<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                   FORM 10-QSB/A
          [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 1999

          [ ] 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 0-21999

                             -----------------------

                          NHANCEMENT TECHNOLOGIES INC.
           (NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

             DELAWARE                                 84-1360852
  (State or other jurisdiction of        (I.R.S. Employer Identification No.)
  incorporation or organization)


                                6663 OWENS DRIVE
                          PLEASANTON, CALIFORNIA 94588
                    (Address of principal executive offices)


                                 (925) 251-3200
                           (Issuer's telephone number)

                                ----------------

     Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

                                    Yes  X    No
                                        ---     ---

         As of January 31, 2000, there were 10,038,300 shares of Common Stock
outstanding.

      Transitional Small Business Disclosure Format (check one) Yes     No X
                                                                   ---    ---


<PAGE>

During the course of the year-end financial audit process for the fiscal year
ended September 30, 2000, Nhancement Technologies Inc. ("Nhancement" or the
"Company") recorded certain adjustments to its previously reported interim
results. The most significant of the adjustments affecting the quarterly period
ended December 31, 1999 related to a decrease in revenues of $400,000 and gross
profit by $227,000 as a result of one customer contract that the Company and the
customer currently are disputing for which acceptance has not been received.

Additionally, the Company has recalculated non-cash compensation related to
net exercise warrants issued to the Company's directors and warrants granted
to non-employees. Consistent with variable accounting requirements the
Company has "marked-to-market" the net change in the value of the warrants
for the first quarter ended December 31, 1999. The restatement has resulted
in an increase in non-cash compensation charges of $305,000.

As a result of the adjustments recorded by the Company, we have revised our
reported results of operations for the quarter ended December 31, 1999. This
Form 10-QSB reflects the effects of these adjustments.

The following items are amended hereby:

PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements
         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations

PART II - OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K

This report continues to speak as of the date of the original filing of the Form
10-QSB for the quarter ended December 31, 1999, and we have not updated the
disclosure in this report to speak to any later date.

<PAGE>




                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, although the Company believes the
disclosures made are adequate to make the information presented not misleading,
and, in the opinion of management, all adjustments have been reflected which are
necessary for a fair presentation of the information shown. These unaudited
financial statements should be read in conjunction with the audited financial
statements for the year ended September 30, 1999. The results for the three
months ended December 31, 1999 are not necessarily indicative of the results of
operations for a full year.









<PAGE>





                          NHANCEMENT TECHNOLOGIES INC.
                                AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                               December 31,
                                                                                   1999
                                                                           ------------------
<S>                                                                        <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents.........................................         $  2,921,000
   Restricted cash...................................................              190,900
   Accounts receivable, net of allowance for
    doubtful accounts of $108,200....................................            7,506,700
   Inventory.........................................................            1,892,100
   Notes receivable from related parties.............................              520,700
   Prepaid expenses and other........................................              282,300
                                                                              ------------

TOTAL CURRENT ASSETS                                                            13,313,700

   Property and equipment, net.......................................            1,337,800
   Capitalized software..............................................            1,686,600
   Goodwill and other intangible assets, net.........................            2,522,700
   Other assets......................................................               66,600
                                                                              ------------

TOTAL ASSETS                                                                  $ 18,927,400
                                                                              ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Lines of credit...................................................         $  1,350,400
   Accounts payable..................................................            4,791,200
   Accrued liabilities...............................................            2,934,600
   Deferred revenue..................................................            2,308,200
   Income tax payable................................................               78,400
   Capital lease obligations, current portion........................               76,200
                                                                              ------------

TOTAL CURRENT LIABILITIES                                                       11,539,000
   Deferred tax liabilities..........................................               28,200
   Capital lease obligations, net of
    current portion..................................................               52,800
                                                                              ------------
TOTAL LIABILITIES                                                               11,620,000
STOCKHOLDERS' EQUITY
   Convertible preferred stock.......................................               22,800
   Common stock......................................................               92,800
   Additional paid-in capital........................................           25,623,800
   Accumulated deficit...............................................          (18,291,800)
   Accumulated other comprehensive loss..............................             (140,200)
                                                                              ------------

TOTAL STOCKHOLDERS' EQUITY                                                       7,307,400
                                                                              ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $ 18,927,400
                                                                              ============
</TABLE>


            See notes to condensed consolidated financial statements.
<PAGE>



                          NHANCEMENT TECHNOLOGIES INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                            December 31,
                                                                                   1998                    1999
                                                                           --------------------    ----------------------
<S>                                                                        <C>                     <C>
Net Revenues.......................................................           $  3,261,900             $  8,340,600
Cost of sales......................................................              2,231,300                5,824,300
                                                                              ------------             ------------

GROSS PROFIT                                                                     1,030,600                2,516,300

OPERATING EXPENSES
Selling, general and administrative................................              2,282,100                2,502,700
Goodwill amortization..............................................                110,500                  159,300
                                                                              ------------             ------------

TOTAL OPERATING EXPENSES                                                         2,392,600                2,662,000

INCOME (LOSS) FROM OPERATIONS                                                   (1,362,000)                (145,700)
OTHER INCOME (EXPENSE)
Interest income....................................................                  8,400                   37,200
Interest expense...................................................                (65,200)                (114,800)
Other..............................................................                  2,700                  (63,400)
                                                                               -----------             ------------

Total other expense                                                                (54,100)                (141,000)
Income (loss) before income tax                                                 (1,416,100)                (286,700)
Provision for income tax...........................................                     --                   37,400
                                                                              ------------             ------------

NET INCOME (LOSS)                                                               (1,416,100)                (324,100)
Preferred dividends................................................                 (3,400)                  (2,400)
                                                                               -----------             ------------

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                                      $(1,419,500)            $   (326,500)
                                                                               ===========             ============

BASIC AND DILUTIED NET LOSS PER COMMON SHARE                                   $     (0.25)            $      (0.04)

SHARES USED IN PER SHARE CALCUATIONS - BASIC
  AND DILUTED                                                                    5,739,400                8,188,500

COMPREHENSIVE LOSS:
 Net loss                                                                     $ (1,416,100)            $   (324,100)
 Other comprehensive loss
   Translation gain (loss)                                                          31,200                   68,400
                                                                              ------------             ------------

COMPREHENSIVE LOSS                                                            $ (1,384,900)            $   (255,700)
                                                                              ============             ============
</TABLE>




            See notes to condensed consolidated financial statements.
<PAGE>

                          NHANCEMENT TECHNOLOGIES INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                 Preferred Stock         Common Stock      Additional                  Cumulative
                                    Par Value             Par Value          Paid In    Accumulated   Translation
                               Shares      Amount     Shares     Amount      Capital      Deficit         Loss         Total
                              ---------- ----------- ---------- ---------- ------------ ------------- ------------- -------------
<S>                          <C>         <C>         <C>        <C>        <C>          <C>           <C>           <C>
Balance, September 30, 1999     11,300    $854,800   8,219,700    $82,200  $24,472,800  ($17,965,300)   ($208,600)   $7,235,900
Preferred Shares converted
  into common stock            (11,000)  ($832,000)  1,045,100     10,400      821,600
Dividends on preferred stock
 Converted to common shares                             23,500        200       24,000        (2,400)                    21,800
Stock based compensation for
  the issuance of warrants to:
    Employees                                                                  207,700                                  207,700
    Other third parties                                                         97,700                                   97,700
Net loss                                                                                    (324,100)                  (324,100)
Translation gain                                                                                           68,400        68,400
                              ---------- ----------- ---------- ---------- ------------ ------------- ------------- -------------
Balance, December 31, 1999         300     $22,800   9,288,300    $92,800  $25,623,800  ($18,291,800)   ($140,200)   $7,307,400
                              ========== =========== ========== ========== ============ ============= ============= =============
</TABLE>







            See notes to condensed consolidated financial statements.
<PAGE>


                          NHANCEMENT TECHNOLOGIES INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                             December 31,
                                                                              --------------------------------------------
                                                                                     1998                     1999
                                                                              --------------------     -------------------
<S>                                                                           <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITES
  Net loss.............................................................           $(1,416,100)           $  (324,100)
  Adjustments to reconcile net loss to net
   cash provided by (used in)operating
   activities:
  Depreciation and amortization........................................                96,200                100,300
  Amortization of goodwill.............................................               110,500                159,300
  Gain on sale of fixed assets.........................................                    --                  1,000
  Stock-based compensation relating to stock
   warrants............................................................                 3,600                305,400
  Other................................................................                (5,300)                56,000
  Changes in operating assets and liabilities:
    Accounts receivable................................................             1,815,600             (1,768,000)
    Inventory..........................................................              (222,900)              (288,100)
    Prepaid expenses and other.........................................                27,500                (59,900)
    Other assets.......................................................               217,400                (23,100)
    Income tax payable.................................................                (8,500)                26,000
    Accounts payable and other current
     Liabilities.......................................................              (127,300)             1,946,700
                                                                                  -----------            -----------
CASH PROVIDED BY OPERATING ACTIVITIES                                                 490,700                131,500
                                                                                  -----------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Restricted cash......................................................              (711,000)                (1,000)
  Proceeds on sale of property and equipment...........................                    --                 17,000
  Development of software assets.......................................                    --               (175,000)
  Purchase of property and equipment...................................              (171,600)              (236,000)
                                                                                  ------------           -----------
NET CASH USED IN INVESTING ACTIVITIES                                                (882,600)              (395,000)
                                                                                  ------------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net borrowing (repayment) under line of credit                                       (8,600)               811,000
  Principal payments on capital lease                                                 (25,600)               (24,000)
  Principal payment on notes payable                                                 (669,600)                    --
                                                                                  -----------            -----------
NET CASH (USED IN)PROVIDED BY FINANCING ACTIVITIES                                   (703,800)               787,000
                                                                                  -----------            -----------
  Effect of exchange rate changes on cash                                              31,200                 68,400
                                                                                  -----------            -----------

NET (DECREASE) INCREASE IN CASH AND CASH
 EQUIVALENTS                                                                       (1,064,500)               591,900

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    $ 1,677,200            $ 2,329,100
                                                                                  -----------            -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $   612,700            $ 2,921,000
                                                                                  ===========            ===========

Supplemental Data:
    Interest paid                                                                 $    84,900            $    91,400
    Income taxes paid                                                             $     1,600            $     4,500
</TABLE>



            See notes to condensed consolidated financial statements.

<PAGE>


DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

         In the quarter ended December 31, 1999, property and equipment
     additions of $7,900 were financed by capital lease obligations.

         In December 1999, the Company accepted cabling and wiring improvements
     of $53,200 made to its leased office by a related party in lieu of payment
     on a note due from this related party.

         In the quarter ended December 31, 1998, property and equipment
     additions of $99,300 were financed by capital lease obligations.





1.   LIQUIDITY

         At December 31, 1999, the Company had working capital of $1,774,700.
     The Company incurred a net loss for the quarter ended December 31, 1998,
     of $1.4 million compared to net loss of $324,100 for the quarter ended
     December 31, 1999. The Company believes that the changes in management,
     cost cutting measures and its renewed focus on its core businesses
     implemented in fiscal 1999, along with its current customer order
     backlog of $5.3 million has improved the Company's operating results and
     positioned it for continued improvement. However if the Company fails to
     maintain improved earnings, its financial condition will be adversely
     effected.

         To improve its liquidity and future cash flows, the Company's
     management restructured its operations in early January 1999. Although no
     assurance can be given, management believes its cash balances as of
     December 31, 1999 of $2.9 million and available credit will provide
     sufficient cash flow for the next twelve months. However, if the Company
     fails to maintain improved earnings, the Company will need to obtain
     additional financing. If additional financing is necessary, there is no
     assurance that the Company will be able to obtain the necessary funds,
     resulting in an adverse effect on the Company's financial condition.

2.   ORGANIZATION

         NHancement Technologies Inc., a Delaware corporation ("NHancement" or
     the "Company"), was incorporated in October 1996 as a holding company. The
     business of NHancement is conducted by its operating company subsidiaries:
     NHancement Technologies North America, Inc. ("NHAN NA", formerly Voice
     Plus, Inc.), Infotel Technologies Pte Ltd ("INFOTEL"), NHancement
     Technologies Software Group, Inc. ("NHAN SWG") and, commencing in January
     2000, NHancement Acquisition Corp., formerly Trimark Incorporated
     ("Trimark"). NHAN NA, a California corporation headquartered in Fremont,
     California, is a systems integrator and national distributor of voice
     processing and multimedia messaging equipment. INFOTEL, a Singapore
     corporation acquired on June 22, 1998 is (i) a systems integrator of
     infrastructure data communications equipment, turnkey project management
     services, and radar systems; and (ii) a provider of test measuring systems.
     NHAN SWG, a California corporation, was recently created upon the
     acquisition of certain software assets from Eastern Systems Technology,
     Inc., and is engaged in software product development. TRIMARK, a California
     corporation headquartered in San Diego that designs, manufactures and
     markets profile selling software products to corporate clients, was
     acquired by the Company following the end of the first fiscal quarter.
     Accordingly, the consolidated financial statements include the results of
     operations from NHancement and its NHAN NA and Infotel subsidiaries for
     both periods presented and those of NHAN SWG for the three months ended
     December 31, 1999.
<PAGE>

3.   FINANCIAL STATEMENT PRESENTATION AND RESTATEMENT OF FINANCIAL STATEMENTS

         The accompanying consolidated financial statements as of December 31,
     1999 and for the three months ended December 31, 1999 and 1998 are
     unaudited. Certain information and footnote disclosures normally included
     in the financial statements prepared in accordance with generally accepted
     accounting principles ("GAAP") have been omitted. These consolidated
     financial statements should be read in conjunction with the audited
     financial statements and accompanying notes for the year ended September
     30, 1999 presented in the Company's latest annual report on Form 10-KSB.

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

         The consolidated financial statements presented herein reflect all
     adjustments which are, in the opinion of management, necessary for a fair
     presentation of the financial condition and results of operations for the
     periods presented.

           During the course of the year-end financial audit process for the
      fiscal year ended September 30, 2000, the Company recorded certain
      adjustments to its previously reported interim results. The most
      significant of the adjustments affecting the quarterly period ended
      December 31, 1999 related to a decrease in revenues of $400,000 and gross
      profit by $227,000 as a result of one customer contract that the Company
      and the customer currently are disputing for which acceptance has not been
      received.

             Additionally, the Company has recalculated non-cash compensation
     related to net exercise warrants issued to the Company's directors and
     warrants granted to non-employees. Consistent with variable accounting
     requirements the Company has "marked-to-market" the net change in the
     value of the warrants for the first quarter ended December 31, 1999. The
     restatement has resulted in an increase in non-cash compensation charges
     of $305,000.

             As a result of the revisions discussed above, we are restating our
      revenues and results of operations for the quarter ended December 31, 1999
      as follows:

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                  December 31, 1999
                                                        --------------------------------------
                                                          As Reported          As Restated
                                                        ----------------     -----------------
<S>                                                     <C>                  <C>
                  Total Revenue                         $ 8,740,900          $ 8,340,600
                  Gross Profit                            2,743,500            2,516,300
                  Net income (loss)                         243,000             (324,100)
                  Basic and diluted net
                   income (loss) per share              $      0.03          $     (0.04)
</TABLE>



4.   WARRANTS

          The Company issued 50,000 warrants to an outside sales person for
     services to be rendered over the next two quarters; 150,000 warrants to
     James S. Gillespie (former owner of Voice Plus, Inc.) and currently a
     consultant and Director of the Company in lieu of consulting fees under
     his consulting agreement rendered in the past and for services to be
     rendered in future periods; 175,000 warrants to outside advisors to
     assist the Company with acquisitions and additional financing during the
     next three quarters, and 100,000 warrants to the President & CEO, each
     with an exercise price of $3.4275 per share. In connection with these
     grants, the Company recorded stock based compensation of $305,400 for
     the quarter ended December 31, 1999.

<PAGE>

5.   FINANCING ACTIVITIES

         The Company's Infotel subsidiary is nearing completion of a line of
     credit agreement providing for advances up to SGD3.5 million (approximately
     USD2.0 million) bearing interest at the Singapore prime rate plus 1.25%,
     collateralized by the assets of the subsidiary and the guarantee of
     NHancement Technologies Inc. It is expected that this line of credit
     agreement will be effective during the second fiscal quarter.

6.   NET INCOME (LOSS) PER SHARE

        Net income (loss) per share were computed under the provisions of
     SFAS 128, Earnings Per Share. The following is a reconciliation of the
     numerators and denominators of the basic and diluted net income (loss)
     per share computations:

<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED
                                                                                           DECEMBER 31,
                 NET LOSS - NUMERATOR                                               1998               1999
                 --------------------                                               ----               ----
        ------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                 <C>
        Net income (loss)                                                        ($1,416,100)        $(324,100)
        Preferred stock dividends                                                     (3,400)           (2,400)
        ------------------------------------------------------------------------------------------------------
        Net income (loss) available to
        common stockholders                                                      ($1,419,100)        $(326,500)
        ------------------------------------------------------------------------------------------------------
        ------------------------------------------------------------------------------------------------------
        Weighted average common shares
        used in net income (loss) per share-
        basic and diluted                                                          5,739,400         8,188,500
        ------------------------------------------------------------------------------------------------------
        Anti-dilutive securities:
        Options and warrants                                                       1,359,600           852,500
        Convertible preferred stock                                                  337,110           439,300
        Other                                                                             --             8,400
        ------------------------------------------------------------------------------------------------------
</TABLE>


         Options and warrants to purchase Common Stock, Preferred Stock
     convertible into Common Stock and other contigently issuable shares were
     outstanding at December 31, 1998 and 1999 but were not included in the
     computation of diluted net loss per common share because the effect would
     be anti-dilutive.

7.   SEGMENT REPORTING

         NHancement's reportable operating segments include NHancement
     Technologies North America, Inc. ("NHAN NA", formerly Voice Plus, Inc.),
     Infotel Technologies Pte Ltd ("Infotel") and Nhancement Technologies
     Software Group, Inc. ("NHAN SWG"). NHAN NA, operating in the United States,
     is a systems integrator and distributor of voice processing equipment,
     which includes equipment installation, technical support and ongoing
     maintenance. NHAN NA derives substantially all of its revenues from sales
     in the United States. Infotel is a provider and integrator of
     infrastructure communications equipment products operating in Singapore,
     providing radar system integration, turnkey project management services and
     test instrumentation. Infotel derives substantially all of its revenue from
     sales in Asia. NHAN SWG was formed late in fiscal year 1999 to internally
     develop and sell integration and application software products. NHAN SWG
     did not generate revenue in the quarter ended December 31, 1999.


<PAGE>



         Financial information for these segments includes the following:



<TABLE>
<CAPTION>
         THREE MONTHS ENDED DECEMBER 31, 1999
       -----------------------------------------------------------------------------------------------------------
                                                NHAN NA       INFOTEL          NHAN         OTHER(1)      TOTAL
                                                                               SWG
       -----------------------------------------------------------------------------------------------------------
<S>                                             <C>          <C>             <C>          <C>         <C>
       Net Sales to external customers          $4,542,600   $3,798,000                           --   $ 8,340,600
       Net income (loss)                           254,600      262,900        (55,900)     (785,700)     (324,100)
       Total assets                              7,090,300    7,226,100      1,719,100     2,891,900    18,927,400
       -----------------------------------------------------------------------------------------------------------
         THREE MONTHS ENDED DECEMBER 31, 1998
       -----------------------------------------------------------------------------------------------------------
                                                NHAN NA       INFOTEL           NHAN        OTHER(1)      TOTAL
                                                                                SWG
       -----------------------------------------------------------------------------------------------------------
       Net Sales to external customers          $1,396,900   $1,865,000            --             --   $ 3,261,900
       Net income (loss)                          (543,200)     189,000            --     (1,061,900)   (1,416,100)
       Total assets                              3,596,700    5,798,400            --      1,212,600    10,607,700
       -----------------------------------------------------------------------------------------------------------
</TABLE>
        (1)     Other includes corporate expenses.
        Management reports include goodwill from the
        Infotel Acquisition in other assets.




8.   SUBSEQUENT EVENTS

          On January 21, 2000, the Company entered into a Plan and Agreement of
     Reorganization whereby the Company acquired all the outstanding shares of
     Trimark, Inc., in exchange for 750,000 shares of Common Stock of NHancement
     and warrants to purchase 250,000 shares of Common Stock of NHancement. This
     acquisition was disclosed in a report on Form 8-K which was filed with the
     Commission on February 7, 2000.

          On February 4, 2000, the Company entered into a Plan and Agreement of
     Reorganization whereby the Company acquired substantially all the assets of
     SVG Software Services, Inc., consisting of mostly software in exchange for
     250,000 shares of the Company's Common Stock.

          On February 4, 2000, the Company entered into a Stock Purchase
     Agreement whereby the Company acquired all the shares of Enhancement
     Technologies (India) Pte. Ltd. for $50,000 in cash.

          On February 8, 2000, the Board of Directors appointed Ram V. Mani to
     fill a vacancy on the Board until the next election of directors by the
     Company's Stockholders.




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

   NHancement Technologies Inc. ("NHancement" or the "Company") is a software
products company that integrates and distributes voice and data processing
equipment and telecommunications systems in the United States and Asia.

   The Company's consolidated financial statements include the accounts of
the Company and three of its operating subsidiaries: NHancement Technologies
North America, Inc. ("NHAN NA" formerly Voice Plus, Inc.), Infotel
Technologies (Pte) Ltd ("Infotel") and NHancement Technologies Software
Group, Inc. ("NHAN SWG"). The consolidated financial statements contain
results of operations from NHancement and its NHAN NA and Infotel
subsidiaries for both periods presented and because NHAN SWG was formed in
August 1999, those of NHAN SWG for the three months ended December 31, 1999.
A fourth subsidiary, NHancement Acquisition Corp. (formerly, Trimark
inncorporated) is not included in the accounts of the Company as it commenced
operations after December 31, 1999.

<PAGE>

   The following contains forward-looking statements regarding future events or
the future financial performance of the Company that involve risks and
uncertainties. Certain statements included in this Form 10-QSB, including,
without limitation, statements related to anticipated cash flow sources and uses
under "Liquidity and Capital Resources" and other statements contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financing alternatives, financial position,
business strategy, plans and objectives of management of the Company for future
operations, and industry conditions, are forward-looking statements. Any
forward-looking statements herein are subject to certain risks and uncertainties
in the Company's business, including but not limited to, reliance on key
customers and competition in its markets, market demand, market acceptance of
the Company's software products, business strategy, product performance,
technological developments, maintenance of relationships with key suppliers,
difficulties of hiring or retaining key personnel and any changes in current
accounting rules, all of which may be beyond the control of the Company. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth herein.

   GENERAL

   Management's Discussion and Analysis of Consolidated Results of Financial
Condition and Results of Operations ("MD&A") should be read in conjunction with
the consolidated financial statements included herein. Further, this first
fiscal quarterly report on Form 10-QSB should be read in conjunction with the
Company's Consolidated Financial Statements and Notes to Consolidated Financial
Statements included in its 1999 Annual Report on Form 10-KSB. In addition, you
are urged to read this report in conjunction with the risk factors described
herein.

   In this MD&A, the Company explains its results of operations and discusses
its financial condition for the three-month fiscal period ended December 31,
1999, as compared to the corresponding periods in 1998. The discussion of
financial condition includes: (1) changes in the software, voice processing,
data processing and communications industry including how the Company expects
these changes to influence future results of operations; and (2) liquidity and
capital resources, including discussions of capital financing activities and
uncertainties that could affect future results.

RESULTS OF OPERATIONS

   In this section, the Company provides the components of its earnings and
explains variances within revenues and expenses for the fiscal three-month
periods ended December 31, 1999 and 1998.


<PAGE>



   The following table shows results of operations, as a percentage of net
revenues, for the three-month periods ended December 31, 1999 and 1998.



<TABLE>
<CAPTION>
                               NHANCEMENT TECHNOLOGIES INC. AND SUBSIDIARIES
               -----------------------------------------------------------------------------------
                                                                             THREE MONTHS ENDED
                                                                                 DECEMBER 31,
                                                                                 ------------
                                                                              1998         1999
               -----------------------------------------------------------------------------------
<S>                                                                           <C>           <C>
               Net revenues                                                   100.0 %       100.0 %
               Cost of sales                                                   68.4 %        69.8 %
               Gross profit                                                    31.6 %        30.2 %
               Selling , general and administrative expenses                   70.0 %        30.0 %
               Goodwill amortization                                            3.4 %         1.9 %
               Income (loss) from operations                                  (41.8)%        (1.7)%
               Other income (expense)                                          (1.7)%        (1.7)%
               Loss before income taxes                                       (43.4)%        (3.4)%
               Provision for income tax                                        (0.0)%         0.4 %
               Net income (loss)                                              (43.4)%        (3.8)%
               -----------------------------------------------------------------------------------
</TABLE>



   The Company's primary focus in the three months ended December 31, 1999 was
as a software products company that integrates and distributes voice processing,
data processing and communications systems. These operations were conducted
through the Company's NHAN NA, Infotel and NHAN SWG subsidiaries. Company-wide
revenue for the quarter ended December 31, 1999 increased $5.0 million or 152%
to $8.3 million as compared to $3.3 million for the same period in 1998. The
increase in revenues for the three month period in 1999 was due primarily to:
(i) Infotel revenues associated with test and measurement equipment being
abnormally high in the quarter ended December 31, 1999 and (ii) NHAN NA's
revenues for the quarter ended December 31, 1998 being abnormally low due mainly
to a lack of focus on its core business. NHAN NA's net sales on a stand-alone
basis increased 221%, from $1.4 million for the three months ended December 31,
1998 to $4.5 million for the three months ended December 31, 1999. The increase
in NHAN NA revenues came from increased sales within its existing customer base
and from new customers. Fifty-eight percent of NHAN NA's first quarter revenue
came from its largest customer, while 4% of the first quarter NHAN NA revenues
came from customers who purchased the Interactive Intelligence communication
systems.

    Revenues for the Company's Infotel subsidiary located in Singapore, on a
stand-alone basis, increased 90% from $2.0 million at December 31, 1998 to $3.8
million for the same period in 1999. The increase in revenues occurred within
the test instrument products and project management services business segments,
due to high customer demand resulting from expansion by key customers.
Management expects revenues to return to historic levels in future quarters.
Revenues for NHAN SWG were insignificant in the quarter ended December 31, 1999.

    Backlog for the Company decreased to $5.3 million as compared to $6.4
million the quarter ended September 30, 1999. NHAN NA's order backlog at
December 31, 1999 increased slightly to $2.4 million from $2.3 million and
Infotel's backlog decreased to $2.4 million from $4.1 million the quarter ended
September 30, 1999. Backlog for NHAN SWG as of December 31, 1999 was about
$0.5million. Consequently, management believes that revenues for the second
fiscal quarter will level off or decrease slightly.

     Company-wide gross margins for the three months ended December 31, 1999
decreased to 30.2% as compared to the 31.6% for same period in 1998. NHAN NA's
gross margin on a stand-alone basis increased to 33.6% from 28.2% for the
quarter ended December 31, 1999 as compared to the same period of 1998. This
increase in gross margin was due to the economies of scale associated with a
significantly higher level of sales. Infotel's gross margin on a stand-alone
basis declined to 25.9% of
<PAGE>

sales for the quarter ended December 31, 1999 versus 30.6% of sales for the
quarter ended December 31, 1998. This decline was due to (i) an exceptionally
high level of customer service revenue with correspondingly high gross margin in
the December 31, 1998 quarter and (ii) commission revenues of $0.2 million with
little or no associated cost in the quarter ended December 1998 while no such
commission revenue was recorded in the quarter ended December 31, 1999. Infotel
earns commissions when its vendors (Motorola and Rhode & Schwartz) sell directly
to end-user customers in Infotel's territory. NHAN SWG's gross margins were
insignificant during the period.

     Company-wide selling, general and administrative ("SG&A") expenses as a
percentage of net sales decreased to 30.0% for the three months ended
December 31, 1999 versus 70.0% for the same period in 1998. SG&A for NHAN NA
on a stand-alone basis decreased to 23.9% for the first fiscal quarter of
1999 compared to 63.4% for the same three-month period in 1998. The decrease
in the quarter was due primarily to: (i) a substantial increase in revenues
for the three months ended December 31, 1999 versus revenues in the
corresponding period of the prior year and (ii) a decrease in salary expenses
as a percentage of revenues due to a reduction in headcount. On a stand-alone
basis, Infotel's SG&A as a percent of revenues decreased to 15.8% for the
three months ended December 31, 1999 compared to 20.9% for the three months
ended December 31, 1998. Infotel's SG&A as a percent of revenues decreased
mainly because of the significant increase in Infotel's revenues during the
first quarter. NHancement's corporate overhead costs decreased by $0.28
million for the three months ended December 31, 1999 compared to $1.06
million for the same period in the prior year due primarily to (i) a decrease
in salaries and related costs, (ii) decreased outside services as a result of
cost controls; and (iii) a decrease in relocation and severance expenses for
the former CEO which had been recorded in the quarter ended December 31, 1998
offset by non-cash compensation expense relating to net exercise warrants
issued to the Company's directors and warrants granted to non-employees.

     At December 31, 1999, the Company provided a 100% allowance against its
deferred tax assets. The Company believes sufficient uncertainty exists
regarding the realizability of the deferred tax assets, such that a full
valuation allowance is required. The Company currently has approximately
$7million in federal net operating loss carryforwards. However, the majority of
these net operating losses are subject to an annual limitation of $250,000.

LIQUIDITY AND CAPITAL RESOURCES

     During the three months ended December 31, 1999, net cash provided by
operating activities was $0.2 million. Sources of cash consisted primarily of
net income before non-cash charges and increases in accounts payable, offset by
increases in accounts receivable. Net cash provided by investing and financing
activities totaled $0.4 million consisting of: (i) increased borrowings under
the Company's line of credit, offset by purchases of software and property and
equipment. At December 31, 1999, the Company's working capital was $1.8 million.
The Company had a cash balance of $3.1 million (including restricted cash of
$190,900) at December 31, 1999. The Company's current ratio remained at 1.2 to
1.0 at December 31, 1999 as compared to same ratio for the previous quarter.
Management believes that available cash reserves coupled with additional
available credit and improved earnings will provide adequate funds for future
operations, although no assurance can be given that current efforts will be
successful.

     As of December 31, 1999, the Company's credit line allowed borrowing of up
to $1.5 million as advances against receivables. The Company, through its
Infotel subsidiary, is nearing completion of a credit line with a major
Singapore bank for S$3.5 million (approximately US$2.0 million) with interest at
1.25% above the bank prime rate to be used for Infotel's overdraft protection,
letters of credit, letters of guarantee, foreign exchange and revolving credit.
This agreement will be guaranteed by the Company.

     The Company's management estimates that it will incur less than $250,000 in
capital expenditures during the next 12 months, representing mostly company-wide
business systems hardware and communication systems. The Company anticipates
that all major capital expenditures will be financed through
<PAGE>

equipment leases and will not require significant direct outlays of cash.

     Based upon its present earnings and cost reduction plans, management
believes that operating cash flow, available cash and available credit are
adequate to meet the working capital needs of the Company and its subsidiaries
during the next 12 months. Although the Company intends to issue shares of
Common Stock as its primary method of financing acquisitions, it anticipates
that additional funds will be required to successfully implement its acquisition
program. There can be no assurance that the Company will be able to obtain
either debt or equity financing if and when it is needed for acquisition or
general working capital purposes.

RISK FACTORS

     The following risk factors, as well as the risks described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," may cause actual results to differ materially from those in any
forward-looking statements contained in the MD&A or elsewhere in this report or
made in the future by the Company or its representatives. Such forward-looking
statements involve known risks, unknown risks and uncertainties and other
factors, which may cause the actual results, performance or achievements
expressed or implied by such forward-looking statements to differ significantly
from such forward looking statements.

RISKS ASSOCIATED WITH DELISTING OF COMMON STOCK; PENNY STOCK RULES.
-------------------------------------------------------------------

     Although the Company's Common Stock was approved for quotation on the
Nasdaq SmallCap Market System in connection with the Company's IPO in February
1997, we cannot assure you that our Common Stock will remain eligible for
listing on the Nasdaq SmallCap Market. In this regard, until as recently as of
June 1999, the Company had failed to comply with the net tangible assets/market
capitalization/net income requirements for continued listing on the Nasdaq
SmallCap Market, as required by Nasdaq under Marketplace Rule 4310(c)(2). This
resulted in written notification from Nasdaq in February 1999 that the Company's
Common Stock would be delisted from the Nasdaq SmallCap Market. In July 1999,
following a hearing with the Nasdaq listing qualifications panel, we received a
positive determination on our request for the continued inclusion of our Common
Stock on the Nasdaq SmallCap Market. As a result, our Common Stock has remained
listed to date, without interruption, on the Nasdaq SmallCap Market.

     If our Common Stock were to become delisted from the Nasdaq SmallCap
Market, we would become subject to the SEC's "penny stock" rules. Were this to
occur, you would find it difficult to dispose of, or to obtain accurate
quotations as to the price of, the Company's Common Stock.

     The "penny stock" rules under the Exchange Act impose additional sales
practice and market-making requirements on broker-dealers who sell and/or make a
market in a penny stock. For transactions covered by the penny stock rules, a
broker-dealer must make special suitability determinations for purchasers and
must have received the purchaser's written consent to the transaction prior to
sale. In addition, for any transaction involving a penny stock, unless exempt,
the rules require delivery prior to any transaction in a penny stock of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market and penny stocks. Consequently, if the Company's Common
Stock were to be delisted from the Nasdaq SmallCap Market and became subject to
the rules on penny stocks, it would negatively affect the ability or willingness
of broker-dealers to sell or make a market in the Company's securities and,
therefore, would severely and adversely affect the market liquidity for, and
your ability to sell, the Company's Common Stock.
<PAGE>

VOLATILITY OF STOCK PRICES.
---------------------------

         The over-the-counter markets for securities such as our Common Stock
historically have experienced extreme price and volume fluctuations during
certain periods. Other factors that also may adversely affect the market price
of our Common Stock include the following:

         -    New product developments

         -    Technological and other changes in the voice-messaging and
              communications industries

         -    Fluctuations in the financial markets

         -    General economic conditions

         -    Quarterly variations in the Company's results of operations

PRIOR LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY.
--------------------------------------------------

         The Company recorded net loss of approximately $324,100 on revenues of
$8.3 million for the quarter ended December 31, 1999, the Company incurred a
loss of $716,800 on $23.3 million in revenues for the fiscal year ended
September 30, 1999. Further, the Company sustained significant losses for the
fiscal year ended December 31, 1997, as well as for the nine-month fiscal year
ended September 30, 1998.

         Our financial condition and results of operations will be adversely
affected if we fail to continue to produce improved operating results. This
could also:

          -    Adversely affect the future value of our Common Stock

          -    Result in delisting of our Common Stock on the Nasdaq SmallCap
               Market System

          -    Adversely affect our ability to obtain debt or equity financing
               on acceptable terms

          -    Prevent us from engaging in acquisition activity

FINANCING RISKS.
----------------

         The acquisition of complementary businesses and products is an element
of our business strategy. Our ability to engage in acquisition activity depends
on our ability to obtain debt or equity financing, neither of which may be
available or, if available, may not be on terms acceptable to us. Our inability
to obtain such financing would have a material adverse effect on our acquisition
strategy.

         Both debt and equity financing involve certain risks. Debt financing
may require us to pay significant amounts of interest and principal payments,
reducing the resources available to us to expand our existing businesses. Equity
financing may be dilutive to our stockholders' interest in the assets and
earnings of the Company. For example, of a total of 12,500 shares of Series A
Convertible Preferred Stock sold in April 1998, those shares plus accrued
dividends were converted into 1,231,180 shares of Common Stock at an average
price per share of approximately $1.04. Prior to the issuance of such shares of
Preferred Stock in April 1998, a total of approximately 4,437,000 shares of
Common Stock had been outstanding. As of December 31, 1999, 17,200 shares of
Preferred Stock plus accrued dividends had been converted into about 1.7 million
shares of Common Stock at an average price per share of $1.04 resulting in a
dilutive effect on the Company's existing stockholders. At December 31, 1999,
300 shares of Preferred Stock remained outstanding. In addition, Common Stock
issued as consideration in an acquisition transaction
<PAGE>

may be dilutive under certain circumstances to our existing stockholders.

RELIANCE UPON DISTRIBUTOR AND SUPPLIER RELATIONSHIPS; DEPENDENCE ON
-------------------------------------------------------------------
SIGNIFICANT CUSTOMERS.
----------------------

         Our North American operations are based upon the integration of
hardware, software, and communications and data processing equipment
manufactured by others with our internally developed software, into systems
designed to meet the needs of our customers. Although we have distributor
agreements with a number of equipment manufacturers, a major portion of our
revenues is based upon products manufactured by three companies. In this regard,
we rely to a significant extent on products manufactured (and services provided)
by Centigram Communications Corporation, products manufactured by Baypoint
Innovations, the Mitel Corporation subsidiary that purchased the customer
premises equipment ("CPE") business of Centigram, and on products manufactured
by Interactive Intelligence, Inc. ("I3"), principally I3's enterprise
information center ("EIC") product, a next-generation communications server that
merges voice and data functions into a single computer-based system. Revenues
from EIC products accounted for approximately 10% of North American revenues for
the last two quarters of the fiscal year ended September 30, 1999 and
approximately 4% of North American revenues for the quarter ended December 31,
1999. EIC revenues are expected to increase rapidly in future quarters. Legacy
voice processing revenues (which includes CPE product revenues), although
declining in importance, accounted for approximately 94% of our revenues for the
quarter ended December 31, 1999. Any disruption to our relationships with, or to
products or services supplied by, Centigram, Baypoint or I3 would have a
significant adverse effect on our business for an indeterminate period of time
until new supplier relationships could be established. Further, any material
change in our other distributor relationships could adversely affect the
Company.

         Infotel, our Singapore subsidiary, offers a wide range of
infrastructure communications equipment products. Infotel also has an
established business providing test measuring instrumentation and testing
environments, and is the regional distributor and test and repair center for
Rohde & Schwarz test instruments. Infotel's profitability depends in part on a
steady stream of revenues relating to the services performed for Rohde & Schwarz
test instruments. Since Infotel's revenues comprised approximately 41% of
NHancement's total revenues for the fiscal year ended September 30, 1999, any
material change in Infotel's relationship with its manufacturers, including
Rohde & Schwarz, and any interruption in the delivery of products to Infotel by
its key suppliers, would materially adversely affect NHancement's financial
condition.

         We currently service approximately 1,000 customers through the
operations of our subsidiaries. The revenues from our three largest customers
accounted for approximately 32.7%, 11.9% and 10.9% of total revenues during the
fiscal quarter ended December 31, 1999. No other customers accounted for over 5%
of total revenues during the period. This concentration of revenue results in
additional risk to the Company and its operations, and any disruption of orders
from our single largest customer would have an adverse effect on our financial
condition.




INTENSE COMPETITION.
--------------------

         The voice-processing and customer premises equipment markets are highly
competitive and competition in this industry is expected to further intensify
with the introduction of new product enhancements and new competitors. Our
domestic subsidiaries compete with a number of larger integrated companies that
provide competitive voice-processing products and services as subsets of larger
product offerings. The Company's existing and
<PAGE>

potential competitors include many large domestic and international companies
that have better name and product recognition in the market for the Company's
products and services, a larger installed base of customers, and substantially
greater financial, marketing and technical resources than the Company.

         Our Singapore subsidiary, Infotel, competes against several large
companies in Singapore that are better capitalized. Although Infotel has in the
past managed to compete successfully against these larger companies on the basis
of its engineering and product management expertise, we cannot assure you that
this expertise will allow Infotel to compete effectively with these larger
companies in the future. Further, various large manufacturers headquartered
outside of Singapore have established their own branch offices in Singapore and
also compete with Infotel.

         The software products and services markets are highly competitive and
competition in this industry is expected to further intensify with the
introduction of new products, product enhancements as well as new competitors.
Our software subsidiaries competes with a number of larger software/middleware
companies that provide competitive products and services on a stand-alone basis
and as subsets of larger product offerings. The Company's existing and potential
competitors include many large domestic and international companies that have
better name and product recognition in the market for the Company's products and
services, a larger installed base of customers, and substantially greater
financial, marketing and technical resources than the Company.

RISKS INVOLVED IN DEVELOPING SOFTWARE PRODUCTS.
-----------------------------------------------

         There are significant risks involved in the development of software
technologies, including suitability for intended uses, economic viability and
obsolesce due to the introduction of new technologies. There are, in addition,
risks associated with product development including feasibility, performance,
cost and quality issues. In this regard, although the Company has added
personnel with software product development experience, the Company has no prior
experience with software product development or new product rollouts. Also,
there is the risk that the Company will not have sufficient resources or be able
to obtain any necessary financing to develop such technologies. Further, there
can be no assurances that a viable market will exist for new products that are
successfully developed by the Company.

RISKS IN INTEGRATING ACQUIRED COMPANIES.
----------------------------------------

         We have in the past pursued, and plan to continue to pursue,
acquisition opportunities. Acquisitions involve a number of special risks,
including among others:

          -    Adverse short-term effects on our operating results

          -    The disruption of our ongoing business

          -    The risk of reduced management attention to control normal daily
               operations

          -    Our dependence on the retention, hiring and training of key
               personnel and the potential risks of loss of such personnel

          -    Our potential inability to successfully integrate the personnel,
               operation, technology and products of acquired companies

          -    Unanticipated problems or unknown legal liabilities

          -    Adverse tax or financial consequences
<PAGE>

         The Company has made several significant acquisitions since its
formation as a holding company in 1996. Two of these acquisitions, namely the
acquisition of NHAN NA (formerly named Voice Plus) and Advantis Network &
Systems Sdn Bhd, a Malaysian company, in the past yielded operating results that
were significantly lower than expected. In fact, the poor performance of
Advantis led to its divestiture less than one year after the company was
acquired by NHancement. Accordingly, we cannot assure you that the future
performance of our subsidiaries will be commensurate with the consideration paid
to acquire these companies. If we fail to establish the needed controls and to
manage growth effectively, our operating results, cash flows and overall
financial condition will be adversely affected.

RISKS PERTAINING TO INTERNATIONAL OPERATIONS.
---------------------------------------------

         Infotel, our Singapore subsidiary, accounted for approximately 41% of
our revenues for the fiscal year ended September 30, 1999 and 43% of our
revenues for the quarter ended December 31, 1999. There are risks associated
with our international operations, including:

         -    Our dependence on members of management of Infotel and the risk of
              loss of customers in the event of the departure of key personnel

         -    Unexpected changes in or impositions of legislative or regulatory
              requirements

         -    Potentially adverse taxes and adverse tax consequences

         -    The burdens of complying with a variety of foreign laws

         -    Political, social and economic instability

         -    Potential hostilities

         -    Changes in diplomatic and trade relationships

         -    Potential restrictions on cash transfers

         -    Volatility in the currency exchange rates

         Any one or more of these factors could negatively affect the
performance of Infotel and result in a material adverse change in the business,
operations and financial condition of NHancement.


RISKS INVOLVED IN CHANGES IN MANAGEMENT.
----------------------------------------

         Management changes often have a disruptive effect on businesses and can
lead to the loss of key employees because of the uncertainty inherent in change.
In early January 1999, the President and Chief Executive Officer of NHancement
resigned his position and, later in the year, the Company's Chief Financial
Officer and the Secretary and General Counsel of NHancement left the Company to
pursue other opportunities. Douglas S. Zorn, the former Chief Financial Officer
of the Company, was promoted to President and Chief Executive Officer to fill
the vacancies created by the resignation of the former President and Chief
Executive Officer. While hiring efforts are underway to fill the vacancies
created by the departure of these and other key employees, there is no assurance
that these posts will be filled in the near future since the job market in the
greater San Francisco Bay Area is intensely competitive. The loss of these or
other key employees of the Company could have a material adverse effect on the
Company's operations. Furthermore, the recent changes in management may not be
adequate to sustain the Company's profitability or to meet its future growth
targets.
<PAGE>

YEAR 2000 DISCLOSURE

         The Company has completed the tasks required to be performed by the
Company under the plan implemented by the Company to correct internal computer
systems that could be affected by the "Year 2000" problem. The Year 2000 problem
is the result of computer programs being written using two digits (rather than
four) to define the applicable year. Software programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a major system failure or miscalculations.

         With the modifications the Company made to its software programs
(including replacements of software in some instances), the Year 2000 problem
did not result in any operational problems for the Company's domestic or foreign
computer systems. Further, the Company's internal computer systems for North
American and Asian operations were purchased from well-recognized companies and
did not suffer any operating problems. However, if the modifications (or
replacements) made by the Company were not made properly or prove to be
inadequate, the Company may incur additional costs, which could be material to
the operations of the Company.

         The costs incurred to date by the Company in connection with such
modifications and replacements total approximately $605,000, spread over the
last two fiscal years.

         The Company distributes products from third party voice product
equipment manufacturers in North America, Europe and Asia, some of which may be
susceptible to Year 2000 problems. During fiscal years 1998 and 1999, the
Company completed a review of the products that its domestic and foreign
subsidiaries distribute for the purpose of determining which, if any, of such
products were not capable of recognizing the year 2000. Communications were
effected with all of the manufacturers of such products to determine the nature
and extent of any Year 2000 problems. Where potential Year 2000 computer
problems were identified, the manufacturers of these products stated that the
upgrades or replacements recommended by them, if implemented prior to the year
2000, would resolve such problems. However, there can be no assurances that
these manufacturers' solutions will, in fact, completely resolve all Year 2000
problems. Moreover, the solutions provided by some manufacturers involved a
significant upgrade cost to the end user, which could give rise to disputes or
litigation between the end user and the manufacturer, which might also involve
the Company. We also have not been able to determine whether the legal systems
of Singapore would result in more or less litigation exposure to the Company and
its subsidiaries if there were disputes between the end user of a product
installed by Infotel and the manufacturer. While the costs of such possible
disputes or litigation could be significant, we have not received any complaints
to date. We believe we have taken all reasonable steps to identify and correct
all Year 2000 problems within our control. However, the Company may suffer
business interruptions if customers, vendors and other third parties with which
we conduct business are unsuccessful in remedying their own Year 2000 problems.
As of the date of this filing, the Company had not received any complaints from
any of its customers.


<PAGE>




                                     PART II
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

    In the case of BOWNE OF LOS ANGELES, INC. VS. NHANCEMENT TECHNOLOGIES
INC., Cause No. B C222457 filed in the Los Angeles County Superior Court on
December 29, 1999, the plaintiff has made a claim in the amount of $33,954.57
against the Company arising out of certain printing services provided to the
Company in 1998 and 1999. The Company answered the complaint denying the
allegations on February 3, 2000. The Company is currently engaged in efforts
to settle the claim.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

            WARRANT ISSUED DURING THE QUARTER ENDED DECEMBER 31, 1999





<TABLE>
<CAPTION>
                                                    TITLE OF                               AGGREGATE
           CLASS OF               DATE OF          NHANCEMENT           NUMBER OF          PURCHASE          FORM OF
        PURCHASERS(1)              SALE           SECURITIES             SHARES             PRICE       CONSIDERATION
-------------------------------  ----------    -----------------     ---------------     ------------   ----------------
<S>                              <C>           <C>                   <C>                 <C>            <C>
Warrants granted to                                 Shares of
executive officer  (2)            12/10/99        Common Stock            100,000             (2)             (2)

Warrants granted to                                 Shares of
consultant (3)                    12/10/99        Common Stock            150,000             (3)             (3)

Warrants granted to financial                       Shares of
consultant (4)                    12/10/99        Common Stock            175,000             (4)             (4)

Warrants granted to                                 Shares of
directors (5)                     12/10/99        Common Stock            150,000             (5)             (5)

Warrants granted to sales                           Shares of
representative (6)                12/10/99        Common Stock             50,000             (6)             (6)
</TABLE>




(1)      The issuance of warrants to the individuals identified in the table
         above were made in reliance on Section 4(2) of the Securities Act of
         1933, as amended (the "1933 Act"), and /or Regulation D promulgated
         thereunder.

(2)      The warrants were granted to the President & Chief Executive Officer of
         NHancement. The warrants are immediately exercisable and expire one
         year from the date of issuance. The exercise price on the date of
         issuance was equal to or greater than 100% of the fair market value as
         determined on the date of issuance.

(3)      The warrants were granted to a consultant (who is also a member of the
         Board of Directors of NHancement) in consideration for the forgiveness
         of amounts due for consulting services. The warrants are immediately
         exercisable and expire one year from the date of issuance. The exercise
         price on the date of issuance was equal to or greater than 100% of the
         fair market value as determined on the date of issuance.

(4)      The warrants were granted to outside financial consultants. The
         warrants are immediately exercisable and expire one year from the date
         of issuance. The exercise price on the date of issuance was equal to or
         greater than 100% of the fair market value as determined on the date of
         issuance.

(5)      The 50,000 warrants were granted to each of the outside directors. The
         warrants are immediately exercisable and expire one year from the
<PAGE>

         date of issuance. The exercise price on the date of issuance was equal
         to or greater than 100% of the fair market value as determined on the
         date of issuance.

(6)      The warrants were granted to an outside sales representative in
         substitution for the commission earned for the sales made by the
         representative. The warrants are immediately exercisable and expire two
         years from the date of issuance. The exercise price on the date of
         issuance was equal to or greater than 100% of the fair market value as
         determined on the date of issuance.


ITEM 5.   OTHER INFORMATION

    Effective February 4, 2000, the Company completed its acquisition of the
assets of SVG Software Services, Inc., a California corporation ("SVG"),
pursuant to the Plan and Agreement of Reorganization (the "Agreement"), dated
February 4, 2000, between NHancement and SVG. The parties intend that the
transaction qualify as a tax-free reorganization within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended, and section
24562(a)(3) of the California Revenue and Taxation Code, as amended.

    Under the Agreement, NHancement acquired from SVG, and SVG sold to
NHancement all of the properties and assets of SVG, including all rights to its
intellectual property and business as a going concern, its goodwill and the
right to use its corporate name (collectively referred to as the "Assets"). In
consideration for Assets by SVG, NHancement issued to SVG two hundred fifty
thousand (250,000) shares of NHancement Common Stock.

    NHancement has agreed to use its best effort to qualify for registration on
Form S-3, a portion (100,000 shares) the Common Stock issued to SVG as soon as
practicable upon the written request by SVG or its assignees to effect such
registration. The remaining 150,000 shares of Common Stock are subject to lockup
agreements.

    Effective February 4, 2000 the Company also entered into an agreement with
certain parties affiliated with SVG to acquire all of the outstanding shares of
the Common Stock of Enhancement Technologies (India) Pte. Ltd. , a company
organized and existing under the laws of the Republic of India. The purchase
price payable for these outstanding shares is fifty thousand dollars ($50,000).

    For this transaction, the sellers of the shares have agreed to use their
best effort to obtain approval from the government of the Republic of India
within thirty (30) days of the date of the agreement.

    Both SVG Software Services Inc. and Enhancement Technologies (India) Pte.
Ltd., have been involved in the development and design of software products.
The acquisitions of these software properties are an important component of
the Company's strategy to become a software products and services company.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following Exhibits are filed as part of the Quarterly Report on Form
    10-QSB



<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER      DESCRIPTION OF EXHIBIT
    ------------ --------------------------------------------------------------
<S>              <C>
         2.5 *     Plan and Agreement of Reorganization between the Company and
                   SVG Software Services, Inc., a California corporation, dated
                   February 4, 2000.
<PAGE>

         2.6  *    Stock Purchase Agreement between the Company and Vijay and
                   Vinita Gulechha dated February 4, 2000.

         4.16 *    Warrant dated December 10, 1999, issued to Douglas S. Zorn.

         4.17 *    Warrant dated December 10, 1999, issued to James S.
                   Gillespie.

         4.18 *    Warrant dated December 10, 1999, issued to John M. Black.

         4.19 *    Warrant dated December 10, 1999, issued to James S.
                   Gillespie.

         4.20 *    Warrant dated December 10, 1999, issued to N. Bruce Walko.

         4.21 *    Warrant dated December 10, 1999, issued to Robert J.
                   Schmier.

         4.22 *    Warrant dated December 10, 1999, issued to Diane Nowak.

        10.59 *    Letter dated December 10, 1999, terminating the Consultancy
                   Agreement dated June 7, 1999 between the Company and James
                   S. Gillespie.

        27.1       Financial data schedule
</TABLE>

        * Filed with original Form 10-QSB filed on February 14, 2000.


(b) Reports on Form 8-K:


    A report on Form 8-K was filed with the Commission on December 23, 1999 and
later amended by a report on Form 8-K/A filed with the Commission on December
29, 1999.



<PAGE>




                                   SIGNATURES

    Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                   NHANCEMENT TECHNOLOGIES INC.

                                   By: /s/ Douglas S. Zorn
                                       ----------------------------------------
Date: February 14, 2001                Douglas S. Zorn
                                       President and Chief Executive Officer
                                       and Acting Chief Financial Officer