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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 14a-11(c) of Section 240.14a-12
CATUITY INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
1
CATUITY INC.
LEVEL 4 BALLARAT HOUSE 2711 E. JEFFERSON AVE.
68-72 WENTWORTH AVE. DETROIT, MICHIGAN 48207 USA
SURRY HILLS NSW 2010 AUSTRALIA
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 22, 2004
We will hold a Special Meeting of Shareholders of Catuity, Inc. at the
AAP Theatrette, AAP Centre, 259 George Street, Sydney, NSW 2000 Australia on
Friday, October 22, 2004 at 9:30 a.m. Australian Eastern Standard Time (Thursday
October 21, 2004 at 7:30 p.m. Eastern Standard Time in the United States) for
the following purposes:
1. To grant the Board of Directors the authority to amend the
Certificate of Incorporation to effect a reverse stock split at one of three
ratios at a date to be determined by the Board of Directors prior to March 31,
2005.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO GRANT THE
BOARD OF DIRECTORS THE AUTHORITY TO AMEND THE CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT AT ONE OF THE FOLLOWING THREE RATIOS: ONE-FOR-TEN;
ONE-FOR-FIFTEEN; OR ONE-FOR-TWENTY AT A DATE TO BE DETERMINED BY THE BOARD OF
DIRECTORS PRIOR TO MARCH 31, 2005.
2. To act upon such other matters as may properly come before the
meeting or any adjournments or postponements thereof.
We have described the items of business more fully in the Proxy
Statement accompanying this Notice. The record date for determining those
shareholders who were entitled to notice of, and to vote at, the Special Meeting
and at any adjournment is September 15, 2004. The stock transfer books will not
be closed between the record date and the date of the Special Meeting. A list of
shareholders entitled to vote at the Special Meeting will be available for
inspection at Catuity's offices.
Whether or not you plan to attend the Special Meeting, please complete,
sign, date and return the enclosed proxy promptly in the accompanying reply
envelope. Please refer to the enclosed voting form for instructions. You may
revoke your proxy at any time prior to the Special Meeting. If you decide to
attend the Special Meeting and wish to change your proxy vote, you may do so
automatically by voting in person at the Special Meeting.
By Order of the Board of Directors
/s/ John H. Lowry III
JOHN H. LOWRY III
Secretary
Detroit, Michigan
September 17, 2004
2
TABLE OF CONTENTS
VOTING RIGHTS AND SOLICITATION 4
VOTING 4
PROXIES 4
SOLICITATION OF PROXIES 4
PROPOSAL NO. 1 PROPOSAL TO GRANT THE BOARD OR DIRECTORS THE AUTHORITY TO
AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT AT ONE
OF THREE RATIOS AT A DATE TO BE DETERMINED BY THE BOARD OF DIRECTORS PRIOR TO
MARCH 31, 2005. 5
GENERAL 5
BACKGROUND OF THE REVERSE SPLIT 5
FRACTIONAL SHAREHOLDERS 6
ACCOUNTING MATTERS 6
PROCEDURE FOR EFFECTING THE REVERSE SPLIT 6
U.S. FEDERAL INCOME TAX CONSEQUENCES 6
AUTHORIZED SHARES 7
EFFECT ON CERTIFICATED HOLDERS 7
EFFECT ON REGISTERED AND BENEFICIAL HOLDERS 8
EFFECT ON CATUITY EMPLOYEES AND DIRECTORS 8
RECOMMENDATION OF THE BOARD OF DIRECTORS 8
OWNERSHIP OF SECURITIES 9
SHAREHOLDER PROPOSALS FOR 2005 PROXY STATEMENT 10
FORM 10-K 10
OTHER MATTERS 10
EXHIBIT-A 11
3
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
We are furnishing these proxy materials for the solicitation of proxies
by the Catuity Inc. Board of Directors for our Special Meeting of Shareholders
to be held on Friday, October 22, 2004 at 9:30 a.m. Australian Eastern Standard
Time at the AAP Theatrette, AAP Centre, 259 George Street, Sydney, NSW 2000
Australia (Thursday, October 21, 2004 at 7:30 p.m. United States Eastern
Standard Time) and at any adjournments or postponements thereto. We first mailed
these proxy materials on or about September 21, 2004 to all shareholders
entitled to vote at the Special Meeting.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Special
Meeting are listed in the accompanying Notice of Special Meeting of
Shareholders. We have described each proposal in more detail in this Proxy
Statement.
VOTING RIGHTS AND SOLICITATION
VOTING
Our Common Stock is the only type of security entitled to vote at the
Special Meeting. On September 15, 2004, the record date for determination of
shareholders entitled to vote at the Special Meeting, there were XX,XXX,XXX
shares of Common Stock outstanding. Each shareholder of record on September 15,
2004 is entitled to one vote for each share of Common Stock held on that date.
One third of the outstanding shares of Common Stock entitled to vote must be
present or represented at the Special Meeting in order to have a quorum for the
conduct of business generally. Abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum for the
transaction of business. The matters to be considered at the Special Meeting
require the approval by affirmative vote of a majority of our outstanding voting
shares present or represented and entitled to vote on those matters at the
Special Meeting. Abstentions and broker non-votes can have the effect of
preventing approval of a proposal where the number of affirmative votes, though
a majority of the votes cast, does not constitute a majority of the shares
present or represented and entitled to vote on the particular matter. The
inspector of election appointed for the Special Meeting will tabulate all votes.
The inspector will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes.
PROXIES
Whether or not you are able to attend the Special Meeting, we urge you
to vote your proxy. Catuity's Board of Directors is soliciting your proxy, and
the Board will vote your proxy as you direct on your proxy when properly
completed. If you sign and return your proxy but do not specify any voting
directions, your proxy will be voted FOR the proposals, and in the discretion of
the proxy holder as to other matters that may properly come before the Special
Meeting. You may revoke or change your proxy at any time before the Special
Meeting. To do this, send a written notice of revocation or another signed proxy
with a later date to Catuity's Secretary at our principal executive office in
Detroit, Michigan or our Australian office in Surry Hills NSW before the
beginning of the Special Meeting. You may also revoke your proxy by attending
the Special Meeting and voting in person.
SOLICITATION OF PROXIES
Catuity will bear the entire cost of solicitation, including the preparation,
assembly, printing, and mailing of this Proxy Statement, the proxy, and any
additional solicitation material we furnish to shareholders. We will furnish
copies of solicitation material to brokerage houses, fiduciaries, and custodians
holding shares in their names that are beneficially owned by others so that they
may forward this solicitation material to the beneficial owners, and we have
retained Proxy Services Inc. to assist us in this endeavor. We anticipate that
we will pay US$1,500, plus
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reasonable out of pocket expenses, for these services. The original solicitation
of proxies by mail may be supplemented by a solicitation by telephone, telegram,
or other means by our Directors, officers, or employees. We will not pay any
additional compensation to these individuals for these services. Except as
described above, we do not presently intend to solicit proxies other than by
mail or via the Internet.
PROPOSAL NO. 1 PROPOSAL TO GRANT THE BOARD OF DIRECTORS THE
AUTHORITY TO AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT A
REVERSE STOCK SPLIT AT ONE OF THREE RATIOS AT A DATE TO BE
DETERMINED BY THE BOARD OF DIRECTORS PRIOR TO MARCH 31, 2005.
GENERAL
Our Board of Directors believes it is advisable and in the best
interests of our shareholders to be granted the authority to effect a reverse
stock split of our outstanding Common Stock. Our Board has unanimously approved
the presentation to shareholders of a proposal to amend our Certificate of
Incorporation to allow our Board of Directors to effect a reverse stock split of
our Common Stock on the terms described in this Proxy Statement.
If the reverse stock split (the "Reverse Split") is approved by the
shareholders, the Board of Directors may subsequently effect, in its sole
discretion, the Reverse Split based upon any of the following three ratios:
one-for-ten; one-for-fifteen; or one-for-twenty at a date prior to March 31,
2005. For example, a one-for-ten ratio would give shareholders one share for
every ten shares they hold. If the Board has not effected the Reverse Split by
March 31, 2005, shareholders approval to do so will expire. As such, in asking
the shareholders to approve the Reverse Split, the Board is also asking the
shareholders to grant to them the authority to set the ratio for the Reverse
Split. The Board believes that approval of this discretion to the Board, rather
than approval of a stock split of a specified ratio, provides the Board with
maximum flexibility to react to current market conditions and to therefore act
in the best interests of the Company and our shareholders. In setting the ratio
for the Reverse Split, the intention of our Board of Directors is to increase
the stock price sufficiently above the $1.00 minimum bid price required for
continued listing on the Nasdaq SmallCap Market so that we would not again be
faced with delisting for failure to meet the minimum bid price absent a
significant percentage decline in our share price.
Approval of this proposal by our shareholders would give the Board of
Directors authority to implement the Reverse Split at anytime prior to March 31,
2005. In addition, notwithstanding approval of this proposal by the
shareholders, the Board of Directors may, in its sole discretion, determine not
to effect, and abandon, the Reverse Split without further action by our
shareholders.
One principal effect of the Reverse Split would be to decrease the
number of outstanding shares of our Common Stock. Except for the payout of
fractional shares as described below, the Reverse Split will not have any
dilutive effect on our shareholders since each shareholder would hold the same
percentage of Common Stock outstanding immediately following the Reverse Split
as such shareholder held immediately prior to the Reverse Split. The relative
voting and other rights that accompany the shares of Common Stock would not be
affected by the Reverse Split.
BACKGROUND OF THE REVERSE SPLIT
On May 7, 2004 the Company received notice from the Nasdaq Stock
Market, Inc. ("Nasdaq") that the daily minimum bid price for our Common Stock
had fallen, and remained, below $1.00 per share for 30 consecutive trading days.
As a result, the Company is out of compliance with Nasdaq's $1.00 minimum bid
price for continued inclusion. In accordance with Section 4310 of the Nasdaq
Marketplace Rules, the Company was given 180 calendar days from its May 7, 2004
notification date to regain compliance. The compliance period will expire on
November 3, 2004.
The requirements for continued listing on The Nasdaq SmallCap Market
are listed below:
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(1) either (a) stockholders' equity of $2,500,000, (b) net income in
the most recently completed fiscal year or in two of the last three
years of $500,000, or (c) market capitalization of $35,000,000;
(2) a public float of 500,000 shares;
(3) a market value of public float of $1,000,000;
(4) a minimum bid price of $1.00 per share;
(5) at least two market makers;
(6) at least 300 round lot stockholders; and
(7) compliance with Nasdaq corporate governance rules.
Our Board believes that it is in the best interest of the Company and
our shareholders to approve the proposal relating to the Reverse Split at this
time to give the Board the flexibility to implement a Reverse Split intended to
increase our minimum bid price. After giving effect to the Reverse Split, we
anticipate that we would be fully compliant with the requirements for continued
listing on The Nasdaq SmallCap Market.
FRACTIONAL SHAREHOLDERS
We would not issue any fractional shares in connection with the Reverse
Split. Instead, any fractional share resulting from the Reverse Split would be
paid out in cash. The cash amount to be paid to each shareholder would be equal
to the number of fractional shares multiplied by the closing trading price of
our Common Stock on the trading day immediately before the effective date of the
Reverse Split.
ACCOUNTING MATTERS
The Reverse Split will not affect the par value of our Common Stock.
However, the Common Stock as designated on our Balance Sheet would be reduced
proportionately based on the reverse stock split ratio selected by the Board of
Directors, and the additional paid-in capital account will be credited with the
amount by which the common stock is reduced. Additionally, net loss per share
would increase proportionately as a result of the Reverse Split since there will
be a lower number of shares outstanding. We do not anticipate that any other
material accounting consequence would arise as a result of the Reverse Split.
PROCEDURE FOR EFFECTING THE REVERSE SPLIT
If the shareholders approve the proposal to grant the Board of
Directors the authority to amend the Certificate of Incorporation to effect the
Reverse Split at one of three ratios at a date to be determined by the Board of
Directors prior to March 31, 2005, and the Board of Directors decides to
implement the Reverse Split at any time prior to March 31, 2005, we will
promptly file a Certificate of Amendment to our Amended Certificate of
Incorporation with the Secretary of State of the State of Delaware to amend our
existing Amended Certificate of Incorporation. The Reverse Split will become
effective on the date of filing the Certificate of Amendment, which is referred
to as the "Effective Date." The effect on Certificated Holders, and Registered
and Beneficial Holders is explained further below. The Certificate of Amendment
is set forth in Exhibit A to this proxy statement. The text of the Certificate
of Amendment is subject to modification to include such changes as may be
required by the office of the Secretary of State of the State of Delaware and as
the Board of Directors deems necessary and advisable to effect the Reverse
Split, including the applicable ratio for the Reverse Split.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material United States federal
income tax consequences of the Reverse Split to shareholders of the Company.
This summary does not purport to be a complete discussion of all of the possible
federal income tax consequences of the Reverse Split and is included for general
information only.
6
Further, it does not address any state, local, foreign, or Australian income or
other tax consequences. Also, it does not address the tax consequences to
holders that are subject to special tax rules, such as banks, insurance
companies, regulated investment companies, personal holding companies, foreign
entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
The discussion is based on the provisions of the United States federal income
tax law as of the date hereof, which is subject to change retroactively as well
as prospectively. This summary also assumes that the pre-reverse stock split
shares were, and the post-reverse stock split shares will be, held as a "capital
asset," as defined in the Internal Revenue Code of 1986, as amended (i.e.,
generally, property held for investment). The tax treatment of a shareholder may
vary depending upon the particular facts and circumstances of such shareholder.
Each shareholder is urged to consult with such shareholder's own tax advisor
with respect to the tax consequences of the Reverse Split. As used herein, the
term United States holder means a shareholder that is, for federal income tax
purposes: a citizen or resident of the United States; a corporation or other
entity taxed as a corporation created or organized in or under the laws of the
United States, any State of the United States or the District of Columbia; an
estate the income of which is subject to federal income tax regardless of its
source; or a trust if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust.
Other than the cash payments for fractional shares discussed below,
generally no gain or loss should be recognized by a shareholder upon such
shareholder's exchange of pre-reverse stock split shares for post-reverse stock
split shares pursuant to the Reverse Split. The aggregate tax basis of the
postreverse stock split shares received in the Reverse Split will be the same as
the shareholder's aggregate tax basis in the pre-reverse stock split shares
exchanged.
In general, shareholders who receive cash in exchange for their
fractional share interests in the post-reverse stock split shares as a result of
the Reverse Split will generally recognize gain or loss based on their adjusted
tax basis in the fractional share interests redeemed. The shareholder's holding
period for the post-reverse stock split shares will include the period during
which the shareholder held the pre-reverse stock split shares surrendered in the
Reverse Split. The receipt of cash by a United States holder of Catuity common
stock will generally result in a taxable gain or loss to such holder for federal
income tax purposes based upon the difference between the amount of cash
received by such holder and the adjusted tax basis in the fractional shares as
set forth above. The gain or loss will constitute a capital gain or loss and
will constitute long-term capital gain or loss if the holder's holding period is
greater than one year as of the effective date.
Our view regarding the tax consequences of the Reverse Split is not binding on
the Internal Revenue Service or the courts. ACCORDINGLY, EACH SHAREHOLDER SHOULD
CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL OF THE POTENTIAL TAX
CONSEQUENCES TO HIM OR HER OF THE REVERSE SPLIT.
AUTHORIZED SHARES
The Reverse Split will affect all issued and outstanding shares of
Common Stock and outstanding rights to acquire Common Sock. Upon the
effectiveness of the Reverse Split, the number of authorized shares of Common
Stock that are not issued or outstanding would increase due to the reduction in
the number of shares issued and outstanding based on the Reverse Split ratio
selected by the Board of Directors. As of August 31, 2004, we had 100 million
shares of authorized Common Stock and approximately 11.7 million shares of
common stock issued and outstanding, and after the Reverse Split will continue
to have 100 million shares of authorized Common Stock. We will continue to have
10 million authorized shares of preferred stock, none of which are issued at
this time.
EFFECT ON CERTIFICATED HOLDERS
If the Reverse Split is approved by shareholders, the conversion of the
shares of our Common Stock under the Reverse Split will occur automatically on
the Effective Date. Our transfer agent, Computershare, will act as exchange
agent ("Exchange Agent") to implement the exchange of stock certificates and the
distribution of any cash in lieu of fractional shares. As soon as practicable
after the Effective Date, the Company, or the Exchange Agent, will send a letter
to each shareholder of record at the Effective Date for use in transmitting the
existing certificates representing shares of our Common Stock ("Old
Certificates") to the Exchange Agent. The letter of transmittal will contain
instructions for the surrender of Old Certificates to the Exchange Agent in
exchange for new certificates
7
representing the appropriate number of whole shares of New Common Stock. No new
stock certificates will be issued to a shareholder until such shareholder has
surrendered all Old Certificates, together with a properly completed and
executed letter of transmittal, to the Exchange Agent. Consequently, you will
need to surrender your Old Certificates before you will be able to sell or
transfer your stock.
Shareholders will then receive a new certificate or certificates
representing the number of whole shares of Common Stock into which their
pre-reverse stock split shares have been converted as a result of the Reverse
Split. Until surrendered, we will deem outstanding Old Certificates held by
shareholders to be canceled and only to represent the number of whole shares of
post-reverse stock split Common Stock to which these shareholders are entitled.
YOU SHOULD NOT SEND YOUR OLD CERTIFICATES TO THE EXCHANGE AGENT UNTIL
YOU HAVE RECEIVED THE LETTER OF TRANSMITTAL.
EFFECT ON REGISTERED AND BENEFICIAL HOLDERS
If the Reverse Split is approved by shareholders, we intend to treat
shareholders holding Catuity Common Stock in "street name", through a bank,
broker or other nominee, in the same manner as registered shareholders whose
shares are registered in their names. Banks, brokers or other nominees will be
instructed to effect the Reverse Split for their beneficial holders holding
Catuity Common Stock in "street name." However, these banks, brokers or other
nominees may have different procedures than registered shareholders for
processing the Reverse Split. If you hold your shares with a bank, broker or
other nominee and if you have any questions in this regard, we encourage you to
contact your nominee.
EFFECT ON CATUITY EMPLOYEES AND DIRECTORS
The number of shares reserved for issuance under Catuity's existing
employee and director stock option plans will be reduced proportionately based
on the Reverse Split ratio selected by the Board of Directors. In addition, the
number of shares issuable upon the exercise of options and the exercise price
for such options will be adjusted based on the Reverse Split ratio selected by
the Board of Directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO GRANT THE
BOARD OF DIRECTORS THE AUTHORITY TO AMEND THE CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT AT ONE OF THE FOLLOWING THREE RATIOS: ONE-FOR-TEN;
ONE-FOR-FIFTEEN; OR ONE-FOR-TWENTY AT A DATE TO BE DETERMINED BY THE BOARD OF
DIRECTORS PRIOR TO MARCH 31, 2005.
8
OWNERSHIP OF SECURITIES
The following tables provide certain information regarding beneficial
ownership of our capital stock as of August 31, 2004 by:
- each person who is known by us to beneficially own more than five
percent of our common stock;
- our Chief Executive Officer and the four most highly compensated
executive officers that earned more than US$100,000 (salary and bonus) for all
services rendered in all capacities to Catuity during the year ended December
31, 2003;
- each of our Directors; and
- all of our Directors and executive officers as a group.
AMOUNT AND NATURE OF COMMON STOCK PERCENT
--------------------------------- -------
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- ------------------------------------ ------------------ -----
Acorn Capital Limited 1,632,717 Direct
Level 12, 90 Collins Street 62,222 Vested Options 14.4
---------
Melbourne Vic 3000 Australia 1,694,939
Duncan P.F. Mount 700,000 Direct
Lot 8, 54 Lane Cove Road 55,000 Vested Options 6.4
---------
Ingleside, NSW 2101 Australia 755,000
Michael V. Howe 46,209 Direct
62 Hampton Road 319,000 Vested Options 3.0
---------
Grosse Pointe Shores, MI 48230 365,209
Alexander S. Dawson 225,000 Direct
38 Macleay Street 25,000 Vested Options 2.1
---------
Potts Point, NSW 2011 Australia 250,000
John H. Lowry III 6,332 Direct
21972 Heatheridge 125,000 Vested Options 1.1
---------
Northville, MI 48167 131,332
Anthony B. Garton 5,164 Direct
1605 N Edgewood Street 0 Vested Options
---------
Arlington, VA 22201-3907 5,164 *
Alan L. Gilman 4,000 Direct
4720 Morris Lake Circle 25,000 Vested Options
---------
West Bloomfield, MI 48323 29,000 *
Douglas G. Kilgour 5,392 Direct
93 Glencarin Ave. 0 Vested Options
---------
Toronto, ON M4R 1M7 Canada 5,392 *
All directors and executive officers as a 992,097 Direct
group (7 persons) 549,000 Vested Options
---------
1,541,097 12.6%
- -----------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to options,
warrants or other rights to purchase which are currently exercisable or are
exercisable within 60 days after August 31, 2004 are deemed vested and
outstanding for purposes of computing the percentage ownership of any other
person. Except as indicated by footnotes and subject to community property laws,
where applicable, the persons named above have sole voting and investment power
with respect to all shares of Common Stock shown as
9
beneficially owned by them. Share data does not include any Shares the
beneficial ownership of which has been disclaimed pursuant to SEC Rules.
(2) Percentage of Beneficial Ownership is calculated on the basis of the amount
of outstanding securities plus those securities of the named person deemed to be
outstanding under Rule 13d-3 (promulgated under the Securities and Exchange Act
of 1934, as amended) by virtue of such securities being subject to rights to
acquire beneficial ownership within 60 days after August 31, 2004. An asterisk
indicates beneficial ownership of less than 1% of the common stock outstanding.
Catuity, Inc. is not subject to Chapter 6 of the Australian
Corporations Act 2001 dealing with the acquisition of shares (including
substantial shareholdings and takeovers).
SHAREHOLDER PROPOSALS FOR 2005 PROXY STATEMENT
Shareholder proposals that are intended to be presented at the
Company's Annual Meeting of Shareholders to be held in 2005 must be received by
the Company no later than February 15, 2005 in order to be included in the proxy
statement and related proxy materials. The Company's Bylaws do not place any
particular time limits or procedural requirements on a shareholder who does not
seek inclusion of the proposal in the proxy material and submits a proposal
outside of the process described in Rule 14a-8 of the Securities Exchange Act of
1934, as amended. Please send any such proposals to Catuity Inc., 2711 E.
Jefferson Ave, Detroit, Michigan 48207, Attn: Investor Relations.
In addition, the proxy solicited by the Board of Directors for the 2005
Annual Meeting of Shareholders will confer discretionary authority to vote on
any Shareholder proposal presented at that meeting, unless the Company is
provided with notice of such proposal no later than February 22, 2005.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2003, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND LIST OF EXHIBITS.
REQUESTS SHOULD BE SENT TO CATUITY INC., 2711 E. JEFFERSON AVE, DETROIT,
MICHIGAN 48207, ATTN: INVESTOR RELATIONS.
OTHER MATTERS
The Board knows of no other matters to be presented for Shareholder
action at the Special Meeting. However, if other matters do properly come before
the Special Meeting or any adjournments or postponements thereof, the Board
intends that the persons named in the proxies will vote upon such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ John H. Lowry III
JOHN H. LOWRY III
Secretary
Dated: September 17, 2004
10
EXHIBIT-A
CERTIFICATE OF AMENDMENT OF
AMENDED CERTIFICATE OF INCORPORATION OF
CATUITY INC.
Catuity Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation adopted the
following resolutions on [ ] with respect to amendment and restatement of
Article FOURTH of the Corporation's Amended Certificate of Incorporation (the
"Charter Amendment"):
NOW, THEREFORE, BE IT RESOLVED, that Article FOURTH of the Amended
Certificate of Incorporation be amended in its entirety to read as follows:
FOURTH: The following provisions pertain to the Corporation's capital
stock:
I. The total number of shares of stock that the Corporation shall have
authority to issue is One Hundred Ten Million (110,000,000) shares, which shall
be divided into two classes as follows:
A. One Hundred Million (100,000,000) shares of Common Stock, par value
$.001 per share; and
B. Ten Million (10,000,000) shares of Preferred Stock, par value $.001
per share ("Preferred Stock"). The Preferred Stock may be divided into
and issued in series. The Board of Directors shall have the authority
to divide the Preferred Stock into series and to fix and determine the
powers, designations, preferences, rights, qualifications, limitations
and restrictions of any series of Preferred Stock so established.
II. Reverse Stock Split. At the time this amendment becomes effective
(the "Reverse Split Date"), each share of Common Stock issued and outstanding
immediately prior to the Reverse Split Date (referred to in this Paragraph II as
the "Old Common Stock") automatically and without any action on the part of the
holder thereof will be reclassified and changed into ____ of a share of new
Common Stock, par value $.001 per share (referred to in this Paragraph II as the
"New Common Stock"), subject to the treatment of fractional share interests as
described below. Each holder of a certificate or certificates that immediately
prior to the Reverse Split Date represented outstanding shares of Old Common
Stock (the "Old Certificates") will be entitled to receive, upon surrender of
such Old Certificates to the Corporation for cancellation, a certificate or
certificates (the "New Certificate", whether one or more) representing the
number of whole shares of the New Common Stock into which and for which the
shares of the Old Common Stock formerly represented by such Old Certificates so
11
surrendered are reclassified under the terms hereof. From and after the Reverse
Split Date, Old Certificates shall represent only the right to receive New
Certificates (and, where applicable, cash in lieu of fractional shares, as
provided below) pursuant to the provisions hereof. No certificates or scrip
representing fractional share interests in New Common Stock will be issued, and
no such fractional share interest will entitle the holder thereof to vote, or to
any rights of a stockholder of the Corporation. In lieu of any such fractional
shares of New Common Stock, each stockholder with a fractional share will be
entitled to receive, upon surrender of Old Certificates to the Corporation for
cancellation, an amount in cash equal to the product of (i) the closing trading
price of the Corporation's Common Stock on the trading date immediately before
the effective date of this amendment and (ii) such fraction. If more than one
Old Certificate shall be surrendered at one time for the account of the same
stockholder, the number of full shares of New Common Stock for which New
Certificates shall be issued shall be computed on the basis of the aggregate
number of shares represented by the Old Certificates so surrendered. In the
event that the Corporation determines that a holder of Old Certificates has not
tendered all his, her or its certificates for exchange, the Corporation shall
carry forward any fractional share until all certificates of that holder have
been presented for exchange such that payment for fractional shares to any one
person shall not exceed the value of nine-tenths of one share of New Common
Stock. The Old Certificates surrendered for exchange shall be properly endorsed
and otherwise in proper form for transfer, and the person or persons requesting
such exchange shall affix any requisite stock transfer tax stamps to the Old
Certificates surrendered, or provide funds for their purchase, or establish to
the satisfaction of the Corporation that such taxes are not payable. From and
after the Reverse Split Date the amount of capital represented by the shares of
the New Common Stock into which and for which the shares of the Old Common Stock
are reclassified under the terms hereof shall be an amount equal to the product
of the number of issued and outstanding shares of New Common Stock and the One
Tenth Cent ($.001) par value of each such share.
SECOND: That pursuant to resolution of the Board of Directors, a
meeting of the stockholders of the Corporation was duly called and held, upon
notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by the General Corporation Law of the State of Delaware were voted in favor of
the Charter Amendment.
THIRD: That said Charter Amendment was duly adopted in accordance with
the provisions of Sections 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Catuity Inc. has caused this Certificate to be
signed by ___________________, its _______________, this ___ day of _____, 200_.
CATUITY INC.
By:_______________________
12
CATUITY INC. PROXY FORM
ARBN 089 327 882 ALL CORRESPONDENCE TO:
Computershare Investor Services Pty Limited
GPO Box 7045 Sydney
New South Wales 2001 Australia
Enquiries (within Australia) 1300 855 080
Mark this box with an "X" if you have made any changes (outside Australia) 61 3 9415 4000
to your name or address details (see reverse) [X] Facsimile 61 2 8234 5050
www.computershare.com
APPOINTMENT OF PROXY
I/We being a member/s of Catuity Inc. and entitled to attend and vote hereby appoint
[X] the Chairman ----------------------------------- Write here the name of the person you are
of the Meeting, OR | | appointing if this person is someone other
(mark with an "X") ----------------------------------- than the Chairman of the Meeting.
or failing the person named, or if no person is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting
on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees
fit) at the Special Meeting of Catuity Inc. to be held at AAP Theatrette, AAP Centre, 259 George Street, Sydney NSW 2000 on Friday
22 October 04 at 9:30am and at any adjournment of that meeting.
VOTING DIRECTIONS TO YOUR PROXY - PLEASE MARK [X] TO INDICATE YOUR DIRECTIONS
FOR AGAINST ABSTAIN*
1. To grant the Board of Directors the
authority to amend the Certificate of [ ] [ ] [ ]
Incorporation to effect a reverse stock
split at one of three ratios at a date
to be determined by the Board of
Directors prior to March 31, 2005.
* If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or
on a poll and your votes will not be counted in computing the required majority on a poll.
PLEASE SIGN HERE This section MUST be signed in accordance with the instructions overleaf to enable your directions to be
implemented.
INDIVIDUAL OR SECURITYHOLDER 1 SECURITYHOLDER 2 SECURITYHOLDER 3
- - - -------------------------------------- ---------------------------------------- ---------------------------------
| | | | | |
- - - -------------------------------------- ---------------------------------------- ---------------------------------
- -
INDIVIDUAL/SOLE DIRECTOR AND DIRECTOR DIRECTOR/COMPANY SECRETARY
SOLE COMPANY SECRETARY
------------------------------------------- ------------------------------------------ -----/-----/-----
CONTACT NAME CONTACT DAYTIME TELEPHONE DATE
C A T 7 P R
HOW TO COMPLETE THE PROXY FORM
1 YOUR NAME AND ADDRESS
This is your name and address as it appears on the share register. If this information is incorrect, please mark the box and
make the correction on the form. Securityholders sponsored by a broker (in which case your reference number overleaf will
commence with an `x') should advise their broker of any changes. PLEASE NOTE, YOU CANNOT CHANGE OWNERSHIP OF YOUR SECURITIES
USING THIS FORM.
2 APPOINTMENT OF A PROXY
If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy
is someone other than the Chairman of the Meeting please write the name of that person. If you leave this section blank, or
your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a
securityholder of the company.
3 VOTES ON ITEMS OF BUSINESS
You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your
securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be
voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you
do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an
item your vote on that item will be invalid.
4 APPOINTMENT OF A SECOND PROXY
You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a
second proxy, an additional Proxy Form may be obtained by telephoning the company's share registry or you may copy this form.
To appoint a second proxy you must:
(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of
securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may
exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
(b) return both forms together in the same envelope.
5 SIGNING INSTRUCTIONS
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must sign.
Joint Holding: where the holding is in more than one name all of the securityholders should sign.
Power of Attorney: to sign under a Power of Attorney, you must have already lodged this document with the registry. If you have
not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this Form
when you return it.
Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that
person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole
Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a
Company Secretary. Please indicate the office held by signing in the appropriate place.
If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate
Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share
registry.
LODGEMENT OF A PROXY
This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than
48 hours before the commencement of the meeting at 9:30am on Friday 22 October 2004. Any Proxy Form received after that time
will not be valid for the scheduled meeting.
DOCUMENTS MAY BE LODGED USING THE REPLY PAID ENVELOPE OR:
- - - By posting, delivery or facsimile to the Catuity Inc. share registry at the
address opposite, or
- - - By delivery to the Registered Office of Catuity Inc being Level 4 Ballarat House
68-72 Wentworth Avenue
Surry Hills NSW 2010 Australia
Facsimile : 61 2 92811242
Catuity Inc. share registry
Computershare Investor Services Pty Limited
GPO Box 7045
Sydney New South Wales 2001
Australia
Delivery: Level 2/60 Carrington Street, Sydney
Facsimile 61 2 8234 5050
PROXY - CATUITY, INC.
LEVEL 4 BALLARAT HOUSE
68-72 WENTWORTH AVE.
SURRY HILLS, NSW 2010 AUSTRALIA
2711 E. JEFFERSON AVE.
DETROIT, MI 48207 USA
MEETING DETAILS
AAP THEATRETTE, AAP CENTRE, 259 GEORGE STREET, SYDNEY, NSW 2000 AUSTRALIA
PROXY SOLICITED BY BOARD OF DIRECTORS FOR SPECIAL MEETING -- October 21, 2004 AT 7:30 P.M. EASTERN DAYLIGHT TIME IN THE UNITED
STATES
October 22, 2004 AT 9:30 A.M. AUSTRALIAN EASTERN STANDARD TIME
The undersigned hereby constitutes and appoints Duncan P.F. Mount, with full power of substitution, for and on behalf of the
undersigned to vote as proxy, as directed and permitted herein, at the Special Meeting of Shareholders of the Company be held at AAP
Centre Theatrette, 259 George Street, Sydney NSW 2000 on Friday, October 22, 2004 9:30 a.m. (Thursday, October 21, 2004 at 7:30 p.m.
Eastern Daylight Time in the United States) or at any adjournment thereof, upon matters set forth in the Proxy Statement and, in his
judgment and discretion, upon such other business as may properly come before the meeting.
(Continued and to be voted on reverse side.)
000000 0000000000 0 0000
CATUITY, INC. 000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1
ADD 2 HOLDER ACCOUNT NUMBER
ADD 3
ADD 4 C 1234567890 J N T
ADD 5
ADD 6
[BAR CODE]
[ ] Mark this box with an X if you have made
changes your name or address details
- - ---------------------------------------------------------------------------------------------------------------------------------
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SPECIAL MEETING PROXY CARD
- - ---------------------------------------------------------------------------------------------------------------------------------
- ---
A. The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
1. Approve the granting of authority to the Board
of Directors to amend the Certificate of Incorporation
to effect a reverse stock split at one of three ratios [ ] [ ] [ ]
at a date to be determined by the Board of Directors
prior to March 31, 2005.
B. AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as
attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (dd/mm/yyyy)
- - --------------------------------------------------- --------------------------------------------------- --------------------
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