Catuity Reports Client Signings, Key Events.

DETROIT, Mich. & SYDNEY, Australia -- Catuity, Inc. (NASDAQ:CTTY)(ASX:CAT), a provider of POS-focused solutions, including loyalty and gift card, provided shareholders with an update of recent business developments.

"The third quarter of 2005 will be a pivotal time in the Company's turnaround strategy," said John Racine, President & CEO of Catuity Inc. "We are nearing the close of the acquisition of Loyalty Magic. Equally important, as described below, we are beginning to see some results from our new sales focus in the U.S. and adoption of our new hosted solution, while our non-recurring investments in development remain low."

The Company also provided updates on seven key events since June 30:

--The Company is preparing to deploy its new CALS solution on the Verifone Omni 3750 at a 15-store chain in the Midwest as the first CertifiChecks client to use the new system. Dayton, Ohio-based CertifiChecks is the first U.S. Company to deploy the new loyalty and gift card system and offer it to their base of merchants and chains.

--Catuity signed a letter of intent with Equity Commerce, a growing reseller of payment processing solutions, to be the first to deploy CALS on the Lipman terminal platform. The Company expects to complete development of its application for that terminal in October. Equity Commerce's decision to use the Company's applications is important because a number of Catuity's key prospects have indicated a preference for using this terminal.

--Catuity is negotiating a contract renewal with KESM Transaction Solutions, a Toronto-based payments and loyalty processor. The company has indicated that it will renew its contract through at least 2008. KESM supports diverse clients ranging from a leading Canadian petrol chain retailer to individual merchants and resellers.

--Loyalty Magic, the company Catuity is in the process of acquiring, reached agreement with lifestyle retailer Billabong to deploy a gift card solution in the past quarter. "We continue to see growing demand for gift card at a wide range of retailers, from household names like Billabong to the corner merchant,'' said Chris Leach, CEO of Loyalty Magic. "We see gift card deployments as an important part of our strategy in 2006 and beyond.

--On July 19, Catuity's shareholders approved the Company's planned acquisition of Melbourne-based Loyalty Magic and other related matters.

--On August 11, the Company's management presented their appeal of a delisting notice to the Nasdaq Listing Qualifications Panel in Washington, D.C. Catuity has asked Nasdaq for an extension of time to allow it to complete its plan to regain and demonstrate compliance with the Nasdaq listing requirements . For more specific details on the Nasdaq issue, please see the Company's second quarter 2005 Form 10-Q filed with the SEC on August 15, 2005. "We are hopeful that the Nasdaq Listing Qualifications Panel will grant us the extension of time needed to demonstrate that we have regained compliance," said Mr. Racine. "There can be no assurance, however, that the Panel will do so."

--Loyalty Magic has agreed to terms with existing client Sky City to sell the casino operator a source code license for a six-figure license fee that it expects to book in the third quarter. That sale is expected to make Loyalty Magic profitable in the second half of 2005.

"While the focus of many of our statements has concerned significant strategic events, it is important to know that we remain focused on running our business day-to-day," said Mr. Racine. "No single event will drive our strategy. Rather, this is a process of executing everyday for our clients and our shareholders."

Catuity, Inc. makes the point of sale more profitable for its clients by delivering products and services that reduce costs and generate new revenue. More information on Catuity is available at its website: http://www.catuity.com.

In conjunction with the provisions of the "Safe Harbor" section to the Private Securities Litigation Reform Act of 1995, this release may contain forward-looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations. All such forward-looking statements are necessarily only estimates of future results and there can be no assurance that actual results will not materially differ from expectations. Further information on potential factors that could affect Catuity, Inc. is included in the Company's Form 10-K, which is filed with the US Securities & Exchange Commission.