<PAGE> 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, 1999
[ ] 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)
999 BAKER WAY, FIFTH FLOOR, SAN MATEO, CALIFORNIA 94404
(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, 1999 were
$3,244,400.
The approximate aggregate market value of the registrant's Common Stock held by
non-affiliates on May 19, 2000 was $12,992,847. 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 May 19, 2000 was 4,952,765.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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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, 1999.
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.
<TABLE>
<CAPTION>
Director
Name Age Position with Enlighten Since
- -------------------------------------------- --- ------------------------------ --------
<S> <C> <C> <C>
Michael Seashols (1)(2)..................... 54 Co-Chairman of the Board of 1997
Directors
David D. Parker............................. 44 Co-Chairman of the Board of 1997
Directors
Peter J. McDonald........................... 52 Director 1986
Peter J. Sprague (1)(2)..................... 61 Director 1994
Michael A. Morgan........................... 37 Director 1991
</TABLE>
- ---------------
(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. From 1994 through 1997, Mr.
Seashols served as Chief Executive Officer of Usoft, Inc., a wholly-owned
software subsidiary of Unysis, Inc. that provides development and maintenance
tools for client/server and Internet based computer applications. 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. He also
currently serves as Chairman of the Board of Evolve Corporation, a provider of
Services Resource Management (SRM) applications designed to manage
mission-critical processes for services organizations, as well as a consultant
to several software companies.
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.
From November 1996 through August 1997, Mr. 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
<PAGE> 3
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. McDonald founded Enlighten in June 1986 and served as Chairman of
the Board, Director, President, and Chief Executive Officer from that date
through July 1997. Since July 1997, Mr. McDonald has been employed as a
strategic advisor to Enlighten.
Mr. Sprague has served as a Director of Enlighten since February 1994.
From 1975 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. Morgan has served as a Director since October 1991. Mr. Morgan is
currently Vice President, Finance and Administration and Chief Financial Officer
of Talarian, Inc. From October 1991 through July 1999, Mr. Morgan served as Vice
President, Finance and Administration, Chief Financial Officer, and Secretary of
Enlighten after joining in May 1991 as Controller.
EXECUTIVE OFFICERS
The following sets forth certain information regarding the executive
officers of Enlighten.
Mr. Bradley was promoted to Chief Executive Officer in December 1999
after joining Enlighten in August 1998 as Vice President of Business Development
and in September 1999 becoming President and Chief Operating Officer. From
October 1997 through August 1998, Mr. Bradley served as a consultant to
Enlighten focusing on business development, strategic planning, and marketing.
Mr. Bradley served as President of Design Technology, Inc. a software
development and consulting firm in Denver, Colorado, from July 1995 through
October 1997. He started his career at IBM in the Data Processing Division and
is a graduate of Colorado College.
Mr. Giusti was promoted to Vice President, Finance and Administration
and Chief Financial Officer in December 1999 after joining 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 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
<PAGE> 4
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 1999.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
paid during the years ended December 31, 1999, 1998 and 1997 of the persons who
served as Chief Executive Officer during 1999 and the other most highly
compensated executive officers of Enlighten in 1999 and two former executive
officers (including the former Chief Executive Officer) who would have been
among the most highly compensated executive officers in 1999 but who were not
executive officers at December 31, 1999 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------- ------------
Other Securities
Annual Underlying
Year Salary Bonus Compensation Options
---- --------- -------- ------------ ------------
(shares)
<S> <C> <C> <C> <C> <C>
Bill Bradley, President and Chief 1999 $143,900 $ 25,000 $ -- 230,000
Executive Officer (1) 1998 $ 35,700 $ 7,500 $ 48,700 60,000
1997 $ -- $ -- $ 24,400 10,000
David D. Parker, Former President 1999 $180,000 $ 30,000 $ -- 100,000
and Chief Executive Officer (2) 1998 $180,000 $ 45,000 $ -- --
1997 $ 40,900 $ 20,000 $ -- 200,000
Michael A. Morgan, Former Vice 1999 $ 81,400 $ 10,000 $ -- 50,000
President, Finance and 1998 $120,000 $ 28,700 $ -- --
Administration and Chief 1997 $110,000 $ 23,800 $ -- 50,352(4)
Financial Officer (3)
</TABLE>
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(1) Mr. Bradley was named President and Chief Operating Officer in
September 1999 and Chief Executive Officer in December 1999.
(2) Mr. Parker resigned as an executive officer of Enlighten in December
1999.
(3) Mr. Morgan resigned as an executive officer of Enlighten in July 1999.
(4) Includes options to purchase an aggregate of 15,875 shares granted on
June 19, 1997 replacing an option to purchase 3,375 shares granted on
September 15, 1993, an option to purchase 5,000 shares granted on July
15, 1994, and an option to purchase 7,500 shares granted in August 30,
1995. Options to purchase 15,875 shares were canceled in connection
with a repricing in 1997.
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OPTION GRANTS IN 1999
The following table provides the specified information concerning
grants of options to purchase Enlighten's common stock made during 1999 to the
Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------
Percent Potential Realizable
of Total Value at Assumed
Number of Options Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Employees Exercise or Option Term
Options In Base Price Expiration -------------------------
Name Granted Fiscal Year Per Share Date 5% 10%
- --------------------------------- ---------- ----------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bill Bradley..................... 30,000 4% $2.8100 03/04/09 $ 53,000 $134,400
100,000 14% $3.1875 09/20/09 $200,500 $508,000
100,000 14% $3.5000 11/22/09 $220,100 $557,800
David D. Parker.................. 100,000 14% $2.8100 03/04/09 $176,700 $447,800
Michael A. Morgan................ 30,000 4% $2.8100 12/31/00 $ 8,600 $ 17,700
20,000 3% $3.6880 07/30/09 $ 57,500 $128,700
</TABLE>
AGGREGATE OPTION EXERCISES AND 1999 YEAR-END VALUES
The following table provides the specified information concerning
exercises of options to purchase Enlighten's common stock in 1999 and
unexercised options held as of December 31, 1999 by the Named Executive
Officers.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Underlying Unexercised Options In-the-Money Options
Shares at December 31, 1999 (shares)(1) at December 31, 1999 (2)
Acquired on Value -------------------------------- -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bill Bradley........ -- $ -- 40,713 259,287 $ 106,375 $ 577,875
David D. Parker..... 9,000 $ 48,938 136,234 154,766 $ 477,895 $ 484,895
Michael A. Morgan... 100,000 $ 436,555 35,102 18,334 $ 122,026 $ 33,221
</TABLE>
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(1) Enlighten stock options generally 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. Directors stock options
generally vest 1/12th each quarter.
(2) The value of the unexercised in-the-money options is based on the
closing price of Enlighten's common stock ($5.50 per share as reported
on the Nasdaq Stock Market) on December 31, 1999, and is net of the
exercise price of such options.
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
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(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 $3.23 per share were granted to
Mr. Sprague in February 1999 and options to purchase 5,000 shares at an exercise
price of $3.13 per share were granted to Mr. Morgan in July 1999.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Enlighten has entered into an agreement with its Chief Executive
Officer ("CEO") providing for benefits upon termination. The agreement provides
that in the event the CEO's employment is terminated by Enlighten, other than
for "Cause," or if the CEO terminates his employment with Enlighten for "Good
Reason" (as those terms are defined in the agreement), the CEO shall be entitled
to the following: (i) a severance payment equal to six (6) months of his
then-current base salary; and (ii) accelerated vesting equal to six (6) months
of normal vesting in all stock options granted prior to the date of termination.
Enlighten has also 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
<PAGE> 7
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 December 31, 1999, 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.
<TABLE>
<CAPTION>
Number of
Shares of Percentage
Common of
Stock Common
Beneficially Stock
Beneficial Owner (1) Owned (1)(2) Outstanding
- -------------------- ------------ -----------
<S> <C> <C>
Peter J. McDonald (3)................................................. 505,554 12%
Michael Seashols (4).................................................. 363,382 9%
David D. Parker (5)................................................... 198,234 5%
Bill Bradley (6)...................................................... 40,713 1%
Peter J Sprague (7)................................................... 43,748 1%
Michael A. Morgan (8)................................................. 35,102 1%
Executive officers and directors as a group (7 persons) (9)........... 1,186,733 29%
</TABLE>
- ----------
(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
4,217,978 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) Includes 7,500 shares subject to options which are exercisable as of
December 31 1999. Also includes 10,800 shares held by Mr. McDonald's
children.
(4) Includes 155,055 shares subject to options which are exercisable as of
December 31, 1999.
(5) Includes 150,520 shares subject to options which are exercisable as of
December 31, 1999.
(6) Consists of shares subject to options which are exercisable as of
December 31, 1999.
(7) Consists of shares subject to options which are exercisable as of
December 31, 1999.
(8) Consists of shares subject to options which are exercisable as of
December 31, 1999.
(9) Includes shares described in Notes 3, 4, 5, 6, 7, and 8.
<PAGE> 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 1999," "Option Exercises and 1999
Year-End Values," and "Compensation of Directors."
All future transactions, including loans, between the Company and its
officers, directors, principal shareholders, and their affiliates will continue
to be approved by the Board, including a majority of the disinterested
directors.
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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/ Bill Bradley
-----------------------------------------
Bill Bradley
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.
<TABLE>
<CAPTION>
Name/Title Date
---------- ----
<S> <C>
/s/ Bill Bradley May 22, 2000
- --------------------------------------------- ------------
Bill Bradley
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Stephen E. Giusti May 22, 2000
- --------------------------------------------- ------------
Stephen E. Giusti
Vice President, Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Michael Seashols May 22, 2000
- --------------------------------------------- ------------
Michael Seashols
Co-Chairman of the Board
/s/ David D. Parker May 22, 2000
- --------------------------------------------- ------------
David D. Parker
Co-Chairman of the Board
/s/ Peter J. McDonald May 22, 2000
- --------------------------------------------- ------------
Peter J. McDonald
Director
/s/ Peter J. Sprague May 22, 2000
- --------------------------------------------- ------------
Peter J. Sprague
Director
/s/ Michael A. Morgan May 22, 2000
- --------------------------------------------- ------------
Michael A. Morgan
Director
</TABLE>
