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Registration No. 333-
As filed with the Securities and Exchange Commission on July 21, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AFFINITY TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware 1201 Main Street, Suite 2080 57-0991269
(State or Other Jurisdiction of Columbia, SC 29201 (I.R.S. Employer
Incorporation or Organization) (803) 758-2511 Identification No.)
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
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Joseph A. Boyle
President, Chief Executive Officer and Chief Financial Officer
Affinity Technology Group, Inc.
1201 Main Street, Suite 2080
Columbia, South Carolina 29201
(803) 758-2511
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
David W. Dabbs
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
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Approximate date of commencement of the proposed sale to the public:
From time to time after the effective date of this Registration Statement as
determined by the selling stockholder.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Unit Price Registration Fee
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Common Stock
$0.0001 par value 969,696 Shares $1.11(1) $1,076,363 $285
========================= ====================== ======================= ====================== ======================
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(1) In accordance with Rule 457(c), on the basis of $1.11 per share, which was
the average of the high ($1.16) and low ($1.06) prices of the common stock
as quoted on the Nasdaq SmallCap Market on July 17, 2000.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDER MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE OR JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 21, 2000
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P R O S P E C T U S
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969,696 Shares
AFFINITY TECHNOLOGY GROUP, INC.
Common Stock
These shares of common stock are being offered by the selling
stockholder. We will not receive any of the proceeds from the sale of the shares
offered hereby.
The selling stockholder may sell the shares of common stock at various
times in various types of public or private transactions, including sales in the
open market, in negotiated transactions or by any combination of these methods,
at prevailing market prices or at privately negotiated prices. The shares may be
sold directly or through agents or broker-dealers acting as principal or agent,
or in block trades or through one or more underwriters on a firm commitment or
best efforts basis. The selling stockholder may engage underwriters, brokers,
dealers or agents, who may receive commissions or discounts from the selling
stockholder. We do not know, however, when the proposed sale of the shares by
the selling stockholder will occur. We will pay the expenses incident to the
registration of such shares, except for selling commissions.
The selling stockholder and any underwriters, agents or broker-dealers
that participate with the selling stockholder in the distribution of the common
stock may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, and any commissions received by them and any profit on the resale
of the common stock may be deemed to be underwriting commissions or discounts
under such Act.
Our common stock is traded on the Nasdaq SmallCap Market under the
trading symbol "AFFI." The reported closing price on the Nasdaq on July 19, 2000
was $1.06 per share.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 OF
THIS PROSPECTUS BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is July 21, 2000.
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TABLE OF CONTENTS
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PAGE
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Affinity Technology Group.........................................................................................3
Risk Factors......................................................................................................5
Use of Proceeds..................................................................................................13
Selling Stockholder..............................................................................................13
Plan of Distribution.............................................................................................13
Legal Matters....................................................................................................15
Experts..........................................................................................................15
Available Information............................................................................................15
Information Incorporated By Reference............................................................................15
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. The selling stockholder is offering to sell, and seeking
offers to buy, shares of our common stock only in jurisdictions where offers and
sales are permitted. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the cover page of such documents.
In this prospectus, "Affinity," "we," "us" and "our" refer to Affinity
Technology Group, Inc., and the "selling stockholder" refers to Redmond Fund,
Inc., as described in the section titled "Selling Stockholder" on page 13.
FORWARD-LOOKING INFORMATION
This prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Some of this information is based on the beliefs of management as well as
assumptions made by and information currently available to management. When used
in this prospectus or in the documents incorporated by reference in this
prospectus, the words "anticipate," "believe," "estimate," "expect," "intend,"
"plan," or any similar expressions, as they relate to Affinity or our
management, or the management of our business, may identify forward-looking
statements. Our actual results could differ materially from those projected in
the forward-looking statements as a result of the risk factors set forth in this
prospectus under the title "Risk Factors" and the factors in section titled
"Business - Business Risks" of our annual report on Form 10-K for the year ended
December 31, 1999 and in the section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of our annual report
on Form 10-K for the year ended December 31, 1999 and our quarterly report on
Form 10-Q for the quarter ended March 31, 2000, both of which are incorporated
by reference in this prospectus, and any subsequently filed reports under the
Securities Exchange Act of 1934. We wish to caution you that such risks and
uncertainties include, but are not limited to, those set forth in this
prospectus under the section titled "Risk Factors."
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AFFINITY TECHNOLOGY GROUP
We were formed to develop and market technologies that enable financial
institutions and other businesses to provide consumer financial services
electronically with reduced or no human intervention. Our DeciSys/RTSM
processing system automates the processing and consummation of consumer
financial services. DeciSys/RT can simultaneously accept and capture consumer
information through remote input devices, such as touch-screen terminals or loan
officers, and automatically interact with credit bureaus and other third parties
that supply information necessary to process a consumer financial transaction.
Our products and services currently consist of:
- the Affinity Automated Loan Machine (the ALM (R)), which looks
and functions much like an automated teller machine and
permits a consumer to apply for and, if approved, receive a
consumer loan without human intervention in as little as 10
minutes;
- our e-xpertLender(SM) system, which permits a financial
institution to use our DeciSys/RT system to make automated
lending decisions through call centers, branches and
automobile dealerships;
- iDEAL(SM) (indirect electronic automobile lending system),
which permits a lender to make automated lending decisions for
loan applications originated at an automobile dealership; and
- rtDS (realtime decisioning services), which is based on our
e-xpertLender system and permits a lender to deliver credit
decisions to loan applicants over the Internet.
We have been granted two patents covering our fully automated loan
processing system. In addition, in 1997 we acquired a patent that covers the
automated processing of an insurance binder through a point-of-sale consumer
directed device. Also, in February 2000 the U.S. Patent and Trademark Office
notified us that our application for a patent covering the automated
establishment of a financial account had been allowed, and we are waiting for
that patent to be issued. We have initiated a patent licensing program for our
patents. As discussed below under the title "Recent Developments," the U.S.
Patent and Trademark Office is reexamining one of our patents.
Since we were formed in January 1994, we have generated substantial
operating losses, have experienced an extremely lengthy sales cycle for our
products and services and have been required to use a substantial amount of
existing cash resources to fund our operations. At March 31, 2000, we had cash
and cash resources of approximately $1,715,000. If we continue to use cash at
the rate used during 1999, we would deplete our existing cash resources very
soon.
In January 2000, we reduced our employee base by 47%, and we believe
that existing cash and internally generated funds will be sufficient to fund
operations during 2000. However, we may encounter unexpected expenses, the loss
of anticipated revenues and other developments that would impact our ability to
fund operations for the entire part of 2000. Therefore, we cannot assure you
that we will have enough cash to operate for the entire part of 2000. Moreover,
we believe that our existing cash resources will be insufficient to fund our
operations after 2000. To remain viable after 2000, we must raise additional
capital. In addition, we may be required to reduce our operations significantly.
We cannot assure you that we will be able to raise additional capital or reduce
our operations in a manner that would permit us to continue operations after
2000.
Our principal offices are located at 1201 Main Street, Suite 2080,
Columbia, South Carolina 29201, and our telephone number is (803) 758-2511.
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RECENT DEVELOPMENTS
On April 18, 2000, we filed a lawsuit against The Dime Savings Bank of
New York, FSB and Hudson United Bancorp in The United States District Court for
the District of South Carolina, Columbia Division. The lawsuit arises out of our
contract with The Dime Savings Bank relating to the development of a system to
process and automate decisioning of automobile loans. This contract was acquired
by The Dime Savings Bank in connection with its acquisition of the indirect
automobile loan business formerly operated by Citibank, N.A. In our complaint,
we allege a breach of contract by The Dime Savings Bank and intentional
interference with the contract by Hudson United Bancorp, which attempted to
merge with The Dime Savings Bank earlier this year. The lawsuit also contains a
civil conspiracy claim against both The Dime Savings Bank and Hudson United
Bancorp and seeks actual and punitive damages against both defendants. Since we
filed this lawsuit, Hudson United Bancorp has been granted a request to dismiss
the lawsuit against it due to lack of jurisdiction in South Carolina. We are
evaluating whether to re-institute a similar lawsuit against Hudson United
Bancorp in another jurisdiction. In addition, The Dime Savings Bank has asserted
counterclaims against us for an unspecified amount of damages for breach of
contract, breach of warranty, constructive fraud and negligent
misrepresentation. We intend to contest these allegations vigorously.
One of our patents covering fully automated lending is being reexamined
by the U.S. Patent and Trademark Office. In March 2000 the U.S. Patent and
Trademark Office issued a preliminary office action rejecting all previously
issued claims under the patent. We have responded to the U.S. Patent and
Trademark Office's preliminary office action and are waiting for a final
decision with respect to any impact this action may have on our patent claims. A
third party has requested that another one of our patents be re-examined, and it
is likely that third parties may bring additional actions to contest some or all
of our other patents. We cannot assure you that we will not lose some of or all
the claims covered by our existing patents.
In February 2000, the U.S. Patent and Trademark Office issued us a
notice of allowance for a patent covering the fully automated establishment of a
financial account, including credit accounts. The patent has not been granted to
date.
In June 2000, we entered into an agreement with Redmond Fund, Inc.
under which Redmond acquired, for $500,000, 484,848 shares of our common stock
and a warrant to acquire an additional 484,848 shares for $1.37 per share.
Redmond Fund, Inc. is the selling stockholder named in this prospectus, and we
are registering these shares under the Securities Act of 1933 pursuant to our
agreement with Redmond. Under certain circumstances, we may issue Redmond
additional shares of our common stock at a price equal to the lesser of $1.50
per share or the trading price of our stock at the time of issuance, subject to
a maximum purchase price of $3,750,000. If we issued these shares, we would also
be required to issue to Redmond one or more warrants to acquire the same number
of shares at a purchase price equal to 133% of the price that Redmond paid for
these shares. We would also be required to register all these shares, including
the shares that may be issued under the warrants, under the Securities Act of
1933. Redmond is currently under no obligation to purchase any additional shares
of our stock.
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RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case the trading price of our common stock could decline and you could lose
all or part of your investment.
WE HAVE VERY LIMITED CAPITAL RESOURCES AND MAY NOT BE ABLE TO RAISE
ADDITIONAL CAPITAL.
We have generated substantial operating losses since our inception in
January 1994, and we have financed our operations primarily through net proceeds
of approximately $60 million from our initial public offering in May 1996. As of
March 31, 2000, we had cash and liquid investments of $1,715,000. We have used,
and expect to continue to use, a substantial amount of our cash resources to
fund our operations. If we continued to use cash at the rate used in 1999, we
would deplete our existing cash resources very soon.
We have taken certain measures to reduce our cash usage rate, including
decreasing our employee based by 47% in January 2000. We believe that our cash
resources and projected funds from operations will be sufficient to meet our
currently anticipated cash requirements for 2000. However, we may encounter
unexpected expenses, the loss of anticipated revenues and other developments
that would negatively affect our ability to continue to operate for the entire
part of 2000. Therefore, we cannot assure you that we will have enough cash to
operate for the rest of 2000. Moreover, we believe that we will not have enough
cash to continue our operations after 2000. Accordingly, to remain viable after
2000, we must raise additional capital. In addition, we may be required to
reduce our operations significantly. We cannot assure you that we will be able
to raise additional capital or reduce our operations in a manner that would
allow us to continue to operate after 2000.
We may seek to raise capital through the issuance of equity or
convertible debt securities, in which case:
- the percentage interest of our stockholders will be reduced;
- our stockholders may experience additional dilution; and
- the securities we sell may have rights, preferences and
privileges senior to our common stock.
WE ARE INCURRING SUBSTANTIAL LOSSES, EXPECT TO CONTINUE INCURRING
LOSSES AND MUST SIGNIFICANTLY INCREASE OUR REVENUES TO BECOME PROFITABLE.
We have incurred substantial losses in the past and anticipate that we
will incur losses for the immediate future. As of March 31, 2000, our
accumulated deficit was $56,884,000, and we had incurred operating losses of
$1,861,033 for the three-month period ended March 31, 2000 and $12,466,000,
$15,906,000, $17,398,000, $11,731,000 and $2,251,000 for the years ended
December 31, 1999, 1998, 1997, 1996 and 1995, respectively. To become
profitable, we must significantly increase our revenues. Operating our business
involves substantial expenditures. Therefore, it is uncertain if we will ever
become profitable or viable as a long-term enterprise.
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WE HAVE A LIMITED OPERATING HISTORY AND HAVE NEVER OPERATED PROFITABLY.
We are a relatively new business and our revenues are not currently
sufficient for us to achieve profitability. We were founded in January 1994 and
we have never operated at a profit. You should consider our prospects in light
of the risks, expenses and difficulties that companies in their earlier stage of
development encounter, particularly companies in new and rapidly evolving
markets. Our success depends upon our ability to address those risks
successfully, which include, among other things:
- whether we will have enough capital to exploit our technology
and adequately pursue our business plans;
- whether we can respond quickly and effectively to
technological changes and competitive forces in our markets;
- whether we will be able to assemble and maintain the necessary
resources, especially talented software programmers, that we
will need to develop and upgrade our technology to meet
evolving market demands;
- whether we will be able to implement an effective sales and
marketing strategy;
- whether we will be able to develop and manage strategic
relationships to maximize acceptance of our products and
services; and
- whether our financial position will adversely affect our
ability to sell our products and services, develop strategic
relationships, attract and retain qualified employees, and
raise additional capital.
If we do not succeed in addressing these risks, our business likely
will be materially and adversely affected.
OUR STOCK PRICE IS VOLATILE, AND OUR STOCK MAY BE DELISTED FROM THE
NASDAQ SMALLCAP MARKET IN THE FUTURE.
The price of our common stock has been and likely will continue to be
subject to wide fluctuations in response to a number of events and factors, such
as:
- developments affecting us, including developments affecting
our patents and patent applications, the announcement of new
customers or the loss of existing customers, and changes in
management;
- sales by significant stockholders of their shares in the
company, many of which were acquired before our initial public
offering in April 1996;
- news reports relating to trends in our market; and
- developments affecting technology stocks in general.
In addition, the stock market in general, and the market prices for
technology companies in particular, have experienced significant price and
volume fluctuations that often have been unrelated to the operating performance
of the companies affected by these fluctuations. These broad market fluctuations
may adversely affect the market price of our common stock, regardless of our
operating performance. Securities class action litigation has often been
instituted against companies that have experienced periods of volatility in the
market price for their securities. If we were to become the target of this kind
of litigation, the cost in dollars and management attention could be
substantial, and the diversion of management's attention and resources could
have a material adverse affect on our business.
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On two separate occasions (in 1998 and again in October 1999), the
Nasdaq Stock Market has advised us that we were not in compliance with Nasdaq
listing standards that require our stock to maintain a minimum bid price of
$1.00 or more. In each case, we were given 90 days to regain compliance, and in
each case we failed to do so. However, in each case, we requested a further
review by Nasdaq, which temporarily suspended the delisting of our stock, and in
each case our stock price recovered during this period. In the case of the
second proceeding, the Nasdaq determined to transfer the listing of our stock
from the Nasdaq National Market to the Nasdaq SmallCap Market due to a concern
by Nasdaq about our ability to maintain net tangible assets of $4 million or
more, which is required of companies listed on the Nasdaq National Market. Our
stock price continues to trade near $1.00 per share and has recently closed
below $1.00 per share on more than one occasion. We cannot assure you that we
will be able to maintain compliance with Nasdaq listing standards or that our
stock will continue to be eligible for trading on the Nasdaq SmallCap Market.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, PERMITTING
COMPETITORS TO DUPLICATE OUR PRODUCTS AND SERVICES.
Our success and ability to compete is dependent in part upon our
proprietary technology. We rely primarily on patent, copyright, trade secret and
trademark law to protect our technology. Our patents are subject to challenge by
third parties. We hold three United States patents, and have applied for others
in the United States to protect certain features of our technology, including
aspects of our closed-loop lending system, our automated insurance product and
our Internet-related products and services. In addition, the U.S. Patent and
Trademark Office has advised us that it will allow additional claims that will
be covered by a fourth patent. However, we are in a reexamination proceeding
with the U.S. Patent and Trademark Office regarding one of our patents ("System
and Method for real-time loan approval", U.S. Patent No.5,870,721). The U.S.
Patent and Trademark Office has reached a preliminary decision to reject the
claims covered by the patent. We expect the reexamination process to conclude
within the next one to four months, and it could result in a loss or limitation
of some of or all the claims under the patent. A third party has requested that
another one of our patents be re-examined, and it is likely that third parties
may bring additional actions to contest some of or all our other patents. Such
actions could result in a limitation or the complete loss of some of or all the
patents we have or may acquire in the future. Moreover, while we intend to
continue to file patent applications to further protect our technology, we
cannot assure you that any of these patents will be granted, or that if granted
these patents would survive a legal challenge to their validity or provide
meaningful levels of protection.
WE MAY BE REQUIRED TO ENGAGE IN LITIGATION TO ENFORCE OUR PROPRIETARY
RIGHTS, AND WE MAY NOT HAVE SUFFICIENT CAPITAL RESOURCES TO DO SO.
We believe that certain companies have developed or will develop
systems and technologies that are covered by one or more of the claims covered
by our existing patents or pending claims for which we have filed. Our capital
resources are very limited, and we may not be able to take the actions necessary
to enforce our proprietary rights. Moreover, if we were to initiate litigation
to enforce our proprietary rights, whether successful or unsuccessful, it would
result in substantial costs and diversions of resources, either of which could
have a material adverse effect on our business, financial condition or operating
results.
Despite our efforts to protect our proprietary rights, third parties
may attempt to copy aspects of our products and services or to obtain and use
information that we regard as proprietary. Policing unauthorized use of our
products and services is difficult, particularly in the global environment in
which we operate, and the laws of other countries may afford us little or no
effective protection of our intellectual property. Additionally, policing the
unauthorized use of our intellectual property rights may be very expensive, and
we may not have the resources to do so. We cannot assure you that the steps that
we have taken will prevent others from misappropriating our technology.
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WE ARE OPERATING IN AN UNPROVEN MARKET, AND WE DO NOT KNOW WHETHER THE
MARKET WILL ACCEPT OUR PRODUCTS AND SERVICES.
The market for e-commerce is new and uncertain. As is the case of a new
and evolving industry, demand and market acceptance for our products and
services is uncertain. Our future growth and financial performance will depend
on consumer acceptance of e-commerce as an attractive means for processing
financial transactions and institutional acceptance of our products and services
as the preferred means for serving customers. Acceptance by institutions will
depend in part upon their acceptance of quantitative credit scoring and
automated lending methodologies. Our business will likely be materially and
adversely affected if:
- the market for automated consumer financial transactions fails
to develop or grows more slowly than anticipated;
- lenders do not use quantitative scoring tools and automated
systems to process financial transactions;
- our products and services do not satisfy the expectations of
our customers or consumers in general; or
- the market does not accept our products and services as the
preferred means of conducting e-commerce for financial
transactions.
Because the market for our products and services is new and uncertain,
we are unable to determine the size or predict the future growth rate, if any,
of this market. Our business will be materially and adversely affected if:
- the market for our products and services does not develop or
develops at a slower pace than expected; or
- our products and services are not adopted by participants in
this market or are adopted by only a limited number of
participants.
OUR PRODUCTS AND SERVICES ARE IN AN EARLY STAGE OF DEVELOPMENT, AND WE
HAVE EXPERIENCED A LENGTHY SALES CYCLE.
Our products and services are in an early stage of development and are
subject to the risks associated with developing new products, including
unforeseen design and engineering problems, changes in customer requirements and
delays in deployment. These risks have greatly affected our ability to introduce
new products and services, and we cannot assure you that these risks will not
materially and adversely continue to affect our business. In addition, we have
experienced an extremely lengthy sales cycle for our products and services. In
most cases, the time between initial customer contact and the execution of a
final contract has exceeded six months.
OUR PRODUCTS AND SERVICES MAY BECOME OUTDATED, OR MAY REQUIRE LARGE
INVESTMENTS TO REMAIN VIABLE.
The market for products and services that enable e-commerce to process
consumer financial transactions is very competitive, is evolving rapidly and is
subject to:
- rapid innovation and technological change;
- shifting consumer preferences;
- frequent new product introductions; and
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- competition from traditional products and services having all
or some of the same features as products and services enabling
e-commerce to process consumer financial transactions.
Competitors in this market have taken different strategic approaches
and have developed substantially different products having all or some of the
same features as our products and services to exploit the same perceived market
opportunity. Until the market validates a strategy through widespread acceptance
of a product or service, it is difficult to identify all market participants or
their respective competitive position. We do not know whether our products and
services will be able to compete technologically or otherwise. Our ability to
compete in this market will depend upon, among other things, broad acceptance of
our products and services and our ability continually to improve our products
and services to meet changing customer requirements. Our business will be
materially and adversely affected if:
- we do not have the capital necessary to exploit demand for our
products and services or to develop and bring to market new
and enhanced products and services;
- we are unable to identify successfully new product and service
opportunities and develop and bring to market new and enhanced
products and services in a timely manner;
- we are unable to penetrate new markets in a timely manner in
response to changing market conditions or customer
requirements; or
- any new or enhanced products or services do not achieve a
significant degree of market acceptance.
THE NATURE OF OUR BUSINESS MAKES IT DIFFICULT TO PREDICT OUR REVENUES AND
OPERATING RESULTS, WHICH MAY NEGATIVELY AFFECT OUR STOCK PRICE.
Our revenues and operating results have varied significantly from
period to period. In particular, our customer base has been highly concentrated,
which has had a significant effect on quarterly revenues. It is likely that we
will continue to experience substantial quarterly fluctuations in operating
results due to the uncertainty regarding future revenues and the fact that we
are unable to adjust quickly many of our operating expenses in response to a
lack of revenues. As a result of these factors, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as an indication of future performance. Also, it is
likely that our operating results in some future quarter may be below the
expectation of public market analysts and investors, in which event the price of
our stock could be materially and adversely affected.
WE FACE INTENSE COMPETITION THAT MAY ADVERSELY AFFECT OUR PROSPECTS.
We compete with a number of companies, and we expect this competition
to intensify in the future, particularly with regard to the development of
e-commerce technologies that enable the processing of consumer financial
transactions. We compete with other e-commerce technologies and traditional
methods for processing consumer financial transactions, including in-person
applications at branch offices of financial institutions, automobile dealerships
and mortgage loan offices, cash advances on credit cards and other consumer
credit arrangements. Our ability to compete with traditional lending methods
will depend on consumer acceptance of e-commerce technologies to process
consumer financial transactions in general and industry acceptance of our
products and services in particular. This competitive environment will make it
difficult for us to gain market acceptance of our products and services, and it
could also at some future point force us to reduce the prices for some of our
products and services.
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WE DEPEND ON THE CONSUMER LENDING INDUSTRY, AND OUR PROSPECTS WILL SUFFER
IF THERE IS A DOWNTURN IN THAT INDUSTRY.
Our business currently is concentrated in the consumer lending industry
and is expected to be so concentrated for the foreseeable future. We are
susceptible to a downturn in that industry. For example, a decrease in consumer
lending could result in a smaller market for our products and services and a
decrease in revenues generated by our products and services. Moreover, our
revenues have been attributable to a small number of customers, and our business
will be materially and adversely affected by negative developments affecting the
businesses of our customers.
Demand for consumer loans is cyclical, in large part based on general
economic conditions, cycles in overall consumer indebtedness levels and changes
in interest rates. These factors may adversely affect the demand for consumer
loans or the willingness of financial institutions to provide consumer loans.
TO SUCCEED, WE MUST ACHIEVE BROAD MARKET ACCEPTANCE FOR OUR PRODUCTS AND
SERVICES AND BE ABLE TO DEVELOP NEW PRODUCTS AND SERVICES TO ADDRESS
TECHNOLOGICAL CHANGE.
Broad acceptance of our products and services and their use in large
numbers is critical to our success. Our business has been materially and
adversely affected by the fact that our initial product, the Affinity Automated
Loan Machine, failed to meet customer expectations or to obtain widespread
acceptance as a viable alternative to traditional and other automated lending
methods. None of our other products and services has been accepted as a viable
alternative to traditional and other automated lending methods. To be
successful, we must obtain broad market acceptance of our products and services,
or modify our products and services to meet whatever industry standards do
ultimately develop. It is not certain that we will be able to do either.
WE MAY EXPERIENCE SOFTWARE DEFECTS AND DEVELOPMENT DELAYS, WHICH MAY DAMAGE
CUSTOMER RELATIONS.
Services based on software and computing systems often encounter
development delays, and the underlying software may contain undetected errors or
failures when introduced or when the volume of services provided increases. We
have experienced and may continue to experience delays in the development of our
products or the software and computing systems underlying our services. In
addition, our software may contain errors. Any material development delays or
errors could damage the reputation of the service or software affected, as well
as our customer relations, which could have a material adverse effect on our
business.
OUR BUSINESS INVOLVES SOME RISK OF FRAUD, WHICH MAY NEGATIVELY AFFECT OUR
BUSINESS.
Our business involves the risk of consumer fraud. We are unaware of any
significant instance of fraud in connection with loans that were processed by
our products and services. However, the rate of fraudulent activity could
increase, especially if the number of transactions we process increases.
Moreover, in light of our limited operating history, we cannot assure you that
our experience is indicative of future events. While our contracts require our
customers to bear the risk of collection in any given transaction, we may
nevertheless be held responsible for losses associated with fraudulent
transactions if they are attributable to our products and services. Also, even
if we are not directly liable for fraudulent transactions processed by our
products and services, an increase in fraud likely would have a material and
adverse effect on our ability to attract and retain customers. In addition, any
measures we may be required to take to reduce the occurrence of fraud may be
expensive.
WE RELY ON THIRD PARTIES TO PROVIDE CERTAIN SERVICES.
We rely on third parties for certain fraud detection systems and for
obtaining credit information about loan applicants. We also use a dedicated
private data network provided by a third party to gain
10
<PAGE> 12
access to the networks maintained by such third parties and to customers.
Prolonged or repeated failure of any of these services would materially and
adversely affect our business.
We currently have strategic alliances with third parties to license
our patents and to promote our mortgage processing business. In addition, we
rely, and plan to continue to rely, on current and potential customers to
develop or promote systems that use or will use our products and services. Our
success will depend on the ability of customers and third parties to market our
products and services. Failure by those parties to generate and sustain demand
for our products and services has had and may continue to have a material and
adverse effect on our business.
Our future success will depend on our ability to work successfully
with third parties. We cannot assure you that we will be able to identify
suitable third parties, reach acceptable agreements with third parties or
successfully implement any agreements with third parties.
WE MAY EXPERIENCE BREAKDOWNS IN OUR PROCESSING SYSTEM, HARMING OUR
BUSINESS.
We would be unable to deliver our services if our system
infrastructure breaks down or is otherwise interrupted. Events that could cause
system interruptions are:
- fire,
- earthquake,
- power loss,
- telecommunications failure, and
- unauthorized entry or other events.
We have adopted a formal disaster recovery plan and have contracted
with a disaster recovery company for back-up and off-site processing systems
capable of supporting our processing operations if there is a system or other
failure. These measures will not necessarily ensure the continued,
uninterrupted operation of our processing capabilities in the event of a
regional natural disaster, power outage, communications interruption, or other
catastrophic event. Also, we have never experienced substantial transaction
volumes that may stress the capacity of our systems. There is a possibility
that our existing systems may be inadequate to handle substantially increased
transaction volumes and cause serious failures of our services. Finally,
although we regularly back up data from operations, and take other measures to
protect against loss of data, there is still some risk of some losses. A system
outage or data loss could materially and adversely affect our business.
Our infrastructure may be vulnerable to computer viruses, hackers,
rogue employees or similar sources of disruption. Any damage or failure that
causes interruptions in our operations could have a material adverse effect on
our business. Any problem of this nature could result in significant liability
to customers and also may deter potential customers from using our services.
OUR RESULTS MAY SUFFER IF WE ARE UNABLE TO ATTRACT AND MAINTAIN
QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL.
Our performance is substantially dependent on the performance of our
executive officers and key employees. We depend on our ability to retain and
motivate high quality personnel, especially our management and technical
personnel. We do not have "key person" life insurance policies on any of our
employees. The loss of the services of any of our key employees could have a
material adverse effect on us. Our future success also depends on our
continuing ability to identify, hire, train and retain other highly qualified
technical and managerial personnel. Competition for these employees is intense
and
11
<PAGE> 13
increasing. We may not be able to attract, assimilate or retain qualified
technical and managerial personnel in the future, and the failure to do so
would have a material adverse effect on our business.
WE CURRENTLY HAVE NO SALES FORCE, AND THERE ARE NO DEVELOPED DISTRIBUTION
CHANNELS FOR OUR PRODUCTS AND SERVICES.
We currently do not have a dedicated sales staff that focuses
exclusively on the marketing and sales of our products and services. Moreover,
we have been unable to enter into strategic relationships with any third
parties that have resulted in meaningful sales of our products and services.
Due to measures taken to reduce our employee base and preserve cash resources,
we do not expect to hire any sales and marketing personnel unless we are able
to raise sufficient additional capital. We currently rely on the efforts of our
senior officers to pursue opportunities to market and sell our products and
services. These officers have only a limited amount of time to dedicate to our
marketing and sales efforts. As a result, our ability to identify and pursue
new opportunities to market and sell our products and services is extremely
limited. For us to achieve increased distribution of our products and services,
we will need to develop a sales force or develop successful strategic
relationships with third parties.
MANY OF OUR EXISTING AND POTENTIAL CUSTOMERS ARE SUBJECT TO EXTENSIVE
GOVERNMENT REGULATION, WHICH MAY CHANGE AND HARM OUR BUSINESS.
The financial services industry is subject to extensive and complex
federal and state regulation. Our current customers and our prospective
customers, which consist of state and federally chartered banks, savings and
loans, credit unions, consumer finance companies, mortgage brokers and
insurance companies, operate in markets that are subject to extensive and
complex federal and state banking and insurance regulation. Our products and
services must be designed to work within the regulatory constraints in which
our customers operate. These constraints include:
- federal and state truth-in-lending disclosure rules;
- state usury laws;
- the Equal Credit Opportunity Act;
- the Electronic Funds Transfer Act;
- the Fair Credit Reporting Act;
- the Community Reinvestment Act; and
- other restrictions on the establishment, number and location of
branch offices and remote electronic banking facilities.
Many of these laws and regulations were adopted before the development
of e-commerce technologies, and their application to our products and services
is uncertain. Also, we have not attempted to review all laws that may be
applicable to the deployment of our products and services. It is possible that
new federal and state laws and regulations adopted in the future may have a
negative effect on the deployment of our products and services.
EFFECTING A CHANGE OF CONTROL OF AFFINITY WOULD BE DIFFICULT, WHICH MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK AND DEPRESS THE VALUE OF OUR
COMMON STOCK.
Our certificate of incorporation authorizes our board of directors to
issue up to 5,000,000 shares of preferred stock and to determine the price,
rights, preferences and privileges, including voting rights, of those shares
without any further vote or action by the stockholders. The rights of the
holders of our common stock will be subject to, and may be adversely affected
by, the rights of the holders of any
12
<PAGE> 14
preferred stock that may be issued in the future. Certain other provisions of
our bylaws and certificate of incorporation, as well as applicable provisions
of Delaware law, could have the effect of making it more difficult for a third
party to acquire control of the company or of discouraging a third party from
attempting to acquire control of the company. These provisions may limit the
price that certain investors would pay for our stock, depress our stock price
or discourage a hostile bid in which stockholders could receive a premium for
their shares. In addition, these provisions could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding
voting stock, or delay, prevent or deter a merger, acquisition, tender offer or
proxy contest for us.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to
this prospectus are solely for the account of the selling stockholder
identified in this prospectus. We will not receive any proceeds from the sale
of the shares by the selling stockholder.
SELLING STOCKHOLDER
On June 2, 2000, we entered into a common stock purchase agreement
with the selling stockholder. Under the agreement, we have issued to the
selling stockholder 484,848 shares of our common stock and a warrant to acquire
an additional 484,848 shares of our common stock for $1.37 per share. We also
agreed to register the offer and sale of these shares under the Securities Act
of 1933. The selling stockholder is offering these shares pursuant to this
prospectus. In certain circumstances, we may issue additional shares of common
stock and warrants to acquire shares to the selling stockholder under the
common stock purchase agreement. However, the selling stockholder is under no
obligation to acquire any additional shares, and no additional shares are
covered by this prospectus.
The table below sets forth information known to us with respect to the
beneficial ownership of our common stock as of July 20, 2000 by the selling
stockholder. The table assumes that the selling stockholder sells all of its
shares. Since the selling stockholder may choose not to sell its shares, we are
unable to state the exact number of shares that actually will be sold.
Information with respect to beneficial ownership shown below is based
on information supplied by the selling stockholder. For purposes of calculating
the percentage beneficially owned, the shares of common stock deemed
outstanding include:
- 30,507,741 shares outstanding as of July 20, 2000; and
- shares issuable by us pursuant to a warrant issued to the
selling stockholder.
<TABLE>
<CAPTION>
Common Stock Common Stock
Beneficially Owned Beneficially Owned After
Prior to this Offering Common Stock This Offering
------------------------ to be sold in ---------------------------
Name Shares Percentage this Offering Shares Percentage
---- ------- ---------- ------------- ------ ----------
<S> <C> <C> <C> <C> <C>
Redmond Fund, Inc. 969,696 3.1% 969,696 0 0.0%
</TABLE>
The mailing address of the selling stockholder is 16541 Redmond Way,
Suite 123 C, Redmond, Washington 98052-4482.
PLAN OF DISTRIBUTION
The selling stockholder and any of its pledgees, assignees and
successors-in-interest may sell, from time to time, any or all of the shares of
common stock covered by this prospectus on any stock
13
<PAGE> 15
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
selling stockholder may use any one or more of the following methods when
selling shares:
- sales in the over-the-counter market or otherwise at prices
and at terms then prevailing or at prices related to the then
current market price;
- underwritten offerings;
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling stockholder to sell
a specified number of such shares at a stipulated price per
share;
- a combination of any such methods of sale; or
- any other method permitted pursuant to applicable law.
The selling stockholder may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
The selling stockholder may, together with any agent of the selling
stockholder, accept or reject in whole or in part any proposed purchase of the
shares of common stock offered by this prospectus. We will not receive any
proceeds from the offering of shares by the selling stockholder.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in a distribution of the shares of common stock
covered by this prospectus may be limited in its ability to engage in market
activities with respect to such shares. The selling stockholder, for example,
will be subject to applicable provisions of the Securities Exchange Act of 1934
and the rules and regulations under it, including, without limitation,
Regulation M, which provisions may restrict certain activities of the selling
stockholder and limit the timing of purchases and sales of any shares of common
stock by the selling stockholder. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and certain other activities with respect to such
securities for a specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. The foregoing may
affect the marketability of the shares offered by this prospectus.
The selling stockholder may also engage in short sales against the
box, puts and calls and other transactions in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The selling stockholder may pledge their shares to their brokers under the
margin provisions of customer agreements. If the selling stockholder defaults
on a margin loan, the broker may offer and sell, from time to time, the pledged
shares.
The selling stockholder may sell shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Broker-dealers engaged by the selling
14
<PAGE> 16
stockholder may arrange for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions, concessions or discounts from the
selling stockholder (or, if any broker-dealer acts as agent for the purchaser
of shares, from the purchaser) in amounts to be negotiated. The selling
stockholder does not expect these commissions and discounts to exceed what is
customary in the types of transactions involved. Market makers and block
purchasers that purchase the shares will do so for their own account and at
their own risk. It is possible that the selling stockholder will attempt to
sell shares in block transactions to market makers or other purchasers at a
price per share that may be below the then-current market price. We cannot make
assurances that all or any of the shares of common stock will be sold by the
selling stockholder.
The selling stockholder and any broker-dealers or agents that are
involved in selling the shares may be deemed to be underwriters within the
meaning of the Securities Act of 1933 in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933.
We have not registered or qualified the shares of common stock offered
by this prospectus under the laws of any country, state or jurisdiction, other
than the United States. In certain states, the selling stockholder may not
offer or sell their shares of common stock unless (1) we have registered or
qualified such shares for sale in such states or (2) we have complied with an
available exemption from registration or qualification. Also, in certain
states, to comply with such state securities laws, the selling stockholder can
offer and sell their shares of common stock only through registered or licensed
brokers or dealers.
We are required to pay all fees and expenses incident to the
registration of the shares. The selling stockholder will pay any sales
commissions or other seller's compensation applicable to these transactions. We
have agreed to indemnify the selling stockholder against certain losses,
claims, damages and liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon
for us by Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina.
EXPERTS
The consolidated financial statements of Affinity Technology Group,
Inc. appearing in Affinity Technology Group, Inc.'s Annual Report (Form 10-K)
for the year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any documents we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-732-0330 for further information about the public reference rooms. Our
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information about
our company to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
15
<PAGE> 17
information that we subsequently file with the SEC will automatically update
and supersede this information. We incorporate by reference the documents
listed below, and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until all the shares
registered by this prospectus are sold. This prospectus is part of a
Registration Statement we filed with the SEC (Registration No. 333-__________).
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
2. Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2000; and
3. The description of our common stock contained in our
Registration Statement on Form 8-A, as filed with the SEC on
April 5, 1996.
You may request a copy of these filings, at no cost, by writing or
calling us at the following address: Affinity Technology Group, Inc., 1201 Main
Street, 20th Floor, Columbia, South Carolina 29201; telephone number
(803) 758-2511.
16
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be borne by Affinity
Technology Group, Inc. (the "Registrant") in connection with the issuance and
distribution of the securities being registered hereby other than underwriting
discounts and commissions. No portion of such expenses will be paid by the
selling stockholder. All expenses other than the SEC registration fee and the
Nasdaq listing fee are estimated.
<TABLE>
<S> <C>
SEC registration fee.........................$ 285.00
Nasdaq listing fee........................... 9,697.00
Accounting fees and expenses................. 15,000.00
Legal fees and expenses...................... 10,000.00
Miscellaneous................................ 1,500.00
-----------
Total........................................$ 36,482.00
===========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Article VIII, Section 8 of the by-laws of the Registrant provides that
in addition to any rights to which its officers and directors may be entitled
by law, the Registrant shall indemnify its officers and directors against any
expenses and liabilities reasonably incurred as a result of serving as an
officer or director of the Registrant to the fullest extent authorized by the
Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law generally provides
that a corporation may indemnify any officer or director who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to
which such officer or director is adjudged liable to the corporation without
application to and approval by the court. Section 145 also provides that a
corporation may indemnify any officer or director who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, other than an action by or in the right of the corporation,
by reason of the fact that such person is or was a director or officer against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. If any officer or
director is successful on the merits or otherwise in the defense of any action,
suit or proceeding, whether or not by or in the right of the corporation, or in
any claim, issue or matter therein, the corporation must indemnify him against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
In accordance with Section 145(g) of the Delaware General Corporation
Law, the Registrant has obtained an insurance policy to support the foregoing
indemnity obligations. The policy is expected to provide indemnity coverage for
certain liabilities incurred by the Registrant's officers and directors in
connection with the performance of duties in their capacities as such, in
connection with their service on certain outside boards (e.g., civic and
charitable) and in connection with their fiduciary responsibilities under
certain benefit programs.
II-1
<PAGE> 19
In addition, pursuant to Article 6 of the Registrant's Certificate of
Incorporation and Section 102 of the Delaware General Corporation Law, the
Registrant has eliminated the personal liability of its directors to the
Registrant and its stockholders for monetary damages for breach of fiduciary
duty as a director, other than (1) any breach of the director's duty of loyalty
to the Registrant or its stockholders; (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(3) for unlawful payment of dividends or unlawful stock purchases or
redemptions; (4) for any transaction from which the director derived an
improper personal benefit; and (5) for any act for which liability may not be
limited or eliminated by virtue of the provisions of Section 102(b)(7) of the
Delaware General Corporation Law.
Item 16. Exhibits.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------------- ----------------------------------------------------------------
<S> <C>
4.1 Specimen Certificate of Common Stock, which is hereby
incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-1 of Affinity Technology Group, Inc.
(File No. 333-1170).
4.2 Warrant to Purchase Common Stock of Affinity Technology
Group, Inc., dated November 8, 1995, for the purchase,
subject to certain conditions, of up to 6,666,340 shares of
Common Stock, which is hereby incorporated by reference to
Exhibit 4.7 to the Registration Statement on Form S-1 of
Affinity Technology Group, Inc. (File No. 333-1170).
4.3 Sections 4, 7 and 8 of the Certificate of Incorporation of
Affinity Technology Group, Inc., as amended, and Article II,
Sections 3, 9 and 10 of the By-laws of Affinity Technology
Group, Inc., as amended, which are incorporated by reference
to Exhibits 3.1 and 3.2, respectively, to the Registration
Statement on Form S-1 of Affinity Technology Group, Inc.
(File No. 333-1170).
4.4 Common Stock Purchase Agreement, dated as of June 2, 2000,
between Affinity Technology Group, Inc. and Redmond Fund,
Inc.
4.5 Form of Common Stock Purchase Warrant issued by Affinity
Technology Group, Inc. to Redmond Fund, Inc.
5 Opinion of Robinson, Bradshaw & Hinson, P.A. 23.1 Independent
Auditors' Consent.
23.1 Independent Auditors' Consent.
23.2 Consent of Robinson, Bradshaw & Hinson, P.A. (included in
Exhibit 5)
24 Power of Attorney (included on signature page)
</TABLE>
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more
II-2
<PAGE> 20
than a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective Registration
Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration
Statement is on Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbia, State of South Carolina, on July 21,
2000.
AFFINITY TECHNOLOGY GROUP, INC.
By: /s/ Joseph A. Boyle
--------------------------------------------
Joseph A. Boyle
President, Chief Executive Officer and Chief
Financial Officer
II-3
<PAGE> 21
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated. Each of the
directors of Affinity Technology Group, Inc. whose signature appears below
hereby appoints Joseph A. Boyle as his attorney-in-fact to sign in his name and
behalf, in any and all capacities stated below and to file with the Securities
and Exchange Commission, any and all amendments, including post-effective
amendments to this Registration Statement, making such changes in the
Registration Statement as appropriate, and generally to do all such things in
their behalf in their capacities as officers and directors to enable Affinity
Technology Group, Inc. to comply with the provisions of the Securities Act of
1933, and all requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph A. Boyle President, Chief Executive Officer and Chief July 21, 2000
--------------------------------- Financial Officer and Director (Principal
Joseph A. Boyle Executive Officer, Principal Financial Officer
and Principal Accounting Officer)
Director
---------------------------------
Alan H. Fishman
/s/ Robert M. Price Director July 21, 2000
---------------------------------
Robert M. Price
/s/ Edward J. Sebastian Director July 21, 2000
---------------------------------
Edward J. Sebastian
/s/ Peter R. Wilson Director July 21, 2000
---------------------------------
Peter R. Wilson
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
4.4 Common Stock Purchase Agreement, dated as of June 2, 2000,
between Affinity Technology Group, Inc. and Redmond
Fund,Inc.
4.5 Form of Common Stock Purchase Warrant issued by Affinity
Technology Group, Inc. to Redmond Fund, Inc.
5 Opinion of Robinson, Bradshaw & Hinson, P.A.
23.1 Independent Auditors' Consent.
23.2 Consent of Robinson, Bradshaw & Hinson, P.A. (included in
Exhibit 5)
24 Power of Attorney (included on signature page)
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