<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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


                                   FORM 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    September 30, 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)

<TABLE>
<CAPTION>
                  Delaware                                                           52-1549401
----------------------------------------------------------------------------------------------------
<S>                                                                                  <C>
(State or other jurisdiction of incorporation or organization)                       (I.R.S. Employer Identification No.)


135 National Business Parkway, Annapolis Junction, MD                                                       20701
------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices)                                                                 (Zip Code)


Registrant's telephone number, including area code    (301) 362-6000
                                                   ---------------------------------------------------------------
</TABLE>


         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 issuer's
classes of common stock, as of the latest practicable date: 7,661,398 shares of
the Company's Common Stock, $.01 par value, were outstanding as of November 6,
1999.



<PAGE>   2


                       CREDIT MANAGEMENT SOLUTIONS, INC.

                     Index to September 30, 1999 Form 10-Q

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

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
                                            Part I -- Financial Information
<S>                                                                                                              <C>
Item 1.     Financial Statements (unaudited)......................................................................3

            Consolidated Balance Sheets --September 30, 1999 and December 31, 1998................................3

            Consolidated Statements of Operations -- Three Months Ended September 30,
            1999 and 1998 and Nine Months Ended September 30, 1999 and 1998.......................................4

            Consolidated Statements of Cash Flows -- Nine Months Ended September 30,
              1999 and 1998.......................................................................................5

            Notes to Consolidated Financial Statements............................................................6

Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations.......................................................8

                                            Part II -- Other Information

Item 1.     Legal Proceedings....................................................................................23

Item 2.     Changes in Securities................................................................................23

Item 3.     Defaults upon Senior Securities......................................................................23

Item 4.     Submission of Matters to a Vote of Security Holders..................................................23

Item 5.     Other Information....................................................................................23

Item 6.     Exhibits and Reports on Form 8-K.....................................................................23

            Signatures...........................................................................................25
</TABLE>


                                       2

<PAGE>   3


                CREDIT MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,           DECEMBER 31,
                                                                                  1999                   1998
                                                                          ---------------------   --------------------
                                                                              (UNAUDITED)

                                 ASSETS
<S>                                                                      <C>                      <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                  $       3,363,555      $       3,090,565
  Investments available for sale                                                     2,614,137              6,482,021
  Accounts receivable, net of allowance of $340,266 and $352,644 in
    1999 and 1998, respectively                                                      4,508,081              5,487,202
  Costs and estimated earnings in excess of billings on uncompleted
    contracts                                                                          314,531                246,831
  Prepaid expenses and other current assets                                            797,167                280,515
  Deferred income taxes                                                                 58,513                 58,513
                                                                          ---------------------   --------------------
Total current assets                                                                11,655,984             15,645,647
                                                                          ---------------------   --------------------

PROPERTY AND EQUIPMENT:

  Computer equipment and software                                                    7,639,157              7,306,811
  Office furniture and equipment                                                     1,588,713              1,657,294
  Leasehold improvements                                                             2,780,583              2,661,291
                                                                          ---------------------   --------------------
                                                                                    12,008,453             11,625,396

  Accumulated depreciation and amortization                                        (3,798,167)            (2,549,451)
                                                                          ---------------------   --------------------
                                                                                     8,210,286              9,075,945

Software development costs, net of accumulated amortization of $358,164
and $298,304 in 1999 and 1998, respectively                                          1,763,141                338,724
Other assets                                                                            49,040                 49,360
                                                                          ---------------------   --------------------

Total assets                                                                 $      21,678,451      $      25,109,676
                                                                          =====================   ====================

                   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                           $       3,362,501      $       5,798,379
  Accrued payroll and related expenses                                                 917,235                668,630
  Billings in excess of costs and estimated earnings on uncompleted
   contracts                                                                           126,364              1,044,015
  Deferred revenue                                                                   2,945,228              2,921,923
  Short-term borrowings                                                                798,000                      -
  Current portion of long-term debt and capital lease obligations                       39,395                 65,994
                                                                          ---------------------   --------------------
Total current liabilities                                                            8,188,723             10,498,941

LONG-TERM DEBT:
  Capital lease obligations, less current portion                                            -                 28,966
  Other lease obligations, less current portion                                        128,611                732,126
                                                                          ---------------------   --------------------
Total liabilities                                                                    8,317,334             11,260,033

SHAREHOLDERS' EQUITY
  Preferred stock, $.01 par value; 1,000,000 share authorized;
    no shares issued or outstanding                                                          -                      -
  Common stock, $.01 par value; 40,000,000 shares authorized;
    7,661,398 and 7,649,770 shares issued and outstanding at
    September 30, 1999 and December 31,
    1998, respectively                                                                  76,614                 76,497
  Additional paid - in capital                                                      26,895,361             26,853,194
  Accumulated deficit                                                             (13,610,858)           (13,080,048)
                                                                          ---------------------   --------------------
Total shareholders' equity                                                          13,361,117             13,849,643
                                                                          ---------------------   --------------------
Total liabilities and shareholders' equity                                   $      21,678,451      $      25,109,676
                                                                          =====================   ====================
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



                                       3


<PAGE>   4


                CREDIT MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED,                    NINE MONTHS ENDED,
                                                               SEPTEMBER 30                           SEPTEMBER 30
                                                   -------------------------------------- --------------------------------------
                                                         1999                1998                1999               1998
                                                   ------------------  ------------------ ------------------- ------------------
                                                      (UNAUDITED)         (UNAUDITED)        (UNAUDITED)         (UNAUDITED)
<S>                                                <C>                 <C>                <C>                 <C>
REVENUES:
  License and software development fees             $  3,293,727       $   2,820,611        $     10,606,554    $     6,996,071

  Maintenance fees                                     1,075,700             998,165               3,696,831          3,002,076

  Computer hardware sales                                 19,686              39,988               1,080,811            431,059

  Service bureau revenues                                872,033             369,857               2,149,731          1,177,995
                                                   ------------------  ------------------ ------------------- ------------------
                                                       5,261,146           4,228,621              17,533,927         11,607,201
                                                   ------------------  ------------------ ------------------- ------------------
COSTS OF REVENUES:
  Cost of license and software development fees        1,342,110           1,653,880               4,946,470          5,146,747

  Cost of maintenance fees                               142,700             216,427                 713,742            765,204

  Cost of computer hardware sales                        105,413             103,078               1,324,165            603,822

  Cost of service bureau                                 641,044             880,332               2,147,066          2,434,346
                                                   ------------------  ------------------ ------------------- ------------------
                                                       2,231,267           2,853,717               9,131,443          8,950,119
                                                   ------------------  ------------------ ------------------- ------------------
Gross profit                                           3,029,879           1,374,904               8,402,484          2,657,082

OTHER OPERATING EXPENSES:

  Selling, general and administrative expenses         2,660,617           2,786,886               8,106,202          7,386,103

  Research and development costs                         363,021             587,199               1,046,906          1,642,535
                                                   ------------------  ------------------ ------------------- ------------------

                                                       3,023,638           3,374,085               9,153,108          9,028,638
                                                   ------------------  ------------------ ------------------- ------------------

Income (loss) from operations                              6,241         (1,999,181)               (750,624)        (6,371,556)

OTHER INCOME (EXPENSE):

  Interest expense                                      (15,739)             (6,497)                (25,360)           (23,773)

  Interest income                                         70,596             178,691                 245,174            653,462
                                                   ------------------  ------------------ ------------------- ------------------

                                                          54,857             172,194                 219,814            629,689
                                                   ------------------  ------------------ ------------------- ------------------

Net income (loss)                                   $     61,098       $ (1,826,987)        $      (530,810)    $   (5,741,867)
                                                   ==================  ================== =================== ==================

Basic earnings (loss) per common share              $       0.01       $      (0.24)        $         (0.07)    $        (0.75)
                                                   ==================  ================== =================== ==================
Shares used in computation                             7,659,848           7,641,278               7,657,191          7,631,999
                                                   ==================  ================== =================== ==================

Diluted earnings (loss) per common share            $       0.01       $      (0.24)        $         (0.07)    $        (0.75)
                                                   ==================  ================== =================== ==================

Shares used in computation                             7,659,848           7,641,278               7,657,191          7,631,999
                                                   ==================  ================== =================== ==================
</TABLE>


   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


                                       4



<PAGE>   5


                CREDIT MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                        NINE MONTHS ENDED
                                                                                                          SEPTEMBER 30,
                                                                                            --------------------------------------
                                                                                                  1999                1998
                                                                                            ------------------  ------------------
                                                                                               (unaudited)        (unaudited)

<S>                                                                                         <C>                  <C>
OPERATING ACTIVITIES:
    Net loss                                                                                   $     (530,810)     $  (5,741,867)
    ADJUSTMENTS:
        Depreciation                                                                                1,338,433            823,929
        Amortization of software development costs                                                     59,860             89,791
        Amortization of discount on debt securities included in interest income                         7,889            (63,349)
        Loss (gain) on disposal of property and equipment                                              18,620            (13,906)
        Other lease obligations                                                                      (603,515)                  -

    CHANGES IN OPERATING ASSETS AND LIABILITIES:
        Accounts receivable, net                                                                      979,121         (1,055,935)
        Prepaid expenses and other current assets                                                    (516,652)            67,948
        Accounts payable                                                                           (2,435,878)          (822,554)
        Accrued payroll and related expenses                                                          248,605            (54,279)
        Net billings in excess of costs and estimated earnings on uncompleted contracts              (985,351)          (513,704)
        Deferred revenue                                                                               23,305            203,233
                                                                                            ------------------  -----------------
    NET CASH USED IN OPERATING ACTIVITIES                                                          (2,396,373)        (7,080,693)

INVESTING ACTIVITIES:

    Sale (purchase) of investments available-for-sale                                               3,859,995        (10,197,012)
    Proceeds from sale of property and equipment                                                       49,714             50,201
    Purchase of property and equipment                                                               (541,108)        (2,771,535)
    Capitalized software development costs                                                         (1,484,277)                  -
    Increase in other assets                                                                              320                  -
                                                                                            ------------------  -----------------
    NET CASH USED IN INVESTING ACTIVITIES                                                           1,884,644        (12,918,346)
FINANCING ACTIVITIES:
    Payments under capital lease obligations                                                          (55,565)          (114,934)
    Proceeds from credit line                                                                         798,000                  -
    Proceeds from exercise of stock options                                                                 -             62,640
    Proceeds from issuance of common stock                                                             42,284            112,971
                                                                                            ------------------  -----------------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                                                         784,719             60,677
                                                                                            ------------------  -----------------

    NET CHANGE IN CASH AND CASH EQUIVALENTS                                                           272,990        (19,938,362)
    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                3,090,565         20,569,300
                                                                                            ------------------  -----------------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                $     3,363,555      $     630,938
                                                                                            ==================  =================
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.



                                       5


<PAGE>   6


                CREDIT MANAGEMENT SOLUTIONS, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.      BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K, for the year ended December 31, 1998.

NOTE. 2.     CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. The cost of these
investments is equivalent to fair value.

NOTE 3.      INVESTMENTS

Available-for-sale securities are carried at fair value, as measured on quoted
exchanges, with unrealized security holding gains and losses recognized in
comprehensive income. Realized gains and losses and declines in value judged to
be other than temporary on available-for-sale securities are included in
interest income. Unrealized security holding gains are recognized in
comprehensive income.

At September 30, 1999, available-for-sale securities consisted of municipal,
corporate and government agency obligations, the cost of which approximates
fair value. The Company has not had significant realized or unrealized gains or
losses on its investments during the periods presented. These investments are
classified as current as all maturities are less than one year.

<TABLE>
<CAPTION>
NOTE 4. EARNINGS (LOSS) PER SHARE

                                                                  THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                --------------------------      ---------------------------
                                                             SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                                                   1999            1998             1999            1998
                                                               ----------      ----------       ----------     ----------

<S>                                                         <C>            <C>                <C>            <C>
Numerator for basic and diluted earnings (loss) per common share:

  Net income (loss)                                             $  61,098  $  (1,826,987)      $ (530,810)   $ (5,741,867)
                                                            =============  ===============    ============  ==============
Denominator for basic and diluted earnings (loss) per
  common share:
  Weighted-average shares                                       7,659,848      7,641,278         7,657,191       7,631,999
                                                            =============  ===============    ============  ==============



Basic and diluted earnings (loss) per common share           $       0.01  $      (0.24)      $      (0.07)  $      (0.75)
                                                            =============  ===============    ============  ==============
</TABLE>



                                       6



<PAGE>   7
<TABLE>
<CAPTION>
NOTE 5. COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Uncompleted contracts consist of the following components:

                                                                   BALANCE SHEET CAPTION

                                                     -------------------------------------------------
                                                      COSTS AND ESTIMATED       BILLINGS IN EXCESS
                                                          EARNINGS IN              OF COSTS AND
                                                       EXCESS OF BILLINGS       ESTIMATED EARNINGS           TOTAL
                                                     ---------------------------------------------------------------------
<S>                                                  <C>                       <C>                      <C>
December 31, 1998:
     Cost and estimated earnings                       $          1,573,861                 3,236,349           4,810,210
     Billings                                                     1,327,030    $            4,280,364   $       5,607,394
                                                     -----------------------  ------------------------ -------------------
                                                       $            246,831    $          (1,044,015)   $       (797,184)
                                                     =======================  ======================== ===================
September 30, 1999:
     Cost and estimated earnings                                  2,472,515                   174,787          2,647,302
     Billings                                          $          2,157,984    $              301,151   $      2,459,135
                                                     -----------------------  ------------------------ -------------------
                                                       $            314,531    $            (126,364)   $        188,167
                                                     =======================  ======================== ===================
</TABLE>

All receivables on contracts in-progress are expected to be collected within
twelve months.

NOTE 6. SEGMENT INFORMATION

Segment Reporting

<TABLE>
<CAPTION>
                                            Three months ended September 30, 1999
          -------------------------- ------------------ ------------------ ------------------ ------------------
                                     Credit Decisioning     E-Commerce      Service Bureau           Total
          -------------------------- ------------------ ------------------ ------------------ ------------------
<S>                                  <C>                <C>                <C>                <C>
          Revenues                      $  4,389,113       $    505,015       $    367,018      $   5,261,146
          -------------------------- ------------------ ------------------ ------------------ ------------------
          Segment profit (loss)            2,242,949          (461,077)          (358,030)          1,423,842
          -------------------------- ------------------ ------------------ ------------------ ------------------
</TABLE>

<TABLE>
<CAPTION>

                                         Three months ended September 30, 1998
          -------------------------- ------------------ ------------------ ------------------ ------------------
                                     Credit Decisioning     E-Commerce      Service Bureau           Total
          -------------------------- ------------------ ------------------ ------------------ ------------------
<S>                                  <C>                <C>                <C>                 <C>
          Revenues                    $    3,858,764      $     293,474      $      76,383      $   4,228,621
          -------------------------- ------------------ ------------------ ------------------ ------------------
          Segment profit (loss)            1,724,569          (709,444)          (627,667)            387,458
          -------------------------- ------------------ ------------------ ------------------ ------------------
</TABLE>

A reconciliation of segment profit for all segments to net income (loss)
for the three months ended September 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                   Three months ended September 30,
          ------------------------------------------------------ ---------------- ---------------
                                                                      1999             1998
          ------------------------------------------------------ ---------------- ---------------
<S>                                                              <C>              <C>
          Total segment profit                                     $   1,423,842   $     387,458
          ------------------------------------------------------ ---------------- ---------------
          Corporate, general and administrative expenses                 947,965       2,023,358
          ------------------------------------------------------ ---------------- ---------------
          Depreciation and amortization                                  469,636         363,281
          ------------------------------------------------------ ---------------- ---------------
          Net interest income                                             54,857         172,194
          ------------------------------------------------------ ---------------- ---------------
          Net income/(loss) before income taxes                    $      61,098   $ (1,826,987)
          ------------------------------------------------------ ---------------- ---------------
</TABLE>

<TABLE>
<CAPTION>

                                          Nine months ended September 30, 1999
          -------------------------- ------------------ ------------------ ------------------ ------------------
                                     Credit Decisioning     E-Commerce      Service Bureau           Total
          -------------------------- ------------------ ------------------ ------------------ ------------------
<S>                                  <C>               <C>                <C>                <C>
          Revenues                    $   15,384,196   $      1,319,625   $        830,106   $     17,533,927
          -------------------------- ------------------ ------------------ ------------------ ------------------
          Segment profits (loss)           7,342,185        (1,839,767)        (1,016,173)          4,486,245
          -------------------------- ------------------ ------------------ ------------------ ------------------
</TABLE>

<TABLE>
<CAPTION>
                                           Nine months ended September, 1998
          ------------------------ ------------------ ------------------ ------------------ ------------------
                                   Credit Decisioning     E-Commerce      Service Bureau           Total
          ------------------------ ------------------ ------------------ ------------------ ------------------
<S>                                <C>                <C>                <C>                <C>
          Revenues                  $     10,429,206    $       904,827    $       273,168   $     11,607,201
          ------------------------ ------------------ ------------------ ------------------ ------------------
          Segment profit (loss)            2,932,800        (2,080,241)          (907,526)           (54,967)
          ------------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>


                                       7
<PAGE>   8


A reconciliation of segment profit (loss) for all segments to net loss for the
nine months ended September 30, 1999 and 1998 is as follows:


<TABLE>
<CAPTION>

                                  Nine months ended September 30,
          ------------------------------------------------------ ---------------- ---------------
                                                                      1999             1998
          ------------------------------------------------------ ---------------- ---------------
<S>                                                              <C>              <C>
          Total segment profit (loss)                              $   4,486,245   $    (54,967)
          ------------------------------------------------------ ---------------- ---------------
          Corporate, general and administrative expenses               3,830,687       5,466,218
          ------------------------------------------------------ ---------------- ---------------
          Depreciation and amortization                                1,406,182         850,371
          ------------------------------------------------------ ---------------- ---------------
          Net interest income                                            219,814         629,689
          ------------------------------------------------------ ---------------- ---------------
          Net loss                                                 $   (530,810)   $ (5,741,867)
          ------------------------------------------------------ ---------------- ---------------
</TABLE>


Substantially all of the revenues and assets or the Company's reportable
segments are attributed to or located in the United States.

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

The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
interim results of operations and financial condition. This discussion should
be read in conjunction with the Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998. This report contains
certain statements of a forward-looking nature relating to future events or the
future financial performance of the Company. Investors are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, investors should carefully consider
the various factors identified in this Report which could cause actual results
to differ materially from those indicated by such forward-looking statements,
including the matters set forth in "--Certain Factors That May Affect Future
Results, Financial Condition and the Market Price of Securities."

License fees for CreditRevue(R) 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 customer's
credit operations and a plan for the configuration and implementation of
CreditRevue(R) according to the customer's 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 and software through various reseller arrangements. However, neither
third-party hardware nor third-party software sales are a focus of the
Company's overall marketing strategy. For the nine months ended September 30,
1999, revenues from third-party hardware and software sales accounted for 6.2%
and 4.3% 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 Company's products and services, including CreditConnection and
CreditRevue(R) Service Bureau, are charged on a per transaction basis. As a
result, the Company anticipates that transaction-based revenue will represent
an increasing proportion of the Company's revenue. The Company's 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 Company's 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 CreditConnection or
CreditRevue(R) Service Bureau, 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 Company's 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 Company's 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


                                       8


<PAGE>   9



Software to be Sold, Leased or Otherwise Marketed. Based on the Company's
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.

As of September 30, 1999, the Company had 17 employees in its sales and
marketing organization. The Company intends to hire additional sales and
marketing personnel in the future to help the Company expand its market
presence. Competition for such personnel is intense, and there can be no
assurance that the Company can retain its existing sales personnel or that it
can attract, assimilate or retain additional highly qualified sales persons in
the future. If the Company is unable to hire such personnel on a timely basis,
the Company's business, results of operations and financial condition could be
materially and adversely affected.

RESULTS OF OPERATIONS

Total Revenues. Total revenues increased 24.4% from $4.2 million in the three
months ended September 30, 1998 to $5.3 million in the three months ended
September 30, 1999. The Company's revenues are derived from four sources:
license and software development fees, maintenance fees, computer hardware
sales and service bureau revenues.

Total revenues increased 51.1% from $11.6 million in the nine months ended
September 30, 1998 to $17.5 million in the nine months ended September 30,
1999. Growth in all revenue categories contributed to improved year-to-year
performance.

License and Software Development Fees. CreditRevue(R) accounted for virtually
all of the Company's license and software development fee revenue through
September 30, 1999. License and software development fees increased 16.8% from
$2.8 million in the three months ended September 30, 1998 to $3.3 million in
the three months ended September 30, 1999. The increases during these periods
resulted from increased market acceptance of CreditRevue(R) and increased
demand for the Company's professional consulting services.

License and software development fees increased 51.6% from $7.0 million for the
nine months ended September 30, 1998 to $10.6 million for the nine months ended
September 30, 1999. Year-to-year revenue growth is the result of strong demand
for the Company's CreditRevue(R) software and professional consulting services.
In addition, during early 1998 the Company experienced delays in obtaining new
CreditRevue(R) clients which contributed to the low revenue levels reported in
the first nine months of 1998.

Maintenance Fees. Maintenance fees include fees from software maintenance
agreements. Maintenance fees increased 7.8% from $1.0 million in the three
months ended September 30, 1998 to $1.1 million in the three months ended
September 30, 1999. The growth in these revenues during the periods presented
was the result of increased maintenance fees associated with the increased
number of licenses of CreditRevue(R) outstanding during such periods.

Maintenance fees increased 23.1% from $3.0 million in the nine months ended
September 30, 1998 to $3.7 million in the nine months ended September 30,
1999. In addition to a growing installed base of CreditRevue(R) systems,
maintenance agreements include annual increases for increases in the Consumer
Price Index (CPI). The Company increased maintenance fees to 18% from 15% for
CreditRevue(R) systems installed after 1998. The increased system base,
scheduled CPI increases and increases to annual maintenance fee percentages all
contributed to the growth in maintenance fee revenue on a year-to-year basis.

Computer Hardware Sales. Computer hardware sales revenue decreased 50.8% from
$0.02 million in the three months ended September 30, 1998 to $0.04 million in
the three months ended September 30, 1999. Computer hardware sales revenue
consists of revenues received from resales of third-party hardware in
connection with the license and installation of the Company's software. The
fluctuation in such revenues during these periods is the result of customer
purchase preferences for computer hardware systems. In certain instances,
CreditRevue(R) 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 nine months ended September 30, 1999 increased
150.7% to $1.1 million


                                       9

<PAGE>   10


compared to $0.4 million for the nine months ended September 30, 1998.
Increased CreditRevue(R) systems sales during the first nine months of 1999 had
a direct impact on the increase in hardware sales during the same period.

Service Bureau Fees. Service Bureau revenues originate from several sources
including: CreditConnection(R) transaction and interface fees, Dun & Bradstreet
OneScore, Portfolio Management transaction and implementation fees and
CreditRevue(R) Service Bureau. Total Service Bureau revenues increased 135.8%
from $0.4 million for the quarter ended September 30, 1998 as compared to $0.9
million for the quarter ended September 30, 1999. The CreditConnection service
generated $505,000 of revenue in the quarter ended September 30, 1999 compared
to $293,000 for the period ended September 30, 1998, an increase of 72.4%. Dun
& Bradstreet OneScore was commercially released in the fourth quarter of 1997,
Portfolio Monitoring and CreditRevue(R) Service Bureau were commercially
released in the first quarter of 1998. These Service Bureau products account
for an aggregate revenue of $367,000 in the quarter ended September 30, 1999
representing an increase of 382.9% over the $76,000 recorded in the quarter
ended September 30, 1998.

Service Bureau fees increased 82.5% from $1.2 million for the nine months ended
September 30, 1998 to $2.1 million for the nine months ended September 30,
1999. Of the total $2.1 million in 1999, CreditConnection(R) related revenues
accounted for $1.3 million up 45.9% from the $0.9 million reported for the
first nine months of 1998. The growth in CreditConnection(R) revenue related to
the increased number of dealers and lenders active on the system at September
30, 1999. The balance of Service Bureau fees for the first nine months of 1999,
totaling $0.8 million, represent revenues related to the CreditRevue(R) service
bureau and the Dun & Bradstreet OneScore and Portfolio monitoring services.
These other service bureau revenues increased 204.0% from $0.3 million to $0.8
million for the nine months ended September 30, 1998 and 1999, respectively.
The increase in other service bureau revenues is attributable to the addition
of an additional account in the CreditRevue(R) service bureau and growth in the
number of clients and transactions for the Dun & Bradstreet related services.

Cost of License and Software Development Fees. Cost of license and software
development fees consist 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 decreased 18.9% from $1.7 million
in the three months ended September 30, 1998 to $1.3 million in the three
months ended September 30, 1999. As a percentage of license fee and software
development revenue, cost of license and software development fees were 73.6%
and 40.7% in the three months ended September 30, 1998 and 1999, respectively.
The net decrease in costs of $0.4 million is the result of improved utilization
of in-house programmers and a greater degree of product standardization for the
systems implemented during this period.

The cost of license and software development fees decreased 3.9% from $5.1
million for the nine months ended September 30, 1998 to $4.9 million for the
nine months ended September 30, 1999. As a percentage of license and software
development revenue, the cost of license and software development fees were
58.6% and 46.6% for the nine months ended September 30, 1998 and 1999
respectively. Several factors contributed to the reduction in costs as a
percentage of revenue. The Company employs programmers and analysts with
expertise in implementing CreditRevue(R) systems. In order to ensure required
skills and knowledge are available to implement new systems, the Company must
retain a core pool of skilled employees even when revenues decline. In the
first nine months of 1998, when there were delays in signing new CreditRevue(R)
clients, the costs of retaining skilled employees caused costs of license and
software development fees as a percentage of license related revenues to be
significantly higher than in prior periods.

In addition a higher degree of product standardization during 1999 contributed
to improved staff utilization and lower costs of implementation. The improved
staff utilization and growth in license and software development revenues
during the first nine months of 1999 resulted in the reduction of costs as a
percentage of revenue.


                                       10


<PAGE>   11



Costs of Maintenance Fees. Cost of maintenance fees consists primarily of
personnel and related costs for customer maintenance and support. Cost of
maintenance fees decreased 34.1% from $0.2 million in the three months ended
September 30, 1998 to $0.1 million in the three months ended September 30,
1999. As a percentage of maintenance fee revenue, cost of maintenance fees was
21.7% and 13.3% in the three months ended September 30, 1998 and 1999,
respectively. Staffing utilization efficiencies will vary based on the timing
and training of additions to maintenance staff personnel. Additionally, the
cost of maintenance for third party software that is resold is included in cost
of maintenance fees for the period ended September 30, 1999.

Cost of maintenance fees decreased 6.7% from $0.8 million for the nine months
ended September 30, 1998 to $0.7 million for the nine months ended September
30, 1999. This decrease in costs relates to improved utilization of maintenance
personnel. Cost of maintenance as a percentage of maintenance revenues were
25.5% and 19.3% for the nine months ended September 30, 1998 and 1999
respectively.

Cost of Computer Hardware Sales. Cost of computer hardware sales consists of
(i) the Company's cost of computer hardware resold to the Company's customers
that are licensing CreditRevue(R) and (ii) salaries and benefits for systems
integration employees. Cost of computer hardware sales increased 2.3% from $0.1
million in the three months ended September 30, 1998 to $0.1 million in the
three months ended September 30, 1999. As a percentage of computer hardware
sales revenue, cost of computer hardware sales was 257.8% and 535.5% in the
three months ended September 30, 1998 and 1999, respectively. The increase in
the cost of computer hardware sales as a percent of revenue is the result of
decreased hardware revenues, while fixed expenses, primarily personnel-related
in nature, remained constant during the same period.

Cost of computer hardware sales increased 119.3% from $0.6 million for the nine
months ended September 30, 1998 to $1.3 million for the nine months ended
September 30, 1999. As a percentage of hardware revenues costs were 140.1% and
122.5% for the nine months ended September 30, 1998 and 1999 respectively.
During the period that costs increased 119.3%, corresponding revenues increased
250.7%. Costs actually exceed revenues because the Company has certain fixed
costs for salaries and benefits for the systems integration staff required to
support hardware sales activities. As hardware margins decline increasing sales
levels are necessary to recover the fixed costs of supporting these revenue
streams.

Cost of Service Bureau Revenues. Cost of service bureau fees consist 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 pass through expenses. Service bureau costs for the three months ended
September 30, 1998 and 1999 were $0.9 million and $0.6 million, respectively.
Cost of service bureau revenues during the three months ended September 30,
1998 exceeded service bureau revenues because of start up costs associated with
establishing the service bureau. During the three months ended September 30,
1999 service bureau revenues, for the first time, exceeded service bureau
costs. As these new services continue to gain market acceptance, corresponding
costs of service bureau fees are expected to decrease as a percent of service
bureau revenues.

Cost of service bureau revenues declined 11.8% from $2.4 million for the nine
months ended September 30 1998 to $2.1 million for the nine months ended
September 30, 1999. The slight reduction in costs relates to staff reductions
and improved staff utilization during 1999. As a percentage of revenues, costs
of service bureau were 206.7% and 99.9% for the nine months ended September 30,
1998 and 1999 respectively. While costs declined 11.8% corresponding revenues
increased 82.5%.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 4.5% from $2.8 million in the three months
ended September 30, 1998 to $2.7 million in the three months ended September
30, 1999. This $0.1 million decrease relates to fluctuations in several areas.
Increases in equipment rental ($0.1 million) and payroll ($0.4 million) were
offset by reductions in travel ($0.2 million), legal ($0.1 million), and rent
expense ($0.3 million). The rental expense reduction relates to subleasing
previously abandoned office space at the Company's former offices. Loss
reserves of approximately $0.3 million were recovered in conjunction with the
sublease transaction.

                                       11



<PAGE>   12



Selling general and administrative expenses increased 9.7% from $7.4 million
for the nine months ended September 30, 1998 to $8.1 million for the nine
months ended September 30, 1999. As a percentage of total revenues, selling,
general and administrative expenses were 63.6% and 46.2% for the nine months
ended September 30, 1998 and 1999 respectively. The increase in selling,
general and administrative expenses of $0.7 million on a year to year basis
relates to increases in payroll (approximately $0.3 million), sales commissions
and incentives (approximately $0.2 million) increases in rent expenses
associated with new offices (approximately $0.4 million), and increased
depreciation expenses (approximately $0.6 million), associated with the new
offices and data center at Annapolis Junction, Maryland. These increases
totaling approximately $1.5 million were offset by reductions in travel
(approximately $0.2 million), and rent expense offsets (approximately $0.6
million). The rent expense offsets relate to recovery of loss reserves upon
subleasing previously abandoned office space under lease by the Company.

Research and Development Costs. Research and development costs consist
primarily of salaries and benefits of in-house programmers. These costs
decreased $0.2 million during the three months ended September 30, 1999 as
compared to the three months ended September 30, 1998 due primarily the
capitalization of certain development costs associated with the Company's
CreditRevue(R) Maestro product. The CreditRevue(R) Maestro product is a robust
automated analysis engine for evaluating and decisioning consumer and small
business credit applications. Technological feasibility of CreditRevue(R)
Maestro was deemed to have occurred November 1, 1998 at which point
capitalization of certain expenses commenced.

The Company has in the past capitalized certain software development expenses.
During the three months ended September 30, 1999, approximately $0.4 million of
expenses related to the development of CreditRevue(R) Maestro were capitalized.
All development activities during the three months ended September 30, 1998
were expensed. During the period from September 1994, the direct payroll costs
of certain programmers were capitalized as software development costs. See Note
1 to Notes to Consolidated Financial Statements in the Company's 10-K or Annual
Report for the year ended December 31, 1998.

Research and development costs decreased 36.3% from $1.6 million for the nine
months ended September 30, 1998 to $1.0 million for the nine months ended
September 30, 1999. During the first nine months of 1999 approximately $1.4
million of research and development expenses related to CreditRevue(R) Maestro
were capitalized in accordance with FASB 86. The capitalization of
CreditRevue(R) Maestro development expenses result in the reduction in research
and development expense on a year to year basis.

Interest Income (Expense). Net interest income decreased to $0.1 million in the
three months September 30, 1999 from $0.2 million in the three months ended
September 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its working capital needs, operating losses and
investments in property and equipment from the net proceeds from the Company's
initial public offering completed in December 1996. During the nine months
ended September 30, 1998, the Company consumed net cash in operating activities
of $7.1 million. During the nine months ended September 30, 1999, the Company
consumed $2.4 million of cash in operating activities. The primary use of cash
in operations during the nine months ended September 30, 1999, was the
reduction of accounts payable of approximately $2.4 million and increases in
prepaids and net billings in excess of costs and estimated gross profit on
uncompleted contracts totaling approximately $1.5 million in the aggregate.

The Company's cash used in investing activities consists principally of
investments in property and equipment. During the nine months ended September
30, 1998 and 1999, the Company invested a total of $2.8 and $0.5 million in
property and equipment, respectively. These investments were directly
attributable to the Company's growth in operations. The Company does not have
any material commitments for the purchase of property and equipment at
September 30, 1999.


                                       12


<PAGE>   13



The Company has historically relied principally on its bank line of credit and
proceeds from its initial public offering completed in December 1996 for its
financing needs. The Company received $22.6 million of net proceeds from its
initial public offering. The Company maintains a secured bank line of credit in
the amount of $1.5 million, of which the balance outstanding at September 30,
1999 was approximately $0.8 million. The line of credit bears interest at the
bank's prime rate per annum (8.5% at September 30, 1999). Further, the bank's
line of credit requires the bank's written consent prior to, among other
things, (i) the payment of cash dividends, (ii) the Company's engagement in a
substantially different business activity, or (iii) the purchase by the Company
of any interest in another enterprise or entity.

The Company currently anticipates that its available cash resources, expected
cash flows from operations, and its bank line of credit will be sufficient to
meet its presently anticipated working capital, capital expenditure and debt
repayment requirements through 1999 and well into 2000.

YEAR 2000 COMPLIANCE

Year 2000 Issue

The Year 2000 issue is a result of computer programs which store or process
date-related information using only two digits to represent the year. These
programs may not be able to properly distinguish between a year in the 1900's
and a year in the 2000's. Failure of these programs to distinguish between the
two centuries could cause the programs to yield erroneous results or even to
fail.

State of Readiness

The Company recognizes the significance of the year 2000 issue and has
implemented a formal year 2000 program to minimize the impact of the year 2000
on the Company and its customers ("Year 2000 Program"). The Year 2000 Program
addresses both information technology ("IT") and non-IT systems, for systems
used by the Company as well as those provided by the Company to its customers.
Non-IT systems are primarily used by the Company in the operation of its
facilities. The Year 2000 Program is implemented by a Year 2000 Team which
includes members from all levels of management and all functional areas of the
Company, as follows:

           -      Executive Sponsor - The Executive Sponsor works with the
                  Senior Technology Executive on budgeting and resources
                  management and other major year 2000 issues, and reports on
                  Year 2000 Program status to the Executive Management of the
                  Company as well as the Board of Directors.

           -      Senior Technology Executive - The Senior Technology Executive
                  manages the Project Managers-Company Wide. Issues relating to
                  budgeting and resources are escalated to the Senior Technology
                  Executive. The Senior Technology Executive also has the
                  authority to prioritize Year 2000 tasks over other project
                  tasks.

           -      Project Managers-Company Wide - The Project Managers-Company
                  Wide share responsibility for determining the Year 2000 tasks
                  that need to be completed, and monitoring the completion of
                  the tasks on schedule. The Project Managers-Company Wide are
                  responsible for collecting, coordinating and disseminating
                  information within the Company about the Year 2000 Program and
                  its status.

           -      System Project Managers - A project manager is assigned to
                  each of the primary areas of the Company. Each System Project
                  Manager is responsible for ensuring that the Year 2000 tasks
                  relating to his/her area are completed on schedule.

           -      Product Project Managers - A project manager is assigned to
                  each specific product. Each Product Project Manager is
                  responsible for ensuring that the Year 2000 tasks relating to
                  that specific product are completed on schedule.

           -      System Analysts - System Analysts review individual products
                  to identify Year 2000 issues.

           -      Developers - Developers perform coding modifications to
                  address year 2000 issues.

           -      Testers - Testing is performed under the guidance of the
                  Quality Services department to ensure that any Year 2000
                  issues have been properly addressed.


                                       13


<PAGE>   14


Individual members of the Year 2000 Team communicate frequently with respect to
Year 2000 issues. The Year 2000 Team meets as a group and reports status
bi-weekly. Subgroups of the Year 2000 Team meet as needed to address specific
issues.

The Company is using employees of the Company to identify and address Year 2000
issues. The Year 2000 Program involves six basic stages: (1) inventory of all
potentially affected software products and software-related services, (2)
analysis of such products and services to identify any areas that require
change or replacement, (3) change or replacement of the identified areas, (4)
testing, (5) implementation of the changes or replacements, and (6) contingency
plans. Because the Company is not only a user of software products and
software-related services, but also provides software products and
software-related services to its customers, the Company's Year 2000 Program
addresses both software products and software-related services used by the
Company and those provided by the Company to its customers.

The Company has established written Year 2000 coding standards which have been
distributed to the Company's system analysts, developers and testers. The
Company has also conducted training for its system analysts, developers and
testers to ensure that they are familiar with the Company's Year 2000 coding
standards.

For purposes of the Year 2000 Program, the Company has classified into the
following three major categories the software products and software-related
services provided by the Company to its customers: credit decisioning systems
(existing systems and new systems), e-commerce systems, and service bureau
systems.

Credit Decisioning Systems (Existing). For existing credit decisioning systems
(i.e., systems which customers were using in production at the time the Year
2000 Program was applied to the system), the Company performs the following
activities:

         1.   The customer's credit decisioning system is analyzed to identify
              any Year 2000 issues and to determine whether any modifications
              to the code are required. The analysis is conducted in accordance
              with detailed procedures which were developed internally by the
              Company for Year 2000 analysis of its credit decisioning systems.

         2.   The Year 2000 modifications are made.

         3.   The modifications are tested. The customer also has an
              opportunity to test the modifications.

         4.   Following the testing, the modifications are installed in the
              customer's system.

         5.   Any enhancements to the customers' credit decisioning system
              since the completion of the procedures described in items 1-4
              above were developed and implemented by the Company under its
              Year 2000 Coding Standards. As an extra safeguard, however, the
              Company conducts a follow-up Year 2000 analysis of these
              enhancements.

Credit Decisioning Systems (New). For new credit decisioning systems (i.e.,
systems which were not used by customers until after the Year 2000 Program was
applied to the system), the Company performs the following activities:

         1.   Each new credit decisioning system starts with a "base" system.
              The base system is analyzed for Year 2000 issues.

         2.   Enhancements are made to the base system based on the functional
              specifications agreed to between the Company and the customer,
              and the enhanced system is delivered to the customer for user
              acceptance testing.

         3.   Before or concurrent with the user acceptance testing, the
              Company reviews the code enhancements for compliance with the
              Company's Year 2000 coding standards.

         4.   The Company implements required modifications on the test system
              at the Company's site, and tests the modifications.

         5.   Upon completion of testing of the changes by the Company, the
              software changes are reported to the customer and installed in
              the customer's system for further testing by the customer.

         6.   With respect to any enhancements to the credit decisioning system
              after acceptance by the customer of the system, the Company
              performs the enhancements in a test environment. The enhancements
              are then analyzed and tested for Year 2000 issues following the
              above approach.



                                       14

<PAGE>   15



E-commerce Systems. For e-commerce systems, the Company performs the following
activities:

         1.   The Company analyzes the software programs supporting the
              e-commerce system to identify any Year 2000 issues and determines
              whether any modifications are required. The Company also
              coordinates with the vendor of any hardware and other equipment
              supporting the e-commerce system to request Year 2000 information
              regarding the applicable product and to determine whether any
              patches, upgrades or replacements are necessary. The Company also
              tests the third party product where necessary, appropriate and
              feasible.

         2.   Any necessary modifications are made to the software programs
              supporting the e-commerce system. In addition, any necessary
              patches or upgrades to, or replacements of, third party products
              are installed.

         3.   The Company analyzes and tests the modifications, patches,
              upgrades and replacements. The Company makes the Year 2000
              version of the software programs supporting the e-commerce system
              available to its customers in a Year 2000 environment for testing
              of the modifications. The customer schedules the testing with the
              Company.

         4.   The modifications, patches, upgrades and replacements are placed
              into production.

         5.   With respect to any subsequent enhancements to the e-commerce
              system, the enhancements are performed in a test environment. The
              enhancements are then analyzed and tested for Year 2000 issues
              following the above approach prior to being placed into
              production.

Service Bureau Systems.  For service bureau systems, the Company performs the
following activities:

         1.   The "base" service bureau system is analyzed for compliance with
              the Company's Year 2000 coding standards.

         2.     The Year 2000 modifications are made.

         3.     The modifications are tested.

         4.   For any subsequent releases, the Company analyzes the changes for
              compliance with the Company's Year 2000 coding standards. The
              Company makes any required modifications to the code.

         5.   The Company tests the modifications.

         6.   Following the testing, the release is ready to be delivered to
              the customer.

Infrastructure.  For products and systems used by the Company internally, the
Company performs one or more of the following activities:

         1.   The Company contacts the provider of the product or system in
              writing to request information regarding the Year 2000 readiness
              of its product or system, and evaluates the response for
              reasonableness and acceptability, based on CMSI's knowledge of
              the product or system.

         2.   The Company obtains Year 2000 compliance information from the
              third party's web site and evaluates the response for
              reasonableness and acceptability based on the Company's knowledge
              of the product or system.

         3.   The Company tests the product or system where appropriate and
              possible.

         4.   For any third party products or systems that require
              modifications, the Company works with the vendor to ensure that
              the modifications are completed in an acceptable time frame.

As the Company does not have any control over the third party providers of
products and systems, the Company cannot guarantee that such third party
products and systems will not suffer any adverse effects due to the Year 2000.

As of September 30, 1999, approximately 93% of the analysis, remediation and
testing had been completed, collectively, for the Company's customers' credit
decisioning systems. As of September 30, 1999, the analysis, remediation,
testing and implementation had been substantially completed for the software
and systems comprising the Company's e-commerce systems. Because certain of the
Company's service bureau customers are currently not scheduled to upgrade to
the year 2000 releases of their software before the end of 1999, the Company is
in the process of analyzing, remediating, and testing the changes necessary to
prepare


                                       15

<PAGE>   16
these customers' existing systems for the year 2000. As of September 30, 1999,
approximately 40% of the total analysis, remediation, testing and implementation
had been completed for all the Company's service bureau customers systems. The
Company is scheduled to complete these procedures and make any necessary changes
available to the services bureau customers during the fourth quarter of 1999. As
of September 30, 1999, approximately 95% of the analysis, remediation, testing
and implementation had been completed for the Company's internal products and
systems, which is scheduled to be completed early during the fourth quarter of
1999. The Company has also implemented analysis and testing procedures to ensure
that any enhancements to a system following the completion of the analysis,
remediation, testing and implementation of that system do not contain any year
2000 issues.

In most cases, the software products and software-related services provided by
the Company interface to third party systems. In cases where a third party has
provided Year 2000 interface specifications, the Company is developing, testing
and implementing new interface code to comply with those specifications. While
the Company continues to receive changes to interface specifications from
certain third parties, the Company intends to complete and implement the
changes during the fourth quarter of 1999.

The Year 2000 activities described above relating to credit decisioning
systems, e-commerce systems, service bureau systems and third party products
and systems represent the standard procedures applied to the applicable system.
In certain circumstances, the Company may make changes to or deviate from these
procedures.

Costs

As of September 30, 1999, substantially all expenses have been associated with
the opportunity cost of time spent by employees of the Company on the Year 2000
Program, particularly on the analysis, development, testing and implementation
relating to software products and software-related services provided to
customers. The Company estimates that the opportunity cost incurred as of
September 30, 1999 is approximately $1.9 million. This cost can be allocated as
follows: $0.9 million to credit decisioning systems, $0.3 million to E-commerce
systems, $0.7 million to service bureau systems, $0.1 million to internal
products and systems, and $0.4 million to Year 2000 Program management, project
oversight, and client and vendor communications. To complete the Year 2000
Program, in addition to the opportunity costs of employees' time, the Company
may also need to purchase replacement products. The Company's projected costs of
the entire Year 2000 Program is $2.4 million. A substantial portion of the
remaining budget is allocated for senior management, customer and vendor
communications, as well as contingency plans.

Risks

If a product or service provided by the Company is found to cause damage or
injury to a customer of the Company due to a failure of such product or service
to operate without any adverse effect due to date related processing associated
with the year 2000, the Company could be liable to such customer for a breach
of warranty, depending on the specific contractual arrangement between the
Company and such customer. Although the Company's contractual arrangement with
each of its customers generally limits the Company's liability to such
customer, the Company cannot accurately predict whether or to what extent any
legal claims will be brought against the Company, or whether the Company will
otherwise be adversely affected by such claims.

In addition, a failure by the Company to make its products year 2000 compliant
could result in a decrease in sales of the Company's products, delays in the
development of other of the Company's products, an increase in the costs
associated with year 2000 remediation, and an increase in litigation costs. The
year 2000 issue may also have an indirect effect on the Company's business and
operations to the extent that potential customers of the Company may be using
significant resources to address year 2000 issues, and therefore may have fewer
resources to evaluate and purchase other products and services such as the
products and services offered by the Company. If a material third party product
or system which the Company uses or interfaces to fails to operate properly due
to the year 2000, such failure could have a material adverse effect on the
Company's business and results of operations.


                                       16


<PAGE>   17



Contingency Plans

The Company will have a dedicated year 2000 support staff which will be
prepared to address year 2000 issues. While the Company is currently finalizing
the plans for the year 2000 support staff, the Company continues to investigate
and develop additional contingency plans which could be implemented if
necessary.

ITEM 3.   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 Company's 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 new services, including the Company's CreditConnection and
CreditRevue(R) Service Bureau, the demand for the Company's products and
services, the successful distribution and implementation of the Company's
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 Company's sales cycle, the size and timing of
individual transactions, the delay or deferral of customer implementations, the
Company's 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
Company's products or services typically involves a significant commitment of
customer resources and is subject to the budget cycles of the Company's
customers. Licenses of CreditRevue(R) 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 Company's revenue and quarterly results
of operations. The timing of revenue is difficult to predict because of the
length and variability of the Company's 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 Company's
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 Company's
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 Company's 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 Company's Common Stock. Due to all of the
foregoing factors, it is likely that in some future quarter the Company's
results of operations will be below the expectations of public market analysts
and investors. In such event, the market price of the Company's Common Stock
will be materially and adversely affected.

Dependence on CreditRevue(R) Product Line. License fees, maintenance fees and
third-party computer hardware sales associated with licenses and installations
of CreditRevue(R) accounted for the majority of all the Company's revenues
through September 30, 1999. Although the Company has introduced its
CreditConnection(R) service, the Company expects that revenues generated from
licenses and installations of CreditRevue(R) will continue to account for a
significant portion of the Company's revenues for the


                                       17


<PAGE>   18


foreseeable future. The life cycles of the Company's 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 Company's products and services, and
competition in the Company's marketplace. A decline in the demand for
CreditRevue(R) whether as a result of competition, technological change, price
reductions or otherwise, would have a material adverse effect on the Company's
business, results of operations and financial condition.

Lengthy Sales and Implementation Cycle. The licensing of the Company's 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
Company's products and services. In addition, the implementation of the
Company's software products involves a significant commitment of resources by
prospective customers and is commonly accompanied by substantial reengineering
efforts and a review of the customer's credit analysis, decisioning and funding
processes. The cost to the customer of the Company's 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
Company's 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 Company's 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
Company's business, results of operations and financial condition and cause the
Company's results of operations to vary significantly from quarter to quarter.

Market Acceptance of CreditConnection; Transition to Transaction-Based Revenue.
The Company's CreditConnection service was commercially introduced in 1996 and
the Company's CreditRevue(R) Service Bureau service was commercially introduced
in January, 1998. The CreditConnection service and the CreditRevue(R) Service
Bureau service (as provided by third parties to which the Company licenses the
CreditRevue(R) Service Bureau) are projected to account for a significant
portion of the Company's 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 services will be commercially successful. The failure
of the Company to generate demand for CreditConnection or CreditRevue(R)
Service Bureau or the occurrence of any significant technological problems with
such services would have a material adverse effect on the Company's business,
results of operations and financial condition. Further, the CreditConnection
service has taken longer to commercialize than originally anticipated. Although
the Company is exploring additional distribution options to further enhance the
CreditConnection service, there can be no assurance that any such channels will
be available to the Company on commercially reasonable terms, or at all. The
failure of the Company to successfully commercialize the CreditConnection
service would have a material adverse effect on the Company's business,
financial condition and results of operations. Historically, virtually all of
the Company's revenues have been derived from license fees, maintenance fees
and hardware sales associated with licenses and installations of CreditRevue(R)
 . Under the terms of its license agreements, a majority of the Company's
revenues are realized during the configuration and installation of
CreditRevue(R). However, the Company anticipates that a significant portion of
the Company's future revenues will be derived from per-usage transaction-based
fees charged to credit originators and financial institutions for transactions
originated from the CreditConnection and CreditRevue(R) Service Bureau
services. 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 Company's 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


                                       18


<PAGE>   19



significantly greater financial and marketing resources than the Company, will
not develop or market products and services which will compete with the
Company's 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 Company's business, results of operations and
financial condition.

In addition, the Company has formed strategic alliances with Automatic Data
Processing (ADP), Universal Computer Systems (UCS) and Advent Resources
(Advent) 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, Advent 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 Company's 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 Company's revenues. License fees for CreditRevue(R) 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 Company's software. The
Company receives continuing revenues on CreditRevue(R) 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 Company's 10 largest customers
accounted for 55.4% and 48.8% of total revenues in 1998 and 1997, respectively.
One of the Company's customers accounted for 10% or more of total revenues in
1998 and none of the Company's customers accounted for more than 10% of total
revenues in 1997. 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
Company's business, results of operations and financial condition.

Dependence on Consumer Retail Lending Industry; Cyclical Nature of Consumer
Lending. The Company's 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 Company's products and services. Furthermore,
banks in the United States are continuing to consolidate, decreasing the
overall potential number of customers for the Company's 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 Company's
business, results of operations and financial condition.

Management of Changing Business. The Company has experienced significant
changes in its business, such as an expansion 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 Company's
management, systems and resources. As of September 30, 1999, the Company had
declined to 186 employees from 205 employees at September 30, 1998. The
Company's ability to compete effectively and to manage future changes will
require the Company to continue to improve its financial and management



                                       19



<PAGE>   20



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 Company's
failure to do so could have a material adverse effect upon the Company's
business, results of operations and financial condition.

Dependence on Key Personnel. The Company's 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
Company's executive officers could have a material adverse effect on the
Company's 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. The Company has no employment agreements and does not
intend to enter into any such agreements in the foreseeable future. The
Company's 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 Company's existing products or services
obsolete or unmarketable. Accordingly, the life cycles of the Company's
products are difficult to estimate. The Company's 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 Company's 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 Company's current
products operate in the UNIX operating system. Although the Company's 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 Company's 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 Company's
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 Company's competitors may cause customers to
defer or forgo purchases of the Company's products or services, which could
have a material adverse effect on the Company's business, results of operations
and financial condition.

System Interruption and Security Risks; Potential Liability; Possible Lack of
Adequate Insurance; and System Inadequacy. The Company's 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 Company's control. The Company's
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.
During 1997, the Company implemented a limited redundant data


                                       20


<PAGE>   21


center. 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, have become the primary production center for the Company's data
processing needs. The Company has determined it to be more cost effective to
obtain back up data center coverage under contract form third parties rather
than upgrade its former data center in Columbia, Maryland. The Company is in
discussions with third parties to establish a diaster recovery site and expects
to have this coverage in effect by the end of the first quarter 2000. 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 Company's operations could
have a material adverse effect on the Company's 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 Company's
services, which may result in significant liability to the Company and also may
deter potential customers from using the Company's 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 Company's
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 Company's 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 Company's operations could have a material
adverse effect on the Company's 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 Company's 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 1999
and into 2000. 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 Company's 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


                                       21



<PAGE>   22



material adverse effect on the Company's business, results of operations and
financial condition.

Government Regulation and Uncertainties of Future Regulation. The Company's
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 Company's 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 Company's 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 Company's
business, results of operations and financial condition.

Control by Existing Stockholders. Assuming no exercise of outstanding options,
James R. DeFrancesco, Director and Co-founder and Scott L. Freiman, President,
Chief Executive Officer and Co-founder, collectively beneficially own
approximately 60% 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 Company's
Common Stock unless the terms are approved by such stockholders.

Possible Volatility of Stock Price. The trading price of the Company's 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 Company's Common Stock.

Effect of Certain Charter Provisions; Anti-takeover Effects of Certificate of
Incorporation, Bylaws and Delaware Law. The Company's 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 Company's Certificate
of Incorporation, including provisions that create a classified Board of
Directors, and certain provisions of the Company's Bylaws and of Delaware law
could delay or make more difficult a merger, tender offer or proxy contest
involving the Company.


                                       22



<PAGE>   23


                          PART II -- OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          The Company is not a party to any material legal proceedings.

ITEM 2.   CHANGES IN SECURITIES

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

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

          None.

ITEM 5.   OTHER INFORMATION

          None.

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(R)
                Licensees)*

      10.6      Form of CreditConnection Lender Agreement (for non-CreditRevue
                (R) Licensees)*

      10.7      Form of CreditConnection Dealer Subscription Agreement*




                                       23


<PAGE>   24



    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*

      10.9      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*

        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 Company's
         Registration Statement on Form S-1, File NO. 333-14007.


                                       24


<PAGE>   25


                                   SIGNATURES

         Pursuant 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.

                                              CREDIT MANAGEMENT SOLUTIONS, INC.
                                              ---------------------------------
                                                         (Registrant)

Date: November 15, 1999              /s/ Scott L. Freiman
                                    -------------------------------------------
                                       Scott L. Freiman
                                       President and Chief Executive
                                       Officer and (Principal Executive Officer)

Date: November 15, 1999                /s/ Robert P. Vollono
                                    -------------------------------------------
                                       Robert P. Vollono
                                       Senior Vice President,
                                       Treasurer, Chief Financial
                                       Officer and Director
                                       (Principal Financial and
                                       Accounting Officer)



                                       25


<PAGE>   26



                       CREDIT MANAGEMENT SOLUTIONS, INC.

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.       Description                                                                                  Page
-----------       -----------                                                                                  ----
<S>               <C>                                                                                         <C>
      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(R)
                  Licensees)

     10.6         Form of CreditConnection Lender Agreement (for non-CreditRevue(R)
                  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

     10.9         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
</TABLE>





<PAGE>   27


<TABLE>
<S>               <C>
    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

       27         Financial Data Schedule
</TABLE>