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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
CATUITY INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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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)
CATUITY INC.
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NOTICE OF SPECIAL MEETING AND PROXY STATEMENT
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ALFRED H. (JOHN) RACINE, III
President and
Chief Executive Officer
December 15, 2006
To our Stockholders:
We are holding a special meeting of stockholders at 300 Preston Avenue,
Suite 302, Charlottesville, VA 22902 on Thursday, January 25, 2007, at 4:30
P.M. EST (Friday, January 26, 2007, at 8:30 A.M. Australian Eastern Daylight
Time)
The Board of Directors and I cordially invite you to attend. Registration
will begin at 3:30 P.M. Only those stockholders who owned shares on the record
date, December 15, 2006, are entitled to vote and attend the meeting.
During the course of the meeting there will be the usual time for
discussion of the items on the agenda and for questions regarding Catuity's
affairs. Directors and officers will be available to talk individually with
stockholders before and after the meeting.
YOUR VOTE IS VERY IMPORTANT. STOCKHOLDERS OF RECORD CAN VOTE BY COMPLETING
AND MAILING THE ATTACHED PROXY CARD IN THE ENCLOSED ENVELOPE. IF YOUR SHARES ARE
HELD IN THE NAME OF A BANK, BROKER OR OTHER HOLDER OF RECORD, YOU WILL RECEIVE
INSTRUCTIONS FROM THE HOLDER OF RECORD THAT YOU MUST FOLLOW IN ORDER FOR YOU TO
VOTE YOUR SHARES.
If you have any questions about the meeting, please contact Mr. John H.
Lowry III, Secretary of Catuity Inc., 37650 Professional Center Drive, Suite
145A, Livonia, Michigan 48154. The telephone number is (734) 779-9000 extension
202. E-Mail: shareholder@catuity.com
Sincerely,
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Alfred H. (John) Racine, III
President and CEO
NOTICE OF SPECIAL MEETING
CATUITY INC.
37650 PROFESSIONAL CENTER DRIVE LEVEL 5
SUITE 145A 140 BOURKE ST.
LIVONIA, MICHIGAN 48154 MELBOURNE, VIC
UNITED STATES 3000
TIME ......................... 4:30 p.m. on Thursday, January 25, 2007 EST
(8:30 a.m. on Friday, January 26, 2007
Australian Eastern Daylight Time)
PLACE ........................ 300 Preston Avenue, Suite 302
Charlottesville, VA 22902
PROPOSAL 1 ................... To approve our "2006 Financing" pursuant to
Marketplace Rule 4350(i)(1)(D) of the
Marketplace Rules promulgated by the National
Association of Securities Dealers, Inc. and
Australian Stock Exchange Limited Listing Rule
7.1.
Our 2006 Financing consists of our issuance of
an aggregate of (a) US$1.8 million face amount
of 10% Senior Convertible Notes ("Senior
Notes"), (b) 700 shares of Series A Convertible
Preferred Stock ("Preferred Shares") (stated
amount US$1,000 per share, or US$700,000 in the
aggregate), and (c) Warrants to acquire 357,143
shares of Common Stock (at an initial exercise
price of US$3.58 per share). We issued the
foregoing at a discount of 10% off face or
stated value, for total cash in the amount of
US$2.25 million.
RECORD DATE .................. Only stockholders of record at the close of
business on December 12, 2006 for U.S.
stockholders and December 16, 2006 for
Australian stockholders are entitled to notice
of and to vote at the meeting or any
adjournment thereof. The stock transfer books
will not be closed between the record date and
the date of the Special Meeting. A list of
stockholders entitled to vote at the Special
Meeting will be available for inspection at
Catuity's offices.
PROXY VOTING ................. It is important that your shares be represented
and voted whether you plan to attend the
Special Meeting or not. Please MARK, SIGN, DATE
AND PROMPTLY RETURN the enclosed proxy card in
the enclosed postage-paid envelope. Any proxy
may be revoked at any time prior to its
exercise at the Special Meeting.
/s/ John H. Lowry III
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JOHN H. LOWRY III
Secretary
Livonia, Michigan
December 15, 2006
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PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
We are furnishing these proxy materials for the solicitation of proxies by
our Board of Directors for our Special Meeting of Stockholders to be held on
Thursday, January 25, 2007 at 4:30 p.m. Eastern Standard Time at the Company's
offices at 300 Preston Avenue, Suite 302, Charlottesville, VA 22902 (Friday,
January 26, 2007 at 8:30 a.m. Australian Eastern Daylight Time) and at any
adjournments or postponements. We first mailed these proxy materials on or about
December 22, 2006 to all stockholders entitled to vote at the Special Meeting.
PURPOSE OF MEETING
The specific proposal to be considered and acted upon at the Special
Meeting is noted in the accompanying Notice of Special Meeting of Stockholders -
to approve our 2006 Financing. We have described the 2006 Financing and this
proposal in more detail in this Proxy Statement under the section entitled
"Proposal 1".
VOTING RIGHTS AND SOLICITATION
VOTING
Our Common Stock is the only type of security entitled to vote at the
Special Meeting. On December 15, 2006, the record date for determination of
stockholders entitled to vote at the Special Meeting, there were 2,237,318
shares of Common Stock outstanding. Each stockholder of record, on December 15,
2006 for U.S. stockholders and December 16, 2006 for Australian stockholders,
is entitled to one vote for each share of Common Stock held on that date.
If your shares are held in "street name," your brokerage firm may not vote
your shares for you if you do not return your proxy. Brokerage firms have
authority under the rules of the NASDAQ Stock Market ("NASDAQ") to vote
customers' unvoted shares on some routine matters. The approval of the proposal
to be considered at the Special Meeting is not considered a routine matter.
Proxies returned without your voting instructions with respect to
non-routine matters (such as the pending proposal) are referred to as "broker
non-votes." Your broker or bank may not vote on this proposal without your
instructions. We encourage you to provide voting instructions to your brokerage
firm by returning your completed proxy. This ensures your shares will be voted
at the meeting according to your instructions. You should receive directions
from your brokerage firm about how to submit your proxy to them at the time you
receive this proxy statement.
The sole matter to be considered at the Special Meeting requires the
approval by affirmative vote of a majority of the voting shares present or
represented and entitled to vote on that matter at the Special Meeting.
Abstentions are treated as shares present or represented at the Special Meeting
and entitled to vote at the Special Meeting and have the practical effect of a
"no" vote. Broker non-votes are considered to not be entitled to vote on
non-routine matters, and are neither counted towards the base number (a majority
of which is required for passage) nor as a vote either affirmatively or
negatively.
The presence, in person or by proxy, of outstanding shares of common stock
representing one-third of the total shares outstanding is necessary to
constitute a quorum for the transaction of business at the Special Meeting.
Shares that reflect abstentions or broker non-votes will be counted for purposes
of determining whether a quorum is present for the transaction of business at
the Special Meeting. The inspector of elections appointed for the Special
Meeting will tabulate all votes. The inspector will separately tabulate
affirmative and negative votes, abstentions, and broker non-votes.
If there is not a quorum at the Special Meeting, the chairman of the
Special Meeting may adjourn the Special Meeting until such time as there is a
quorum. The Special Meeting may be reconvened without notice to the
stockholders, other than an announcement at the prior adjournment of the Special
Meeting, within 30 days after the original meeting date, and a quorum must be
present at such reconvened Special Meeting.
Information concerning principal holders of our common stock is discussed
under "Security Ownership of Certain Beneficial Owners and Management."
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 proposal, and in the discretion of the proxy
holders 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 Livonia,
Michigan or our Australian office in Melbourne, VIC 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 stockholders. 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. We
may retain a proxy solicitation service to assist us in obtaining proxies from
our stockholders. We anticipate that we will pay no more than US$10,000,
plus reasonable out of pocket expenses for these services, if needed. 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 1
GENERAL
We are seeking your approval of our 2006 Financing pursuant to Marketplace
Rule 4350(i)(1)(D) of the Marketplace Rules promulgated by the National
Association of Securities Dealers, Inc. and Australian Stock Exchange Limited
Listing Rule 7.1. Our 2006 Financing consists of our issuance to two new
investors, Gottbetter Capital Master, Ltd. and BridgePointe Master Fund Ltd.
("Investors") of an aggregate of (a) US$1.8 million face amount of 10% Senior
Convertible Notes, (b) 700 shares of Series A Convertible Preferred Stock
(stated amount US$1,000 per share, or US$700,000 in the aggregate), and (c)
Warrants to acquire 357,143 shares of Common Stock (at an initial exercise price
of US$3.58 per share). We issued the foregoing at a discount of 10% off face or
stated value, for total cash in the amount of US$2.25 million. If approved by
our stockholders, the Senior Notes and Preferred Shares will be convertible into
an aggregate of 769,230 shares of Common Stock, at a conversion price of US$3.25
per share. This approval also covers shares that may additionally be issuable
pursuant to certain "anti-dilution" rights included in the Senior Notes,
Preferred Shares and Warrants, as well as any shares that may be issued on
conversion of accrued and unpaid interest or dividends (as noted below).
On November 22, 2006, we concluded a definitive securities purchase
agreement with the Investors. Pursuant to the securities purchase agreement, we
issued the Preferred Shares, the Senior Notes and the Warrants, as follows:
Preferred
Investor Senior Notes Warrants Shares
- -------- ------------ -------- ---------
Gottbetter Capital Master, Ltd. $1,111,112 220,459 432.10
BridgePointe Master Fund Ltd. $ 688,888 136,684 267.90
Applicable securities listing rules of the Australian Stock Exchange and
Nasdaq Small Cap Market require that we obtain approval from our stockholders
for any conversion rights for the Senior Notes and Preferred Shares, and
exercise rights for the Warrants, that would result in more than 335,000 shares
of Common Stock being issuable on conversion or exercise of the foregoing
securities. Accordingly, such exercise or conversion rights are specifically
subject to obtaining stockholder approval. We agreed with the Investors that we
would convene the Special Meeting to seek this approval, and recommend to our
stockholders that such approval be given. In addition,
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the transaction documents limit each Investor's beneficial ownership of Catuity
to no more than 4.99% at any given time, subject to the Investor's waiver of
such restrictive covenant upon giving advance notice to us.
If our stockholders do not approve the 2006 Financing, the securities
issued thereunder will remain issued, and we will retain the proceeds.
Conversion and exercise, respectively, will continue to be limited to the
maximum permissible under listing rules from time to time without stockholder
approval.
This sale was made pursuant to claim of exemption from registration under
applicable U.S. and other securities laws.
We received $2,250,000 in proceeds from the 2006 Financing on November 22,
2006, and we have been using these cash proceeds for working capital and capital
expenditures. We may also use them for other purposes including asset and/or
business acquisitions, as and when needed. We presently have no firm plans,
proposals or arrangements to use proceeds for any specific acquisition.
REASONS FOR THE 2006 FINANCING AND EFFECTS ON STOCKHOLDERS
We are carrying out the 2006 Financing in order to raise cash needed to
sustain our continued operations for the short term. In the absence of the 2006
Financing or another financing at this time in similar amount, our short-term
liquidity and our ability to continue operations would be severely impaired. Our
Board approved the 2006 Financing after management conducted extensive
fund-raising efforts finding it to be the best-available financing alternative
to raise needed funds.
If approved by our stockholders, the 2006 Financing will result in
substantial dilution of current stockholders resulting from the issuance of
securities convertible into or exercisable for a total of 1,126,373 shares of
Common Stock. This is approximately 50.3% of our currently outstanding shares,
and will constitute approximately 33.5% of our total of then-outstanding shares
of Common Stock.
THE PREFERRED SHARES
The Preferred Shares are in the aggregate stated amount of US$700,000, and
provide for cumulating monthly dividends at the per-year rate of 10% of
outstanding stated amount, with initial dividend paid on December 1, 2006. The
Preferred Shares are convertible to shares of Common Stock, as discussed below.
The Preferred Shares were issued at a 10% discount off of stated amount, for a
sales price of US$900 per Share (US$630,000 in the aggregate).
The Preferred Shares have no voting rights, and carry a liquidation
preference equal to the stated amount.
The Preferred Shares do not carry any mandatory or permissive redemption
rights or features.
THE SENIOR NOTES
The Senior Notes are in the aggregate face amount of US$1.8 million. The
Senior Notes carry interest at the rate of 10% per annum compounded monthly. We
issued and sold the Senior Notes at a 10% discount off of face amount, for an
aggregate sales price of US$1.62 million.
We began making monthly payments on the Senior Notes of interest on
December 1, 2006, the first business day of the month following the date of the
Senior Notes' issuance. We will begin making principal installments on December
1, 2007. The Senior Notes are due in full on or before 36 months after the date
of issuance. Any conversion of any portion of the principal to Common Stock
shall be deemed to be a pre-payment of principal plus accrued and unpaid
interest, without any penalty, and shall be credited against any future payments
in reverse chronological order starting with the last payment due. Any payments
of principal of the Senior Notes that we make shall reduce on a dollar for
dollar basis the face amount of the Senior Notes.
The Senior Notes are secured by a senior security interest in all of our
and our subsidiaries' assets.
Upon a change of control of Catuity involving the acquisition of voting
control or direction over 50% or more of our outstanding common stock, the
Investors have the right to cause Catuity to repurchase the Senior Notes in cash
for the greater of (A) 130% of the equity value or (B) 150% of the issue price
plus accrued but unpaid interest. In the event of a change of control at a per
share price which is equal to or greater than 200% of the Conversion Price, then
130% in (A) above will be reduced to 120%.
We have the right to redeem in cash any or all of the outstanding Senior
Notes at any time prior to maturity, upon three (3) business days prior written
notice, at the greater of (x) one hundred twenty percent (120%) of the
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principal amount to be redeemed or (y) the product of (i) the remaining
principal balance of the Convertible Note divided by the Conversion Price in
effect on the day before such redemption notice is sent and (ii) the closing
sale price of the Common Stock on the day before such redemption notice is sent,
plus in each case, the amount of any accrued but unpaid interest, subject to the
maximum amount of interest allowed to be charged by law, payable in cash. In the
event of any redemption of the Senior Notes, the Investors shall retain the
Warrants and the "Registration Rights" that attached thereto.
THE WARRANTS
Each Warrant is exercisable at any time prior to five years after the date
of issuance of the Warrant, at an initial exercise price equal to $3.58 per
share of Common Stock. The Warrants contain a cashless exercise feature and
full-ratchet and other standard anti-dilution protection. We have the right to
redeem the Warrants at $.01 per share on ten (10) days prior written notice
provided (i) the shares of Common Stock underlying the Warrants are free
trading, (ii) the average daily dollar trading volume of our Common Stock is at
least $400,000.00, and no single trading day is less than $200,000.00, based
upon a closing bid price of at least $7.87 for each of the twenty (20) trading
days immediately preceding the notice of redemption as reported by Bloomberg and
(iii) such redemption shall be limited to 100,000 Warrants every thirty (30)
calendar days.
Upon a change of control of Catuity that is within Catuity's control, the
Investors have the right to cause us to pay the Black-Scholes value of the
Warrants subject to a volatility cap of 60. To the extent not redeemed upon a
change of control, each Investor has the right to cause the ultimate parent
company of the acquiring or surviving company in the change of control to issue
new warrants in replacements of the Warrants with terms (including, without
limitation, exercise rights and anti-dilution rights) equivalent to those
contained in the Warrants.
CONVERSION AND REGISTRATION
The stated amount of the Preferred Shares and Senior Notes plus any accrued
and unpaid dividends or interest thereon (the "Conversion Amount") are
convertible into a number shares of Common Stock determined by dividing the
Conversion Amount by US$3.25. The conversion price is subject to downward
adjustment as a result of full-ratchet and other standard anti-dilution
protection. The full-ratchet anti-dilution protection provides that the
conversion or exercise price for the Preferred Shares, Senior Notes and
Warrants, respectively, will adjust automatically if we issue common stock at a
price less than the then-current conversion or exercise price, to the lower
price. This is also commonly known as a "best price" anti-dilution provision. As
a result of this provision, the number of shares that may be issued on
conversion or exercise will be greater than as initially set, if we issue shares
of common stock in the future at a price lower than $3.25 or $3.58,
respectively.
The Preferred Shares, Senior Notes and each Warrant also contain provisions
that provide that no one Investor may at any time convert Preferred Shares or
Senior Notes, or exercise Warrants, that would entitle the Investor to then hold
more than 4.99% of our then-outstanding shares of Common Stock (which may be
increased, at an Investor's request, up to 19.99%).
Promptly, but no later than sixty (60) calendar days from the date of
stockholder approval, we are obligated to file, at our expense, a registration
statement with the United States Securities & Exchange Commission ("SEC")
covering the shares of Common Stock underlying the Preferred Shares and the
Senior Notes (the "Registration Statement"). We are obligated to use our best
efforts to ensure that the Registration Statement is declared effective within
ninety (90) calendar days of filing with the SEC. In the event the Registration
Statement is not either filed within the aforementioned sixty (60) days or
declared effective within the aforementioned ninety (90) calendar days, then the
exercise price of the Warrants shall be reset to ninety percent (90%) of the
Conversion Price and shall be reduced by an additional ten percent (10%) of the
Conversion Price for each subsequent thirty (30) day period thereafter. We are
required to keep the Registration Statement "Evergreen" for the life of the
Preferred Shares or until Rule 144(k) of the Securities Act of 1933, as amended,
is available to the Investors, whichever is later.
OTHER PROVISIONS
We have paid the lead Investor's legal fees and due diligence fees in
connection with this transaction. We also paid our investment banker, Broadband
Capital Management, LLC, a fee of 7% of the gross cash proceeds of the
financing. One of our directors (Clifford Chapman) is affiliated with Broadband,
although he will not share in any of fee we paid to Broadband. We will bear all
of our own legal and professional fees and expenses, including but not limited
to those associated with the filing of the Registration Statement. We expect our
paid or reimbursed legal, diligence and accounting fees to aggregate
approximately US$165,000.
The Investors have the right of first refusal on any and all future
financings that includes our equity and/or securities convertible into its
equity for as long as the Preferred Shares remain issued and outstanding.
We have filed copies of all of the 2006 Financing documents with the SEC as
exhibits to our report on Form 8-K for this transaction. We will also provide a
copy of these documents, without charge, to any stockholder on written request
to Mr. John H. Lowry, III, Secretary of Catuity Inc., 37650 Professional Center
Drive, Suite 145A, Livonia, Michigan 48154. We urge our stockholders to refer to
the 2006 Financing documents for more complete information, and the foregoing
discussion is qualified by reference to these documents.
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VOTING EXCLUSION STATEMENT
We will disregard any votes cast on Proposal 1 by a person who may
participate in the proposed issue and a person who might obtain a benefit,
except a benefit solely in the capacity of a holder of ordinary securities, if
the proposal is passed. However, we need not disregard the vote if it is cast by
a person as proxy for a person who is entitled to vote, in accordance with the
directions on the proxy form; or if it is cast by such person chairing the
meeting as proxy for a person who is entitled to vote, in accordance with a
direction on the proxy form to vote as the proxy decides.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THIS PROPOSAL.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables provide certain information regarding beneficial
ownership of our capital stock as of November 20, 2006 by: (i) each person who
is known by us to beneficially own more than five percent of our common stock;
(ii) 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, 2005;
(iii) each of our Directors; and (iv) 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 (1) OWNED (2)
- ------------------------------------ --------------------------------- ---------
A&B Venture Fund 251,467 Direct 11.2%
Level 13, 18 Bulletin Place
Sydney, NSW 2000
Alfred H. Racine III 1,998 Direct
11 Altamont Circle, #51 90,414 Vested Options
-------
Charlottesville, VA 22902 92,412 4.1%
Geoffrey C. Wild 6,820 Direct
Level 5, 132 Arthur Street 5,000 Vested Options
-------
North Sydney, NSW 2060 11,820 *
Alexander S. Dawson 28,042 Direct
38 Macleay Street 8,000 Vested Options
-------
Potts Point, NSW 2011 Australia 36,042 1.6%
John H. Lowry III 20,422 Direct
21972 Heatheridge 8,333 Vested Options
-------
Northville, MI 48167 28,755 1.3%
Donald C. Campion 6,460 Direct
3747 Loch Bend Dr. 5,000 Vested Options
-------
Commerce, MI 48382 11,460 *
Clifford W. Chapman Jr. 17,606 Direct
10 Warren Ave. 5,667 Vested Options
-------
Spring Lake, NJ 07762 23,273 1.0%
All directors and executive officers as a 81,348 Direct
group (6 persons) 122,414 Vested Options
-------
203,762 8.6%
- ----------
(1) Beneficial ownership is determined in accordance with the SEC rules and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to options, warrants or other rights to
purchase common shares which are currently exercisable or are exercisable
within 60 days after November 20, 2006 are deemed vested and outstanding
for purposes of computing the percentage ownership of any 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 beneficially owned by
them. Share data does not include any shares the beneficial ownership of
which has been disclaimed pursuant to SEC Rules. Restricted stock held by
the beneficial owner is included in the direct holdings in the above table.
(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 Exchange Act) by
virtue of such securities being subject to rights to acquire beneficial
ownership within 60 days after November 20, 2006. An asterisk indicates
beneficial ownership of less than 1% of the common stock outstanding.
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STOCKHOLDER PROPOSALS FOR 2007 PROXY STATEMENT
Stockholder proposals that are intended to be presented at Catuity's Annual
Meeting of Stockholders to be held in 2007 must be received by Catuity no later
than February 1, 2007 in order to be included in the proxy statement and related
proxy materials. Catuity's Bylaws do not place any particular time limits or
procedural requirements on a stockholder 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., 37650 Professional Center Drive,
Suite 145A, Livonia, MI 48154, Attn: Investor Relations.
In addition, the proxy solicited by the Board of Directors for the 2007
Annual Meeting of Stockholders will confer discretionary authority to vote on
any Stockholder proposal presented at that meeting, unless Catuity is provided
with notice of such proposal no later than February 22, 2007.
FINANCIAL STATEMENTS
Stockholders are concurrently being furnished with a copy of Catuity's 2005
Annual Report, which contains its audited financial statements as of December
31, 2005, as well as our Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30 and September 30, 2006. We incorporate these documents, and
the financial and other information contained therein, into this Proxy Statement
by reference to those documents. In addition, copies of Catuity's Annual Report
on Form 10-KSB for the year ended December 31, 2005, as filed with the
Securities and Exchange Commission (the "SEC"), will be sent to any stockholder,
without charge, upon written request to Mr. John H. Lowry, III, Secretary of
Catuity Inc., 37650 Professional Center Drive, Suite 145A, Livonia, Michigan
48154.
OTHER MATTERS
The Board knows of no other matters to be presented for Stockholder 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
----------------------------------------
JOHN H. LOWRY III
Secretary
Dated: December 15, 2006
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[ ] Mark this box with an X if you have
made changes to your name or address
details above.
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SPECIAL MEETING PROXY CARD
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SOLE ISSUE
The Board of Directors recommends a vote FOR the following proposal.
FOR AGAINST ABSTAIN
1. To approve the 2006 Financing, which consists of
The sale of US$1,800,000 of 10% Senior Convertible Notes, [ ] [ ] [ ]
700 shares of Series A Convertible Preferred Stock, and
Warrants to acquire 357,143 shares of Common Stock,
in accordance with Australian Stock Exchange Limited
Listing Rule 7.1
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 (mm/dd/yyyy)
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001CD40001 00JQ1D 1 U P X 008363 +
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PROXY - CATUITY, INC.
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PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 25, 2007
(JANUARY 26, 2007 IN AUSTRALIA) IN CHARLOTTESVILLE, VIRGINIA.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby constitutes and appoints Alexander S. Dawson with full
power of substitution, for and on behalf of the undersigned to vote as proxy, as
directed and permitted herein, at the Annual Meeting of Shareholders of the
Company to be held at 300 Preston Avenue, Suite 302, Charlottesville, Virginia
on Thursday January 25, 2007 at 4:30 p.m. Eastern Standard Time (Friday January
26, 2007 at 8:30 a.m. Australian Eastern Daylight Time), and at any adjournment
thereof, upon matters set forth in the Proxy Statement and, in his judgement and
discretion, upon such other business as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
(To be signed on reverse side.)