Listen to this articleBelow is our recent interview with Orie Rechtman, CEO of Crednology Holding Corp:
Q: Could you provide our readers with a brief introduction to Crednology Holding Corp?
A: Crednology Holding Corp. (COHO) is an investment company specializing in identifying emerging organizations in the Information Technology field with knowledge, talent, experience, and investment in leading edge technologies. The company is publicly trading on the OTC under the symbol COHO.
Crednology Holding provides more than capital to small companies— the company is able to provide an exceptional level of support with our seasoned management team, all of whom come with operational experience managing businesses in this field for over 30 years.
Our approach is to provide hands on collaborative support and work alongside management to build the infrastructure and efficiencies necessary for sustainable scalable growth.
We make control investments in an identified platforms primarily in the Information Technology field and then continue to invest in the development and growth of the organization – organically and through a series of strategic mergers and acquisitions.
The Company is engaged in the cloud computing segment of the technology sector primarily providing Virtual Environment with a built-in robust Disaster Recovery and Business Resilience service, as well as Cyber Security prevention, training and recovery. With the recent acquisition of ITatONCE and Evolve Partners the company provides Managed Services and IT support at the highest level of networks technology.
The company operates out of 3 data Centers in Los Angeles, Santa Clara and New Jersey. COHO also has an office in Switzerland to support certain European clients and set the stage to further expansion of services in Europe.
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Q: Orie, tell us more about your background. What were you doing before Crednology Holding?
A: I consider myself a veteran of the computer industry being involved since late 1980. In 1987I founded one of the first distribution channel for computer software to K-12 educational institutions in the United States. As President of Home and School Computing Inc. I formed a sales and service organization to support over 35,000 schools nationwide.
In 1989 I made my first acquisition and merged the company with Software, Hardware and IT Service organization then a $2 Million in revenue, specializing in software sales to enterprise clients.
I grew that business with grit and determination,lugging 90-100 hours weeks for the first 10 years which I believe was the driving force behind the successful growth of the company. Soon the company was recognized as one of the top 500 System Integrators (Ranked 176) in the USA with sales approaching $200 Million in the year 2000. The company was also recognized as the 2nd largest organization in its sector for a California based company.
After the sale of the company I continued to look for opportunities in emerging technologies and implement the same strategy of acquiring small organization who lacked leadership and or resources to fuel growth, bring on my team and help them grow providing them with management, capital and strategy.
Today we created a publicly trading Holding Company that has 4 subsidiaries – all of which I acquired in the past 5-7 years with the leading one being 4Service Cloud Tech providing Cloud Computing and high level Technology Managed Services to the mid-level business segment, schools and municipalities.
Q: How did you get into Cloud Computing?
A: After the sale of my company I continued to look for new opportunities in emerging technologies in the IT field and in 2011 I acquired a small organization 4Service Inc. The company then provided small companies with different solutions of backup services, disaster recovery and business continuity. This was at the time when Cloud Computing was a new buzz word and I saw 4Service as a great platform to transform it into a provider of private, secured and compliant cloud services. The mission was simple – build a strong cloud infrastructure and show small to medium organizations how the current approach was simply too expensive and inefficient. To me it made great sense that the approach has to be as simple as entering a room flipping a switch and the lights come on. No need to have a transformer at your business and be or employ electrical engineer. By providing them a complete virtual environment we eliminated the need for on-site hardware, the constant spending on new hardware and software licenses, maintenance and upgrades and keeping up with new technologies. It was not an easy task to separate business owners from their computing environment and giving up control. The timing was right and initial investment in our data centers infrastructure was heavy, sales and marketing was frustrating at first with long closing cycles on new clients. Today we have thousands of users in our cloud environment where we guarantee 99.999% uptime, the latest and greatest technology and with 24X7 support. Clients enjoy dedicated engineering teams who are familiar with all companies’ environment and are able to address any issue within minutes.
Q: What is your target market?
A: Our “sweet spot” is a company with 30-50 users in any field or industry. While 4Service prior to me acquiring them developed expertise with law firms and majority of their clients then where from this field, we expanded our marketing to any organization in any sector and today we have clients in the healthcare, construction, travel and entertainment, educational institutions and local municipalities.
We support companies as small as 10 employees and the largest client we have has over 3000 users.
Q: What are the services you provide your customers?
A: We built the business around 2 key technology services and another is in the collection of IT End-Of Life products – refurbishing and reuse or recycle the components.
The IT segments are divided in 2 –the first is Cloud Computing with real-time high availability, disaster recovery and data backups, storage and archiving and the second segment is high level Managed Services where we come into an environment that does not have high level technical expertise or CIO and we handle the company’s entire IT requirements, maintaining stable environment – including expansion projects, software upgrades and updates and networking internally and externally. This division also provide Cyber Security implementation, training of users on threats and remediation in case of a threat.
We provide 24X7 support and what sets us apart is that we are very familiar with the client’s internal environment and vertical productivity software solution they utilize, where we also provide support with our internal expertise and by bringing in outside experts if required.
Many of our clients started with one of the two products of our services and gradually increased the level of our involvement once they realize that we provide other services and have very high level expertise across any of the business’s IT requirements.
Q: What is Crednology Holding Corp’s main focus?
A: COHO main focus is to provide the platform for us to consolidate the results of the different segments of our organization under one organization that is publicly trading. The main focus of COHO is to demonstrate to investors our vision and business growth plans in order to increase Shareholders’ Value and attract new money.
Q: I noticed 3 IT subs and one company California Recycles under your command – what are the synergies between the two sectors?
A: That is correct. Our Cloud Computing environment is spread over several data centers across the country. Many times when we used to do technology refresh or had to get end-of-life products out of the centers we contacted Electronic recycling company who would provide us the service. One of these companies was looking for a transition – I saw the opportunity to build on their success in the market place and many years of servicing the Los Angeles County municipalities and large businesses such as CBS, NBC, museums, universities and more and also to offer the services to other data centers and to all our clients. Since we took over in 2017 the business increased 30% in the first year and we continue to build on that momentum. This is a feel good business as well where we actually doing something to help save our planet.
Q: Could you please cite case studies on how you have enabled clients to overcome hurdles and attain desired outcomes with your innovative array of solutions?
A: Our client -one of the largest, multiple radio stations organization in California was hit with Ransomware Cyber-attack. This client has chosen to keep their IT infrastructure in-house and hired us to provide them with disaster recovery backup and business continuity services. The perpetrators were able to gain access to our client’s internal systems through a suspicious download one of the users made on her desktop. The demand was for a large payment to be made in bitcoins or they will delete all data and files. Fortunately we provide this client with high availability real-time imaging and backups of their data. Within hours our team was able to reformat all systems and restore all data up to the attack. The client did not have to pay any ransom, the stations continued to operate with no interruptions and back office was restored and was fully operational within hours.
Another case involved a law firm of 300 users located in Thousand Oaks California. In the recent devastating Woolsey fire the law firm had to send all local users home. Since the firm is one of our Cloud Technology client, all users were able to continue normal operations remotely with no data lose or any interruptions whatsoever. Users were able to access all their vertical solutions including communication, correspondence, filing cases and of course billing through our data centers.
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Q: What are the main challenges of a small cap OTC listed company and how do you overcome them?
A: The main reason we became publicly trading company was to enable us to raise money in order to execute our growth plans. We decided that we would like to accelerate growth through M&A and acquire larger organization in our field with cash and shares. OTC is a challenging trading platform and is not for the faint of hearts. Since the share prices on the “Pinks” are sub penny – the daily price fluctuations can be significant in terms of percentages. Daily swings of 30%-200% are common. Many times you find that share prices – unlike the larger exchanges, not having any correlation to the financial results of the company. You may see that the day you announce excellent quarterly results the share price drops with no explanation as to what triggered the drop. This makes financial planning related to fueling growth through acquisitions or raising money from new investors a lot more difficult. To overcome that you as the CEO of the company must concentrate on the business fundamentals, and continue to look for the right approach, many time a hybrid approach to providing the shareholder community good Investor Relations support, good communication of the business affairs with complete transparency.
Q: What are your plans for the future?
A: If you do not push for innovations and growth you will become stagnant and be taken over by competition. Our growth plans are 2 prong – the first is organic growth primarily by finding the right approach to sales and marketing to bring on new clients, continue to look for cross sales and sales of new solutions to your existing client base while maintaining the highest level of service and support. We are very proud of our achievement in this category where all our tickets are addressed immediately, in minutes, issues addressed on first call and in most cases gets resolved immediately. Escalations and resolution of more complex issues has very specific protocols in our organization and I personally review tickets and resolutions daily. In addition we must maintain our infrastructures at the various data centers and monitor them 24X7. We are proud to offer our Cloud clients a guarantee of 99.999% up time but for that we must continue to invest in our infrastructure continually.
The second prong is growth through M&A. We identified several opportunities in the technology field with companies that has synergies and fit our business model. The high level goal we have is to acquire 1-2 companies a year for the next five year in order to be over $200 Million in revenues by 2025. This process will be enhanced once we make the move from the OTC to NASDAQ a move that is predicated on our success in implementing both growth strategies.
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