Catuity Reports Profitable First Quarter 2003; Cautions Investors on Full Year Outlook.

Business Editors/High-Tech Writers

DETROIT--(BUSINESS WIRE)--May 14, 2003

Catuity, Inc. (Nasdaq:CTTY; ASX:CAT), a leading loyalty software solutions provider to card issuers, merchants and processors, today reported its first quarter results for the period ending March 31, 2003.

For the quarter, Catuity reported revenue of $1,475,000, compared to first quarter 2002 revenue of $976,000. The company achieved its first profitable quarter, recording earnings of $305,000 or $0.04 per share, as compared to its first quarter loss of ($355,000) or ($0.04) per share one year ago.

Michael V. Howe, President and CEO, made the announcement noting, "The Company's profitable quarter is the result of a number of initiatives that the company instituted last year. A significant portion of the first quarter's revenue is license revenue that was deferred revenue at the end of 2002."

In January, Catuity indicated that it expected to be profitable for 2003. "While we anticipate that our 2003 revenues will be significantly above 2002, our first quarter 2003 sales efforts are indicating a slower than expected commitment to Information Technology investments. Our major customers are on track to carry out their planned programs; however many new customers are coming along slower than we had originally expected. As a result, while second quarter revenue remains as planned, we now anticipate lower revenues in the second half of 2003 than originally expected," Howe explained. "Because we are maintaining tight control over our operating costs we expect them to be in line with 2002. However, we anticipate we will incur a loss for the full year." Howe declined to estimate at this time exactly what the loss will be, adding that license revenue continues to be extremely difficult to forecast because they are directly tied to the plans and timetables that are solely under the control of the Company's customers and key prospects.

"We provide an emerging technology and are building an open platform software system that provides an advanced real time data-driven incentive distribution system capable of increasing loyalty through highly targeted electronic distribution of incentives at the point of sale. As such, Catuity remains engaged with many large prospective customers and our prospect for future revenue remains strong."

Catuity, Inc. is a leading provider of application software that allows merchants, transaction processors and card issuers to establish and administer customer loyalty programs integrated to the payment system at the point-of-sale. The patented Catuity system can be deployed using a mag stripe, smart card, memory card, RFID or contactless token. Catuity's smart card applet has been included on millions of chip-based credit cards. Catuity's loyalty software can be used by a broad range of sellers of goods and services, particularly those who sell through both store locations and over the Internet. In addition to its innovative software products, Catuity also provides marketing expertise and service to its clients, so that with Catuity's loyalty solution merchants can offer their customers valuable benefits, thereby attracting and retaining customers as well as encouraging increased purchases. More information on Catuity is available at its Web site: http://www.catuity.com.

In conjunction with the provisions of the "Safe Harbor" section of 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 U.S. Securities & Exchange Commission.