Room 4561


	December 12, 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.
	Amendment No. 1 to Registration Statement on Form S-3 filed
November 29, 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
Form 10-QSB for fiscal quarter ended September 30, 2005
File No. 0-30045

Dear Mr. Lowry:

      We have reviewed your amended filing and response letter
dated
November 29, 2005 and have the following comments.

Amendment No. 1 to Form S-3

1. We note your response to comment no. 1 in our letter dated
October
25, 2005 and your Form 8-K/A filed November 14, 2005 providing
financial statements and pro forma financial information for
Loyalty
Magic.  Your Form 8-K/A, however, only provides Loyalty Magic`s
audited financial statements for the year ended June 30, 2004.
Item
310(c)(i) of Regulation S-B requires financial statements of the
most
recent fiscal year which, in the case of Loyalty Magic, would
appear
to be the year ended June 30, 2005.  We further note that you have
provided pro forma balance sheet information as of June 30, 2004.
Item 310(d)(2), however, would appear to require such information
to
be as of June 30, 2005.  Please revise as appropriate.

Selling Stockholders, page 8

2. We note your revised disclosure with respect to Mr. Stewart
Flink`s status as a registered broker-dealer.  As a result, it
appears that Crestview Capital Master LLC can be construed as an
affiliate of a broker-dealer.  Please clarify your disclosure to
indicate that Crestview Capital Master LLC is an affiliate of a
broker-dealer and disclose whether Crestview Capital Master LLC
acquired the securities to be resold in the ordinary course of
business.

Item 16. Exhibits

3. Please provide consents of your independent accountants as of a
more recent practicable date.

Form 10-K for Fiscal Year Ended December 31, 2004

Item 9A. Controls and Procedures

4. We note your response to comment no. 11 in our letter dated
October 25, 2005.  Please advise us whether there were any changes
to
your internal control over financial reporting for the quarters
ended
December 31, 2004, March 31, 2005 and June 30, 2005.

Form 10-QSB for Fiscal Quarter Ended September 30, 2005

Item 3. Controls and Procedures

5. We note your disclosure that your "disclosure controls and
procedures are designed to provide reasonable assurance."  With
reference to comment no. 10 in our letter dated October 25, 2005,
please advise us whether your disclosure controls and procedures
are
also effective at that reasonable assurance level.  Please advise
us
whether you will note this comment with respect to preparing
subsequent reports.


*              *              *              *


      As appropriate, please amend your registration statement 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.

      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