Catuity Comments On Lawsuit in Filings With Australian Stock Exchange and U.S. SEC

Business Wire, May 17, 2001

Business Editors

DETROIT--(BUSINESS WIRE)--May 17, 2001

Catuity, Inc. (NASDAQ: CTTY; ASX: CAT) has been advised that the judge in the legal proceedings between Welcome Real Time (WRT) and Catuity in the Federal Court of Australia will release his written opinion tomorrow, Friday May 18, 2001 Sydney time.

Catuity has been advised that some elements of its submission have not been accepted by the Court, but Catuity at this time, has not received any information from the Court that provides a basis for the claims made by WRT in its press release earlier today. Catuity does not expect to be able to comment until at least Monday May 21, 2001 and until it's legal advisors have had time to review the opinion.

Catuity considered applying for a voluntary halt of trading in its shares on both the Nasdaq and ASX pending its review of the judgment, but decided that a voluntary halt of trading is not warranted. The Company believes that whatever the judgment involves will have limited impact on its primary business for the reasons below.

(1) The case involves only Australia and has does not relate to

the American market,

(2) WRT has not obtained a similar patent grant in America,

(3) Catuity's business focus is the American market and Catuity's

major relationships are with the leading providers of the

payment infrastructure in America and its primary customers

are in America.

(4) Catuity believes the American market will set the

international standards for the integration of loyalty

programs with payment and that the release of draft standards

later this year will provide a mechanism to resolve all patent

issues related to smart cards

(5) The patent issue appears to only involve smart cards and not

magnetic stripe cards

(6) Even in the broadest interpretation of the WRT patent, it

places few or no restraints on the operation of the Catuity

system

(7) Catuity has a number of patents pending that will impact the

market if granted

(8) Catuity believes patent action by patentees is a spoiling

action that may slow the market but will not stop the market

or the Catuity product from being implemented by customers

(9) There are a number of patents issued, some or all which may

impact Catuity, WRT and other market participants, but none of

these patents will stop the development of standards or the

ultimate roll-out of smart card loyalty programs Catuity will

release a statement when its legal advisors have completed

their review of the judgement.

Catuity believes that, irrespective of the judgment and its reasons, there may be an appeal, which must be filed within 21 days. Catuity will advise when and if any appeal is filed.

About Catuity, Inc.

Catuity (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 U.S. Securities & Exchange Commission.