-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CU9wVbLnB4VDk6Aa0AQS9iWXY+UV/YZGwhxzjmZilnV1420XfH81KJRcjSrBpgKf Quinauwab/XXcYFVeMyZfw== 0000950149-97-001533.txt : 19970814 0000950149-97-001533.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950149-97-001533 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENLIGHTEN SOFTWARE SOLUTIONS INC CENTRAL INDEX KEY: 0000919175 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943008888 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23446 FILM NUMBER: 97658421 BUSINESS ADDRESS: STREET 1: 999 BAKER WAY STE 390 CITY: SAN MATCO STATE: CA ZIP: 94404-1578 BUSINESS PHONE: 4155780700 FORMER COMPANY: FORMER CONFORMED NAME: SOFTWARE PROFESSIONALS INC DATE OF NAME CHANGE: 19940217 10QSB 1 FORM 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10 - QSB (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR [ ] 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. ---------------------------------- (Exact Name as registrant specified 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) (Zip code) (415) 578-0700 (Registrant's telephone number, including area code) 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 --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 1997: OUTSTANDING CLASS JUNE 30, 1997 ----- ------------- Common Stock, no par value 2,938,124 This is Page 1 of 14 Pages. The Index to Exhibits begins on Page 13 2 ENLIGHTEN SOFTWARE SOLUTIONS, INC. QUARTERLY REPORT ON FORM 10-QSB QUARTER ENDED JUNE 30, 1997 TABLE OF CONTENTS
PAGE NO. - -------------------------------------------------------------------------------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets - 3 As of June 30, 1997 and December 31, 1996 Condensed Consolidated Statements of Operations - 4 Three months ended June 30, 1997 and 1996, and Six months ended June 30, 1997 and 1996 Condensed Consolidated Statements of Cash Flows - 5 Six months ended June 30, 1997 and 1996 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of 8 Financial Condition and Results of Operations - -------------------------------------------------------------------------------- PART II OTHER INFORMATION Item 1. Legal Proceedings 11 Item 4. Submissions of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 - -------------------------------------------------------------------------------- SIGNATURES 12 - --------------------------------------------------------------------------------
Page 2 3 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1997 1996 ------------ ------------ (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $ 208,564 $ 689,611 Short term investments 712,104 1,639,065 Accounts receivable, less allowance for doubtful accounts 1,092,636 1,500,051 Refundable income taxes 400,669 400,669 Prepaid expenses and other assets 193,517 215,819 ----------- ----------- Total current assets 2,607,490 4,445,215 Property and equipment, net 1,050,924 1,152,302 Acquired technology and software development costs, net 785,256 903,346 Other assets 217,581 208,384 ----------- ----------- $ 4,661,251 $ 6,709,247 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 259,168 $ 344,266 Accrued and other current liabilities 346,801 595,252 Deferred revenue 1,467,190 1,475,273 ----------- ----------- Total current liabilities 2,073,159 2,414,791 ----------- ----------- Shareholders' equity: Common stock 5,014,741 4,921,208 Unrealized gain on investments 26,104 -- Accumlated deficit (2,452,753) (626,752) ----------- ----------- Total shareholders' equity 2,588,092 4,294,456 ----------- ----------- $ 4,661,251 $ 6,709,247 =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements Page 3 4 ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Six months ended June 30, June 30, ---------------------------- ---------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenue: Product license fees $ 540,952 $ 167,402 $ 972,630 $ 495,020 Product maintenance fees 846,687 861,024 1,708,892 1,775,866 Consulting services 40,711 90,405 75,762 316,541 ----------- ----------- ----------- ----------- Total revenue 1,428,350 1,118,831 2,757,284 2,587,427 Cost of revenue 235,636 221,692 465,926 523,472 ----------- ----------- ----------- ----------- Gross profit 1,192,714 897,139 2,291,358 2,063,955 ----------- ----------- ----------- ----------- Operating expenses: Research and development 541,888 442,744 1,238,152 842,646 Sales and marketing 947,271 650,079 2,117,816 1,232,032 General and administrative 445,113 333,940 802,716 655,022 ----------- ----------- ----------- ----------- Total operating expenses 1,934,272 1,426,763 4,158,684 2,729,700 ----------- ----------- ----------- ----------- Operating loss (741,558) (529,624) (1,867,326) (665,745) ----------- ----------- ----------- ----------- Other income (expense): Interest income net of interest expense 32,234 38,736 35,008 71,682 Foreign exchange gain (loss), net 9,677 (19,140) 7,397 (56,466) ----------- ----------- ----------- ----------- Total other income 41,911 19,596 42,405 15,216 ----------- ----------- ----------- ----------- Loss before income taxes (699,647) (510,028) (1,824,921) (650,529) Income tax expense (benefit) 0 (123,408) 1,080 (158,236) ----------- ----------- ----------- ----------- Net loss $ (699,647) $ (386,620) $(1,826,001) $ (492,293) =========== =========== =========== =========== Net loss per share $ (0.24) $ (0.13) $ (0.62) $ (0.17) =========== =========== =========== =========== Shares used in computing net loss per share 2,937,810 2,894,144 2,931,018 2,860,637 =========== =========== =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements Page 4 5 ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30, ---------------------------- 1997 1996 ----------- ----------- Cash flows from operating activities: Net loss $(1,826,001) $ (492,293) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization 358,431 248,079 Changes in operating assets and liabilities: Accounts receivable, net 407,415 583,717 Refundable income taxes -- (164,391) Prepaid expenses and other assets 13,105 (30,569) Trade accounts payable (85,098) 89,378 Accrued and other liabilities (248,451) (374,862) Deferred revenue (8,083) (141,514) ----------- ----------- Net cash used for operating activities (1,388,682) (282,455) ----------- ----------- Cash flows from investing activities: Short-term investments, net 953,065 (756,772) Capitalization of software development costs (66,449) (313,895) Purchases of property and equipment (72,514) (104,766) ----------- ----------- Net cash provided by (used for) investing activities 814,102 (1,175,433) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of stock 93,533 234,018 ----------- ----------- Net decrease in cash and cash equivalents (481,047) (1,223,870) Cash and cash equivalents at beginning of period 689,611 2,124,525 ----------- ----------- Cash and cash equivalents at end of period $ 208,564 $ 900,655 =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements Page 5 6 ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The Consolidated Financial Statements of ENlighten Software Solutions, Inc. and Subsidiary (the "Company") included in the Company's Form 10-KSB for the year ended December 31, 1996 contain additional information about the Company, its operations, and its financial statements and accounting practices, and should be read in conjunction with this Quarterly Report on Form 10-QSB. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-QSB and therefore certain information and footnote disclosures normally contained in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to present a fair statement of the financial position as of June 30, 1997, and the results of operations and cash flows for the interim periods presented. 2. Revenue Recognition Product license fees are recognized after the following events have occurred: a product evaluation has been shipped to the customer; the customer elects to purchase the software following an evaluation period; the customer signs the related contract; and collection of the sales price is probable. Product maintenance fees committed as part of new product licenses and maintenance resulting from renewed maintenance contracts are deferred and recognized ratably over the contract period, generally one year. Consulting service revenue is recognized when services are performed for time and material contracts and on a percentage of completion basis for fixed price contracts. 3. Cash and Cash Equivalents The Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company has classified its investments in preferred stock as "available-for-sale." Such investments are recorded at fair market value based on quoted market prices, with unrealized gains and losses reported as a separate component of stockholders' equity. 4. Property and Equipment Property and equipment are stated at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets, generally five years. Leasehold improvements are amortized on a straight-line basis over the lease term or the estimated useful life of the asset, whichever is less. Page 6 7 ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 5. Acquired Technology and Software Development Costs A summary of acquired technology and software development costs as of June 30, 1997 and December 31, 1996 follows:
June 30, December 31, 1997 1996 ---------- ----------- Acquired technology $ 475,000 $ 475,000 Software development costs 1,579,182 1,512,733 ---------- ---------- 2,054,182 1,987,733 ---------- ---------- Less accumulated amortization: Acquired technology 361,249 334,999 Software development costs 907,677 749,388 ---------- ---------- 1,268,926 1,084,387 ---------- ---------- $ 785,256 $ 903,346 ========== ==========
6. Recent Accounting Pronouncements The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS No. 128 requires the presentation of basic earnings per share ("EPS") and, for companies with complex capital structures or potentially dilutive securities, such as convertible debt, options and warrants, diluted EPS. SFAS No. 128 is effective for annual and interim periods ending after December 31, 1997. Had SFAS No. 128 been effective for the quarter ended June 30, 1997, basic EPS and diluted EPS would not have been significantly different from the reported net loss per share. The FASB also recently issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 130 and No. 131 are both effective for fiscal 1998. The Company is currently evaluating the impact of these statements on the financial statements. Page 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis Of Financial Condition and Results Of Operations includes a number of forward-looking statements which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below, that could cause actual results to differ materially from historical results or those anticipated. In this report, the words "anticipates", "believes", "expects", "intends", "future", and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. OVERVIEW ENlighten Software Solutions, Inc. develops, markets, and supports software products designed to automate the management of computer systems used by some of the world's largest companies in banking, finance, telecommunications, health care, information technology, and other major industries. ENlighten Software offers systems management and administration solutions for the UNIX and NT, as well as the Tandem systems markets. The Company's product solutions allow companies to manage their information systems by enabling systems managers and administrators to control their systems from diverse platforms such as Sun Microsystems, IBM, Hewlett-Packard, Silicon Graphics, Digital Equipment Corporation, Santa Cruz Operation (SCO), and Microsoft Windows NT. The Company develops software products internally and enhances and packages other software products it acquires. The following statements regarding the Company's future revenues, expenses, and net income are forward-looking statements, and actual results may vary substantially depending upon a variety of factors described in this paragraph and elsewhere in this report. The Company intends to continue expansion of its market presence through hiring additional staff, diversifying its product line, and/or adding features to existing products. This may require the Company to incur substantial additional operating expenses prior to its receipt of material additional revenues, if any, resulting from those expenditures. The Company expects that these expenses will be incurred prior to earning any related revenue and, therefore, may adversely affect the Company's quarterly net income in future periods. VARIABILITY OF QUARTERLY RESULTS The Company has experienced significant quarterly fluctuations in operating results and expects 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 the Company or its competitors, purchasing patterns of its customers, size and timing of individual orders, the rate of customer acceptance of new products, and pricing and promotion strategies undertaken by the Company or its competitors. Future operating results may fluctuate as a result of these and other factors, including the Company's ability to continue to develop, acquire, and introduce new products on a timely basis. Additionally, the Company's operating results may be influenced by seasonality (principally in Europe where sales are typically lower in the summer months) and overall trends in the global economy. Because the Company operates 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. Page 8 9 RESULTS OF OPERATIONS Total revenue. Revenue for the second quarter of 1997, totaled $1,428,000, a 28% increase when compared to the same quarter in 1996. Total revenue for the six months ended June 30, 1997, increased 7% to $2,757,000, from the same period in 1996. Product license fees increased significantly, while revenue from maintenance fees and consulting services decreased over the same periods of the prior year. Product license fees increased by $374,000, or 223%, in the second quarter of 1997 and increased by $478,000, or 96%, for the six months ended June 30, 1997, when compared to the same periods of 1996. The increase is primarily due to the Company's UNIX product, ENlighten for UNIX - Distributed Systems ManagerTM ("DSM"), which generated license fees of $257,000 and $317,000 in the second quarter of 1997 and the six months ended June 30, 1997, respectively. There were no comparable DSM revenues in the first six months of 1996. In the second quarter and the first six months of 1997, DSM revenue represented 48% and 33%, respectively, of total product license fees. All other products combined increased by $117,000, or 70%, and $161,000, or 33%, for the second quarter of 1997 and the six months ended June 30, 1997, respectively, when compared to the same periods of 1996. Revenue from consulting services decreased by $50,000, or 55%, in the second quarter of 1997 and decreased by $241,000, or 76%, for the six months ended June 30, 1997 when compared to the same periods in 1996. The decrease is due to a restructuring of the services division that resulted in the termination of high level custom development services projects by the end of the first quarter of 1996. The Company expects continued decreasing consulting service revenue as it restructures its service division to focus on service projects closely related to its product lines, as opposed to tailored development projects. Cost of revenue. Cost of revenue increased by $14,000, or 6%, in the second quarter of 1997 when compared to the same quarter in 1996. For the six months ended June 30, 1997, cost of revenue decreased by $58,000, or 11%. This decrease is attributable to a decrease in costs associated with consulting services. Costs of consulting services were reduced commensurate with the decrease in consulting revenue. The decrease in consulting services costs was partially offset by an increase in third party royalties and amortization related to capitalized costs from internally developed software. The increase in third party royalties relates to the overall increase in product license fees. The increase in amortization is a result of the release of various internally developed products, most notably version 2.0 DSM during mid-1996. Research and development. Research and development expenditures increased by $99,000, or 22%, in the second quarter of 1997, compared with same quarter in 1996. Gross research and development costs increased by $9,000, or 2%, while capitalized software development costs decreased by $90,000. For the six months ended June 30, 1997, research and development costs increased by $396,000, or 47%. The increase is a result of a $148,000 increase in gross research and development costs and a $248,000 reduction in capitalized software development costs. The increase in gross research and development costs is attributable to the use of short-term contractors in the continued development of the Company's DSM product. During the first half of 1997, the Company released DSM version 2.1, delivered its planned release of a DSM port to the Digital Equipment Corporation ("DEC") platform, and completed the port of DSM to Microsoft Windows NT. Due to these rapid increased demands on the engineering staff, contractors were used during the first half of 1997. While necessary to fill immediate needs, the use of third party contractors is more expensive than full time employee equivalents. Sales and marketing. Sales and marketing expenses increased by $297,000, or 46%, during the second quarter of 1997 compared to the same quarter of 1996, and $886,000, or 72%, year to date through June 30, 1997. This increase is mainly attributable to an increase in Page 9 10 sales and marketing personnel. Worldwide sales and marketing personnel-related costs increased due to the Company's reconstruction of its sales and marketing division, including senior management positions, and an increase to its direct sales force in the United States and Europe. Additionally sales and marketing expenses in the first half of 1996 reflected lower personnel costs due to a reduction in force in January 1996. General and administrative. General and administrative expenses increased by $111,000, or 33%, for the second quarter of 1997 when compared to the same quarter of 1996. For the six month period ended June 30, 1997, general and administrative expenses increased by $148,000, or 23%. The increase in expenses was due to an increase in legal fees related to legal proceedings against a third party developer described in the Company's Form 10-KSB for the year ended December 31, 1996. Provision for income taxes. The Company recognized a tax benefit of $123,000 and $158,000 in the second quarter of 1996 and for the six months ended June 30, 1996, respectively. A tax benefit was recognized due to the Company's ability to recover previously paid income taxes and no similar tax benefit exists during 1997. The tax expense for the six month period ended June 30, 1997 results from tax expense related to foreign jurisdictions. Net loss. Net loss was $700,000 in the second quarter of 1997, compared to a net loss of $387,000 in the same quarter in 1996. The net loss was $1,826,000 for the six months ended June 30, 1997, compared to a net loss of $492,000 in the same period in 1996. The net loss per share was $.24, based on 2,938,000 weighted average shares outstanding in the second quarter of 1997, compared to a loss per share of $.13, based on 2,894,000 weighted average shares outstanding, in the same quarter of 1996. The net loss per share was $.62, based on 2,931,000 weighted average shares outstanding for the six months ended June 30, 1997, compared to a loss per share of $.17, based on 2,861,000 weighted average shares outstanding, in the same period in 1996. LIQUIDITY AND CAPITAL RESOURCES During the first six months of 1997 the Company's operating activities used cash of $1,389,000, compared to cash used by operating activities of $282,000 in the same period of the prior year. The change is principally related to an increased net loss. The Company's investing activities have consisted primarily of sales of short-term investments, capitalization of software development costs, and expenditures for capital equipment. Investing activities provided cash of $814,000 for the six months ended June 30, 1997, compared with using cash of $1,175,000 in same period in 1996. The change is due to an increase in sales of short-term investments and a decrease in capitalization of software development costs during the six months ended June 30, 1997, when compared to the same period in 1996. Financing activities provided cash of $94,000 in the six months ended June 30, 1997, compared with providing cash of $234,000 for the same period in the prior year. The change is primarily due to decreased employee option exercises. As of June 30, 1997, the Company had cash, cash equivalents, and short-term investments of $921,000, compared to $2,978,000 at June 30, 1996, and working capital of $534,000, compared to working capital of $2,237,000 at June 30, 1996. The Company is currently leasing approximately 17,000 square feet of office space in San Mateo, California, under a lease expiring in April 2001. The Company is currently negotiating a sublease for approximately 4,300 square feet of its office space in San Mateo. The Company believes that its existing sources of liquidity and anticipated funds from operations will satisfy the Company's projected working capital and capital expenditure requirements through at least through December 31, 1997. Page 10 11 ENLIGHTEN SOFTWARE SOLUTIONS, INC. FORM 10-QSB, JUNE 30, 1997 PART II: OTHER INFORMATION Item 1. Legal Proceedings In January 1997, the Company was served with two complaints and demands for arbitration from TRIicon Solutions, Inc. ("TSI"). In the first complaint, TSI requested arbitration in order to confirm the termination of a distribution agreement entered into by and between the Company and TSI in August 1993. The Company filed a response and counter-claim in February 1997 asserting the termination by TSI was improper and a breach of contract for which it seeks compensation from TSI. In the second complaint, TSI requested arbitration in order to confirm the termination of an agreement for use of technology by and between TSI and the Company entered into in February 1994. The Company filed a response and counter-claim in February 1997 asserting the termination by TSI was improper and a breach of contract for which it seeks compensation from TSI. In June 1997 the parties agreed to mutually terminate the agreement for use of technology by and between TSI and the Company entered into in February 1994, and to drop all claims and counter-claims with respect to such agreement. Each party agreed to bear its own costs associated with this complaint and counter-claim. An arbitration hearing before the American Arbitration Association was held in July 1997 with respect to the distribution agreement entered into by and between the Company and TSI in August 1993. As of this filing, the arbitrator has not rendered a decision. Failure to be properly compensated for such improper termination may have an adverse financial impact on the Company. At this time, the Company is unable to predict the ultimate outcome of such arbitration, or the amount of monetary compensation awarded, if any. Item 4. Submissions of Matters to a Vote of Security Holders The annual meeting of shareholders of the Company was held on May 20, 1997. The following matters were submitted to a vote of shareholders: (a) Election of Directors
Date of Term Votes Name Expiration Votes Withheld ---- ------------ ----- -------- Peter J. McDonald 1998 Annual Meeting 2,631,269 82,500 Michael A. Morgan 1998 Annual Meeting 2,631,269 82,500 Peter J. Sprague 1998 Annual Meeting 2,631,269 82,500 Bruce Cleveland 1998 Annual Meeting 2,631,269 82,500
(b) Stock Option Plan Amendment A proposal was submitted to approve an amendment to the Company's 1992 Stock Option Plan to increase the maximum number of shares issuable under the Plan by 500,000 shares, from 1,000,000 shares to 1,500,000, and to increase by 125,000, from 25,000 to 150,000, the number of shares that may be issued to any person during any fiscal year of the Company. Approved by a vote of 1,943,670 shares in favor, 236,851 shares against, 3,550 shares abstaining, and 529,698 of broker non-votes. (c) Appointment of Independent Auditors A proposal to ratify the appointment of KPMG Peat Marwick LLP as independent auditors for the Company for the fiscal year ending December 31, 1997. Approved by a vote of 2,684,869 shares in favor, 28,800 shares against, 100 shares abstaining, and no broker non-votes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed in the accompanying Index of Exhibits on Page 14 are filed or incorporated by reference as part of this report. Exhibit numbers 10.1, 10.2, 10.3, 10.14, 10.15, 10.16, 10.21, 10.21.1, 10.22, 10.23, 10.24, 10.25, and 10.26 are management contracts or compensatory plans or arrangements. (b) Reports on Form 8-K During the quarter ended June 30, 1997, the Company did not file any reports on Form 8-K. ITEMS 2, 3, AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE. Page 11 12 ENLIGHTEN SOFTWARE SOLUTIONS, INC. FORM 10-QSB, JUNE 30, 1997 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:_____________________ SIGNATURE: /s/ Peter J. McDonald ------------------------- Peter J. McDonald Chief Executive Officer DATE:_____________________ SIGNATURE: /s/ Michael A. Morgan ------------------------- Michael A. Morgan Chief Financial Officer Page 12 13 ENLIGHTEN SOFTWARE SOLUTIONS, INC. FORM 10-QSB, JUNE 30, 1997 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 10.1(1)@ Form of Indemnity Agreement for officers and directors. 10.2(1)@ First Amended and Restated 1992 Stock Option Plan. 10.3(1)@ 1994 Employee Stock Purchase Plan. 10.4(1) Business Loan Agreement and related agreements, dated April 14, 1993, by and between ENlighten Software Solutions, Inc. and Commercial Center Bank. 10.5(1) Commercial Security Agreement and related agreements, dated April 14, 1993, by and between ENlighten Software Solutions, Inc. and Commercial Center Bank. 10.6(1) Loan Agreement and related agreements, dated April 14, 1993, by and ENlighten Software Solutions, Inc. and Commercial Center Bank. 10.10(1) Lease, dated January 19, 1989, by and between ENlighten Software Solutions, Inc. and Mariner's Island Ltd. for 999 Baker Way, Suite 390, San Mateo, California 94404, and Amendments 1, 2, 3 and 4 thereto. 10.11(1) Lease, dated November 25, 1994, by and between ENlighten Software Solutions, Ltd. and Cannon Silver Quastel for 6 Eghams Court, Boston Drive, Bourne End, Bucks, SL8 54S, U.K. 10.12(1) ENlighten Purchase Agreement, dated April 10, 1993, by and between and ENlighten Software Solutions, Inc. and Steve Killelea. 10.13(1) Partner Agreement, dated December 29, 1993, by and between ENlighten Software Solutions, Inc. and Gupta Corporation. 10.14(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between ENlighten Software Solutions, Inc. and Kenneth S. Voss. 10.15(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between ENlighten Software Solutions, Inc. and Michael A. Morgan. 10.16(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between ENlighten Software Solutions, Inc. and Michael A. Morgan. 10.17(3) Software Purchase and Assignment Agreement dated September 9, 1994 by and between Software Professionals and Sierra Software. 10.18(4) Stock Agreement dated December 30, 1994, by and between Software Professionals, Inc. and Network Partners, Inc. 10.19(5) Software Purchase and Assignment Agreement dated December 30, 1994, by and between ENlighten Software Solutions, Inc., Thomas Kraus, and Overseers Corporation. 10.20(5) Lease, dated February 24, 1995, by and between ENlighten Software Solutions, Inc. and Mariner's Island Ltd. for 999 Baker Way, Suite 500, San Mateo, California 94404.
Page 13 14
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 10.21(6)@ Employment letter and Termination and Change in Control Agreement, dated March 4, 1996, by and between ENlighten Software Solutions, Inc. and Byron E. Jacobs. 10.21.1(7)@ Amendment to Employment letter and Termination and Change in Control Agreement, dated November 6, 1996, by and between ENlighten Software Solutions, Inc. and Byron E. Jacobs. 10.22(6)@ Nonqualified Stock Option Agreement, dated March 4, 1996, by and between ENlighten Software Solutions, Inc. and Byron E. Jacobs. 10.23(6)@ Incentive Stock Option Agreement, dated March 4, 1996, by and between ENlighten Software Solutions, Inc. and Byron E. Jacobs. 10.24(7)@ Termination and Change in Control Agreement, dated April 24, 1996, by and between ENlighten Software Solutions, Inc. and Michael A. Morgan. 10.25(7)@ Employment letter, dated December 27, 1996, by and between ENlighten Software Solutions, Inc. and Mark Himelstein. 10.26(7)@ Nonqualified Stock Option Agreement, dated December 27, 1996, by and between ENlighten Software Solutions, Inc. and Mark Himelstein. 21.1(5) Subsidiaries of the Company.
- ------------------------------- (1) Incorporated by reference from exhibits of the same number in the Company's Registration Statement on Form S-1 (No. 33-75388), which was declared effective on April 19, 1994. (2) Exhibits 10.14, 10.15, 10.16 are incorporated by reference from exhibits 4.1, 4.2, and 4.3, respectively, in the Company's Registration Statement on Form S-1 (No. 33-75388), which was declared effective on April 19, 1994. (3) Incorporated by reference from an exhibit of the same number in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. (4) Incorporated by reference from exhibit 2.1 in the Company's Current Report on Form 8-K dated December 30, 1994. (5) Incorporated by reference from an exhibit of the same number in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. (6) Incorporated by reference from an exhibit of the same number in the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996. (7) Incorporated by reference from an exhibit of the same number in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996. @ Compensatory or employment arrangement. Page 14 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 208,564 712,104 1,092,636 0 0 2,607,490 2,520,417 1,469,493 4,661,251 2,073,159 0 0 0 5,014,741 26,104 4,661,251 2,757,284 2,757,284 465,926 465,926 4,158,684 0 0 (1,824,921) 1,080 (1,826,001) 0 0 0 (1,826,001) (0.62) (0.62)
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