Edgar Filing: ENLIGHTEN SOFTWARE SOLUTIONS INC

1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB

(MARK ONE)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER 0-23446

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ENLIGHTEN SOFTWARE SOLUTIONS, INC.
(Exact name of small business issuer as specified 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)

999 BAKER WAY, FIFTH FLOOR, SAN MATEO, CALIFORNIA 94404
------------------------------------------------------------------------------
(Former address of principal executive offices, including zip code, if changed
since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the past 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 [ ]

As of May 11, 2001, there were 4,979,812 shares of the issuer's common stock, no
par value per share, outstanding.

ENLIGHTEN SOFTWARE SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 2001

TABLE OF CONTENTS

PAGE NO.
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PART I FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets: March 31, 2001 and December 31, 2000.............. 3

Condensed Consolidated Statements of Operations: Three Months Ended
March 31, 2001 and 2000............................................................... 4

Condensed Consolidated Statements of Cash Flows: Three Months Ended
March 31, 2001 and 2000............................................................... 5

Notes to Condensed Consolidated Financial Statements...................................... 6

Item 2. Management's Discussion and Analysis or Plan of Operations................................ 10

PART II OTHER INFORMATION

Item 1. Legal Proceedings......................................................................... 24

Item 2. Changes in Securities and Use of Proceeds................................................. 24

Item 3. Defaults Upon Senior Securities........................................................... 24

Item 4. Submission of Matters to a Vote of Security Holders....................................... 24

Item 5. Other Information......................................................................... 24

Item 6. Exhibits and Reports on Form 8-K.......................................................... 24

SIGNATURES................................................................................ 26

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PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

March 31, December 31,
2001 2000
------------ ------------

ASSETS
Current assets:
Cash and cash equivalents .............................................. $ 63,800 $ 182,600
Accounts receivable, less allowance for
doubtful accounts of $5,000 and $5,000, respectively.................. 244,100 49,000
Prepaid expenses and other current assets .............................. 28,800 72,600
------------ ------------
Total current assets ................................................ 336,700 304,200
Property and equipment, net ............................................... 230,400 256,100
Other assets .............................................................. 377,300 364,600
------------ ------------
$ 944,400 $ 924,900
============ ============

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Trade accounts payable ................................................. $ 550,500 $ 229,900
Accrued and other current liabilities .................................. 173,200 268,300
Convertible note payable ............................................... 325,000 --
Deferred revenue ....................................................... 230,200 116,200
------------ ------------
Total current liabilities ........................................... 1,278,900 614,400

Commitments and contingencies
Shareholders' (deficit) equity:
Preferred stock, 1,000,000 shares authorized,
none issued and outstanding .......................................... -- --
Common stock, no par value, 20,000,000 shares
authorized, 4,979,812 and 4,972,312 issued and
outstanding at March 31, 2001 and December 31, 2000, respectively .... 11,253,700 11,249,300
Deferred stock-based compensation ...................................... (2,100) (700)
Accumulated deficit .................................................... (11,586,100) (10,938,100)
------------ ------------
Total shareholders' (deficit) equity ................................ (334,500) 310,500
------------ ------------
$ 944,400 $ 924,900
============ ============

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

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended
March 31,
---------------------------------
2001 2000
----------- -----------

Revenue:
Product licenses ................................................... $ 254,100 $ 179,900
Product maintenance ................................................ 52,800 172,100
Consulting services ................................................ 39,200 68,400
Royalties .......................................................... -- 15,800
----------- -----------
Total revenue ................................................... 346,100 436,200

Cost of revenue:
Product licenses ................................................... -- 24,800
Product maintenance ................................................ 1,700 56,800
Consulting services ................................................ 4,800 45,600
----------- -----------
Total cost of revenue ........................................... 6,500 127,200
----------- -----------
Gross margin .................................................. 339,600 309,000

Operating expenses:
Research and development ........................................... 302,700 611,100
Sales and marketing ................................................ 398,200 680,100
General and administrative ......................................... 325,800 294,000
----------- -----------
Total operating expenses ........................................ 1,026,800 1,585,200
----------- -----------
Operating loss ............................................. (687,200) (1,276,200)
Other income, net ..................................................... 40,000 18,000
----------- -----------
Loss before income taxes ................................... (647,200) (1,258,200)
----------- -----------
Provision for income taxes ............................................ (800) (1,300)
----------- -----------
Net loss ................................................... $ (648,000) $(1,259,500)
=========== ===========
Basic and diluted net loss per share .................................. $ (0.13) $ (0.30)
=========== ===========
Shares used in computing basic and diluted net loss per share ......... 4,977,312 4,229,589
=========== ===========

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

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Three Months Ended
March 31,
------------------------------
2001 2000
----------- -----------

Cash flows from operating activities:
Net loss ..................................................................... $ (648,000) $(1,259,500)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ............................................. 32,400 84,900
Amortization of deferred stock-based compensation ......................... 600 33,500
Changes in operating assets and liabilities:
Accounts receivable ..................................................... (195,100) 929,600
Prepaid expenses and other assets ....................................... 31,100 (158,900)
Trade accounts payable .................................................. 320,600 (10,600)
Accrued and other liabilities ........................................... (95,100) 26,200
Deferred revenue ........................................................ 114,000 36,100
----------- -----------
Net cash used in operating activities ................................ (439,500) (318,700)
----------- -----------

Cash flows from investing activities:
Capitalization of software development costs ................................. -- (10,200)
Purchases of property and equipment .......................................... (6,700) (19,200)
----------- -----------
Net cash used in investing activities ................................ (6,700) (29,400)
----------- -----------

Cash flows from financing activities:
Borrowings under convertible note payable .................................... 325,000 --
Proceeds from issuance of stock .............................................. 2,400 51,000
----------- -----------
Net cash provided by financing activities ............................ 327,400 51,000
----------- -----------

Net decrease in cash and cash equivalents ....................................... (118,800) (297,100)
Cash and cash equivalents at beginning of periods ............................... 182,600 1,045,600
----------- -----------
Cash and cash equivalents at end of periods ..................................... $ 63,800 $ 748,500
=========== ===========

Supplemental cash flow information:
Cash paid for interest ....................................................... $ -- $ --
=========== ===========
Cash paid for income taxes ................................................... $ 800 $ 1,300
=========== ===========

Non-cash financing and investing activity:
Issuance of warrants in connection with convertible note payable ............. $ -- $ --
=========== ===========
Deferred stock based compensation ............................................ $ 2,000 $ 16,500
=========== ===========

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

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been
prepared by Enlighten Software Solutions, Inc. and subsidiary ("Enlighten"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. These condensed consolidated financial statements have been
prepared in accordance with the instructions for Form 10-QSB and therefore
certain information and note disclosures normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted.
However, Enlighten believes that the disclosures are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in Enlighten's Annual Report on Form
10-KSB for the year ended December 31, 2000.

The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) that
are, in the opinion of management, necessary to state fairly the consolidated
financial position and results of operations as of and for the periods
presented. The results for such periods are not necessarily indicative of the
results to be expected for the full year.

The preparation of condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the condensed consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Certain amounts in the condensed consolidated financial statements as of
December 31, 2000 and for the three months ended March 31, 2000, have been
reclassified to conform with the 2001 presentation.

2. Revenue Recognition

Enlighten recognizes product license revenue upon shipment if a signed contract
exists, the fee is fixed and determinable, collection of resulting receivables
is probable and product returns are reasonably estimable. Product license
revenues that are contingent upon sale to an end-user by OEM's are recognized
upon receipt of quarterly reports of shipments from OEMs.

Enlighten recognizes revenue from maintenance fees for ongoing customer support
and product updates ratably over the contract period, generally one year.
Payments for maintenance fees are generally made in advance and are
non-refundable. Consulting service revenue is recognized

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

when services are performed for time and material contracts and on a percentage
of completion basis for fixed price contracts.

During the three months ended March 31, 2001, Enlighten had three customers
that represented 34%, 22% and 11% of total revenue, respectively. During the
three months ended March 31, 2000, Enlighten had two customers that represented
29% and 27% of total revenue, respectively.

3. Cash and Cash Equivalents

Enlighten considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

4. Comprehensive Loss

Unrealized gains or losses on investments represent the only component of
comprehensive loss, other than net loss. As of March 31, 2001 and 2000, the tax
effects related to the component of other comprehensive loss were not
significant. A summary of comprehensive loss follows:

Three Months Ended
March 31,
------------------------------
2001 2000
----------- -----------

Net loss .......................... $ (648,000) $(1,259,500)
Unrealized gain on securities ..... -- 8,000
----------- -----------
Comprehensive loss ............ $ (648,000) $(1,251,500)
=========== ===========

5. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted
average shares of common stock outstanding during the period. Diluted net loss
per share is calculated by dividing net loss by the weighted-average number of
common shares outstanding plus all potentially dilutive common shares
outstanding. Potentially dilutive common shares included in the dilution
calculation consist of dilutive shares issuable upon the exercise of outstanding
common stock options and warrants computed using the treasury stock method. For
the periods in which Enlighten had losses, potential common shares from common
stock options and warrants are excluded from the computation of diluted net loss
per share, as their effects are antidilutive.

The following is a reconciliation of the weighted average common shares used to
calculate basic net loss per share to the weighted average common and
potentially dilutive common shares used to calculate diluted net loss per share:

Three Months Ended
March 31,
-------------------------
2001 2000
--------- ---------

Weighted average common shares used to calculate
basic net loss per share ............................ 4,977,312 4,229,589

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Stock options ..................................... -- --
Warrants .......................................... -- --
--------- ---------
Weighted average common and potentially dilutive
common shares used to calculate diluted
loss per share ...................................... 4,977,312 4,229,589
========= =========

Stock options and warrants to purchase 4,401,019 and 1,429,476 shares of common
stock for the three months ended March 31, 2001 and 2000, respectively, were
outstanding but not included in the computation of diluted earnings per common
share because they are anti-dilutive as a result of Enlighten's net loss.

6. Notes Payable

In February 2001, Enlighten entered into a loan agreement with Maden Tech
Consulting, Inc., a privately held Delaware corporation, through which Enlighten
obtained a credit facility from Maden Tech. Under the loan agreement, Maden Tech
agreed to provide 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. Interest shall be paid quarterly
at a rate equal to the Federal short-term rate announced by the Internal Revenue
Service, calculated monthly, 4.75% at March 31, 2001.

To satisfy certain of the conditions precedent specified in the loan agreement,
on March 6, 2001, Enlighten (1) expanded the size of the board of directors from
four to seven members, (2) caused one of our incumbent directors to resign
effective upon the receipt of the initial advance, and (3) appointed four
individuals designated by Maden Tech to serve on the board of directors. In
addition, Omar Maden, the sole stockholder, Chief Executive Officer and a
director of Maden Tech, was appointed to serve as Chief Executive Officer of
Enlighten effective immediately following the initial advance.

Subject to adjustment upon the occurrence of certain events, Maden Tech is
entitled to convert amounts extended under the credit facility into shares of
common stock at a conversion price of $0.225 per share. Accordingly, as a result
of the initial $100,000 advance made by Maden Tech on March 6, 2001, Maden Tech
acquired beneficial ownership of 444,444 shares of common stock. On March 12,
2001 and March 28, 2001, Maden Tech advanced additional amounts of $75,000 and
$150,000, respectively. This $225,000 can be converted into an aggregate of an
additional 1,000,000 shares of common stock. Maden Tech expects to acquire
beneficial ownership of additional shares of our common stock as additional
amounts are loaned to Enlighten under the credit facility. If the credit
facility were fully extended, Maden Tech would acquire the right to convert the
indebtedness into up to 49.9% of the shares of common stock

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ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

then outstanding (excluding, for the purpose of such calculation, shares of
common stock issuable upon exercise by Maden Tech of the warrant described in
the next paragraph).

As a condition precedent to obtaining the initial advance, on March 6, 2001,
Enlighten granted Maden Tech a warrant to purchase up to 2,000,000 shares of
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 our common stock calculated as of the trading day immediately before
the date of exercise. Accordingly, as of March 31, 2001, Maden Tech beneficially
owned 3,444,444 shares of common stock, representing 40.9% of the shares of
common stock then outstanding.

As of March 31, 2001, Maden Tech has advanced a total of $325,000 under the
credit facility.

6. Subsequent Events

On April 6, 2001, April 11, 2001 and April 25, 2001, Maden Tech advanced
additional amounts of $50,000, $50,000 and $75,000, respectively. This $175,000
can be converted into an aggregate of an additional 777,777 shares of common
stock. Accordingly, as of May 11, 2001, Maden Tech beneficially owned 4,222,222
shares of our common stock, representing 45.9% of the shares of common stock
then outstanding.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

You should read the following discussion and analysis in conjunction
with our financial statements and the notes thereto included elsewhere herein.
Except for historical information contained herein, the following discussion
contains forward-looking statements based on current expectations that involve
certain risks and uncertainties. Such forward-looking statements include, among
others, those statements including the words "expects," "anticipates,"
"intends," "believes" and similar language. Our actual results could differ
materially from those discussed herein. Factors that could cause actual results
or performance to differ materially or contribute to such differences include,
but are not limited to, those discussed below in "Factors That May Affect Future
Results" and "Liquidity and Capital Resources."

OVERVIEW

We provide software products that allow the user to automate
configuration and management tasks and monitor critical performance and
operational characteristics of computer servers and workstations in the
commercial environment. Our products allow the user to manage many computers
through a single console view of its computer infrastructure. Our product is
available for multiple operating systems within three distinct categories of
computer and software architecture, including Unix, Linux and Windows. Our
products enable users of computer servers and workstations that are networked or
Internet based to manage their operations across various sites. Our core
product, EnlightenDSM(TM), allows companies to manage their mission critical
computer servers and workstations by enabling system managers and administrators
to standardize the management of diverse computer operating systems, such as
Unix, Linux, FreeBSD and Windows, and to monitor the on-going performance and
availability of many different systems running together.

Our software manages products from vendors such as Compaq Computer
Corporation, Hewlett-Packard Company, International Business Machines
Corporation, Intel Corporation, Microsoft Corporation, The Santa Cruz Operation,
Inc., Silicon Graphics, Inc., Sun Microsystems, Inc., Red Hat, Inc., TurboLinux,
Inc., Caldera Systems, Inc. and SuSE, Inc. Our award winning EnlightenDSM
product suite is a fully integrated, cross-platform software solution.

The key elements of our strategy include enabling the integration of
Linux into the corporate environment, focusing on the mid-sized organization and
departments of larger companies, adding timely effective manageability to
Internet based application environments and distributing our products through
third-party relationships such as systems management and other software
application vendors, systems management service providers, and Linux hardware
and appliance manufacturers and directly to end-user customers.

VARIABILITY OF QUARTERLY RESULTS

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We have experienced significant quarterly fluctuations in our operating
results and expect that these fluctuations will continue in future periods.
These fluctuations have been caused by a number of factors, including the timing
of new product or product enhancement introductions by us or our competitors,
the development and introduction of new operating systems that require
additional development efforts, purchasing patterns of our customers, size and
timing of individual orders, the rate of customer acceptance of new products and
pricing and promotion strategies undertaken by us or our competitors. Future
operating results may fluctuate as a result of these and other factors,
including our ability to continue to develop, acquire, and introduce new
products on a timely basis, the timing and level of sales by our OEMs or other
third-party licensees of computer systems or software incorporating our
products, technological changes in computer systems and environments, quality
control of the products sold and general economic conditions. Additionally, our
operating results may be influenced by seasonality and overall trends in the
global economy. Because we operate with a relatively small backlog, quarterly
sales and operating results generally depend on the volume and timing of orders
received during the quarter, which are difficult to forecast. Historically, we
have recognized a substantial portion of our license revenues in the last month
of the quarter. Since our staffing levels and other operating expenses are based
upon anticipated revenues, delays in the receipt of orders can cause significant
fluctuations in income from quarter to quarter.

HISTORICAL RESULTS OF OPERATIONS

Net Revenue

Net revenue decreased $90,100, or 21%, to $346,100 in the first quarter
of 2001, as compared to the first quarter of 2000. The decrease was primarily
attributable to a decrease in product maintenance revenue received from SGI. For
the first quarter of 2000, product license revenues from our relationship with
SGI were not included in operating results. In prior quarters, SGI provided
Enlighten with revenue information prior to the issuance of Enlighten's interim
financial information and thus revenue had been recorded in the period in which
SGI shipped its servers and workstations. During the first quarter of 2000, SGI
did not report revenue prior to the issuance of Enlighten's interim financial
information and beginning in the second quarter of 2000, product license
revenues from SGI are recorded in the quarter in which the report is received
from SGI. Additionally, the first quarter of 2001 is the final quarter in which
Enlighten will record revenues from SGI.

Revenue from product license fees increased $74,200, or 41%, to $254,000
in the first quarter of 2001, as compared to the first quarter of 2000. The
increase was primarily attributable to revenues reported from the SGI OEM
relationship during the first quarter of 2001, partially offset by a decrease in
end-user customer license revenues.

Revenue from product maintenance fees decreased by $119,300, or 69%, to
$52,800 in the first quarter of 2001, as compared to the first quarter of 2000.
The decrease was primarily attributable to product maintenance revenue received
from SGI under our OEM relationship

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received during the first quarter of 2000. The portion of this relationship for
which we received product maintenance revenues ended in the fourth quarter of
2000.

Revenue from consulting services decreased by $29,200, or 43%, to
$39,200 in the first quarter of 2001, as compared to the first quarter of 2000.
The decrease was primarily attributable to the non-recurring engineering
revenues received during the first quarter of 2000 related to Enlighten's 1999
strategic relationship with Intel. There were no similar consulting services
revenue during the first quarter of 2001. During the first quarter of 2001,
Enlighten recognized consulting services revenue from product installation
assistance and training of our end-user customers.

Royalties consist primarily of royalties from BMC Corporation ("BMC"),
formerly New Dimensions Software, Inc., from product license fees and product
maintenance fees generated by the Tandem product line sold to BMC in October
1997. Total royalties decreased by $15,800, or 100%, in the first quarter of
2001, as compared to the first quarter of 2000. The decrease was attributable
to the expiration of the royalty period in September 2000.

Cost of Revenue

Cost of license revenue consists of royalties paid to third parties,
amortization of software development costs, product packaging, documentation and
software media. Cost of license revenue decreased by $24,800, or 100%, in the
first quarter of 2001, as compared to the first quarter of 2000. This decrease
was primarily attributable to a decrease in royalties paid to third parties,
fully amortizing software development costs in the fourth quarter of 2000 and a
decrease in the quantity of hardcopy product documentation and software media
shipped during the first quarter of 2001.

Cost of maintenance revenue includes customer support costs, such as
hot-line and on-site support. Cost of maintenance revenue decreased by $55,100,
or 97%, in the first quarter of 2001, as compared to the first quarter of 2000.
This decrease was due primarily to a decrease in customer support headcount and
personnel related costs.

Cost of consulting services revenue consists of the direct costs
required to provide the consulting services. Cost of consulting services revenue
decreased by $40,800, or 89%, in the first quarter of 2001, as compared to the
first quarter of 2000. This decrease is due primarily to a decrease in fees paid
to third party software development vendors incurred in our strategic
relationship with Intel.

Research and Development

Research and development expenses consist of personnel expenses and
associated overhead, the costs of short-term independent contractors required in
connection with product development efforts and software

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development costs less amounts capitalized. Enlighten's investment in research
and development, prior to the reduction for capitalization of software
development costs, was $302,700 and $621,300, respectively, representing 87% and
142% of total revenue for the first quarter of 2001 and the first quarter of
2000, respectively. The decrease of $318,600, or 51%, in the first quarter of
2001, as compared to the first quarter of 2000, was primarily attributable to
lower personnel related expenses due to lower headcount. Enlighten capitalized
approximately $10,200 of software development costs in the first quarter of 2000
which represented approximately 2% of total research and development
expenditures incurred during the quarter. There were no software development
costs capitalized in the first quarter of 2001. The amount of capitalized
software development costs in any given period may vary depending on the nature
of the development performed.

Costs incurred in the research and development of new software products
are expensed as incurred until technological feasibility is established.

Sales and Marketing

Sales and marketing expenses include costs of sales and marketing
personnel, advertising and promotion expenses, travel and entertainment, and
other selling and marketing costs. Sales and marketing expenses decreased by
$281,900, or 41%, to $398,200 in the first quarter of 2001, as compared to the
first quarter of 2000. This decrease was primarily attributable to lower
personnel related expenses due to lower headcount and decreases in recruiting
and trade show expenses.

General and Administrative

General and administrative expenses include personnel costs for finance,
administration, information systems, and general management, as well as
professional fees, legal expenses, and other administrative costs. General and
administrative expenses increased by $31,800, or 11%, to $325,800 in the first
quarter of 2001, as compared to the first quarter of 2000. The increase was
primarily attributable to higher legal and other professional expenses incurred
in connection with certain corporate governance matters and our relationship
with Maden Tech Consulting, Inc., partially offset by decreases in personnel
related expenses due to lower headcount.

Other income, net

Other income and expense includes interest income net of interest
expense, foreign exchange gains and losses and gains from closure of UK
operations. Interest income is primarily derived from short-term
interest-bearing securities and money market accounts. Other income, net
increased by $22,000, or 123%, to $40,000 in the first quarter of 2001, as
compared to the first quarter of 2000, primarily due to a gain related to the
liquidation of our dormant operations in the UK, partially offset by a decrease
in interest income due to a lower average balance of invested cash.

Provision for income taxes

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Provision for income taxes consists of the minimum California state
income taxes due for 2001, and the minimum California and New Jersey state
income taxes due for 2000. No tax benefits have been recognized during the first
quarter of either 2001 or 2000 due to the uncertainty related to Enlighten's
ability to recognize a tax benefit for loss and credit carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001, our cash balance was $63,800, representing 7% of
total assets. Cash equivalents are highly liquid investments with original
maturities of ninety days or less. Our working capital deficit was $942,200 as
of March 31, 2001. We had debt of $325,000 as of March 31, 2001 in addition to
normal trade payables and accrued liabilities. Shareholders' deficit as of
March 31, 2001 was $334,500.

During the three months ended March 31, 2001, our operating activities
used cash of $439,500, compared to cash used by operating activities of $318,700
in the same period in the prior year. The increase in cash used by operating
activities was principally caused by changes in the balances of operating assets
and liabilities, partially offset by a decrease in net loss.

Enlighten's investing activities consisted primarily of additions to
capital equipment in 2001 and 2000 and the capitalization of software
development costs in 2000, which represented $6,700 and $29,400 of cash used
for investing activities during the three months ended March 31, 2001 and 2000,
respectively.

Financing activities consisted primarily of the issuance of common stock
and advances under a convertible note payable. Financing activities provided
cash of $327,400 in the first quarter of 2001, compared with cash provided of
$51,000 in the same period of 2000. Cash provided from financing activities in
the first quarter of 2001 consisted primarily of advances on the loan agreement
with Maden Tech. Cash provided from financing activities in the first quarter of
2000 consisted of proceeds from the exercise of employee stock options and the
employee stock purchase plan.

We will require substantial additional funding to fund our current
obligations and meet our other obligations through 2001. To that end, in
February 2001, we entered into a loan agreement with Maden Tech, through which
we obtained a credit facility from Maden Tech. Under the loan agreement, Maden
Tech agreed to provide us 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 our core products, technology
and intellectual property and are evidenced by a convertible note repayable upon
demand by Maden Tech after July 15, 2001. Interest shall be paid quarterly at a
rate equal to the Federal short-term rate announced by the Internal Revenue
Service, calculated monthly, 4.75% at March 31, 2001.

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To satisfy certain of the conditions precedent specified in the loan
agreement, on March 6, 2001, we (1) expanded the size of our board of directors
from four to seven members, (2) caused one of our incumbent directors to resign
effective upon the receipt of the initial advance, and (3) appointed four
individuals designated by Maden Tech to serve on our board of directors. In
addition, Omar Maden, the sole stockholder, Chief Executive Officer and a
director of Maden Tech, was appointed to serve as our Chief Executive Officer
effective immediately following the initial advance.

Subject to adjustment upon the occurrence of certain events, Maden Tech
is entitled to convert amounts extended under the credit facility into shares of
our common stock at a conversion price of $0.225 per share. Accordingly, as a
result of the initial $100,000 advance made by Maden Tech on March 6, 2001,
Maden Tech acquired beneficial ownership of 444,444 shares of our common stock.
On March 12, 2001 and March 28, 2001, Maden Tech advanced additional amounts of
$75,000 and $150,000, respectively. This $225,000 can be converted in to an
aggregate of an additional 1,000,000 shares of common stock. Maden Tech expects
to acquire beneficial ownership of additional shares of our common stock as
additional amounts are loaned to us under the credit facility. If the credit
facility were fully extended, Maden Tech would acquire the right to convert the
indebtedness into up to 49.9% of the shares of our common stock then outstanding
(excluding, for the purpose of such calculation, shares of common stock issuable
upon exercise by Maden Tech of the warrant described in the next paragraph).

As a condition precedent to obtaining the initial advance, on March 6,
2001, we granted Maden Tech a warrant to purchase up to 2,000,000 shares of our
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 our common stock calculated as of the trading day immediately before
the date of exercise. Accordingly, as of March 31, 2001, Maden Tech beneficially
owned 3,444,444 shares of our common stock, representing 40.9% of the shares of
common stock then outstanding.

In conjunction with our agreement with Maden Tech, we are refocusing our
business strategy from a technology orientation to a solutions based sales and
marketing effort. Additionally, we implemented a plan to decrease our operating
expenses to a level for which our historical sales volume can support. As a
result, our headcount decreased as engineering positions were eliminated and
through increased attrition in other departments. We will continue our effort
to add OEM partners and increase our end-user customer sales for both product
license fees and consulting services.

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Our ability to continue as a going concern depends on our success in
implementing the foregoing strategy on a timely basis. If our efforts to
increase our sales and decrease our operating expenses fail or if Maden Tech
does not advance amounts under the convertible note payable or if Maden Tech
requires a cash repayment of borrowings under the convertible note payable, we
would be required to obtain additional financing. There can be no assurance that
we would be able to obtain such financing, or that any financing would result in
a level of net proceeds required.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain statements contained in this Quarterly Report on Form 10-QSB,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "intends," "expects" and words of similar import,
constitute forward-looking statements within the meaning of the Private
Securities Reform Act of 1995. Actual results could vary materially from those
expressed in those statements. Readers are referred to the "Management's
Discussion and Analysis or Plan of Operation" section contained herein as well
as the factors described below, which identify some of the important factors or
events that could cause actual results or performance to differ materially from
those contained in the forward looking statements.

WE HAVE EXPERIENCED SIGNIFICANT OPERATING LOSSES AND HAVE AN ACCUMULATED
DEFICIT, AND WE MAY NOT BE ABLE TO SATISFY OUR FUTURE CAPITAL AND OPERATING
REQUIREMENTS. OUR AUDITORS HAVE ISSUED THEIR REPORT ON OUR FISCAL YEAR 2000
CONSOLIDATED FINANCIAL STATEMENTS WHICH DISCUSSED SUBSTANTIAL DOUBT WITH
RESPECT TO OUR ABILITY TO CONTINUE AS A GOING CONCERN

We have a history of losses, anticipate further losses in 2001 and may
not achieve profitability. We expect our cash flow from operations in 2001 to be
insufficient to cover our capital or operating requirements, and we expect to
incur a net loss in 2001. To meet our capital and operating requirements, we are
seeking to restructure our business operations and will require additional
funding. Given our uncertain financial condition, our independent auditors have
concluded there exists substantial doubt as to our ability to continue as a
going concern and accordingly, have included a "going concern" uncertainty
paragraph in their report on our December 31, 2000 consolidated financial
statements.

WE CONTINUE TO NEED ADDITIONAL CAPITAL, AND WE MIGHT NOT BE ABLE TO OBTAIN
ADDITIONAL FINANCING

During the last five years we have financed our operations primarily
through sales of equity securities and the sale of a prior product line. We
believe that our existing capital resources, assuming Maden Tech remains willing
to advance up to the full $1,118,250 under our recently obtained credit
facility, are adequate to maintain our current operations through December 2001.
In order to maintain our current operations beyond December 2001 and to continue
to fund our operations and meet our other obligations through 2001, we may be
required

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to obtain additional financing, particularly if Maden Tech declines to advance
additional funds under the credit facility. The extent of our need for
additional financing depends on our future performance, which, in part, is
subject to general economic conditions and other factors beyond our control. We
may not be able to obtain such financing in the amounts required for us to
remain in business.

WE HAVE RECEIVED NOTIFICATION FROM THE NASDAQ STOCK MARKET THAT OUR COMMON STOCK
MAY BE DELISTED AS A RESULT OF OUR FAILURE TO COMPLY WITH THE CONTINUED LISTING
REQUIREMENTS OF THE NASDAQ SMALLCAP MARKET

We received a determination letter from Nasdaq on April 26, 2001,
indicating that our common stock is subject to delisting from the Nasdaq
SmallCap Market due to our inability to meet the continued listing requirement
that our stock maintain a $1.00 minimum bid price on Nasdaq. Although we have
appealed that determination, and our common stock will remain listed pending
Nasdaq's final decision in response to our appeal, we cannot assure you that
Nasdaq's decision ultimately will be favorable to us. If our common stock is
delisted, it will trade over-the-counter rather than on Nasdaq, which could
impair the liquidity of the trading market and cause holders to have difficulty
trading in our stock.

OUR FUTURE REVENUES ARE UNPREDICTABLE, OUR OPERATING RESULTS ARE LIKELY TO
FLUCTUATE FROM QUARTER TO QUARTER AND IF WE FAIL TO MEET THE EXPECTATIONS OF
INVESTORS OR ANALYSTS, OUR STOCK PRICE COULD DECLINE SIGNIFICANTLY

We have experienced significant quarterly fluctuations in operating
results and expect that these fluctuations will continue in future periods.
These fluctuations have been caused by a number of factors, including:

- the timing of new product or product enhancement introductions
by us or our competitors,

- the development and introduction of new operating systems that
require additional development efforts,

- purchasing patterns of our customers,

- size and timing of individual orders,

- the rate of customer acceptance of new products and

- pricing and promotion strategies undertaken by us or our
competitors.

Future operating results may fluctuate as a result of these and other
factors, including:

- our ability to continue to develop, acquire and introduce new
products on a timely basis,

- the timing and level of sales by our OEM or other third-party
licensees of computer systems or software incorporating our
products,

- technological changes in computer systems and environments,

- quality control of the products sold,

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- our success in shifting our primary sales strategy from direct
to indirect channels and

- general economic conditions.

Additionally, our operating results may be influenced by seasonality and
overall trends in the global economy. Because we operate with a relatively small
backlog, quarterly sales and operating results generally depend on the volume
and timing of orders received during the quarter, which are difficult to
forecast. Historically, we have recognized a substantial portion of our license
revenues in the last month of the quarter, particularly the last week. Since our
staffing levels and other operating expenses are based upon anticipated
revenues, delays in the receipt of orders can cause significant fluctuations in
income from quarter to quarter.

MADEN TECH CONTROLS OUR OPERATIONS

To satisfy the conditions precedent specified in the loan agreement, we
entered in to with Maden Tech, on March 6, 2001, we (1) expanded the size of our
board of directors from four to seven members, (2) caused one of our incumbent
directors to resign effective upon the receipt of the initial advance, and (3)
appointed four individuals designated by Maden Tech to serve on our board of
directors. In addition, Omar Maden, the sole stockholder, Chief Executive
Officer and a director of Maden Tech, was appointed to serve as our Chief
Executive Officer effective immediately following the initial advance. Moreover,
as of May 11, 2001, Maden Tech beneficially owned 4,222,222 shares of our common
stock, representing 45.9% of the shares of common stock then outstanding. As a
result, Maden Tech controls our day-to-day operations and has the ability, upon
acquiring shares of our common stock by converting amounts outstanding under the
credit facility and by exercising its warrant, to exert significant influence on
the outcome of all matters submitted to a vote of our shareholders.

WE NOW DERIVE ALL OF OUR REVENUES FROM THE OPEN SYSTEMS MARKET AND WE MAY NOT BE
SUCCESSFUL IN THAT MARKET

The future success of our business is substantially dependent on our
ability to generate significant revenue from our Unix, Linux, FreeBSD and
Windows product offering. Although we have entered into a number of agreements
with others to bundle or integrate our products into theirs, we may not be
successful in our efforts to generate significant revenue from these agreements.

A SIGNIFICANT PERCENTAGE OF OUR REVENUE IS ATTRIBUTED TO SALES TO ONE OF OUR
CUSTOMERS, AND OUR CONTRACT WITH THAT CUSTOMER HAS EXPIRED, LEAVING US WITHOUT A
KEY SOURCE OF REVENUE

Our largest customer accounts for a substantial percentage of our
revenues. During the three months ended March 31, 2001 and 2000, approximately
35% and 29%, respectively, of our revenues consisted of license and maintenance
fees received under our OEM relationship with Silicon Graphics to bundle a
subset of features of the EnlightenDSM product with each Unix server and
workstation that Silicon Graphics ships. Our license agreement with Silicon
Graphics

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terminated at the end of the first quarter of fiscal year 2001, the end date of
our three-year agreement. If we are unable to generate revenues from new sources
to replace the Silicon Graphics revenue, our revenues and financial results will
be harmed.

WE ARE DEPENDENT ON RESELLERS AND IF THEY ARE NOT SUCCESSFUL MARKETING OUR
TECHNOLOGY, OUR ABILITY TO MAINTAIN OR INCREASE OUR REVENUES WILL BE HARMED

We sell through resellers in the United States and abroad. We have no
control over our third-party distributors, their shipping dates or the volumes
of systems shipped by them. These companies may not license our products in
volumes anticipated by us. If they fail to do so, our revenues will be harmed.

IF OUR RESELLERS ARE NOT SUCCESSFUL IN EXPANDING DISTRIBUTION CHANNELS, OUR
ABILITY TO MAINTAIN OR INCREASE OUR REVENUES MAY BE HARMED

Our growth depends on our ability to continue to expand our third-party
distribution channel to market, sell and support our software products. We are
currently investing, and intend to continue to invest, resources to develop this
channel. We may not be successful in recruiting new organizations to represent
us and our products.

WE RELY ON THIRD PARTIES FOR TECHNICAL SUPPORT, AND IF THEY DON'T PROVIDE
ADEQUATE SERVICE, OUR BUSINESS MAY BE HARMED

We are dependent on our third-party distributors for technical support
and consultation to end-users. We must educate our third-party distributors so
that they obtain technical proficiency and knowledge with respect to our
products. This may result in, among other things, an increased workload for our
internal support and engineering staff or poor customer acceptance of our
products or both, either of which would significantly harm our business.

OUR MARKET IS SUBJECT TO INTENSE COMPETITION AND CONTINUED COMPETITION IN OUR
MARKET MAY LEAD TO A REDUCTION IN OUR PRICES, REVENUES AND MARKET SHARE

We experience intense competition from other systems management
companies. Our ability to compete successfully depends on a number of factors,
including the performance, price and functionality of our products relative to
those of our competitors. Most of our competitors are larger and have greater
financial, technical, marketing, support and other resources than us. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer requirements than us. In addition, our industry is
characterized by low barriers to entry. Other competitors can easily enter the
market. Our current competitors or any new market entrants may develop systems
management products that offer significant performance, price or other
advantages over our technology. In addition, we sell our products through
operating system vendors. These same operating system vendors could introduce
new or upgrade existing operating systems or environments that include systems
which perform the same functions as the products offered by us. This could
render our products obsolete and

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unmarketable. If we are not able to successfully compete against current or
future competitors, our revenues or profits could be harmed.

ALL OF OUR LICENSE REVENUE IS DERIVED FROM A SINGLE PRODUCT FAMILY AND IF THOSE
PRODUCTS FAIL TO ACHIEVE AND MAINTAIN MARKET ACCEPTANCE, OUR BUSINESS WOULD BE
SIGNIFICANTLY HARMED

Our EnlightenDSM products have accounted for all of our license revenue
since October 1, 1997. We expect that the EnlightenDSM product family and its
extensions and derivatives will continue to account for a substantial majority,
if not all, of our revenue for the foreseeable future. Broad market acceptance
of EnlightenDSM is, therefore, critical to our future success. Failure to
achieve broad market acceptance of EnlightenDSM, as a result of competition,
technological change or otherwise, would significantly harm our business. Our
future financial performance will depend in significant part on the successful
development, introduction and market acceptance of EnlightenDSM and its product
enhancements. If we are not successful in marketing EnlightenDSM or any new
products, applications or product enhancements, our revenues would be
significantly reduced.

THE MARKET FOR OUR PRODUCTS IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE, AND
IF WE ARE NOT ABLE TO DEVELOP OR MARKET NEW PRODUCTS TO RESPOND TO SUCH CHANGE,
OUR REVENUE WOULD BE SIGNIFICANTLY AFFECTED

The market for our products is characterized by rapid technological
developments, evolving industry standards and rapid changes in customer
requirements. The introduction of products embodying new technologies, including
new operating systems, applications, hardware products, systems management
frameworks and network management platforms, the emergence of new industry
standards or changes in customer requirements could render our existing products
obsolete and unmarketable. As a result, our success depends upon our ability to
continue to enhance existing products, respond to changing customer requirements
and rapidly develop and introduce new products that keep pace with technological
developments and emerging industry standards. We may not be successful in
developing and marketing, on a timely basis, product enhancements or new
products that respond to technological change, evolving industry standards or
changing customer demands.

WE MAY BE FORCED TO FORFEIT OUR RIGHTS TO OUR INTELLECTUAL PROPERTY IF WE DO NOT
PERFORM OUR OBLIGATIONS OR IF THERE IS A DEFAULT UNDER THE AGREEMENTS EVIDENCING
THE CREDIT FACILITY WE OBTAINED FROM MADEN TECH

In order to obtain advances under the credit facility we obtained from
Maden Tech Consulting, Inc., we granted Maden Tech a first priority security
interest in our EnlightenDSM software and other key intellectual property. In
addition, we also granted Maden Tech the right to require us to assign to Maden
Tech all of our rights to our EnlightenDSM software and other key intellectual
property. Thus if we fail to comply with our obligations under our agreements
with Maden Tech, we will lose all of our rights to conduct our business as we
currently conduct

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it using the EnlightenDSM software and our other key intellectual property.
Instead, Maden Tech would have the exclusive rights to:

- use the EnlightenDSM software and other key intellectual
property,

- operate, manage and control our business and collect all rents
and revenues from the EnlightenDSM software and our other key
intellectual property,

- sell, assign or grant licenses to use the EnlightenDSM software
and our other key intellectual property on terms and conditions
set by Maden Tech,

- sue for, collect and receive all income, royalties, damages and
payments due and/or payable in connection with the EnlightenDSM
software and our other key intellectual property.

OUR FAILURE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS COULD SERIOUSLY HARM
OUR BUSINESS

We generally rely on copyrights, trademarks, trade secret laws and
software security measures, along with employee and third-party nondisclosure
agreements, to establish and protect our proprietary intellectual property
rights, products and technology. Our products are typically licensed on a "right
to use" basis pursuant to licenses that restrict the use of the products to the
customer's internal purposes. We distribute our software under license
agreements that are signed by our end-users. We also distribute our software to
our OEM partners under similar software license and distribution agreements.
Despite our precautions taken to protect our software, unauthorized parties may
attempt to reverse engineer, copy or obtain and use information we regard as
proprietary. Policing unauthorized use of our products is difficult and software
piracy is a persistent problem. Additionally, the laws of some foreign countries
do not protect our proprietary rights to the same extent as do the laws of the
United States. We cannot assure you that our reliance on licenses to third
parties or copyright, trademark, trade secret protection or our software
security measures, will be enough to be successful and profitable in the
industry in which we compete.

WE MAY BE REQUIRED TO RELEASE OUR SOURCE CODE TO CERTAIN CUSTOMERS IF WE FAIL TO
FULFILL OUR CONTRACTUAL OBLIGATIONS, WHICH COULD RESULT IN THE MISUSE OF OUR
INTELLECTUAL PROPERTY

We have entered into source code escrow agreements with some of our
customers that require the release of source code to the customer in the event
there is a bankruptcy proceeding by or against us, we cease to do business or we
are unable to fulfill our contractual support obligations. In the event of a
release of the source code, the customer is required to maintain confidentiality
of the code and, in general, to use the source code solely for the purpose of
maintaining the software's usability. Releasing source code to customers may
increase the likelihood of misappropriation or other misuse of our intellectual
property. If our source code was misused or misappropriated, it could
significantly harm our business.

INTELLECTUAL PROPERTY INFRINGEMENT BY OR AGAINST US COULD SIGNIFICANTLY HARM OUR
BUSINESS

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From time to time, we receive notices from third parties asserting that
we have infringed their patents or other intellectual property rights. In
addition, we may initiate claims or litigation against third parties for
infringement of our proprietary rights or to establish the validity of our
proprietary rights. Any such claims could be time-consuming, result in costly
litigation, cause product shipment delays or lead us to enter into royalty or
licensing agreements rather than dispute the merits of such claims. As the
number of software products in the industry increases and the functionality of
such products further overlap, we believe that software developers may become
increasingly subject to infringement claims. Any such claims, with or without
merit, can be time consuming and expensive to defend. In addition, an adverse
outcome in litigation could subject us to significant liabilities to third
parties, require expenditure of significant resources to develop non-infringing
technology, require disputed rights to be licensed from others or require us to
cease the marketing or use of certain products. Such a result could have a
material adverse effect on our business, operating results and financial
condition.

A DECLINE IN SALES OF UNIX OR LINUX SYSTEMS WILL RESULT IN A DECREASE IN
REVENUES.

A significant portion of our revenue will be derived from Unix and Linux
based computer systems for the foreseeable future. While we have also released
versions of our products for the Windows NT platform, the product's graphical
user interface is available only on Unix and Linux based systems, and,
therefore, users must manage their environments from these types of systems. A
significant decline in sales of Unix and Linux based systems would decrease the
demand for our products and would significantly harm our business.

IF THE OPEN SYSTEMS MANAGEMENT MARKET FAILS TO GROW, OUR BUSINESS WOULD BE
SIGNIFICANTLY HARMED

For the foreseeable future, all of our business will be in the open
systems (Unix, Linux, FreeBSD and Windows NT) management market, which is still
an emerging market. Our future financial performance will depend in large part
on continued growth in the number of companies adopting systems management
solutions for their client/server computing environments. The market for systems
management solutions may not continue to grow. If the systems management market
fails to grow or grows more slowly than we currently anticipate, our business
would be significantly harmed.

OUR SUCCESS IS TIED TO THE SUCCESS OF OTHER SEGMENTS OF THE COMPUTER INDUSTRY.

Our products are marketed to users of computer products. During recent
years, segments of the computer industry have experienced significant economic
downturns characterized by decreased product demand, production overcapacity,
price erosion, work slowdowns and layoffs. Our operations may in the future
experience substantial fluctuations from period-to-period as a consequence of
such industry patterns, general economic conditions affecting the timing of
orders from major customers and other factors affecting capital spending. Such
factors may significantly harm our business.

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OUR FAILURE TO ATTRACT, TRAIN, MOTIVATE, AND RETAIN KEY EMPLOYEES MAY HARM OUR
BUSINESS

The competition for highly skilled employees is intense. Our business
depends on the efforts and abilities of our senior management, our research and
development staff and other key sales, support, technical and services
personnel. Our failure to attract, train, motivate and retain such employees
would impair our development of new products, our ability to provide technical
services and the management of our business. This would seriously harm our
business, operating results and financial position.

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PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Enlighten is subject to certain legal actions that have arisen in the
ordinary course of business. Management believes that the ultimate outcome of
these actions will not have a material affect on Enlighten's consolidated
financial statements or results of operations, although there can be no
assurance as to the outcome of such litigation.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

10.1 Loan Agreement dated as of February 14, 2001 by and among the
Registrant and Maden Tech

10.2 Convertible Demand Note made March 6, 2001

10.3 Warrant Agreement dated as of March 6, 2001 by and among the
Registrant and Maden Tech

10.4 Warrant Certificate MT-001 issued March 6, 2001

10.5 Registration Rights Agreement dated as of March 6, 2001 by and
among the Registrant and Maden Tech

10.6 Software Security Agreement dated as of February 14, 2001 by and
among the Registrant and Maden Tech

10.7 Conditional Assignment dated as of February 14, 2001

(b) Reports on Form 8-K:

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Our current reports on Form 8-K as filed on March 15, 2001 included
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 as referenced in
the Exhibit list above.

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ENLIGHTEN SOFTWARE SOLUTIONS, INC.

FORM 10-QSB, MARCH 31, 2001
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, thereunto duly authorized.

Enlighten Software Solutions, Inc.

DATE: May 14, 2001 SIGNATURE: /s/ Omar Maden
----------------- ---------------------------
Omar Maden
President and
Chief Executive Officer

DATE: May 14, 2001 SIGNATURE: /s/ Stephen E. Giusti
----------------- ---------------------------
Stephen E. Giusti
Vice President, Finance and
Administration and
Chief Financial Officer

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