<PAGE>   1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                  FORM 10-KSB
                            ------------------------

      [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

      [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES AND EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER: 0-23446

                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                  CALIFORNIA                                     94-3008888
       (STATE OR OTHER JURISDICTION OF                        I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NUMBER)
</TABLE>

            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 [X]  NO [ ]

    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.  [ ]

    The registrant's revenues for the fiscal year ended December 31, 2000 were
$1,802,400.

    The approximate aggregate market value of the registrant's common stock held
by non-affiliates on March 15, 2001 was $2,380,600. 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 March 15, 2001 was 4,979,812.

                      DOCUMENTS INCORPORATED BY REFERENCE:

    Portions of the definitive proxy statement for the 2001 Annual Meeting are
incorporated by reference into Part III hereof.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                                    PART I.

ITEM 1. DESCRIPTION OF BUSINESS

     Certain statements contained in this Annual Report on Form 10-K, including,
without limitation, statements containing the words "anticipates," "believes,"
"expects," "intends," "future" and similar expressions constitute
forward-looking statements within the meaning of the Private Securities Reform
Act of 1995. 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. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and in "Management's Discussion and Analysis or Plan of
Operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.

OVERVIEW

     We provide software solutions 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. They are available for
multiple operating systems within three distinct categories of computer and
software architecture, including Unix, Linux, FreeBSD 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,
Silicon Graphics, Inc. or SGI, Sun Microsystems, Inc., Red Hat, Inc., TurboLinux
Inc., Caldera Systems, Inc. and SuSE, Inc. Our 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 and effective manageability to
Internet-based application environments and distributing our products through
third-party relationships such as software vendors, hardware vendors, Linux
distributors, systems management service providers and Linux appliance
manufacturers. We also plan to leverage the strategic relationship recently
developed with Maden Tech Consulting, Inc., to enhance our services practice and
expand our distribution network.

     Enlighten Software Solutions, Inc. was incorporated in California in June
1986 as LAB, Inc. In June 1986, LAB, Inc. changed its name to Software
Professionals, Inc. In May 1996, Software Professionals, Inc. changed its name
to Enlighten Software Solutions, Inc. Enlighten's principal executive offices
are located at 999 Baker Way, Fifth Floor, San Mateo, California 94404.
Enlighten's telephone number is (650) 578-0700.

RECENT DEVELOPMENTS FOR ENLIGHTEN

  Subsequent Events

     In February 2001, we entered into a loan agreement with Maden Tech
Consulting, Inc. or Maden Tech, a privately held Delaware corporation, 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

                                        2
<PAGE>   3

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.

     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.

     The four directors designated by Maden Tech were Omar Maden; David Ford,
Senior Vice President and General Counsel of Maden Tech; Robert Hinaman, CEO of
esqNetwork, Inc. and a former Managing Director of Chase Manhattan Bank for
European Mergers and Acquisitions; and Kim McCaffrey, President of MC Info, Inc.
a subsidiary of Maden Tech. The remaining three seats on our board of directors
continue to be held by three of the four incumbent members of the board,
including David Parker, Co-Chairman of the Board and a former CEO; Michael
Seashols, Co-Chairman of the Board and former Chairman and CEO of Evolve
Software; and Peter Sprague, Chairman of WaveSystems Corp. and former Chairman
of the Board of National Semiconductor Corporation.

     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 share 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 the date hereof Maden Tech beneficially
owns 3,444,444 shares of our common stock, representing 40.9% of the shares of
common stock outstanding.

     In December 2000, we announced that we would restructure our operations
during the first quarter of 2001. 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. Our objective for our end-user
customers is to market and sell software and services to better establish our
software as a complete administration and monitoring tool and use our services
to help successfully deploy our software products at our end-user customer
sites.

     Additionally, we implemented a plan to decrease our operating expenses to a
level which our historical sales volume can support. As a result, our headcount
decreased subsequent to year end as engineering positions were eliminated and
through 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.

  Recent Developments

     In 2000, we continued adding OEM partners and introduced versions of our
EnlightenDSM product for certain releases of the Linux open source operating
system. Linux is a free, open source alternative to proprietary Unix operating
systems. The Linux operating system is bundled with complimentary products,
packaged, sold and supported by many different companies. These products are
commonly known as Linux

                                        3
<PAGE>   4

distributions. During 2000, we released version 4.2 of our EnlightenDSM product,
we entered into an agreement to include our system monitoring and reporting
technology into the SuSE Linux 6.4 for Intel distribution, entered into a
product distribution agreement with The LinuxStore and completed a customer
licensing agreement with Mindspring Enterprises, subsequently merged into
Earthlink. Additionally, we completed the development phase of our relationship
with Intel to incorporate the Linux version of our technology into Intel's
LANDesk(R) product for its System Management Division, we released Enlighten
Administrator for Sun Management Center providing seamless integration between
certain administrative portions of the EnlightenDSM product and Sun's Management
Center products.

  OEM Bundling and Reseller Agreements

     In August 2000, we restructured our relationship with SGI. SGI will bundle
the entire EnlightenDSM product on SGI's servers and workstations for their IRIX
and Linux operating systems. Enlighten continues to receive license fees for
each copy distributed to SGI's IRIX customers and has received lower maintenance
fees through December 2000, when maintenance agreements will be sold directly to
end-user customers.

     In June 2000, we released Enlighten Administrator for Sun Management Center
providing seamless integration between certain administrative portions of the
EnlightenDSM product and Sun's Management Center products. We sell this product
directly to Sun's Sun Management Center customers complementing the existing
event monitoring software that is included in the Sun Management Center product.

     In May 2000, Intel announced the availability of LANDesk(R)Server Manager
for Linux. Using our technology, the LANDesk(R)Server Manager for Linux fully
integrates into Intel's LANDesk(R)Management Suite, the industry-leading system
management tool for Microsoft and Novell networks. Under this agreement, we
receive a certain percent of the license revenues Intel records from the sale of
each copy of LANDesk(R) Server Manager for Linux shipped by Intel or its
resellers.

     In March 2000, we entered into an agreement with SuSE under which SuSE
bundles a single user version of our system monitoring and reporting technology
with each copy of SuSE's Linux 6.4 for Intel distribution. Under this agreement,
SuSE customers are able to monitor critical system and operating conditions once
they have licensed the technology through our e-commerce website.

     In February 2000, we entered into a product distribution agreement with The
LinuxStore, a wholly owned subsidiary of EBIZ Enterprises, to distribute our
EnlightenDSM 3.4 for Red Hat through The LinuxStore's e-commerce website.

INDUSTRY BACKGROUND

     The most dynamic changes in the industry continue to be in the market
consisting of networked computer systems comprised of servers and workstations.
These computer systems have traditionally been based upon Unix and Windows NT
operating systems. Since mid 1999, Linux has moved in to compete with the growth
of these existing systems. At the same time many companies are increasingly
using these servers and their associated workstations for more time sensitive or
mission critical applications that are integral to the organization's day-to-day
operations. This trend is being accelerated by the increased use of the Internet
between businesses, between businesses and customers and within companies to
automate and communicate more efficiently. In more and more cases today, the
Internet and the web-based applications that companies build to exploit it, are
the business itself. Taken together, customers face the addition of Linux to the
already complex mix of many versions of Unix and Windows and the increased need
for immediate, flexible and easy to use computing solutions that provide
business benefits quickly.

     The Linux Operating System and the accelerated adoption of this platform in
customer IT departments are of interest to us. Linux is an open source operating
system meaning that it is both free to download from the Internet and open to
modification and enhancement by users and other interested parties. According to
International Data Corporation, Linux has a growth rate twice that of
traditional Unix and Windows systems yet it lacks the sophisticated tools and
utilities for management and instrumentation that accompany traditional
commercial products. Native Linux management tools typically address the
management of a

                                        4
<PAGE>   5

single Linux machine one at a time and do not address the management of Unix,
Linux, FreeBSD and Windows networks that need to function collectively.
Commercial adoption of Linux is being promoted by companies such as Red Hat,
Caldera Systems, SuSE, TurboLinux, VA Linux, Silicon Graphics, IBM and others.

     The commercial providers of Linux fall into three primary categories. The
first category is Linux Distributors. These companies take the freely available
Linux operating system and package it with enhancements that add commercial
value and make it easier to install and use. The second category is Linux
Service Providers. These companies sell installation, customization, development
and ongoing support services that relate to and depend on Linux. The third
category is Linux Solution Providers that combine the Linux operating system
with other hardware or software components to provide a turnkey solution. As an
alternative to traditional Unix operating systems, Linux systems have potential
to provide robust, reliable and scalable commercial computing performance at a
much lower price point.

     Working in the same environment, Unix and Linux comprise the open systems
marketplace that offers several benefits to customers, such as common standards,
allowing for combinations of hardware and software from a variety of vendors.
Other benefits include lower price points than mainframes, cost effective
networking and a large pool of experienced technical personnel. However,
managing the operations of large client/server systems or massive rack mounted
servers in an Internet Service Provider ("ISP") or Application Service Provider
("ASP") environment can be difficult and labor intensive. As corporate customers
build mission critical applications and Internet-based relationships on Unix,
Linux, FreeBSD and Windows NT systems, they are demanding sophisticated yet
quick and easy to deploy management and administration tools. The diversity of
systems and applications has increased significantly in recent years. The
introduction and proliferation of the Linux operating system into existing Unix
and Windows NT environments, the increased scope of applications from core
business transactional software to decision support, groupware and Internet/
Intranet products and the advancement of requirements of a centralized
information technology, or IT, department to manage systems in remote physical
locations has greatly expanded the systems management expertise required within
IT organizations of these companies. Additionally, an inherent characteristic of
open systems is a lack of complete integration of the various vendors' products.
The development of standards such as Simple Network Management Protocol, or
SNMP, the leading protocol for network management and the leading standard for
information collection in multi-vendor computing environments, provide a
standard framework for systems management products in open environments, but
these standards must be integrated and managed. Many hardware manufacturers have
been slow to provide effective multi-vendor solutions to manage their own, let
alone their competitor's hardware, creating a market need for truly
heterogeneous system administration solutions.

     While open systems have produced significant advantages, the management of
these widespread mixed vendor open systems presents a major challenge. Add to
that the increased demands to reduce time to deployment and time to market that
are imposed by the Internet and web-based applications and businesses face the
prospect of managing increasingly complex networks of resources with less time
and skill to make them productive and keep them available. The responsibility
for managing these open systems has become the domain of technicians who
typically use limited system utilities and historically prefer "home grown"
routines and manual procedures.

     The market needs of open systems customers are currently being addressed
either through manual procedures and routines of a company's internal IT
organization, or by one of three types of solutions: (i) point products, or
stand-alone products designed to address one particular function or requirement;
(ii) interfaced products, or a set of point products loosely coupled by a common
interface but not truly integrated; and (iii) enterprise systems management
frameworks, or large monolithic products designed to manage a customer's entire
computing infrastructure from mainframe systems, to Unix/NT/Linux systems, to
desktop PCs. Many products serving this market were developed by porting
mainframe technology and architecture to the Unix environment. These solutions
are typically expensive to acquire and implement due to the extensive efforts
associated with installing and configuring these products to a customer's
particular environment.

                                        5
<PAGE>   6

THE ENLIGHTEN SOFTWARE SOLUTION

     Our products are suited for quick, effective installation and
implementation to provide a management infrastructure that matches today's needs
for immediate, flexible solutions in the Internet business environment. Our
mission is to provide the industry's most pervasive software solutions to help
corporate enterprises simply and inexpensively monitor, manage and administer
computers that are spread among many locations and consist of many different
operating systems. We intend to be a market leader for easy to use, out-of-the-
box, broad-based functionality for event monitoring and systems. While numerous
standards are being introduced and companies are vying to position themselves in
the open systems management market, we are positioning our EnlightenDSM product
suite as the one product that is vital and affordable to open systems managers
in mixed Unix, Linux, FreeBSD and Windows environments.

     Our systems management solution differentiates itself from other companies'
systems management approaches. We believe that systems managers demand
management tools that are simple to use, easy to install, scalable and
customizable, intuitive to learn and reasonably priced. The EnlightenDSM product
suite is targeted to the broadest segment of the open systems market: customers
with ten to 1,000 servers and workstations from a variety of the most popular
vendors. We believe the product's key strengths that address the needs of this
market niche are:

     - Ease of Use: EnlightenDSM is designed to be easily installed and
       configured. The product is installed and managed from a graphical window.
       Graphical templates drive the deployment and initial configuration of the
       product and provide the interface for ongoing monitoring and management
       once installed. This easy to use interface standardizes complex,
       proprietary rules and procedures between various server vendors.
       EnlightenDSM uses the native protocols and storage schemes of each
       supported platform instead of a proprietary database that cannot be
       accessed outside of the product.

     - Time to Deployment and ROI: EnlightenDSM installs and begins operating in
       hours and can be fully configured with customized event alarms and
       thresholds and integration with other third-party products in weeks.
       Return On Investment associated with deployment of systems management
       begins very early after installation, giving customers immediate benefit.
       Customers benefit from greater productivity of their professional IT
       staff because of single-console, graphical management of the entire
       networked environment. Customers also achieve higher availability of all
       managed servers and workstations because EnlightenDSM monitors critical
       operating parameters and will alert operators or take automatic
       corrective action when necessary.

     - Broad Functionality: EnlightenDSM addresses a broad range of system
       monitoring and administration needs, alleviating the customer from the
       need to make a series of investments in "point" product solutions.
       EnlightenDSM provides a common interface for an integrated product that
       addresses (i) user account configuration, (ii) printer resource
       management, (iii) network services configuration and management, (iv)
       security auditing, (v) disk and file management, (vi) archive management,
       (vi) systems management and (vii) event generation and monitoring.

     - Price Performance: We believe our product is generally priced below
       comparable point products in the market, as well as enterprise framework
       products.

     - Open Architecture: EnlightenDSM is based on an architecture which is
       designed to be easily integrated with most existing point solutions as
       well as solutions developed by customers internally. The product is also
       designed to communicate "up" to the enterprise framework products with
       event mechanisms or easy-to-write scripts in the product's Programmable
       Event Processor or PEP. EnlightenDSM uses Structured Query Language or
       SQL with any Open Database Connectivity or ODBC databases and SNMP. The
       product can operate as an integral part of an enterprise management
       environment in a larger customer environment, or as the focal point of
       administration and management in a smaller customer environment, or in
       divisions/sites of a larger customer environment.

     EnlightenDSM is scalable to large networks and supports the day-to-day
operational requirements of networked systems, such as adding users and nodes,
reconfiguring system processes, managing disk storage and managing
Internet/Intranet users. We believe our product suite is affordably priced,
scalable to match

                                        6
<PAGE>   7

customer needs, designed to install quickly for most configurations and will
integrate with other system console and network administration products, such as
those offered by Tivoli, Computer Associates, Remedy and many others.

STRATEGY

     The following discussion regarding our response to the systems management
market and our product and marketing strategy contains forward-looking
statements and actual results may vary substantially depending upon a variety of
factors, including, but not limited to, the development of emerging markets for
systems management and administration software, competition, technological
change, changing customer needs, evolving industry standards, any product
development delays and our ability to manage future growth and new distribution
channels, if any. These and other factors are more fully discussed under the
caption "Factors That May Affect Future Results" on page 21.

     Our objective is to become a market leader in integrated open systems event
monitoring and systems administration. To achieve this objective, we have
adopted a business strategy incorporating the following elements:

  The integration of Linux into the corporate environment

     The management tools and utilities available for the Linux operating system
are designed for single machine management only and are typically shareware or
freeware that address only one aspect of systems management. In addition, native
Linux management tools address Linux platforms only and thus are not beneficial
to the existing Unix and Windows environments found at our typical customers.
Because our EnlightenDSM product is cross-platform and addresses a broad range
of system management and administration needs, IT managers can easily integrate
Linux servers and workstations into their corporate environment and use the same
tool for a single-console view of the Unix, Linux, FreeBSD and Windows systems
in their enterprise. These tools enable users to manage resources in a scalable
way and enable the further commercialization of Linux in the business
environment.

  Focus on the "under-served" market

     We believe that most of the products in the enterprise systems management
market are currently focused toward Fortune 500 companies that possess the
resources necessary to implement a monolithic enterprise-wide systems management
solution. Mid-sized companies and smaller sites or departments of larger
companies cannot effectively and efficiently implement these solutions.
Additionally, these customers require less intrusive, more cost-effective means
to manage their Unix, Linux, FreeBSD and Windows systems. We believe there are
very few products to assist these organizations in managing and monitoring their
open systems networks. Our focus for our Unix, Linux, FreeBSD and Windows
products is this under-served market, defined as sites with ten to 1,000 Unix,
Linux, FreeBSD or Windows workstations or servers without a large mainframe
presence. We feel our low-cost, easy-to-use, non-intrusive workgroup
administration and systems monitoring solution is the most effective tool for
these companies.

  Leverage strategic relationship with Maden Tech

     Our relationship with Maden Tech, a leader in IT integration services,
enables Enlighten to offer a more comprehensive software solution. Our
technology is designed for integration and extension on a wide scale to our
customer's environment, but we have always relied on our customers to complete
the value-add with deployment and integration. Through reseller arrangements
with Maden Tech, we can now design and deliver more comprehensive management
solutions for our clients.

  Penetrate the market through a balanced approach of third-party OEM
  relationships and direct sales to end-user customers

     For the past three years, our sales and marketing focus has primarily been
through indirect sales and partner relationships. We have entered into OEM
bundling or technology agreements with Silicon Graphics,

                                        7
<PAGE>   8

IBM, Sun, TurboLinux, SuSE and Intel. Our product architecture and the design,
price point and ease of use of the EnlightenDSM product allow it to be
effectively bundled with a hardware or appliance manufacturer's operating
system, integrated into a software vendor's offering, or bundled with a Linux
distribution. These relationships allow us to penetrate different markets by
proliferating our product and technology on thousands of systems. Additionally,
we have begun to focus greater resources on direct sales opportunities with
end-user customers. We intend to continue to pursue additional partnering
relationships and intend to focus our sales and marketing efforts on the
following:

     - Systems Management and Other Software Application Vendors: We believe our
       product suite is complementary with several software vendors'
       applications. EnlightenDSM's architecture is designed to allow
       integration with other third-party software products with minimal
       engineering requirements. We intend to pursue relationships with software
       companies providing systems management, web monitoring and management,
       clustering, help desk software and other "customer care" applications
       with which our product could be integrated and sold as a combined
       solution.

     - Systems Management Service Providers: We believe that our product suite
       can be effectively used by third party Linux and Unix systems management
       consulting and outsourcing service providers to remotely monitor and
       administer their customers IT infrastructure without those customers
       having to use their valuable resources on critical corrective issues or
       mundane administrative functions. We intend to pursue relationships with
       service providers where our product can be used to increase the quality
       and efficiency in managing heterogeneous open systems environments.

     - Linux Hardware and Appliance Manufacturers: We believe that Linux
       hardware and appliance manufacturers lack effective systems management
       solutions. A Linux appliance is a hardware device bundled with the Linux
       operating system and dedicated to a specific purpose. As the competition
       for this hardware increases and price points drop, we feel these
       manufacturers will need to add value through the ability to offer
       solutions to customers that provide lower cost of ownership through ease
       of use, administration and networked integration for their systems.

     - End-User Customers: We will maintain a direct sales force focused on
       select end-user customers where we can provide value through stronger,
       more dedicated customer relationships.

     - Maden Tech client base: We believe that Maden Tech's existing and future
       clients will provide additional business development opportunities for
       Enlighten. Maden Tech's network monitoring services often require a
       systems management software tool, and our relationship with the company
       will provide us with further opportunities to fulfill this need for its
       expansive client base.

PRODUCTS

     We offer software products designed to automate the management and
administration of computer systems. Set forth below is a summary of our
principal product offerings.

     In the fast-paced Linux/Unix/Windows environment, millions of new computers
are being deployed annually. All system administrators must learn to manage
networks in which users are added on a regular and continuous basis. The tools
these system administrators need to effectively perform their jobs should be
simple, easy to implement and intuitive; not complex, rules-based systems
management software. Our customers routinely use our products to add and manage
users in mixed environments from a single, template-driven interface to all
machines at the same time.

     In December 1994, we acquired core technology for Unix systems
administration products and released two complementary Unix products in the
second quarter of 1995. The features of these two products were combined in
EnlightenDSM version 2.0, which was released in May 1996. This product was
further updated to version 3.2 in 1999 and, in October 1999, we released version
3.4 of EnlightenDSM for Linux distributed by TurboLinux and Red Hat. In December
2000, we released version 4 of EnlightenDSM, which, in addition to product
feature and function enhancements, added support for FreeBSD, an open source,
Unix operating system.

                                        8
<PAGE>   9

     EnlightenDSM is a standards-based, multi-function management system
covering the following disciplines: user administration, file system management,
Internet/Intranet management, printer management, security checking, archiving,
subsystem monitoring, event generation/tracking and other system functions.
EnlightenDSM runs on a variety of open systems computer platforms, including Red
Hat Linux, TurboLinux Linux, HP/UX, SUN/Solaris, IBM/AIX, Intel and AMD X86
families, Silicon Graphics/IRIX, Compaq True64 and Microsoft Windows
2000/NT/98/95. Cross-platform functionality enables the management of diverse
and distributed systems from a centralized console.

     EnlightenDSM automatically collects and saves status, configuration,
performance and capacity information and makes it available for monitoring by
most commercial SNMP managers. The product monitors system resources including
peripheral devices, processes, resources and services. Thresholds can be set to
generate alarms that warn users of an error or problem about to occur. For
example, in some cases our customers use the product to monitor the status of
business critical Oracle database servers. The EnlightenDSM product can be
programmed to automatically take corrective action and/or provide immediate
notification to operators before critical events escalate to cause significant
problems. EnlightenDSM monitors and reports changes in system inventory and can
track the addition or removal of memory, disk drives, tape drives and other
devices, thereby reducing costly downtime and improving system performance.

SALES AND DISTRIBUTION

     Our revenues are derived from three sources: product license fees, product
maintenance fees and consulting services.

  Product license fees

     During 2000, we marketed our products through a direct field sales force
and third-party distributors. Our products were marketed throughout North
America, Europe and parts of the Pacific Rim by our product sales organization
located at our headquarters in San Mateo, California as well as through our
regional field sales office in Denver, Colorado and through independent
distributors. Additionally, in November 1999, we launched our Internet
e-commerce site, which allows customers to purchase and download certain
EnlightenDSM products.

     Our new relationship with Maden Tech has provided us with an additional
distribution channel. We expect Maden Tech to market our products in exchange
for the ability to derive revenues from services engagements with our clients.
We believe our clients will benefit from Maden Tech's ability to customize and
integrate our EnlightenDSM products in the course of the installation process.
As a result, we believe the assistance of the Maden Tech sales force will
augment our distribution capabilities as we seek to expand our business.

     Product license fees in 2000 consisted primarily of revenue from the
granting of perpetual licenses and from the licensing of product upgrades
necessary when customers upgrade their system hardware. Revenue from end-user
licenses is payable in full at the commencement of the license period and is
recognized after all of the following events have occurred: (i) a product
evaluation has been shipped to the customer; (ii) the customer elects to
purchase the software following an evaluation period; (iii) the customer signs
the related contract; (iv) the fee is fixed and determinable; and (v) the
collection of resulting receivables is probable. Product license fees
represented 58% of total revenue for the year ended December 31, 2000.

     We continue to build our sales, marketing and customer support
organizations with a focus on delivery of our products to OEM partners,
resellers, system integrators and end-users. Historically, we have distributed
through OEM's and systems management and application software vendors whose
products are complementary with ours.

     We are currently investing, and intend to continue to invest, resources to
develop the OEM, ISV and VAR channels as well as direct sales to end-user
customers. Our efforts to expand in both areas are intended to penetrate the
market and achieve widespread commercial acceptance of our products as a
workgroup administration standard. There can be no assurance that we will be
successful in our efforts to increase the

                                        9
<PAGE>   10

revenues represented by this effort. There is no assurance that our third-party
distributors will effectively distribute and exploit our products or that
investment in direct sales will continue to expand our customer base. The
inability to recruit additional third parties to distribute, market and support
our products could have a material adverse affect on our business, operating
results and financial condition. A more detailed discussion of these and other
risks associated with our business is set forth under the caption "Factors That
May Affect Future Results" on page 21.

  Product maintenance fees

     All customers subscribing to our maintenance service agreements are
entitled to receive (i) technical support and consultation, primarily over the
telephone, and (ii) subsequent product enhancement and maintenance releases we
periodically produce. Product maintenance support is provided directly to
customers as well as through our authorized distributors. As part of the
business model to market through indirect channels, we provide training and
education for our third-party distributors to ensure technical proficiency with
our products and technology.

     Product maintenance fees consist of all maintenance revenue on new and
existing installed software products. We generally charge end users, on an
annual basis, for telephone support, product updates and product enhancements.
OEM, partner and distributor maintenance is negotiated separately. Product
maintenance revenue is recognized ratably over the maintenance contract period
(typically one year). Product maintenance fees accounted for 32% of total
revenue for the year ended December 31, 2000.

  Consulting services

     Revenue from consulting services consists of fees charged for contract
services, product training and other service activities. This division of our
technical support organization provides fee-based consulting services to our
customers throughout the United States. Our relationship with Maden Tech enables
us to utilize Maden Tech's consulting resources which will significantly extend
our consulting services offerings. 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. Consulting services represented 8%
of total revenue for the year ended December 31, 2000.

PRODUCT DEVELOPMENT

     The computer software industry is characterized by rapid technological
change and is highly competitive in regard to timely product innovation.
Accordingly, we believe that our future success depends on our ability to
enhance current products that meet a wide range of customer needs and to develop
new products rapidly to attract new customers and provide additional solutions
to existing customers. In particular, we believe we must continue to respond
quickly to users' needs for broad functionality and open systems support.

     We address the needs of current users through regularly scheduled
maintenance and enhancement releases. At the same time, we seek to acquire and
develop new products to meet the needs of a broader group of users.

     We provide an integrated workgroup administration and systems management
product for open systems currently running on four different Linux
distributions, six different Unix-based systems, FreeBSD and Microsoft Windows
2000/NT/98/95. The EnlightenDSM product consists of the following features: user
administration, file system management, Internet/Intranet management, printer
management, security checking, archiving, subsystem monitoring and event
generation/tracking.

                                        10
<PAGE>   11

     Our strategy is to continue to enhance EnlightenDSM's functionality through
new releases and new feature development to meet the continually advancing
systems administration and management requirements of our customers, including:

     - increased scalability and performance;

     - increased integration with other systems management point solutions as
       well as other enterprise systems management frameworks;

     - increased levels of automation and ease of use to further reduce
       administrative costs and overhead;

     - increased range of supported platforms; and

     - continued customization for our current and new third-party distributors.

     There can be no assurance that we will be successful in developing and
marketing new features or products that respond to technological change or
evolving industry standards, that we will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of any
new features or products or that our new features or products will adequately
meet the requirements of the marketplace and achieve market acceptance. Due to
the complexity of the product and the large number of network configurations in
the market, it is extremely difficult to fully test EnlightenDSM in all possible
environments and, although we employ a continual effort to assure a quality
product, there is no assurance that errors will not be found in the released
commercial product resulting in delays of new feature development. If we are
unable, due to lack of resources or for technological or other reasons, to
develop and introduce new features and products in a timely manner in response
to changing market conditions or customer requirements, our business, operating
results and financial condition will be materially adversely affected. See
"Factors That May Affect Future Results" on page 21.

     As of December 31, 2000, we had twenty two (22) professional and technical
employees engaged in research and development. During the fiscal year ended
December 31, 2000, our research and development expenditure was $2,917,900.

COMPETITION

     The systems management market in which we compete is intensely competitive,
highly fragmented and rapidly changing. In order to compete, we must enhance our
current products, enhance the interoperability of our products with other
products, management frameworks and operating systems through a truly open
architecture, develop new products in a timely fashion and develop key strategic
partnerships with other hardware and software vendors. Many of our competitors
in the open systems markets are larger and have greater financial, technical,
marketing and other resources than Enlighten. Because there are relatively low
barriers to entry in the software market, we expect additional competition from
other established and emerging companies. Increased competition is likely to
result in price reductions, reduced gross margins and increased difficulty in
establishing market share, any of which could have a material adverse affect on
our business, operating results and financial condition.

     Our principal competition in the market for open systems workgroup
administration and system management products is from enterprise systems
management vendors such as Tivoli, a wholly-owned subsidiary of IBM and Computer
Associates, as well as point products from BMC Software, Platinum Technologies,
Veritas Software and Legato Systems. We also face competition from internal
development groups of prospective end-user customers and OEMs, including
operating system vendors, many of which have substantial internal programming
resources and are capable of developing specific operating system level products
for their own needs. In addition, certain operating systems vendors have already
incorporated systems management capabilities into their operating system,
including HP, Sun, IBM and Microsoft, which reduces such vendors' need for our
products. Additional hardware manufacturers may elect to offer similar
competitive products in the future. Given our size and the advantages our
competition enjoys with respect to size and resources, there can be no
assurances we can effectively compete in this market.

                                        11
<PAGE>   12

PRODUCT PROTECTION

     We rely on a combination of copyright, trade secret and trademark laws and
software security measures, along with employee and third-party nondisclosure
agreements, to protect our intellectual property rights, products and
technology. Our products are typically licensed on a "right to use" basis
pursuant to perpetual 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. 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 expected to be 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 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 obligations with respect to support. In
the event of a release of the source code, the customer is required to maintain
their confidentiality and, in general, to use the source code solely for the
purpose of maintaining the software's usability. The provision of source code
may increase the likelihood of misappropriation or other misuse of our
intellectual property.

     In addition, 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 tot
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 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.

     We are not aware that our products, trademarks or other proprietary rights
infringe the proprietary rights of third parties. However, 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
disputing 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. An adverse outcome in litigation or similar proceedings
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, any of which could have a material adverse
effect on our business, operating results and financial condition.

EMPLOYEES

     As of December 31, 2000, we employed 36 people. Of these employees, 22 were
engaged in product development, 10 in sales, marketing and customer support and
4 in finance and other administrative departments. As of March 15, 2001, we
employed 13 people. Of these employees, 8 were engaged in product

                                        12
<PAGE>   13

development, 4 in sales, marketing and customer support and 1 in finance and
other administrative departments. We believe our future success depends in large
part upon the continued employment of our key technical and senior management
personnel and our ability to attract and retain highly qualified technical and
managerial personnel. Competition for such personnel is intense, as certain of
these personnel have significant prior industry experience and are in great
demand. There can be no assurance that we can retain our key technical and
managerial employees or that we can attract, assimilate or retain other highly
qualified technical and managerial personnel in the future. None of our
employees are subject to any collective bargaining agreements. Each of our
employees have executed an agreement not to disclose trade secrets or other
confidential information. We believe our employee relations are good.

ITEM 2. DESCRIPTION OF PROPERTIES

     We lease approximately 17,000 square feet of office space in San Mateo,
California under a lease, which expires in April 2001 and lease a sales and
support office in Denver, Colorado under a lease expiring in March 2001. In
March 2001, we entered into a lease agreement for approximately 3,000 square
feet of office space in San Mateo, California, expiring June 2003 and will move
our headquarters to this new location. We believe that our facilities are
adequate for our needs through 2001 and for the foreseeable future. Should
additional space be needed to accommodate the expansion of our operations, we
will seek to acquire such space on commercially reasonable terms.

ITEM 3. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                        13
<PAGE>   14

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Since October 23, 1998, Enlighten's common stock has been traded on the
Nasdaq SmallCap Market under the symbol "SFTW." Prior to such time, Enlighten's
common stock was traded on the Nasdaq National Market. As of December 31, 2000,
there were 46 record holders of Enlighten's common stock. As of the same date,
4,972,312 shares of common stock were outstanding and 20,000,000 shares of
common stock were authorized.

     The following table sets forth, for the periods indicated, the high and low
sale prices per share of common stock on the Nasdaq SmallCap Market:

<TABLE>
<CAPTION>
                                                               HIGH      LOW
                                                              ------    -----
<S>                                                           <C>       <C>
2000
Quarter Ended:
  March 31, 2000............................................  $16.88    $5.63
  June 30, 2000.............................................  $ 7.75    $2.56
  September 30, 2000........................................  $ 3.63    $1.69
  December 31, 2000.........................................  $ 2.31    $0.06

1999
Quarter Ended:
  March 31, 1999............................................  $ 4.88    $2.13
  June 30, 1999.............................................  $ 4.63    $2.50
  September 30, 1999........................................  $ 4.50    $2.50
  December 31, 1999.........................................  $14.50    $2.63
</TABLE>

DIVIDEND POLICY

     Enlighten has never paid cash dividends and does not anticipate paying cash
dividends in the foreseeable future. Enlighten anticipates that it will retain
earnings, if any, for future growth and expansion of its business.

RECENT SALES OF UNREGISTERED SECURITIES

     As discussed above under Item 1, in February 2001, we entered into a loan
agreement with Maden Tech Consulting, Inc. through which we obtained a credit
facility from Maden Tech. 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 commons 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 the common stock calculated as of the trading day immediately before
the date of exercise. Accordingly, as of the date hereof Maden Tech beneficially
owns 3,444,444 shares of our common stock, representing 40.9% of the shares of
common stock outstanding.

                                        14
<PAGE>   15

     The convertible note issued to Maden Tech to evidence the credit facility
and the warrant granted to Maden Tech were exempt from registration under
Section 4(2) of the Securities Act of 1933 as transactions not involving a
public offering.

                                        15
<PAGE>   16

ITEM 6. 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,"
"Disclosures about Market Risk," 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, FreeBSD 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, the
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,
Silicon Graphics, Sun Microsystems, Red Hat, TurboLinux, Caldera Systems and
SuSE. 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 through directly to end-user customers.

VARIABILITY OF QUARTERLY RESULTS

     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.

                                        16
<PAGE>   17

HISTORICAL RESULTS OF OPERATIONS

     The following table sets forth the results of operations for Enlighten
expressed as a percentage of total revenue. The historical results are not
necessarily indicative of results to be expected for any future period.

<TABLE>
<CAPTION>
                                                                YEARS ENDED
                                                               DECEMBER 31,
                                                              ---------------
                                                               2000     1999
                                                              ------    -----
<S>                                                           <C>       <C>
Revenue:
  Product license fees......................................    57.8%    54.9%
  Product maintenance fees..................................    31.5     19.8
  Consulting services.......................................     8.3     17.2
  Royalties.................................................     2.4      8.1
                                                              ------    -----
          Total revenue.....................................   100.0    100.0
Cost of revenue:
  Cost of product license fees..............................    14.5     10.6
  Cost of product maintenance fees..........................     7.7     10.6
  Cost of consulting services...............................     3.6      3.1
                                                              ------    -----
          Total cost of revenue.............................    25.8     24.3
                                                              ------    -----
          Gross profit......................................    74.2     75.7
                                                              ------    -----
Operating expenses:
  Research and development..................................   161.9     54.4
  Sales and marketing.......................................   134.4     57.3
  General and administrative................................    92.4     29.7
                                                              ------    -----
          Total operating expenses..........................   388.7    141.4
                                                              ------    -----
          Operating loss....................................  (314.5)   (65.7)
Other income, net...........................................     2.2      5.2
                                                              ------    -----
          Loss before income taxes..........................  (312.3)   (60.5)
Income tax benefit..........................................    (0.9)    (0.3)
                                                              ------    -----
          Net loss..........................................  (311.4)%  (60.2)%
                                                              ======    =====
</TABLE>

  Net Revenue

     Net revenue decreased $1,442,000, or 44%, to $1,802,400 in 2000, as
compared to 1999. This decrease was primarily due to lower license revenues from
the SGI OEM relationship and lower engineering consulting revenue from our OEM
relationships.

     Revenue from product license fees decreased $739,400, or 42%, to $1,041,800
in 2000, as compared to 1999. The decrease was primarily attributable to the
decrease in license fees from the SGI OEM relationship. License fees from SGI
are derived from SGI's Unix server and workstation sales on a per unit shipped
basis, of which SGI had lower units shipped during 2000. We will recognize
license fee revenue from SGI through the first quarter of fiscal year 2001, when
our three-year agreement will terminate. The decrease in license fees from SGI
was partially offset by an increase in license fees from sales to end-user
customers.

     Product maintenance fees decreased by $73,900, or 12%, to $567,300, as
compared to 1999. This decrease was primarily due to the restructuring of our
maintenance contract with SGI, partially offset by an increase in maintenance
fees from end-user customers.

     Consulting services revenue decreased by $409,100, or 73%, to $149,000 in
2000, as compared to 1999. This decrease was primarily due to non-recurring
engineering consulting revenues related to Enlighten's strategic relationships
with IBM and Intel recognized in 1999.

     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

                                        17
<PAGE>   18

sold to BMC in October 1997. Total royalties decreased by $219,600, or 83%, to
$44,300 in 2000, as compared to 1999. This decrease was primarily due to a lower
royalty rate used during 2000 than 1999 and the expiration of the royalty period
in September 2000.

  Cost of Revenue

     Cost of revenue consists of royalties paid to third parties, amortization
of software development and acquisition costs, product packaging and
documentation, software media and the costs of employees and contractors
providing consulting services. Cost of revenue decreased by $322,200, or 41%, in
2000, as compared to 1999. This decrease is due primarily to a decrease in
customer support costs from lower headcount and a decrease in royalties paid to
third party software vendors.

  Research and Development

     Research and development expenses consist of personnel expenses and
associated overhead and costs of short-term independent contractors required in
connection with product development efforts, less amounts capitalized.
Enlighten's investment in research and development, prior to the reduction for
capitalization of software development costs, was $2,966,600 and $1,996,200 for
2000 and 1999, respectively, representing 165% and 62% of total revenue for 2000
and 1999, respectively. The increase of $970,400 in 2000, as compared to 1999,
was primarily attributable to higher employee related costs due to increases in
headcount and increases in contract labor and employee recruiting expenses.
Enlighten capitalized approximately $48,700 and $231,900 of software development
costs in 2000 and 1999 which represented approximately 2% and 13% of total
research and development expenditures incurred in those years. The amount of
capitalized software development costs in any given period may vary depending on
the exact 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. Enlighten
expects research and development expenses to continue to increase in absolute
dollars as Enlighten continues to invest in the enhancement of existing products
and the development of new products.

  Sales and Marketing

     Sales and marketing expenses include costs of sales and marketing
personnel, advertising and promotion expenses, customer service and technical
support, travel and entertainment and other selling and marketing costs. Sales
and marketing expenses increased by $563,000, or 30%, to $2,422,600 in 2000, as
compared to 1999. This increase was primarily due to higher personnel related
expenses due to higher headcount and increases in trade show expenses, employee
recruiting and travel costs, partially offset by decreases in depreciation and
amortization expenses.

  General and Administrative

     General and administrative expenses, which include personnel costs for
finance, administration, information systems and general management, as well as
professional fees, legal expenses and other administrative costs, increased by
$699,100, or 72%, to $1,664,200 in 2000, as compared to 1999. The increase is
primarily due to a final royalty payment made on a portion of the EnlightenDSM
product, additional legal fees and investment banking fees related to the
amended SGI agreement and exploring strategic alternatives and increases in
investor relations expenses.

  Other income, net

     Other income and expense includes interest income net of interest expense
and gains and losses on foreign currency transactions. Interest income is
primarily derived from short-term interest-bearing securities and money market
accounts. Other income, net decreased by $130,400, or 77%, to $39,500 in 2000,
as compared to 1999. The decrease was due primarily to a decrease in interest
income due to a lower average balance of invested cash and short-term
investments and realized losses on the sales of an investment.

                                        18
<PAGE>   19

  Income tax benefit

     Enlighten's tax benefit recognized in 2000 of $15,400 is primarily due to
income tax refunds from the United Kingdom partially offset by minimum state
income tax expenses. In 1999, Enlighten recognized a tax benefit of $10,400 as a
result of receiving Federal tax refunds partially offset by minimum state income
tax expenses. No tax benefits, other than those stated above, were recognized in
these years due to the uncertainty related to Enlighten's ability to utilize a
tax benefit for tax loss and credit carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000, our cash and cash equivalents and short-term
investments were $182,600, representing 20% of total assets as compared with
$1,293,100, or 36%, of total assets, at December 31, 1999. Cash equivalents are
highly liquid investments with original maturities of ninety days or less. Our
short-term investments are primarily highly liquid investment grade commercial
paper. Our working capital (deficit) was $(310,200) and $2,045,100 as of
December 31, 2000 and 1999, respectively. We had no debt as of December 31, 2000
and 1999, other than normal trade payables and accrued liabilities.

     Our operating activities used cash of $3,882,500 in 2000, compared to cash
used by operating activities of $2,075,500 in the prior year. The increase in
cash used by operating activities was principally caused by increases in net
losses and changes in the balances of operating assets and liabilities.

     Our investing activities have consisted primarily of short-term
investments, capitalization of software development costs and additions to
capital equipment. Investing activities provided cash of $150,500 in 2000,
compared with cash provided of $668,800 in 1999. The decrease is primarily due
to a decrease in sales of short-term investments, partially offset by a decrease
in capitalized software development costs and equipment acquisitions.

     Financing activities provided cash of $2,869,000 in 2000, compared with
cash provided of $552,300 in the prior year. The increase in cash provided from
financing activities resulted from our April 2000 private placement offering of
715,885 unites, each consisting of one share of common stock and one redeemable
purchase warrant to purchase one share of common stock.

     We will require substantial additional capital resources 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, a privately
held Delaware corporation, 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.

     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

                                        19
<PAGE>   20

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 the date hereof Maden Tech beneficially
owns 3,444,444 shares of our common stock, representing 40.9% of the shares of
common stock outstanding.

     In December 2000, we announced that we would restructure our operations
during the first quarter of 2001. 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 subsequent to year-end
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.

     If our efforts to increase our sales and decrease our operating expenses
fail or if Maden Tech does not advance amounts under the convertible credit
facility or if Maden Tech requires a cash repayment of borrowings under the
convertible credit facility, 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.

                                        20
<PAGE>   21

                     FACTORS THAT MAY AFFECT FUTURE RESULTS

     Certain statements contained in this Annual Report on Form 10-KSB,
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 "Products," "Sales and
Distribution," "Product Development," "Competition," "Product Protection" and
"Management's Discussion and Analysis or Plan of Operation" sections 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.

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,

     - 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.

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.

                                        21
<PAGE>   22

WE CONTINUE TO NEED ADDITIONAL CAPITAL, AND THERE IS NO CERTAINTY OF 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 and expand our operations and meet our other obligations through 2001,
we may be required to obtain additional financing, particularly if Maden Tech
declines to advance 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 or financing in the level of net
proceeds required for us to remain in business.

A SIGNIFICANT PERCENTAGE OF OUR REVENUE IS ATTRIBUTED TO SALES TO ONE OF OUR
CUSTOMERS

     Our largest customer accounts for a substantial percentage of our revenues.
During the years ended December 31, 2000 and 1999, approximately 42% and 60%,
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. License fees from Silicon Graphics decreased in 2000 when
compared to 1999. Our license agreement with Silicon Graphics runs through the
first quarter of fiscal year 2001, the termination 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, significant 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

                                        22
<PAGE>   23

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 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.

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 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.

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 the date hereof, Maden Tech beneficially owns 3,444,444 shares of our
common stock, representing 40.9% of the shares of common stock 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.

                                        23
<PAGE>   24

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.

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

     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.

                                        24
<PAGE>   25

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.

WE HAVE A HISTORY OF LOSSES, AND WE MAY NOT ACHIEVE PROFITABILITY

     We have a history of losses and anticipate further significant losses. We
may not achieve profitability. We have incurred significant operating losses
each of the last five fiscal years and we may not realize sufficient revenue to
achieve profitability. We expect to continue to incur significant losses for the
foreseeable future and these losses may be higher than our current losses. We
may not achieve profitability. Failure to become and remain profitable may
adversely affect the market price or our common stock and our ability to raise
capital and continue operations.

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.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     See Consolidated Financial Statements included herein beginning on page
F-1.

ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
       DISCLOSURE

     None.

                                        25
<PAGE>   26

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROLLING PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The information required by this Item 9 is set forth in Enlighten's
definitive Proxy Statement for its 2001 Annual Meeting of Shareholders under the
captions "Directors and Executive Officers" and "Section 16(b) Beneficial
Ownership Reporting Compliance" and is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

     The information required by this Item 10 is set forth in Enlighten's
definitive Proxy Statement for its 2001 Annual Meeting of Shareholders under the
caption "Executive Compensation and Other Matters" and is incorporated herein by
reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item 11 is set forth in Enlighten's
definitive Proxy Statement for its 2001 Annual Meeting of Shareholders under the
caption "Stock Ownership of Certain Beneficial Owners and Management" and is
incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item 12 is set forth in Enlighten's
definitive Proxy Statement for its 2001 Annual Meeting of Shareholders under the
caption "Certain Relationships and Related Transactions" and is incorporated
herein by reference.

                                        26
<PAGE>   27

                                    PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

<S>     <C>                                                           <C>
(a)(1)  Financial Statements:
        Independent Auditors' Report................................  F-1
        Consolidated Balance Sheets:
          December 31, 2000 and 1999................................  F-2
        Consolidated Statements of Operations:
          Years ended December 31, 2000 and 1999....................  F-3
        Consolidated Statements of Shareholders' Equity:
          Years ended December 31, 2000 and 1999....................  F-4
        Consolidated Statements of Cash Flows:
          Years ended December 31, 2000 and 1999....................  F-5
        Notes to Consolidated Financial Statements..................  F-6
</TABLE>

(a)(2) Exhibits:

       See Exhibits Index on Page 31. The Exhibits listed in the accompanying
       Exhibits Index are filed or incorporated by reference as part of this
       report. Exhibit Nos. 10.24, 10.26, 10.28, 10.29, 10.31, 10.36 and 10.37
       are compensatory plans or arrangements.

   (b) Reports on Form 8-K:

       None

                                        27
<PAGE>   28

                                 EXHIBITS INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
  3.1      The Registrant's Amended and Restated Articles of
           Incorporation as filed with the Secretary of State of the
           State of California on May 21, 1996 (incorporated by
           reference to Exhibit 3.1 to the Registrant's Form S-1
           Registration Statement (No. 33-75388) which became effective
           April 19, 1994 (the 1994 Form S-1)).
  3.2      The Registrant's By Laws, as currently in effect
           (incorporated by reference to Exhibit 3.2 to the
           Registrant's Form S-1 Registration Statement (No. 33-75388)
           which became effective April 19, 1994).
 10.01     The Registrant's Form of Indemnity Agreement for officers
           and directors (incorporated by reference to Exhibit 10.1 of
           the 1994 Form S-1).
 10.02     The Registrant's First Amended and Restated 1992 Stock
           Option Plan (incorporated by reference to Exhibit 10.2 of
           the 1994 Form S-1).
 10.03     The Registrant's 1994 Employee Stock Purchase Plan
           (incorporated by reference to Exhibit 10.3 of the 1994 Form
           S-1).
 10.20     Lease, dated February 24, 1995, by and between Registrant
           and Mariner's Island Ltd. for the Registrant's offices at
           999 Baker Way, Fifth Floor, San Mateo, California
           (incorporated by reference to Exhibit 10.20 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1994 (the 1994 Form 10-KSB)).
 10.24*    Termination and Change in Control Agreement, dated April 24,
           1996, by and between Enlighten Software Solutions, Inc. and
           Michael A. Morgan (incorporated by reference to Exhibit
           10.24 of the Registrant's Annual Report on Form 10-KSB for
           the year ended December 31, 1996 (the 1996 Form 10-KSB)).
 10.26*    Nonqualified Stock Option Agreement, dated December 27,
           1996, by and between Enlighten Software Solutions, Inc. and
           Mark Himelstein (incorporated by reference to Exhibit 10.26
           of the Registrant's 1996 Form 10-KSB).
 10.27     Agreement dated as of September 22, 1997, by and among
           Enlighten Software Solutions, Inc., Peter J. McDonald and
           New Dimension Software, Inc (incorporated by reference to
           Exhibit 10.27 of the Registrant's Current Report on Form 8-K
           dated October 1, 1997).
 10.28*    Employment letter, dated July 3, 1997, by and between
           Enlighten Software Solutions, Inc. and Mike Seashols
           (incorporated by reference to Exhibit 10.28 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1997 (the 1997 Form 10-KSB)).
 10.29*    Employment letter, dated August 28, 1997, by and between
           Enlighten Software Solutions, Inc. and David D. Parker
           (incorporated by reference to Exhibit 10.29 of the
           Registrant's 1997 Form 10-KSB).
 10.30     Agreement dated as of January 21, 1998, by and between
           Enlighten Software Solutions, Inc. and Silicon Graphics, Inc
           (incorporated by reference to Exhibit 10.30 of the
           Registrant's 1997 Form 10-KSB).
 10.31*    Employment letter, dated July 15, 1998, by and between
           Enlighten Software Solutions, Inc. and Bill Bradley
           (incorporated by reference to Exhibit 10.31 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1998 (the 1998 Form 10-KSB)).
 10.32*    Employment letter, dated January 15, 1999, by and between
           Enlighten Software Solutions, Inc. and Tim Gardner
           (incorporated by reference to Exhibit 10.32 of the
           Registrant's 1998 Form 10-KSB).
 10.33     Agreement dated as of December 31, 1998, by and between
           Enlighten Software Solutions, Inc. and International
           Business Machines Corporation (incorporated by reference to
           Exhibit 10.33 of the Registrant's 1998 Form 10-KSB).
</TABLE>

                                        28
<PAGE>   29

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
 10.34     Agreement dated as of September 28, 1999, by and between
           Enlighten Software Solutions, Inc. and TurboLinux, Inc.
           (incorporated by reference to Exhibit 10.33 of the
           Registrant's Quarterly Report on Form 10-QSB for the quarter
           ended September 30, 1999).
 10.35     Agreement dated as of October 21, 1999, by and between
           Enlighten Software Solutions, Inc. and Intel Corporation
           (incorporated by reference to Exhibit 10.35 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1999 (the 1999 Form 10-KSB)).
 10.36*    Employment letter, dated November 24, 1999, by and between
           Enlighten Software Solutions, Inc. and Bill Bradley
           (incorporated by reference to Exhibit 10.36 of the
           Registrant's 1999 Form 10-KSB).
 10.37*    Employment letter, dated December 8, 1999, by and between
           Enlighten Software Solutions, Inc. and Stephen E. Giusti
           (incorporated by reference to Exhibit 10.37 of the
           Registrant's 1999 Form 10-KSB).
 10.38     Loan Agreement dated as of February 14, 2001 by and among
           the Registrant and Maden Tech Consulting, Inc. (incorporated
           by reference to Exhibit 10.1 of the Registrant's Current
           Report on Form 8-K filed on March 15, 2001 (the "2001 Form
           8-K")).
 10.39     Convertible Demand Note made March 6, 2001 (incorporated by
           reference to Exhibit 10.2 to the 2001 Form 8-K).
 10.40     Warrant Agreement dated as of March 6, 2001 by and among the
           Registrant and Maden Tech Consulting, Inc. (incorporated by
           reference to Exhibit 10.3 to the 2001 Form 8-K).
 10.41     Warrant Certificate MT-001 issued March 6, 2001
           (incorporated by reference to Exhibit 10.4 to the 2001 Form
           8-K).
 10.42     Registration Rights Agreement dated as of March 6, 2001 by
           and among the Registrant and Maden Tech Consulting, Inc.
           (incorporated by reference to Exhibit 10.5 to the 2001 Form
           8-K).
 10.43     Software Security Agreement dated as of February 14, 2001 by
           and among the Registrant and Maden Tech Consulting, Inc.
           (incorporated by reference to Exhibit 10.6 to the 2001 Form
           8-K).
 10.44     Conditional Assignment dated as of February 14, 2001
           (incorporated by reference to Exhibit 10.7 to the 2001 Form
           8-K).
 21.1      Subsidiaries of Enlighten (incorporated by reference to
           Exhibit 21.1 of the Registrant's 1994 Form 10-KSB).
 23.1      Consent of KPMG LLP.
</TABLE>

---------------
* Compensatory or employment arrangement.

                                        29
<PAGE>   30

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          ENLIGHTEN SOFTWARE SOLUTIONS, INC.

                                                    /s/ OMAR MADEN
                                          --------------------------------------
                                                        Omar Maden
                                                 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
                        ----                                        -----                    ----
<C>                                                    <C>                              <S>

                   /s/ OMAR MADEN                          Chief Executive Officer      March 30, 2001
-----------------------------------------------------           and Director
                     Omar Maden                         (Principal Executive Officer)

                /s/ STEPHEN E. GIUSTI                    Vice President, Finance and    March 30, 2001
-----------------------------------------------------        Administration and
                  Stephen E. Giusti                        Chief Financial Officer
                                                          (Principal Financial and
                                                             Accounting Officer)

                /s/ MICHAEL SEASHOLS                      Co-Chairman of the Board      March 30, 2001
-----------------------------------------------------
                  Michael Seashols

                 /s/ DAVID D. PARKER                      Co-Chairman of the Board      March 30, 2001
-----------------------------------------------------
                   David D. Parker

                /s/ PETER J. SPRAGUE                              Director              March 30, 2001
-----------------------------------------------------
                  Peter J. Sprague

                   /s/ DAVID FORD                                 Director              March 30, 2001
-----------------------------------------------------
                     David Ford

                 /s/ ROBERT HINAMAN                               Director              March 30, 2001
-----------------------------------------------------
                   Robert Hinaman

                  /s/ KIM MCCAFFREY                               Director              March 30, 2001
-----------------------------------------------------
                    Kim McCaffrey
</TABLE>

                                        30
<PAGE>   31

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Enlighten Software Solutions, Inc.:

     We have audited the consolidated financial statements of Enlighten Software
Solutions, Inc. and subsidiary as listed in the index under Item 13(a)(1). These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Enlighten
Software Solutions, Inc. and subsidiary as of December 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the years in
the two-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, the Company has suffered recurring
losses from operations, and has negative working capital as of December 31,
2000, that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

                                          /s/ KPMG LLP

Mountain View, California
March 15, 2001, except as
to Note 10, which is as
of March 30, 2001

                                       F-1
<PAGE>   32

               ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

                                     ASSETS

<TABLE>
<CAPTION>
                                                                  2000           1999
                                                              ------------    -----------
<S>                                                           <C>             <C>
Current assets:
  Cash and cash equivalents.................................  $    182,600    $ 1,045,600
  Short-term investments....................................            --        247,500
  Accounts receivable, less allowance for doubtful accounts
     of $5,000 and $50,000, respectively....................        49,000      1,285,500
  Prepaid expenses and other assets.........................        72,600         60,900
                                                              ------------    -----------
          Total current assets..............................       304,200      2,639,500
Property and equipment, net.................................       256,100        402,700
Software development costs, net.............................            --        208,400
Other assets................................................       364,600        312,100
                                                              ------------    -----------
                                                              $    924,900    $ 3,562,700
                                                              ============    ===========

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable....................................  $    229,900    $   177,000
  Accrued and other current liabilities.....................       268,300        335,600
  Deferred revenue..........................................       116,200         81,800
                                                              ------------    -----------
          Total current liabilities.........................       614,400        594,400
Commitments and contingencies
Shareholders' equity:
  Preferred stock, 1,000,000 shares authorized, none issued
     and outstanding........................................            --             --
  Common stock, no par value, 20,000,000 and 10,000,000
     shares authorized, 4,972,312 and 4,217,978 issued and
     outstanding at December 31, 2000 and 1999,
     respectively...........................................    11,249,300      8,410,400
  Deferred stock-based compensation.........................          (700)       (85,000)
  Accumulated other comprehensive income (loss).............            --        (32,200)
  Accumulated deficit.......................................   (10,938,100)    (5,324,900)
                                                              ------------    -----------
          Total shareholders' equity........................       310,500      2,968,300
                                                              ------------    -----------
                                                              $    924,900    $ 3,562,700
                                                              ============    ===========
</TABLE>

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

                                       F-2
<PAGE>   33

               ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                 2000           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Revenue:
  Product license fees......................................  $ 1,041,800    $ 1,781,200
  Product maintenance fees..................................      567,300        641,200
  Consulting services.......................................      149,000        558,100
  Royalties.................................................       44,300        263,900
                                                              -----------    -----------
          Total revenue.....................................    1,802,400      3,244,400
Cost of revenue:
  Cost of product licenses fees.............................      260,900        343,200
  Cost of product maintenance fees..........................      139,100        344,800
  Cost of consulting services...............................       65,800        100,000
                                                              -----------    -----------
          Total cost of revenue.............................      465,800        788,000
                                                              -----------    -----------
          Gross margin......................................    1,336,600      2,456,400
Operating expenses:
  Research and development..................................    2,917,900      1,764,300
  Sales and marketing.......................................    2,422,600      1,859,600
  General and administrative................................    1,664,200        965,100
                                                              -----------    -----------
          Total operating expenses..........................    7,004,700      4,589,000
                                                              -----------    -----------
          Operating loss....................................   (5,668,100)    (2,132,600)
Other income, net...........................................       39,500        169,900
                                                              -----------    -----------
          Loss before income tax benefit....................   (5,628,600)    (1,962,700)
Income tax benefit..........................................       15,400         10,400
                                                              -----------    -----------
          Net loss..........................................  $(5,613,200)   $(1,952,300)
                                                              ===========    ===========
Basic and diluted net loss per share........................  $     (1.19)   $     (0.49)
                                                              ===========    ===========
Shares used in computing basic and diluted net loss per
  share.....................................................    4,720,666      4,022,600
                                                              ===========    ===========
</TABLE>

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

                                       F-3
<PAGE>   34

               ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                      ACCUMULATED
                                                                                         OTHER
                                                 COMMON STOCK           DEFERRED     COMPREHENSIVE                      TOTAL
                            COMPREHENSIVE   -----------------------   STOCK-BASED       INCOME       ACCUMULATED    SHAREHOLDERS'
                                LOSS         SHARES       AMOUNT      COMPENSATION      (LOSS)         DEFICIT         EQUITY
                            -------------   ---------   -----------   ------------   -------------   ------------   -------------
<S>                         <C>             <C>         <C>           <C>            <C>             <C>            <C>
Balance at
  December 31, 1998.......                  3,899,761     7,591,500           --          5,600        (3,372,600)     4,224,500
  Stock options
    exercised.............                    278,824       483,100           --             --                --        483,100
  Employee stock purchase
    plan shares issued....                     27,145        69,200           --             --                --         69,200
  Warrants exercised......                     12,248            --           --             --                --             --
  Warrants issued for
    services..............                         --        42,600           --             --                --         42,600
  Deferred stock-based
    compensation..........                         --       224,000     (224,000)            --                --             --
  Amortization of deferred
    stock based
    compensation
    expense...............                         --            --      139,000             --                --        139,000
  Unrealized loss on
    investments...........   $   (37,800)          --            --           --        (37,800)               --        (37,800)
  Net loss................    (1,952,300)          --            --           --             --        (1,952,300)    (1,952,300)
                             -----------    ---------   -----------    ---------       --------      ------------    -----------
  Comprehensive loss......   $(1,990,100)
                             ===========
Balance at
  December 31, 1999.......                  4,217,978   $ 8,410,400    $ (85,000)      $(32,200)     $ (5,324,900)   $ 2,968,300
  Stock options
    exercised.............                      7,119        22,400           --             --                --         22,400
  Employee stock purchase
    plan shares issued....                     31,330        76,600           --             --                --         76,600
  Shares issued in
    connection with
    private stock
    offering..............                    715,885     2,770,000           --             --                --      2,770,000
  Amortization of deferred
    stock based
    compensation
    expense...............                         --            --       54,200             --                --         54,200
  Deferred stock-based
    compensation..........                         --       (30,100)      30,100             --                --             --
  Unrealized losses on
    securities:
    Less: Reclassification
      adjustment for
      losses included in
      net loss............        32,200           --            --           --         32,200                --         32,200
  Net loss................    (5,613,200)          --            --           --             --        (5,613,200)    (5,613,200)
                             -----------    ---------   -----------    ---------       --------      ------------    -----------
  Comprehensive loss......   $(5,581,000)
                             ===========
Balance at
  December 31, 2000.......                  4,972,312   $11,249,300    $    (700)      $     --      $(10,938,100)   $   310,500
                                            =========   ===========    =========       ========      ============    ===========
</TABLE>

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

                                       F-4
<PAGE>   35

               ENLIGHTEN SOFTWARE SOLUTIONS, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                 2000           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Cash Flows from Operating Activities:
  Net loss..................................................  $(5,613,200)   $(1,952,300)
  Adjustments to reconcile net loss to net cash used in
     operating activities:
     Depreciation and amortization..........................      448,500        408,700
     Loss on disposal of property and equipment.............        1,500          2,500
     Loss on sales of short-term investments................       34,200             --
     Provision for doubtful accounts........................      (45,000)        25,000
     Compensation expense for warrants issued...............           --         42,600
     Compensation expense for stock options issued..........       54,200        139,000
     Changes in operating assets and liabilities:
       Accounts receivable..................................    1,281,500       (657,100)
       Prepaid expenses and other assets....................      (64,200)        26,600
       Trade accounts payable...............................       52,900        274,100
       Accrued and other liabilities........................      (67,300)      (422,600)
       Deferred revenue.....................................       34,400         38,000
                                                              -----------    -----------
          Net cash used in operating activities.............   (3,882,500)    (2,075,500)
Cash Flows from Investing Activities:
  Sales of short-term investments...........................      245,500      1,000,300
  Capitalization of software development costs..............      (48,600)      (232,000)
  Purchases of property and equipment.......................      (46,400)       (99,500)
                                                              -----------    -----------
          Net cash provided by investing activities.........      150,500        668,800
Cash flows from financing activities:
  Proceeds from issuance of stock, net......................    2,869,000        552,300
                                                              -----------    -----------
          Net cash provided by financing activities.........    2,869,000        552,300
                                                              -----------    -----------
Net decrease in cash and cash equivalents...................     (863,000)      (854,400)
Cash and cash equivalents at beginning of year..............    1,045,600      1,900,000
                                                              -----------    -----------
Cash and cash equivalents at end of year....................  $   182,600    $ 1,045,600
                                                              ===========    ===========
Supplemental cash flow information disclosure of non-cash
  investing and financing activities:
  Income taxes paid.........................................  $     1,300    $     1,100
                                                              ===========    ===========
  Warrants issued...........................................  $        --    $    42,600
                                                              ===========    ===========
  Deferred stock-based compensation.........................  $    84,300    $   224,000
                                                              ===========    ===========
</TABLE>

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

                                       F-5
<PAGE>   36

                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Description of Business

     Enlighten Software Solutions, Inc. develops, markets and supports event
monitoring and workgroup administration software products. The EnlightenDSM(TM)
product allows companies to manage their computer servers and workstations by
enabling systems managers and administrators to standardize the management of
diverse computer operating systems, such as Unix, Linux, FreeBSD and Windows.
The EnlightenDSM product suite is a fully integrated, cross-platform software
solution providing computer system management covering a wide range of workgroup
administration and systems management tasks and the monitoring of critical
operating and performance metrics during computer operation.

     Founded in 1986, Enlighten was a leading provider of systems management
software on the Tandem platform, providing a range of automated systems
management products to over 400 companies in 30 countries. In 1997, Enlighten
sold its Tandem product line to BMC Corporation ("BMC") formerly New Dimension
Software, Inc., in order to focus efforts on its EnlightenDSM product suite. In
addition, BMC paid Enlighten royalties through September 2000 from BMC's
licensing and support of the Tandem software products.

  Principles of Consolidation and Basis of Presentation

     The accompanying consolidated financial statements include the accounts of
Enlighten Software Solutions, Inc. and its wholly-owned subsidiary, a sales
corporation in Europe. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain prior year consolidated financial
statement balances have been reclassified to conform to the 2000 presentation.

     Historically, Enlighten has incurred losses from operations. As of December
31, 2000, Enlighten had a deficit in working capital. To date, Enlighten has
funded its operations principally through the net proceeds of its initial public
offering in 1994, secondary offering in 1998 and private placement of common
stock and warrants in 2000 generating net proceeds of approximately $2.8
million. In addition, in the future, management expects to obtain additional
funding through an agreement with Maden Tech Consulting, Inc. where by Maden
Tech has provided a convertible credit facility providing for total borrowings
of up to $1.1 million, advanced at the discretion of Maden Tech (see Note 10).

     Management believes that its current cash balances, plus the credit
facility and funding it expects to obtain in the future will be sufficient to
enable Enlighten to satisfy its obligations through fiscal 2001 from Maden Tech.
However, there can be no assurance that Enlighten can obtain additional funds on
terms agreeable to Enlighten. The accompanying consolidated financial statements
have been prepared assuming that Enlighten will continue as a going concern.

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

                                       F-6
<PAGE>   37
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

  Cash Equivalents and Short Term Investments

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

     Enlighten has classified its investments in preferred stock and municipal
bonds as "available-for-sale." Such investments are recorded at market value
based on quoted market prices, with unrealized gains and losses reported as a
component of other comprehensive loss. The cost of securities sold is determined
based on the specific identification method.

  Property and Equipment

     Property and equipment are stated at cost. Depreciation is calculated on
the straight-line method 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.

     Enlighten reviews property and equipment for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of property and equipment is measured by
comparison of its carrying amount to future net undiscounted cash flows the
property and equipment are expected to generate. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the property and equipment exceeds its fair value.
To date, Enlighten has made no impairment adjustments to the carrying values of
its property and equipment.

  Software Development Costs

     Software development costs incurred subsequent to the determination of
product technological feasibility are capitalized. Technological feasibility is
established at the completion of detail program design and testing. The
establishment of technological feasibility and the ongoing assessment of the
recoverability of these costs requires considerable judgment by management with
respect to certain external factors including, but not limited to, anticipated
future gross product revenue, estimated economic life and changes in software
and hardware technology. Costs related to computer software development incurred
prior to establishing product technological feasibility are expensed as
incurred. Amortization of capitalized software development costs begins when the
products are available for general release to customers and is computed on a
straight-line basis over the remaining estimated economic life of the product,
generally two to three years.

     Enlighten periodically assesses the recoverability of these intangible
assets by comparing their amortized cost to the net realizable value of the
related products. The amount by which the unamortized costs exceed the net
realizable value is written off. In fiscal 2000, Enlighten has written-off a
total of approximately $127,000 related to software development costs.

  Foreign Currency Translation

     The functional currency for Enlighten's foreign subsidiary is the U.S.
dollar. Accordingly, this entity remeasures monetary assets and liabilities at
year-end exchange rates while nonmonetary items are remeasured at historical
rates. Income and expense accounts are remeasured at the average rates in effect
during the year, except for depreciation, which is remeasured at historical
rates. Transaction gains and losses are recognized in income in the period of
occurrence.

                                       F-7
<PAGE>   38
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

  Use of Estimates

     The preparation of 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.

  Stock Based Compensation

     Enlighten uses the intrinsic value-based method to account for all of its
employee stock-based compensation plans. Compensation costs recognized, if any,
are amortized on a straight-line basis over the vesting term.

  Fair Value of Financial Instruments and Concentration of Credit Risk

     The fair value of Enlighten's cash, cash equivalents, accounts receivable
and accounts payable approximates the carrying amount due to the relatively
short maturity of these items. The fair value of Enlighten's short term
investments are based on quoted market prices. Financial instruments that
potentially subject Enlighten to concentrations of credit risk consist
principally of short-term investments and trade account receivables. Enlighten
has investment policies that limit the amount of credit exposure to any one
financial institution and restrict placement of these investments to financial
institutions evaluated as credit worthy. Substantially all of Enlighten's
accounts receivable are derived from sales to large OEM partners and select
end-users. Enlighten performs ongoing credit evaluations of its customers'
financial condition and does not require collateral. Enlighten maintains
allowances for potential credit losses and such losses have been within
management's expectations.

  Other Comprehensive Loss

     Unrealized gains or losses on investments represent the only component of
comprehensive loss, other than net loss. Comprehensive loss has been presented
in the consolidated statement of shareholders' equity. As of December 31, 2000
and 1999, the tax effects allocated to the component of other comprehensive loss
and accumulated other comprehensive loss balances were not significant.

  Income Taxes

     Enlighten accounts for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Deferred tax assets are reduced by an allowance to an
amount whose realization is more likely than not. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

  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

                                       F-8
<PAGE>   39
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

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 effect would be
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:

<TABLE>
<CAPTION>
                                                                2000         1999
                                                              ---------    ---------
<S>                                                           <C>          <C>
Weighted average common shares used to calculate basic net
  loss per share............................................  4,720,666    4,022,600
Stock options...............................................         --           --
Warrants....................................................         --           --
                                                              ---------    ---------
Weighted average common and potentially dilutive common
  shares used to calculated diluted net loss per share......  4,720,666    4,022,600
                                                              =========    =========
</TABLE>

     Stock options and warrants to purchase 2,444,104 and 1,319,489 shares of
common stock for the years ended December 31, 2000 and 1999, 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.

  Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 as
amended by SFAS No. 137 and SFAS No. 138 is effective for all fiscal years
beginning after June 15, 2000. SFAS No. 133 requires Enlighten to recognize all
derivatives as either assets or liabilities and measure those instruments at
fair value. It further provides criteria for derivative instruments to be
designated as fair value, cash flow and foreign currency hedges and establishes
respective accounting standards for reporting changes in the fair value of the
derivative instruments. Upon adoption, Enlighten will be required to adjust
hedging instruments to fair value in the balance sheet and recognize the
offsetting gains or losses as adjustments to be reported in net income or other
comprehensive income, as appropriate. Enlighten will adopt the requirements of
SFAS 133 on January 1, 2001. The adoption will not have a material impact on
Enlighten's financial position or results of operations since Enlighten does not
participate in such investments or activities.

(2) CASH, CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

     Cash and cash equivalents consisted of the following:

<TABLE>
<CAPTION>
                                                                2000         1999
                                                              --------    ----------
<S>                                                           <C>         <C>
Cash and cash equivalents...................................  $ 36,900    $   87,300
Money market funds..........................................   145,700       958,300
                                                              --------    ----------
                                                              $182,600    $1,045,600
                                                              ========    ==========
</TABLE>

     Short-term investments consisted of the following:

<TABLE>
<CAPTION>
                                                              2000      1999
                                                              ----    --------
<S>                                                           <C>     <C>
Equity securities...........................................  $--     $247,500
                                                              ===     ========
</TABLE>

                                       F-9
<PAGE>   40
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

(3) PROPERTY AND EQUIPMENT

     A summary of property and equipment follows:

<TABLE>
<CAPTION>
                                                                 2000          1999
                                                              ----------    ----------
<S>                                                           <C>           <C>
Equipment...................................................  $1,211,500    $1,173,700
Furniture and fixtures......................................     285,900       285,900
Leasehold improvements......................................     142,200       142,200
                                                              ----------    ----------
                                                               1,639,600     1,601,800
Less accumulated depreciation and amortization..............   1,383,500     1,199,100
                                                              ----------    ----------
                                                              $  256,100    $  402,700
                                                              ==========    ==========
</TABLE>

(4) SOFTWARE DEVELOPMENT COSTS

     A summary of software development costs follows:

<TABLE>
<CAPTION>
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Software development costs..................................  $697,000    $648,400
Less accumulated amortization...............................   697,000     440,000
                                                              --------    --------
                                                              $     --    $208,400
                                                              ========    ========
</TABLE>

(5) INCOME TAX BENEFIT

     Enlighten's loss before income taxes is entirely from domestic sources.
Income tax benefit consisted of:

<TABLE>
<CAPTION>
                                                       CURRENT     DEFERRED     TOTAL
                                                       --------    --------    --------
<S>                                                    <C>         <C>         <C>
YEAR ENDED DECEMBER 31, 2000:
  Federal............................................  $     --      $--       $     --
  State..............................................       400       --            400
  Foreign............................................   (15,800)      --        (15,800)
                                                       --------      ---       --------
                                                       $(15,400)     $--       $(15,400)
                                                       ========      ===       ========
YEAR ENDED DECEMBER 31, 1999:
  Federal............................................  $(11,500)     $--       $(11,500)
  State..............................................     1,100       --          1,100
  Foreign............................................        --       --             --
                                                       --------      ---       --------
                                                       $(10,400)     $--       $(10,400)
                                                       ========      ===       ========
</TABLE>

     Enlighten's income tax benefit differed from the expected income tax
benefit computed by applying the statutory U.S. federal income tax rate (34%) to
loss before income tax benefit as a result of the following:

<TABLE>
<CAPTION>
                                                                2000          1999
                                                             -----------    ---------
<S>                                                          <C>            <C>
Provision computed at federal statutory rate...............  $(1,913,800)   $(667,300)
State income tax, net of federal tax effect................     (326,900)    (114,400)
Change in valuation allowance..............................    2,280,300      835,700
Foreign taxes..............................................      (15,800)          --
Other......................................................      (39,200)     (64,400)
                                                             -----------    ---------
                                                             $   (15,400)   $ (10,400)
                                                             ===========    =========
</TABLE>

                                       F-10
<PAGE>   41
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:

<TABLE>
<CAPTION>
                                                               2000           1999
                                                            -----------    -----------
<S>                                                         <C>            <C>
Deferred tax assets:
  Reserves not currently deductible.......................  $    36,000    $    47,500
  Credit carryforward.....................................      890,900        664,300
  Loss carryforward.......................................    3,576,500      1,603,000
                                                            -----------    -----------
          Total deferred tax assets.......................    4,503,400      2,314,800
Valuation allowance.......................................   (4,458,900)    (2,178,600)
                                                            -----------    -----------
          Net deferred tax assets.........................       44,500        136,200
                                                            -----------    -----------
Deferred tax liabilities:
  Software development costs..............................           --         83,000
  Depreciation and amortization...........................       44,500         53,200
                                                            -----------    -----------
          Total deferred tax liabilities..................       44,500        136,200
                                                            -----------    -----------
          Net deferred tax assets.........................  $        --    $        --
                                                            ===========    ===========
</TABLE>

     The net change in the total valuation allowance for the year ended December
31, 2000 was a net increase of $2,280,300. Management has determined that such
portion of deferred tax assets may not be realized.

     Enlighten has federal and state net operating loss carryforwards of
approximately $9,564,200 and $5,568,600, respectively, that may be used to
offset future taxable income and federal and state research tax credits of
approximately $438,300 and $452,600, respectively, that may be used to offset
future tax liabilities. The federal net operating loss and research credit
carryforwards will expire primarily in 2018 and 2019 and the state net operating
loss carryforward will expire primarily in 2003 and 2004.

(6) ACCRUED AND OTHER CURRENT LIABILITIES

     Accrued and other current liabilities consisted of the following:

<TABLE>
<CAPTION>
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Accrued employee related expenses...........................  $129,400    $152,600
Deferred rent...............................................    10,800      38,300
Royalty payable.............................................        --      16,400
Accrued professional fees...................................    59,200      54,800
Other.......................................................    68,900      73,500
                                                              --------    --------
                                                              $268,300    $335,600
                                                              ========    ========
</TABLE>

(7) SHAREHOLDERS' EQUITY

  Preferred Stock

     The Board of Directors has the authority to issue, without further action
by the shareholders, up to 1,000,000 shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series.

                                       F-11
<PAGE>   42
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

  Offering of Common Stock

     On April 28, 2000, Enlighten completed a private placement of 715,885 units
each consisting of one share of common stock and one redeemable purchase warrant
to purchase one share of common stock for net proceeds of approximately
$2,770,000. Enlighten sold the common stock at $4.225 and the warrants at
$0.125, for an aggregate of $4.35 per unit. The price for the common stock was
determined based on the five-day average closing price of Enlighten's common
stock from April 17 through April 24, 2000. The private placement was completed
entirely with accredited investors as defined in Regulation D promulgated under
the Securities Act of 1933. The warrants have an exercise price of approximately
$4.65 per share and a term of five years.

  Employee Stock Option Plan

     As of December 31, 2000, Enlighten had authorized 3,000,000 shares of
common stock for issuance under the 1992 Employee Stock Option Plan (the Option
Plan). The Option Plan may be administered by the Board of Directors or a
committee of the Board, which determines the terms of the options granted under
the Option Plan, including exercise price, number of shares subject to each
option and the exercisability thereof. The vesting periods determined by the
Board of Directors generally provides for shares to vest ratably over 3.5 years
and expire over 10 years.

     A summary of the status of all of Enlighten's stock option plans as of and
during the years ended December 31, 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                           2000                     1999
                                                   ---------------------    ---------------------
                                                                WEIGHTED                 WEIGHTED
                                                                AVERAGE                  AVERAGE
                                                                EXERCISE                 EXERCISE
                                                    SHARES       PRICE       SHARES       PRICE
                                                   ---------    --------    ---------    --------
<S>                                                <C>          <C>         <C>          <C>
Outstanding at beginning of year.................  1,279,489     $2.97      1,066,793     $2.21
Granted..........................................    499,332     $5.50        748,750     $3.55
Exercised........................................     (7,119)    $3.15       (278,824)    $1.73
Cancelled........................................   (226,661)    $5.07       (257,230)    $2.88
                                                   ---------                ---------
Outstanding at end of year.......................  1,545,041     $3.48      1,279,489     $2.97
                                                   =========                =========
Options exercisable at year end..................    839,512     $2.90        473,644     $2.35
                                                   =========                =========
Options available for future grant...............  1,216,514                  489,185
                                                   =========                =========
</TABLE>

     A summary of the status of all Enlighten's stock option plans at December
31, 2000 follows:

<TABLE>
<CAPTION>
                         OPTIONS OUTSTANDING
                 ------------------------------------    OPTIONS EXERCISABLE
                                WEIGHTED                ----------------------
                   NUMBER        AVERAGE     WEIGHTED     NUMBER      WEIGHTED
                 OUTSTANDING    REMAINING    AVERAGE    EXERCISABLE   AVERAGE
   RANGE OF          AT        CONTRACTUAL   EXERCISE       AT        EXERCISE
    PRICES        12/31/00        LIFE        PRICE      12/31/00      PRICE
---------------  -----------   -----------   --------   -----------   --------
<S>              <C>           <C>           <C>        <C>           <C>
$ 1.01 - $ 2.00     395,353        6.6        $ 1.81      347,133      $ 1.79
$ 2.01 - $ 3.00     366,203        8.1        $ 2.68      212,028      $ 2.72
$ 3.01 - $ 4.00     586,485        6.6        $ 3.42      207,180      $ 3.36
$ 4.01 - $ 5.00      49,000        6.2        $ 4.62       28,428      $ 4.67
$ 5.01 - $ 7.00      10,000        2.3        $ 6.31       10,000      $ 6.31
$ 7.01 - $ 8.00      19,000        2.1        $ 7.55        4,689      $ 7.56
$ 8.01 - $10.00      45,000        4.1        $ 9.75       12,856      $ 9.75
$10.01 - $11.00      74,000        8.5        $10.75       17,198      $10.76
                  ---------                               -------
          Total   1,545,041                               839,512
                  =========                               =======
</TABLE>

                                       F-12
<PAGE>   43
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

  Employee Stock Purchase Plan

     Under Enlighten's 1994 Employee Stock Purchase Plan (the Purchase Plan) a
total of 300,000 shares of common stock remain reserved for issuance under the
Purchase Plan. The Purchase Plan permits eligible employees to purchase common
stock through payroll deductions, which may not be less than 1% nor exceed 10%
of an employee's compensation, not to exceed shares with a fair market value of
$25,000. The price of stock purchased under the Purchase Plan must be at least
85% of the lower of the fair market value of the common stock at the beginning
of each six-month offering period or at the end of the present purchasing
period. Employees may end their participation in the offering at any time during
the offering period and participation ends automatically upon termination of
employment with Enlighten. The fair value of purchase plan rights granted in
fiscal 2000 and 1999 was $1.29 and $1.39 per share, respectively.

  Accounting for Stock-Based Compensation Plans

     Enlighten has elected to use the intrinsic value-based method in accounting
for its Plan. Accordingly, no compensation cost has been recognized in the
accompanying consolidated financial statements for options granted to employees.
The exercise price of each option equaled or exceeded the fair value of the
underlying common stock as of the grant date for each option. Had compensation
cost for Enlighten's stock options been determined in a manner consistent with
SFAS No. 123, Enlighten's net loss and net loss per share as reported would have
been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                               2000       1999
                                                              -------    -------
<S>                                                           <C>        <C>
Net loss (In thousands):
  As reported...............................................  $(5,613)   $(1,952)
                                                              =======    =======
  Pro forma.................................................  $(7,021)   $(2,636)
                                                              =======    =======
Basic and diluted net loss per share:
  As reported...............................................  $ (1.19)   $ (0.49)
                                                              =======    =======
  Pro forma.................................................  $ (1.49)   $ (0.66)
                                                              =======    =======
</TABLE>

     The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: 2000 -- an expected life of 3.5 years, risk-free interest rates of
5.50%, 160% expected volatility and no dividend yield; 1999 -- an expected life
of 3.5 years, risk-free interest rates of 5.50%, 136% expected volatility and no
dividend yield. The weighted-average fair value of options granted during the
year was $4.45 and $2.98 for the years ended December 31, 2000 and 1999,
respectively.

  Warrants

     In April 1994, in connection with Enlighten's initial public offering,
Enlighten issued warrants to purchase up to 100,000 shares of common stock at an
exercise price of $6.60, of which warrants to purchase up to 85,000 shares
expired on April 19, 1999. In April 1999, terms of the warrants to purchase up
to 15,000 shares were amended to extend their expiration to April 2001. The fair
value of the extension of this warrant as determined using the Black-Scholes
option pricing model was not significant using the following assumptions: an
expected life of 2 years, risk-free interest rate of 5.50%, 136% expected
volatility and no dividend yield.

     In June 1995, in connection with its facility lease, Enlighten issued
warrants to purchase up to 50,000 shares of common stock at an exercise price of
$5.50. In December 1999, Enlighten issued 12,248 shares of common stock pursuant
to the net exercise of warrants to purchase 50,000 shares of common stock at
$5.50 per share.

                                       F-13
<PAGE>   44
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

     In January 1999, in connection with product marketing consulting performed,
Enlighten issued warrants to purchase up to 25,000 shares of common stock at an
exercise price of $2.50. Upon notice of exercise by the holders of the warrants,
Enlighten, at the holders' option, may settle such exercise by either issuing
the full amount of shares and receiving cash proceeds or issuing a net amount of
shares with no cash proceeds. The fair value of these warrants, as determined
using the Black-Scholes option pricing model, was $42,600, using the following
assumptions: the contractual life of 10 years, risk-free interest rate of 5.50%,
135.8% expected volatility and no dividend yield. These warrants expired in
January 2001.

     In April 2000, in connection with the private stock offering, Enlighten
issued warrants to purchase up to 859,063 shares of common stock at an exercise
price of $4.65. These warrants expire in April 2005.

(8) COMMITMENTS

  Leases

     Enlighten leases office space and certain office equipment under
noncancelable leases expiring through 2003. Future minimum lease payments under
these leases aggregate approximately $179,700, $1,500 and $700 in 2001, 2002 and
2003. Enlighten will receive payments totaling $21,500 in 2001 under an office
space sublease agreement. Rent expense was $358,000 and $311,600 in 2000 and
1999, respectively.

  Royalties

     Enlighten has license agreements with unrelated third parties covering
certain of its products requiring royalty payments ranging from 10% to 50% of
product license and maintenance fees. During 2000, there were no royalties
related to these agreements and $130,500 in 1999.

  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.

(9) SEGMENT REPORTING AND MAJOR CUSTOMERS

     SFAS No. 131 establishes standards for the way in which public companies
disclose certain information about operating segments in Enlighten's financial
reports. The information reviewed by the Chief Executive Officer is identical to
the information in the accompanying statements of operations. Therefore, based
on the criteria of SFAS No. 131, Enlighten operates in one segment and
accordingly has provided only the required enterprise wide disclosures.

     For the years ended December 31, 2000 and 1999, sales to one customer
accounted for approximately 42% and 60% of total revenues, respectively.

     Enlighten's operations outside of the United States consisted solely of a
sales corporation in the United Kingdom. Domestic operations are responsible for
the design, development and licensing of all products.

                                       F-14
<PAGE>   45
                       ENLIGHTEN SOFTWARE SOLUTIONS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

Enlighten's Long-lived assets reside solely in the United States. Following are
selected financial data, categorized by primary geographic area:

<TABLE>
<CAPTION>
                                                                 2000          1999
                                                              ----------    ----------
<S>                                                           <C>           <C>
Revenues:
  United States.............................................  $1,729,800    $3,235,400
  International.............................................      72,600         9,000
                                                              ----------    ----------
                                                              $1,802,400    $3,244,400
                                                              ==========    ==========
</TABLE>

(10) SUBSEQUENT EVENTS

     In February 2001, Enlighten entered into a loan agreement with Maden Tech,
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 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.

     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 the 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 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 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 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 common stock calculated as of the trading day
immediately before the date of exercise. Accordingly, as of March 30, 2001,
Maden Tech beneficially owns 3,444,444 shares of common stock, representing
40.9% of the shares of common stock outstanding.

     As of March 30, 2001, Maden Tech has advanced a total of $325,000 under the
credit facility.

                                       F-15
<PAGE>   46

                                 EXHIBITS INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
  3.1      The Registrant's Amended and Restated Articles of
           Incorporation as filed with the Secretary of State of the
           State of California on May 21, 1996 (incorporated by
           reference to Exhibit 3.1 to the Registrant's Form S-1
           Registration Statement (No. 33-75388) which became effective
           April 19, 1994 (the 1994 Form S-1)).
  3.2      The Registrant's By Laws, as currently in effect
           (incorporated by reference to Exhibit 3.2 to the
           Registrant's Form S-1 Registration Statement (No. 33-75388)
           which became effective April 19, 1994).
 10.01     The Registrant's Form of Indemnity Agreement for officers
           and directors (incorporated by reference to Exhibit 10.1 of
           the 1994 Form S-1).
 10.02     The Registrant's First Amended and Restated 1992 Stock
           Option Plan (incorporated by reference to Exhibit 10.2 of
           the 1994 Form S-1).
 10.03     The Registrant's 1994 Employee Stock Purchase Plan
           (incorporated by reference to Exhibit 10.3 of the 1994 Form
           S-1).
 10.20     Lease, dated February 24, 1995, by and between Registrant
           and Mariner's Island Ltd. for the Registrant's offices at
           999 Baker Way, Fifth Floor, San Mateo, California
           (incorporated by reference to Exhibit 10.20 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1994 (the 1994 Form 10-KSB)).
 10.24*    Termination and Change in Control Agreement, dated April 24,
           1996, by and between Enlighten Software Solutions, Inc. and
           Michael A. Morgan (incorporated by reference to Exhibit
           10.24 of the Registrant's Annual Report on Form 10-KSB for
           the year ended December 31, 1996 (the 1996 Form 10-KSB)).
 10.26*    Nonqualified Stock Option Agreement, dated December 27,
           1996, by and between Enlighten Software Solutions, Inc. and
           Mark Himelstein (incorporated by reference to Exhibit 10.26
           of the Registrant's 1996 Form 10-KSB).
 10.27     Agreement dated as of September 22, 1997, by and among
           Enlighten Software Solutions, Inc., Peter J. McDonald and
           New Dimension Software, Inc (incorporated by reference to
           Exhibit 10.27 of the Registrant's Current Report on Form 8-K
           dated October 1, 1997).
 10.28*    Employment letter, dated July 3, 1997, by and between
           Enlighten Software Solutions, Inc. and Mike Seashols
           (incorporated by reference to Exhibit 10.28 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1997 (the 1997 Form 10-KSB)).
 10.29*    Employment letter, dated August 28, 1997, by and between
           Enlighten Software Solutions, Inc. and David D. Parker
           (incorporated by reference to Exhibit 10.29 of the
           Registrant's 1997 Form 10-KSB).
 10.30     Agreement dated as of January 21, 1998, by and between
           Enlighten Software Solutions, Inc. and Silicon Graphics, Inc
           (incorporated by reference to Exhibit 10.30 of the
           Registrant's 1997 Form 10-KSB).
 10.31*    Employment letter, dated July 15, 1998, by and between
           Enlighten Software Solutions, Inc. and Bill Bradley
           (incorporated by reference to Exhibit 10.31 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1998 (the 1998 Form 10-KSB)).
 10.32*    Employment letter, dated January 15, 1999, by and between
           Enlighten Software Solutions, Inc. and Tim Gardner
           (incorporated by reference to Exhibit 10.32 of the
           Registrant's 1998 Form 10-KSB).
 10.33     Agreement dated as of December 31, 1998, by and between
           Enlighten Software Solutions, Inc. and International
           Business Machines Corporation (incorporated by reference to
           Exhibit 10.33 of the Registrant's 1998 Form 10-KSB).
</TABLE>

                                       F-16
<PAGE>   47

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
 10.34     Agreement dated as of September 28, 1999, by and between
           Enlighten Software Solutions, Inc. and TurboLinux, Inc.
           (incorporated by reference to Exhibit 10.33 of the
           Registrant's Quarterly Report on Form 10-QSB for the quarter
           ended September 30, 1999).
 10.35     Agreement dated as of October 21, 1999, by and between
           Enlighten Software Solutions, Inc. and Intel Corporation
           (incorporated by reference to Exhibit 10.35 of the
           Registrant's Annual Report on Form 10-KSB for the year ended
           December 31, 1999 (the 1999 Form 10-KSB)).
 10.36*    Employment letter, dated November 24, 1999, by and between
           Enlighten Software Solutions, Inc. and Bill Bradley
           (incorporated by reference to Exhibit 10.36 of the
           Registrant's 1999 Form 10-KSB).
 10.37*    Employment letter, dated December 8, 1999, by and between
           Enlighten Software Solutions, Inc. and Stephen E. Giusti
           (incorporated by reference to Exhibit 10.37 of the
           Registrant's 1999 Form 10-KSB).
 10.38     Loan Agreement dated as of February 14, 2001 by and among
           the Registrant and Maden Tech Consulting, Inc. (incorporated
           by reference to Exhibit 10.1 of the Registrant's Current
           Report on Form 8-K filed on March 15, 2001 (the "2001 Form
           8-K")).
 10.39     Convertible Demand Note made March 6, 2001 (incorporated by
           reference to Exhibit 10.2 to the 2001 Form 8-K).
 10.40     Warrant Agreement dated as of March 6, 2001 by and among the
           Registrant and Maden Tech Consulting, Inc. (incorporated by
           reference to Exhibit 10.3 to the 2001 Form 8-K).
 10.41     Warrant Certificate MT-001 issued March 6, 2001
           (incorporated by reference to Exhibit 10.4 to the 2001 Form
           8-K).
 10.42     Registration Rights Agreement dated as of March 6, 2001 by
           and among the Registrant and Maden Tech Consulting, Inc.
           (incorporated by reference to Exhibit 10.5 to the 2001 Form
           8-K).
 10.43     Software Security Agreement dated as of February 14, 2001 by
           and among the Registrant and Maden Tech Consulting, Inc.
           (incorporated by reference to Exhibit 10.6 to the 2001 Form
           8-K).
 10.44     Conditional Assignment dated as of February 14, 2001
           (incorporated by reference to Exhibit 10.7 to the 2001 Form
           8-K).
 21.1      Subsidiaries of Enlighten (incorporated by reference to
           Exhibit 21.1 of the Registrant's 1994 Form 10-KSB).
 23.1      Consent of KPMG LLP.
</TABLE>

---------------
* Compensatory or employment arrangement.

                                       F-17