Catuity Reports Significant Revenue Growth for 2001; Expects to Achieve Profitability and Strong Cash Flow for 2002.

Business Editors

DETROIT--(BUSINESS WIRE)--March 15, 2002

Catuity, Inc. (NASDAQ: CTTY; ASX: CAT) today reported preliminary results for 2001.

For the year, the company expects to report total operating revenue of $2.02 million, an increase of 169 percent over the year 2000. The company's total operating revenue has progressively grown over the past year on a quarter-to-quarter basis, with the majority of 2001 revenues being recorded in the fourth quarter.

Software development and customization revenue increased by 164 percent to $1.41 million for 2001. The Company's Australian based software development costs, including all R & D expenses, increased only eight percent to $1.3 million, although after currency exchange rate differences between 2000 and 2001 are eliminated, the cost increase was 19 percent. As a result, software development made a positive contribution to the Company's results for the first time in 2001 and the Company expects that this will continue in the future.

Services revenue, including implementation, training and other consulting fees, increased 173 percent to 590,000 in 2001. Corresponding costs increased 260 percent to $950,000. This cost increase is due to the fact that service and implementation costs did not begin to occur until August 2000 and due to the build up of implementation, training and customer support personnel during 2001 to service the Company's growing customer base and US sales efforts. The Company's customers include Visa USA, Target Corporation, Visa member banks and processors.

The Company has received $830,000 in non-refundable license and service fees, which were not included in 2001 revenue, but are included in deferred revenue on the balance sheet. Any costs incurred that were related to deferred revenue were expensed in 2001.

The company sees the growth in its software development and services revenue as a positive sign for the future as this revenue is expected to precede growth in license revenue.

Catuity has signed contracts that provide license revenue on a per card activated basis and on a per transaction fee basis. Current indications are that this business model can deliver reasonable recurring license fee revenue to the Company.

In 2001, 70 percent of Catuity's revenue resulted from the company's relationship with Visa and 96 percent of revenue was derived from its US operations. The Company expects that its sources of revenue and customer base will be broadened in 2002.

For 2001, the company reported a net loss of $3.88 million compared to a net loss of $3.81 million in 2000. Increasing revenues resulted in a substantially reduced loss in the second half of 2001 ($1.24 million) compared to the first half of 2001 ($2.63 million). In each of the past two years Catuity's financial results have reflected non-recurring items, including legal expenses in 2000 and 2001 in connection with a lawsuit filed by a competitor, an extraordinary loss on the early extinguishment of debt in 2000, and a non-cash sales discount in 2001. If the amounts related to these items were excluded, on a pro-forma basis the Company's losses would have been $2.78 million in 2001 and $3.28 million in 2000.

Company Expects Revenue in First Quarter of 2002 to Exceed Projections; Continues to Expect 2002 to be Profitable

Catuity expects first quarter revenue for 2002 to exceed its previous expectations while expenses are expected to be less than budgeted amounts. The Company expects to incur losses in both its first and second quarters of 2002, but continues to expect to achieve profitability for the full year 2002. Revenue is expected to exceed 2001 revenue by over 250 percent. 2002 costs and expenses, before stock compensation and other non-cash adjustments, are projected to grow by less than 20 percent.

As of December 31, 2001, Catuity had cash reserves of $4.47 million and no debt. Total assets were $5.87 million and net assets were $3.86 million. The Company's balance sheet includes no intangible assets and all R & D costs have been expensed when incurred.

Catuity achieved positive, net cash flow of $320,000 in the fourth quarter of 2001, which exceeded previous projections by the Company. Catuity believes it has sufficient cash reserves to implement its current business plans.

"Catuity is continuing its core focus on the software for the multi-program card market," stated Michael V. Howe, president and CEO. "The US market appears to be developing rapidly with many industry observers and participants predicting rapid growth over the next five years. While there have been many positive developments and strong interest in the Company's products, Catuity believes the market will grow in a relatively subdued way until the current implementations are completed later this year. We believe successful completion of these are expected to have a significant positive impact on the US and world markets." Howe added that, in 2001, Catuity successfully delivered all customer requirements on time and this continues in 2002 with all development and services resources fully committed under current contracts.

Catuity, Inc. (www.catuity.com) is a leading provider of loyalty software systems. The Catuity software includes an integrated suite of applications that provide loyalty, ticketing, access control and membership. The Catuity Loyalty System is ubiquitous in that it can operate on any device, any card program and with any payment process, including stored value, smart cards and wireless applications. Catuity unites the brick-and-mortar retailer with the Internet to enable cross-sell capabilities with consistent brand imaging across all channels.

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 US Securities & Exchange Commission.