Exhibit 99.1
CONTACT: Leonard Carr
Vice President
713-783-8200
lcarr@tidelmail.com
PRESS RELEASE
TIDEL COMPLETES MAJOR REFINANCING WITH LAURUS FUNDS
HOUSTON, Texas -- Dec. 5, 2003 -- Tidel Technologies, Inc. (Other OTC: ATMS)
announced today that it closed a $6.85 million financing with Laurus Master
Fund, Ltd. ("Laurus Funds"), a New York-based investment group that makes direct
investments in small and mid cap companies. The financing is comprised of a
three-year convertible note in the amount of $6.45 million and a one-year
convertible note in the amount of $400,000. The notes are secured by all of the
assets of Tidel and its subsidiaries and bear interest at the annual rate of
prime plus 2%. The notes may be converted, at Laurus Funds' option, into Tidel
common stock at a conversion price of $0.40 per share. Tidel also issued
seven-year warrants to Laurus Funds to purchase 4.25 million shares of Tidel
common stock at an exercise price of $0.40 per share. Tidel expects to record a
substantial non-cash charge to earnings related to the issuance of securities to
Laurus Funds at conversion prices that were below the market price of the
underlying common stock at the closing date of the transaction.
Among other things, the three-year convertible note has provisions to partially
amortize the principal of the loan over its term with monthly principal payments
beginning in April 2004. As a condition of the Laurus Funds financing, a company
controlled by James T. Rash, Chairman and CEO of Tidel, loaned an additional
$100,000 to Tidel on substantially the same terms and conditions as the Laurus
Funds one-year term note. Of the total proceeds, $6 million was utilized to
retire Tidel's 6% convertible subordinated debentures with the balance to be
used for transaction fees and expenses and working capital purposes.
In the sixty-day period prior to the Laurus Funds transaction, Tidel issued
short-term, unsecured promissory notes to three major shareholders in the amount
of $720,000, together with warrants to purchase 240,000 shares of Tidel common
stock. The maturities of the notes range from three to six months.
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RETIREMENT OF EXISTING INDEBTEDNESS
In connection with the Laurus Funds financing, Tidel entered into settlement
agreements with the holders of its 6% subordinated convertible debentures.
Pursuant to the terms of the agreements, Tidel paid $6 million in full and
complete satisfaction of all amounts due and payable by Tidel under the
debentures, which aggregated approximately $24.4 million in principal, interest,
penalties and fees. Additionally, all warrants previously issued to the holders
of the debentures were canceled and all outstanding litigation was dismissed
with prejudice.
Concurrent with the Laurus Funds financing, Tidel repaid its existing senior
secured facility with a bank in the principal amount of $2 million. Tidel
utilized its $2.2 million in pledged cash collateral to repay the bank note,
with the balance of $200,000 being returned to working capital.
The following is an unaudited summary of outstanding debt principal and accrued
interest immediately prior to the refinancing together with the unaudited pro
forma balances, after giving effect to the financing and settlement
transactions:
UNAUDITED
Balances Before Pro Forma
Refinancing ---------
-----------
Senior bank indebtedness $ 2,000,000 $ --
6% subordinated convertible debentures 18,000,000 --
Accrued interest payable 6,410,000 --
Short-term promissory notes 720,000 720,000*
Laurus Funds notes -- 6,850,000*
Director note -- 100,000
--------------- ------------
$ 27,130,000 $ 7,670,000
*- Amounts exclude applicable debt discount arising from the issuance of
warrants and the issuance of convertible notes with a beneficial conversion
feature.
PLAN TO RESUME PERIODIC REPORTING AND APPLY FOR LISTING ON NASDAQ BULLETIN BOARD
EXCHANGE
In connection with the Laurus Funds financing, a timetable for the filing of
Tidel's past due periodic reports with the Securities and Exchange Commission
(SEC) and a future registration statement covering the securities underlying the
Laurus Funds notes and warrants was specified. The terms require Tidel to
complete the filing of its Form 10-K for the fiscal year ended September 30,
2002 on or before February 8, 2004, and the filing of its Forms 10-Q for 2003
and Form 10-K for the fiscal year ended September 30, 2003 on or before May 8,
2004. Upon returning to compliance with its filing requirements, Tidel is
required to file a registration statement covering the securities underlying the
Laurus Funds notes and warrants, and to apply for listing of its securities on
the Nasdaq Bulletin Board exchange. Notwithstanding the required timetable for
these filings, Tidel is not able to provide assurance with respect to when or if
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its SEC reports will be brought current or when or if its common stock will be
listed on the Nasdaq Bulletin Board exchange.
RECENT RESULTS
Tidel has continued to sustain substantial losses since the quarter ended June
30, 2002, which is the latest period for which it has filed a Form 10-Q report.
Accordingly, Tidel expects to report substantial losses for the quarter and the
fiscal year ended September 30, 2002, and for each of the quarters and for the
fiscal year ended September 30, 2003. Unaudited revenues for the fiscal years
ended September 30, 2002 and 2003 were approximately $19.4 million and $17.8
million, respectively. These financial results are subject to the performance
and completion of the audits for the periods.
These losses are attributable to severely depressed sales during these periods,
reduced gross profit margins arising from declines in productivity, higher than
normal legal fees due to litigation pending during the periods, and significant
accrual of interest and penalties applicable to the subordinated convertible
debentures prior to their extinguishments.
During this time, Tidel has redesigned existing products and developed certain
new products. Management is currently attempting to rebuild its customer base
through these new product initiatives and an improved balance sheet resulting
from the refinancing.
ABOUT TIDEL
Tidel Technologies, Inc. is a manufacturer of automated teller machines and cash
security equipment designed for specialty retail marketers. More information
about the company and its products may be found on the company's web site at
www.tidel.com.
"Safe Harbor" disclaimer under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements, including
statements as to anticipated or expected results, beliefs, opinions, and future
financial performance. The forward-looking statements are based on current
expectations and assumptions and involve risks and uncertainties that may cause
the company's actual experience to differ materially from that anticipated.
Estimates are based on reliable information and past experience. However,
operating results are affected by a wide variety of factors, many of which are
beyond the control of the company. Factors include, but are not limited to, the
Company's financial position and working capital availability; the levels of
orders which are received and can be shipped in a quarter; customer order
patterns and seasonality; costs of labor, raw materials, supplies and equipment;
technological changes; competition and competitive pressures on pricing; changes
in the company's relationships with customers or suppliers; acceptance of the
Company's product and technology introductions in the marketplace; unanticipated
litigation, claims or assessments; the Company's ability to reduce costs and
expenses and improve internal operating efficiencies; the economic condition of
the ATM industry and the possibility that it is a mature industry; the future
trading market for the Company's securities; and economic conditions in the
United States and worldwide. Additionally, factors and risks affecting operating
results include those described in the company's registration statements and
periodic reports filed with the U.S. Securities and Exchange Commission.
