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To: Galirayo who wrote (8742)	6/21/2005 3:00:52 PM
From: ACAN	Read Replies (1) \| Respond to of 23958

Ray; From the CEO - Catuity shares soar on software deal CEO cautions investors about 450% gain in stock The stock (CTTY: news, chart, profile) jumped $17.88, or 450%, to $22.10 in afternoon action. Volume of 5.8 million was roughly 290 times the issue's daily average of 20,700. At their peak for the session, the shares reached $22.58, more than double the previous high for the year of $9.10 on Nov. 18. Financial terms weren't disclosed. The agreement is the first contract for Catuity's Advanced Loyalty System loyalty and gift card software. It calls for CertifiChecks to deploy Catuity's software as a turnkey hosted application to be sold to merchants and chain stores already using CertifiChecks paper-based products. Deployment is expected early in the third quarter. CertifiChecks, which was founded in 1999, partners with more than 70,000 merchants across the U.S., including Army & Air Force Exchange Service and the Defense Commissary Agency. John Racine, the CEO of Catuity, said the price action in the stock was "gratifying but shocking" and he was quick to downplay the increase, acknowledging the volume indicates a large amount of day-trading is going on and that there's likely to be a pullback before long. "We caution investors that there is no single announcement we'll make to get us to profitability," he told MarketWatch. "This is going to be a gradual process." He did add, however, that the contract is a revenue-sharing arrangement between the two companies, and that Catuity continues to work towards similar deals with roughly 400 prospective clients. Racine, who was named CEO in September, said Catuity is still in the process of executing a turnaround plan. The company's fortunes changed, according to its Form 10-K filing for fiscal 2004 in March of that year, when Target (TGT: news, chart, profile) decided to discontinue use of smart cards and phase-out its participation in Visa's Smart Rewards program. This, in turn, led to Visa ending the program, and prompted Catuity to switch its focus away from smart cards to point-of-sale software products. Further evidencing the company's conservative tone during its restructuring, Racine noted that Catuity came to terms with CertifiChecks in April but waited to announce the deal until everything was in place for deployment. "Nothing short of calamity will get in the way of us going live with this deal," he said. "This isn't about a quick jump in the stock price for us," adding later that Tuesday's jump was "totally unreasonable." "I know that may deflate the shares a bit but there's just no justification for the level we're at now," Racine said. Allan