1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Commission File Number: 0-23446
ENLIGHTEN SOFTWARE SOLUTIONS, INC.
(Name of Small Business Issuer in its Charter)
CALIFORNIA 94-3008888
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1900 SOUTH NORFOLK STREET, SUITE 220, SAN MATEO, CALIFORNIA 94403
(Address of Principal Executive Offices, including Zip Code)
(650) 578-0700
(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:
Title of Each Class
COMMON STOCK, NO 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 [ ] NO [X]
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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The registrant's revenues for the fiscal year ended December 31, 2000 were
$3,244,400.
The approximate aggregate market value of the registrant's Common Stock held by
non-affiliates on April 16, 2001 was $1,820,500. This amount excludes shares
held by directors, executive officers and holders of 5% or more of the
outstanding Common Stock since such persons may be deemed to be affiliates of
the registrant. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of common shares outstanding as of April 16, 2001 was 4,979,812.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
2
The undersigned registrant hereby amends items 9, 10, 11 and 12 of its
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROLLING PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
DIRECTORS
Listed below are Enlighten's directors whose terms expire at the next
annual meeting of shareholders.
Director
Name Age Position with Enlighten Since
--------------------------------- ----------- --------------------------- ---------
Michael Seashols(1)(2)......... 55 Co-Chairman of the Board 1997
of Directors
David D. Parker................ 45 Co-Chairman of the Board 1997
of Directors
Omar Maden..................... 54 President, Chief Executive 2001
Officer and Director
Peter J. Sprague(1)(2)......... 62 Director 1994
David Ford..................... 45 Director 2001
Robert Hinaman................. 53 Director 2001
Kim McCaffrey.................. 45 Director 2001
---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
Mr. Seashols joined Enlighten Software Solutions, Inc. (Enlighten) in
July 1997 as Chairman of the Board and Director. Since retiring from his
position as Chief Executive Officer of Usoft, Inc., a wholly-owned software
subsidiary of Unysis, Inc., a provider of development and maintenance tools for
client/server and Internet based computer applications, a position he held from
1994 through 1997, Mr. Seashols has been a private investor. From 1988 through
1993, he served as Chief Executive Officer and was a founder of Versant Object
Technology Corporation, a provider of enterprise component management software
systems for commercial applications in distributed computing environments.
Previously, Mr. Seashols was a founder and the original Chief Executive Officer
of Documentum, Inc., as well as vice president of sales for several software
companies, including Oracle Corporation and Ingres.
Mr. Parker was elected to the Board of Directors in March 1999 and in
December 1999, became Co-Chairman of the Board of Directors. Mr. Parker served
as President and Chief Executive Officer from August 1997 through December 1999.
Since December 1999, Mr Parker has been employed by Enlighten working in
business development and investor relations. Since 2000, Mr. Parker has also
been interim Chief Executive Officer of Buzme, Inc., a communications
application service provider. From November 1996 through August 1997, Mr.
3
Parker served as President of Web Logic, a software company developing
enterprise Java server components. From July 1993 through October 1996, Mr.
Parker served in various sales management positions, most recently as Vice
President, Indirect Sales of Quintus Corporation, which markets and develops
software and services for use in call center operations. Mr. Parker has over
nineteen years of experience in the software industry, including senior sales
and management positions at Versant Object Technology Corporation and IBM.
Mr. Maden joined Enlighten in March 2001 as President, Chief Executive
Officer and Director. In 1986, Mr. Maden founded Maden Technologies, Inc., an
Information Technology (IT) consulting firm, for which he currently serves as
Chairman, President and Chief Executive Officer. Additionally, Mr. Maden serves
as Chief Executive Officer of two Maden Tech subsidiaries,
ReplyNet, Inc. and McCaffrey Consulting, Inc.
Mr. Sprague has served as a Director of Enlighten since February 1994.
From 1965 through 1995, Mr. Sprague served as Chairman of the Board of National
Semiconductor Corporation, a leading manufacturer of semiconductor components
and integrated circuits. In May 1988, Mr. Sprague founded Wave Systems Corp., an
electronic information company, for which he currently serves as Chairman.
Mr. Ford has served as a Director of Enlighten since March 2001. Mr.
Ford currently serves as Senior Vice President and General Counsel for Maden
Tech Consulting, Inc. From 1995 to 2000, Mr. Ford was a member of the law firm
of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC.
Mr. Hinaman has served as a Director of Enlighten since March 2001. From
August 2000 until April 2001, Mr. Hinaman was President of esqNetwork, Inc.
Prior to August 2000, Mr. Hinaman served as Managing Director for European
Mergers and Acquisitions for Chase Manhatten Bank. Mr. Hinaman was previously
the non-executive chairman of Huntsworth, PLC.
Mr. McCaffrey has served as a Director of Enlighten since March 2001.
Since 1993, Mr. McCaffrey has served as President of McCaffrey Consulting, Inc.,
a computer networking solutions provider and subsidiary of Maden Tech
Consulting, Inc. Mr. McCaffrey previously served as Director of Worldwide Sales
for Simpact, Inc.
EXECUTIVE OFFICERS
The following sets forth certain information regarding the other
executive officers of Enlighten.
Stephen E. Giusti has served as Vice President, Finance and
Administration and Chief Financial Officer since December 1999. Mr. Giusti
joined Enlighten in August 1999 as Controller. From January 1998 to August 1999,
Mr. Giusti served as Accounting and Financial Reporting Supervisor at Cadence
Design Systems, Inc. From January 1991 to December 1997, Mr. Giusti served
various positions at the public accounting firm of Meredith, Cardozo, and
4
Lanz, LLP most recently as Manager. Mr. Giusti is a Certified Public Accountant
in the State of California.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Enlighten's executive officers, directors, and persons who beneficially own more
than 10% of Enlighten's common stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish Enlighten with
copies of all Section 16(a) forms filed by such persons.
Based solely on Enlighten's review of such forms furnished to Enlighten
and written representations from certain reporting persons, Enlighten believes
that all filing requirements applicable to Enlighten's executive officers,
directors, and persons who beneficially own more than 10% of Enlighten's common
stock were complied with in 2000.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
paid during the years ended December 31, 2000, 1999 and 1998 of the person who
served as Chief Executive Officer during 2000 and the other most highly
compensated executive officer of Enlighten in 2000 (the "Named Executive
Officers"):
Long Term
Annual Compensation Compensation
------------------------------------- ------------
Other Securities
Annual Underlying
Year Salary Bonus Compensation Options
---- -------- -------- ------------ ------------
(shares)
Bill Bradley, Former President 2000 $176,000 $ 48,700 $ -- --
and Chief Executive Officer(1) 1999 $143,900 $ 25,000 $ -- 230,000
1998 $ 35,700 $ 7,500 $ 48,700 60,000
Stephen Giusti, Vice President 2000 $108,300 $ 21,000 $ -- 20,000
Finance and Administration and 1999 $ 31,000 $ 4,000 $ -- 60,000
Chief Financial Officer 1998 $ -- $ -- $ -- --
--------
(1) Mr. Bradley was named President and Chief Operating Officer in September
1999, named Chief Executive Officer in December 1999 and resigned as an
executive officer of Enlighten in March 2001.
OPTION GRANTS IN 2000
The following table provides the specified information concerning grants
of options to purchase Enlighten's common stock made during 2000 to the Named
Executive Officers.
5
Individual Grants
------------------------------------------------------
Percent
of Total
Number of Options
Securities Granted to
Underlying Employees Exercise or
Options In Base Price Expiration
Name Granted Fiscal Year Per Share Date
----------------------------------------- ---------- ----------- ------------ ----------
Bill Bradley.............................. -- -- $ -- --
Stephen Giusti(1)........................ 20,000 4% $3.8125 05/17/10
----------
(1) Stock options vest one-seventh six months from the date of grant and
1/42nd per month thereafter for each full month of the optionee's
continuous employment by Enlighten. Options are exercisable only to the
extent vested.
AGGREGATE OPTION EXERCISES AND 2000 YEAR-END VALUES
The following table provides the specified information concerning
exercises of options to purchase Enlighten's common stock in 2000 and
unexercised options held as of December 31, 2000 by the Named Executive
Officers. The value of the unexercised in-the-money options is based on the
closing price of Enlighten's common stock ($0.13 per share as reported on the
Nasdaq Stock Market) on December 31, 2000, and is net of the exercise price of
such options. As of December 31, 2000, none of the options were in-the-money.
Number of Securities Value of Unexercised
Number of Underlying Unexercised Options In-the-Money Options
Shares at December 31, 2000 (shares)(1) December 31, 2000 (2)
Acquired on Value --------------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---------------- ----------- ---------- ----------- ------------- ----------- -------------
Bill Bradley..... -- $ -- 40,713 259,287 $ -- $ --
Stephen Giusti... -- $ -- 24,284 55,716 $ -- $ --
COMPENSATION OF DIRECTORS
Directors who are employees of Enlighten do not receive any compensation
for their services as directors. Directors who are not employees of Enlighten
receive between $500 and $750 for attendance at each Board Meeting.
Additionally, Enlighten's 1992 Stock Option Plan (the "Option Plan") provides
that the Board has no authority, discretion, or power to grant options to any
independent directors. Instead, each nonemployee director is automatically
granted a nonqualified stock option to purchase 5,000 shares of common stock
upon initial appointment or election and, for each year that a nonemployee
director continues to serve on the Board, options to purchase 5,000 shares of
common stock on the anniversary date of such initial appointment or election.
Such options vest quarterly over a three-year period. Options to purchase 5,000
shares at an exercise price of $10.75 per share were granted to Mr. Sprague in
February 2000.
6
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Enlighten has entered into an agreement with its Chief Financial Officer
("CFO"), providing for benefits upon termination and in the event of a "Change
of Control" (as defined in the agreement). The agreement provides that in the
event of a Change of Control, if the CFO's employment is terminated by Enlighten
or its successor within ninety (90) days of a Change of Control, other than for
cause, or if the CFO terminates his employment because of a change in duties, or
in certain other circumstances, the CFO shall be entitled to the following: (i)
a one-time payment equal to six (6) months of his then-current base salary; (ii)
full vesting in all stock options.
The Option Plan provides that in the event of certain mergers, sales of
assets, or sales by the shareholders of substantially all of their voting stock
in Enlighten constituting a "Transfer of Control," as defined in the Option
Plan, the Board may, in its sole discretion, arrange for the surviving,
continuing, successor, or purchasing corporation or a parent corporation
thereof, as the case may be (the "Acquiring Corporation"), to either assume
Enlighten's rights and obligations under outstanding stock option agreements
under the Option Plan (the "Options") or substitute options for the Acquiring
Corporation's stock for such outstanding Options. The Board may also provide
that any options that are not assumed or substituted for by the Acquiring
Corporation will be fully vested and exercisable as of a date prior to the
Transfer of Control. An Option will terminate effective as of the date of the
Transfer of Control to the extent that the Option is neither assumed by the
Acquiring Corporation, nor exercised as of the date of the Transfer of Control.
Enlighten's 1994 Employee Stock Purchase Plan (the "Purchase Plan")
provides that in the event of a "Transfer of Control," as defined in the
Purchase Plan, the Board may, in its sole discretion, arrange for the assumption
of Enlighten's rights and obligations under the Purchase Plan by the acquiring
or successor corporation. All purchase rights shall terminate if no assumption
occurs.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 16, 2001, certain information
with respect to the beneficial ownership of Enlighten's common stock by (i) all
persons known by Enlighten to be the beneficial owners of more than 5% of the
outstanding common stock of Enlighten, (ii) each director of Enlighten, (iii)
each Named Executive Officer, and (iv) all executive officers and directors of
Enlighten as a group.
7
Number of
Shares of Percentage
Common of
Stock Common
Beneficially Stock
Beneficial Owner(1) Owned(1)(2) Outstanding
--------------------------------------------------------------- --------------- -----------
Maden Tech Consulting, Inc.(3)................................. 3,888,888 43.9%
Omar Maden(4).................................................. 3,888,888 43.9%
Peter J. McDonald(5)........................................... 463,065 9.3%
Michael Seashols(6)............................................ 410,000 7.9%
David D. Parker(7)............................................. 320,284 6.1%
Peter J Sprague(8)............................................. 50,832 1%
Stephen Giusti(9).............................................. 34,593 *
Bill Bradley................................................... -- *
Robert Hinaman................................................. -- *
David Ford..................................................... -- *
Kim McCaffrey.................................................. -- *
Executive officers and directors as a group (11 persons) (10).. 5,167,662 55.0%
----------
* Less than 1%.
(1) The persons named in this table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable and to the information
contained in the footnotes to this table.
(2) Shares beneficially owned and percentage of ownership are based on
4,972,312 shares of common stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or disposition power with respect
to such shares.
(3) Maden Tech has the right to acquire all such shares upon conversion of
amounts outstanding under a credit facility (covering 1,888,888 shares) or
exercise of a warrant (covering 2,000,000 shares).
(4) Mr. Maden, as the sole shareholder and a director of Maden Tech, may be
deemed to beneficially own all such 3,888,888 shares beneficially owned by
Maden Tech.
(5) Includes 24,800 shares held by Mr. McDonald's children.
(6) Includes 200,000 shares subject to options which are exercisable as of
June 15, 2001.
(7) Includes 255,284 shares subject to options which are exercisable as of
June 15, 2001.
(8) Consists of shares subject to options which are exercisable as of June 15,
2001.
(9) Includes 34,284 shares subject to options which are exercisable as of June
15, 2001.
(10) Includes shares described in Notes 3, 4, 5, 6, 7, 8 and 9.
8
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For transactions between the Company and its officers, directors, and
holders of more than 5% of its outstanding common stock, see "Summary
Compensation Table," "Stock Options Granted in 2000," "Option Exercises and 2000
Year-End Values," and "Compensation of Directors."
On March 6, 2001, Maden Tech Consulting, Inc. acquired the Enlighten
securities it beneficially owns pursuant to the initial advance made by Maden
Tech to Enlighten under a Loan Agreement dated as of February 14, 2001 by and
between Maden Tech and Enlighten (the "Loan Agreement"). Under the Loan
Agreement, Maden Tech agreed to provide Enlighten an initial advance of $100,000
and, in the sole discretion of Maden Tech, additional advances under a credit
facility providing for total borrowings in the aggregate amount of up to
$1,118,250. All amounts extended under the credit facility are secured by
Enlighten's core products, technology and intellectual property and are
evidenced by a convertible note repayable upon demand by Maden Tech made after
July 15, 2001.
On March 6, 2001, Maden Tech made the initial advance of $100,000
under the credit facility from Maden Tech's working capital. In connection with
the initial advance of $100,000, on March 6, 2001 Enlighten granted Maden Tech a
warrant to purchase up to 2,000,000 shares of Enlighten's Common Stock. The
warrant is immediately exercisable and will remain exercisable until March 6,
2002, at a price equal to the trailing five-day average closing price of
Enlighten's Common Stock calculated as of the trading day immediately before the
date of exercise.
Subject to adjustment upon the occurrence of certain events, Maden
Tech is entitled to convert amounts extended under the credit facility into
shares of Enlighten's Common Stock at a conversion price of $0.225 per share.
Accordingly, the $100,000 advanced by Maden Tech to Enlighten is immediately
convertible into 444,444 shares of Enlighten's Common Stock. On March 12, 2001,
March 28, 2001, April 6, 2001 and April 11, 2001, Maden Tech advanced Enlighten
$75,000, $150,000, $50,000 and $50,000, respectively, under the credit facility.
The aggregate of $325,000 advanced is immediately convertible into an
additional 1,444,444 shares of Enlighten's Common Stock. If the credit facility
were fully extended, Maden Tech would acquire the right to convert the
indebtedness into shares of Enlighten's Common Stock representing up to 49.9
percent of the shares then outstanding (excluding, for the purpose of such
calculation, shares of Common Stock issuable upon exercise by Maden Tech of the
warrant).
All future transactions, including loans, between the Company, Maden
Tech and their respective officers, directors, principal shareholders, and their
affiliates will continue to be approved by the Board, including a majority of
the disinterested directors.
9
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ENLIGHTEN SOFTWARE SOLUTIONS, INC.
/s/ Omar Maden
---------------------------------------
Omar Maden
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Name/Title Date
---------- ----
/s/ Omar Maden April 30, 2001
-------------------------------------------- ------------------
Omar Maden
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Stephen E. Giusti April 30, 2001
-------------------------------------------- ------------------
Stephen E. Giusti
Vice President, Finance and Administration and Chief
Financial Officer (Principal Financial and Accounting
Officer)
/s/ Michael Seashols April 30, 2001
-------------------------------------------- ------------------
Michael Seashols
Co-Chairman of the Board
-------------------------------------------- ------------------
David D. Parker
Co-Chairman of the Board
-------------------------------------------- ------------------
Peter J. Sprague
Director
/s/ David Ford April 30, 2001
-------------------------------------------- ------------------
David Ford
Director
/s/ Robert Hinaman April 30, 2001
-------------------------------------------- ------------------
Robert Hinaman
Director
/s/ Kim McCaffrey April 30, 2001
-------------------------------------------- ------------------
Kim McCaffrey
Director