8-K

                     SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 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 5, 2003


                                 ZANETT, INC.
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             (Exact name of registrant as specified in charter)


        Delaware                    0-27068                56-4389547
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(State or other jurisdiction  (Commission File Number)    IRS Employer
   of incorporation)                                    Identification No.)


135 East 57th Street, 15th Floor, New York, NY               10022
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  (Address of principal executive offices)                 (Zip Code)


Registrant's telephone number, including area code       (212)-980-4600
                                                         --------------
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        (Former name or former address, if changed since last report).
        ------------------------------------------------------------

















Item 5. Other Events

On September 5, 2003, the company issued a press release announcing the sale of
one of its legacy investments, Applied Discovery, to LexisNexis (TM), a member
of Reed Elsevier Group plc (NYSE: ENL).  A copy of this press release is
attached as an exhibit to this Form 8-K.


(c) Exhibits.


Exhibit No.                            Description
- -----------      --------------------------------------------------------------
99.1             Press release announcing the sale of Zanett, Inc.'s investment
                 in Applied Discovery to LexisNexis TM, a member of Reed
                 Elsevier Group plc (NYSE. ENL).

                                  SIGNATURES

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


                                          ZANETT, INC.


Date:  September 8, 2003               by:   /s/ Jack M. Rapport
       -----------------                     -------------------------------
                                             Name:  Jack M. Rapport
                                             Title: Chief Financial Officer














                              Exhibit Index

Exhibit No.                            Description
- -----------      --------------------------------------------------------------
99.1             Press release announcing the sale of Zanett, Inc.'s investment
                 in Applied Discovery to LexisNexis TM, a member of Reed
                 Elsevier Group plc (NYSE. ENL).

EX-99

Press Release                                             Source: Zanett, Inc.

   ZANETT SELLS STAKE IN TECH INVESTMENT YIELDING SIGNIFICANT CAPITAL GAIN
       -$95 MILLION ACQUISITION BY LEXISNEXIST OF LEGAL SERVICES FIRM-

NEW YORK-September 5, 2003--ZANETT, INC (NASDAQ : ZANE) parent of The Zanett
IT Commonwealth TM, today announced that one of its legacy investments,
Applied Discovery, has been sold to LexisNexis (TM), a member of Reed Elsevier
Group plc (NYSE: ENL). Zanett received $1,806,937 on its original investment
of $450,000 - representing a four-fold return of its original investment.
In April of 2000, Zilkha Capital Partners and Zanett provided $5 million of
seed capital to launch Applied Discovery, a Seattle based provider of
electronic discovery services to top U.S. law firms, large corporations and
government agencies.  Three years later, in July of 2003, Applied Discovery
was sold to NexisLexis (TM) for $95 million.

Claudio M Guazzoni, president of Zanett, stated, "This transaction typifies
the excellence in thought and execution of Team Zanett. An idea conceived, an
opportunity identified, a needed product brought to market, and profits were
realized by those who seized the opportunity early on."

The firm of Credit Suisse First Boston acted as Investment Banker to the
transaction.  Details of the transaction, which closed on July 31, 2003, can
be found in the footnotes of the financial statements submitted as part of
Form 10-QSB filed with the Securities and Exchange Commission for the period
ending June 30, 2003. All capital gains resulting from this transaction will
be part of Q3 financial statements.

About Zanett, Inc.
(www.zanettinc.com)

Zanett, Inc. is an information technology (IT) services company. It is
building an innovative new delivery platform called The IT Commonwealth (TM)
by acquiring profitable IT consulting firms that serve Fortune 500 caliber
companies and governmental agencies.

The commonwealth business model preserves the culture, management and
business practices responsible for the success of the acquired entities,
while increasing competitive advantage and maximizing the financial and
operating performance of the IT Commonwealth (TM) as a whole. Commonwealth
members provide their services individually, but leverage the capabilities of
the Commonwealth collectively.

Commonwealth members focus on their core technical skill sets by availing
themselves of corporate services provided by the Company such as: legal
support; financial and accounting assistance; employee benefits; recruiting
and other human resources administration; and network management and
maintenance. The Company facilitates cross-selling, knowledge-transfer, and
resource-sharing among Commonwealth members, while preserving the autonomy
and individual strengths of each.

Commonwealth members seek to offer solutions that meet or exceed client
expectations, are delivered on time and within budget, and achieve superior
returns on investment. Their offerings include systems planning and design,
business process engineering, applications development, training and systems
integration services that help clients maximize value from existing
technology investments, employ new technology to make core business
transactions more efficient, manage knowledge and information, or facilitate
enterprise procurement and communications.

The rigorous selection process undertaken prior to acquiring Commonwealth
members ensures that only best practices and the very best personnel are
offered to clients. Because of the very high standards of admission,
Commonwealth members are with confidence able to cross-sell and provide more
comprehensive solutions to meet customer needs. Commonwealth candidates
typically achieve a minimum of $4-20 million in annual revenues and $1-4
million in EBITDA. Each Commonwealth candidate must also have superb people,
superb reputations, superb customers and a superb operating history.

Contact:
     Zanett, Inc., New York
     Claudio Guazzoni or David McCarthy, 212/980-4600
     corprelations@zanett.com

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of
the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements relate to, among other things, future events
or Zanett, Inc.'s future financial performance. In some cases, forward-
looking statements can be identified by terminology including, but not
limited to, "may," "will," "could", "should," "expects," "plans,"
"anticipates" "believes," "estimates," "projects," "predicts," "potential" or
"continue" or the negative of such terms or other comparable terminology.
These statements involve, among other things, known and unknown risks,
uncertainties and other factors that may cause Zanett, Inc.'s actual results,
levels of activity, performance or achievements to be materially different
from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In evaluating these
statements, various factors should be considered, including the risk that
Zanett, Inc.'s, and its operating subsidiaries' businesses will not be
coordinated and integrated successfully, and disruptions from acquisitions
will make it more difficult to maintain relationships with clients, lenders,
employees, suppliers or other constituents. For a discussion of additional
factors that could cause Zanett, Inc.'s results to differ materially from
those described in the forward-looking statements, please refer to Zanett,
Inc.'s filings with the Securities and Exchange Commission, including, but
not limited to, the sections titled "Special Note Regarding Forward-Looking
Information" and "Management's Discussion and Analysis (MD&A) of Financial
Condition and Results of Operations -- Risk Factors" in Zanett, Inc.'s 2002
Annual Report on Form 10-KSB and relevant MD&A sections of Zanett Inc.'s 2003
quarterly reports. Unless otherwise required by applicable securities laws,
Zanett, Inc. disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.