Washington, DC 20549

                                    FORM 8-K

                             CURRENT REPORT Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

Date of report (Date of earliest event reported)  September 17, 2004

                             Forgent Networks, Inc.
             (Exact Name of Registrant as Specified in Its Charter)

                 (State or Other Jurisdiction of Incorporation)

        0-20008                                           74-2415696
(Commission File Number)                      (IRS Employer Identification No.)

          108 Wild Basin Road
          Austin, Texas                                              78746
         (Address of Principal Executive Offices)                    (Zip Code)

                                 (512) 437-2700
              (Registrant's Telephone Number, Including Area Code)

          (Former Name or Former Address, if Changed Since Last Report)

     Check the  appropriate  box below if the Form 8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     |_| Written  communications  pursuant to Rule 425 under the  Securities Act
(17 CFR 230.425)

     |_| Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     |_|  Pre-commencement  communications  pursuant to Rule 14d-2(b)  under the
Exchange Act (17 CFR 240.14d-2(b))

     |_|  Pre-commencement  communications  pursuant to Rule 13e-4(c)  under the
Exchange Act (17 CFR 240.13e-4(c))

Section 2 - Financial Information

Item 2.02   Results of Operations and Financial Condition

     On September 17, 2004, the registrant  announced its financial  results for
the fiscal  2004  fourth  quarter  and the fiscal  year  ending July 31, 2004 by
issuing a press release.  Also, on September 17, 2004,  the registrant  hosted a
conference call with investors  concerning its financial  results for the fiscal
quarter  ended  July 31,  2004.  The full  text of the press  release  issued in
connection with the  announcement  and the transcript of the related  conference
call are  furnished as Exhibit No. 99.1 and Exhibit No. 99.2,  respectively,  to
this  report.  This  information  shall not be deemed  "filed"  for  purposes of
Section 18 of the  Securities  Exchange Act of 1934,  as amended (the  "Exchange
Act"),  or  incorporated  by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly set forth by
specific  reference  in  such a  filing.  The  press  release  contains  and may
implicate,  forward-looking  statements  regarding the  registrant  and includes
cautionary  statements  identifying  important  factors  that could cause actual
results to differ materially from those anticipated.

Section 9 - Financial Statements and Exhibits

9.01     Financial Statements and Exhibits

         (a) Not applicable.

         (b) Not applicable.

         (c) Exhibits.

         Exhibit  99.1   Press  Release  dated  September  17,  2004
                         (furnished pursuant to Item 2.02)

         Exhibit  99.2   Transcript of Earnings Call held on September 17, 2004
                         (furnished pursuant to Item 2.02)


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 hereunto duly authorized.

Date:  September 17, 2004                    Forgent Networks, Inc.

                                             By:   /s/Richard N. Snyder
                                             Name:    Richard N. Snyder
                                             Title:   Chief Executive Officer

                                 EXHIBIT INDEX

Exhibit No.             Description

99.1                    Press  Release  dated  September  17,  2004
                        (furnished pursuant to Item 2.02)

99.2                    Transcript of Earnings Call held on September 17, 2004
                        (furnished pursuant to Item 2.02)

                                                                  Exhibit 99.1

For Immediate Release                                 [GRAPHIC OMITTED]

Press contact:  Nelson Duffle                Investor contact:  Michael Noonan
512.437.2532                                 512.437.2476
nelson_duffle@forgent.com                    michael_noonan@forgent.com

      Forgent Announces the Results for the 2004 Fiscal Fourth Quarter and
                                2004 Fiscal Year
     $5.5 million in IP license revenues for the 2004 fiscal fourth quarter

AUSTIN,  Texas,  Sep.  17,  2004 -  Forgent(TM)  Networks  (Nasdaq:  FORG) today
announced the results for the 2004 fiscal  fourth  quarter and fiscal year ended
July 31, 2004. During the 2004 fiscal fourth quarter,  total revenues  increased
to  approximately  $6.2  million  compared to $0.8  million for the third fiscal
quarter of 2004. Other highlights for the fiscal fourth quarter include:

o    Increased revenues from the intellectual property program to more than $5.5

o    Realized the first major intellectual property license since the initiation
     of litigation

o    Grew NetSimplicity software revenues by 35% over the third fiscal quarter

o    Achieved a 29% decline in operating expenses over the prior quarter

o    Improved cash, cash equivalents and short-term investments to approximately
     $21.5 million

"We are continuing to make progress with the overall  performance of the company
and particularly  the  intellectual  property program where we granted the first
significant  license  since  we  initiated  litigation,"  said  Richard  Snyder,
chairman and CEO of Forgent.  "In addition,  the software business  continues to
improve and with the  addition of new  products and  marketing  initiatives,  we
expect  that  trend  to  continue.  Currently,  we are  focusing  on  increasing
shareholder  value through our intellectual  property  program,  and growing the
software business."

Intellectual Property

The intellectual  property program revenues were  approximately $5.5 million for
the fourth  quarter of fiscal 2004 compared to $0.3 million for the fiscal third
quarter of 2004,  as a result of  licensing  Forgent's  still-image  compression
technology, embodied in U.S. Patent No. 4,698,672 (`672 Patent). As an evolution
of the company's  intellectual  property program,  Forgent initiated  litigation
against 42 companies  for  infringement  of the `672 Patent in the United States
District  Court  for  the  Eastern   District  of  Texas,   Marshall   Division.
Subsequently,   two  companies  have  been  dismissed  as  defendants  from  the
litigation as a result of reaching final agreements.

Since  its  inception,   the   intellectual   property   program  has  generated
approximately  $95  million  from  licensing  the `672  Patent  to more  than 30
different  companies  in Asia,  Europe and the United  States.  The `672  Patent
relates to digital  image  compression,  and fields of use  include  any digital
still  image  device  used to  compress,  store,  manipulate,  print or transmit
digital  still  images such as digital  cameras,  personal  digital  assistants,
cellular telephones,  printers, scanners, and certain software applications. The
company's patent portfolio includes the combined inventions of Compression Labs,
Inc., VTEL Corporation, and Forgent Networks, Inc.


NetSimplicity software revenues grew by approximately 35% for the fourth quarter
of fiscal 2004 compared to the third quarter of fiscal 2004. NetSimplicity,  now
with more than 1,000 customers worldwide, provides low-cost, high-value business
applications to small and medium businesses and divisions of large  enterprises.
NetSimplicity's  flagship  product,  Meeting Room Manager,  enables customers to
schedule conference rooms, catering and other resources with a few clicks of the
mouse, thereby increasing  productivity and reducing costs. In addition,  NetSim

sells other high-value business applications,  such as IT asset management,  via
its same low-cost e-marketing and telesales model.

Fiscal Fourth Quarter Results

Revenue increased to $6.2 million for the fiscal fourth quarter compared to $0.8
million for the 2004 fiscal third quarter,  reflecting a meaningful  increase in
intellectual  property licensing revenues over the prior quarter.  Gross margins
improved to $3.2 million for the fiscal fourth quarter  compared to $0.4 million
for the 2004 fiscal third quarter.  Overall  expenses  declined by approximately
29% to $3.5 million  compared to $4.9 million for the 2004 fiscal third  quarter
as part of a  continuing  effort to  reduce  operating  expenses.  Net loss from
continuing  operations was $0.2 million or $0.01 per share for the fourth fiscal
quarter of 2004  compared  to a net loss of $4.4  million or $0.18 per share for
the  third  fiscal  quarter  of 2004.  Cash,  cash  equivalents  and  short-term
investments were approximately $21.5 million.


Forgent has continued efforts to license the `672 Patent and expects to continue
to  generate  license  revenues in the 2005 fiscal  year.  As a result,  Forgent
anticipates additional IP licensing revenues during the pendency of the recently
filed  patent  litigation.  However,  predicting  the timing and amounts will be
complicated because of the uncertainty of licensing  negotiations and due to the
pending litigation. Forgent believes that NetSimplicity software revenue for the
first fiscal quarter of 2005 will grow.

Conference Call and Webcast

Forgent has scheduled a conference  call with the investment  community for Fri,
Sep.  17,  2004,  at 10:00 a.m.  CT (11:00  a.m.  ET) to discuss the quarter and

To participate, dial 800-591-6945 ten minutes before the conference call begins,
ask for  the  Forgent  event,  and use a pass  code of  30093130.  International
callers  should dial  617-614-4911  and use a pass code of 30093130.  Investors,
analysts,  media and the general public will also have the opportunity to listen
to the conference call over the Internet by visiting the investor relations page
of Forgent's  web site at  www.forgent.com.  To listen to the live call,  please
visit the web site at least 15 minutes  early to register,  download and install
any necessary audio software. For those who cannot listen to the live broadcast,
a replay will be available shortly after the call on the investor relations page
of our web site at www.forgent.com.

About Forgent

Forgent(TM) Networks (Nasdaq:  FORG) develops and licenses intellectual property
and  provides  scheduling  software to a wide  variety of  customers.  Forgent's
intellectual property program is related to communication technologies developed
from a diverse  and  growing  patent  portfolio.  Forgent's  software  division,
NetSimplicity, provides a spectrum of scheduling software that enables all sizes
of organizations to streamline the scheduling of people,  places and things. For
additional information please visit www.forgent.com.

Safe Harbor

This release may include projections and other  forward-looking  statements that
involve a number of risks  and  uncertainties  and as such,  actual  results  in
future periods may differ  materially from those currently  expected or desired.
Some of the factors that could cause actual results to differ materially include
changes in the general  economy and the  technology  industry,  rapid changes in
technology,  sales  cycle and product  implementations,  risks  associated  with
transitioning  to a new  business  model and the  subsequent  limited  operating
history,  the  possibility  of new entrants  into the  collaboration  management
market,  the  possibility  that the market for the sale of certain  software and
services may not develop as expected;  that  development  of these  software and
services may not proceed as planned, risks associated with the company's license
program,  including risks of litigation involving intellectual property, patents
and trademarks,  acquisition integration,  and the ability to consummate certain
divestiture transactions.  Additional discussion of these and other risk factors
affecting  the  company's  business and  prospects is contained in the company's
periodic filings with the SEC.

                  Forgent Networks Consolidated Balance Sheets
                  (Amounts in thousands, except per share-data)

                                                                               JULY 31,
                                                                           2003           2004
                                                                     --------------   -------------

 Current assets:
     Cash and equivalents, including restricted cash
       of $730 and $650 at July 31, 2003 and
       July 31, 2004, respectively                                   $     21,201    $    19,051
     Short-term investments                                                 3,845          2,490
     Accounts receivable, net of allowance for doubtful
       accounts of $0 and $26 at July 31, 2003 and July
       31, 2004, respectively                                               9,457            398
     Notes receivable, net of reserve of $639 and $848 at
        July 31, 2003 and July 31, 2004, respectively                                         --
     Prepaid expenses and other current assets                                415            386
                                                                     ------------    -----------
        Total current assets                                               34,992         22,325

 Property and equipment, net                                                2,158          3,165
 Intangible assets, net                                                     5,042            258
 Capitalized software                                                       4,827             --
 Other assets                                                                 230            267
                                                                     ------------    -----------
                                                                     $     47,249    $    26,015
                                                                     ============    ===========
 Current liabilities:
     Accounts payable                                                $      3,178    $     1,509
     Accrued compensation and benefits                                        683            290
     Other accrued liabilities                                              1,661          1,060
     Notes payable, current portion                                           323            348
     Deferred revenue                                                         281            525
                                                                     ------------     ----------
        Total current liabilities                                           6,126          3,732

Long-term liabilities:
     Deferred revenue                                                          59             14
     Other long-term obligations                                            1,810          2,769
                                                                     ------------    -----------
        Total long-term liabilities                                         1,869          2,783

Stockholders' equity:
   Preferred stock, $.01 par value; 10,000 authorized; none
      issued or outstanding                                                    --             --
   Common stock, $.01 par value; 40,000 authorized; 26,172
      and 26,625 shares issued, 24,588 and 24,871 shares
      outstanding at July 31, 2003 and July 31, 2004,
      respectively                                                            261            266
   Treasury stock, 1,584 and 1,754 at July 31, 2003 and
      July 31, 2004                                                        (4,231)        (4,726)
   Additional paid-in capital                                             263,875        264,582
   Accumulated deficit                                                   (219,991)      (240,631)
   Unearned compensation                                                      (28)            --
   Accumulated other comprehensive income                                    (632)             9
                                                                     ------------    ------------
        Total stockholders' equity                                         39,254         19,500
                                                                     ------------    ------------
                                                                     $     47,249    $    26,015
                                                                     ============    ============

             Forgent Networks Consolidated Statements of Operations
                  (Amounts in thousands, except per-share data)

                                                                                                              For the
                                                                                 For the                Twelve Months Ended
                                                                           Three Months Ended                 July 31,
                                                                      ------------------------------    -------------------------
                                                                         July 31,       April 30,
                                                                           2004           2004             2004           2003
                                                                       (Unaudited)      (Unaudited)
                                                                      --------------   -------------    --------------  ---------
            Software and professional services                         $         659   $        549      $     2,999    $  4,363
            Intellectual property licensing                                    5,517            267           14,454      48,935
            Other                                                                 --             --               22         566
                                                                      --------------- --------------  ---------------- ----------
               Total revenues                                                  6,176            816           17,475      53,864
                                                                      --------------- --------------  ---------------- ----------

Cost of sales:
            Software and professional services                                   205            269             6,925      3,338
            Intellectual property licensing                                    2,759            134             7,227     24,471
            Other                                                                 --             --                24        497
                                                                      --------------- --------------  ---------------- ----------
               Total cost of sales                                             2,964            403            14,176     28,306
                                                                      --------------- --------------  ---------------- ----------
            Gross margin                                                       3,212            413             3,299     25,558
                                                                      --------------- --------------  ---------------- ----------

Operating expense:
            Selling, general and administrative                                2,541          3,292            12,250     11,013
            Research and development                                             909            918             4,060      3,869
            Impairment of assets                                                  --             --             6,989      1,140
            Restructuring charge                                                  --            628               628         --
            Amortization of intangible assets                                     12             12                41         --
                                                                      --------------- --------------  ---------------- ----------
               Total operating expenses                                        3,462          4,850            23,968     16,022
                                                                      --------------- --------------  ---------------- ----------

(Loss) income from operations                                                  (250)        (4,437)          (20,669)      9,536
                                                                      --------------- --------------  ---------------- ----------

Other income (expense):
            Interest income                                                       49             49               213        160
            Foreign currency translation                                          29           (22)             (625)          -
            Interest expense and other                                           (4)            (6)             (110)       (195)
                                                                      --------------- --------------  ---------------- ----------
               Total other income (expense)                                       74             21             (522)        (35)
                                                                      --------------- --------------  ---------------- ----------

(Loss) income from continuing operations, before income taxes                  (176)        (4,416)          (21,191)      9,501
Provision for income taxes                                                      (22)             --              (22)      (126)
                                                                      --------------- --------------  ---------------- ----------
(Loss) income from continuing operations                                       (198)        (4,416)          (21,213)      9,375
Income from discontinued operations, net of income taxes                          --             --                --        599
Income (loss) on disposal, net of income taxes                                    --             --               573     (1,954)
                                                                      --------------- --------------  ---------------- ----------
Income (loss) from discontinued operations, net of income taxes                   --             --               573     (1,355)
                                                                      --------------- --------------  ---------------- ----------
Net (loss) income                                                     $        (198)   $    (4,416)          (20,640)      8,020
                                                                      =============== ==============  ================ ==========
Basic (loss) income per share:
(Loss) income from continuing operations                              $       (0.01)  $     (0.18)        $    (0.85)   $   0.38
                                                                      =============== ==============  ================ ==========
(Loss) income from discontinued operations                            $           --  $        --     $         0.02    $  (0.05)
                                                                      =============== ==============  ================ ==========
Net (loss) income                                                     $       (0.01)  $     (0.18)    $        (0.83)   $   0.33
                                                                      =============== ==============  ================ ==========
Diluted (loss) income per share:
(Loss) income from continuing operations                              $       (0.01)  $     (0.18)    $        (0.85)   $   0.37
                                                                      =============== ==============  ================ ==========
(Loss) income from discontinued operations                            $          --   $       --      $          0.02   $  (0.05)
                                                                      =============== ==============  ================ ==========
Net (loss) income                                                     $       (0.01)  $     (0.18)    $         (0.83)  $    0.32
                                                                      =============== ==============  ================ ==========
Weighted average shares outstanding:
            Basic                                                             24,883         24,802            24,731     24,660
            Diluted                                                           24,883         24,802            24,731     25,201

                                                                    EXHIBIT 99.2

                                FINAL TRANSCRIPT

FORG - Q4 2004 Forgent Earnings Conference Call

Michael Noonan  - Forgent - Director of Investor Relations

Well, thank you,  Andrea,  and welcome  everybody to Forgent's  conference call.
Before  we  start,  I'd like to  mention  that  some of the  statements  made by
management  during  this call might  include  projections,  estimates  and other
forward-looking  information.  This would  include other  information  about the
Company's outlook.

These  particular  forward-looking  statements and all those statements that are
made on this call that are not historical facts are subject to a number of risks
and  uncertainties  that could affect our outcome.  You are urged to considerate
the risk  factors  relating to the  company's  business  contained in our latest
periodic reports on file with the Securities and Exchange Commission. These risk
factors are important and they could cause actual results to differ materially.

This call is being recorded on behalf of Forgent and is copyrighted material. It
cannot be recorded or rebroadcast without the Company's express permission,  and
your  participation  implies  consent  to  the  call's  recording.  After  we've
completed our review of the quarter, we will open the call up for questions from
the financial analyst  community.  I'd like to now turn the call over to Richard
Snyder, Chairman and Chief Executive Officer of Forgent. Richard?

Richard Snyder  - Forgent - Chairman, Chief Executive Officer

Thanks,  Michael. Good morning and thank you for attending Forgent's 2004 fiscal
fourth  quarter  conference  call.  With me this morning are a few people that I
will introduce:  Jay Peterson, Vice President and Chief Financial Officer, Jamie
Stevens who is our Chief Adviser on intellectual property, and Nancy Harris, the
General Manager of our NetSimplicity  software division.  As customary for these
calls,  I will  comment on our  results,  and have Jay give you some  additional
details around the numbers, and then we will open it up for questions.

The major theme last  quarter  was to take  specific  action to improve  overall
performance  of the  Company.  I believe  we made some  solid  progress,  and it
brought us further  clarity to those areas of the  business we will  continue to
drive to do even better.

As you know,  we have two  business  segments  and I'd like to  comment on both.
First,  intellectual property licensing,  and second, the NetSimplicity software
business. Okay, on IP. We see steady progress in this program, and that makes us
optimistic  about the  future.  It's very  important  at this  stage to take the
necessary  steps  to  ensure  that  the  lawsuits  that  we have  filed  will be
successful, so that we can recover in full measure from those who are infringing
on our '672 compression patent.

We are also continuing every effort to reach  agreements  outside of litigation,
and we were  successful  with two  defendants and are continuing the dialog with
many others,  who see the benefit of coming  forward early to settle with us and
to be dismissed  from this lawsuit.  On this evidence,  we are  optimistic  that
other defendants and other companies yet to be named in the lawsuit might choose
to license the patent.  Those recoveries can obviously provide  significant cash
to our company.

To keep you informed, we have also added additional links to our website to give
visibility to the details of the various court filings that are relevant to this
lawsuit.  We remain  confident about the process,  and we have not seen anything
from the defendants that would change our plans.

Our NetSimplicity  software division grew over 35% last quarter, and is on track
to  break  even by the end of this  year.  This is a  healthy  and  attractively
growing  business  with  significant  margins.  We  believe  NetSimplicity  will
continue to grow as we bring on new products and  promotions,  as well as expand
the distribution,  particularly on an international  front. We now have partners
in the United Kingdom, Germany, and Australia.

We have a small  amount of  ALLIANCE  activity  remaining,  that is  focused  on
supporting  existing  customers  through  paid  maintenance  contracts.  We have
stopped the investment in ALLIANCE, and we now have two or three employees where
there were once 40 or 50. We are continuing to seek  alternatives for partnering
and  have  spoken  to  several  companies  who have  expressed  an  interest  in
purchasing the code. In the meantime,  we have a responsibility to our customers
and we will, of course, honor those commitments.

We also  continue  to seek  other  ways to  return  shareholder  value.  We have
repurchased  shares when appropriate,  and consider other strategies as well. If
we were able to prevail in our IT litigation, we believe there will be even more
options available in the future.  Perhaps as a special dividend or even a tender
offer.  But let me caution you:  These  lawsuits can be lengthy and that puts us
some time away from that goal.

On another note, we have been asked by some of our long-term  shareholders about
the potential of  acquisition  activity.  This is an option,  but let me be very
clear.  We would only proceed with a  transaction  that would  produce cash very
early,  and provide a significant  growth  engine for the future.  It would also
need to be a good fit to our areas of understanding and technology.  We continue
to look very  carefully for a strategic,  public or private  business or product
line to  acquire  or  partner,  that  has  growth,  profitability,  and is of an
appropriate  size.  We have already  considered  several  options,  and were not
satisfied with the fit to the criteria that we have outlined.

Lastly,  I want to  discuss  other  patent  activity.  Several  months  ago,  we
announced  Baker Botts was going to assist us with some other patents we have in
our portfolio.  Unfortunately, Baker Botts was not able to continue, due to some
unforeseen conflicts.  These patents represent many products in diverse markets,
and those conflicts were not readily apparent at the outset.  However, they have
been working  closely with us to assist us in moving those  patents to a new law
firm, along with the work they were already able to accomplish.

We are seeking alternatives, including bringing on perhaps, new firms to help us
with the IP program, as well as other strategies,  such as brokering, or perhaps
even selling some of these patents. We will keep you apprised of the progress of
this activity as it goes along.

So in  summary,  Number  1, we remain  very  optimistic  about the  intellectual
property program, and the litigation process to date. NetSimplicity continues to
grow rapidly and provide a solid margin base, and from a corporate  perspective,
we will continue to drive down expenses and overhead,  preserve or grow cash and
look for ways of returning shareholder value through a variety of means.

Now I'm going to turn it over to Jay for some specific financial results.

Jay Peterson  - Forgent - Vice President, Chief Financial Officer

Thank  you,  Dick.  First let me talk  about  the  revenue  performance  for the
quarter.  Total  revenue  increased  significantly  during the  quarter,  due to
improved  intellectual  property  revenues  and  software  revenues.  Let me now
discuss those two segments for you in greater detail.

As I mentioned  last quarter,  we noticed that our  negotiations  with potential
licensees  were not  productive,  resulting in declining  intellectual  property
revenues. In April, and then again in August, we initiated litigation against 42
companies  regarding the '672 patent.  During this last quarter,  we realized an
increase in revenue and settled with one of the defendants in the case.

Subsequent  to the end of the fourth  fiscal  quarter,  we settled  with another
defendant,  and we are  currently  in  discussions  with  other  defendants  and
nondefendants regarding licensing agreements.  Regarding litigation,  we believe
that the  process is on track,  and we have not  learned of any new  information
that would negatively impact our position.

Total  software  revenues  for the quarter grew by 20%, led by a 35% increase in
NetSimplicity  revenues.  Note that both  NetSimplicity  units and ASPs, average
selling  prices,  grew this past quarter.  We are also seeing positive trends in
certain  verticals,  including  legal,  education,  healthcare,  financial,  and
pharmaceuticals. ALLIANCE revenues were essentially flat with the prior quarter.
Note that these ALLIANCE  revenues are maintenance  contracts related to support
of existing customers, and are not from new software license sales.

Let me briefly discuss gross margins. Margins for intellectual property business
this last quarter were 50%, with one half of the proceeds going to our law firm,
Jenkens and Gilchrist, as part of the existing success fee arrangement with that
firm.  Our  software  business  generated  margins  of 69%,  an  increase  of 18
percentage points over the previous quarter.

Let me now discuss operating expenses. Consistent with previous guidance, our
total operating expenses decreased significantly. This last quarter, we reduced
SG&A expenses, R&D expenses, and Other infrastructure costs by a total of 29%.
Also, we have moved the majority of our development efforts to our NetSimplicity
office in Vancouver, where we realize lower operating costs. Note that we are
planning additional overall spending reductions for this quarter while
maintaining our investment in our software business, and also increasing
spending in our IP segment.

Our headcount as of today is 32 full-time employees,  down from 44 at the end of
April,  and 103 at the end of  January.  In terms of the  income  statement,  we
significantly  narrowed the loss for the quarter to $200,000, or approximately 1
cent per share loss, nearly getting to breakeven.  As you can calculate, we need
only approximately  $5.5 million to $6 million in intellectual  property license
revenue per quarter to be profitable.  And that is without growing software from
its current revenue base, or by further reducing expenses.

In terms of our balance sheet,  our balance sheet remains strong.  At the end of
July,  we were able to grow cash by  $400,000,  approximately  $.02 a share,  to
$21.5  million  dollars,   including  the  cash  impact  of  a  modest  security
repurchase.  Working  capital was over $18.6 million,  an  improvement  over the
prior quarter by approximately a half a million dollars. Also, our current ratio
improved to 6:1, a slight improvement over the prior quarter's 5.7.

Let me switch to guidance, please. First off, we will achieve IP license revenue
this  current  quarter,  and  again,  while  predicting  the exact  timing of IP
revenues remains  difficult,  we are forecasting  intellectual  property revenue
throughout the next fiscal year. We anticipate that we will reduce our operating
expenses again, and this quarter we anticipate that reduction to be in the range
of 10% to approximately 3.2 million.

We believe  that the  NetSimplicity  business  will  continue to grow,  and will
generate cash in the second or third fiscal quarter of this current year. We are
forecasting  this business to be profitable later this year, and we believe that
we will have to invest an additional one half million  dollars in cash over that
period, for NetSimplicity to achieve profitability.

Last  point,  we are  forecasting  our cash  balances  to remain  healthy and to
maintain  strong  working  capital.  I would  now like to turn the call  over to
Michael Noonan.

Michael Noonan  - Forgent - Director of Investor Relations

Well, thanks,  gentlemen. And with that, I'd like to open up the meeting for Q&A
from the analysts. And I'll ask Andrea to coordinate the session.



Ladies and gentlemen, this is the question-and-answer  session. If you'd like to
ask a  question  or  make a  comment,  please  key  star  followed  by 1 on your
touch-tone  phone.  Questions will be taken in the order that they are received.
Again, star 1 for questions.  Our first question comes from Carter Mansbach from
Concord Equity Group, please proceed.

Carter Mansbach  - The Concord Equity Group - Analyst

Good morning, fellows.

Richard Snyder  - Forgent - Chairman, Chief Executive Officer

Good morning, Carter.

Carter Mansbach  - The Concord Equity Group - Analyst

I have two questions,  one regarding the Dwork and Maxwell case, where these two
attorneys who originally were on the case are suing Jenkens regarding  Forgent's
lawsuits.  There were statements in there quite  intriguing,  one being the fact
that the JPEG patent  could bring  hundreds of millions of dollars to the bottom
line for  Jenkens,  which I guess in turn would be the same for you. My question
is,  do you  agree  with  that  statement?  And what are  your  feelings  on it?
Secondly,  in the way of Adobe,  and the 5.5 million that was settled,  could we
expect the 42 companies  that are  currently  being sued,  the 5.5 million is an
average,  is it a low number, is it a high number?  Where does that fit into the
whole realm of it? I want to know if Adobe,  5.5 million is the average  that we
should look for, in the companies that the company is going after.

Richard Snyder  - Forgent - Chairman, Chief Executive Officer

Let me comment on the first part, the Dwork and Maxwell case.  Obviously this is
an issue  between  two former  employees  at  Jenkens,  and it is not  something
relative to Forgent,  per se. We find that the information  that is in that case
is also  interesting.  We think that,  you know,  their  estimates are certainly
valid within the context of what we know about the IP business, and I think, you
know, I think they  obviously  have a right to their opinion as well. So I think
that's really all I can comment with regard to that part of the case. Jay, would
you like to comment on the second part of that question?

Jay Peterson  - Forgent - Vice President, Chief Financial Officer

Sure, Dick. Thanks for the easy question,  Carter.  Let me tell you what we know
in terms of what's  actually  happened  over the program.  We have had some very
significant  licenses from companies that we call tier one companies,  and we've
had some smaller  license from what we call tier 2, tier 3 and tier 4. If I take
the average of the 30-odd  licensees thus far, it's around 3.25 million  dollars
per license.  We've got about 40 people  we're in  litigation  with,  and as you
recall,  there are many people,  other than the current  litigants  that we have
either noticed or are currently in discussions with.

In terms of looking forward,  I think we will see some very large companies that
we will possibly license tier 1, and we will see, again, tier 2, tier 3 and tier
4. How the average  changes over time and in the future,  it's very difficult to
predict, Carter.

Carter Mansbach  - The Concord Equity Group - Analyst

Can I just ask you,  would tier 1 be considered a Sony, 20 million plus? And are
there many,  like,  can you give me a number of how many tier 1 companies  there

Jay Peterson  - Forgent - Vice President, Chief Financial Officer

Sony would  definitely have been a tier 1. There are more than a handful of tier
1 going forward.

Carter Mansbach  - The Concord Equity Group - Analyst

Okay. Thank you.


Our next  question is from  Michael  James from  Keukenhof  Capital  Management.
Please proceed.

Michael James  - Keukenhof Capital Management - Analyst

For the past few years the company  burned through in excess of $25 million with
the ALLIANCE  software.  During such time  management  has received  bonuses and
stock option grants.  In the past I've raised questions about  management's high
compensation  and  inability to enhance  shareholder  value.  What is being done
about your compensation?  Why do you think NetSimplicity will be profitable when
you never achieved the forecast for ALLIANCE?  And why do you think that you can
be successful with an acquisition when your history shows that you have not been
able to? Thank you.

Richard Snyder  - Forgent - Chairman, Chief Executive Officer

Is that one question or --

Michael James  - Keukenhof Capital Management - Analyst

It's actually three big questions.

Richard Snyder  - Forgent - Chairman, Chief Executive Officer

Okay,  fine, I'll be happy to start with that. With regard to  compensation,  we
use the standard  methods within the industry to find  competitiveness  with our
pay ranges. We have not paid any incentive  compensation  through the last year,
due to the  financial  condition  of the  company,  nor  have  pay  raises  been
implemented.  So there has been no  movement in  compensation,  which I think is
appropriate as the company reforms and goes through this process.

Number 2, the reason that NetSimplicity is successful, is being successful,  and
is not the same as ALLIANCE,  it's a totally different business model.  ALLIANCE
was a enterprise  software  play,  which  required a high degree of direct sales
content.  It was also a very high ASP of around  200,000 to 300,000 at  minimum,
and  NetSimplicity  is a very small,  simple business  package that's focused at
small and  medium-sized  businesses in more the $2,000 to $3,000  range.  And is
really scoped at an entirely different audience.

Third, with regard to an acquisition, as I stated, we are being very cautious as
we  look  forward  to  what  might  be   appropriate  in  terms  of  growth  and
profitability.  And acquisitions in the past have been more speculatively  done.
We will  make  sure  that  that is to a  minimum.  But if we are going to find a
growth engine to replace our intellectual property as that declines over time, I
think it's important for us to find a business that will be complimentary and to
add to the  business  mix.  I  believe  that  that's  consistent  with  what our
shareholders would want to do.

Jay Peterson  - Forgent - Vice President, Chief Financial Officer

And thank you for the question.


Ladies and  gentlemen,  this  concludes  your  question-and-answer  portion  for
today's call. I would now like to turn the  presentation  back to Michael Noonan
for closing remarks.

Michael Noonan  - Forgent - Director of Investor Relations

Well, thanks very much. And we appreciate everybody's  participation.  Just as a
reminder,  Forgent is going to be at the Merriman Curhan Ford Investor Summit in
San Francisco next Monday and Tuesday,  if you're attending the conference or in
the Bay area, we hope to see you there.  Thank you again for listening,  we look
forward to speaking with you soon. Good-bye for now.


Ladies and gentlemen,  thank you for your  participation in today's  conference.
This concludes your presentation. You may now disconnect. Good day.


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