UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): APRIL 5, 2004
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CATUITY INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-30045 38-3518829
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2711 E. JEFFERSON AVE.
DETROIT, MICHIGAN 48207 (313)-567-4348
(Address of principal (Registrant's telephone number,
executive offices) including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
CATUITY PROVIDES GUIDANCE FOR FIRST QUARTER 2004 AND REMAINDER OF YEAR
Detroit, MI., (April 5, 2004) -- Catuity, Inc. (NASDAQ: CTTY; ASX: CAT), a
leading provider of loyalty software for transaction processors, card issuers
and merchants, today provided guidance to its investors regarding the first
quarter of 2004 and the remainder of the year.
For the quarter ending March 31, the company expects revenue of approximately
$470,000, most of which is attributable to its work for Target and Visa. This
compares to last year's first quarter revenue of $1,475,000 of which
approximately $1.1 million was license revenue that was recorded as deferred
revenue in 2002. Software development and services revenue for the first quarter
of 2004 are expected to be approximately $460,000 compared to approximately
$400,000 in the first quarter of 2003.
Michael Howe, President and CEO of Catuity, indicated: "Although it is difficult
to predict the amount and timing of future revenue, we currently believe our
2004 revenue will be significantly less than that recorded for 2003 as a result
of the phasing out of the Target Visa smart card program. As a result of the
revenue loss, we will incur a loss in 2004, as compared to our
close-to-break-even 2003 results."
Howe added that at the end of March 2004 Catuity had approximately $5.1 million
of cash and projected that operating expenses for the last nine months of the
year will be approximately $3.6 million. This compares to expenses in the last
nine months of 2003 of approximately $4.5 million. "Our agreements with our
current channel partners Maritz, Certegy, KESM and EMS should generate revenue
in 2004 and additional revenue in 2005 as they add new retail licensees. We are
also continuing to examine other expense reduction opportunities in 2004," Howe
said.
"In 2003 almost all of our software development and service focus was on smart
Visa and Target Corporation," said Howe. "We learned much from our successful
installation of the Catuity system with a national retailer. Catuity delivered
its software on time, to system tested customer specifications, and within
budget. This has provided our channel partners and other retailers with
confidence that Catuity is a reliable source for their loyalty software
initiatives.
"During the past three years, while our resources have been directed primarily
to the Visa/Target initiative, information technology has continued to advance
significantly. Our product development team is now able to add new technological
improvements to our proprietary system to keep Catuity competitive. These
changes will allow us to integrate our system to more databases, making our
software easier for our customers to provide highly targeted offers based on
more customer data, and make it much easier to integrate the Catuity system to
their various POS environments," explained Howe.
He also said that Catuity anticipates that its efforts in 2004 will be directed
more toward magnetic stripe cards, rather than smart cards. "In North America,
Western Europe and Australia, we believe that mag stripe with loyalty rewards
stored, not on the card, as in the case of smart cards, but on a host server
will be preferred. The discussions that we have had with Maritz, Certegy and
others, indicate that this appears to be the preference. We are also able to
utilize our system with smart cards as EMV mandates are accomplished in various
regions of the world".
"Although we are very disappointed in the decision by Target to phase out its
use of smart chip technology, we remain optimistic about our business
opportunities and we continue to work to grow this business and bring about
profitability and long-term value to our shareholders," Howe said.
Catuity, Inc. is a leading provider of loyalty program management and e-coupon
software to merchants, card issuers and processors. Clients of Catuity use the
software to establish and administer a new breed of customer loyalty and
e-coupon programs that immediately reward profitable behavior by customers at
the point of sale. The patented software can be used to attract and retain
customers and to encourage more valuable purchases, thereby resulting in greater
revenue for the merchant or card issuer. The Catuity system supports many forms
of customer ID, including
mag-stripe, smart cards and RFID tokens. Catuity's smart card loyalty applet has
been loaded on millions of chip-based credit cards. Catuity's software is in use
in more than 3,000 U.S. stores, in addition to Target's chain of stores. In
addition to its innovative software, Catuity also provides marketing expertise
and support services to its clients. More information on Catuity is available at
its website: http://www.catuity.com.
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.
Contact: Michael V. Howe or Beverly Jedynak
President & CEO Martin E. Janis & Company, Inc.
313-567-4348 ext. 213 312-943-1100 ext. 12
cell: 773-350-5793
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CATUITY INC.
(Registrant)
By /s/ John H. Lowry
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John H. Lowry
Senior Vice President,
Chief Financial Officer & Secretary
Date: April 5, 2004