Catuity to Appeal Nasdaq De-Listing Notification, Notification Was Expected.

DETROIT & SYDNEY, Australia -- Catuity, Inc. (NASDAQ:CTTY)(ASX:CAT), a provider of POS-focused solutions, including loyalty, said that on July 21, 2005 it received a determination from Nasdaq Staff that its securities are subject to de-listing from The Nasdaq Small Cap Market pursuant to Nasdaq Marketplace Rules 4310(c)(2)(B) and 4350 on August 1, 2005 unless the Company appeals the Staff's determination to the Nasdaq Listing Qualifications Panel. Catuity will appeal and request a hearing. The hearing request will stay the de-listing of the Company's securities pending the Panel's decision.

Marketplace Rule 4310(c)(2)(B) requires Nasdaq SmallCap Market companies to maintain a minimum of $2,500,000 in stockholders' equity, or $35,000,000 market value of listed securities, or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years in order to maintain the listing of their securities on The Nasdaq SmallCap Market. Nasdaq Staff (the "Staff") had previously granted the Company until July 14, 2005 to evidence compliance with the shareholders' equity requirement.

The notice had been expected and these events were detailed in prior securities filings by the company.

"On July 18, 2005 Catuity received shareholder approval at its Annual Shareholder Meeting to acquire Loyalty Magic Pty. Ltd. and to complete a capital raising for the acquisition and to provide working capital," said John Racine, President and CEO of Catuity Inc. "The Company expects to file the prospectus for its capital raising with the Australian Securities Investment Commission (ASIC) within one week. The subscription period is expected to remain open for approximately 2-3 weeks with the closing of the acquisition occurring shortly thereafter. The Company believes that completion of these steps will immediately bring the Company into compliance with Nasdaq's shareholders' equity requirement and enable it to sustain compliance with that requirement over the long term. There can be no assurance however that the panel will grant our request for continued listing."

Marketplace Rule 4350 requires listed companies to maintain three independent directors on the Audit Committee of the Board and provides that companies have the lesser of one year from the date of non-compliance or until the company's next Annual Shareholder Meeting to cure the deficiency. Catuity became non-compliant on June 22, 2005 when the Company's Chairman, who was also a member of its Audit Committee, resigned from the Board, subsequent to the sudden death on June 9, 2005, of Alan Gilman, another member of the Audit Committee. "Nasdaq Staff indicated that they have no latitude to grant an exception to Marketplace Rule 4350," said John Racine. "The Board has made significant progress in identifying and interviewing prospective candidates and expects to name a new, qualified independent director to the Board within weeks."

"We will follow the normal process under Nasdaq's rules and request a hearing to appeal the notice," Racine said.

An appeal hearing is expected to be held within 45 days from the date that Catuity files its appeal request. "At that point we believe Nasdaq will determine that we either have achieved, or will very shortly achieve, full compliance with all criteria for continued listing on The Nasdaq SmallCap Market," said Mr. Racine. "We are hoping that the appeal hearing will not need to be held based on our current timetable for completing the acquisition and capital raise, and naming a new independent director to our Board."

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.