UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[ X ] ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2005

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________.

                         Commission file number 0-28152

                         AFFINITY TECHNOLOGY GROUP, INC.
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)

                                   57-0991269
                      (I.R.S. Employer Identification No.)

                              8807-A TWO NOTCH ROAD
                               COLUMBIA, SC 29223
                    (Address of principal executive offices)
                                   (Zip code)

                                 (803) 758-2511
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.0001 per share
                                (Title of class)

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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<PAGE>



     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

   Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [X]

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

     The  aggregate  market  value  of the  Registrant's  Common  Stock  held by
non-affiliates  of the  Registrant was  approximately  $3,253,000 as of June 30,
2005.  For purposes of such  calculation,  persons who hold more than 10% of the
outstanding shares of Common Stock, directors and officers of the Registrant and
certain of their immediate family members have been treated as affiliates.  This
determination is not conclusive.

     There were 42,225,096  shares of the Registrant's  Common Stock outstanding
as of March 15, 2006.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Certain  portions of the  Registrant's  proxy statement with respect to the
2006 Annual Meeting of Stockholders of the Registrant have been  incorporated by
reference herein.

                                       2
<PAGE>


         Item 1 of this Form 10-K  entitled  "Business"  and Item 7 of this Form
10-K entitled  "Management's  Discussion and Analysis of Financial Condition and
Results of Operations" contain 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.  Forward-looking  statements are inherently  uncertain and
actual results could differ  materially  from those  expressed or implied by the
forward-looking   statements.   These   forward-looking   statements  should  be
considered  in the  context of the  business  risks set forth  below in Item 1A,
"Risk Factors."

PART I

ITEM 1.  BUSINESS

         Affinity  Technology  Group, Inc. (the "Company") was 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.  Products and services  previously  offered by the Company include
its  DeciSys/RT(R)  loan processing  system,  which automated the processing and
consummation of consumer financial services transactions; the Affinity Automated
Loan  Machine  (the  ALM),  which  allowed  an  applicant  to apply for and,  if
approved,  obtain a loan in as little as ten minutes;  the Mortgage  ALM,  which
allowed an  applicant  to apply for a  mortgage  loan;  E-xpertLender(R),  which
permitted a financial  institution to make automated  lending  decisions through
its call centers and branches; iDEAL, which permitted automobile lenders to make
automobile  lending  decisions  for loan  applications  originated at automobile
dealers;  and rtDS,  which  permitted  lenders to deliver  credit  decisions  to
applicants  over the  Internet.  Due to capital  constraints,  the  Company  has
suspended all efforts to further develop,  market and operate these products and
services.  The Company's last processing  contract  terminated in late 2002, and
the  Company  has no plans in the near term to engage in further  sales or other
activities related to its products or services, other than to attempt to license
certain  of  the  patents  that  it  owns.  Currently,  the  Company's  business
activities  consist  exclusively of attempting to enter into license  agreements
with third parties to license the Company's rights under certain of its patents.

         In conjunction  with its product  development  activities,  the Company
applied for and obtained three patents. The Company has been granted two patents
covering  its  fully-automated  loan  processing  systems  (U.  S.  Patents  No.
5,870,721 and 5,940,811).  In August 2000, the U.S. Patent and Trademark  Office
issued to the Company a patent covering the  fully-automated  establishment of a
financial account,  including credit accounts (U. S. Patent No.  6,105,007).  In
addition,  in 1997 the  Company  acquired a patent  that  covers  the  automated
processing of an insurance binder through a kiosk (U. S. Patent No. 5,537,315).

         Both of the Company's  patents covering fully automated loan processing
systems  have been subject to  reexamination  by the U.S.  Patent and  Trademark
Office (the "PTO") as a result of challenges  to such patents by third  parties.
On January 28, 2003, the Company  received a  Reexamination  Certificate  (U. S.
Patent No. 5,870,721 C1) from the PTO which formally concluded the reexamination
of U. S. Patent No.  5,870,721.  On December  20, 2005,  the Company  received a
Reexamination  Certificate  (U.S.  Patent No.  5,940,811  C1) from the PTO which
formally concluded the reexamination of U.S. Patent No. 5,940,811.

         On March 26, 2004,  the Company was  notified by  Federated  Department
Stores,  Inc.  ("Federated") and Ameritrade Holding  Corporation  ("Ameritrade")
that they had jointly filed a request with the PTO to reexamine U. S. Patent No.
6,105,007.  On June 23, 2004, the Company received notification that the PTO had
granted the request for reexamination.  The Company has lawsuits pending against
Federated and Ameritrade in the Columbia  Division of the United States District
Court for the State of South Carolina (the "Columbia Federal Court") in which it
claims that both Federated and Ameritrade  infringe U. S. Patent No.  6,105,007.
The Company has similar litigation pending against Household International, Inc.
("Household"),  in which it claims  that  Household  infringes  U.S.  Patent No.
5,870,721 C1, No. 5,940,811 C1 and No. 6,105,007.  The Company has jointly, with
Federated,  Ameritrade  and Household,  requested the Columbia  Federal Court to
stay the lawsuits against Federated, Ameritrade and Household pending resolution
of the  reexamination  of U. S.  Patent  No.  6,105,007.  On March 30,  2006 the
Company was notified that the PTO has concluded the reexamination of U.S. Patent
No. 6,105,007 and has issued a "Notice of Intent to Issue Ex Parte Reexamination
Certificate"  (the  "Notice").  The  Notice  indicates  that  the  reexamination
resulted in the full  allowance of all the claims of the Company's  U.S.  Patent
No.  6,105,007.  The Company  expects to request  that the stay of the  lawsuits
against  Federated,  Ameritrade and Household be lifted so that the lawsuits may
proceed in the Columbia Federal Court. It may take an extended period of time to
complete the litigation  with  Federated,  Ameritrade  and Household.  Moreover,
protracted  litigation  with  Federated,  Ameritrade  and  Household  may have a
material adverse effect on the Company's patent licensing program and impede its
ability  to  attract  additional  capital  resources  in order to  continue  its
operations.

                                       3
<PAGE>

         It is  possible  that third  parties  may bring  additional  actions to
contest all or some of the Company's patents. The Company can make no assurances
that it will not lose all or some of the claims covered by its existing patents.

         To date, the Company has generated substantial operating losses and has
been  required  to use a  substantial  amount  of cash  resources  to  fund  its
operations.  At December 31, 2005, the Company had cash and cash  equivalents of
$13,776.  As of March 31, 2006, the Company had almost completely  exhausted its
remaining cash resources. Unless it secures additional capital immediately,  the
Company may have to consider  alternatives for winding down its business,  which
may include  offering its patents for sale or filing for bankruptcy  protection.
Moreover,  the  Company  currently  does  not have the  resources  to repay  the
principal and accrued interest  outstanding under its convertible  secured notes
(the "notes"),  which have become due and payable in full as discussed below. If
any of the holders of these notes  takes  action to collect the amounts  owed by
the  Company  under  these  notes,  the  Company  will  be  forced  to  consider
alternatives  for winding  down its  business,  which may include  offering  its
patents for sale or filing for bankruptcy protection.

         Since 2002, the Company has issued an aggregate of $1,425,336 principal
amount of convertible  secured notes to certain investors as part of its efforts
to raise  additional  capital.  These notes bear interest at 8%, are convertible
into the Company's  common stock at a conversion rate of $.20 per share, and are
secured by the Company's  equity interest in  decisioning.com,  Inc., which owns
the Company's  patent  portfolio.  The  outstanding  notes include a note in the
principal  amount of $125,000  acquired on June 3, 2002 by the  Company's  Chief
Executive  Officer and a note in the  principal  amount of $100,000  acquired on
November 5, 2003 by a subsidiary  of The South  Financial  Group,  which at that
time  owned  approximately  12%  of the  Company's  outstanding  capital  stock.
Principal and interest under these notes  generally  becomes  payable in full on
the second  anniversary  of the date on which these notes were issued.  However,
under the terms of the notes,  the full amount of principal  and interest  under
all notes  becomes  immediately  due and  payable in certain  events,  including
bankruptcy  or  similar  proceedings  involving  the  Company,  a default in the
payment of principal and interest  under any note, or a change in control of the
Company.

         To date,  notes with a principal  amount of $1,206,336  have become due
and payable in accordance with their  contractual  two-year  maturity dates. The
Company  has had  discussions  with the  holders of these  notes  regarding  the
extension of the maturity date of these notes. However, the Company has not been
successful  in  reaching  an  agreement  with all of the  holders of these notes
regarding an extension of their maturity date.  Because the Company is currently
in default  regarding payment of principal and interest due under certain of the
notes, the full amount of principal and interest outstanding under all notes has
become due and payable.  Accordingly,  the full amount of principal  and accrued
interest under all of these notes is shown as a current liability of the Company
as of December 31, 2005.  As of December  31, 2005,  and December 31, 2004,  the
amount of principal and accrued interest  outstanding under all of the notes was
$1,595,906 and $1,383,149, respectively.


                                       4
<PAGE>

         To remain viable, the Company must generate working capital through the
sale of patent licenses or by raising additional  capital.  To date, the Company
generally  has been unable to enter into  licensing  agreements  with  potential
licensees upon terms that are acceptable to the Company. As discussed above, the
Company  has  been  forced  to  become   involved  in  litigation  with  alleged
infringers. The Company believes that these lawsuits may take an extended period
of time to complete,  and no  assurance  can be given that the Company will have
the resources necessary to complete these lawsuits or that it will be successful
in obtaining a favorable outcome.  Accordingly,  to remain viable it is critical
that the Company raise  additional  capital  immediately.  The  uncertainties of
these  litigation  matters and other factors  affecting the Company's  short and
long-term  liquidity  discussed  above has impeded  and will likely  continue to
impede the  Company's  ability to raise  additional  capital.  To  maintain  the
minimal  resources  necessary  to support its current  operations  and execute a
patent  licensing  strategy,  the  Company  does not  believe  that  substantial
additional  reductions in its operating expenses are feasible. No assurances can
be given that the Company will be able to raise  additional  capital or generate
working capital from its patent licensing business.

         The Company has been a defendant in a lawsuit  brought by Temple Ligon,
who  claims  that the  Company  breached  an  agreement  to give him a 1% equity
interest in the Company in consideration of services he claims to have performed
in 1993 and 1994 in  conjunction  with the formation of the Company.  In January
2004,  this  litigation  resulted  in a jury  verdict  against  the  Company  of
$382,148.  In connection with the litigation and the resulting jury verdict, the
Company  filed  post-trial  motions  with the trial court in which,  among other
things,  it claimed that the jury verdict should be set aside. On July 23, 2004,
the trial judge granted the Company's motions,  set aside the jury verdict,  and
ordered entry of a judgment in favor of the Company.  The plaintiff has appealed
the trial judge's ruling to the South Carolina Court of Appeals.  If the Company
becomes  obligated  to pay more  than an  insignificant  amount  of  damages  in
connection with this litigation,  it will be forced to consider alternatives for
winding down its  business,  which may include  offering its patents for sale or
filing for bankruptcy protection.

         The Company maintains an Internet site at HTTP://WWW.AFFI.NET, although
the contents of such web site are not incorporated into this report. The Company
has made its annual  reports on Form 10-K,  quarterly  reports on Form 10-Q, and
current  reports  on Form  8-K and any  amendments  to these  reports  available
through its web site free of charge through a link to the SEC's web site.

         The Company was  incorporated  as a Delaware  corporation  in 1994. Its
principal  executive  offices are  located at 8807-A Two Notch  Road,  Columbia,
South Carolina 29223, and its telephone number is (803) 758-2511.

         PATENT LICENSING AGENT

         On May 27, 2003,  decisioning.com  entered into a legal  representation
agreement  with Withrow &  Terranova,  PLLC,  pursuant to which  decisioning.com
appointed  Withrow & Terranova,  PLLC as its  exclusive  representative  for the
solicitation and negotiation of agreements to license decisioning.com's patents.
(This  arrangement  replaced the former patent licensing agent agreement between
decisioning.com  and  Information  Ventures  LLC  d/b/a  LPS  Group,  which  was
terminated on April 30, 2003.) Under the  agreement,  Withrow & Terranova,  PLLC
has agreed to promote,  market,  solicit, and negotiate the licensing of patents
with  third  parties  and to  represent  decisioning.com  as  legal  counsel  in
connection  with any patent  litigation  associated  with the enforcement of the
patents.  As  compensation  for its  services  under  the  agreement,  Withrow &
Terranova will receive 25% of all revenues received by decisioning.com under any
patent  agreements  and 25% of all  amounts  paid in  settlement  of any  patent
litigation  commenced by the Company.  The term of the agreement is for the life
of the patents,  subject to either  party's right to terminate the agreement for
"cause," as specified in the  agreement,  and without cause  following the third
anniversary of the agreement. If the agreement is terminated by decisioning.com,
Withrow & Terranova,  PLLC will be entitled to continue to receive  compensation
attributable to patent  agreements  negotiated prior to termination and, if such
termination is without cause, compensation for certain future patent agreements.


                                       5
<PAGE>



         COMPETITION

         The market for technologies that enable  electronic  commerce is highly
competitive  and is  subject  to  rapid  innovation  and  technological  change,
shifting consumer  preferences,  new product  introductions and competition from
traditional  methods  having all or some of the same  features  as  technologies
enabling electronic  commerce.  Competitors in this market have frequently taken
different  strategic  approaches  and  have  launched  substantially   different
products or services in order to exploit the same perceived market  opportunity.
Until the market actually validates a strategy through widespread  acceptance of
a product or  service,  it is  difficult  to identify  all current or  potential
market participants.  There can be no assurance that the technologies covered by
the Company's patents will be competitive technologically or otherwise.

         Electronic  commerce  technologies  in general,  including  the methods
covered  by  the  Company's  patents,   compete  with  traditional  methods  for
processing financial transactions. The success of the Company's patent licensing
efforts will depend in part on consumer  acceptance of  electronic  commerce and
industry use of systems that are covered by the Company's patents.

         INTELLECTUAL PROPERTY

         The Company was issued two patents in 1999 covering systems and methods
for real-time loan processing over a computer network without human intervention
("System and Method for Real-time Loan Approval", U.S. Patent No. 5,870,721, and
"Closed-loop  Financial  Transaction  Method  and  Apparatus,"  U.S.  Patent No.
5,940,811).  Both  of  the  Company's  patents  covering  fully  automated  loan
processing  systems expire in 2013 and have been subject to reexamination by the
PTO at the request of third  parties  who have  challenged  the  validity of the
patents.  On January 28, 2003, the Company received a Reexamination  Certificate
relating  to the  completion  of the PTO's  reexamination  of U. S.  Patent  No.
5,870,721.   On  December  20,  2005,  the  Company   received  a  Reexamination
Certificate relating to the completion of the PTO's reexamination of U.S. Patent
No. 5,940,811.

         In August 2000, the Company was issued a patent  covering the automated
establishment  of a financial  account  without human  intervention  ("Automatic
Financial Account Processing  System",  U.S. Patent No.  6,105,007).  The patent
expires in 2013.  On June 23, 2004,  the Company was notified by the PTO that it
had granted a reexamination  request  previously  filed by Federated  Department
Stores, Inc. ("Federated") and Ameritrade Holding Corporation  ("Ameritrade") to
reexamine U. S. Patent No.  6,105,007.  The Company has lawsuits pending against
Federated and Ameritrade in the Columbia  Division of the United States District
Court for the State of South Carolina (the "Court") in which it claims that both
Federated and Ameritrade  infringe U. S. Patent No.  6,105,007.  The Company has
similar litigation pending against Household International,  Inc. ("Household"),
in which it claims that Household  infringes U.S.  Patent No.  5,870,721 C1, No.
5,940,811  C1 and No.  6,105,007.  The  Company  has  jointly,  with  Federated,
Ameritrade  and  Household,  requested  the Columbia  Federal  Court to stay the
lawsuits against  Federated,  Ameritrade and Household pending resolution of the
reexamination of U. S. Patent No.  6,105,007.  On March 30, 2006 the Company was
notified by the PTO that the  reexamination  had been  concluded and that all of
the claims of U.S. Patent No. 6,105,007 had been allowed. The Company expects to
request  that  the  stay  of the  lawsuits  against  Federated,  Ameritrade  and
Household be lifted so that the  lawsuits  may proceed in the  Columbia  Federal
Court.  It may take an extended  period of time to complete the litigation  with
Federated, Ameritrade and Household.

         Other parties may take actions to challenge the Company's patents.  The
Company can make no  assurances  that it will not lose all or some of the claims
covered by its existing patents.

         The Company also holds a patent,  which  expires in 2014,  covering the
issuance  of  insurance  products  automatically  through a kiosk  ("Method  and
Apparatus for Issuing Insurance from a Kiosk", U.S. Patent No. 5,537,315).

         "DeciSys/RT",  and  "E-xpertLender"  are  registered  trademarks of the
Company and "Affinity Technologies," "iDEAL," "rtDS," and "Affinity enabled" are
registered service marks of the Company.

         The  Company's  success is  completely  dependent  upon its  ability to
defend and license its patents.  There can be no assurance that the Company will
be  able  to  protect  its  intellectual  property.  Moreover,  there  can be no
assurance that new  technological  innovations  will not be developed and widely
accepted  by the market  which will  render  obsolete  the types of systems  and
methods over which the Company believes it has proprietary intellectual property
rights.


                                       6
<PAGE>

         EMPLOYEES

         At December 31, 2005, the Company employed 1 full-time employee and one
part-time employee,  compared to 3 full-time employees at December 31, 2004. The
Company has no collective bargaining agreements.

ITEM 1A. RISK FACTORS

         In addition to the other  information  in this report,  readers  should
carefully consider the following  important factors,  among others, that in some
cases have  affected,  and in the future  could  affect,  the  Company's  actual
results and could cause the Company's  future results to differ  materially from
those expressed in any forward looking  statements made by, or on behalf of, the
Company.

         LIMITED CAPITAL RESOURCES; OPERATING LOSSES

         The Company has generated net losses of $69,244,419 since its inception
and has financed its operations  primarily through net proceeds from its initial
public  offering  in May 1996 and  cash  generated  from  operations  and  other
financing transactions.  Net proceeds from the Company's initial public offering
were $60,088,516.

         To date, the Company has generated substantial operating losses and has
been  required  to use a  substantial  amount  of cash  resources  to  fund  its
operations.  At December 31, 2005, the Company had cash and cash  equivalents of
$13,776.  As of March 31, 2006, the Company had almost completely  exhausted its
remaining cash resources. Unless it secures additional capital immediately,  the
Company may have to consider  alternatives for winding down its business,  which
may include  offering its patents for sale or filing for bankruptcy  protection.
Moreover,  the  Company  currently  does  not have the  resources  to repay  the
principal and accrued interest  outstanding under its convertible  secured notes
(the "notes"),  which have become due and payable in full as discussed below. If
any of the holders of these notes  takes  action to collect the amounts  owed by
the  Company  under  these  notes,  the  Company  will  be  forced  to  consider
alternatives  for winding  down its  business,  which may include  offering  its
patents for sale or filing for bankruptcy protection.

         Since 2002, the Company has issued an aggregate of $1,425,336 principal
amount of convertible  secured notes to certain investors as part of its efforts
to raise  additional  capital.  These notes bear interest at 8%, are convertible
into the Company's  common stock at a conversion rate of $.20 per share, and are
secured by the Company's  equity interest in  decisioning.com,  Inc., which owns
the Company's  patent  portfolio.  The  outstanding  notes include a note in the
principal  amount of $125,000  acquired on June 3, 2002 by the  Company's  Chief
Executive  Officer and a note in the  principal  amount of $100,000  acquired on
November 5, 2003 by a subsidiary  of The South  Financial  Group,  which at that
time  owned  approximately  12%  of the  Company's  outstanding  capital  stock.
Principal and interest under these notes  generally  becomes  payable in full on
the second  anniversary  of the date on which these notes were issued.  However,
under the terms of the notes,  the full amount of principal  and interest  under
all notes  becomes  immediately  due and  payable in certain  events,  including
bankruptcy  or  similar  proceedings  involving  the  Company,  a default in the
payment of principal and interest  under any note, or a change in control of the
Company.

         To date,  notes with a principal  amount of $1,206,336  have become due
and payable in accordance with their  contractual  two-year  maturity dates. The
Company  has had  discussions  with the  holders of these  notes  regarding  the
extension of the maturity date of these notes. However, the Company has not been
successful  in  reaching  an  agreement  with all of the  holders of these notes
regarding an extension of their maturity date.  Because the Company is currently
in default  regarding payment of principal and interest due under certain of the
notes, the full amount of principal and interest outstanding under all notes has
become due and payable.  Accordingly,  the full amount of principal  and accrued
interest under all of these notes is shown as a current liability of the Company
as of December 31, 2005.  As of December  31, 2005,  and December 31, 2004,  the
amount of principal and accrued interest  outstanding under all of the notes was
$1,595,906 and $1,383,149, respectively.


                                       7
<PAGE>

         To remain viable, the Company must generate working capital through the
sale of patent licenses or by raising additional  capital.  To date, the Company
generally  has been unable to enter into  licensing  agreements  with  potential
licensees upon terms that are acceptable to the Company. As discussed above, the
Company  has  been  forced  to  become   involved  in  litigation  with  alleged
infringers. The Company believes that these lawsuits may take an extended period
of time to complete,  and no  assurance  can be given that the Company will have
the resources necessary to complete these lawsuits or that it will be successful
in obtaining a favorable outcome.  Accordingly,  to remain viable it is critical
that the Company raise  additional  capital  immediately.  The  uncertainties of
these  litigation  matters and other factors  affecting the Company's  short and
long-term  liquidity  discussed  above has impeded  and will likely  continue to
impede the  Company's  ability to raise  additional  capital.  To  maintain  the
minimal  resources  necessary  to support its current  operations  and execute a
patent  licensing  strategy,  the  Company  does not  believe  that  substantial
additional  reductions in its operating expenses are feasible. No assurances can
be given that the Company will be able to raise  additional  capital or generate
working capital from its patent licensing business.

         The Company has been a defendant in a lawsuit  brought by Temple Ligon,
who  claims  that the  Company  breached  an  agreement  to give him a 1% equity
interest in the Company in consideration of services he claims to have performed
in 1993 and 1994 in  conjunction  with the formation of the Company.  In January
2004,  this  litigation  resulted  in a jury  verdict  against  the  Company  of
$382,148.  In connection with the litigation and the resulting jury verdict, the
Company  filed  post-trial  motions  with the trial court in which,  among other
things,  it claimed that the jury verdict should be set aside. On July 23, 2004,
the trial judge granted the Company's motions,  set aside the jury verdict,  and
ordered entry of a judgment in favor of the Company.  The plaintiff has appealed
the trial judge's ruling to the South Carolina Court of Appeals.  If the Company
becomes  obligated  to pay more  than an  insignificant  amount  of  damages  in
connection with this litigation,  it will be forced to consider alternatives for
winding down its  business,  which may include  offering its patents for sale or
filing for bankruptcy protection.

         In  order  to fund  its  operations,  the  Company  may  need to  raise
additional  funds through the issuance of additional  convertible debt or equity
securities,  in which case the percentage  ownership of the  stockholders of the
Company may be reduced,  stockholders may experience  additional  dilution,  and
such  securities  may have rights,  preferences  or privileges  senior to common
stock. There can be no assurance that additional  financing will be available on
terms  acceptable to the Company or at all. If adequate  funds are not available
or not  available  on  acceptable  terms,  the Company may be unable to continue
operations.

         DEPENDENCE ON PATENT LICENSING PROGRAM

         Due to capital constraints, the Company has suspended efforts to deploy
its loan processing  products and services.  The Company's  business  activities
currently  consist  exclusively of attempting to license certain of its patents.
The  Company's  prospects  are dependent on its ability to finance and execute a
sustainable patent licensing program. Even though the Company believes there are
companies  that may be using  systems,  processes  and  methods  covered  by the
Company's  patents,  it is not known  whether the Company  will be able to enter
into  any new  licensing  agreements.  Moreover,  the  Company  may not have the
resources to sustain its patent  licensing  program,  enforce its patent rights,
finance any related  litigation,  or successfully  negotiate  patent licenses on
terms that will generate meaningful future revenues.

         The Company is further subject to the risk that negotiations to license
its  patents  may be lengthy  and that it may be  necessary  for the  Company to
become  involved in litigation to assert and protect its  intellectual  property
rights.  To date, the Company  generally has been unable to enter into licensing
agreements  with  potential  licensees  upon  terms that are  acceptable  to the
Company.  As a  result,  the  Company  has been  forced to  become  involved  in
litigation with alleged infringers.  Currently, the Company is involved in three
patent litigation actions.  The Company believes that these lawsuits may take an
extended period of time to complete.  No assurance can be given that the Company
will have the resources  necessary to complete these lawsuits or that it will be
successful in obtaining a favorable  outcome.  Prolonged patent litigation could
have a material adverse effect on the Company's business,  operating results and
financial position.


                                       8
<PAGE>

         CHALLENGES TO PATENTS

         Both of the Company's patents covering  fully-automated loan processing
systems have been subject to reexamination by the PTO as a result of requests by
third parties who have  challenged  the validity of the patents.  On January 28,
2003,  the  Company  received  a  Reexamination   Certificate  relating  to  the
completion of the PTO's reexamination of U. S. Patent No. 5,870,721. On December
20,  2005,  the Company  received a  Reexamination  Certificate  relating to the
completion of the PTO's reexamination of U.S. Patent No. 5,940,811.

         On March 26, 2004,  the Company was  notified by  Federated  Department
Stores,  Inc.  ("Federated") and Ameritrade Holding  Corporation  ("Ameritrade")
that they had jointly filed a request with the PTO to reexamine U. S. Patent No.
6,105,007.  On June 23, 2004, the Company received notification that the PTO had
granted the request for reexamination.  The Company has lawsuits pending against
Federated and Ameritrade in the Columbia  Division of the United States District
Court for the State of South Carolina (the "Columbia Federal Court") in which it
claims that both Federated and Ameritrade  infringe U. S. Patent No.  6,105,007.
The Company has similar litigation pending against Household International, Inc.
("Household"),  in which it claims  that  Household  infringes  U.S.  Patent No.
5,870,721 C1, No. 5,940,811 C1 and No. 6,105,007.  The Company has jointly, with
Federated,  Ameritrade  and Household,  requested the Columbia  Federal Court to
stay the lawsuits against Federated, Ameritrade and Household pending resolution
of the  reexamination  of U. S.  Patent  No.  6,105,007.  On March 30,  2006 the
Company was notified that the PTO has concluded the reexamination of U.S. Patent
No. 6,105,007 and has issued a "Notice of Intent to Issue Ex Parte Reexamination
Certificate"  (the  "Notice").  The  Notice  indicates  that  the  reexamination
resulted in the full  allowance of all the claims of the Company's  U.S.  Patent
No.  6,105,007.  The Company  expects to request  that the stay of the  lawsuits
against  Federated,  Ameritrade and Household be lifted so that the lawsuits may
proceed in the Columbia Federal Court. It may take an extended period of time to
complete the litigation  with  Federated,  Ameritrade  and Household.  Moreover,
protracted  litigation  with  Federated,  Ameritrade  and  Household  may have a
material adverse effect on the Company's patent licensing program and impede its
ability  to  attract  additional  capital  resources  in order to  continue  its
operations.

         It is  possible  that third  parties  may bring  additional  actions to
contest all or some of the Company's  patents.  The Company may lose all or some
of the claims covered by its existing  patents as a result of existing or future
challenges. The loss of all or some of its claims or a significant limitation of
such claims could have a material  adverse  effect on the  Company's  ability to
execute a  successful  patent  licensing  program.  Moreover,  if other  parties
request  reexaminations  of or otherwise  challenge the Company's patents in the
future,  the  Company  is subject  to the risk that such  proceeding  may not be
resolved to the Company's  satisfaction  on a timely basis,  if at all. Any such
proceeding  may  have a  material  adverse  effect  on the  Company's  business,
operating results and financial position.  Moreover, in the event a challenge to
the  Company's  patents  results  in a  significant  loss  of all or some of its
claims,  the Company's  only remedy may be to contest the decision,  which would
likely be a lengthy process. Due to the Company's limited capital resources,  it
is unlikely that the Company  could  successfully  contest the decision  without
additional  cash resources.  Accordingly,  a decision by the PTO to limit all or
some of the Company's  patent claims could have a material adverse effect on the
Company's business, operating results and financial position.


                                       9
<PAGE>

         DEPENDENCE ON E-COMMERCE TECHNOLOGIES

         The Company's patents are specific to the e-commerce  businesses of the
financial  services industry and generally cover the automated  establishment of
loans,  financial accounts and credit accounts using specific e-commerce related
systems, processes and methods. The market for products and services that enable
e-commerce is subject to change and technological development, shifting consumer
preferences, new product introductions and competition from traditional products
and  services  having all or some of the same  features as products and services
which enable e-commerce. It is possible that new products or technologies may be
developed that may render obsolete the systems, processes and methods over which
the Company believes it has intellectual property rights. Moreover, the delivery
of products and services through e-commerce channels is not fully developed, and
competition  from  traditional  channels  to  deliver  these same  products  and
services  is  intense.  Any  wide-scale  rejection  of  e-commerce  channels  by
consumers  will  have a  material  adverse  effect  on the  Company's  business,
operating results and financial position.

         DEPENDENCE ON THIRD PARTIES

         Patent licensing is a highly  technical and specialized  business which
requires the Company to rely on the services of third parties.  In May 2003, the
Company  appointed  Withrow & Terranova,  PLLC as its exclusive patent licensing
agent. Under the terms of the agreement,  Withrow & Terranova,  PLLC has agreed,
among other things,  to perform  market  research,  initiate the sales of patent
license agreements,  negotiate patent licensing arrangements with third parties,
and represent the Company as legal counsel in connection with the enforcement of
its patents.  Accordingly, the Company is dependent on Withrow & Terranova, PLLC
to  successfully  execute  its  patent  licensing  program.   Additionally,  the
agreement  requires  Withrow & Terranova,  PLLC to coordinate  the engagement of
experts,  on terms satisfactory to the Company,  if litigation becomes necessary
to enforce the Company's  patent  rights.  The success of the  Company's  patent
licensing  program and enforcement of its patents may depend on the satisfactory
retention  and  efforts of experts.  Moreover,  experts  frequently  request and
charge significant fees.

         POTENTIAL FOR FLUCTUATION IN QUARTERLY RESULTS

         Since its inception,  the Company's  quarterly  results have fluctuated
and have not been susceptible to meaningful  period-to-period  comparisons.  The
Company believes that it may continue to experience significant  fluctuations in
its  quarterly   operating  results  in  the  foreseeable  future.  The  Company
anticipates that its period-to-period  revenue and operating results will depend
on  numerous  factors  including  the  ability of the  Company  to  successfully
negotiate and enter into patent licensing  agreements and the timing,  terms and
the pricing attributes of any such agreements.

         The Company believes that period-to-period comparisons of its operating
results are not  meaningful  and should not be relied upon as an  indication  of
future performance.  The uncertainty regarding the extent and timing of revenues
coupled with the risk of  substantial  fluctuations  in its quarterly  operating
results may have a material  adverse effect on the price of the Company's Common
Stock in the future.

         DEPENDENCE ON KEY EMPLOYEES

         The  Company  is highly  dependent  on the  services  of its  Chairman,
President and Chief  Executive  Officer,  Joseph A. Boyle.  The Company does not
have an employment  agreement with Mr. Boyle or "key man" insurance on his life.
The complete  loss of the  services of Mr.  Boyle could have a material  adverse
effect upon the Company's business,  operating results and financial  condition.
In addition, the Company's financial condition would likely adversely affect the
Company's ability to retain or recruit employees and executives.



                                       10
<PAGE>




         RISK OF SUBSTANTIAL DILUTION

         The  Company has issued  convertible  notes that are  convertible  into
common  stock at $0.20 per share,  which  could be  substantially  less than the
market  price of the common  stock at the time of  conversion.  The  issuance of
stock at a price that is less than the  market  price  could  have an  immediate
adverse effect on the market price of the Company's  common stock.  In addition,
the Company  has issued  options  and  warrants to acquire  shares of its common
stock,  and the Company may issue  additional  convertible  notes or warrants in
connection with financing  arrangements  and may grant  additional stock options
under its stock option plan that may further dilute the Company's  common stock.
The exercise of such  securities  would have a dilutive  effect on the Company's
common stock.  Also, to the extent that persons who acquire shares under all the
foregoing agreements sell those shares in the market, the price of the Company's
shares may decrease due to additional shares in the market.

         VOLATILITY OF STOCK PRICE AND RISK OF LITIGATION

         The Company's  common stock price has been volatile and has experienced
substantial  and  sudden  fluctuations  in  response  to a number of events  and
factors.  In addition,  the stock market has experienced  significant  price and
volume  fluctuations  that have especially  affected the market prices of equity
securities of many companies directly and indirectly  involved in the technology
sector, and that often have been unrelated to the operating  performance of such
companies.  These broad  market  fluctuations  have  adversely  affected and may
continue to adversely  affect the market price of the Company's common stock. In
the past,  following  periods of  volatility  in the market price of a company's
securities, securities class action litigation has often been instituted against
such a  company.  Such  litigation  could  result  in  substantial  costs  and a
diversion of management's  attention and resources,  which would have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.

         ANTI-TAKEOVER PROVISIONS

         Certain  provisions  of Delaware law and the Company's  Certificate  of
Incorporation and bylaws could have the effect of making it more difficult for a
third party to acquire,  or of  discouraging  a third party from  attempting  to
acquire,  control of the  Company.  Such  provisions  could limit the price that
certain  investors  might be  willing  to pay in the  future  for  shares of the
Company's  common  stock.  These  provisions  of Delaware law and the  Company's
Certificate of Incorporation and bylaws may also have the effect of discouraging
or preventing  certain types of  transactions  involving an actual or threatened
change of control of the Company (including unsolicited takeover attempts), even
though such a transaction may offer the Company's  stockholders  the opportunity
to sell their stock at a price above the  prevailing  market  price.  Certain of
these  provisions  allow the Company to issue preferred stock with rights senior
to those of the common  stock and other rights that could  adversely  affect the
interests of holders of common  stock  without any further vote or action by the
stockholders.  The issuance of preferred stock, for example,  could decrease the
amount of earnings or assets available for distribution to the holders of common
stock or could adversely affect the rights and powers,  including voting rights,
of the holders of the common  stock.  In certain  circumstances,  such  issuance
could have the effect of  decreasing  the market price of the common  stock,  as
well as having the anti-takeover effects discussed above.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

         Not applicable.

ITEM 2.  PROPERTIES

         The  Company's  principal  executive  offices are located at 8807-A Two
Notch  Road  in  Columbia,   South  Carolina.   Such  office  space  encompasses
approximately 300 square feet and is currently under a month-to-month lease. The
Company also leases warehouse space located in Columbia,  South Carolina,  which
encompasses   approximately   4,000   square   feet.   Such  space  is  under  a
month-to-month lease.



                                       11
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         The Company and its founder,  Jeff Norris,  are defendants in a lawsuit
filed by Temple  Ligon on November 30, 1996 in the Court of Common Pleas for the
County of Richland in Columbia,  South Carolina.  Mr. Ligon claims,  among other
things,  that the Company and Mr. Norris  breached an agreement to give him a 1%
equity interest in the Company in  consideration of services Mr. Ligon claims to
have  performed  in 1993  and 1994 in  conjunction  with  the  formation  of the
Company,  and seeks  monetary  damages of  $5,463,000.  This  lawsuit  initially
resulted in a jury verdict  against the Company of $68,000.  However,  Mr. Ligon
subsequently  requested  and was  granted a new  trial.  In January  2004,  this
lawsuit  resulted in another  jury verdict  against the Company of $382,148.  In
connection with the litigation and the resulting jury verdict, the Company filed
post-trial motions with the trial court in which, among other things, it claimed
that the jury verdict  should be set aside.  On July 23,  2004,  the trial judge
granted the Company's motions,  set aside the jury verdict, and ordered entry of
a judgment in favor of the Company. The plaintiff has appealed the trial judge's
ruling to the South Carolina Court of Appeals.  If the Company becomes obligated
to pay more than an  insignificant  amount of  damages in  connection  with this
litigation,  it will be forced to consider  alternatives  for  winding  down its
business,  which  may  include  offering  its  patents  for sale or  filing  for
bankruptcy protection.

         In June 2003, the Company filed a lawsuit against Federated  Department
Stores,  Inc.,  and certain of its  subsidiaries  alleging  that  Federated  has
infringed  one of the  Company's  patents  (U.  S.  Patent  No.  6,105,007).  In
September 2003, the Company filed a similar lawsuit against  Ameritrade  Holding
Corporation and its subsidiary,  Ameritrade,  Inc. (collectively  "Ameritrade"),
alleging infringement of the same patent. Both lawsuits were filed in the United
States  District  Court in  Columbia,  South  Carolina  (the  "Columbia  Federal
Court"),  and both seek unspecified  damages. On March 26, 2004, the Company was
notified by Federated and Ameritrade  that they had jointly filed a request with
the PTO to reexamine U. S. Patent No.  6,105,007.  On June 23, 2004, the Company
received  notification  that the PTO had granted the request for  reexamination.
The Company has jointly,  with Federated and Ameritrade,  requested the Columbia
Federal  Court to stay the lawsuits  against  Federated and  Ameritrade  pending
resolution of the reexamination of U. S. Patent No. 6,105,007. On March 30, 2006
the Company was notified that the PTO has concluded  the  reexamination  of U.S.
Patent  No.  6,105,007  and has  issued a  "Notice  of  Intent to Issue Ex Parte
Reexamination  Certificate"  (the  "Notice").  The  Notice  indicates  that  the
reexamination  resulted in the full allowance of all the claims of the Company's
U.S. Patent No.  6,105,007.  The Company expects to request that the stay of the
lawsuits  against  Federated  and  Ameritrade be lifted so that the lawsuits may
proceed in the Columbia Federal Court. It may take an extended period of time to
complete the litigation with Federated, Ameritrade and Household.

         In November 2003, Household  International,  Inc. ("Household") filed a
declaratory  judgment  action against the Company in the United States  District
Court in Wilmington,  Delaware (the "Delaware Federal Court").  In its complaint
Household  requested the Delaware  Federal Court to rule that  Household was not
infringing any of the claims of the Company's patents (U.S. Patent No. 5,870,721
C1, No.  5,940,811 C1, and No.  6,105,007)  and that the patents were not valid.
The Company  filed  counterclaims  against  Household  claiming  that  Household
infringes U. S. Patent No. 5,870,721 C1, No. 5,940,811 C1 and No. 6,105,007. The
Company also filed a motion with the Delaware Federal Court to transfer the case
to the Columbia Federal Court. In April 2004, the Delaware Federal Court granted
the Company's motion to transfer the case to Columbia Federal Court. The Company
has jointly,  with  Household,  requested  and received a stay of the  Household
action from the  Columbia  Federal  Court  pending the  resolution  of the PTO's
reexamination  of U.S. Patent No.  6,105,007.  As discussed  above,  the PTO has
concluded the  reexamination  of U.S.  Patent No.  6,105,007.  Accordingly,  the
Company  expects to request  that the stay of the lawsuit  against  Household be
lifted so that the lawsuit may proceed in the Columbia Federal Court.




                                       12
<PAGE>




ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

  NAME                   AGE     POSITION WITH THE COMPANY
-----------------        ---     -------------------------
  Joseph A. Boyle        52      Chairman, President, Chief Executive
                                 Officer, and Chief Financial Officer
  S. Sean Douglas        37      Executive Vice President and
                                 Chief Operating Officer

JOSEPH A. BOYLE became  President and Chief Executive  Officer of the Company in
January  2000 and  Chairman  in March 2001.  Mr.  Boyle has also served as Chief
Financial  Officer of the Company since  September 1996. Mr. Boyle also held the
title of Senior Vice  President  from  September 1996 to January 2000. Mr. Boyle
has previously served as Secretary and Treasurer of the Company. To conserve the
Company's limited financial  resources,  Mr. Boyle has from time to time reduced
his time commitment to and compensation received from the Company. Since January
3, 2005,  Mr. Boyle has  performed  consulting  services  for a local  financial
institution.  From April 2003 to August  2004,  Mr.  Boyle also was a partner of
Elliott Davis,  LLC, a South Carolina public  accounting  firm. Prior to joining
the Company, Mr. Boyle served as Price Waterhouse,  LLP's engagement partner for
most of its Kansas City,  Missouri,  financial services clients and was a member
of  the  firm's  Mortgage  Banking  Group.  Mr.  Boyle  was  employed  by  Price
Waterhouse, LLP from June 1982 to August 1996.

S. SEAN DOUGLAS became  Executive Vice President and Chief Operating  Officer of
the  Company  in March  2003.  Mr.  Douglas  also held the title of Senior  Vice
President of Finance,  Operations and  Administration  of the Company from March
2002 to March 2003.  From January 2000 to March 2002, Mr. Douglas held the title
of Vice President and  Controller of the Company.  From November 1995 to January
2000 Mr. Douglas was the Company's accounting manager.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
         AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)           Since February 12, 2001, the Company's  common stock has traded on
              the OTC  Bulletin  Board under the symbol  "AFFI."  The  Company's
              common stock traded on the Nasdaq  SmallCap  Market from March 27,
              2000 to February 12, 2001.  Prior to March 27, 2000, the Company's
              common  stock  was  traded  on the  Nasdaq  National  Market.  The
              following  table  presents  the high and low  sales  prices of the
              Company's  Common Stock for the periods  indicated during 2005 and
              2004 as reported by the OTC Bulletin  Board.  As of March 6, 2006,
              there were 443 stockholders of record of the Common Stock.

                                                     SALES PRICE PER SHARE
                                                     ---------------------
                                                      HIGH            LOW
                                                     ------          -----
                               2005
                               First Quarter          0.19           0.05
                               Second Quarter         0.15           0.06
                               Third Quarter          0.10           0.06
                               Fourth Quarter         0.10           0.05
                               2004
                               First Quarter          0.17           0.09
                               Second Quarter         0.12           0.06
                               Third Quarter          0.07           0.04
                               Fourth Quarter         0.09           0.04

              The Company has never paid  dividends  on its capital  stock.  The
              Company  intends  to  retain  earnings,  if  any,  for  use in its
              business and does not anticipate  paying any cash dividends in the
              foreseeable future.

                                       13
<PAGE>

              On December 13, 2005, the Company issued $25,000  principal amount
              of its  convertible  secured notes to an  accredited  investor for
              cash in a transaction  exempt from  registration  pursuant to Rule
              506 of  Regulation  D and Section  4(2) of the  Securities  Act of
              1933.  These notes are convertible  into shares of common stock of
              the Company at a price of $0.20 per share.

(b) Not applicable

(c) Not applicable

ITEM 6.  SELECTED FINANCIAL DATA

         The following table presents selected financial data of the Company for
the  periods  indicated.   The  following  financial  data  should  be  read  in
conjunction  with the information set forth under  "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations,"  the  Company's
Consolidated  Financial  Statements  and Notes  thereto  and  other  information
included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                               2005           2004           2003            2002            2001
                                       -------------------------------------------------------------------------------
Statement of Operations Data:
<S>                                        <C>            <C>             <C>            <C>             <C>
Revenues                                   $    20,261    $   287,298     $   517,647    $    185,960    $  1,285,944
Cost and expenses:
    Cost of revenues                             2,026         64,265           1,765          16,846          63,751
    Research and development                         -              -               -               -         496,441
    Impairment loss                                  -              -               -               -         448,945
    Selling, general and
      administrative expenses                  486,607        732,285         996,711       1,406,841       3,847,807
                                       -------------------------------------------------------------------------------
Total costs and expenses                       488,633        796,550         998,476       1,423,687       4,856,944
                                       -------------------------------------------------------------------------------
Operating loss                                (468,372)      (509,252)       (480,829)     (1,237,727)     (3,571,000)
Interest income                                    182          1,967             694           1,643          10,101
Interest expense                               (98,197)       (95,990)        (80,373)        (70,334)       (115,557)
Litigation accrual reversal                          -        386,148               -               -               -
                                       -------------------------------------------------------------------------------
Loss from continuing operations               (566,387)      (217,127)       (560,508)     (1,306,418)     (3,676,456)
Income from operations of
    discontinued subsidiary                          -              -               -               -         467,188
Gain on disposal of subsidiary                       -              -               -               -         891,569
                                       -------------------------------------------------------------------------------
Net loss                                   $  (566,387)   $  (217,127)    $  (560,508)   $ (1,306,418)   $ (2,317,699)
                                       ===============================================================================
Loss per share - basic and diluted
    Continuing operations                  $     (0.01)   $     (0.01)    $     (0.01)   $      (0.03)   $      (0.10)
                                       ===============================================================================
    Net loss per share                     $     (0.01)   $     (0.01)    $     (0.01)   $      (0.03)   $      (0.06)
                                       ===============================================================================
Shares used in computing
    net loss per share                      42,207,884     41,926,272      41,512,897      40,707,108      38,004,089
                                       ===============================================================================
</TABLE>



                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                          December 31,
                                              2005            2004            2003            2002          2001
                                          ------------------------------------------------------------------------------
Balance Sheet Data:
<S>                                       <C>              <C>             <C>              <C>            <C>
Cash and cash equivalents                 $     13,776     $    62,756     $   578,398      $ 156,780      $  27,720
Working capital                             (1,992,056)     (1,524,772)       (909,356)       (82,512)       117,477
Total assets                                   152,311         121,240         618,002        234,848        927,657
Convertible debenture                                -               -               -              -        225,090 (1)
Convertible notes and accrued interest       1,595,906 (4)   1,383,149 (3)   1,291,841  (2)   868,427              -
Stockholder's equity (deficiency)           (2,048,371)     (1,513,523)     (1,329,579)      (908,230)       343,438
</TABLE>


------------------------------------------

(1)      Amounts outstanding under the convertible  debenture as of December 31,
         2001,  were  classified as a current  liability and,  accordingly,  are
         included in the working  capital of the Company at December  31,  2001,
         set forth above.

(2)      $756,336 of the amount  outstanding  under the convertible  notes as of
         December  31,  2003,  was  classified  as  a  current   liability  and,
         accordingly,  is  included  in the  working  capital of the  Company at
         December 31, 2003, set forth above.

(3)      All amounts  outstanding under the convertible notes as of December 31,
         2004,  were  classified as a current  liability and,  accordingly,  are
         included in the working  capital of the Company at December  31,  2004,
         set forth above.

(4)      All amounts  outstanding under the convertible notes as of December 31,
         2005,  were  classified as a current  liability and,  accordingly,  are
         included in the working  capital of the Company at December  31,  2005,
         set forth above.



                                       15
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

         The Company was formed in 1994 to develop and market  technologies that
enable financial institutions and other businesses to provide consumer financial
services  electronically with reduced or no human  intervention.  Due to capital
constraints,  the Company has suspended  efforts to deploy products and services
that use its loan processing system,  DeciSys/RT,  in order to focus its efforts
exclusively on attempting to license certain of its patents.

         In conjunction  with its product  development  activities,  the Company
applied for and obtained three patents. The Company has been granted two patents
covering its fully-automated loan processing systems (U. S. Patent No. 5,870,721
and No. 5,940,811).  In August 2000, the U.S. Patent and Trademark Office issued
to  the  Company  a  patent  covering  the  fully-automated  establishment  of a
financial account,  including credit accounts (U. S. Patent No.  6,105,007).  In
addition,  in 1997 the  Company  acquired a patent  that  covers  the  automated
processing of an insurance binder through a kiosk (U. S. Patent No. 5,537,315).

         Both of the Company's  patents covering fully automated loan processing
systems  have been subject to  reexamination  by the U.S.  Patent and  Trademark
Office (the "PTO") as a result of challenges  to such patents by third  parties.
On January 28, 2003, the Company  received a  Reexamination  Certificate  (U. S.
Patent No. 5,870,721 C1) from the PTO which formally concluded the reexamination
of U. S. Patent No.  5,870,721.  On December  20, 2005,  the Company  received a
Reexamination  Certificate  (U.S.  Patent No.  5,940,811  C1) from the PTO which
formally concluded the reexamination of U.S. Patent No. 5,940,811.

         On March 26, 2004,  the Company was  notified by  Federated  Department
Stores,  Inc.  ("Federated") and Ameritrade Holding  Corporation  ("Ameritrade")
that they had jointly filed a request with the PTO to reexamine U. S. Patent No.
6,105,007.  On June 23, 2004, the Company received notification that the PTO had
granted the request for reexamination.  The Company has lawsuits pending against
Federated and Ameritrade in the Columbia  Division of the United States District
Court for the State of South Carolina (the "Columbia Federal Court") in which it
claims that both Federated and Ameritrade  infringe U. S. Patent No.  6,105,007.
The Company has similar litigation pending against Household International, Inc.
("Household"),  in which it claims  that  Household  infringes  U.S.  Patent No.
5,870,721 C1, No. 5,940,811 C1 and No. 6,105,007.  The Company has jointly, with
Federated,  Ameritrade  and Household,  requested the Columbia  Federal Court to
stay the lawsuits against Federated, Ameritrade and Household pending resolution
of the  reexamination  of U. S.  Patent  No.  6,105,007.  On March 30,  2006 the
Company was notified that the PTO has concluded the reexamination of U.S. Patent
No. 6,105,007 and has issued a "Notice of Intent to Issue Ex Parte Reexamination
Certificate"  (the  "Notice").  The  Notice  indicates  that  the  reexamination
resulted in the full  allowance of all the claims of the Company's  U.S.  Patent
No.  6,105,007.  The Company  expects to request  that the stay of the  lawsuits
against  Federated,  Ameritrade and Household be lifted so that the lawsuits may
proceed in the Columbia Federal Court. It may take an extended period of time to
complete the litigation  with  Federated,  Ameritrade  and Household.  Moreover,
protracted  litigation  with  Federated,  Ameritrade  and  Household  may have a
material adverse effect on the Company's patent licensing program and impede its
ability  to  attract  additional  capital  resources  in order to  continue  its
operations.




                                       16
<PAGE>

         It is  possible  that third  parties  may bring  additional  actions to
contest all or some of the Company's patents. The Company can make no assurances
that it will not lose all or some of the claims covered by its existing patents.

         To date, the Company has generated substantial operating losses and has
been  required  to use a  substantial  amount  of cash  resources  to  fund  its
operations.  At December 31, 2005, the Company had cash and cash  equivalents of
$13,776.  As of March 31, 2006, the Company had almost completely  exhausted its
remaining cash resources. Unless it secures additional capital immediately,  the
Company may have to consider  alternatives for winding down its business,  which
may include  offering its patents for sale or filing for bankruptcy  protection.
Moreover,  the  Company  currently  does  not have the  resources  to repay  the
principal and accrued interest  outstanding under its convertible  secured notes
(the "notes"),  which have become due and payable in full as discussed below. If
any of the holders of these notes  takes  action to collect the amounts  owed by
the  Company  under  these  notes,  the  Company  will  be  forced  to  consider
alternatives  for winding  down its  business,  which may include  offering  its
patents for sale or filing for bankruptcy protection.

         Since 2002, the Company has issued an aggregate of $1,425,336 principal
amount of convertible  secured notes to certain investors as part of its efforts
to raise  additional  capital.  These notes bear interest at 8%, are convertible
into the Company's  common stock at a conversion rate of $.20 per share, and are
secured by the Company's  equity interest in  decisioning.com,  Inc., which owns
the Company's  patent  portfolio.  The  outstanding  notes include a note in the
principal  amount of $125,000  acquired on June 3, 2002 by the  Company's  Chief
Executive  Officer and a note in the  principal  amount of $100,000  acquired on
November 5, 2003 by a subsidiary  of The South  Financial  Group,  which at that
time  owned  approximately  12%  of the  Company's  outstanding  capital  stock.
Principal and interest under these notes  generally  becomes  payable in full on
the second  anniversary  of the date on which these notes were issued.  However,
under the terms of the notes,  the full amount of principal  and interest  under
all notes  becomes  immediately  due and  payable in certain  events,  including
bankruptcy  or  similar  proceedings  involving  the  Company,  a default in the
payment of principal and interest  under any note, or a change in control of the
Company.

         To date,  notes with a principal  amount of $1,206,336  have become due
and payable in accordance with their  contractual  two-year  maturity dates. The
Company  has had  discussions  with the  holders of these  notes  regarding  the
extension of the maturity date of these notes. However, the Company has not been
successful  in  reaching  an  agreement  with all of the  holders of these notes
regarding an extension of their maturity date.  Because the Company is currently
in default  regarding payment of principal and interest due under certain of the
notes, the full amount of principal and interest outstanding under all notes has
become due and payable.  Accordingly,  the full amount of principal  and accrued
interest under all of these notes is shown as a current liability of the Company
as of December 31, 2005.  As of December  31, 2005,  and December 31, 2004,  the
amount of principal and accrued interest  outstanding under all of the notes was
$1,595,906 and $1,383,149, respectively.

         To remain viable, the Company must generate working capital through the
sale of patent licenses or by raising additional  capital.  To date, the Company
generally  has been unable to enter into  licensing  agreements  with  potential
licensees upon terms that are acceptable to the Company. As discussed above, the
Company  has  been  forced  to  become   involved  in  litigation  with  alleged
infringers. The Company believes that these lawsuits may take an extended period
of time to complete,  and no  assurance  can be given that the Company will have
the resources necessary to complete these lawsuits or that it will be successful
in obtaining a favorable outcome.  Accordingly,  to remain viable it is critical
that the Company raise  additional  capital  immediately.  The  uncertainties of
these  litigation  matters and other factors  affecting the Company's  short and
long-term  liquidity  discussed  above has impeded  and will likely  continue to
impede the  Company's  ability to raise  additional  capital.  To  maintain  the
minimal  resources  necessary  to support its current  operations  and execute a
patent  licensing  strategy,  the  Company  does not  believe  that  substantial
additional  reductions in its operating expenses are feasible. No assurances can
be given that the Company will be able to raise  additional  capital or generate
working capital from its patent licensing business.

         The Company has been a defendant in a lawsuit  brought by Temple Ligon,
who  claims  that the  Company  breached  an  agreement  to give him a 1% equity
interest in the Company in consideration of services he claims to have performed
in 1993 and 1994 in  conjunction  with the formation of the Company.  In January
2004,  this  litigation  resulted  in a jury  verdict  against  the  Company  of
$382,148.  In connection with the litigation and the resulting jury verdict, the
Company  filed  post-trial  motions  with the trial court in which,  among other
things,  it claimed that the jury verdict should be set aside. On July 23, 2004,
the trial judge granted the Company's motions,  set aside the jury verdict,  and
ordered entry of a judgment in favor of the Company.  The plaintiff has appealed
the trial judge's ruling to the South Carolina Court of Appeals.  If the Company
becomes  obligated  to pay more  than an  insignificant  amount  of  damages  in
connection with this litigation,  it will be forced to consider alternatives for
winding down its  business,  which may include  offering its patents for sale or
filing for bankruptcy protection.


                                       17
<PAGE>

CRITICAL ACCOUNTING POLICIES

         The Company applies certain accounting  policies which are important in
understanding the Company's results of operations and the information  presented
in  the  consolidated  financial  statements.  The  Company  considers  critical
accounting  policies to be those that require  more  significant  judgments  and
estimates  in the  preparation  of its  financial  statements  and  include  the
valuation  reserve on net deferred tax assets.  The Company  records a valuation
allowance  to reduce its  deferred tax assets to the amount that it estimates is
more  likely  than not to be  realized.  As of December  31,  2005,  the Company
recorded a valuation allowance that reduced its deferred tax assets to zero

RESULTS OF OPERATIONS

         REVENUES.  The  Company's  revenues  from  continuing  operations  were
$20,261,  $287,298 and $517,647 for the years ended December 31, 2005, 2004, and
2003,  respectively.  The types of  revenue  recognized  by the  Company  are as
follows:

<TABLE>
<CAPTION>

                                                                        Years ended December 31,
                                           2005                           2004                          2003
                               ---------------------------    ---------------------------    ---------------------------
                                                    % of                           % of                           % of
                                   Amount           Total         Amount           Total          Amount          Total
                               ---------------     --------    --------------     --------    ---------------    --------
<S>                               <C>                <C>         <C>                 <C>         <C>                 <C>
Patent license revenue            $20,261            100.0       $ 267,647           93.2        $ 17,647            3.4
Other income                            -                -          19,651            6.8         500,000           96.6
                               ---------------     --------    --------------     --------    ---------------    --------
                                  $20,261            100.0       $ 287,298          100.0        $517,647          100.0
                               ===============     ========    ==============     ========    ===============    ========
</TABLE>


         PATENT LICENSE REVENUE. The Company recognized patent licensing revenue
of $20,261, $267,467 and $17,647 in 2005, 2004 and 2003, respectively.  In 2005,
2004 and 2003, the Company  recognized patent licensing revenue  associated with
the annual fee from one patent license agreement  executed in 1999. Of the total
amount recognized in 2004,  $250,000 was related to a settlement  agreement with
an institution  that formerly  maintained a system that  permitted  consumers to
apply for credit cards over the Internet and is non-recurring.


         OTHER INCOME. In 2005, the Company  recognized no amounts classified as
other income.  In 2004,  other income  consisted  exclusively  of  non-recurring
miscellaneous  income items  primarily  associated with the sale of equipment no
longer needed in the operation of the Company's business.  In 2003, other income
of $500,000  related  exclusively to amounts received by the Company as a result
of the settlement of a lawsuit.

COSTS AND EXPENSES

         COSTS OF REVENUES. Costs of revenues from continuing operations for the
years ended December 31, 2005,  2004, and 2003 were $2,026,  $64,265 and $1,765,
respectively.  Cost of revenues  consists of  commissions  paid to the Company's
patent licensing agents.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative ("G&A")
expenses  for the year ended  December  31,  2005,  were  $486,607,  compared to
$732,285  and  $996,711  for  the  years  ended  December  31,  2004  and  2003,
respectively.

         G&A expenses  during 2005 consisted  primarily of personnel  expense of
approximately   $248,000;   professional   fees   of   approximately   $139,000;
depreciation and amortization  expense of approximately  $6,000; rent expense of
approximately $26,000; and insurance and taxes of approximately $56,000.


                                       18
<PAGE>

         G&A expenses  during 2004 consisted  primarily of personnel  expense of
approximately   $272,000;   professional   fees   of   approximately   $321,000;
depreciation and amortization  expense of approximately  $8,000; rent expense of
approximately $41,000; and insurance and taxes of approximately $61,000.

         G&A expenses  during 2003 consisted  primarily of personnel  expense of
approximately   $266,000;   professional   fees   of   approximately   $269,000;
depreciation and amortization expense of approximately  $15,000; rent expense of
approximately  $54,000;  insurance  and  taxes  of  approximately  $72,000;  and
litigation accruals of approximately $318,000.

         The decrease in G&A in 2005  compared to 2004 and 2004 compared to 2003
is due the continued  reduction of the Company's  activities over the past three
years and curtailment of other expenses. G&A expenses were lower in all material
categories  in 2005  compared to 2004.  G&A expenses  were lower in all material
categories  in  2004  compared  to  2003,   except  for  personnel  expense  and
professional  fees. The  approximately  $6,000 increase in personnel  expense in
2004  compared  to 2003 was  attributable  to the  full-time  employment  of the
Company's  President and CEO for four months in 2004 compared to three months in
2003. The  approximately  $52,000 increase in professional fees in 2004 compared
to 2003 was primarily  attributable  to legal expenses  incurred with respect to
the Temple Ligon trial.

INTEREST INCOME

         Interest income was $182,  $1,967 and $694 during 2005, 2004, and 2003,
respectively,  and  primarily  reflects  interest  income  attributable  to cash
balances.

INTEREST EXPENSE

         Interest  expense was $98,197,  $95,990 and $80,373 in 2005,  2004, and
2003,  respectively.  Interest expense is primarily associated with the interest
on  $1,425,336  aggregate  principal  amount  of  convertible  notes  issued  in
installments  in June  2002  ($830,336),  March  2003  ($200,000),  August  2003
($25,000),  November  2003  ($150,000),  December 2003  ($50,000),  January 2004
($25,000),  May  2005  ($75,000),   August  2005  ($45,000)  and  December  2005
($25,000).  The increase in interest  expense in 2005  compared to 2004 and 2004
compared to 2003 is  attributable  to the increase in the average amounts of the
convertible notes outstanding.

LITIGATION ACCRUAL REVERSAL

         The Company has been a defendant in a lawsuit which  resulted in a jury
verdict  against the Company in January 2004. The Company had recorded a reserve
for the  estimated  loss in this  litigation of $386,148 as a result of the jury
verdict.  In July 2004 the trial judge ruled on post-trial  motions submitted by
the  Company  and set  aside the jury  verdict,  and  accordingly,  in the third
quarter of 2004, the Company reversed the $386,148 accrual and recognized a like
amount as other income.

INCOME TAXES

         The Company has recorded a valuation  allowance  for the full amount of
its net  deferred  income tax assets as of December 31,  2005,  2004,  and 2003,
based on  management's  evaluation of the  recognition  criteria as set forth in
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes."



                                       19
<PAGE>




LIQUIDITY AND CAPITAL RESOURCES

         The Company has generated net losses of $69,244,419 since its inception
and has financed its operations  primarily through net proceeds from its initial
public  offering  in May 1996 and  cash  generated  from  operations  and  other
financing transactions.  Net proceeds from the Company's initial public offering
were $60,088,516.

         To date, the Company has generated substantial operating losses and has
been  required  to use a  substantial  amount  of cash  resources  to  fund  its
operations.  At December 31, 2005, the Company had cash and cash  equivalents of
$13,776.  As of March 31, 2006, the Company had almost completely  exhausted its
remaining cash resources. Unless it secures additional capital immediately,  the
Company may have to consider  alternatives for winding down its business,  which
may include  offering its patents for sale or filing for bankruptcy  protection.
Moreover,  the  Company  currently  does  not have the  resources  to repay  the
principal and accrued interest  outstanding under its convertible  secured notes
(the "notes"),  which have become due and payable in full as discussed below. If
any of the holders of these notes  takes  action to collect the amounts  owed by
the  Company  under  these  notes,  the  Company  will  be  forced  to  consider
alternatives  for winding  down its  business,  which may include  offering  its
patents for sale or filing for bankruptcy protection.

         Since 2002, the Company has issued an aggregate of $1,425,336 principal
amount of convertible  secured notes to certain investors as part of its efforts
to raise  additional  capital.  These notes bear interest at 8%, are convertible
into the Company's  common stock at a conversion rate of $.20 per share, and are
secured by the Company's  equity interest in  decisioning.com,  Inc., which owns
the Company's  patent  portfolio.  The  outstanding  notes include a note in the
principal  amount of $125,000  acquired on June 3, 2002 by the  Company's  Chief
Executive  Officer and a note in the  principal  amount of $100,000  acquired on
November 5, 2003 by a subsidiary  of The South  Financial  Group,  which at that
time  owned  approximately  12%  of the  Company's  outstanding  capital  stock.
Principal and interest under these notes  generally  becomes  payable in full on
the second  anniversary  of the date on which these notes were issued.  However,
under the terms of the notes,  the full amount of principal  and interest  under
all notes  becomes  immediately  due and  payable in certain  events,  including
bankruptcy  or  similar  proceedings  involving  the  Company,  a default in the
payment of principal and interest  under any note, or a change in control of the
Company.

         To date,  notes with a principal  amount of $1,206,336  have become due
and payable in accordance with their  contractual  two-year  maturity dates. The
Company  has had  discussions  with the  holders of these  notes  regarding  the
extension of the maturity date of these notes. However, the Company has not been
successful  in  reaching  an  agreement  with all of the  holders of these notes
regarding an extension of their maturity date.  Because the Company is currently
in default  regarding payment of principal and interest due under certain of the
notes, the full amount of principal and interest outstanding under all notes has
become due and payable.  Accordingly,  the full amount of principal  and accrued
interest under all of these notes is shown as a current liability of the Company
as of December 31, 2005.  As of December  31, 2005,  and December 31, 2004,  the
amount of principal and accrued interest  outstanding under all of the notes was
$1,595,906 and $1,383,149, respectively.

         To remain viable, the Company must generate working capital through the
sale of patent licenses or by raising additional  capital.  To date, the Company
generally  has been unable to enter into  licensing  agreements  with  potential
licensees upon terms that are acceptable to the Company. As discussed above, the
Company  has  been  forced  to  become   involved  in  litigation  with  alleged
infringers. The Company believes that these lawsuits may take an extended period
of time to complete,  and no  assurance  can be given that the Company will have
the resources necessary to complete these lawsuits or that it will be successful
in obtaining a favorable outcome.  Accordingly,  to remain viable it is critical
that the Company raise  additional  capital  immediately.  The  uncertainties of
these  litigation  matters and other factors  affecting the Company's  short and
long-term  liquidity  discussed  above has impeded  and will likely  continue to
impede the  Company's  ability to raise  additional  capital.  To  maintain  the
minimal  resources  necessary  to support its current  operations  and execute a
patent  licensing  strategy,  the  Company  does not  believe  that  substantial
additional  reductions in its operating expenses are feasible. No assurances can
be given that the Company will be able to raise  additional  capital or generate
working capital from its patent licensing business.

         The Company has been a defendant in a lawsuit  brought by Temple Ligon,
who  claims  that the  Company  breached  an  agreement  to give him a 1% equity
interest in the Company in consideration of services he claims to have performed
in 1993 and 1994 in  conjunction  with the formation of the Company.  In January
2004,  this  litigation  resulted  in a jury  verdict  against  the  Company  of
$382,148.  In connection with the litigation and the resulting jury verdict, the
Company  filed  post-trial  motions  with the trial court in which,  among other
things,  it claimed that the jury verdict should be set aside. On July 23, 2004,
the trial judge granted the Company's motions,  set aside the jury verdict,  and
ordered entry of a judgment in favor of the Company.  The plaintiff has appealed
the trial judge's ruling to the South Carolina Court of Appeals.  If the Company
becomes  obligated  to pay more  than an  insignificant  amount  of  damages  in
connection with this litigation,  it will be forced to consider alternatives for
winding down its  business,  which may include  offering its patents for sale or
filing for bankruptcy protection.


                                       20
<PAGE>

         Net cash  used  during  the  year  ended  December  31,  2005,  to fund
operations was approximately  $194,000,  compared to approximately  $558,000 and
$44,000  for 2004 and  2003,  respectively.  The  decrease  in cash used to fund
operations  during 2005 as compared to 2004 primarily  reflects lower  operating
expenses  in 2005,  an  increase  in the  deferral  of the  payment  of  certain
operating  expenses  in 2005,  which is  reflected  as an  increase  in accounts
payable,  accrued expenses, and accrued compensation and related benefits on the
December 31, 2005 balance sheet  compared to December 31, 2004  balances,  and a
reduction in prepaid expenses in 2005. In 2003, the Company received $500,000 in
conjunction  with the settlement of a lawsuit which  significantly  reduced cash
used to fund its  operations.  At December 31, 2005,  2004,  and 2003,  cash and
liquid investments were $13,776, $62,756 and $578,398, respectively, and working
capital  was  ($1,992,056),   ($1,524,772)  and  ($909,356),  respectively.  For
purposes  of  determining  working  capital  at  December  31,  2005  and  2004,
$1,595,906 and $1,383,149, respectively, of principal and accrued interest under
the Company's convertible notes are included as current liabilities.

CONTRACTUAL OBLIGATIONS

         The following  table sets forth the Company's  long-term debt and other
obligations at December 31, 2005.


<TABLE>
<CAPTION>
                                                                         Payment Due By Period
                                                        ---------------------------------------------------------
                                                                                                      More than
                                           Total        Less than 1 year      1-3 years    3-5 years   5 years
                                     ----------------------------------------------------------------------------
<S>                                      <C>             <C>                  <C>         <C>          <C>
Convertible Notes (1)                       $ 1,595,906     $ 1,595,906          $ -         $ -          $ -
Operating Lease Obligations                       1,700           1,700            -           -            -
Purchase Obligations                                  -               -            -           -            -
                                     ---------------------------------------------------------------------------
Total                                       $ 1,597,606     $ 1,597,606          $ -         $ -          $ -
                                     ===========================================================================
</TABLE>

(1)      Convertible notes consist of the Company's convertible notes, including
         accrued interest, which have become immediately due and payable.

         ITEM 7(A).  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

         ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

         The  report  of  Independent  Registered  Public  Accounting  Firm  and
consolidated  financial  statements are set forth below (see item 15(a) for list
of financial statements and financial statement schedules):




                                       21
<PAGE>




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Affinity Technology Group, Inc.
Columbia, South Carolina

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Affinity Technology Group, Inc. and subsidiaries  (collectively,  the "Company")
as of December 31, 2005 and 2004,  and the related  consolidated  statements  of
operations,  changes in stockholders'  equity  (deficiency),  and cash flows for
each of the years in the  three-year  period  ended  December  31,  2005.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for the purpose of expressing an opinion on the  effectiveness  of the Company's
internal  control  over  financial  reporting.  Accordingly,  we express no such
opinion. An audit also includes examining,  on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 2005 and 2004,  and the  consolidated  results of
its operations and its cash flows for each of the years in the three-year period
ended  December 31, 2005, in conformity  with  accounting  principles  generally
accepted in the United States of America.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
financial  statements,  the Company has incurred recurring operating losses, has
an accumulated  deficit,  and has certain  convertible  notes in default.  These
matters raise  substantial doubt about the ability of the Company to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
discussed in Note 1. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.


                           /s/ SCOTT McELVEEN, L.L.P.


Columbia, South Carolina
March 13, 2006, except for Note 1
  which is as of March 30, 2006




                                       22
<PAGE>





                AFFINITY TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                         2005            2004
                                                                    ----------------------------
ASSETS
Current assets:
<S>                                                                 <C>             <C>
  Cash and cash equivalents                                         $     13,776    $     62,756
  Receivables                                                            100,000               -
  Prepaid expenses                                                        33,739          47,235
                                                                    ----------------------------
Total current assets                                                     147,515         109,991
Property and equipment, net                                                4,796          11,249
                                                                    ----------------------------
Total assets                                                        $    152,311    $    121,240
                                                                    ============================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
  Accounts payable                                                  $    119,768    $     21,502
  Accrued expenses                                                       362,018         277,329
  Accrued compensation and related benefits                              323,116         139,890
  Convertible notes                                                    1,301,336       1,181,336
  Current portion of deferred revenue                                     33,333          14,706
                                                                    ----------------------------
Total current liabilities                                              2,139,571       1,634,763
Deferred revenue                                                          61,111               -

Commitments and contingent liabilities Stockholders' deficiency:
  Common  stock,  par  value
     $0.0001; authorized  60,000,000 shares, issued
     44,393,104 shares in 2005 and 44,230,910
     shares in 2004                                                        4,439           4,423
  Additional paid-in capital                                          70,696,896      70,665,373
  Treasury stock, at cost (2,168,008 shares at
     December 31, 2005 and 2004)                                      (3,505,287)     (3,505,287)
  Accumulated deficit                                                (69,244,419)    (68,678,032)
                                                                    ----------------------------
Total stockholders' deficiency                                        (2,048,371)     (1,513,523)
                                                                    ----------------------------
Total liabilities and stockholders' deficiency                      $    152,311    $    121,240
                                                                    ============================

See accompanying notes.

</TABLE>


                                       23
<PAGE>




                AFFINITY TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                    2005          2004            2003
                                              --------------------------------------------
Revenues:
<S>                                           <C>             <C>             <C>
   Patent license revenue                     $     20,261    $    267,647    $     17,647
   Other income                                          -          19,651         500,000
                                              --------------------------------------------
                                                    20,261         287,298         517,647
                                              --------------------------------------------
Costs and expenses:
   Cost of revenues                                  2,026          64,265           1,765
   General and administrative expenses             486,607         732,285         996,711
                                              --------------------------------------------
                                                   488,633         796,550         998,476
                                              --------------------------------------------
Operating loss                                    (468,372)       (509,252)       (480,829)
Other income (expenses):
   Interest income                                     182           1,967             694
   Interest expense                                (98,197)        (95,990)        (80,373)
   Litigation accrual reversal                           -         386,148               -
                                              --------------------------------------------
Net loss                                      $   (566,387)   $   (217,127)   $   (560,508)
                                              ============================================
Net loss per share - basic and diluted        $      (0.01)   $      (0.01)   $      (0.01)
                                              ============================================
Shares used in computing net loss per share     42,207,884      41,926,272      41,512,897
                                              ============================================

See accompanying notes.
</TABLE>



                                       24
<PAGE>




                AFFINITY TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)


<TABLE>
<CAPTION>
                                Common Stock
                               ----------------------
                                                                                                                     Total
                                                         Common                                                  Stockholders'
                                                        Additional      Stock                   Accumulated          Equity
                                Shares        Amount   Paid-in Capital Warrants  Treasury Stock   Deficit          (Deficiency)
                               -----------------------------------------------------------------------------------------------
<S>                           <C>           <C>       <C>           <C>          <C>           <C>                <C>
Balance at December 31, 2002   43,049,363    $ 4,305   $ 70,441,149  $ 52,000     $(3,505,287)  $ (67,900,397)     $ (908,230)
Expiration of warrants                  -          -         52,000   (52,000)              -               -               -
Note payable conversion to
    common stock                  409,796         41         81,918         -               -               -          81,959
Issuance of common stock as
    board service compensation    283,334         28         25,472         -               -               -          25,500
Issuance of common stock
    for consulting services       250,000         25         22,475         -               -               -          22,500
Issuance of common stock
    as finder's fees               40,000          4          9,196         -               -               -           9,200
Net loss                                -          -              -         -               -        (560,508)       (560,508)
                               -----------------------------------------------------------------------------------------------
Balance at December 31, 2003   44,032,493      4,403     70,632,210         -      (3,505,287)    (68,460,905)     (1,329,579)
Note payable conversion to
    common stock                  148,417         15         29,668         -               -               -          29,683
Issuance of common stock
    as finder's fees               50,000          5          3,495         -               -               -           3,500
Net loss                                -          -              -         -               -        (217,127)       (217,127)
                               -----------------------------------------------------------------------------------------------
Balance at December 31, 2004   44,230,910      4,423     70,665,373         -      (3,505,287)    (68,678,032)     (1,513,523)
Note payable conversion to
    common stock                  152,194         15         30,424         -               -               -          30,439
Issuance of common stock
    as finder's fees               10,000          1          1,099         -               -               -           1,100
Net loss                                -          -              -         -               -        (566,387)       (566,387)
                               -----------------------------------------------------------------------------------------------
Balance at December 31, 2005   44,393,104    $ 4,439   $ 70,696,896       $ -     $(3,505,287)  $ (69,244,419)   $ (2,048,371)
                               ===============================================================================================

See accompanying notes.
</TABLE>


                                       25
<PAGE>






                AFFINITY TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                               YEARS ENDED DECEMBER 31,
                                                           2005          2004        2003
                                                        ------------------------------------
OPERATING ACTIVITIES
<S>                                                     <C>          <C>          <C>
Net loss                                                $(566,387)   $(217,127)   $(560,508)
Adjustments to reconcile net loss to net cash used in
  operating activities:
    Depreciation and amortization                           6,453        8,181       14,859
    Impairment loss                                             -        1,147            -
    Deferred revenue                                       79,738      (17,647)     (17,647)
    Litigation accrual reversal                                 -     (386,148)           -
    Other                                                     796      (14,497)      12,311
    Changes in current assets and liabilities:
       Accounts receivable                               (100,000)           -        5,666
       Prepaid expenses                                    13,496      (27,114)      22,663
       Accounts payable                                    98,266      (54,554)      55,315
       Accrued expenses                                    90,127      103,024      378,463
       Accrued compensation and related benefits          183,226       47,190       45,331
                                                        -----------------------------------
Net cash used in operating activities                    (194,285)    (557,545)     (43,547)
                                                        -----------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment                             -       (1,697)      (4,724)
Proceeds from sale of property and equipment                  305       18,600       44,889
                                                        -----------------------------------
Net cash provided by investing activities                     305       16,903       40,165
                                                        -----------------------------------
FINANCING ACTIVITIES
Proceeds from convertible notes                           145,000       25,000      425,000
                                                        -----------------------------------
Net cash provided by financing activities                 145,000       25,000      425,000
                                                        -----------------------------------
Net (decrease) increase in cash                           (48,980)    (515,642)     421,618
Cash and cash equivalents at beginning of year             62,756      578,398      156,780
                                                        -----------------------------------
Cash and cash equivalents at end of year                $  13,776    $  62,756    $ 578,398
                                                        =========    =========    =========
Supplemental cash flow information:
   Income taxes paid                                    $       -    $       -    $       -
                                                        ===================================
   Interest paid                                        $       -    $       -    $       -
                                                        ===================================

See accompanying notes.
</TABLE>


                                       26
<PAGE>




                AFFINITY TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       THE COMPANY - GOING CONCERN

         The Company was 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.  Products and
services  previously  offered by the  Company  include  its  DeciSys/RT(R)  loan
processing  system,  which automated the processing and consummation of consumer
financial services transactions;  the Affinity Automated Loan Machine (the ALM),
which  allowed an applicant  to apply for and, if approved,  obtain a loan in as
little as ten minutes; the Mortgage ALM, which allowed an applicant to apply for
a mortgage loan;  E-xpertLender(R),  which permitted a financial  institution to
make automated lending  decisions through its call centers and branches;  iDEAL,
which permitted automobile lenders to make automobile lending decisions for loan
applications originated at automobile dealers; and rtDS, which permitted lenders
to deliver  credit  decisions to applicants  over the  Internet.  Due to capital
constraints,  the Company has suspended all efforts to further  develop,  market
and operate these products and services.  The Company's last processing contract
terminated in late 2002, and the Company has no plans to engage in further sales
or other activities  related to its products or services,  other than to attempt
to  license  certain  of the  patents  that it owns.  Currently,  the  Company's
business  activities  consist  exclusively  of  attempting to enter into license
agreements  with third parties to license the Company's  rights under certain of
its patents.

         In conjunction  with its product  development  activities,  the Company
applied for and obtained three patents. The Company has been granted two patents
covering  its  fully-automated  loan  processing  systems  (U.  S.  Patents  No.
5,870,721 and 5,940,811).  In August 2000, the U.S. Patent and Trademark  Office
issued to the Company a patent covering the  fully-automated  establishment of a
financial account,  including credit accounts (U. S. Patent No.  6,105,007).  In
addition,  in 1997 the  Company  acquired a patent  that  covers  the  automated
processing of an insurance binder through a kiosk (U. S. Patent No. 5,537,315).

         Both of the Company's  patents covering fully automated loan processing
systems  have been subject to  reexamination  by the U.S.  Patent and  Trademark
Office (the "PTO") as a result of challenges  to such patents by third  parties.
On January 28, 2003, the Company  received a  Reexamination  Certificate  (U. S.
Patent No. 5,870,721 C1) from the PTO which formally concluded the reexamination
of U. S. Patent No.  5,870,721.  On December  20, 2005,  the Company  received a
Reexamination  Certificate  (U.S.  Patent No.  5,940,811  C1) from the PTO which
formally concluded the reexamination of U.S. Patent No. 5,940,811.

         On March 26, 2004,  the Company was  notified by  Federated  Department
Stores,  Inc.  ("Federated") and Ameritrade Holding  Corporation  ("Ameritrade")
that they had jointly filed a request with the PTO to reexamine U. S. Patent No.
6,105,007.  On June 23, 2004, the Company received notification that the PTO had
granted the request for reexamination.  The Company has lawsuits pending against
Federated and Ameritrade in the Columbia  Division of the United States District
Court for the State of South Carolina (the "Columbia Federal Court") in which it
claims that both Federated and Ameritrade  infringe U. S. Patent No.  6,105,007.
The Company has similar litigation pending against Household International, Inc.
("Household"),  in which it claims  that  Household  infringes  U.S.  Patent No.
5,870,721 C1, No. 5,940,811 C1 and No. 6,105,007.  The Company has jointly, with
Federated,  Ameritrade  and Household,  requested the Columbia  Federal Court to
stay the lawsuits against Federated, Ameritrade and Household pending resolution
of the  reexamination  of U. S.  Patent  No.  6,105,007.  On March 30,  2006 the
Company was notified that the PTO has concluded the reexamination of U.S. Patent
No. 6,105,007 and has issued a "Notice of Intent to Issue Ex Parte Reexamination
Certificate"  (the  "Notice").  The  Notice  indicates  that  the  reexamination
resulted in the full  allowance of all the claims of the Company's  U.S.  Patent
No.  6,105,007.  The Company  expects to request  that the stay of the  lawsuits
against  Federated,  Ameritrade and Household be lifted so that the lawsuits may
proceed in the Columbia Federal Court. It may take an extended period of time to
complete the litigation  with  Federated,  Ameritrade  and Household.  Moreover,
protracted  litigation  with  Federated,  Ameritrade  and  Household  may have a
material adverse effect on the Company's patent licensing program and impede its
ability  to  attract  additional  capital  resources  in order to  continue  its
operations.


                                       27
<PAGE>


         It is  possible  that third  parties  may bring  additional  actions to
contest all or some of the Company's patents. The Company can make no assurances
that it will not lose all or some of the claims covered by its existing patents.

         To date, the Company has generated substantial operating losses and has
been  required  to use a  substantial  amount  of cash  resources  to  fund  its
operations.  At December 31, 2005, the Company had cash and cash  equivalents of
$13,776.  As of March 31, 2006, the Company had almost completely  exhausted its
remaining cash resources. Unless it secures additional capital immediately,  the
Company may have to consider  alternatives for winding down its business,  which
may include  offering its patents for sale or filing for bankruptcy  protection.
Moreover,  the  Company  currently  does  not have the  resources  to repay  the
principal and accrued interest  outstanding under its convertible  secured notes
(the "notes"),  which have become due and payable in full as discussed below. If
any of the holders of these notes  takes  action to collect the amounts  owed by
the  Company  under  these  notes,  the  Company  will  be  forced  to  consider
alternatives  for winding  down its  business,  which may include  offering  its
patents for sale or filing for bankruptcy protection.

         Since 2002, the Company has issued an aggregate of $1,425,336 principal
amount of convertible  secured notes to certain investors as part of its efforts
to raise  additional  capital.  These notes bear interest at 8%, are convertible
into the Company's  common stock at a conversion rate of $.20 per share, and are
secured by the Company's  equity interest in  decisioning.com,  Inc., which owns
the Company's  patent  portfolio.  The  outstanding  notes include a note in the
principal  amount of $125,000  acquired on June 3, 2002 by the  Company's  Chief
Executive  Officer and a note in the  principal  amount of $100,000  acquired on
November 5, 2003 by a subsidiary  of The South  Financial  Group,  which at that
time  owned  approximately  12%  of the  Company's  outstanding  capital  stock.
Principal and interest under these notes  generally  becomes  payable in full on
the second  anniversary  of the date on which these notes were issued.  However,
under the terms of the notes,  the full amount of principal  and interest  under
all notes  becomes  immediately  due and  payable in certain  events,  including
bankruptcy  or  similar  proceedings  involving  the  Company,  a default in the
payment of principal and interest  under any note, or a change in control of the
Company.

         To date,  notes with a principal  amount of $1,206,336  have become due
and payable in accordance with their  contractual  two-year  maturity dates. The
Company  has had  discussions  with the  holders of these  notes  regarding  the
extension of the maturity date of these notes. However, the Company has not been
successful  in  reaching  an  agreement  with all of the  holders of these notes
regarding an extension of their maturity date.  Because the Company is currently
in default  regarding payment of principal and interest due under certain of the
notes, the full amount of principal and interest outstanding under all notes has
become due and payable.  Accordingly,  the full amount of principal  and accrued
interest under all of these notes is shown as a current liability of the Company
as of December 31, 2005.  As of December  31, 2005,  and December 31, 2004,  the
amount of principal and accrued interest  outstanding under all of the notes was
$1,595,906 and $1,383,149, respectively.

         To remain viable, the Company must generate working capital through the
sale of patent licenses or by raising additional  capital.  To date, the Company
generally  has been unable to enter into  licensing  agreements  with  potential
licensees upon terms that are acceptable to the Company. As discussed above, the
Company  has  been  forced  to  become   involved  in  litigation  with  alleged
infringers. The Company believes that these lawsuits may take an extended period
of time to complete,  and no  assurance  can be given that the Company will have
the resources necessary to complete these lawsuits or that it will be successful
in obtaining a favorable outcome.  Accordingly,  to remain viable it is critical
that the Company raise  additional  capital  immediately.  The  uncertainties of
these  litigation  matters and other factors  affecting the Company's  short and
long-term  liquidity  discussed  above has impeded  and will likely  continue to
impede the  Company's  ability to raise  additional  capital.  To  maintain  the
minimal  resources  necessary  to support its current  operations  and execute a
patent  licensing  strategy,  the  Company  does not  believe  that  substantial
additional  reductions in its operating expenses are feasible. No assurances can
be given that the Company will be able to raise  additional  capital or generate
working capital from its patent licensing business.


                                       28
<PAGE>

         The Company has been a defendant in a lawsuit  brought by Temple Ligon,
who  claims  that the  Company  breached  an  agreement  to give him a 1% equity
interest in the Company in consideration of services he claims to have performed
in 1993 and 1994 in  conjunction  with the formation of the Company.  In January
2004,  this  litigation  resulted  in a jury  verdict  against  the  Company  of
$382,148.  In connection with the litigation and the resulting jury verdict, the
Company  filed  post-trial  motions  with the trial court in which,  among other
things,  it claimed that the jury verdict should be set aside. On July 23, 2004,
the trial judge granted the Company's motions,  set aside the jury verdict,  and
ordered entry of a judgment in favor of the Company.  The plaintiff has appealed
the trial judge's ruling to the South Carolina Court of Appeals.  If the Company
becomes  obligated  to pay more  than an  insignificant  amount  of  damages  in
connection with this litigation,  it will be forced to consider alternatives for
winding down its  business,  which may include  offering its patents for sale or
filing for bankruptcy protection.

         In  order  to fund  its  operations,  the  Company  may  need to  raise
additional  funds through the issuance of additional  convertible debt or equity
securities,  in which case the percentage  ownership of the  stockholders of the
Company may be reduced,  stockholders may experience  additional  dilution,  and
such  securities  may have rights,  preferences  or privileges  senior to common
stock. There can be no assurance that additional  financing will be available on
terms  acceptable to the Company or at all. If adequate  funds are not available
or not  available  on  acceptable  terms,  the Company may be unable to continue
operations.  The Company is  evaluating  alternatives  to continue  its business
activities through 2006 and beyond.

         There is substantial doubt about the Company's ability to continue as a
going  concern.  The  financial  statements  do not include any  adjustments  to
reflect the possible future effects on the  recoverability and classification of
assets or amounts and  classification  of liabilities  that may result from this
uncertainty.  However,  management  believes that any adjustments to reflect the
possible future effects on the  recoverability  and classification of assets and
amounts of  liabilities  would not  materially  change the  Company's  financial
position.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

         The consolidated  financial statements include the accounts of Affinity
Technology  Group,   Inc.  and  its   subsidiaries,   Affinity  Bank  Technology
Corporation,  Affinity Clearinghouse  Corporation,  Affinity Credit Corporation,
Affinity   Processing   Corporation,   Affinity   Mortgage   Technology,   Inc.,
decisioning.com,  Inc.  ("decisioning.com"),  and Multi Financial Services, Inc.
All significant  inter-company balances and transactions have been eliminated in
consolidation.

CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid  investments with a maturity of
three months or less when purchased to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying  amounts  reported in the balance  sheet for cash and cash
equivalents, accounts payable and notes payable approximate their fair values.


                                       29
<PAGE>

PROPERTY AND EQUIPMENT

         Property  and  equipment  are  recorded  at  cost.   Depreciation   and
amortization  are computed  using the  straight-line  method over the  estimated
useful lives of the assets.  Estimated useful lives range from five to ten years
for  office  furniture  and  fixtures  and  three to five  years  for all  other
depreciable assets.  Depreciation expense was approximately  $6,000,  $7,000 and
$13,000 during 2005, 2004, and 2003, respectively.


SOFTWARE DEVELOPMENT COSTS

         Costs  incurred in the  development  of  software,  which  formerly was
incorporated  as  part  of  the  Company's  products  or  sold  separately,  are
capitalized  after a product's  technological  feasibility has been established.
Capitalization  of such costs is  discontinued  when a product is available  for
general release to customers.  Software development costs are capitalized at the
lower of cost or net  realizable  value and  amortized  using the greater of the
revenue curve method or the  straight-line  method over the  estimated  economic
life of the  related  product.  Amortization  begins when a product is ready for
general  release  to  customers.   The  net  realizable   value  of  unamortized
capitalized costs is periodically evaluated and, to the extent such costs exceed
the net  realizable  value,  unamortized  amounts are reduced to net  realizable
value. The Company had no amortization of capitalized software in 2003, 2004 and
2005.

REVENUE RECOGNITION

PATENT  LICENSING  -  The  Company  recognizes  revenue  from  patent  licensing
activities  pursuant to the provisions of each license  agreement  which specify
the periods to which the related license and corresponding revenue applies.

DEFERRED REVENUES - Deferred revenues relate to unearned revenue associated with
cash received for patent licenses.  Such revenue is recognized in the period the
patent license entitles the licensee to use technology  covered by the Company's
patents.

COST OF REVENUES

         Cost of revenues  consists solely of commissions  paid to the Company's
patent  licensing  agents.  Commissions  paid or accrued by the Company  totaled
$2,026,  $64,265 and $1,765 for the years ended  December  31, 2005,  2004,  and
2003, respectively.

STOCK BASED COMPENSATION

         The Company  accounts for stock options in accordance  with APB Opinion
No.25,  "Accounting for Stock Issued to Employees"  ("APB 25"). Under APB 25, no
compensation  expense  is  recognized  for  stock or  stock  options  issued  to
employees at fair value.  For stock options granted at exercise prices below the
estimated fair value, the Company records deferred  compensation expense for the
difference  between  the  exercise  price of the shares and the  estimated  fair
value. The deferred  compensation  expense is amortized ratably over the vesting
period of the individual options.

         Statement of Financial  Accounting  Standards No. 123,  "Accounting for
Stock Based  Compensation"  ("SFAS 123") as amended by FASB  Statement  No. 148,
"Accounting  for  Stock-Based  Compensation-Transition  and  Disclosure"  ("SFAS
148"),  provides  an  alternative  to  APB  25 in  accounting  for  stock  based
compensation  issued to  employees.  SFAS 123  provides  for a fair value  based
method of accounting for employee stock options and similar equity  instruments.
However,  for companies  that  continue to account for stock based  compensation
arrangements under APB 25, SFAS 123 requires  disclosure of the pro forma effect
on net  income  and  earnings  per  share  as if the  fair  value  based  method
prescribed  by SFAS 123 had been applied.  The Company  accounts for stock based
compensation  arrangements  under  APB No.  25 and  has  adopted  the pro  forma
disclosure  requirements of SFAS 123. Equity  instruments issued to consultants,
directors  and  employees in lieu of cash  payments for services are recorded at
the fair value of the equity  instrument  on the date the equity  instrument  is
granted and the related  expense is recognized  over the period the services are
performed.  In 2005, 2004 and 2003, the Company  recognized  $1,100,  $3,500 and
$57,200,  respectively,  of stock based compensation  related to the issuance of
equity instruments.


                                       30
<PAGE>

         Had   compensation   cost  for  options  granted  under  the  Company's
stock-based  compensation  plans been determined  based on the fair value at the
grant dates  consistent with SFAS 123, the Company's net income and earnings per
share would have changed to the pro forma amounts listed below:

                                                2005        2004          2003
                                            ------------------------------------
Net loss:
As reported                                 $(566,387)   $(217,127)   $(560,508)

Add:  stock-based compensation expense
    included in reported net income                 -            -            -
                                            -----------------------------------
Deduct: stock-based compensation expense
    determined under the fair value based
    method for all awards                      (6,543)     (22,887)     (47,941)
                                            -----------------------------------
Pro forma net loss                          $(572,930)   $(240,014)   $(608,449)
                                            ===================================
Net loss per common share:
    As reported:
      Basic and diluted                     $   (0.01)   $   (0.01)   $   (0.01)
                                            ===================================
    Pro forma:
      Basic and diluted                     $   (0.01)   $   (0.01)   $   (0.01)
                                            ===================================

         See  Note  5  for  more  information   regarding  the  Company's  stock
compensation plans and the assumptions used to prepare the pro forma information
presented above.

NET LOSS PER SHARE OF COMMON STOCK

         All net loss per  share of Common  Stock  amounts  presented  have been
computed  based on the  weighted  average  number  of  shares  of  Common  Stock
outstanding  in accordance  with SFAS 128.  Stock warrants and stock options are
not included in the  calculation  of dilutive  loss per common share because the
Company  has  experienced   operating  losses  in  all  periods  presented  and,
therefore, the effect would be antidilutive.

NEW ACCOUNTING STANDARDS


          In December  2004,  the Financial  Accounting  Standards  Board (FASB)
issued  Statement  of Financial  Accounting  Standards  No. 123 (revised  2004),
Share-Based Payments (SFAS 123R). This accounting  standard,  which is effective
for interim and annual  periods  beginning  after January 1, 2006,  requires the
recognition of compensation expense related to stock options under SFAS 123. The
United States  Securities and Exchange  Commission  (SEC) announced on April 14,
2005 that it approved a phased-in  implementation  process for SFAS 123R.  Under
the new SEC implementation  process,  the Company's  effective date for adopting
SFAS  123R was  extended  six  months.  The  Company  plans to adopt  SFAS  123R
prospectively  in the  first  quarter  of 2006  with an  anticipated  impact  to
earnings per share of less than $0.01 per share in 2006.

         In  May  2005,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  No. 154 (SFAS 154),  "Accounting  Changes and Error  Corrections  - a
replacement  of APB Opinion No. 20 and FASB Statement No. 3". SFAS 154 requires,
unless  impracticable,  retrospective  application to prior  periods'  financial
statements  of changes in  accounting  principle.  SFAS 154 also  requires  that
retrospective  application of a change in accounting principle be limited to the
direct  effects  of the  change.  Indirect  effects  of a change  in  accounting
principle should be recognized in the period of the accounting  change.  The new
standard is effective for accounting  changes and  corrections of errors made in
fiscal years  beginning  after  December  15,  2005.  The Company will adopt the
provisions  of SFAS 154, as  applicable,  beginning  in fiscal 2006 and does not
anticipate that the adoption of this standard will have a material effect on the
Company's consolidated results of operations, financial position, or cash flows.


                                       31
<PAGE>

INCOME TAXES

         Deferred  income  taxes  are  calculated  using  the  liability  method
prescribed by Statement of Financial  Accounting  Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109").

CONCENTRATIONS OF CREDIT RISK

         The Company is not exposed to any concentration of credit risk.

USE OF ESTIMATES

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.


RECLASSIFICATION

         Certain  amounts in 2003 and 2004 have been  reclassified to conform to
2005 presentations for comparability.  These reclassifications have no effect on
previously reported stockholders' equity (deficiency) or net loss.

3.       PROPERTY AND EQUIPMENT

Property and equipment consists of the following:


                                                     DECEMBER 31,
                                                   2005       2004
                                                 --------------------
Data processing equipment                        $ 32,109    $ 32,109
Office furniture and fixtures                      37,161      37,161
Automobiles and industrial equipment               11,038      11,038
Purchased software                                  3,770       3,770
                                                 --------------------
                                                   84,078      84,078
Less accumulated depreciation and amortization    (79,282)    (72,829)
                                                 ---------------------
                                                 $  4,796    $ 11,249
                                                 =====================

4.       CONVERTIBLE NOTES

         In June  2002,  the  Company  issued  convertible  secured  notes  (the
"notes") to certain  investors as part of its capital raising  initiatives.  The
principal amount of notes issued totaled $830,336 and included the issuance of a
note in the  principal  amount of  $125,000  to the  Company's  Chief  Executive
Officer and the issuance of a note in the  principal  amount of $205,336 to AMRO
International,  S.A.  ("AMRO")  in  satisfaction  of the  principal  and accrued
interest  outstanding under AMRO's convertible  debenture previously acquired by
AMRO. The notes bear interest at 8% and principal and accrued  interest were due
in June 2004. In 2005, 2004 and 2003, the Company issued additional  convertible
notes in the aggregate amount of $145,000,  $25,000 and $425,000,  respectively.
Such notes also bear  interest at 8% and mature at various  dates in 2007,  2006
and 2005.  Included in the aggregate  $425,000  principal  amount of convertible
notes issued by the Company in 2003 is a $100,000  convertible  note issued to a
subsidiary of The South Financial Group, which at that time owned  approximately
12% of the Company's  outstanding  common stock. All notes are collateralized by
the   stock  of  the   Company's   wholly-owned   subsidiary,   decisioning.com.
decisioning.com  is the  Company's  patent  licensing  subsidiary  and  owns the
Company's patent portfolio.  The notes are convertible into the Company's common
stock at a conversion rate of $.20 per share.

         AMRO has  converted  principal  and  accrued  interest  related  to its
$205,336  convertible  note  purchased in June 2002 into shares of the Company's
common stock at the rate of $0.20 per share as detailed in the table below:


                                       32
<PAGE>


Conversion Date      Principal         Interest    Shares of Common Stock
---------------------------------------------------------------------------
October 2003            $  74,000         $  7,959            409,796
October 2004               25,000            4,683            148,417
February 2005              25,000            5,439            152,194
                   ---------------   --------------  -----------------
                        $ 124,000         $ 18,081            710,407
                   ===============   ==============  =================


         As more fully  explained  in Note 1, all the  convertible  notes are in
default and are classified as current liabilities. The contractual maturities of
the  principal  outstanding  under the  Company's  8%  convertible  notes are as
follows:


                                                December 31,
      Contractual Maturity Date            2005             2004
      -------------------------------------------------------------------
      June 2004                           $  706,336      $   731,336
      March 2005                             200,000          200,000
      August 2005                             25,000           25,000
      November 2005                          150,000          150,000
      December 2005                           50,000           50,000
      January 2006                            25,000           25,000
      May 2007                                75,000                -
      August 2007                             45,000                -
      December 2007                           25,000                -
                                       -------------------------------
                                           1,301,336        1,181,336
      Less: current portion               (1,301,336)      (1,181,336)
                                       --------------   --------------
      Long-term portion                   $         -     $         -
                                       ==============   ==============

         On February  22,  2005,  AMRO  International,  S.A.  converted  $25,000
principal  amount and $5,439 of accrued  interest under an 8%  convertible  note
issued  by the  Company  to AMRO  into an  aggregate  of  152,194  shares of the
Company's  common  stock.  Under the terms of the note,  principal  and interest
converted into shares of common stock at $.20 per share. Such shares were issued
by the  Company in  reliance  on an  exemption  from  registration  set forth in
Section 3(a)(9)of the Securities Act of 1933.

5.       STOCKHOLDERS' DEFICIENCY

PREFERRED STOCK

         Pursuant to the Company's  Certificate of  Incorporation,  the Board of
Directors has the  authority,  without  further action by the  stockholders,  to
issue up to 5,000,000 shares of preferred stock in one or more series and to fix
the designations,  powers, preferences,  privileges, and relative participating,
optional or special rights and the qualifications,  limitations, or restrictions
thereof,  including dividend rights,  conversion rights, voting rights, terms of
redemption and liquidation preferences,  any or all of which may be greater than
the rights of the  common  stock.  At  December  31,  2005 and 2004 there are no
shares of preferred stock issued or outstanding.



                                       33
<PAGE>




STOCK OPTION PLANS

         During 1995, the Company adopted the 1995 Stock Option Plan under which
incentive  stock  options  and  nonqualified  stock  options  may be  granted to
employees,  directors,  consultants or independent contractors.  At December 31,
2005,  3,180 options were  outstanding  under the 1995 Stock Option Plan, all of
which are exercisable. At December 31, 2005, the weighted average exercise price
was $0.44 and the weighted  average  remaining  contractual  life was 0.2 years.
This plan closed during April 1996.

         In April 1996,  the Company  adopted the 1996  Incentive  Stock  Option
Plan.  Under  the  terms of the  plan,  incentive  options  may be  issued at an
exercise  price not less than the  estimated  fair  market  value on the date of
grant. Generally, options granted vest ratably over a 60 month term.

         In  addition,  the 1996  Incentive  Stock  Option  Plan was amended and
restated  effective  May 28,  1999,  to increase  the number of shares of common
stock  available  for  issuance  from  1,900,000  to  2,900,000  and  to  permit
non-employee  directors to participate in the 1996 Stock Option Plan.  Under the
Company's director compensation program in effect from April 1999 to March 2002,
non-employee  directors  received  options under the 1996 Incentive Stock Option
Plan to purchase 5,000 shares of common stock of the Company on the 5th business
day after each annual shareholder  meeting. In March 2002, the Company adopted a
new director  compensation  program as a component of the 1996  Incentive  Stock
Option Plan under which all non-employee  directors received a one-time grant of
options to purchase  100,000 shares of the Company's  stock at the closing sales
price of the Company's common stock on the business day immediately prior to the
date of grant.  Such  options vest  ratably  over a two-year  period.  Under the
program,  all  non-employee  directors  on the Board  were  granted  options  to
purchase  100,000  shares  on March 20,  2002.  Any new  non-employee  directors
appointed to the Board will be granted options to purchase 100,000 shares at the
time of his or her election to the Board.


                                       34
<PAGE>




A summary of activity under the 1995 and 1996 Option Plans is as follows:


<TABLE>
<CAPTION>
                                                                            OPTIONS OUTSTANDING
                                                                  ------------------------------------
                                                     SHARES                           WEIGHTED AVERAGE
                                                   AVAILABLE             NUMBER             PRICE
                                                   FOR GRANT            OF SHARES         PER SHARE
      1995 STOCK OPTION PLAN
<S>                       <C> <C>                                           <C>           <C>
      Balance at December 31, 2002                             -            18,020        $0.44
      Options canceled/forfeited                               -                 -        $0.44
                                               -------------------------------------------------------
      Balance at December 31, 2003                             -            18,020        $0.44
      Options canceled/forfeited/expired                       -           (10,600)       $0.44
                                               -------------------------------------------------------
      Balance at December 31, 2004                             -             7,420        $0.44
      Options canceled/forfeited/expired                       -            (4,240)       $0.44
                                               -------------------------------------------------------
      Balance at December 31, 2005                             -             3,180        $0.44
                                               =======================================================

      1996 INCENTIVE STOCK OPTION PLAN
      Balance at December 31, 2002                       684,065         2,044,005        $0.53
      Options granted                                   (125,000)          125,000        $0.19
      Options cancelled/forfeited                         18,185           (18,185)       $1.12
                                               -------------------------------------------------------
      Balance at December 31, 2003                       577,250         2,150,820        $0.50
      Options granted                                          -                 -        $0.00
      Options cancelled/forfeited                         17,500           (17,500)       $0.22
                                               -------------------------------------------------------
      Balance at December 31, 2004                       594,750         2,133,320        $0.50
      Options granted                                          -                 -        $0.00
      Options cancelled/forfeited                         99,620           (99,620)       $0.34
                                               -------------------------------------------------------
      Balance at December 31, 2005                       694,370         2,033,700        $0.51
                                               =======================================================
</TABLE>



         A summary of stock options  exercisable  and stock options  outstanding
under the 1996 Incentive Stock Option Plan is as follows:

<TABLE>
<CAPTION>
                                                   1996 INCENTIVE STOCK OPTION PLAN
  -------------------------------------------------------------------------------------------------------------------------
                                OPTIONS EXERCISABLE                                OPTIONS OUTSTANDING
                                AT DECEMBER 31, 2005                               AT DECEMBER 31, 2005
                      =====================================================================================================
                                                                                                             WEIGHTED
                                                WEIGHTED                                  WEIGHTED            AVERAGE
       RANGE OF                                  AVERAGE                                   AVERAGE           REMAINING
       EXERCISE             NUMBER                PRICE               NUMBER                PRICE           CONTRACTUAL
        PRICES            EXERCISABLE           PER SHARE           OUTSTANDING           PER SHARE         LIFE (YEARS)
  -------------------------------------------------------------------------------------------------------------------------
<S>                   <C>                     <C>                     <C>               <C>                 <C>
     $0.09 - $0.94               1,525,000         $0.19             1,640,000               $0.19               5.7
     $1.06 - $3.75                 393,700         $1.85               393,700               $1.85               3.7
                      -----------------------------------------------------------------------------------------------------
     $0.09 - $3.75               1,918,700         $0.53             2,033,700               $0.51               5.4
                      =====================================================================================================
</TABLE>


                                       35
<PAGE>




         The pro forma  disclosures  required by SFAS 123 regarding net loss and
net loss per share are stated as if the Company had  accounted for stock options
using fair values.  Using the Black-Scholes  option-pricing model the fair value
at the date of grant  for  these  options  was  estimated  using  the  following
assumptions:

                                                                2003
                                                          ------------------
                          Dividend yield                          -
                          Expected volatility                   132%
                          Risk-free rate of return              1.99%
                          Expected option life, years             3



         The weighted  average fair value for options  granted  under the Option
Plans  during 2003 was $0.14.  No options were granted by the Company in 2004 or
2005.

         The  Black-Scholes  and other option  pricing models were developed for
use  in  estimating  fair  value  of  traded  options,  which  have  no  vesting
restrictions  and are fully  transferable.  In addition,  option-pricing  models
require the input of highly subjective assumptions. The Company's employee stock
options  have  characteristics  significantly  different  than  those of  traded
options,  and changes in the subjective  assumptions  can materially  affect the
fair value estimate. Accordingly, in management's opinion, these existing models
may not  necessarily  provide a  reliable  single  measure  of the fair value of
employee stock options.

         STOCK WARRANTS

         In September 2000, the Company entered into a convertible debenture and
warrants  purchase  agreement  with an investor  and, in  connection  therewith,
issued to the broker  representing  the investor in this transaction a five-year
warrant to acquire  35,000  shares of the  Company's  common  stock at $0.47 per
share. These warrants expired unexercised in 2005.


6.       EMPLOYEE BENEFIT PLANS

         The  Company  has an  employee  savings  plan (the  Savings  Plan) that
qualifies as a deferred salary  arrangement under Section 401(k) of the Internal
Revenue  Code.  Under the  Savings  Plan,  participating  employees  may defer a
portion of their pretax  earnings,  up to the Internal  Revenue  Service  annual
contribution limit.

7.       LEASES

         The Company has  non-cancelable  operating leases for the rental of its
offices and  warehouse.  Future  minimum  lease  payments  under these leases at
December 31, 2005 are approximately $1,700, all of which is payable in 2006.

         In 2005,  2004, and 2003 the Company  incurred rent expense,  including
rent associated with cancelable  rental  agreements,  of approximately  $24,000,
$32,000 and $47,000, respectively.

8.       INCOME TAXES

         As of  December  31,  2005,  the  Company had federal and state tax net
operating loss  carryforwards  of approximately  $67,299,000.  The net operating
loss carryforwards will begin to expire in 2009, if not utilized.




                                       36
<PAGE>




        Deferred   income  taxes   reflect  the  net  tax  effect  of  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and the amounts used for income tax  purposes.  Significant
components of the Company's  deferred tax assets and liabilities  consist of the
following:

                                               December 31,
                                          2005             2004
                                      ----------------------------
Deferred tax assets:
   Net operating loss carryforwards   $ 25,102,000    $ 24,891,000
   Accrued expenses                         19,000          18,000
   Other                                         -           6,000
                                      ----------------------------
Total deferred tax assets               25,121,000      24,915,000
                                      ----------------------------
Deferred tax liabilities:
   Other                                         -               -
                                      ----------------------------
Total deferred tax liabilities                   -               -
                                      ----------------------------
Less:  Valuation allowance             (25,121,000)    (24,915,000)
                                      ----------------------------
Total net deferred taxes
                                      $          -    $          -
                                      ============================


         The Company has recorded a valuation  allowance  for the full amount of
its net  deferred  tax  assets  as of  December  31,  2005  and  2004,  based on
management's  evaluation of the evidential  recognition  requirements  under the
criteria  of  SFAS  109.  The  main  component  of  the  evidential  recognition
requirements was the Company's  cumulative  pretax losses since  inception.  The
provision for income taxes at the Company's  effective  rate did not differ from
the provision for income taxes at the statutory rate for 2005, 2004, and 2003.

9.       SEGMENT INFORMATION

         The  Company  conducts  its  business  within  one  industry  segment -
financial  services  technology.  To date, all revenues generated have been from
transactions with North American customers.  Single entities accounted for 100%,
87% and 97% of revenues in 2005, 2004, and 2003, respectively.

10.      RELATED PARTY TRANSACTIONS

         In December 2003, the Company sold a convertible  note in the principal
amount of $100,000 to a subsidiary of The South Financial  Group,  which at that
time owned approximately 12% of the Company's outstanding common stock.

         In July 2003, the Company relocated and executed a month-to-month lease
with a holder of one of its convertible  notes.  The rent expense for the office
for the twelve month  period ended  December 31, 2004 and six month period ended
December 31, 2003, was approximately $18,000 and $7,500, respectively.  In April
2005, the Company again relocated and executed a  month-to-month  lease with the
same holder of one of its convertible notes. The rent expense for the office for
the twelve month period ended December 31, 2005 was approximately $9,250.

         In January 2003,  the Company  issued 283,334 shares of common stock to
two board members in lieu of cash compensation owed to them by the Company.

         In June  2002,  the  Company  sold a  convertible  secured  note to its
Chairman,  President  and Chief  Executive  Officer in the  principal  amount of
$125,000. The note bears interest at 8%, and principal and accrued interest were
due in June 2004.

         In June 2002,  the Company  issued  70,000 shares of Company stock to a
member of its Board of Directors as a finder's fee for capital raising services.



                                       37
<PAGE>




11.      COMMITMENTS AND CONTINGENT LIABILITIES

         The Company and its founder,  Jeff Norris,  have been  defendants  in a
lawsuit  filed by Temple Ligon on November 30, 1996 in the Court of Common Pleas
for the County of Richland in Columbia,  South Carolina. Mr. Ligon claims, among
other things,  that the Company and Mr. Norris breached an agreement to give him
a 1% equity  interest in the Company in  consideration  of  services  Mr.  Ligon
claims to have performed in 1993 and 1994 in  conjunction  with the formation of
the Company,  and seeks monetary damages of $5,463,000.  This lawsuit  initially
resulted in a jury verdict  against the Company of $68,000.  However,  Mr. Ligon
subsequently  requested  and was  granted a new  trial.  In January  2004,  this
lawsuit  resulted in another  jury verdict  against the Company of $382,148.  In
connection with the litigation and the resulting jury verdict, the Company filed
post-trial motions with the trial court in which, among other things, it claimed
that the jury verdict  should be set aside.  On July 23,  2004,  the trial judge
granted the Company's motions,  set aside the jury verdict, and ordered entry of
a judgment in favor of the Company. The plaintiff has appealed the trial judge's
ruling to the South Carolina Court of Appeals.  If the Company becomes obligated
to pay more than an  insignificant  amount of  damages in  connection  with this
litigation,  it will be forced to consider  alternatives  for  winding  down its
business,  which  may  include  offering  its  patents  for sale or  filing  for
bankruptcy protection.


12.      QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

                           First         Second       Third         Fourth
                          Quarter        Quarter     Quarter        Quarter
                         ------------------------------------------------------
YEAR ENDED
DECEMBER 31, 2005

Revenue                   $   4,412    $   4,412    $   4,411    $   7,026
Gross profit                  3,971        3,971        3,969        6,324
Net (loss) income          (129,625)    (165,330)    (134,976)    (136,456)

Net loss per share -
basic and diluted             (0.00)       (0.00)       (0.00)       (0.00)

YEAR ENDED
DECEMBER 31, 2004

Revenue                   $ 254,412    $   4,412    $  23,011    $   5,463
Gross profit                191,471        3,971       22,569        5,022
Net (loss) income          (122,990)    (185,575)     242,351     (150,913)

Net loss per share -
basic and diluted             (0.00)       (0.00)        0.01        (0.00)

The sum of certain net loss per share amounts  differs from the annual  reported
total due to rounding.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable

ITEM 9A.  CONTROLS AND PROCEDURES

         The Company has carried out an evaluation,  under the  supervision  and
with the  participation  of the  Company's  Chief  Executive  Officer  and Chief
Financial  Officer,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls and  procedures as defined in Rule 13a-15 of the
Securities   Exchange  Act  of  1934  (the  "Exchange  Act").  Based  upon  that
evaluation,  the Company's Chief Executive  Officer and Chief Financial  Officer
concluded that the Company's  disclosure  controls and procedures were effective
as of December 31, 2005, in  recording,  processing,  summarizing  and reporting
information  required to be  disclosed  by the Company  (including  consolidated
subsidiaries) in the Company's Exchange Act filings.



                                       38
<PAGE>

         There were no changes in the Company's internal controls over financial
reporting  that occurred  during the Company's  most recent fiscal  quarter that
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal controls over financial reporting.

ITEM 9B.  OTHER INFORMATION

         Not applicable

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information required by this Item will be contained in the Registrant's
definitive  proxy statement  relating to its 2006 Annual Meeting of Stockholders
under the captions  "Board of Directors - Code of Ethics," "Board of Directors -
Audit Committee Financial Expert," "Board of Directors--Nominees  for Director,"
and  "Section  16(a)  Beneficial  Ownership  Reporting  Compliance,"  which  are
incorporated by reference herein.

ITEM 11.  EXECUTIVE COMPENSATION

         Information required by this Item will be contained in the Registrant's
definitive  proxy statement  relating to its 2006 Annual Meeting of Stockholders
under    the    captions     "Executive     Compensation"    and    "Board    of
Directors--Compensation  of  Directors",  which are  incorporated  by  reference
herein.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT AND RELATED STOCKHOLDER MATTERS

         Certain  information  required  by this Item will be  contained  in the
Registrant's  definitive proxy statement  relating to its 2006 Annual Meeting of
Stockholders  under the caption  "Security  Ownership of Management  and Certain
Beneficial Owners," which is incorporated by reference herein.

<TABLE>
<CAPTION>
                                             EQUITY COMPENSATION PLAN INFORMATION
-------------------------------------------------------------------------------------------------------------------
                                                                                          Number of securities
                                                                                         remaining available for
                               Number of securities to be   Weighted-average exercise     future issuance under
                                 issued upon exercise of      price of outstanding      equity compensation plans
                                  outstanding options,        options, warrants and       (excluding securities
        Plan Category              warrants and rights               rights             reflected in column (a))
-------------------------------------------------------------------------------------------------------------------
                                           (a)                         (b)                          (c)
-------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                           <C>                        <C>
Equity compensation plans
approved by security holders            2,046,880                     $0.51                      694,370
-------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders
                                                -                         -                            -
-------------------------------------------------------------------------------------------------------------------
            Total                       2,046,880                     $0.51                      694,370
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         The table set forth above does not include any information with respect
to shares of common stock that may be issued upon the  conversion of convertible
notes that have been issued by the  Company.  At December  31,  2005,  there was
$1,595,906  of principal  and accrued  interest  outstanding  under these notes,
which could be converted into an aggregate of 7,979,530  shares of the Company's
common stock at a conversion price of $0.20 per share.



                                       39
<PAGE>




ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         If applicable,  information  required by this Item will be contained in
the Registrant's  definitive proxy statement relating to its 2006 Annual Meeting
of Stockholders under the caption "Certain  Transactions," which is incorporated
by reference herein.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Information required by this item will be contained in the Registrant's
definitive proxy statement  relating to its 2006 Annual Meeting of Stockholders,
under the caption "Accounting Fees."

ITEM 15.  EXHIBITS

(a)      (1)  The  following   consolidated  financial  statements  of  Affinity
         Technology Group, Inc. and subsidiaries  included in this Annual Report
         on Form 10-K are included in Item 8.

         i.       Consolidated Balance Sheets as of December 31, 2005 and 2004.

         ii.      Consolidated  Statements  of  Operations  for the years  ended
                  December 31, 2005, 2004, and 2003.

         iii.     Consolidated  Statements of Stockholders'  Equity (Deficiency)
                  for the years ended December 31, 2005, 2004, and 2003.

         iv.      Consolidated  Statements  of Cash  Flows for the  years  ended
                  December 31, 2005, 2004, and 2003.

         v.       Notes to Consolidated Financial Statements.

         (2) Exhibits:

         Documents  incorporated  by reference to exhibits  that have been filed
with the Company's reports or proxy statements under the Securities Exchange Act
of 1934 are available to the public over the Internet from the SEC's web site at
HTTP://WWW.SEC.GOV.  You may also read and copy any such  document  at the SEC's
public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C.
20549 under the Company's SEC file number (0-28152).


   EXHIBIT NUMBER     DESCRIPTION
--------------------- ---------------------------------------------------------

         3.1      Certificate of  Incorporation  of Affinity  Technology  Group,
                  Inc., which is hereby incorporated by reference to Exhibit 3.1
                  to  the  Registration   Statement  on  Form  S-1  of  Affinity
                  Technology Group, Inc. (File No. 333-1170).

         3.2      Bylaws of Affinity  Technology  Group,  Inc.,  which is hereby
                  incorporated  by reference to Exhibit 3.2 to the  Registration
                  Statement on Form S-1 of Affinity Technology Group, Inc. (File
                  No. 333-1170).

         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      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  Bylaws  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).

         4.3      Convertible  Note  Purchase  Agreement,  dated  June 3,  2002,
                  between   Affinity   Technology   Group,   Inc.,  and  certain
                  investors,  which is  incorporated by reference to Exhibit 4.1
                  to the Company's Quarterly Report on Form 10-Q for the Quarter
                  ended June 30, 2002.

         10.1*    Form of Stock Option Agreement (1995 Stock Option Plan), which
                  is hereby  incorporated  by  reference  to Exhibit 10.7 to the
                  Registration  Statement  on Form  S-1 of  Affinity  Technology
                  Group, Inc. (File No. 333-1170).

         10.2*    Form of Stock Option Agreement (1996 Stock Option Plan), which
                  is hereby  incorporated  by  reference  to Exhibit 10.8 to the
                  Registration  Statement  on Form  S-1 of  Affinity  Technology
                  Group, Inc. (File No. 333-1170).

         10.3*    Form of Stock Option Agreement (Directors' Stock Option Plan),
                  which is hereby  incorporated  by reference to Exhibit 10.9 to
                  the Registration  Statement on Form S-1 of Affinity Technology
                  Group, Inc. (File No. 333-1170).

                                       40
<PAGE>

         10.4*    1995 Stock  Option Plan of Affinity  Technology  Group,  Inc.,
                  which is hereby  incorporated by reference to Exhibit 10.10 to
                  the Registration  Statement on Form S-1 of Affinity Technology
                  Group, Inc. (File No. 333-1170).

         10.5*    Amended  and  Restated  1996  Stock  Option  Plan of  Affinity
                  Technology  Group,  Inc.,  which  is  hereby  incorporated  by
                  reference to Exhibit 10 to the Company's  Quarterly  Report on
                  Form 10-Q for the quarter ended September 30, 1999.

         10.6*    Non-Employee   Directors'   Stock   Option  Plan  of  Affinity
                  Technology  Group,  Inc.,  which  is  hereby  incorporated  by
                  reference to Exhibit  10.12 to the  Registration  Statement on
                  Form  S-1  of  Affinity   Technology  Group,  Inc.  (File  No.
                  333-1170).

         10.7     Stock  Rights  Agreement,  dated  October  20,  1995,  between
                  Affinity Technology Group, Inc., and certain investors,  which
                  is hereby  incorporated  by reference to Exhibit  10.15 to the
                  Registration  Statement  on Form  S-1 of  Affinity  Technology
                  Group, Inc. (File No. 333-1170).

         10.8*    Declaration  of First  Amendment  to 1996 Stock Option Plan of
                  Affinity Technology Group, Inc., and 1995 Stock Option Plan of
                  Affinity  Technology  Group,  Inc.,  which is  incorporated by
                  reference to Exhibit 10.10 to the  Company's  Annual Report on
                  Form 10-K for the year ended December 31, 1998.

         10.9*    Restricted Stock Agreement between Affinity  Technology Group,
                  Inc., and Joseph A. Boyle,  which is incorporated by reference
                  to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
                  for the quarter ended June 30, 2002.

         10.10*   Stock Agreement between Affinity  Technology Group,  Inc., and
                  Wade H. Britt,  III,  which is  incorporated  by  reference to
                  Exhibit 10.2 of the  Company's  Quarterly  Report on Form 10-Q
                  for the quarter ended June 30, 2002.

         10.13    Legal  Representation  Agreement,  dated May 27, 2003, between
                  decisioning.com, Inc., and Withrow & Terranova, PLLC, which is
                  incorporated  by reference  to Exhibit  10.1 of the  Quarterly
                  Report on Form 10-Q for the quarter ended June 30, 2003.

         14       Code of Ethics,  which is incorporated by reference to Exhibit
                  14 of the  Company's  Annual  Report on Form 10-K for the year
                  ended December 31, 2003.

         21       Subsidiaries of Affinity Technology Group, Inc.

         23.1     Consent of Scott McElveen, L.L.P.

         31       Rule 13a-14(a)/15d-14(a) Certification.

         32       Section 1350 Certification.

* Denotes a management contract or compensatory plan or arrangement.

(b)      Exhibits

         The exhibits  required by Item 601 of Regulation S-K are filed herewith
and incorporated by reference herein. The response to this portion of Item 15 is
submitted under Item 15(a) (3).

(c)      Financial Statement Schedules

         The response to this  portion of Item 15 is submitted  under Item 15(a)
(2).



                                       41
<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                 AFFINITY TECHNOLOGY GROUP, INC.

Date:    March 31, 2006          By:      /S/  JOSEPH A. BOYLE
                                          -------------------------------------
                                          Joseph A. Boyle
                                          President and Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

 SIGNATURES                    TITLE                                               DATE
 ----------------------------- --------------------------------------------------- --------------


<S>                             <C>                                             <C>
 /s/ Joseph A. Boyle                                                               March 31, 2006
 -----------------------------
 Joseph A. Boyle               Chairman, President, Chief Executive Officer and
                               Chief Financial Officer and Director
                               (principal executive and financial officer)


 /s/ Wade H. Britt, III                                                            March 31, 2006
 -----------------------------
 Wade H. Britt, III            Director


 /s/  Robert M. Price, Jr.                                                         March 31, 2006
 -----------------------------
 Robert M. Price, Jr.          Director


 /s/  Peter R. Wilson, Ph.D.                                                       March 31, 2006
 -----------------------------
 Peter R. Wilson, Ph.D.        Director


 /s/  S. Sean Douglas                                                              March 31, 2006
 -----------------------------
 S. Sean Douglas               Executive  Vice  President
                               and Chief Operating  Officer  (principal
                               accounting officer)

</TABLE>


                                       42
<PAGE>



EXHIBIT INDEX

EXHIBIT NUMBER   DESCRIPTION
---------------- --------------------------------------------------------------
21               Subsidiaries of Affinity Technology Group, Inc.
23.1             Consent of Independent Registered Public Accounting Firm
31               Rule 13a-14(a)/15d-14(a) Certifications
32               Section 1350 Certifications




                                       43