<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A
                                (Amendment No. 1)

                                   (Mark one)
            [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
                                        -----------------

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
            For the transition period from               to
                                          --------------    --------------
                         Commission File Number 0-15454

                       TANGRAM ENTERPRISE SOLUTIONS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                    Pennsylvania                          23-2214726
           (State or Other Jurisdiction of  (I.R.S. Employer Identification No.)
            Incorporation or Organization)

                        11000 Regency Parkway, Suite 401
                                 Cary, NC 27511
              (Address of Principal Executive Offices) (Zip Code)

                                 (919) 653-6000
              (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:
                         Common Stock, $0.01 par value
                                (Title of class)

  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-K or any amendment to this
Form 10-K.  [X]


  The aggregate market value of shares of common stock held by non-affiliates on
March 27, 2001 (as reported on The Nasdaq SmallCap Market tier of The Nasdaq
Stock Market under the symbol TESI) was approximately $2,896,698.  For purposes
of determining this amount only, Registrant has defined affiliates as including
(a) the executive officers named in Part I of this 10-K report, (b) all
directors of Registrant, and (c) each shareholder that has informed Registrant
by March 27, 2001 that it is the beneficial owner of 10% or more of the
outstanding common stock of Registrant.

  As of March 27, 2001 there were 19,405,548 shares of the Company's common
stock outstanding.
<PAGE>

                                EXPLANATORY NOTE
                                ----------------


  This Amendment No. 1 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, is being filed in order to submit the
information required to be included in Part III thereof within the period
required by General Instructions G(3) to Form 10-K.

  Part III of the Registrant's Annual Report on Form 10-K is hereby amended by
deleting the text thereof in its entirety and substituting the following:

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

  Information regarding the Company's executive officers may be found in the
section entitled "Executive Officers" in part I of this Annual Report on Form
10-K.

  The table below sets forth, for the Company's directors, all of whom are
nominees for director to be elected at the Company's Annual Meeting of
Shareholders, certain information regarding the background and age of each
director:

Name                   Age  Position with the Company
----                   ---  -------------------------
John F. Owens          60   Chairman of the Board and Director
Norman L. Phelps       63   President and Chief Executive Officer, Director
Steven F. Kuekes       42   Senior Vice President and Chief Technology Officer,
                            Director
Thomas R. Brown        54   Director
James A. Ounsworth     58   Director
Carl G. Sempier        69   Director
Carl Wilson            54   Director
Steven R. Zodtner      44   Director

--------------------------------------------------------------------------------
John F. Owens                                          Director since 1992

  Mr. Owens was appointed chairman of our board in December 1999.  Mr. Owens is
president of Solo Systems, Inc., a management consulting firm, and president of
Implementation and Consulting Services, Inc., a systems software services
company.

--------------------------------------------------------------------------------
Norman L. Phelps                                       Director since 2000

  Mr. Phelps has served as our president and chief executive officer since
December 31, 1999.  Prior to joining us, Mr. Phelps held the position of chief
information officer at Blue Cross & Blue Shield of North Carolina, a health
insurance company, from June 1995 to September 1999.  Prior to that, he was
chief executive officer of National Liberty Corp., a personal insurance company.
Previously, Mr. Phelps served as executive vice president of Colonial Penn Group
based in Philadelphia, Pennsylvania and also served as president of the Colonial
Penn Group Information Systems Data Corporation.

--------------------------------------------------------------------------------
Steven F. Kuekes                                       Director since 1993

  Mr. Kuekes has served as our senior vice president and chief technology
officer since October 1993.
--------------------------------------------------------------------------------

                                       2
<PAGE>

--------------------------------------------------------------------------------
Thomas R. Brown                                        Director since 2001

  Mr. Brown has served as chief executive officer of the Axial Finance group of
companies since its formation in 1987.  Axial is a Swiss-based international set
of companies focused on financing in the high-tech sector in Europe and Southern
Africa.  Mr. Brown is also a director of Axial Technology Holding AG, a Swiss-
based technology investment company, and a director of Axiam Holdings Limited, a
South African-based financial services company.

--------------------------------------------------------------------------------
James A. Ounsworth                                     Director since 1999

  Mr. Ounsworth has served as vice president, secretary and general counsel of
Safeguard Scientifics, Inc. since December 1991, and as a senior vice president,
secretary and general counsel from November 1995 until November 2000.  Safeguard
is a leader in developing and operating premier Internet infrastructure
companies.  Mr. Ounsworth presently works with Safeguard and consults with other
business entities.  Mr. Ounsworth is a director of Owosso Corporation.

--------------------------------------------------------------------------------
Carl G. Sempier                                        Director since 1992

  Mr. Sempier is a business consultant.

--------------------------------------------------------------------------------
Carl Wilson                                            Director since 1995

  Mr. Wilson has served as executive vice president and chief information
officer of Marriott International, an international hospitality company, since
April 1997.  Prior to that Mr. Wilson served as vice president-information
resources of Georgia-Pacific Corporation, a diversified forest products company,
from December 1992 to March 1997.

--------------------------------------------------------------------------------
Steven R. Zodtner                                      Director since 2001

  Mr. Zodtner has served as vice president of operations and development for
Safeguard Scientifics, Inc., a leader in developing and operating premier
Internet infrastructure companies, since February 2000.  Prior to that Mr.
Zodtner served as Managing Partner of aligne, Inc, a management and IT strategy
consulting firm, from November 1996 to February 2000.  Before co-founding
aligne, Inc., Mr. Zodtner served as vice president of information systems with
Independence Blue Cross based in Philadelphia, Pennsylvania.
--------------------------------------------------------------------------------


Section 16(A) Beneficial Ownership Reporting Compliance

  Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that our directors, officers and persons who own more than 10% of a registered
class of our equity securities file reports of ownership and changes in
ownership of such securities with the SEC and Nasdaq.  Directors, officers and
greater than 10% beneficial owners are required by applicable regulations to
furnish us with copies of all Section 16(a) forms they file.  Based solely upon
a review of the copies of the forms and information furnished to us, we believe
that during the 2000 fiscal year all filing requirements applicable to our
directors, officers and greater than 10% beneficial owners were satisfied.

                                       3
<PAGE>

Item 11.  Executive Compensation

  The following table provides summary information concerning the compensation
earned by our chief executive officer and other executive officers employed by
us during the fiscal year ended December 31, 2000.


<TABLE>
<CAPTION>

                             2000 Annual Compensation for the Top Six Officers
---------------------------------------------------------------------------------------------------------------------------------
                                                                             Long-Term Compensation
                                          Annual Compensation                        Awards
                                       --------------------------------------------------------------------
                                                                        Other Annual         Securities               All Other
Name and Principal                                                      Compensation         Underlying             Compensation
    Position                Year       Salary ($)       Bonus ($)          ($)(4)          Options/SARS (#)             ($)(5)
------------------          ----       ----------       ---------       ------------       ----------------         -------------
<S>                         <C>        <C>              <C>              <C>               <C>                       <C>
Norman L. Phelps,           2000       $250,000         $45,000              --                    --                  $  7,230
President and Chief
Executive Officer           1999             --              --              --               100,000                        --



Steven F. Kuekes,           2000       $160,000         $14,000              --                    --                  $  7,448
Senior Vice President
and Chief Technology        1999        150,000          17,500              --                    --                    29,543
Officer
                            1998        136,250          37,579              --                    --                    19,491



Ronald R. Nabors,           2000       $ 80,238         $    --              --                75,000                  $    288
Senior Vice President
of Worldwide Sales and
Customer Care (1)


John N. Nelli,              2000       $170,000         $47,667              --                50,000                  $  5,575
Senior Vice President
and Chief Financial         1999        160,000          21,333              --                    --                       405
Officer
                            1998        127,917          31,444              --                50,000                       332


Nancy M. Dunn,              2000       $ 50,348         $    --              --                    --                  $101,359
Former Senior Vice
President, Legal (2)        1999        120,000           8,000              --                    --                    20,516

                            1998        120,000          37,769              --                    --                    20,386


Scott L. Jaffe,             2000       $139,972          $   --              --                40,000                  $150,542
Former Senior Vice
President of Worldwide
Sales and Sales
Operations (3)

</TABLE>

Notes to Annual Compensation Table:

(1)  Mr. Nabors joined us as senior vice president of worldwide sales and
     customer care on August 8, 2000.
(2)  Ms. Dunn resigned as senior vice president, legal effective February 2,
     2000 and terminated her employment as of June 30, 2000.
(3)  Mr. Jaffe's employment as a senior vice president of worldwide sales and
     sales operations was terminated on September 30, 2000.
(4)  Personal benefits do not exceed $50,000 or 10% of the total annual salary
     and bonus for any executive.
(5)  For 2000, all other compensation includes the following:


                            Other            Company Match        Life Insurance
       Name             Compensation*  Defined Contribution Plan  Premiums Paid
----------------------- -------------  -------------------------  --------------
Norman L. Phelps        $      0                $5,250                  $1,980
Steven F. Kuekes               0                 5,250                   2,198
Ronald R. Nabors               0                     0                     288
John N. Nelli                  0                 5,250                     325
Nancy M. Dunn             96,660                 1,473                   3,226
Scott L. Jaffe           145,000                 5,250                     292

*    Represents obligation due under Ms. Dunn and Mr. Jaffe's severance and non-
     competition agreements.

                                       4
<PAGE>


  The following table relates to options to acquire Tangram common stock, unless
otherwise noted in the footnotes.

          Stock Option Grants During the Year Ended December 31, 2000

<TABLE>
<CAPTION>
                                                                                                        Potential Realizable Value
                                                                                                        At Assumed Annual Rates Of
                                                                                                         Stock Price Appreciation
                                         Individual Grants                                                   For Option Term(1)
-----------------------------------------------------------------------------------------------------------------------------------
                                     Number of            % of Total
                                     Securities             Options/
                                     Underlying               SARS
                                      Options/             Granted To       Exercise Or
                                        SARs              Employees In      Base Price     Expiration
Name                               Granted (#)(2)         Fiscal Year        ($/Sh)(3)        Date            5%  ($)     10%  ($)
<S>                                <C>                    <C>               <C>            <C>                <C>         <C>
-----------------------------------------------------------------------------------------------------------------------------------
Norman L. Phelps                         --                    --                --            --            $     --       $ --
-----------------------------------------------------------------------------------------------------------------------------------
Steven F. Kuekes                         --                    --                --            --                  --        --
-----------------------------------------------------------------------------------------------------------------------------------
Ronald R. Nabors                     75,000                  17.9%             $1.88         8/09/10          229,500     366,000
-----------------------------------------------------------------------------------------------------------------------------------
John N. Nelli                        50,000                  11.9%             $8.00         2/11/10          651,500   1,037,500
-----------------------------------------------------------------------------------------------------------------------------------
Nancy M. Dunn                            --                    --                 --              --               --          --
-----------------------------------------------------------------------------------------------------------------------------------
Scott L. Jaffe                       40,000                   9.5%             $8.00         2/11/10          521,200     830,000
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) These values assume that the shares appreciate at the compounded annual rate
    shown from the grant date until the end of the option term.  These values
    are not estimates of future stock price growth of Tangram.  Executives will
    not benefit unless the common stock price increases above the stock option
    exercise price.  The assumed annual rates of appreciation of 5% and 10%
    would result in the price of the Company's stock increasing to $3.06 and
    $4.88, respectively, with respect to Mr. Nabors' option grant and $13.03 and
    $20.75, respectively, with respect to Messrs. Nelli's and Jaffe's option
    grants.

(2) All options are to acquire common stock and have a term of 10 years. The
    first 25% of Mr. Nabors' options vest immediately and 25% will vest on the
    first, second, and third anniversaries of the date of grant.  Messrs.
    Nelli's and Jaffe's options vest 50% on the first anniversary of the date of
    grant and 50% on the second anniversary of the date of grant.  Options
    continue to vest and remain exercisable so long as Messrs. Nabors, Nelli and
    Jaffe are employed by us.  The option exercise price may be paid in cash, by
    delivery of previously acquired shares (under certain conditions), or same-
    day sales (that is, cashless exercises).  The compensation committee has the
    authority to modify the terms of outstanding options, including acceleration
    of the exercise date.

(3) All options have an exercise price equal to the fair market value of the
    shares subject to each option on the grant date.

    The following table set forth information about option exercises by each of
the officers named in the annual compensation table.

         2000 Stock Option Exercises and Year-End Stock Option Values

<TABLE>
<CAPTION>

                                                                   Number Of Securities Underlying
                                                                             Unexercised                   Value Of Unexercised
                                                                             Options/SARs                In-The-Money Options/SARs
                                Shares                                  At Fiscal Year-End (#)           At Fiscal Year-End ($)(1)
                              Acquired On
        Name                  Exercise (#)    Value Realized ($)    Exercisable      Unexercisable     Exercisable   Unexercisable
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>             <C>                   <C>              <C>               <C>           <C>
Norman L. Phelps                  --             $     --               25,000           115,000          $   --          $  --
------------------------------------------------------------------------------------------------------------------------------------
Steven F. Kuekes                   --                  --              360,000                --              --             --
------------------------------------------------------------------------------------------------------------------------------------
Ronald R. Nabors                   --                  --               18,750            56,250              --             --
------------------------------------------------------------------------------------------------------------------------------------
John N. Nelli                      --                  --              112,500            62,500              --             --
------------------------------------------------------------------------------------------------------------------------------------
Nancy M. Dunn                  90,000             202,394                   --                --              --             --
------------------------------------------------------------------------------------------------------------------------------------
Scott L. Jaffe                     --                  --               70,000            70,000              --             --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Value is calculated using the difference between the option exercise price
    and the year-end stock price, multiplied by the number of shares subject to
    an option.  The year-end stock price used was $0.38 for each share of our
    common stock.

                                       5
<PAGE>

Employment Contracts; Severance and Change-in-Control Arrangements

  We have entered into severance agreements with Messrs. Phelps and Nelli that
provide for their employment as executive officers until their employment
relationships are terminated under certain conditions.  As part of their
agreements, if employment is terminated without cause, or if we demote either
Messrs. Phelps or Nelli or reduce their salaries or benefits below their current
levels, each executive officer will be entitled to continuation of their salary
and welfare benefits for up to one year.  Messrs. Phelps and Nelli have agreed
not to compete with Tangram for one year after their voluntary termination of
employment, and if their employment is terminated for any reason other than due
cause, for the same period of time for which they receive compensation.  Under
certain conditions, in the event of a change in control, Messrs. Phelps or Nelli
may voluntarily choose to leave within six months following a change in control
event and be entitled to receive, in lump sum payment, all payments due to them
as if they were terminated without cause.  Additionally, all unvested stock
options held by Messrs. Phelps or Nelli to purchase shares of Tangram will be
vested.

  We have entered into a change in control agreement with Mr. Nabors that
provides him protection under certain conditions in the event of a change in
control.  Within six months following a change in control event, if Mr. Nabors'
employment is terminated without cause, or if his base salary is reduced by more
than 30% of his then current level, Mr. Nabors may voluntarily chose to leave
and be entitled to continuation of his salary and welfare benefits for up to one
year.  Additionally, all unvested stock options held by Mr. Nabors to purchase
shares of Tangram will be vested.

  In October 1993, we entered into severance and non-competition agreements with
Mr. Kuekes and Ms. Dunn that provide for continued health and dental benefits
for up to one year and severance payments equal to one year of their respective
base salaries upon termination of employment for any reason other than cause or
voluntary termination.  We may, at our discretion, provide these benefits upon
termination for cause or voluntary termination.  Mr. Kuekes and Ms. Dunn have
agreed to refrain from competing for one year after termination during which
time severance payments and health benefits would continue to be paid.

  On June 30, 2000, Ms. Dunn voluntarily resigned and the board exercised its
option to grant the benefits provided under the severance and non-competition
agreement with Ms. Dunn.

  In September 2000, we terminated the employment of Mr. Jaffe as senior vice
president of worldwide sales and sales operations.  As part of his employment
agreement, we are obligated to provide Mr. Jaffe health and dental benefits for
up to one year and continuation of Mr. Jaffe's 2000 base salary through
September 9, 2001.

Compensation of Directors

  The board of directors held 11 meetings in 2000.  Each of the incumbent
directors attended at least 75% of the aggregate of the total number of meetings
held by the board and all committees of the board on which he served during the
period in which he served as a director.

  Directors who are employees of Tangram, Safeguard or Axial receive no
compensation other than their normal salary for serving on the board or its
committees.  Directors who are not employees of Tangram, Safeguard or Axial
receive:

        .  $1,000 for each board meeting attended,
        .  $500 for each committee meeting attended,
        .  $500 for each telephonic meeting attended, and
        .  reimbursement of out-of-pocket expenses.

                                       6
<PAGE>

Stock Options:

  Directors who are not employees of Tangram, Safeguard or Axail receive:

     .  a stock option to purchase 10,000 shares of our common stock upon
        initial election to the board, and
     .  service grants to purchase 2,000 shares of our common stock every two
        years after election to the board.

  Directors' initial options have a 10-year term and vest in four equal annual
amounts starting on the first anniversary of the grant date.  Service grants
have a 10-year term and vest in two equal annual amounts starting on the
anniversary of the grant date.  The exercise price is equal to the fair market
value of our common stock on the date of grant.  The maximum number of shares
subject to option grants for any individual director is 20,000.

  In October 2000, Mr. Owens received a grant to purchase 2,000 shares at an
exercise price of $0.88 per share.  In November 2000, Mr. Sempier received a
grant to purchase 2,000 shares at an exercise price of $0.75 per share.

Compensation Committee Interlocks and Insider Participation

  The compensation committee currently consists of Mr. Wilson, Mr. Ounsworth and
Mr. Owens.  None of our executive officers served as a member of the
compensation committee (or other board committee performing similar functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served on our compensation
committee.  None of our executive officers served as a director of another
corporation, one of whose executive officers served on our compensation
committee.  None of our executive officers served as a member of the
compensation committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served on our board.

                                       7
<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and Management

  The following table sets forth certain information regarding beneficial
ownership of our common stock as of April 20, 2001 by:

  .  each person (or group of affiliated persons) who is known by us to own more
     than five percent of the outstanding shares of our common stock;
  .  each of our directors and our executive officers named in the summary
     compensation table; and
  .  all of our executive officers and directors as a group.

  Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. Unless
otherwise noted, we believe that all persons named in the table have sole voting
and sole investment power with respect to all shares beneficially owned by them.
All figures include shares of the Company's common stock issuable upon exercise
of options exercisable within 60 days of April 20, 2001. These options are
deemed to be outstanding and to be beneficially owned by the person holding them
for the purpose of computing the percentage ownership of that person but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person.

          Stock Ownership Of Directors, Executive Officers And Greater
                   Than 5% Shareholders as of April 20, 2001

<TABLE>
<CAPTION>
                                                                                                 Shares
                                                                                           Beneficially Owned
                                         Shares Beneficially      Options Exercisable       Assuming Exercise      Percent of
      Name                                      Owned               Within 60 Days             of Options             Shares
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                       <C>                      <C>                   <C>
Safeguard Scientifics, Inc. (1)              12,316,604                     0                  12,316,604              58.9%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
------------------------------------------------------------------------------------------------------------------------------------
Axial Technology Holding AG                   3,000,000                     0                   3,000,000              14.4%
Blickensdorferstrasse 2
6312 Steinhausen, Switzerland
------------------------------------------------------------------------------------------------------------------------------------
John F. Owens                                         0                16,000                      16,000                  *
------------------------------------------------------------------------------------------------------------------------------------
Norman L. Phelps                                 10,000                25,000                      35,000                  *
------------------------------------------------------------------------------------------------------------------------------------
Steven F. Kuekes                                939,727               360,000                   1,299,727               6.1%
------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Brown                                       0                     0                           0                  *
------------------------------------------------------------------------------------------------------------------------------------
James A. Ounsworth                                    0                     0                           0                  *
------------------------------------------------------------------------------------------------------------------------------------
Carl G. Sempier                                       0                16,000                      16,000                  *
------------------------------------------------------------------------------------------------------------------------------------
Carl Wilson                                           0                13,000                      13,000                  *
------------------------------------------------------------------------------------------------------------------------------------
Steven R. Zodtner                                     0                     0                           0                  *
------------------------------------------------------------------------------------------------------------------------------------
Ronald R. Nabors                                  2,500                18,750                      21,250                  *
------------------------------------------------------------------------------------------------------------------------------------
John N. Nelli                                     2,000               112,500                     114,500                  *
------------------------------------------------------------------------------------------------------------------------------------
Nancy M. Dunn (2)                                    10                     0                          10                  *
------------------------------------------------------------------------------------------------------------------------------------
Scott L. Jaffe (3)                                    0                70,000                      70,000                  *
------------------------------------------------------------------------------------------------------------------------------------
Executive officers and directors as a
 group (12 persons)                             954,237               631,250                   1,585,487               7.4%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*    Less than 1% of our outstanding shares of common stock

Each individual has the sole power to vote and to dispose of the shares (other
than shares held jointly with spouse) except as otherwise disclosed.

(1)  Safeguard Scientifics, Inc. includes 10,816,604 shares held by Safeguard
     Scientifics (Delaware), Inc. and 3,000 Series F preferred shares held by
     Safeguard Delaware, Inc., both are wholly owned subsidiaries of Safeguard
     Scientifics, Inc.  The Series F preferred shares are convertible into
     1,500,000 shares of common stock, which are included in this table on an
     as-converted basis.  All of the shares beneficially owned by Safeguard have
     been pledged by Safeguard as collateral under its line of credit.

(2)  Ms. Dunn resigned as senior vice president, legal effective February 2,
     2000 and terminated her employment as of June 30, 2000.

(3)  Mr. Jaffe's employment as a senior vice president of worldwide sales and
     sales operations was terminated on September 30, 2000.

Shares Owned by Directors and Officers in Safeguard Scientifics, Inc.:
Safeguard Scientifics, Inc. is the parent corporation of Tangram as Safeguard
owns 58.9% of our outstanding common stock (assuming the conversion of the
series F preferred stock).  As of April 20, 2001, executive officers and
directors as a group beneficially owned less than 1% of Safeguard stock.

                                       8
<PAGE>

Item 13.  Certain Relationships and Related Transactions

  We have an unsecured revolving line of credit with Safeguard of up to
$3,000,000.  The loan is evidenced by a promissory note which bears interest at
an annual rate of the prime rate plus 1%.  The principal amount is due and
payable thirteen months after the date of demand by Safeguard or earlier in the
case of a sale of substantially all our assets, a business combination or upon
the closing of a debt or equity offering.  Interest is payable monthly.  During
2000, we paid interest costs totaling $222,000. At April 20, 2001, there were no
borrowings under the line of credit with Safeguard.

  In prior years, we made non-recourse, non-interest bearing loans to each of
Mr. Kuekes and Ms. Dunn.  These loans were secured by shares of our common stock
owned by each officer which matured at various dates through April 15, 2000, or
termination of their respective employment, whichever occurred first.  On
January 10, 2000, Mr. Kuekes and Ms. Dunn retired their outstanding loans of
$250,000 and $246,500, respectively, by surrendering 25,932 and 25,569 shares of
common stock, respectively.  The number of shares surrendered was determined
based on the current market price of our common stock as reflected by the
average of the high and low prices for that day.

  The Company has transactions in the normal course of business with Safeguard
or affiliated companies.  Up until May, 2000, we were party to an administrative
support agreement with Safeguard under which we paid Safeguard a fee equal to
1/4 of 1% of net sales, up to a maximum of $200,000 annually, including
reimbursement of certain out-of-pocket expenses incurred by Safeguard.  The
administrative support services included consultation regarding our general
management, investor relations, financial management, certain legal services,
insurance programs administration, and tax research and planning, but did not
cover extraordinary services or services that were contracted out.  We paid
$71,000 to Safeguard during 2000. In addition, during 2000, the Company incurred
consulting-related expenses of approximately $261,200 from affiliates of
Safeguard.  We believe that the terms of these consulting-related expenses were
similar to those obtainable from unrelated parties.

  We employ an indirect sales force that works closely with our major resellers
and partners to manage the development of our indirect channels, distribution of
our product, and product implementation.  CompuCom Systems, Inc. has been a
reseller of our Asset Insight product since 1996.  During 2000, we recognized
revenue of $387,400 from CompuCom Systems, Inc. associated with their purchase
and resale of the product and related implementation services and annual
maintenance contracts.  As of December 31, 2000, CompuCom Systems, Inc. had an
outstanding receivable with us of $99,300.  Safeguard is the majority
shareholder of CompuCom Systems, Inc., holding approximately 60% of CompuCom's
outstanding voting securities

                                       9
<PAGE>

                                   SIGNATURES
                                   ----------

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Amendment No. 1 to the Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                    TANGRAM ENTERPRISE SOLUTIONS, INC.

Dated:  April 30, 2001              /s/ John N. Nelli
                                    --------------------------
                                    John N. Nelli,
                                    Senior Vice President and Chief Financial
                                    Officer
                                    (Principal Financial and Accounting Officer)

                                       10