Affinity Technology Group, a pioneer of self-service consumer lending, is hoping a patent approval it received last week will help boost its earnings outlook and revive its sagging stock price.

Still in the final stages of being issued, the patent would protect the Columbia, S.C.-based vendor's rights to its technology, which can grant instant approvals of consumer loans through any type of communications network, including the Internet. Self-service kiosks, called automated loan machines, that Affinity has sold since its founding in 1994 also would be covered by the patent.

Though the company intends to "defend the patent aggressively," said Murray Smith, president and chief executive officer of Affinity, it is not clear how it would be used to improve the company's slumping fortunes.

For the first six months of 1998, Affinity's revenue was $1.7 million, 60% less than in the same period in 1996. Its net loss was $7.5 million in the first two quarters of this year.

After an initial public offering that priced at $13 a share in April 1996, and a subsequent high of $24.25 a share, the company's 29.5 million shares outstanding traded at about 50 cents just before the patent approval.

News of the patent did little to inspire investor enthusiasm. Affinity's stock closed Friday at 50 cents a share, unchanged for the week.

Mr. Smith nonetheless viewed the patent as a positive development. "This has created a significant asset for our company, and exactly how that asset will operate is still a matter of strategizing."

Other bank technology companies have been successful in turning their patented innovations into revenue streams. On-line Resources and Communications Corp., which owns a patent on its method of executing on- line debit transactions through ATM networks, earns undisclosed revenues from royalties paid by other companies that have adopted the method.

Ram Kasargod, an analyst at Morgan Keegan & Co., a Memphis-based investment bank, said Affinity "has a real asset now," which is causing his firm to reassess the company's potential. "I think getting a patent for loan processing off the Internet looks like an exciting marketing opportunity."

Affinity is considering a number of ways of putting its patent to use, Mr. Smith said. "We are still trying to understand which of these is the best one for us to pursue."

One extreme, he said, would be to limit competition by requiring companies that want to offer the technology to buy it from Affinity. Another option, he said, would be to sell large volumes of products that use the technology covered by the patent.

A third option would involve licensing the technology to others so they could write their own software based on the patent, and have them pay royalties to Affinity based on the revenues they generate. Finally, Affinity could trade use of its patent with that of another company, Mr. Smith said.

Affinity has sold 100 of its automated lending machines to a dozen banks, mostly smaller institutions. The company also has larger outsourcing deals with Dime Savings Corp. and Citicorp's automobile lending division.

Mr. Kasargod said Affinity has about $16.4 million in cash, which is enough to sustain it for at least a year. "It's pretty safe to say it has an even chance of becoming a successful company," he said.

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