and comprehensive loss, and cash flows for the period from January 1, 2003 to September 30, 2003 and for each of the years in the two year period ended December 31, 2002. Our audit also included the consolidated financial statement schedule as of September 30, 2003 and for the period from January 1, 2003 to September 30, 2003 and the two years ended December 31, 2002. The consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements and consolidated financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described in Note 1 to the consolidated financial statements, the stockholders of Sagent Technology, Inc. approved a plan of liquidation on September 30, 2003, and the Company commenced liquidation shortly thereafter. As a result, the Company has changed its basis of accounting for periods subsequent to September 30, 2003, from the going concern basis to the liquidation basis.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the net assets in liquidation of Sagent Technology, Inc. and subsidiaries as of December 31, 2003, the changes in net assets in liquidation for the period from October 1, 2003 to December 31, 2003, their financial position as of December 31, 2002, and the results of their operations and cash flows for the period from January 1, 2003 to September 30, 2003, and for each of the years in the two year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related consolidated financial statement schedule as of September 30, 2003 and for the period January 1, 2003 to September 30, 2003, and for the two years ended December 31, 2002, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Mountain View, California

March 8, 2004

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SAGENT TECHNOLOGY, INC.

STATEMENT OF NET ASSETS IN LIQUIDATION

(In thousands)

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

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SAGENT TECHNOLOGY, INC.

STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

(In thousands)

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

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SAGENT TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

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

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SAGENT TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

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

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SAGENT TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE LOSS

Period from October 1 to December 31, 2003, period from January 1 to September 30, 2003 and years ended December 31, 2002 and 2001

(In thousands)