Room 4561
October 25, 2005
Mr. John H. Lowry III
Vice President, Chief Financial Officer,
Treasurer and Secretary
Catuity Inc.
2711 East Jefferson Avenue
Detroit, Michigan 48207
Re: Catuity Inc.
Registration Statement on Form S-3 filed September 26, 2005
File No. 333-128600
Form 10-K for fiscal year ended December 31, 2004
Form 10-QSB for fiscal quarter ended March 31, 2005
Form 10-QSB for fiscal quarter ended June 30, 2005
File No. 0-30045
Dear Mr. Lowry:
This is to advise you that we have limited our review of the
above filings to the matters addressed in the comments below.
Where
indicated, we think you should revise your document in response to
these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. Please
respond to our comments on the periodic reports no later than 10
business days from the date of this letter. After reviewing this
information, we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form S-3
1. We note your disclosure regarding the consummation of your
acquisition of Loyalty Magic on September 1, 2005. It does not
appear that you have provided financial statements or pro forma
financial information for Loyalty Magic pursuant to Item 9.01 of
Form
8-K in your Forms 8-K filed on September 7 and 9, 2005. Please
advise us of your requirements under Item 9.01. Please also note
that unless Rule 310(c)(3)(iv) of Regulation S-B is available your
registration statement will not be declared effective until the
financial information required by Rule 310(c) is provided. If
applicable, please provide us your analysis with respect to the
availability of Rule 310(c)(3)(iv). Please also see the
Instruction
to Item 9.01 of Form 8-K and Interpretation S.21 of our July 1997
Manual of Publicly Available Telephone Interpretations for
additional
guidance.
Selling Stockholders, page 8
2. Please disclose the natural persons who exercise the voting
and/or
dispositive powers with respect to the securities to be offered
for
resale by your selling stockholders that are non-reporting
entities.
Please see Interpretation I.60 of our July 1997 Manual of Publicly
Available Telephone Interpretations and Interpretation 4S of the
Regulation S-K portion of the March 1999 Supplement to our July
1997
Manual of Publicly Available Telephone Interpretations.
3. It does not appear that any selling stockholder is a registered
broker-dealer. Please confirm. Please disclose whether any
selling
stockholder is an affiliate of a registered broker-dealer. If a
selling stockholder is an affiliate of a registered broker-dealer,
please expand the prospectus disclosure to indicate whether such
selling stockholders acquired the securities to be resold in the
ordinary course of business. Also indicate whether at the time of
the acquisition such selling stockholders had any agreements,
understandings or arrangements with any other persons, either
directly or indirectly, to dispose of the securities.
4. Pursuant to Item 601(b)(1)(i)(A) of Regulation S-B, please
incorporate by reference or file the subscription agreements and
purchase agreement that you have entered into with your selling
stockholders as exhibits to your registration statement. We note
that you have filed various registration rights agreements.
5. Please clarify your use of the designation "atf" with respect
to
certain selling stockholders.
Where You Can Find More Information, page 12
6. Please update our contact information.
Incorporation by Reference, page 12
7. It appears that you have filed a Form 8-K subsequent to the
filing
of your registration statement. Please revise to incorporate by
reference all filings required by Item 12 of Form S-3.
Item 16. Exhibits
8. We note that counsel`s opinion on the legality of the shares
subject to the registration statement is limited to federal laws
and
the laws of Michigan, but that you are subject to Delaware law
with
respect to the issuance of your securities. Item 601(b)(5) of
Regulation S-B contemplates an opinion as to the legality of the
securities being sold without qualification. We believe that all
lawyers are capable of opinions on the Delaware General
Corporation
Law, but counsel cannot include any sort of jurisdictional
qualification in their opinion. Please revise. Please also see
Section VIII.A.14 of our Current Issues and Rulemaking Projects
Outline dated November 14, 2000.
Form 10-K for Fiscal Year Ended December 31, 2004
Item 9A. Controls and Procedures
9. Your disclosure suggests that your disclosure controls and
procedures are effective, but only to the extent that information
required to be disclosed is recorded, processed, summarized and
reported within the time periods specified by the Commission`s
rules
and forms. This text does not address the effectiveness of your
disclosure controls and procedures with respect to whether
information required to be disclosed by you in the reports that
you
file or submit under the Exchange Act is accumulated and
communicated
to your management, including your principal executive and
principal
financial officers, to allow timely decisions regarding required
disclosure. We note similar disclosure in your subsequent interim
reports. Please confirm whether your disclosure controls and
procedures as of December 31, 2004, March 31, 2005 and June 30,
2005
are effective with respect to the foregoing requirement and
whether
you will note this comment with respect to preparing reports.
Please
see Rule 13a-15(e) of the Exchange Act for additional guidance.
10. We note your qualifying statement that your disclosure
controls
and procedures are effective "in all material respects." Please
confirm whether your disclosure controls and procedures are
designed
to provide reasonable assurance of achieving their objectives and
that your chief executive officer and chief financial officer
concluded that your disclosure controls and procedures are
effective
at that reasonable assurance level. In the alternative, remove
the
qualification to your disclosure controls and procedures. Please
refer to Section II.F.4 of Release No. 33-8238 for additional
guidance.
11. We note your disclosure that "there have been no significant
changes in [your] internal controls or in other factors that could
significantly affect internal controls subsequent to the date
[you]
carried out your evaluation." Please note that Items 308 of
Regulations S-K and S-B require the disclosure of "any" change in
your internal control over financial reporting that occurred
during
your "last fiscal quarter" that has "materially affected, or is
reasonably likely to materially affect," your internal control
over
financial reporting. We note similar disclosure in your
subsequent
interim reports. In light of the foregoing, please advise us with
respect to changes in your internal control over financial
reporting
for the quarter ended December 31, 2004, March 31, 2005 and June
30,
2005 and whether you will note this comment with respect to
preparing
reports.
* * * *
As appropriate, please amend your filings in response to
these
comments. You may wish to provide us with marked copies of the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings to be certain that the
filings include all information required under the Securities Act
and
Exchange Act and that they have provided all information investors
require for an informed investment decision. Since the company
and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert the staff comments and the
declaration
of effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of your registration statement as a confirmation of
the fact that those requesting acceleration are aware of their
respective responsibilities under the Securities Act and the
Exchange
Act as they relate to the proposed public offering of the
securities
specified in the above registration statement. We will act on the
request and, pursuant to delegated authority, grant acceleration
of
the effective date.
We direct your attention to Rule 461 regarding requesting
acceleration of a registration statement. Please allow adequate
time
after the filing of any amendment for further review before
submitting a request for acceleration. Please provide this
request
at least two business days in advance of the requested effective
date.
You may contact Daniel Lee at (202) 551-3477 with any
questions. If you need further assistance, you may contact me at
(202) 551-3735.
Sincerely,
Barbara C. Jacobs
Assistant Director