| Subject: American Express. |
Author:
Steve Bonkers.
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Date Posted: 15:04:56 02/17/02 Sun
This should also speed up smart card deals for Catuity as it has previously announced that some had held off because of the patent issues.Now that Catuity has its own patent as the market leader at this time in the United States it can call the shots with infringers/accusers.
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The smartcard operations of ERG, including its yet-to-be built Sydney ticketing system and its ANZ Bank and American Express systems, may be put in jeopardy by the granting of a broad smartcard system patent to rival player Catuity.
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Catuity, a loyalty software systems provider listed on Nasdaq and the Australian Stock Exchange, is expected to announce this morning that the US Patent and Trademark Office has granted it an expansive smartcard system
patent that will last 17 years.
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It is understood the patent will cover systems for manipulating data on several devices - including smartcards - used in multiple terminals to conduct programs such as electronic payments, ticketing and loyalty
programs.
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Catuity chief executive Mr Mike Howe said the patent may mean other operators would find their smartcard and loyalty systems trespassed on Catuity's territory.
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"A number of existing and proposed smartcard system implementations could fall within the scope of the Catuity patent claim," he said.
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"Catuity has two other patents pending in the US which would broaden its patent protection in the multiprogram and smartcard areas."
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It is understood similar patents will now be granted to Catuity in markets including Australia, New Zealand, Europe, Canada, Brazil and Japan.
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The company's chairman, Mr David MacSmith, said although Catuity had no plans to pursue its rivals for patent infringement, "having a patent with this scope will cause questions to be asked".
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"We've got no plans to take aggressive action and get into a patent fight -we have 17 years to do that. When we've got all the ammunition and all the
facts, we'll evaluate," Mr MacSmith said.
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However, receiving licensing fees from other smartcard operators using technology covered by its patent could become a new and significant revenue stream for Catuity, he said.
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Mr MacSmith said Catuity, whose technology is used by Visa and Target in America, had been able to secure such a broad patent because it applied in
1995, when smartcard systems were still in their infancy.
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Should Catuity begin requesting royalties from companies deemed to infringe its patent, the group would be making others take the medicine French smartcard rival Welcome Real Time forced it to swallow last year.
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Last July, a Melbourne court ruled that Catuity had infringed WRT's patent.The ruling forced Catuity to ditch its Sydney-based Transcard smartcard project.
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Mr MacSmith said Catuity had appealed and the matter would be heard on February 25.
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"We believe we are outside the WRT patent. They're not going to get any significant amount of money from us," he said.
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A spokesman for American Express said it believed Catuity's patent would have no impact on its Amex Blue card, which uses a loyalty and smartcard system to provide discounts to card holders at 14 merchants.
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ERG also said it believed it would not be in breach of the patent. "Our business is not to develop loyalty systems - we buy them. We don't see Catuity as a competitor but as a supplier," an ERG spokesman said.
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 Ticker
Symbol: CTTY Last
Sale: $ 2.20
Shares
Outstanding: 7,870,000 Market
Value: $ 17,314,000 52 Week
High: $ 5.50
Exchange: Nasdaq-SCM Issue
Type: Common Stock 52 Week
Low: $ 1.93
P/E
Ratio: N/A
Annual
Dividend: N/A Dividend
Yield: N/A
Company Information
------------------------------------------------------------
Address: 2711 EAST JEFFERSON AVENUE
City: DETROIT
State: MI
Zip Code: 48207
Telephone: 313-567-4348
Description of Business
Primary SIC Code: 7371
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The company (formerly known as novatec inc.) designs, develops, operates and markets multi-program systems that provide loyalty and incentive marketing solutions for retailers and card issuing banks for purchases in stores as well as over the internet. these solutions aim to increase customer retention, increase the customer base and reduce costs for merchants. the company provides full program services and network system software that directly connects the seller and the buyer across all purchasing channels, irrespective of payment method. the company sells its products through value added resellers and directly through its own sales force. the company's product may be used by a wide variety of businesses, including retail stores, internet merchants, banks and financial institutions, credit card issuers, public transport providers and membership organizations. software development revenue accounted for 71% of 2000 revenues and product service revenue, 29%.
Per Share Overview
------------------------------------------------------------
Date 12-mos Rolling EPS Dividend P/E Ratio
09/30/01 -0.60 NA N/E
06/30/01 -0.61 NA N/E
03/31/01 -0.25 NA N/E
12/31/00 -0.78 NA N/E
09/30/00 -0.78 NA N/E
Key Financial Ratios and Statistics
FYE: 12/31
------------------------------------------------------------
Profitability 2000 Leverage 2000
Net Inc/Comm Equity -0.47 Total Liab/Total Assets 0.14
Net Inc/Total Assets -0.40 Total Liab/Inv Cap 0.16
Net Inc/Inv Cap -0.47 Total Liab/Comm Equity 0.16
Pretax Inc/Net Sales -4.95 Interest Coverage Ratio -77.14
Net Inc/Net Sales -5.12 Curr Debt/Equity NA
Cash Flow/Net Sales -5.30 LTD/Equity NA
SG&A/NetSales 4.29 Total Debt/Equity NA
Asset Utilization Liquidity
Receivables Turnover 6.66 Quick Ratio 7.08
Inventory Turnover NA Current Ratio 7.38
Inventory Day Sales NA Rec/Curr Assets 0.01
Net Sales/Work Cap 0.09 Inv/Curr Assets NA
Net Sales/PP&E 3.14
Income Statement (Millions)
------------------------------------------------------------
09/30/01 06/30/01 03/31/01 12/31/00 A
Total Revenues(Net Sales) 0.48 0.16 0.15 0.74
Costs of Goods Sold NA NA NA NA
Selling & Admin Exps 1.09 1.72 0.24 3.19
Operating Income -0.92 -1.86 -0.61 -3.88
Amorization & Depreciation NA NA NA NA
Interest Exp NA NA NA 0.05
Pretax Income -0.83 -2.13 -0.50 -3.68
Other Income NA NA NA NA
Net Income Bef Extraordinary ... -0.83 -2.13 -0.50 -3.68
Net Income -0.83 -2.13 -0.50 -3.81
Balance Sheet (Millions)
------------------------------------------------------------
Assets 09/30/01 06/30/01 03/31/01 12/31/00 A
Cash & Short Term Investments 4.48 5.93 7.31 8.78
Receivables - Total 0.26 0.32 0.17 0.11
Inventories - Total NA NA NA NA
Total Current Assets 5.29 6.44 7.65 9.26
Net Property, Plant & Equipment 0.21 0.22 0.23 0.24
Total Assets 5.50 6.67 7.88 9.50
Liabilities
Accounts Payable 0.18 0.26 0.21 0.38
Debt in Current Liabilities NA NA NA NA
Total Current Liabilities 1.46 1.62 1.10 1.26
Long-Term Debt NA NA NA NA
Total Liabilities 1.46 1.62 1.14 1.31
Stockholder's Equity
Minority Interest NA NA NA NA
Preferred Stock NA NA NA NA
Common Stock 0.01 0.01 0.01 0.01
Retained Earnings -26.88 -26.05 -23.92 -23.42
Treasury Stock NA NA NA NA
Total Stockholders' Equity 4.04 5.05 6.74 8.19
Total Liabilities and Stockholders' Equity 5.50 6.67 7.88 9.50
Cash Flow Summary (Millions)
--------------------------------------------------------------------------------
Categories 09/30/01 06/30/01 03/31/01 12/31/00 A
Net Cash Provided by Operating Activities -4.35 -2.92 -1.45 -3.94
Net Cash Provided by Investing Activities -0.05 -0.04 -0.02 -0.11
Net Cash Provided by Financing Activities 0.06 -0.02 0.04 8.14
Annual Summary Data (Millions)
--------------------------------------------------------------------------------
Year Sales Net Income EPS
12/98 0.29 -2.38 --
12/99 0.64 -6.21 --
12/00 0.74 -3.81 -0.78
Growth Rates -- -- --
Stock Ownership
--------------------------------------------------------------------------------
Type Date(Q,M) No. Owners Shares Held (000s) % Own
Institutional 12/31/01(Q) 1 1 NA
Insiders 12/31/01(M) 10 1,464 18.49
Major Shareholders > 5% Pertaining to Major Class of Stock
------------------------------------------------------------
O CONNOR, LANCE D.,9.60%
Report Date*: 02/08/02
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