Affinity Announces Third-Quarter Results
Company Highlights Development of New Products and Expansion into New
Distribution Channels as Keys to Long-Term Growth
COLUMBIA, S.C., Oct. 23 /PRNewswire/ -- Affinity Technology Group, Inc. (Nasdaq: AFFI)
today announced financial results for the third quarter ended September 30, 1996. Revenues for the
quarter were $0.316 million, with a net loss of $3.262 million, or $0.12 per share. For the
comparable period in 1995, revenues were $0.034 million, and the company reported a net loss of
$0.404 million, or $0.03 per share. The weighted average number of shares outstanding during the
three months ended September 30, 1996 was 27.8 million, compared to 15.4 million for the same
period in 1995. Revenues for the nine- month period ended September 30, 1996 were $4.654
million, with a net loss of $4.426 million, or $0.19 per share, compared to nine-month revenues in
1995 of $0.528 million, with a net loss of $0.598 million, or $0.04 per share. The weighted average
number of shares outstanding during the first nine months of 1996 was 22.9 million, compared to
15.0 million for the same period in 1995.
Affinity's proprietary Decisys/RT(SM) (for Decision Support, Real-Time fulfillment) technology is a
closed loop system that enables consumers to get financial services whenever and wherever they
want them, and enables financial institutions to deliver those services through any channel that fits their
strategy. The company's first product, the Automated Loan Machine, uses touch- screen technology
to process and close loan applications in as little as 10 minutes, without human intervention.
"As previously announced, our third-quarter results are disappointing due to longer-than-expected
sales cycles and continued investment in new distribution channels. While this quarter's performance is
clearly not acceptable to us, we are confident that executing our business plan will build a foundation
for long-term, sustainable growth," said Jeff A. Norris, Chief Executive Officer and President of
Affinity.
"We are taking two key actions to improve market penetration," Mr. Norris continued. "First, we are
rolling out a wide range of new financial products supported by Decisys/RT -- including home equity
lines of credit and auto loans -- that represent large, important markets for our current and
prospective customers. Second, we are aggressively expanding into new distribution channels beyond
the ALM, where Decisys/RT offers our customers immediate time and expense savings in whatever
channel they are currently using to sell products, including branches, call centers, the telephone, PCs
and the Internet. Taken together, I'm confident these actions will establish us as the premier provider
of electronic technology to the financial services market."
New products in development include 'Second Look,' mortgages
Mr. Norris said Affinity's new product development remains on schedule:
-- Affinity's 'Second Look' program allows loan applicants who are declined by a primary lender to
have immediate, real-time access to consideration by another lending institution. During the quarter,
Affinity announced an agreement with a leading consumer finance company for installing ALMs and
taking a lead role in 'Second Look.' The program is an important step in increasing loan approvals,
particularly for unsecured loans, a market traditionally served by finance companies and other
non-bank lenders.
-- Affinity is currently using Decisys/RT to process home equity loans for Union Planters Bank and it
anticipates launching auto loans, credit cards and deposit account services in the fourth quarter.
-- A demonstration of a prototype version of the company's Decisys/RT mortgage product, using a
PC interface, will be shown at key industry trade shows in the fourth quarter, and is expected to be
introduced commercially in the first half of 1997.
"We are only beginning to tap the potential of Decisys/RT in electronic commerce. The first channel
for Decisys/RT was the ALM, and the first product the unsecured loan -- our goal has always been
to expand rapidly from those initial applications to offer a much broader array of products through all
the channels where financial institutions are competing for business. Affinity's senior management are
significant shareholders, and we believe this is the right strategy for building long-term shareholder
value. We anticipate important progress in the months ahead," Mr. Norris added.
Separately, the company announced a new marketing agreement, an acquisition and a management
appointment as part of its strategy to move into new channels and markets:
-- Affinity has signed an ALM purchase agreement with First Advisors, a consulting group to major
retailers who will market the Affinity ALM to major home centers such as Builders Square and
Lowes.
-- The company has acquired the assets of Electronic Merchant Services (EMS), a privately held
company in Columbia with technology for retail merchants that reduces their payment acceptance
costs and provides opportunities for target marketing to key repeat customers. EMS' capabilities will
be combined with Decisys/RT to serve the market for retail payment automation.
-- Affinity has hired Calvin D. Johnson as Vice President, Research and Development. Mr. Johnson
was formerly at Security First Network Bank in Atlanta, where he oversaw the development and
implementation of the world's first completely Internet-based, on-line virtual bank. Mr. Johnson will
oversee Affinity's development of new products and alliances for the Internet and other leading-edge
financial service channels, including its recently announced partnership with the Home Financial
Network (HFN). HFN's home ATM software enables bank customers to fill out a consumer loan
application on- line and send it to the bank, where Affinity's software gives the bank the capability to
respond while the customer is still on-line.
Formed in January, 1994, Affinity is based in Columbia, S.C. Customers include NationsBank, First
Union, Union Planters, Banco Popular and Bank One.
This release contains forward-looking statements with respect to planned products and services.
Such statements are subject to risks and uncertainties, including customer acceptance and the
development of unforeseen design or engineering problems.
AFFINITY TECHNOLOGY GROUP, INC.
Third Quarter
Income Statement
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Revenues
Initial set-up,
transactions
and other $ 116,364 $ 7,686 $ 542,656 $ 16,722
Sales & Rental $ 199,321 $ 25,900 $ 2,311,342 $ 511,264
License Revenue $ -- $ -- $ 1,800,000 $ --
Total revenues $ 315,685 $ 33,586 $ 4,653,998 $ 527,986
Costs & Expenses
Cost of revenues $ 212,620 $ 16,500 $ 2,725,427 $ 209,662
Research and
development $ 738,296 $ 29,801 $ 1,735,409 $ 83,737
Selling, general
and administrative $ 3,451,979 $ 375,713 $ 5,968,165 $ 779,919
Total costs and
expenses $ 4,402,895 $ 422,014 $10,429,001 $1,073,318
Operating loss $(4,087,210) $(388,428) $(5,775,003) $ 545,332
Interest income
(expense), net $ 825,493 $ (15,793) $ 1,348,522 $ (52,407)
Net loss $(3,261,717) $(404,221) $(4,426,481) $ (597,739)
Net loss per share $ (0.12) $ (0.03) $ (0.19) $ (0.04)
Shares used in
computing net loss
per share 27,786,723 15,430,971 22,908,466 14,968,500
Balance Sheet
September 30, December 31,
1996 1995
Cash and Short Term
Investments $ 48,126,672 $ 1,235,983
Total Current
Assets $ 54,304,194 $ 2,072,998
Total Assets $ 61,009,494 $ 4,591,168
Total Liabilities $ 3,897,530 $ 3,973,756
Stockholders Equity $ 57,111,964 $ 617,412
/NOTE TO EDITORS: This release is also available on the Internet over the World Wide Web at:
idx.com and noonanrusso.com /
/CONTACT: Paige Muh of Affinity Technology Group, 803-758-2511; or Mary
Ann Dunnell of Robinson Lerer & Montgomery, 212-484-7797/ |
