September 20, 2010 - 4:17pm EST by
2010 2011
Price: 4.20 EPS $0.12 $0.17
Shares Out. (in M): 8 P/E 0.0x 0.0x
Market Cap (in $M): 33 P/FCF 35.0x 25.0x
Net Debt (in $M): 0 EBIT 2 3
TEV ($): 27 TEV/EBIT 18.0x 10.8x

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Description is a digitized database company.
The overall focus of the Company's totally digital services is on facilitating the extension of trade credit from one business to another at accessed through annual subscription licenses. CRMZ provides licensed subscribers paying an annual low fee of $4,000 or $8,000, depending on domestic or world wide coverage, and additional "passes" at $800 or $1,500 per provides public and proprietary information, designed to save time for corporate credit professionals. CRMZ may be considered in competition with Dun & Bradstreet and but encourages clients to take CRMZ's service in addition to DNB, which most do because of CRMZs considerable added value. The Company publishes comprehensive commercial credit reports covering public companies worldwide, including detailed financial statements, ratio analysis and trend reports, peer analyses, Altman Z" default  scores, FRISKtm scores, credit limit recommendations, company background information, plus Moody's Investors Service ("Moody's") and Standard & Poor's ("S&P") ratings. The service also includes trade payment data and public filings (i.e., suits, liens, judgments and bankruptcy information) on millions of U.S. companies. In addition, the service provides continuous filtered news monitoring that keeps subscribers up to date on events affecting the creditworthiness of companies, including FRISKtm score reports, credit limit alerts, financial statement updates, SEC filings, Moody's and S&P rating changes, credit-relevant news stories and press releases.

I find their financial spreadsheet analyses superior in many ways to my Bloomberg Professional service, particularly the FA and alerts functions. I would recommend all VIC members call the CEO Jerry Flum and ask for free access to his service which I believe he will be glad to provide to you as CRMZ is not marketing to analysts or portfolio managers or the Street and he probably would not at all mind if you became familiar with his site, service, company and stock. has a stock market valuation that is miniscule relative to its potential scale of operations. Although a tiny company it is one with extraordinary financial metrics potential. As to size, has an equity market capitalization of about $33 million, 57 employees, and based on Q-2-10 is operating today at a revenue run rate of $9.2 million. It has achieved revenue growth for the last twenty-four straight sequential quarters and annually in eleven of its twelve years since it began serious commercial operations in 1999, increasing its sales from $1.26 Million to $9.2 million at the mid 2010 year run rate, and btw its business is neither seasonal nor cyclical. It turned profitable in 2005 and its bottom line of recurring income has been growing annually since.

The following three tables are good examples of the many spreadsheets available to the CRMZ site service. The first one shows the recent year over year quarterly P & L results. Note the steady improvements in the ratios. As revenues grow the expenses will not follow and the various operating margins should be expected to continue to rise meaningfully over the years ahead. The second table shows the liquidity Ratios an dollars of YOY C.A. The third provides balance sheet data. Notice the biggest increase in last four years was cash which increased nearly 2.8 times. Basically the right side of the balance sheet is void of entries, the only significant liability item is Other current liabilities which are the annual subscriptions paid for in advance i.e. the cash float., Inc.
704 Executive Boulevard
Suite A
Phone: (845) 230-3000 begin_of_the_skype_highlighting              
(845) 230-3000      
Valley Cottage, NY  10989  S

Performance Ratios - Year-over-Year
(Thousands of U.S. Dollars)
Period Ended
3 mos
3 mos
3 mos
3 mos
3 mos
Net Sales $ $2,305 $1,922 $1,404 $1,233 $1,058
  % change 19.93% 36.89% 13.87% 16.54% 11.37%
Gross Margin $ $1,732 $1,357 $956 $825 $686
  % change 27.63% 41.95% 15.88% 20.26% 1.93%
  % of sales 75.13% 70.60% 68.09% 66.91% 64.84%
  change as % of incremental sales 97.91% 77.41% 76.61% 79.43% 12.04%
SG&A $ $1,347 $1,305 $921 $754 $776
  % change 3.22% 41.69% 22.15% -2.84% 6.16%
  % of sales 58.45% 67.90% 65.60% 61.15% 73.35%
  change as % of incremental sales 10.97% 74.13% 97.66% -12.57% 41.67%
Operating margin $ $353 $27 $14 $54 ($107)
  % change 1,207.41% 92.86% -74.07% 150.47% -110.43%
  % of sales 15.31% 1.40% 1.00% 4.38% -10.11%
  change as % of incremental sales 85.12% 2.51% -23.39% 92.00% -1,049.07%
EBITDA $ $398 $40 $43 $88 ($73)
  % change 895.00% -6.98% -51.14% 220.55% -106.96%
  % of sales 17.28% 2.08% 3.06% 7.14% -6.90%
  change as % of incremental sales 93.47% -0.58% -26.32% 92.00% -1,038.89%
Pre-tax income $ $367 $15 $20 $62 ($103)
  % change 2,346.67% -25.00% -67.74% 160.19% -110.14%
  % of sales 15.92% 0.78% 1.42% 5.03% -9.74%
  change as % of incremental sales 91.91% -0.97% -24.56% 94.29% -1,036.11%
Net income (loss) $ $219 $14 $20 $57 ($103)
  % change 1,464.29% -30.00% -64.91% 155.34% -110.14%
  % of sales 9.52% 0.73% 1.42% 4.62% -9.74%
  change as % of incremental sales 53.52% -1.16% -21.64% 91.43% -1,036.11%
Tax expense $ $147 $1 $0 $5 $0
  Effective tax rate 40.19% 6.67% 0.00% 8.06% 0.00%
Depreciation expense $ $32 $25 $20 $17 $17
  % of sales 1.39% 1.30% 1.42% 1.38% 1.61%
  % of capital expenses 48.81% 33.78% 64.52% 850.00% 113.33%
  % of PP&E, net (annualized) 45.32% 45.25% 47.90% 62.10% 47.55%
Capital expenditures $ $65 $74 $31 $2 $15
  % change -12.16% 138.71% 1,450.00% -86.67% 36.36%
  % of PP&E, net (annualized) 92.84% 133.94% 74.25% 7.31% 41.96%
  % of working capital (annualized) 33.75% 143.00% -330.67% -4.29% -22.68%
Interest coverage ratio n/a n/a 14.33 8.80 (5.62)
  % change n/a n/a 62.88% 256.71% -109.10%
Free cash flow $ $924 $486 $269 $237 $37
  % change 90.12% 80.67% 13.50% 540.54% -97.00%
Source: 10-Q

Liquidity Ratios - Year-over-Year
(Thousands of U.S. Dollars)
Period Ended
3 mos
3 mos
3 mos
3 mos
3 mos
Current assets $ $7,378 $5,783 $4,080 $3,745 $2,803
  % change 27.58% 41.74% 8.95% 33.61% 3.05%
  % of short-term debt n/a n/a n/a 2,815.79% 1,933.10%
Current liabilities $ $6,435 $5,583 $4,185 $3,903 $3,127
  % change 15.26% 33.41% 7.23% 24.82% 8.58%
Working capital $ $943 $200 ($105) ($158) ($324)
  % change 371.50% 290.48% 33.54% 51.23% -102.50%
  % of sales (annualized) 10.23% 2.60% -1.87% -3.20% -7.66%
Cash $ $6,043 $4,742 $3,237 $2,717 $2,181
  % change 27.44% 46.49% 19.14% 24.58% 2.73%
  % of short-term debt n/a n/a n/a 2,042.86% 1,504.14%
Cash ratio 0.94 0.85 0.77 0.70 0.70
  % change 10.57% 9.81% 11.12% -0.20% -5.39%
Quick assets $ $7,273 $5,623 $3,928 $3,599 $2,672
  % change 29.34% 43.15% 9.14% 34.69% 2.89%
  % of short-term debt n/a n/a n/a 2,706.02% 1,842.76%
Quick ratio 1.13 1.01 0.94 0.92 0.85
  % change 12.22% 7.31% 1.79% 7.91% -5.23%
Current ratio 1.15 1.04 0.97 0.96 0.90
  % change 10.70% 6.25% 1.61% 7.04% -5.08%
Source: 10-Q
Balance Sheet - Year-over-Year - Standardized
(Thousands of U.S. Dollars)
As of
Current Assets:
  Cash and short term investments $6,043 $4,742 $3,237 $2,717 $2,181
  Accounts receivable (trade), net 1,230 881 691 882 491
  Other current assets, total 105 160 152 146 131
Total current assets 7,378 5,783 4,080 3,745 2,803
Non-Current Assets:
  Property/plant/equip., net 295 245 172 102 142
  Goodwill, net 1,954 1,954 1,954 1,954 1,954
  Other long term assets, total 680 36 34 33 36
Total assets $10,307 $8,018 $6,240 $5,834 $4,935
Current Liabilities:
  Accounts payable $48 $27 $61 $59 $79
  Accrued expenses 488 509 334 234 149
  Current port. LT debt/capital leases n/a n/a 0 133 145
  Other current liabilities, total 5,898 5,047 3,790 3,477 2,754
Total current liabilities 6,435 5,583 4,185 3,903 3,127
Non-Current Liabilities:
  Long term debt n/a n/a 0 221 350
  Capital lease obligations n/a n/a n/a n/a 4
  Other liabilities, total n/a 0 6 68 97
Total liabilities 6,435 5,583 4,191 4,192 3,578
Shareholders' Equity:
  Common stock 79 78 77 77 77
  Additional paid-in capital 28,408 28,306 28,254 28,198 28,138
  Retained earnings/accum. deficit (24,615) (25,949) (26,280) (26,632) (26,857)
Total equity 3,873 2,435 2,051 1,643 1,358
Total liabilities & shareholders' equity $10,307 $8,018 $6,242 $5,835 $4,936
Supplemental Information:
  Total common shares outstanding 7,899 7,849 7,699 7,694 7,679
Source: 10-Q
Background for this type of recommendation
Thinly traded stocks are appealing to for a variety of reasons including these. Most professional investors will not invest in them because it takes "forever" to build meaningful positions, and then if they did, they worry about how they would ever get out. Their standard set of three questions are: "How are you going to buy enough?" "What is going to make the stock go up?" And then "How are you going to get out?" These questions have always been music to our ears as they indicate there will be little or no competition to buy these stocks, until that is, they "grow up." Given a long-term focus however, when the time comes and a catalyst to bring out value arrives - and it almost always occurs if you are willing to exercise great patience - rewards can be great. By the same token the prices accorded inactive, thinly traded stocks, at which they are typically available for purchase - normally in very small or even tiny amounts, which many investors are unwilling to deal with - are at a considerable discount from where they would trade were they not inactively traded, and hence can frequently be bargain priced relative to comparable investments in the very same industry or business often in absolute and always relative to peers given the investment merits and features of its metrics.

Such was certainly the case And contuse to be the case for example with Compass Knowledge Holdings (CKHI) which we submitted to VIC on 12/30/2008 @ $0.60 per share, or an adjusted $15,000 per share after a 55,000 for 1 reverse split in May 09, and which now is still bargained priced at last sale price of $53,000 where it is inactively trading at an estimated 5 or 6 times 2010 possible eps, But we are about CRMZ here.,
which might from its name, seem so "dot com-ish", i.e. late 1990's - 2000-ish, and therefore you might not think would be a year 2010 investment, is another appealing thinly traded stock. I learned many, many years ago, neither judge a book by its cover, nor a stock by its name.

Contrast this description of Dun & Bradstreet (DNB) in its own 10-K words -
Our traditional solutions, which includes our DNBi® Solution [an internet based service] and also consists of reports from our database used primarily for making decisions about new credit applications, constituted 48% of our total revenue

DNB has a pretax profit margin of approximately 26% which has been stable at this level for some years. Revenues actually declined 2.6% in 2009)

-- with this description of (CRMZ) in its own 10-K words -

The overall focus of the Company's services is on facilitating the extension of trade credit from one business to another. CRMZ (see our website at is [entirely] an internet-based publisher of financial information, designed to save time for busy corporate credit professionals, which competes with Dun & Bradstreet, Inc. ("D&BTM") and other firms.

The 48% of revenues DNB speaks of amounts to $810 million of which $133 million is internet based. CRMZ's revenues last year were $7,848,010, less than one percent of DNB's internet business revenues, and are entirely internet based. CRMZ's pretax margin last year was 10.5%, up from 6.4% the prior year and is expected to continue to rise rapidly - faster than revenues grow - in the years ahead, to more than DNB's margins because CRMZ is 100% a digital internet
database business whereas DNB is not and also CRMZ is tiny and its revenues are growing quickly while its costs are not - except for one possible reason I will mention in a bit.

CRMZ has an ongoing effort to add and train telemarketers and very importantly working to build its database of private companies and gathering information on their trade payment habits etc. As the company is very conservative in its accounting, expenses for none of this are capitalized and spending is uneven, the march to profit margins significantly larger than those of DNB, while I expect will be relentless, will undoubtedly be in an uneven fashion until critical mass is achieved, and until another potential new product with recurring revenues the company might even be working on is either abandoned or is developed and exploited. Expenses for projects will weigh on earnings for sometime. In failure mode the expenses will go away and profit margins will therefore rise. In success mode the revenues can soar, and in my view outstrip the existing trade credit business, and profit margins will take a giant leap forward akin to the highest found in any business today.

Basic to CRMZ today is a business-to-business transaction, for example the purchase and sale of $20,000 of merchandise, where the seller usually will ship before the buyer pays - this is an extension of trade credit by the seller. The seller takes a financial risk extending this credit, referred to as "trade credit risk." The buyer may pay late, causing the seller to incur increased borrowing costs; the seller may incur extra costs in attempting to collect the $20,000; or the buyer may never pay the full $20,000. Amounts unlikely to be repaid are called "bad debt." If buyers fail to pay, the seller can suffer substantial losses (e.g., assuming the seller averages a 10% pre-tax margin it will take about $10 of sales to offset each $1 of bad debt). For this reason one $4,000 annual CRMZ subscription can save the business in this example from incurring a $20,000 bad debt.

CRMZ's service is usually purchased by a seller to review the risks of extending trade credit to its customers. With the downsizing of corporations and the related reductions in credit departmental budgets and personnel, corporate credit professionals have to do more with less. It is also notable that trade credit decisions are often made under intense time pressure. Simultaneously there has been an explosive growth in the volume of data about businesses. Credit professionals are often faced with an overwhelming amount of available data concerning important customers, while the time for research and analysis is severely limited. CRMZ packages the necessary information in such a way as to far and away, I believe, be the best and most efficient available anywhere today. As an aside, s mentioned above, I use a Bloomberg Professional terminal in my daily work at a cost of about $25,000/year. In the past year or so I have increasingly been using CRMZ analytics spreadsheets, SEC and other news services as well as some of its unique proprietary metrics. CRMZ's cost is one-sixth of Bloomberg's annual fee. True I still need Bloomberg. In similar fashion, increasingly clients take CRMZ service but likewise still take DNB subscriptions. The two situations are, and I clearly experienced it first hand, analogous. With a CRMZ subscription customers can however, prevent DNB price increases and even obtain price reductions (something we can't do with Bloomberg) as they use CRMZ where there is duplication of a given creditor's information and CRMZ also has it in better format and with more information important to the credit manager.

The CRMZ model metrics is a rather low few thousands of dollars for an annual subscription and still lower additional annual password user fees. DNB fees are extremely higher. As a matter of fact CRMZ tells its growing list of clients (I believe they now include some 300 of the Fortune 1,000) to maintain their DNB relationship so if CRMZ's data base coverage does not include a company, DNB's service may be used. In the process the DNB usage fees can be reduced and
enable CRMZ to continue to be an extremely cost effective service. Because DNB already has virtually all possible clients in the world needing credit information they are fee reduction constrained unless they do not want to increase revenues and profits which already require regularly increasing subscription fees. By the way CRMZ receives the annual cash subscription fee up front but records revenues ratably over the following twelve months. Very conservative. While on finances I should also mention the balance sheet is extremely strong with lots of cash and no liabilities other than the 12 month subscriptions paid in advance. And last year an annual dividend was instituted. CRMZ paid a 10 cent/share dividend in December and recently this year declared a 5 cent/share dividend - to beat the threatened dividend tax hike no doubt.

I would also point out that saving money is not the first or only reason clients are "flocking" to CRMZ. My research - I spoke with numerous credit managers and other users - has confirmed that better, more presentable and unique information, which has the benefit of users doing their work in speedier fashion, is the number one reason subscribers use (and rarely every give up using) CRMZ.

Business Model
There are some 40,000 members of the National Association of Credit Management, plus any number of personnel performing such functions who are not members of this association. Their task is to evaluate whether and on what terms to extend credit to corporate purchasers of products and services, since as a matter of course corporate purchases are made on credit. The business-to-business market for private company trade credit analysis is both far larger and more critical to many users than for public companies. CreditRiskMonitor has such a service but it is an ongoing, very slow and very tedious job to build it.

The CreditRiskMonitor business model is based on the establishment of a virtually labor free production and distribution process and on the following facts and judgments:

·  The Internet has enabled a cost/pricing structure of an entirely different order of magnitude than traditional credit reporting, such as produced by Dun & Bradstreet. It is often suspected that the prices of credit reports are far too high, a legacy from an era in which companies such as Dun & Bradstreet occupied a bottleneck to information
access. Dun & Bradstreet still enjoys 25% net income margins.

 At a price that is an order of magnitude lower, there exists significant demand for basic credit information. CreditRiskMonitor's product costs $3,500 per year for unlimited usage. Although it is notoriously difficult to obtain definitive pricing information from the major credit reporting agencies, it is believed that pricing for Dun & Bradstreet services can easily be 10 times greater for regular users of such services.

·  Its sole mode of distribution, the Internet, removes a traditional limitation on growth for small service companies. One of the primary barriers to growth for CreditRiskMonitor until the late nineties was that 60% of its prospective subscribers had no Internet

·  The utility of low-cost access has increased as years of cost reduction programs at corporations have reduced the size and budgets of credit departments. While far more pure data is available, via the Internet, to be useful to credit managers with limited time, resources and, perhaps, expertise, it must be customized to their needs (turned into information) - the traditional need for this service has not changed.

·  The price of the service is so low that it is less than the likely loss from a poor credit decision at virtually the lowest level of significance for a corporate subscriber. It therefore has the potential to expand the audience for trade credit analysis service (i.e., to those who, effectively, self-insure) well beyond the traditional universe of those entities that can afford tens of thousands to over $100,000 per year.

·  As a subscription-based business, it has a recurring revenue stream. Its cost structure should continue to steadily decline over time, since it is based on declining prices for computers and telecommunications rather than on human capital.
By way of example of users, a small sample among Fortune 500 companies and divisions subscribing to CRMZ service some of the more recognizable are:
3 Com Corp.3 M
Abbott Laboratories
ABC Inc.
Bayer Corp.
Bristol Myers Squibb
Colgate Palmolive
Compaq Computer
Dow chemical
Emerson Electrical
Ericsson, Inc.
Fort James Corp.
Fuji Photo Film, Inc.
Genesco, Inc.
Georgia Pacific Co.
Hyundai Electronics America
Hoechst Celanese
IBM Credit
IDG Books
Jockey Int'l.
Johnson & Johnson
Kikkoman Int'l.
Kohler Co.
Louisiana Pacific
Pharmacia & Upjohn
Pioneer Electronics USA
McKesson HBOC
McCormick & Co.
NCR Corp.
Pennzoil Quaker State
RR Donnelley & Sons
Rhone-Poulenc Porter
Schering Plough Corp.
Tenneco Packaging
Tootsie Roll Industries
US Gypsum
Van de Kamps
Vishay Intertechnology
Warner Lambert
WD-40 Company
Yamaha Corp. of America

It should be noted that the Chairman/CEO owns or controls 68% of the shares.

For all of the above reasons, and more I think there is excellent long-term investment opportunity with CRMZ.

I am viewing CRMZ as a five year play. It is the only way to view this Company, and other extremely thinly traded companies and stocks.
In "failure mode" in the fullness of time I believe CRMZ's traditional business will grow to double and profits more so as the company scales up revenues without attendant increases in costs. As mentioned above CRMZ could in real "success mode" turn out to be an extraordinarily rewarding investment I believe. So get happily and patiently invested in CRMZ for the long-haul.


1 Discovery. Company has no professional following at the present time
2 Sale of Company in the fullness of time to any of numerous perhaps obvious buyers ranginng from Google et al to Yahoo. Catalyst
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