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Affinity Technology Post $4 Million Loss

Affinity Technology Group (Nasdaq: AFFI) today announced financial results for the second quarter and six months ended June 30, 1997.

Revenues for the quarter were $417 thousand, with a net loss of $4.4 million, or $0.15 per share. For the comparable period in 1996, revenues were $2.5 million and the Company reported a net loss of $947 thousand, or $0.04 per share. The weighted average number of shares outstanding during the three months ended June 30, 1997 was 28.6 million, compared to 24.1 million for the same period in 1996.

For the first six months of the fiscal year, revenues were $1.1 million and the Company reported a net loss of $7.8 million, or $0.27 per share, compared to revenues of $4.3 million and a net loss of $1.2 million, or $0.06 per share, in the comparable period in 1996. The weighted average number of shares outstanding during the six months ended June 30, 1997 was 28.3 million, compared to 20.4 million for the same period in 1996.

The Company stated that it is continuing its negotiations on an expansion of its previously announced agreement with the Dime Savings Bank of New York, FSB, involving a multiple-stage project deploying Decisys/RT(SM) technology across the Dime’s consumer loan product line. Affinity also announced orders for Automated Loan Machines (ALMs) from People’s Bank of California and the Marine Federal Credit Union.

Jeff A. Norris, Chief Executive Officer and President of Affinity, stated, “The second quarter was a period in which Affinity further demonstrated the value of our technology, as we continued to expand our ability to offer multiple products over multiple channels. While potential revenues from new orders were not realized in the second quarter, we are delighted that we are ready to move to the next stages of our relationship with Dime Savings Bank and able to announce the completion of agreements largely negotiated during the second quarter with two new customers, People’s Bank of California and Marine Federal Credit Union, involving ALM orders and multiple products.”

Continued Norris, “In accordance with our business plan, we have continued to emphasize our product development initiatives during the quarter. Our auto voucher loan product began and completed beta testing during the month of June, and development initiatives were completed with respect to our credit card, line of credit and open checking account products.

“We also initiated beta testing of our mortgage product in late June. In accordance with our beta customer’s request, we are adding functionality to accommodate the processing of a second mortgage product, which is very popular with consumers. While this additional development activity will extend the beta testing by several weeks, it demonstrates our ability to quickly adjust our aggregate product offering to respond to market demands.”

Norris concluded, “Affinity’s products and technology are rapidly moving to a new phase. We have solidly established the commercial viability of our core technology, Decisys/RT(SM) and are beginning to process larger numbers of applications and approved loans. The addition of new products and enhanced functionalities is sparking new inquiries and renewed interest in our decisioning solutions. We are convinced that both increased volume from existing customers and orders from new and previous prospects will be reflected in rising and more reliable revenues in upcoming quarters.”

New Integrated Performance Management Service at People’s Bank, First Military Deployment of Affinity ALMs at Marine Federal Credit Union
People’s Bank of California has agreed to order ALMs for deployment in Southern California. The ALMs at People’s Bank will have Affinity’s personal loan and checking account products installed on them. People’s will also use Affinity’s integrated performance management service, which incorporates site analysis, education and incentive programs, and marketing support for Affinity’s clients. People’s Bank intends to use Affinity ALMs to expand the bank’s geographic reach and points of service for its customers. Mosler, a strategic partner of Affinity’s, brought People’s Bank as a prospect to Affinity.

Marine Federal Credit Union has agreed to deploy Affinity ALMs, equipped with Affinity’s automated personal loan and auto voucher loan products, at Marine bases in Camp LeJeune, North Carolina and Quantico, Virginia. The first military credit union to utilize ALMs, Marine Federal is installing this technology as part of its continuing commitment to provide enhanced access to financial services for its customers, without leaving the base.

Auto Voucher Loan Product Performs Well in Beta Tests
Affinity reported that development of additional products for its ALMs(R) and other channels continued, and that its auto voucher loan product has successfully concluded beta testing and performed well.

Ronit Waser-Monzon, President and Chief Executive Officer of Educational Systems Employee Federal Credit Union, which conducted the testing, stated, “The addition of the auto voucher loan product to our existing ALMs not only increased the volume from those machines several-fold, but it also has achieved its primary goal of increasing convenience for consumers. The product enables consumers to apply for and be approved for financing of the car of their choice, 24 hours a day, seven days a week.”

Company Reiterates Share Repurchase Program
Affinity had previously announced a program to purchase up to $2 million of its common stock. “As we previously stated, we believe that Affinity’s stock is undervalued at current levels and represents an attractive investment opportunity, and we want the flexibility to make prudent and timely investments in our shares,” Norris said.

The company did not set a timetable for the repurchase of the shares, but anticipates that share repurchases will be made periodically over the next 12 months.

Affinity’s proprietary Decisys/RT(SM) technology is a real-time, closed loop decision support system designed to bridge the gap between financial institutions and consumers by automating the processing and closing of credit, deposit, insurance, mortgage and other financial transactions through any retail delivery channel — branches, call centers, kiosks, ATMs, home banking, the Internet, retail dealers, the Affinity Automated Loan Machine (ALM(R)), and beyond. The flexibility of Decisys/RT(SM) can empower consumers to conduct financial transactions anytime and anywhere they like, while enabling financial institutions to realize greater market share and assets by selling, servicing and fulfilling consumers’ needs precisely when and where they are ready to buy.

The Affinity ALM delivers revenue generating branch services, without the brick-and-mortar investment, and can be deployed in any location. It also serves as a powerful and immediate fulfillment vehicle for transactions initiated through other retail delivery channels. Affinity is located on the World Wide Web at

Statements in this news release looking forward in time are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties, including general economic conditions, delays and risks associated with the development of new technologies, consumer and industry acceptance of automated delivery channels and regulatory risks.

                       AFFINITY TECHNOLOGY GROUP, INC.
                               Income Statement
                             Second Quarter 1997

                                        Six Months           Three Months
                                       Ended June 30,        Ended June 30,
                                      1997       1996       1997         1996
     Initial set-up,
      transaction and other  $   726,107  $   426,292  $   192,523  $ 156,264
     Sales & rental              352,047    2,112,021      224,347  1,734,653
     License revenue                  --    1,800,000           --    562,500
       Total revenues          1,078,154    4,338,313      416,870  2,453,417

    Costs & Expenses
     Cost of revenues            540,956    2,512,807      249,741  1,784,596
     Research & Development    1,686,874      997,113      843,747    609,676
     Selling, general &
      administrative           7,707,443    2,516,186    4,170,174  1,513,084
       Total costs and expense 9,935,273    6,026,106    5,263,662  3,907,356

    Operating loss            (8,857,119)  (1,687,793)  (4,846,792)(1,453,939)
    Interest income (expense)  1,095,930      523,029      489,263    507,357
    Net loss                 $(7,761,189) $(1,164,764) $(4,357,529) $(946,582)
    Net loss per share       $     (0.27) $     (0.06) $     (0.15) $   (0.04)
    Shares used in computing
     net loss per share       28,338,286   20,388,105   28,609,116 24,080,893

                       AFFINITY TECHNOLOGY GROUP, INC.
                                Balance Sheet

                                                      June 30,
                                                1997              1996
    Cash and Short Term Investments     $ 32,024,151      $ 54,349,165
    Total Current Assets                  37,379,414        58,422,963
    Total Assets                          48,656,985        63,461,799
    Total Liabilities                      2,313,577         3,390,023
    Stockholders' Equity                  46,343,408        60,071,776

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