|
Previous: WILSHIRE FINANCIAL SERVICES GROUP INC, 10-Q, EX-27, 2000-08-14 |
Next: CREDIT MANAGEMENT SOLUTIONS INC, 10-Q, EX-10.17, 2000-08-14 |
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549FORM 10-Q(MARK ONE) |
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2000OR |
[_] | 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 000-21735CREDIT MANAGEMENT
SOLUTIONS, INC. |
Delaware
(State or other jurisdiction of incorporation or organization) 135 National Business Parkway, Annapolis Junction, MD (Address of principal executive offices) |
52-1549401
(I.R.S. Employer Identification No.) 20701 (Zip Code) |
Registrants telephone number, including area code (301) 362-6000 FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT. Indicate by check 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 the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 7,822,081 shares of the Companys Common Stock, $.01 par value, were outstanding as of August 4, 2000. |
CREDIT MANAGEMENT
SOLUTIONS, INC.
|
Page | |||||
---|---|---|---|---|---|
Part I Financial Information | |||||
Item 1. | Financial Statements | ||||
Consolidated Balance Sheets June 30, 2000 (unaudited) and December 31, 1999 | 3 | ||||
Consolidated Statements of Operations Three Months Ended
June 30, 2000 (unaudited) and 1999 (unaudited) and Six Months Ended June 30, 2000 (unaudited) and 1999 (unaudited) | 4 | ||||
Consolidated Statements of Cash Flows Six Months Ended June 30, 2000 (unaudited) and 1999 (unaudited) | 5 | ||||
Notes to Consolidated Financial Statements | 6 | ||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 8 | |||
Part II Other Information | |||||
Item 1. | Legal Proceedings | 22 | |||
Item 2. | Changes in Securities | 22 | |||
Item 3. | Defaults upon Senior Securities | 22 | |||
Item 4. | Submission of Matters to a Vote of Security Holders | 22 | |||
Item 5. | Other Information | 22 | |||
Item 6. | Exhibits and Reports on Form 8-K | 22 | |||
Signatures | 24 | ||||
Item I. FINANCIAL STATEMENTSCredit
Management Solutions, Inc. and Subsidiaries
|
June 30, 2000 |
December 31, 1999 | ||||
---|---|---|---|---|---|
(unaudited) | |||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ 2,054,014 | $ 3,594,328 | |||
Investments available-for-sale | 1,954,210 | 1,316,470 | |||
Accounts receivable, net of allowance of $192,602 and | |||||
$311,583 in 2000 and 1999, respectively | 6,769,529 | 5,724,256 | |||
Costs and estimated earnings in excess of | |||||
billings on uncompleted contracts | 54,755 | 5,891 | |||
Prepaid expenses and other current assets | 416,249 | 474,725 | |||
Total current assets | 11,248,757 | 11,115,670 | |||
Property and equipment: | |||||
Computer equipment and software | 5,687,289 | 5,234,084 | |||
Office furniture and equipment | 1,223,036 | 1,458,793 | |||
Leasehold improvements | 2,775,460 | 2,769,926 | |||
9,685,785 | 9,462,803 | ||||
Accumulated depreciation and amortization | (3,817,928 | ) | (3,065,136 | ) | |
5,867,857 | 6,397,667 | ||||
Software development costs, net of accumulated amortization | 2,823,987 | 1,932,867 | |||
Other non current assets | 36,800 | 46,386 | |||
Total assets | $ 19,977,401 | $ 19,492,590 | |||
Liabilities and Shareholders Equity | |||||
Current liabilities: | |||||
Accounts payable | $ 2,417,595 | $ 2,163,044 | |||
Accrued payroll and related expenses | 852,777 | 722,389 | |||
Billings in excess of costs and estimated | |||||
earnings on uncompleted contracts | 595,626 | 101,046 | |||
Deferred revenue | 2,767,004 | 2,920,904 | |||
Current portion of deferred tenant allowance | 144,866 | 144,866 | |||
Short-term borrowings | 798,000 | 798,000 | |||
Current portion of long-term debt and capital lease obligations | 2,887 | 25,402 | |||
Total current liabilities | 7,578,755 | 6,875,651 | |||
Deferred tenant allowance, less current portion | 1,068,385 | 1,140,818 | |||
Total liabilities | 8,647,140 | 8,016,469 | |||
Shareholders equity: | |||||
Preferred stock, $.01 par value; 1,000,000 shares authorized; | |||||
no shares issued or outstanding | | | |||
Common stock, $.01 par value; 40,000,000 shares authorized; | |||||
7,820,988 and 7,689,570 shares issued and outstanding at | |||||
June 30, 2000 and December 31, 1999, respectively | 78,210 | 76,896 | |||
Additional paid-in capital | 27,758,287 | 27,034,049 | |||
Accumulated deficit | (16,506,236 | ) | (15,634,824 | ) | |
Total shareholders equity | 11,330,261 | 11,476,121 | |||
Total liabilities and shareholders equity | $ 19,977,401 | $ 19,492,590 | |||
THE ACCOMPANYING NOTES
ARE AN INTEGRAL PART OF THESE |
CREDIT
MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARIES
|
Three Months Ended June 30, |
Six Months Ended June 30, | ||||||||
---|---|---|---|---|---|---|---|---|---|
2000 |
1999 |
2000 |
1999 | ||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
Revenues: | |||||||||
License and software development fees | $ 3,229,165 | $ 3,759,727 | $ 5,831,399 | $ 7,312,826 | |||||
Maintenance fees | 1,637,464 | 1,429,934 | 3,124,777 | 2,621,131 | |||||
Computer hardware sales | 116,592 | 282,298 | 165,595 | 1,061,125 | |||||
Service bureau revenues | 1,661,982 | 669,090 | 2,720,844 | 1,277,698 | |||||
6,645,203 | 6,141,049 | 11,842,615 | 12,272,780 | ||||||
Costs of revenues: | |||||||||
Cost of license and software development fees | 2,037,913 | 1,899,819 | 3,429,441 | 3,604,360 | |||||
Cost of maintenance fees | 430,990 | 300,562 | 720,886 | 571,042 | |||||
Cost of computer hardware sales | 199,542 | 433,912 | 283,678 | 1,218,752 | |||||
Cost of service bureau | 1,162,372 | 699,554 | 2,189,328 | 1,506,021 | |||||
3,830,817 | 3,333,847 | 6,623,333 | 6,900,175 | ||||||
Gross profit | 2,814,386 | 2,807,202 | 5,219,282 | 5,372,605 | |||||
Other Operating Expenses: | |||||||||
Selling, general and administrative expenses | 2,948,208 | 2,546,015 | 5,633,065 | 5,445,587 | |||||
Research and development costs | 306,138 | 327,062 | 543,217 | 683,885 | |||||
3,254,346 | 2,873,077 | 6,176,282 | 6,129,472 | ||||||
Loss from operations | (439,960 | ) | (65,875 | ) | (957,000 | ) | (756,867 | ) | |
Other income (expense): | |||||||||
Interest expense | (24,853 | ) | 112 | (47,638 | ) | (9,620 | ) | ||
Interest income | 69,198 | 119,460 | 133,226 | 174,579 | |||||
44,345 | 119,572 | 85,588 | 164,959 | ||||||
Net income (loss) | $ (395,615 | ) | $ 53,697 | $ (871,412 | ) | $ (591,908 | ) | ||
Basic and diluted earnings (loss) per common share | $ (0.05 | ) | $ 0.01 | $ (0.11 | ) | $ (0.08 | ) | ||
Weighted average shares used in computation | 7,820,524 | 7,658,119 | 7,774,849 | 7,655,841 | |||||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
CREDIT MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARY
|
Six Months Ended June 30, | |||||
---|---|---|---|---|---|
2000 |
1999 | ||||
(unaudited) | (unaudited) | ||||
Operating activities: | |||||
Net loss | $ (871,412 | ) | $ (591,908 | ) | |
Adjustments: | |||||
Depreciation | 895,765 | 881,412 | |||
Amortization of software development costs | | 59,860 | |||
Amortization of deferred tenant allowance | (72,433 | ) | | ||
Loss on disposal of property and equipment | 76,295 | 23,826 | |||
Other lease obligations | | (334,547 | ) | ||
Changes in operating assets and liabilities: | |||||
Accounts receivable, net | (1,045,273 | ) | (276,924 | ) | |
Prepaid expenses and other current assets | 58,476 | (271,187 | ) | ||
Accounts payable | 254,551 | (2,064,152 | ) | ||
Accrued payroll and related expenses | 130,387 | 512,062 | |||
Net billings in excess of costs and estimated gross profit on uncompleted contracts | 445,716 | (556,516 | ) | ||
Deferred revenue | (153.900 | ) | (592,437 | ) | |
Net cash used in operating activities | (281,827 | ) | (3,210,511 | ) | |
Investing activities: | |||||
Purchase of investments available-for-sale | (8,380,994 | ) | (9,916,902 | ) | |
Sale of investments available-for-sale | 7,743,254 | 14,072,867 | |||
Proceeds from sale of property and equipment | 7,373 | 29,458 | |||
Purchase of property and equipment | (449,623 | ) | (304,363 | ) | |
Capitalized software development costs | (891,120 | ) | (1,093,121 | ) | |
Increase in other assets | 9,587 | (287 | ) | ||
Net cash (used in) provided by investing activities | (1,961,524 | ) | 2,787,652 | ||
Financing activities: | |||||
Payments under capital lease obligations | (22,515 | ) | (34,936 | ) | |
Proceeds from credit line | | 798,000 | |||
Proceeds from issuance of common stock and exercise of stock options | 725,552 | 32,390 | |||
Net cash provided by financing activities | 703,037 | 795,454 | |||
Net change in cash and cash equivalents | (1,540,314 | ) | 372,595 | ||
Cash and cash equivalents at beginning of period | 3,594,328 | 3,090,565 | |||
Cash and cash equivalents at end of period | $ 2,054,014 | $ 3,463,160 | |||
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. |
NOTE 2. COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTSUncompleted contracts consist of the following components: |
BALANCE SHEET CAPTION | |||||||
---|---|---|---|---|---|---|---|
COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS |
BILLINGS IN EXCESS OF COSTS AND ESTIMATED EARNINGS |
TOTAL | |||||
December 31, 1999: | |||||||
Cost and estimated earnings | $ 169,923 | $ 261,742 | $ 431,665 | ||||
Billings | 164,032 | 362,788 | 526,820 | ||||
$ 5,891 | $ (101,046 | ) | $ (95,155 | ) | |||
June 30, 2000: | |||||||
Cost and estimated earnings | $ 472,707 | $ 922,013 | $ 1,394,720 | ||||
Billings | 417,952 | 1,517,639 | 1,935,591 | ||||
$ 54,755 | $ (595,626 | ) | $ (540,871 | ) | |||
Three months ended June 30, 2000 | |||||||
---|---|---|---|---|---|---|---|
CMSI Systems |
Credit Online |
Total | |||||
Revenues | $5,685,860 | $ 959,343 | $6,645,203 | ||||
Segment profit (loss) | 2,282,268 | (843,666 | ) | 1,438,602 | |||
Three months ended June 30, 1999 | |||||||
CMSI Systems |
Credit Online |
Total | |||||
Revenues | $5,642,039 | $ 499,010 | $6,141,049 | ||||
Segment profit (loss) | 2,567,536 | (819,374 | ) | 1,748,162 | |||
A reconciliation of segment profit for all segments to net income (loss) before income taxes is as follows: |
Three months ended June 30, | |||||
---|---|---|---|---|---|
2000 |
1999 | ||||
Total segment profit | $ 1,438,602 | $ 1,748,162 | |||
Unallocated corporate, general and administrative expenses | (1,459,286 | ) | (1,360,927 | ) | |
Depreciation and amortization | (419,276 | ) | (453,110 | ) | |
Net interest income | 44,345 | 119,572) | |||
Net income (loss) | $ (395,615 | ) | $ 53,697 | ||
Six months ended June 30, 2000 | |||||||
---|---|---|---|---|---|---|---|
CMSI Systems |
Credit Online |
Total | |||||
Revenues | $9,967,002 | $ 1,875,613 | $11,842,615 | ||||
Segment profit (loss) | 4,299,282 | (1,468,998 | ) | 2,830,282 | |||
Six months ended June 30, 1999 | |||||||
CMSI Systems |
Credit Online |
Total | |||||
Revenues | $11,338,821 | $ 933,959 | $12,272,780 | ||||
Segment profit (loss) | 5,000,941 | (2,070,828 | ) | 2,930,113 | |||
A reconciliation of segment profit for all segments to net income (loss) before income taxes is as follows: |
Six months ended June 30, | |||||
---|---|---|---|---|---|
2000 |
1999 | ||||
Total segment profit | $ 2,830,284 | $ 2,930,113 | |||
Unallocated corporate, general and administrative expenses | (2,963,951 | ) | (2,745,708 | ) | |
Depreciation and amortization | (823,333 | ) | (941,242 | ) | |
Net interest income | 85,588 | 164,959 | |||
Net Loss | $ (871,412 | ) | $ (591,908 | ) | |
In February 2000, the Company announced the formation of two new wholly-owned subsidiaries: Credit Online, Inc. and CMSI Systems, Inc. Credit Online, Inc., focusing on the Companys e-commerce strategy, intends to expand and enrich the Companys offerings in online lending for the automotive industry. Credit Online, Inc. also may leverage investments made in infrastructure to expand into additional vertical markets in the business-to-business Internet credit arena. CMSI Systems, Inc. intends to continue to provide the Companys line of licensed credit management software solutions, including CreditRevue. License fees for CreditRevue are recognized based on a percentage-of-completion method, measured generally on a cost-incurred basis. The Company typically charges a nonrefundable fee of 25% of the preliminary estimate of the total license fee to develop an analysis of the customers credit operations and a plan for the configuration and implementation of CreditRevue according to the customers requirements. Costs consist primarily of direct labor, temporary contract labor and office space. Contracts in progress are reviewed periodically, and revenues and earnings are adjusted based on revisions in contract value and estimated time to completion. The Company recognizes revenue for maintenance fees pro rata over the term of the related agreement, which is generally one year. Maintenance fees received in advance of revenue recognition are included in deferred revenue. In addition, as a convenience to its customers, the Company offers third-party computer hardware through various reseller arrangements. However, neither third-party hardware nor third-party software sales are a focus of the Companys overall marketing strategy. For the six months ended June 30, 2000, revenues from third-party hardware and software sales accounted for 1.0% and 1.8% of total revenues, respectively. Revenues from resales of third-party computer hardware and software are recognized at the time of shipment and installation. Certain of the Companys products and services, including CreditConnection, CreditRevue Service Bureau and Dun & Bradstreets OneScore and the CreditOnline network are charged on a per transaction basis. As a result, the Company anticipates that transaction-based revenue will represent an increasing proportion of the Companys revenue. The Companys sales and marketing efforts will no longer be exclusively targeted at generating license-based revenue but will be increasingly focused on generating transaction-based revenue from prospective customers. The Companys anticipated future growth is based, in large part, on the success of these products and services and the transition to a transaction-based revenue stream. Accordingly, the failure by the Company to generate demand for the CreditConnection service, Dun & Bradstreets OneScore, Dun & Bradstreets Portfolio Monitoring, CreditOnline network, eValuate, the occurrence of any significant technological problems, such as a system failure incurred prior to the implementation of a back-up computer system, any inadequacy of the Companys business interruption insurance to cover costs associated with system failure or business interruptions, or the failure of the Company to successfully manage the transition to a transaction-based revenue stream would have a material adverse effect on the Companys business, results of operations and financial condition. Since 1987, the Company has continually invested in the development and introduction of new products, services and enhancements to its software. Research and development expenditures are expensed as incurred. Certain software development costs are capitalized subsequent to the establishment of technological feasibility in accordance with Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Based on the Companys current research and development process, technological feasibility is established upon completion of a working model. The Company intends to continue to expend substantial resources on developing new products and services and enhancements to its software to incorporate technological developments and satisfy evolving customer needs. |
Computer Hardware Sales. Computer hardware sales revenues decreased 58.7% from $0.3 million in the three months ended June 30, 1999 to $0.1 million in the three months ended June 30, 2000. Computer hardware sales revenue consists of revenues received from resales of third-party hardware in connection with the license and installation of the Companys software. The fluctuation in such revenues during these periods is the result of customer purchase preferences for computer hardware systems. In certain instances, CreditRevue customers have volume discount arrangements with hardware resellers making them eligible for discounts greater than those offered by the Company. Computer hardware sales for the six months ended June 30, 2000 decreased 84.4% to $0.2 million as compared to $1.1 million for the six months ended June 30, 1999. Because hardware sales typically occur in conjunction with the sale and implementation of new CreditRevue systems, the higher number of CreditRevue sales during the first six months of 1999 had a direct impact on the higher level of hardware sales during that period. Service Bureau Fees. Service Bureau revenues originate from several sources including: CreditConnection transaction and interface fees, Credit Online network fees, Dun & Bradstreet OneScore and Portfolio Management transaction and implementation fees and CreditRevue Service Bureau. Total service bureau revenues increased 148.4% from $0.7 million for the quarter ended June 30, 1999, as compared to $1.7 million for the quarter ended June 30, 2000. The CreditConnection service and Credit Online network generated $0.9 million of revenue in the quarter ended June 30, 2000 compared to $0.4 million for the period ended June 30, 1999, an increase of 202.5%. Revenue increases are the result of increases in the number of dealers and lenders enrolled in the CreditConnection service and the resulting growth in transaction volume. At June 30, 2000 there were approximately 340 dealers enrolled in the service compared to approximately 170 dealers at June 30, 1999. Dun & Bradstreet OneScore was commercially released in the fourth quarter of 1997. Portfolio Monitoring and CreditRevue Service Bureau were commercially released in the first quarter of 1999. These products account for an aggregate revenue of $0.8 million in the quarter ended June 30, 2000, which represents an increase of 336.8% compared to the $0.2 million recorded in the quarter ended June 30, 1999. The increase in 2000 over 1999 relates to one-time revenues of approximately $0.6 million associated with the winding down of the CreditRevue Service Bureau business. Service bureau revenues increased 112.9% from $1.3 million for the six months ended June 30, 1999 to $2.7 million for the six months ended June 30, 2000. Of the total $2.7 million in 2000, CreditConnectionrelated revenues accounted for $1.7 million, up 214.8% from the $0.8 million reported for the first six months of 1999. The growth in CreditConnection® revenue related to the increased number of dealers and lenders active on the system at June 30, 2000. The balance of service bureau fees for the first six months of 2000, totaling $0.9 million, represent revenues related to the CreditRevue® service bureau and the Dun & Bradstreet OneScore and Portfolio monitoring services. These other service bureau revenues increased 200.4% from $0.5 million to $0.9 million for the six months ended June 30, 1999 and 2000, respectively. Approximately $0.6 million of the increase in other service bureau revenues is attributable to one-time revenues associated with the winding-down of the CreditRevue Service Bureau business. Cost of License and Software Development Fees. Cost of license and software development fees consists primarily of salaries and benefits for in-house programmers, the cost of temporary contract labor and costs for office space. Cost of license and software development fees increased 7.3% from $1.9 million in the three months ended June 30, 1999 to $2.0 million in the three months ended June 30, 2000. As a percentage of license fee and software development revenue, cost of license and software development fees were 50.5% and 63.1% in the three months ended June 30, 1999 and 2000, respectively. The increase in cost of license and software fees as a percentage of license and software development fees relates to the fluctuation in the Companys quarterly revenues and the costs associated with in-house programmers and temporary contract labor. Revenue fluctuations result in corresponding fluctuations in the extent to which the Company employs temporary contractors and may also result in increases or decreases in-house programmer staffing as revenues increase or decrease. The net increase in costs of $0.1 million is the result of increased costs associated with temporary contractors. |
The cost of license and software development fees decreased 4.9% from $3.6 million for the six months ended June 30, 1999 to $3.4 million for the six months ended June 30, 2000. As a percentage of license and software development revenue, the cost of license and software development fees were 49.3% and 58.8% for the six months ended June 30, 1999 and 2000, respectively. The use of temporary contractors is primarily responsible for the increase in costs as a percentage of revenue. In order to help ensure that required skills and knowledge are available to implement new systems, the Company retains a core pool of skilled programmers and analysts with expertise in implementing CreditRevue® systems. In periods of rapid revenue growth the employee pool is supplemented with temporary contractors. The costs of temporary contractors exceeds the cost of permanent employees and in those instances where temporary contractors must be employed to meet project deadlines, costs as a percent of revenue will increase. Costs of Maintenance Fees. Cost of maintenance fees consists primarily of personnel and related costs for customer maintenance and support. Cost of maintenance fees increased 43.4% from $0.3 million in the three months ended June 30, 1999 to $0.4 million in the three months ended June 30, 2000. As a percentage of maintenance fee revenue, cost of maintenance fees was 21.0% and 26.3% in the three months ended June 30, 1999 and 2000, respectively. The dollar increase in the cost of maintenance fees reflects increased costs associated with maintenance for third party software for which the Company is a reseller. As the number of CreditRevue systems in use increases, the base of installed third party software is likewise increasing. Compared to second quarter 1999, there were a greater number of third party software systems under contract. The costs associated with maintenance for these third party software products resulted in increased costs of maintenance for the current year. Cost of maintenance fees increased 26.2% from $0.6 million for the six months ended June 30, 1999 to $0.7 million for the six months ended June 30, 2000. This increase in costs related directly to the increase in revenues and the increase in third party software maintenance costs. Cost of maintenance as a percentage of maintenance revenues were 21.8% and 23.1% for the six months ended June 30, 1999 and 2000, respectively. Cost of Computer Hardware Sales. Cost of computer hardware sales consists of the Companys cost of computer hardware resold to the Companys customers that are licensing CreditRevue and salaries and benefits for systems integration employees. Cost of computer hardware sales decreased 54.0% from $0.4 million in the three months ended June 30, 1999 to $0.2 million in the three months ended June 30, 2000. As a percentage of computer hardware sales revenue, cost of computer hardware sales was 153.7% and 171.7% in the three months ended June 30, 1999 and 2000, respectively. The increase in the cost of computer hardware sales as a percent of revenue is the result of decreased hardware margins resulting from decreased hardware sales, while fixed expenses, primarily personnel-related in nature, remained relatively constant during the same period. Cost of computer hardware sales decreased 76.7% from $1.2 million for the six months ended June 30, 1999 to $0.2 million for the six months ended June 30, 2000. As a percentage of hardware revenues, costs were 114.9% and 171.3% for the six months ended June 30, 1999 and 2000, respectively. During the period that costs decreased 76.7%, corresponding revenues decreased 84.4%. Costs of computer hardware sales exceeded associated revenues because the Company has certain fixed costs for salaries and benefits for the systems integration staff required to support hardware sales activities. Cost of Service Bureau Revenues. Cost of service bureau fees consists primarily of personnel costs associated with the operation and support of the service bureau. Other costs of service bureau revenues include equipment rental expenses, communications network costs from third parties and hardware and software passthrough expenses. Service bureau costs increased 66.2% from $0.7 million for the three months ended June 30, 1999 to $1.2 million for the three months ended June 30, 2000. Cost of service bureau revenues as a percent of service bureau revenues were 104.6% and 69.9% for the three months ended June 30, 1999 and 2000, respectively. While service bureau costs increased 66.2%, corresponding service bureau revenues increased 148.4%. |
Cost of service bureau revenues increased 52.5% from $1.4 million for the six months ended June 30 1999 to $2.2 million for the six months ended June 30, 2000. As a percentage of revenues, costs of service bureau were 112.4% and 80.5% for the six months ended June 30, 1999 and 2000, respectively. While costs increased 52.5%, corresponding revenues increased 112.9%. The increase in costs relates to increased labor costs related to one-time software deliveries for the CreditRevue service bureau and fees associated with alliance partner revenue sharing arrangements for the Credit Connection service. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 15.8% from $2.5 million in the three months ended June 30, 1999 to $2.9 million in the three months ended June 30, 2000. Of this $0.4 million increase, approximately $0.3 million related to office rental expense. During 1999 the Company successfully subleased previously abandoned office space for which approximately $0.3 of loss reserves had been established in 1998. The reversal of these loss reserves in 1999 is responsible for the increase when comparing 2000 to 1999. Approximately $0.1 million of the increase in selling, general and administrative expenses relates to non-salary based administrative expenses, consisting primarily of advertising and repairs and maintenance expenses. Selling general and administrative expenses increased 2.1% from $5.5 million for the six months ended June 30, 1999 to $5.6 million for the six months ended June 30, 2000. As a percentage of total revenues, selling, general and administrative expenses were 44.9% and 47.6% for the six months ended June 30, 1999 and 2000, respectively. The increase in selling, general and administrative expenses of $0.1 million on a period to period basis relates to the reversal in 1999 of loss reserves on office space abandoned in 1998 of approximately $0.3 million. Excluding the reversal of the loss reserve, selling, general and administrative expenses on a year-to-year basis would reflect a decrease of approximately $0.2 million, resulting primarily from reduced labor related expenses. Research and Development Costs. Research and development costs consist primarily of salaries and benefits for in-house programmers. These costs remained constant at $0.3 million during the three months ended June 30, 2000 as compared to the three months ended June 30, 1999. Overall research and development staffing at June 30, 2000 was 26 compared to 35 at June 30, 1999. The Company is continuing to capitalize certain development costs associated with the eValuate product until commercial release, which is expected to occur in the third quarter of 2000. During the three months ended June 30, 2000, approximately $0.5 million of expenses related to the development of eValuate were capitalized which compares to approximately $0.4 million which was capitalized during the second quarter of 1999. See Note 1 to Notes to Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year ended December 31, 1999. Research and development costs decreased 20.6% from $0.7 million for the six months ended June 30, 1999 to $0.5 million for the six months ended June 30, 2000. This decrease is attributable primarily to slightly higher levels of capitalized software development expenses during 2000. Interest Income (Expense). For the three months ended June 30, 2000, net interest income was approximately $44,000 compared to approximately $120,000 for the same period in 1999. The decline in net interest income is the result of lower average cash balances during the respective periods, and increased interest expense resulting from increased borrowings against the Companys working capital line of credit. Net interest income decreased 48.1% from $0.2 million for the six-month period ended June 30, 1999 to $0.1 million for the six months ended June 30, 1999. Lower average invested cash balances and increased average outstanding borrowings against the Companys working capital line of credit are responsible for the decline in net interest income. |
For the Year 2000 and beyond, the Company continues to code according to its Year 2000 coding standards. In addition, because system clocks are now in the Year 2000, all testing necessarily includes testing of dates in the Year 2000. CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS, FINANCIAL CONDITION AND THE MARKET PRICE OF SECURITIES.Uncertainty of Future Results of Operations; Fluctuations in Quarterly Results of Operations. Prior growth rates in the Companys revenue and net income should not be considered indicative of future results of operations. Future results of operations will depend upon many factors, including market acceptance of the Companys CreditConnection service, the demand for the Companys licensed software products and related services, the successful distribution and implementation of the Companys products and services, the successful transition from predominantly license fee-based revenue to predominantly transaction fee-based revenue, the timing of new product and service development and introductions and software enhancements by the Company or its competitors, the level of product, service and price competition, the length of the Companys sales cycle, the size and timing of individual transactions, the delay or deferral of customer implementations, the Companys success in expanding its customer support organization, direct sales force and indirect distribution channels, the nature and timing of significant marketing programs, the mix of products and services sold, the timing of new hires, the ability of the Company to timely develop and successfully market new products and services and control costs, competitive conditions in the industry and general economic conditions. In addition, the decision to implement the Companys products or services typically involves a significant commitment of customer resources and is subject to the budget cycles of the Companys customers. Licenses of CreditRevue generally reflect a relatively high amount of revenue per order. The loss or delay of individual orders, therefore, would have a significant impact on the Companys revenue and quarterly results of operations. The timing of revenue is difficult to predict because of the length and variability of the Companys sales cycle, which has ranged to date from two to 18 months from initial customer contact to the execution of a license agreement. In addition, since a substantial portion of the Companys revenue is recognized on a percentage-of-completion basis, the timing of revenue recognition for its licenses may be materially and adversely affected by delays or deferrals of customer implementations. Such delays or deferrals may also increase expenses associated with such implementations which would materially and adversely affect related operating margins. The Companys operating expenses are based in part on planned product and service introductions and anticipated revenue trends and, because a high percentage of these expenses are relatively fixed, a delay in the recognition of revenue from a limited number of transactions could cause significant variations in operating results from quarter-to-quarter and could result in operating losses. To the extent such expenses precede, or are not subsequently followed by, increased revenues, the Companys results of operations would be materially and adversely affected. As a result of these and other factors, revenues for any quarter are subject to significant variation, and the Company believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. There can be no assurance that the Company will be profitable in any future quarter or that such fluctuations in results of operations will not result in volatility in the price of the Companys Common Stock. Due to all of the foregoing factors, it is likely that in some future quarter the Companys results of operations will be below the expectations of public market analysts and investors. In such event, the market price of the Companys Common Stock will be materially and adversely affected. Dependence on CreditRevue Product Line. License fees, maintenance fees and third-party computer hardware sales associated with licenses and installations of CreditRevue accounted for the majority of the Companys revenues through June 30, 2000. Although the Company has introduced its CreditConnection service, the Company expects that revenues generated from licenses and installations of CreditRevue will continue to account for a significant portion of the Companys revenues for the foreseeable future. The life cycles of the Companys products and services are difficult to predict due to the effect of new product and service introductions or software enhancements by the Company or its competitors, market acceptance of new and enhanced versions of the Companys products and services, and competition in the Companys marketplace. A decline in the demand for CreditRevue, whether as a result of competition, technological change, price reductions or otherwise, would have a material adverse effect on the Companys business, results of operations and financial condition. |
Lengthy Sales and Implementation Cycle. The licensing of the Companys software products and services is often an enterprise-wide decision by prospective customers and generally requires the Company to provide a significant level of education to prospective customers regarding the use and benefits of the Companys products and services. In addition, the implementation of the Companys software products involves a significant commitment of resources by prospective customers and is commonly accompanied by substantial reengineering efforts and a review of the customers credit analysis, decisioning and funding processes. The cost to the customer of the Companys products and services is typically only a portion of the related hardware, software, development, training and integration costs associated with implementing a large-scale automated credit origination information system. For these and other reasons, the period between initial customer contact and the implementation of the Companys products is often lengthy (ranging from between two and 18 months) and is subject to a number of significant delays over which the Company has little or no control. The Companys implementation cycle could be lengthened by increases in the size and complexity of its license transactions and by delays or deferrals in its customers implementation of appropriate interfaces and networking capabilities. Delays in the sale or implementation of a limited number of license transactions could have a material adverse effect on the Companys business, results of operations and financial condition and cause the Companys results of operations to vary significantly from quarter to quarter. Market Acceptance of CreditOnline and CreditConnection; Transition to Transaction-Based Revenue. The Companys CreditConnection service was commercially introduced in 1996, the Companys CreditOnline network was introduced in February 1999, and the Companys CreditRevue Service Bureau service was commercially introduced in January 1998. The CreditConnection service, CreditOnline network and CreditRevue Service Bureau product (which may be introduced in new ASP or other formats, based on the eValuate and CreditRevue software in development) are projected to account for a significant portion of the Companys revenues in the future. As a result, demand and market acceptance for these services are subject to a high level of uncertainty, and the Company will be heavily dependent on their market acceptance. There can be no assurance that these products and services will be commercially successful. The failure of the Company to generate demand for the CreditConnection service, CreditOnline network or CreditRevue Service Bureau product, or the occurrence of any significant technological problems with such products or services, would have a material adverse effect on the Companys business, results of operations and financial condition. Historically, virtually all of the Companys revenues have been derived from license fees, maintenance fees and hardware sales associated with licenses and installations of CreditRevue. Under the terms of its license agreements, a majority of the Companys revenues are realized during the configuration and installation of CreditRevue. However, the Company anticipates that a significant portion of the Companys future revenues will be derived from per-usage transaction-based fees and subscription fees charged to credit originators and financial institutions for transactions originated through the CreditConnection service, CreditOnline network and CreditRevue Service Bureau product. There can be no assurance that the Company will successfully manage the transition of a significant portion of its revenues from license-based revenue to transaction-based revenue. The failure of the Company to successfully manage the transition to a transaction-based revenue stream would have a material adverse effect on the Companys business, results of operations and financial condition. Reliance on Certain Relationships. The Company has established relationships with a number of companies that it believes are important to its sales, marketing and support activities, as well as to its product, service and software development efforts. The Company has relationships with automated scorecard companies, hardware vendors and credit bureaus. There can be no assurance that these companies, most of which have significantly greater financial and marketing resources than the Company, will not develop or market products and services which will compete with the Companys products and services in the future. Furthermore, since many of these relationships are informal in nature, they are terminable by either party at will. Other relationships are terminable by either party after a relatively short notice period. There can be no assurance that these companies will not otherwise discontinue their relationships with or support of the Company. The failure by the Company to maintain its existing relationships or to establish new relationships in the future, because of a divergence of interests, acquisition of one or more of these third parties or other reasons, could have a material adverse effect on the Companys business, results of operations and financial condition. |
In addition, the Company has formed strategic alliances with Automatic Data Processing (ADP) and Universal Computer Systems (UCS) for remarketing CreditConnection and with Dun & Bradstreet for the marketing of OneScore. There can be no assurance that these relationships will be successful. Moreover, there can be no assurance that these companies will actively remarket CreditConnection or OneScore. The failure by the Company to leverage and maintain its existing relationships ADP, UCS and Dun & Bradstreet, or to establish new relationships in the future, because of a divergence of interests, acquisition of one or more of these third parties or other reasons, could have a material adverse effect on the Companys business, results of operations and financial condition. Dependence on Large License Fee Contracts and Customer Concentration. A relatively small number of customers have accounted for a significant percentage of the Companys revenues. License fees for CreditRevue are based on a percentage-of-completion method on a cost-incurred basis with the final installment being paid in full upon acceptance of the Companys software. The Company receives continuing revenues on CreditRevue from annual maintenance agreements which commence upon acceptance of the software by the customer. Maintenance agreements are renewable annually by the customer, and the license agreements are generally co-terminous with the maintenance agreements. Although the Company has experienced a high degree of customer loyalty, the Company cannot predict how many maintenance agreements will be renewed or the number of years of renewal. Revenues generated by the Companys 10 largest customers accounted for 55.1% and 55.4% of total revenues in 1999 and 1998, respectively. None of the Companys customers individually accounted for 10% or more of total revenues in 1999 and one customer accounted for 10% of revenues in 1998. The Company expects that a limited number of customers will continue to account for a significant percentage of revenue for the foreseeable future. The loss of any major customer or any reduction or delay in orders by any such customer, delay or deferral in configurations or enhancements by such customers or the failure of the Company to successfully market its products or services to new customers, could have a material adverse effect on the Companys business, results of operations and financial condition. Dependence on Consumer Retail Lending Industry; Cyclical Nature of Consumer Lending. The Companys business is currently concentrated in the consumer lending industry and is expected to be so concentrated for the foreseeable future, thereby making the Company susceptible to a downturn in the consumer lending industry. For example, a decrease in consumer lending could result in a smaller overall market for the Companys products and services. Furthermore, banks in the United States are continuing to consolidate, decreasing the overall potential number of customers for the Companys products and services. In addition, demand for consumer loans has been historically cyclical, in large part based on general economic conditions and cycles in overall consumer indebtedness levels. Changes in general economic conditions that adversely affect the demand for consumer loans, the willingness of financial institutions to provide funds for such loans, changes in interest rates and the overall consumer indebtedness level, as well as other factors affecting the consumer lending industry, could have a material adverse effect on the Companys business, results of operations and financial condition. Management of Changing Business. The Company has experienced significant changes in its business, such as a reduction in the Companys staff and an expansion in the Companys customer base and the development of new products, services and enhancements to its software. Such changes have placed and may continue to place a significant strain upon the Companys management, systems and resources. As of June 30, 2000, the Company had 181 employees down from 191 employees at June 30, 1999. The Companys ability to compete effectively and to manage future changes will require the Company to continue to improve its financial and management controls, reporting systems and procedures and budgeting and forecasting capabilities on a timely basis and expand its sales and marketing work force, and train and manage its employee work force. There can be no assurance that the Company will be able to manage such changes successfully. The Companys failure to do so could have a material adverse effect upon the Companys business, results of operations and financial condition. |
Dependence on Key Personnel. The Companys future performance depends in significant part upon the continued service of its key technical, sales and senior management personnel, particularly, Scott L. Freiman, President and Chief Executive Officer. The Company has obtained for key-person life insurance on the life of Mr. Freiman. The loss of the services of one or more of the Companys executive officers could have a material adverse effect on the Companys business, results of operations and financial condition. The Company retains its key employees through the use of equity incentive programs, including stock option plans, employee stock purchase plans, and competitive compensation packages. In addition to entering into an employment agreement with Mr. Freiman, the Company entered into employment agreements with Mr. Miles Grody, the Companys Senior Vice President and President and Chief Executive Officer of the Companys CMSI Systems subsidiary, Mr. Howard Tischler, the Companys Senior Vice President and President and Chief Executive Officer of the Companys Credit Online subsidiary and Mr. Robert Vollono, the Companys Senior Vice President and Chief Financial Officer . The Companys future success also depends on its continuing ability to attract and retain highly qualified technical, customer support, sales and managerial personnel. In particular, the Company has encountered difficulties in hiring sufficient numbers of programmers and technical personnel. Competition for qualified personnel is intense, and there can be no assurance that the Company will be able to retain its key technical, sales and managerial employees or that it can attract, assimilate or retain other highly qualified technical, sales and managerial personnel in the future. Rapid Technological Change; Risk Associated with New Products, Services or Enhancements. The credit processing software products and services industry in which the Company competes is characterized by rapid technological change, frequent introductions of new products and services, changes in customer demands and evolving industry standards. The introduction or announcement of new products, services or enhancements by the Company or one or more of its competitors embodying new technologies or changes in industry standards or customer requirements could render the Companys existing products or services obsolete or unmarketable. Accordingly, the life cycles of the Companys products are difficult to estimate. The Companys future results of operations will depend, in part, upon its ability to enhance its products and services and to develop and introduce new products and services on a timely and cost-effective basis that will keep pace with technological developments and evolving industry standards, as well as address the increasingly sophisticated needs of the Companys customers. There can be no assurance that these new products and services will gain market acceptance or that the Company will be successful in developing and marketing new products or services that respond to technological change, evolving industry standards and changing customer requirements, that the Company will not experience difficulties that could delay or prevent the successful development, introduction and marketing of these products or services, or that its new products or services will adequately meet the requirements of the marketplace and achieve any significant degree of market acceptance. In addition, a majority of the Companys current products operate in the UNIX operating system. Although the Companys software is designed to work with other operating environments, a requirement to port to a different operating system could be costly and time consuming and could have a material adverse effect on the Companys business, results of operations and financial condition. Failure of the Company to develop and introduce, for technological or other reasons, new products and services in a timely and cost-effective manner could have a material adverse effect on the Companys business, results of operations and financial condition. Furthermore, the introduction or announcement of new product or service offerings or enhancements by the Company or the Companys competitors may cause customers to defer or forgo purchases of the Companys products or services, which could have a material adverse effect on the Companys business, results of operations and financial condition. System Interruption and Security Risks; Potential Liability; Possible Lack of Adequate Insurance; and System Inadequacy. The Companys operations are dependent, in part, on its ability to protect its system from interruption by damage from fire, earthquake, power loss, telecommunication failure, unauthorized entry or other events beyond the Companys control. The Companys computer equipment constituting its central computer system, including its processing operations, is located at a single site. The Company is currently in the process of acquiring and implementing a back-up, off-site processing system capable of fully supporting its operations in the event of system failure. The Company relocated operations to new leased facilities in Annapolis Junction, MD in late 1998. The new facilities, which include a state of the art data center, is primary production center for the Companys data processing needs. Prior to full implementation of the back up facility, the Companys operations are subject to substantial risks, including temporary interruptions resulting from damage caused by any one or more of the foregoing factors or due to other causes including computer viruses, hackers or similar disruptive problems. While the Company maintains $1.6 million of property insurance coverage, business interruption insurance coverage, $2.0 million of errors and omissions insurance coverage and $10.0 million of umbrella insurance coverage, such insurance may not be adequate to compensate the Company for all losses that may occur or to provide for costs associated with system failure or business interruption. Any damage or failure that causes interruptions in the Companys operations could have a material adverse effect on the Companys business, results of operations and financial condition. |
Persistent problems continue to affect public and private data networks. For example, in a number of networks, hackers have bypassed firewalls and have appropriated confidential information. Such computer break-ins and other disruptions may jeopardize the security of information stored in and transmitted through the computer systems of the parties utilizing the Companys services, which may result in significant liability to the Company and also may deter potential customers from using the Companys services. In addition, while the Company attempts to be careful with respect to the employees it hires and maintain controls through software design and security systems to prevent unauthorized employee access, it is possible that, despite such safeguards, an employee of the Company could obtain access, which would also expose the Company to a risk of loss or litigation and possible liability to users. The Company attempts to limit its liability to customers, including liability arising from the failure of the security features contained in the Companys system and services, through contractual provisions. However, there can be no assurance that such limitations will be enforceable. There can be no guarantee that the growth of the Companys customer base will not strain or exceed the capacity of its computer and telecommunications systems and lead to degradations in performance or system failure. Any damage, failure or delay that causes interruptions in the Companys operations could have a material adverse effect on the Companys business, results of operations and financial condition. Risk of Defects, Development Delays and Lack of Market Acceptance. Software products and services as sophisticated as those offered by the Company often encounter development delays and may contain defects or failures when introduced or when new versions are released. The Company has in the past and may in the future experience delays in the development of software and has discovered, and may in the future discover, software defects in certain of its products. Such delays and defects may result in lost revenues during the time corrective measures are being taken. Although the Company has not experienced material adverse effects resulting from any such defects to date, there can be no assurance that, despite testing by the Company, errors will not be found in its existing software in future releases or enhancements, or that the Company will not experience development delays, resulting in delays in the commercial release of new products and services, the loss of market share or the failure to achieve market acceptance. Any such occurrence could have a material adverse effect upon the Companys business, results of operations and financial condition. Future Capital Needs; Uncertainty of Additional Financing. The Company currently anticipates that its available cash resources combined with anticipated funds from operations will be sufficient to meet its presently anticipated working capital and capital expenditure requirements through 2001. Thereafter, the Company may need to raise additional funds. The Company may need to raise additional funds sooner in order to fund more rapid expansion, to develop new or enhanced products and services, to respond to competitive pressures or to acquire complementary businesses or technologies. If additional funds are raised through the issuance of equity securities, the percentage ownership of the stockholders of the Company will be reduced, stockholders may experience additional dilution, or such equity securities may have rights, preferences or privileges senior to those of the holders of the Companys Common Stock. There can be no assurance that additional financing will be available when needed on terms favorable to the Company or at all. If adequate funds are not available or are not available on acceptable terms, the Company may be unable to develop or enhance its products and services, take advantage of future opportunities or respond to competitive pressures, which could have a material adverse effect on the Companys business, results of operations and financial condition. |
Government Regulation and Uncertainties of Future Regulation. The Companys current and prospective customers, which consist of state and federally chartered banks, saving and loan associations, credit unions, consumer finance companies and other consumer lenders, as well as customers in the industries that the Company may target in the future, operate in markets that are subject to extensive and complex federal and state regulations. While the Company is not itself directly subject to such regulations, the Companys products and services must be designed to work within the extensive and evolving regulatory constraints in which its customers operate. These constraints include federal and state truth-in-lending disclosure rules, state usury laws, the Equal Credit Opportunity Act, the Fair Credit Reporting Act and the Community Reinvestment Act. Furthermore, some consumer groups have expressed concern regarding the privacy and security of automated credit processing, the use of automated credit scoring tools in credit underwriting, and whether electronic lending is a desirable technological development in light of the current level of consumer debt. The failure by the Companys products and services to support customers compliance with current regulations and to address changes in customers regulatory environment, or to adapt to such changes in an efficient and cost-effective manner, could have a material adverse effect on the Companys business, results of operations and financial condition. Control by Existing Stockholders. Assuming no exercise of outstanding options, James R. DeFrancesco, the Companys co-founder and Scott L. Freiman, the Companys President and Chief Executive Officer collectively beneficially own approximately 55% of the outstanding shares of Common Stock. As a result, these stockholders will be able to exercise control over matters requiring stockholder approval, including the election of directors, and the approval of mergers, consolidations and sales of all or substantially all of the assets of the Company. This may prevent or discourage tender offers for the Companys Common Stock unless the terms are approved by such stockholders. Possible Volatility of Stock Price. The trading price of the Companys Common Stock could be subject to significant fluctuations in response to variations in quarterly operating results, the gain or loss of significant orders, changes in earning estimates by analysts, announcements of technological innovations or new products by the Company or its competitors, general conditions in the consumer lending and software industries, credit processing software and services and other events or factors. In addition, the stock market in general has experienced extreme price and volume fluctuations which have affected the market price for many companies in industries similar or related to that of the Company and which have been unrelated to the operating performance of these companies. These market fluctuations may adversely affect the market price of the Companys Common Stock. Effect of Certain Charter Provisions; Anti-takeover Effects of Certificate of Incorporation, Bylaws and Delaware Law. The Companys Board of Directors has the authority to issue up to 1,000,000 shares of Preferred Stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights of those shares without any further vote or action by the stockholders. The Preferred Stock could be issued with voting, liquidation, dividend and other rights superior to those of the Common Stock. The rights of the holders of Common Stock will be subject to, and may be adversely affected by the rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred Stock could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of the Company. Further, certain provisions of the Companys Certificate of Incorporation, including provisions that create a classified Board of Directors, and certain provisions of the Companys Bylaws and of Delaware law could delay or make more difficult a merger, tender offer or proxy contest involving the Company. |
(a) | The Companys Annual Meeting of Stockholders was held on June 29, 2000. |
(b) | Not applicable |
(c) | Motions before stockholders |
(1) | Election of One Director |
Name |
Votes For |
Votes Against |
Non Votes |
Abstentions | |||||
---|---|---|---|---|---|---|---|---|---|
Robert P. Vollono | 7,455,014 | 64,182 | 0 | 0 |
(2) | Approval and Adoption of Amendment to the Companys 1997 Stock Incentive Plan |
Votes For |
Votes Against |
Non Votes |
Abstentions | ||||||
---|---|---|---|---|---|---|---|---|---|
7,360,775 | 148,067 | 0 | 354 |
(3) | Ratification of Ernst & Young, LLP as Auditors |
Votes For |
Votes Against |
Non Votes |
Abstentions | ||||||
---|---|---|---|---|---|---|---|---|---|
7,506,298 | 2,100 | 0 | 150 |
ITEM 5. OTHER INFORMATIONNone. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(a) EXHIBITS. |
3.1 | Certificate of Incorporation* | ||||||||||
3.2 | Bylaws of the Company* | ||||||||||
4.1 | Specimen certificate for Common Stock of the Company* | ||||||||||
4.2 | See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and Bylaws of the Company defining rights of holders of Common Stock of the Company | ||||||||||
10.1 | Form of Project Commencement Agreement* | ||||||||||
10.2 | Form of Software License Agreement* | ||||||||||
10.3 | Form of Software Maintenance Agreement* | ||||||||||
10.4 | Form of Professional Services Agreement* | ||||||||||
10.5 | Form of CreditConnection Lender Agreement (for CreditRevue Licensees)* | ||||||||||
10.6 | Form of CreditConnection Lender Agreement (for non-CreditRevue Licensees)* | ||||||||||
10.7 | Form of CreditConnection Dealer Subscription Agreement* | ||||||||||
10.8.1 | Office Building Lease between Symphony Woods Limited Partnership and the | ||||||||||
Company dated October 29, 1993* | |||||||||||
10.8.2 | Office Building Lease between Symphony Woods Limited Partnership and the | ||||||||||
Company dated February 10, 1995* | |||||||||||
10.8.3 | First Amendment to Lease dated March 29, 1995* | ||||||||||
10.8.4 | Second Amendment to Lease dated August 12, 1996* | ||||||||||
10.8.5 | 135 National Business Parkway Lease between Constellation Real Estate, Inc. | ||||||||||
and the Company dated April 27, 1998 | |||||||||||
10.8.6 | First Amendment of 135 National Business Parkway Lease dated December 23, 1998 | ||||||||||
10.9 | Promissory Note dated December 31, 1995 given by the Company to James R. | ||||||||||
DeFrancesco* | |||||||||||
10.10 | Business Loan Agreement between The Columbia Bank and the Company | ||||||||||
dated June 10, 1994* | |||||||||||
10.11 | 1996 Credit Management Solutions, Inc. Non-Qualified Stock Option Plan* | ||||||||||
10.12 | 1996 Credit Management Solutions, Inc. Employee Stock Purchase Plan* | ||||||||||
10.13 | 1996 Credit Management Solutions, Inc. Long-Term incentive Plan* | ||||||||||
10.14 | Form of Tax Indemnification Agreement* | ||||||||||
10.15 | 1996 Credit Management Solutions, Inc. Non-Qualified Stock Option Plan* | ||||||||||
10.16 | 1997 Credit Management Solutions, Inc. Stock Incentive Plan** | ||||||||||
10.17 | Employment Agreement between Miles Grody and the Company | ||||||||||
10.18 | Employment Agreement between Scott Freiman and the Company | ||||||||||
10.19 | Employment Agreement between Robert Vollono and the Company | ||||||||||
27 | Financial Data Schedule | ||||||||||
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the quarter for which this report is filed. |
* | Incorporated by reference to the Exhibits filed with the Companys Registration Statement on Form S-1, File NO. 333-14007. |
** | Incorporated by reference to the Companys 1997 Proxy Statement, file no. 000-21735 |
SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
Date: August 14, 2000 |
CREDIT MANAGEMENT SOLUTIONS, INC. (Registrant) By: /s/ Scott L. Freiman Scott L. Freiman President, Chief Executive Officer and Director (Principal Executive Officer) |
|
Date: August 14, 2000 |
By: /s/ Robert P. Vollono Robert P. Vollono Senior Vice President, Treasurer, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
|