Affinity Announces Second Quarter Results and Files for Chapter 11 Bankruptcy

COLUMBIA, S.C.--(BUSINESS WIRE)--Affinity Technology Group, Inc. (OTCBB:AFFI) today announced financial results for the second quarter and six months ended June 30, 2008.

Revenues for the quarter were $8 thousand, with a net loss of $514 thousand, or $0.01 per share. Second quarter 2007 revenues were $8 thousand and the Company reported a net loss of $476 thousand or $0.01 per share. The weighted average number of shares outstanding during the three months ended June 30, 2008 was 47.1 million, compared to 45.3 million for the same period in 2007.

For the first six months of 2008, revenues were $17 thousand, with a net loss of $742 thousand, or $0.02 per share. Revenues for the comparable period in 2007 were $17 thousand, with a net loss of $919 thousand, or $0.02 per share. The weighted average number of shares outstanding during the six months ended June 30, 2008, was 47.1 million, compared to 45.3 million for the same period in 2007.

In other news, Affinity announced that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court, District of South Carolina. In connection with this proceeding, Affinity has filed motions with the Court requesting permission to go forward on the basis of a debtor-in-possession to execute its plan of offering its patents and other assets for sale under the supervision of the Court.

Joe Boyle, Chairman, President and Chief Executive Officer of Affinity, stated, "We are obviously disappointed that we have had to file for bankruptcy. However, as we have previously announced, our financial resources are nearing exhaustion, and due to the limitations placed on our patents in May by the United States Court of Appeals for the Federal Circuit, we believe the further pursuit of our patent licensing program and the raising of additional capital necessary to continue such pursuit is not a realistic alternative. Accordingly, our plan is to offer our patents for sale in an orderly process while we are in Chapter 11 and to avoid a Chapter 7 liquidation, in which a court-appointed trustee would execute the sales process. It is possible, however, that our limited resources or other factors could later force us to convert our Chapter 11 case to a Chapter 7."

About Affinity Technology Group, Inc.

Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through a remote interface, as applicable. Affinity’s patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811C1, and No. 6,105,007C1.

Forward-looking statements in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that the Company’s business is subject to several substantial risks and uncertainties, including the recent adverse ruling of the Federal Appeals Court in its patent litigation, the judgment against the Company related to its lawsuit with Temple Ligon and its inability and failure to pay amounts due under its secured convertible notes, which, combined with the Company’s very limited capital resources, has threatened the viability of the Company’s business as a going concern and may make it difficult or impossible to raise additional capital in amounts sufficient to permit it to continue operations or pursue further legal options for vindicating its patent claims; the risk that the Company may lose all or part of the claims covered by its patents as a result of challenges to its patents; the risk that its patents may be subject to additional reexamination by the U.S. Patent and Trademark Office or challenges by third parties; the results of ongoing litigation, including the recent adverse ruling of the Federal Appeals Court in the Company’s patent litigation; and, unanticipated costs and expenses affecting the Company’s cash position. Additionally, due to its inability to pay its judgment of $382,148 plus accrued interest of $245,082 associated with its longstanding lawsuit with Temple Ligon and its inability and failure to pay amounts due related to its convertible notes, the Company has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code and plans to offer its remaining patents and rights thereunder for sale. The Company can give no assurances that it will be successful in completing a sale of its patents or that any proceeds from such sale would be sufficient to satisfy any of its obligations in whole or in part or that there will be any residual proceeds that would accrue to the benefit of any of the Company’s constituencies, including the Company’s secured or unsecured creditors or its stockholders. Moreover, the Company can give no assurances that it will have the financial resources to complete the Chapter 11 bankruptcy process and that it will not be forced to later convert its Chapter 11 proceedings to one under Chapter 7 of the United States Bankruptcy Code, under which a trustee would be appointed by the Bankruptcy Court to liquidate the Company. Further, there can be no assurance that the Company will prevail on its claims of patent infringement against third parties or that such claims will result in the award of monetary damages to the Company. These and other factors discussed in the Company’s filings with the Securities and Exchange Commission, including the information set forth in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and other filings the Company makes with the Securities and Exchange Commission from time to time. The Company is not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet Services. The Company undertakes no ongoing obligation to update any forward-looking statements if it learns that any such forward-looking statements or the underlying assumptions are incorrect.

Affinity Technology Group, Inc.
Statements of Operations
		Three months ended June 30,								Six months ended June 30,
		2008				2007				2008				2007
Revenues:
Patent license revenue		$	8,334			$	8,334			$	16,667			$	16,667
Costs and expenses:
Cost of revenues			834				834				1,667				1,667
General and administrative expenses			220,263				426,257				392,434				822,249
Total costs and expenses			221,097				427,091				394,101				823,916
Operating loss			(212,763	)			(418,757	)			(377,434	)			(807,249	)
Other income (expense):
Interest income			-				5,555				-				14,169
Interest expense			(301,295	)			(62,814	)			(364,108	)			(125,627	)
Net loss		$	(514,058	)		$	(476,016	)		$	(741,542	)		$	(918,707	)
Net loss per share - basic and diluted:		$	(0.01	)		$	(0.01	)		$	(0.02	)		$	(0.02	)
Shares used in computing net loss per share			47,142,398				45,267,398				47,142,398				45,267,398
Balance Sheets		June 30,
		2008				2007
Cash and Short Term Investments		$	16,861			$	372,202
Total Current Assets			53,478				445,060
Total Assets			59,384				452,022
Total Liabilities			4,963,106				4,383,123
Stockholders' Deficiency			(4,903,722	)			(3,931,101	)