|UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549








FORM 10-K/A

(Mark One)
|-------------------------------------------------------------------------------------------------------

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

For fiscal year ended December 31, 1999 or

||_| |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ----------------------------------------------------------------------------------------

|For the transition period from ____________________
to______________________
|----------------------------------------------------------------------------

|Commission |  | file
number 000-21735
|---------- |  | ---------------------

|CREDIT MANAGEMENT SOLUTIONS, INC. (Exact name of
registrant as specified in its charter)
|----------------------------------------------------------------------------------------

|                               | 
|------------------------------ | 
|Delaware                       | 
|State or other jurisdiction of | 
|incorporation or organization  | 

|                                         | 
|---------------------------------------- | 
|135 National Business Parkway            | 
|Annapolis Junction, MD                   | 
|(Address of principal executive offices) | 

|Registrants telephone number, including area code    (301)
362-6000

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:


Common Stock, $0.01 par value (Title of Class)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Indicate by check mark whether
the registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. [X]
Yes |_| No


Indicated by a check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405
of this chapter) is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. |_|

While it is difficult to
determine the number of shares owned by non-affiliates, the registrant
estimates that the aggregate market value of outstanding Common Stock on March
23, 2000 (based upon the average bid and asked prices of such Common Stock on
the Nasdaq National Market on March 23, 2000) held by non-affiliates was
approximately $34.1 million. For this computation, the registrant has excluded
the market value of all shares of its Common Stock reported as beneficially
owned by officers, directors and certain significant shareholders of the
registrant. Such exclusion shall not be deemed to constitute an admission that
any such stockholder is an affiliate of the registrant.

The undersigned registrant hereby
amends and restates the information required by Part III (Items 10, 11, 12 and
13) of the previously filed Annual Report on Form 10-K for the year ended
December 31, 1999.

PART III

Item 10. Directors and Executive Officers of the
Registrant.

The directors and executive
officers of the Company, their ages and their positions with the Company are as
follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

|NAME                  |  | AGE |  | POSITION                                                                          | 
|--------------------- |  | --- |  | --------------------------------------------------------------------------------- | 
|Scott L. Freiman      |  | 37  |  | President, Chief Executive Officer and Director                                   | 
|Miles H. Grody        |  | 43  |  | Senior Vice President and Director; President and Chief Executive Officer of CMSI | 
|                      |  |     |  | Systems, Inc.                                                                     | 
|Howard L. Tischler    |  | 46  |  | Senior Vice President; President and Chief Executive Officer of Credit            | 
|                      |  |     |  | Online, Inc.                                                                      | 
|Robert P. Vollono     |  | 51  |  | Senior Vice President, Chief Financial Officer and Director                       | 
|John J. McDonnell, Jr |  | 62  |  | Chairman of the Board of Directors                                                | 
|James R. DeFrancesco  |  | 51  |  | Director                                                                          | 
|Stephen X. Graham     |  | 47  |  | Director                                                                          | 

|Scott L. Freiman, a co-founder of
the Company, has served as the Companys President and Chief Executive Officer
since September 1999, and as a director since 1987. Mr.
Freiman served as Executive Vice President of the Company from 1987 to
September 1999. From 1985 to 1987, Mr. Freiman served as Technology Director of
American Financial Corporation, an automobile finance/leasing company, where he
worked with Mr. DeFrancesco to develop the Companys credit origination
software. Prior to 1985, Mr. Freiman served as a development engineer for IBM
and AT&T Bell Laboratories.

Miles H. Grodyhas served as the
Companys Senior Vice President since June 1995,  and President and Chief Executive Officer of the Companys subsidiary, CMSI Systems, Inc., since February 2000.
Mr. Grody served as the Companys Senior Vice President and General Manager of the Companys  Credit
Decisioning  Systems division (predecessor to CMSI Systems, Inc.) from November 1998 to February 2000.
From June 1995 to November 1998, Mr. Grody served as the Companys Secretary and General Counsel. He has been a director since October 1996.
From January 1993 to June 1995, Mr. Grody served as Chief Operating Officer of
Tomahawk II, Inc., a document imaging and conversion service company. From
January 1992 to January 1993, Mr. Grody was a partner in the law firm of Rowan & Grody,
P.C. From 1988 to January 1992, Mr. Grody served as Corporate Counsel for Perot
Systems Corporation.

Howard L. Tischler has served  since February 2000 as
the Companys Senior Vice President and as  President and Chief Executive Officer of the Companys subsidiary,  Credit Online, Inc.
From November 1999 to February 2000, Mr. Tischler served as General Manager of the Companys e-Commerce division, predecessor to Credit
Online, Inc.   From 1995 to 1999, Mr. Tischler was President
of SunGard Healthcare, a wholly owned subsidiary of SunGard Data Systems, Inc. Mr. Tischler was President of the Healthcare
Systems Group  of Intelus Corporation from 1993 until the acquisition of Intelus by SunGard Data Systems in 1995.  From 1986 to 1993,
Mr. Tischler served as Executive Vice President and Vice President, Operations, for Intelus Corporation.

Robert P. Vollono has served as
the Companys Senior Vice President and Chief Financial Officer since April
1995, and as the Companys Treasurer and a director since October 1996.  Since February 1999, Mr. Vollono has served as
Chief Financial Officer of CMSI Systems, Inc. and Credit Online, Inc. From
1988 to April 1995, Mr. Vollono served as Vice President and Chief Financial
Officer of Carey International, Inc., a transportation services company. From 1986 to 1988, Mr. Vollono served as Vice
President and Chief Financial Officer of Commercial Office Environments, Inc.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|John J. McDonnell, Jr.has served
as a director since November 1996, and as Chairman of the Board since
September 1999. Mr. McDonnell has served as President and Chief Executive Officer of Paylinx Corporation,
a leading provider of internet payment solutions, since February 2000.
Mr. McDonnell served as President, Chief Executive Officer
and a director of Transaction Network System, Inc., a nationwide communications
network company specializing in transaction-oriented data services from 1990 until its acquisition by PSInet, Inc. in November 1999. From 1987 to 1989, Mr.
McDonnell served as President and Chief Executive Officer of Digital Radio
Network, Inc., a local access carrier for point-of-sale transactions. Mr.
McDonnell has previously served as Group Vice President for the Information
Technologies and Telecommunications Group of the Electronic Industries
Association (EIA); Vice President, International Operations and Vice President,
Sales, for Tymnet, Inc. with the responsibility for both private network sales
and public services; and Director of Technology and Telecommunications for the
National Commission on Electronic Funds Transfer. Mr. McDonnell was one of the
founding members and is currently Chairman of the Executive Committee of the
Board of Directors of the Electronics Funds Transfer Association.  Mr. McDonnell currently serves on the Board of Directors
of Intelidata Data Technologies Corp., a publicly-traded software company.

James R. DeFrancesco, a
co-founder of the Company, has served as a director of the Company since
1987. Mr. DeFrancesco served as the Companys Chief Executive Officer
from 1987 to May 1999, as Chairman of the Board of Directors from 1987 to
September 1999 and as President from 1987 to 1998.  Since 1989, Mr. DeFrancesco has served as the President of Businessliner, Inc., a company
which leases an airplane to the Company for business travel.  From August 1997 to May 1999, Mr. DeFrancesco served as a Vice President of D & R Investments, L.L.C., a company
that leased an airplane to the Company for business travel during that period.       From 1987 to 1992, Mr.
DeFrancesco served as President of Perpetual Leasing Services, Inc., the
automobile leasing subsidiary of Perpetual Savings Bank, FSB.  From 1976 to 1987, Mr. DeFrancesco founded and
served as President and Chief Executive Officer of American Financial
Corporation, an automobile finance/leasing company.

Stephen X. Graham, age 47, has
served as a director since October 1996. Since 1998, he has been the President
and Chief Executive Officer of Cross Hill Financial Group, Inc., a private
investment banking firm. From 1982 to 1988 Mr. Graham was a Vice President of
Kidder, Peabody & Co.

Section 16(a) Beneficial Ownership Reporting
Compliance

Under the securities laws of the
United States, the Companys directors and executive officers, and any persons
holding more than ten percent of the Companys Common Stock, are required to
report their ownership of the Companys Common Stock and any changes in that
ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established and the Company is required to report in
this Annual Report any failure to file by these dates during 1999. Based
solely on its review of such reports received by it from such persons for their
1999 transactions, the Company believes that all directors, executive officers
and beneficial owners of more than ten percent of the Companys Common Stock
were in compliance with all such filing requirements, except for the following:
(i) Mr. McDonnell failed to timely report two purchases of Common Stock in
November 1999, (ii) Mr. DeFrancesco failed to timely report two sales of Common
Stock in November and December 1999, (iii) Mr. Freiman failed to timely
report one sale of Common Stock in November 1999 and (iv) Mr. Vollono failed to timely report one sale of common stock in
September 1999.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 11. Executive Compensation.

Summary Compensation Table

The following table provides
certain summary information concerning the compensation earned by each person
who served as the Companys Chief Executive Officer during the fiscal year
ended December 31, 1999, and by each of the four other most highly compensated
executive officers of the Company whose salary and bonus for such fiscal year
was in excess of $100,000, for services rendered in all capacities to the
Company and its subsidiaries for the fiscal years ended December 31, 1997, 1998
and 1999. The listed individuals shall be hereinafter referred to as the Named
Executive Officers.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                    | AnnualCompensation | Long-TermCompensation
|--------------------------------------------------------------------------------------------------- | ------------------ | ---------------------
|
|                                                                                                   
|Scott L. Freiman                                                                                    |                    | 1999                 
|Chief Executive Officer                                                                             |                    | 1998                 
|and  President                                                                                      |                    | 1997                 
|                                                                                                   
|James R. DeFrancesco                                                                                |                    | 1999                 
|Chief Executive Officer(4)                                                                          |                    | 1998                 
|                                                                                                    |                    | 1997                 
|                                                                                                   
|Peter M. Leger                                                                                      |                    | 1999                 
|Chief Executive                                                                                     |                    | 1998                 
|Officer(5)                                                                                          |                    | 1997                 
|                                                                                                   
|Robert P. Vollono                                                                                   |                    | 1999                 
|Senior Vice President,                                                                              |                    | 1998                 
|Treasurer and                                                                                       |                    | 1997                 
|Chief Financial Officer;   Chief Financial Officer,
   CMSI Systems, Inc. and   Credit Online, Inc. |                   
|                                                                                                   
|Miles H. Grody                                                                                      |                    | 1999                 
|Senior Vice President;                                                                              |                    | 1998                 
|President and Chief Executive                                                                       |                    | 1997                 
|Officer of CMSI Systems, Inc.                                                                       |                   
|                                                                                                   

|__________
|----------

|(1) |  | Other
compensation in the form of perquisites and other personal benefits has been
omitted as the aggregate amount of such perquisites and other personal benefits
constituted the lesser of $50,000 or 10% of the total annual salary and bonus
for the executive officer for such year.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The Company
did not grant any stock appreciation rights or make any long-term incentive
plan payments to any Named Executive Officer in 1999, 1998 or 1997.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Consists
of an automobile allowance.
|--- |  | ------------------------------------

|(4) |  | Mr.
DeFrancesco resigned his position in May 1999.
|--- |  | --------------------------------------------------

|(5) |  | Mr.
Leger served as Chief Executive Officer from May 1999 to September 1999.
|--- |  | ----------------------------------------------------------------------------

|Option Grants in Last Fiscal Year

The following table provides
information with respect to the stock option grants made during the last fiscal
year to the Named Executive Officers. All grants were made under the Companys
1997 Stock Incentive Plan. No stock appreciation rights were granted during
1999.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    
|--------------------
|
|                    
|
|                    
|Scott L. Freiman    
|                    
|James R. DeFrancesco
|                    
|Peter M. Leger      
|                    
|Robert P. Vollono   
|                    
|Miles H. Grody      
|                    

__________

|(1) |  | There
can be no assurance provided to any executive officer or other holder of the
Companys securities that the actual stock price appreciation over the ten-year
option term will be at the assumed 5% or 10% levels or at any other defined
level. Unless the market price of the Common Stock appreciates over the option
term, no value will be realized from those option grants which were made to the
Named Executive Officers with an exercise price equal to (or in the case of Scott Freiman, greater than) the fair market value
of the option shares on the grant date.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | These
options were granted on November 11, 1999, and vest in four equal installments
on each of the first, second, third and fourth annual anniversaries of the
grant date.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values

The following table sets forth
certain information with respect to the Named Executive Officers regarding
stock option holdings as of December 31, 1999. No stock options were exercised
by any named Executive Officer during 1999. No stock appreciation rights were
exercised by any Named Executive Officer during 1999 and no stock appreciation
rights were outstanding as of December 31, 1999.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    
|--------------------
|
|
|                    
|
|                    
|Scott L. Freiman    
|                    
|James R. DeFrancesco
|                    
|Peter M. Leger      
|                    
|Robert P. Vollono   
|                    
|Miles H. Grody      
|                    

|__________
|----------

|(1) |  | Amounts
calculated by subtracting the exercise price of the options from the market
value of the underlying Common Stock using the closing selling price as
reported on the Nasdaq National Market of $8.50 per share of Common Stock on
December 31, 1999.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Compensation of Directors

Cash Compensation.
Employee directors do not currently receive a fee
for attending Board of Directors or committee meetings, but are
reimbursed for ordinary and necessary travel expenses related to such
directors attendance at Board of Directors and committee meetings.
Each non-employee director is paid $2,000 for each meeting of the
Board of Directors or any committee thereof attended. Commencing in
January 2000, each of Stephen Graham and John McDonnell were granted
annual retainers of $24,000. Both Messrs. Graham and McDonnell have
elected to apply 100% of their annual retainer fee to the acquisition
of a special stock option grant pursuant to the Director Fee Option
Grant Program under the Companys 1997 Stock Incentive Plan.

Stock Option Grant. Pursuant to
the Companys 1997 Stock Incentive Plan, each non-employee director is
automatically granted a non-qualified stock option to purchase 5,000 shares of
Common Stock upon such directors initial election to the Board of Directors and on each anniversary of such election while still
serving on the Board of Directors. Such options vest 50% six months from the
date of grant and 50% one year from the date of grant.  Directors who
are employees of the Company do not receive any compensation as directors of
the Company beyond that paid to them on account of their services as employees
of the Company. On January 3, 1999, Messrs Graham and McDonnell were each granted options to buy 5,000 shares of the Companys Common
Stock at an option price of $7.625 per share. These options vest 50% six months from date of grant and 50% one year from the date of grant.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Employment Contracts, Termination of Employment and
Change in Control Arrangements

In April 2000, the Company
entered into employment agreements with each of Scott Freiman and Robert
Vollono, pursuant to which they are employed as President and Chief Executive
Officer and Chief Financial Officer, respectively, of the Company. The
agreements provide for the payment of a minimum annual salary of $220,000 to
Mr. Freiman and $175,000 to Mr. Vollono, subject to increase at the discretion
of the Company. Both agreements provide for the payment of bonuses in the
Companys sole discretion, based upon criteria determined by the Company. In
addition, under each agreement the applicable executive is entitled to
participate in all employee benefit plans provided by the Company from time to
time, to receive 184 hours of paid leave per year of employment (two-thirds of
which is considered to be vacation time), to be provided term life insurance
with benefits equal to the executives annual salary (up to a maximum of
$400,000), a monthly automobile allowance of $500, and reimbursement for all
reasonable out-of-pocket expenses. If at any time the executives employment
under the agreement is terminated by the Company for any reason other than for
cause or the executive resigns for good reason, then such executive will become
entitled to the following severance benefits: (i) continued payment of his full
salary for six months, (ii) continued medical, life and disability coverage for
a period of six months, and (iii) immediate vesting of all of his outstanding
stock options. If such termination or resignation occurs within 18 months after
a change in control of the Company or an affiliate of the Company which employs
the executive, whether by merger, asset sale, tender or exchange offer for more
than 50% of the outstanding voting securities of the Company or such affiliate,
adoption by the Board (or the board of directors of such affiliate) of a plan
of liquidation or a change in the majority of the Board (or the board of
directors of such affiliate) by one or more contested elections, then the
executive would instead become entitled to the following: (i) a lump sum
payment equal to 2.99 times his average annual cash compensation during the
previous five years (or such shorter period as he shall have been employed by
the Company), (ii) upon his surrender of all rights to vested and unvested
stock options granted to him by the Company, a lump sum payment equal to the
difference between the exercise price of such options and the greater of the
fair market value of the Common Stock on the date of the termination or the
highest effective price paid for the Common Stock by any acquirer in connection
with the change in control, (iii) continued medical, life and disability
coverage for 12 months (or until he receives comparable coverage from a new
employer, if sooner), and (iv) immediate vesting of all accrued retirement and
deferred compensation plans. The Companys obligation to provide any such
severance benefits is contingent upon the executive executing and delivering to
the Company a general release of all claims against the Company. The term cause is
defined under the agreements to include continued failure by the executive to
perform his duties, conviction of a felony, willful or reckless misconduct
which is injurious to the Company or any affiliate or the commission of fraud
or malfeasance. The term good reason is defined to include a
reduction in annual salary, the Companys failure to provide fringe benefits
comparable to those offered to other executives, the failure of any successor
to the Company to assume the Companys obligations under the employment
agreements or a relocation of the executives worksite to a location which
increases the distance from his home to his worksite by more than 50 miles.

The Company had been a party to
an employment agreement with Peter Leger dated October 1998. Such agreement
terminated upon Mr. Legers resignation as an executive officer of the Company
in September 1999.

The Company does not have any
existing employment agreements with any other executive officer named in the
Summary Compensation Table. The Company expects to enter into an employment
agreement with Miles Grody and Howard Tischler containing terms and conditions
substantially similar to those described above.

Following James DeFrancescos
resignation from his position as Chief Executive Officer of the Company in May
1999, the Company continued to pay Mr. DeFrancesco his salary, and to provide
his employment benefits, through December 31, 1999, as severance benefits. Mr.
DeFrancesco continued to consult with and otherwise assist the Company during
that period with respect to strategic planning, transactions and relationships
and certain other matters. Effective as of January 1, 2000, the Company entered
into a consulting arrangement with Mr. DeFrancesco, pursuant to which Mr.
DeFrancesco was retained as a consultant, on an independent contractor basis,
to continue to provide such services through December 31, 2000, for an annual
fee of $213,200, payable bi-weekly. The consulting arrangement may be extended
thereafter upon mutual written agreement of the parties. The Company expects to
enter into a written consulting agreement with Mr. DeFrancesco to formalize such terms
in the near future.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The Compensation Committee of
the Board of Directors, as Plan Administrator of the Companys 1997 Stock
Incentive Plan, has the authority to provide for accelerated vesting of the
shares of Common Stock subject to any outstanding options held by the Chief
Executive Officer or any other executive officer or any unvested share
issuances actually held by such individual, in connection with certain changes
in control of the Company or the subsequent termination of the officers
employment following the change in control event.

Compensation Committee Interlocks and Insider
Participation

John J. McDonnell, Jr. and
Stephen X. Graham served as members of the Companys compensation committee
during 1999. Neither Mr. McDonnell nor Mr. Graham has been an officer or
employee of the Company at any time. Mr. Graham is President and Chief
Executive officer of Cross Hill Financial Group, Inc. In connection with the
Companys initial public offering of securities and other matters, the Company
paid Cross Hill Financial Group, Inc., financial advisory fees in an aggregate
amount equal to $62,345 in 1999. The Company also agreed to indemnify Cross
Hill Financial Group, Inc. against certain liabilities resulting from the
performance of its duties as financial advisor, subject to certain limitations.

Item 12. Security Ownership of Certain Beneficial
Owners and Management.

The following table sets forth
certain information regarding beneficial ownership of the Companys Common
Stock as of Apri1 21, 2000 by (i) each stockholder known to the Company to
beneficially own more than five percent of the outstanding shares of Common
Stock, (ii) each director and nominee for director, (iii) each of the Named
Executive Officers and (iv) all current executive officers and directors as a
group. Unless otherwise indicated, the mailing addres of each beneficial owner listed is 135 National Business
Parkway, Annapolis Junction, Maryland  20701.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name of Beneficial Owner                                   | Number of Shares ofCommon StockBeneficially Owned(1) | Percentage of SharesOutstanding (1) (2)
|---------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------
|                                                          
|James R. DeFrancesco                                       |                                                      | 2,926,396                              
|                                                          
|Scott L. Freiman(3)                                        |                                                      | 1,396,160                              
|                                                          
|Cumberland Associates LLC(4)                               |                                                      | 708,594                                
|                                                          
|Dolphin Offshore Partners, L.P.(5)                         |                                                      | 643,659                                
|                                                          
|Jon D. Gruber(6)                                           |                                                      | 488,400                                
|                                                          
|J. Patterson McBaine(6)                                    |                                                      | 462,000                                
|                                                          
|Eric B. Swergold(6)                                        |                                                      | 433,000                                
|                                                          
|Gruber & McBaine Capital Management, LLC(6)                |                                                      | 429,000                                
|                                                          
|Thomas O. Lloyd-Butler(6)                                  |                                                      | 429,000                                
|                                                          
|Miles H. Grody(7)                                          |                                                      | 304,784                                
|                                                          
|Robert P. Vollono(8)                                       |                                                      | 304,809                                
|                                                          
|Stephen X. Graham(9)                                       |                                                      | 15,000                                 
|                                                          
|John J. McDonnell, Jr.(10)                                 |                                                      | 240,400                                
|                                                          
|Peter M. Leger                                             |                                                      |                                       
|                                                          
|All current executive officers and directors as a group (6 |                                                     
|persons)(12)                                               |                                                      | 5,187,549                              
|                                                          

| |  | Represents
beneficial ownership of less than one percent of the Common Stock.
|- |  | -----------------------------------------------------------------------------

|(1) |  | Gives
effect to the shares of Common Stock issuable within 60 days of April 21, 2000
upon the exercise of all options and other rights beneficially owned by the
indicated stockholders on that date. Unless otherwise indicated, the persons
named in the table have sole voting and sole investment control with respect to
all shares beneficially owned. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and includes voting
and investment power with respect to shares.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Percent
ownership is based upon 7,819,407 shares of Common Stock issued and
outstanding as of April 21, 2000.
|--- |  | -------------------------------------------------------------------------------------------------------------

|(3) |  | Includes
an aggregate of 69,476 shares held by Mr. Freimans spouse and children.
|--- |  | ---------------------------------------------------------------------------------

---

|(4) |  | Pursuant
to a Schedule 13G filed February 14, 2000 with the Securities and Exchange
Commission, Cumberland Associates LLC reported that as of that date it had sole
voting power and sole dispositive power with respect to 632,800 of the shares
and shared voting and dispositive power with respect to the remaining 68,800
shares. Cumberland Associates LLCs mailing address is 1114 Avenue of the Americas, New York, New York  10036.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Pursuant
to a Schedule 13D filed on February 10, 2000 with the Securities and Exchange
Commission, Peter E. Salas, as general partner of Dolphin Offshore Partners,
L.P. (DOP), reported that as of that date he, as general partner of
DOP, had sole voting and dispositive power with respect to all 643,659 shares.  Mr. Salass mailing address is c/o Dolphin Asset Management,
129 East 17th Street, New York, New York 10003.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Pursuant
to a Schedule 13D filed on February 10, 2000 with the Securities and Exchange
Commission, Gruber & McBaine Capital Management, L.L.C. (G&MCM)
reported that as of December 7, 1999 it shared voting and dispositive power
with respect to the 429,000 shares beneficially owned by it. Jon D. Gruber (Gruber)
and J. Patterson McBaine (McBaine), as managers of G&MCM,reported
that they shared voting and dispositive powers with respect to the same 429,000
shares. In addition, Gruber reported having sole voting and dispositive power
with respect to an additional 59,400 shares and McBaine reported having sole
voting and dispositive power with respect to an additional 33,000 shares.
Thomas Lloyd-Butler and Eric B. Swergold (Swergold), members of G& CMC, reported
having shared voting and dispositive power with respect to the 429,000 shares.
In addition, Swergold reported having sole voting and dispositive power with
respect to an additional 4,000 shares. The mailing address of each of G & McM, Gruber, McBaine, Thomas Lloyd-Butler and Swergold is 50 Osgood Place, Penthouse, San Francisco, California
94133
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Consists
of 304,784 shares of Common Stock issuable upon exercise of a stock option.
|--- |  | ------------------------------------------------------------------------------------

|(8) |  | Includes
25 shares held by Mr. Vollonos spouse and 324,784 shares of Common Stock
issuable upon exercise of a stock option.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------

|(9) |  | Consists
of 15,000 shares of Common Stock issuable upon exercise of stock options.
|--- |  | ----------------------------------------------------------------------------------

|(10) |  | Includes
15,000 shares of Common Stock issuable upon exercise of stock options.
|---- |  | -------------------------------------------------------------------------------

|(11) |  | Mr. Legers mailing address is c/o APAC Customer Services, Inc., One Parkway North Center, Deerfield, Illinois  60015
|---- |  | ---------------------------------------------------------------------------------------------------------------------

|(12) |  | See
Notes (3) and (7) through (10).
|---- |  | -----------------------------------

|Item 13. Certain Relationships And Related
Transactions.

James R. DeFrancesco owns 50% of
the outstanding stock, and is the President, of Business Liner, Inc. and 50% of the outstanding stock,
and is the Vice President, of D&R Investments, L.L.C. These companies lease airplanes to the Company for
business travel. The Company pays an hourly fee for its use of each airplane
and a portion of the monthly cost of maintaining the airplane. The Company
believes that the amounts paid for the leases of the airplanes are comparable
to the amounts the Company would have otherwise paid for comparable services
from unaffiliated parties. For the fiscal year ended December 31, 1999, the
Company paid Business Liner, Inc. $45,781 and D&R Investments, L.L.C. $ 24,200
under this leasing arrangement.

Stephen X. Graham is President
and Chief Executive Officer of Cross Hill Financial Group, Inc. In connection
with the Companys initial public offering of securities and other matters, the
Company paid Cross Hill Financial Group, Inc. financial advisory fees in an
aggregate amount equal to $62,345 in 1999. The Company also agreed to
indemnify Cross Hill Financial Group, Inc. against certain liabilities
resulting from the performance of its duties as financial advisor, subject to
certain limitations.

In addition, the information set
forth under Employment Contracts, Termination of Employment and Change in
Control Arrangements in Item 11 of this Annual Report is incorporated
herein by reference.
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|SIGNATURES


Pursuant to the requirements of
Section 13 or 15(d) 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.

Credit Management Systems, Inc.
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|Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
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