SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                    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
         /X/      Definitive proxy statement
         / /      Definitive additional materials
         / /      Soliciting   material  pursuant  to  Rule  14a-11(c)  or  Rule
                  14(a)-12


                            TIDEL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
                  (Name of Registrant as Specified in Charter)


                              LEONARD L. CARR, JR.
- --------------------------------------------------------------------------------
                   (Name of Person(s) filing Proxy Statement)


         Payment of filing fee (check the appropriate box):

         /X/      $125 per Exchange  Act Rule  0-11(c)(1)(ii),  14a-6(i)(1),  or
                  14a-6(j)(2).

         / /      $500 per each party to the  controversy  pursuant  to Exchange
                  Act Rule 14a-6(i)(3).

         / /      Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
                  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 0-11:1


- --------------------------------------------------------------------------------


         (4) Proposed maximum aggregate value of transaction:
- --------
(1)      Set forth the amount on which the filing  fee is  calculated  and state
how it was determined.


         / / 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:



- --------------------------------------------------------------------------------




                                       -2-


                            TIDEL TECHNOLOGIES, INC.
                                 5847 SAN FELIPE
                                    SUITE 900
                              HOUSTON, TEXAS 77057
                                 (713) 783-8200

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD JULY 29, 1998

                  The Annual Meeting (the  "Meeting") of  Stockholders  of Tidel
Technologies,  Inc. (the "Company") will be held at the DoubleTree  Hotel,  2001
Post Oak Blvd.,  Houston,  Texas 77056,  on  Wednesday,  July 29, 1998, at 10:30
A.M., Central Daylight Time. The purposes of the Meeting are to vote upon:

                  1.       The  election of four  directors to hold office until
                           the  next  Annual  Meeting  in  1999 or  until  their
                           successors have been elected and qualified;

                  2.       The  selection  of  KPMG  Peat  Marwick  LLP  as  the
                           Company's  independent  auditors  for the fiscal year
                           ending September 30, 1998; and

                  3.       Such other  business as may properly  come before the
                           Meeting and any adjournment thereof.

                  The Board of Directors  fixed the close of business on Monday,
June 8, 1998, as the record date for determining stockholders entitled to notice
of, and to vote at, the Meeting and any adjournment  thereof. A complete list of
stockholders entitled to vote at the Meeting will be available at the offices of
the Company, 5847 San Felipe, Suite 900, Houston, Texas 77057, for not less than
ten days prior to the Meeting.



                  IT IS  IMPORTANT  THAT  YOUR  SHARES  BE  REPRESENTED  AT THIS
MEETING.  EVEN IF YOU PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY
SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE.  A PROXY WILL
NOT BE VALID  UNLESS IT IS  RECEIVED  AT THE OFFICE OF HARRIS  TRUST AND SAVINGS
BANK,  c/o HARRIS TRUST  COMPANY OF NEW YORK,  88 PINE STREET,  19TH FLOOR,  NEW
YORK,  NEW YORK 10005,  PRIOR TO THE DATE FIXED FOR THE  MEETING.  MAILING  YOUR
PROXY WILL NOT LIMIT YOUR RIGHT TO ATTEND IN PERSON OR VOTE AT THE MEETING.

                                        James T. Rash
                                        Chairman and
                                        Chief Executive Officer

June 25, 1998


                            TIDEL TECHNOLOGIES, INC.
                                 5847 SAN FELIPE
                                    SUITE 900
                              HOUSTON, TEXAS 77057
                                 (713) 783-8200

                                 PROXY STATEMENT

Introduction

         This Proxy Statement is furnished in connection  with the  solicitation
         by the Board of  Directors  of Tidel  Technologies,  Inc.,  a  Delaware
         corporation (the "Company") of proxies in the  accompanying  form to be
         used at the Annual  Meeting  (the  "Meeting")  of  Stockholders  of the
         Company to be held on July 29, 1998, and any adjournment thereof.  This
         Proxy Statement,  the accompanying  form of proxy and the Annual Report
         to Stockholders  were mailed to stockholders on or about June 25, 1998.
         The  shares  represented  by  the  proxies  received  pursuant  to  the
         solicitation made hereby and not revoked will be voted at the Meeting.

Meeting of Stockholders

         The Meeting will be held at the DoubleTree  Hotel, 2001 Post Oak Blvd.,
         Houston,  Texas 77056,  on  Wednesday,  July 29,  1998,  at 10:30 A.M.,
         Central Daylight Time.

Record Date and Voting

         The Board of Directors  fixed the close of business on Monday,  June 8,
         1998, as the record date (the "Record Date") for the  determination  of
         holders of outstanding  shares of the Company entitled to notice of and
         to vote on all matters presented at the Meeting. Such stockholders will
         be entitled to one vote for each share held on each matter submitted to
         a vote at the Meeting.  On the Record Date there were 15,702,968 shares
         of the  Company's  Common Stock,  $.01 par value (the "Common  Stock"),
         issued and  outstanding,  each of which is entitled to one vote on each
         matter to be voted upon.

Purposes of the Meeting

         The  purposes  of the  Meeting  are to vote upon (i) the  election of 4
         directors  for the ensuing year (ii) the selection of KPMG Peat Marwick
         LLP as the  Company's  independent  auditors for the fiscal year ending
         September  30, 1998 and (iii) such other  business as may properly come
         before the meeting and any adjournment thereof.

Quorum and Required Vote

         The presence,  either in person or by properly  executed  proxy, of the
         holders of a majority of the outstanding  shares of Common Stock of the
         Company is necessary  to  constitute a quorum for the purpose of acting
         on the matters referred to in the Notice of Annual Meeting accompanying
         this Proxy  Statement and any other  proposals  which may properly come
         before  the  Meeting.  In  the  tabulation  of  votes,  proxies  marked
         "abstain" will be



         counted for the  purposes of  determining  the presence of a quorum and
         for  calculating  the number of shares  represented  at the Meeting but
         will not be  counted as either  affirmative  votes or  negative  votes.
         So-called broker "non-votes" (i.e., shares held by brokers, fiduciaries
         or other nominees which are not permitted to vote due to the absence of
         instructions  from beneficial  owners) will be deemed to be abstentions
         and counted solely for quorum purposes.

Proxies

         A  stockholder  who has given a proxy may revoke it by voting in person
         at the Meeting, by giving written notice of revocation to the Secretary
         of the  Company  or by giving a later  dated  proxy at any time  before
         voting.

         On the matters  coming before the Meeting as to which a choice has been
         specified  by a  stockholder  by means of the ballot on the proxy,  the
         shares will be voted  accordingly.  If no choice is so  specified,  the
         shares will be voted FOR the  election  of the  nominees  for  director
         listed  in this  Proxy  Statement  and FOR the  selection  of KPMG Peat
         Marwick LLP as the Company's independent  auditors,  all as referred to
         in Items 1 and 2,  respectively,  in the  Notice of Annual  Meeting  of
         Stockholders and as described in this Proxy Statement.

         The  form  of  proxy   accompanying   this  Proxy   Statement   confers
         discretionary  authority  upon the named  proxyholders  with respect to
         amendments or variations to the matters  identified in the accompanying
         Notice of  Meeting  and with  respect  to any other  matters  which may
         properly  come  before  the  Meeting.  As of the  date  of  this  Proxy
         Statement,  the management of the Company knows of no such amendment or
         variation or of any matters  expected to come before the Meeting  which
         are not referred to in the accompanying Notice of Annual Meeting.

Substituted Proxies

         The persons named in the accompanying  form of proxy have been selected
         by the Company's  management to act as proxies. A stockholder  desiring
         to  appoint  some  other  person  (who  need not be a  stockholder)  to
         represent him at the Meeting may do so, either by: (a) striking out the
         printed  names and  inserting  the desired  person's  name in the blank
         space directly above the names so stricken or (b) by completing another
         proper form of proxy.

Costs of Solicitation

         The Company will bear the cost of printing and mailing proxy materials,
         including  the  reasonable  expenses of brokerage  firms and others for
         forwarding the proxy materials to beneficial owners of Common Stock. In
         addition to solicitation by mail,  solicitation  may be made by certain
         directors, officers and employees of the Company, or firms specializing
         in  solicitation;  and  may  be  made  in  person  or by  telephone  or
         telegraph.  No  additional  compensation  will be paid to any director,
         officer or employee of the Company for such solicitation.


                                       -2-


                          ITEM 1: ELECTION OF DIRECTORS

         The  Company  has one  class  of  directors  serving  one  year  terms.
         Directors  elected  at the  Meeting  will serve  until the 1999  Annual
         Meeting of Stockholders and until their respective  successors are duly
         elected and qualified.

Information with Respect to Nominees and Directors

         Set forth below are the names and ages of the  nominees  for  directors
         and their principal occupations at present and for the past five years.
         There  are,  to  the  knowledge  of  the  Company,   no  agreements  or
         understandings by which these  individuals were so selected.  No family
         relationships exist between any directors or executive  officers.  Each
         of the nominees is currently serving as a director of the Company.

                               All Offices
                               with the                                Director
Name                    Age    Company                                 Since
- ----                    ---    -------                                 -----

James T. Rash            57    Chairman,                               11/11/87
                               Chief Executive and
                               Financial Officer,
                               and Director

James L. Britton, III    62    Director                                12/03/90

Jerrell G. Clay          56    Director                                12/03/90

Mark K. Levenick         38    Director, Chief Operating               03/28/95
                               Officer and President of the
                               operating subsidiaries

Business Backgrounds

         The following is a summary of the business background and experience of
         each of the persons named above:

         James T. Rash  joined  the  Company  in July  1987 and  served as Chief
         Financial Officer and as a Director until February 14, 1989. Since that
         time he has served  continuously  as Chairman of the Board of Directors
         and Chief Executive Officer, and he currently serves as Chief Financial
         Officer.

         He was also  Chairman  and  Chief  Executive  Officer  of 3CI  Complete
         Compliance  Corporation from the date of its acquisition by the Company
         until   February   1994.   Mr.   Rash  holds  a  Bachelor  of  Business
         Administration degree from the University of Texas.

         James L.  Britton,  III for more than the past 5 years has  managed his
         own   investments.   Mr.   Britton   holds  a  Bachelor   of   Business
         Administration degree from the University of Texas.

                                       -3-


         Jerrell G. Clay is the Chief  Executive  Officer of III Mark Financial,
         Inc., an independent  life insurance  marketing  organization,  and for
         more than the  preceding  five years  served as President of one of its
         predecessors.  Mr.  Clay is also a member  of the  Management  Advisory
         Committee of Protective Life Insurance Company of Birmingham, Alabama.

         Mark  K.  Levenick  is the  Chief  Operating  Officer  of the  Company,
         President of the operating  subsidiaries and has been an executive with
         the Company's wholly owned subsidiary, Tidel Engineering,  Inc. and its
         predecessors  and  affiliates  for more than the preceding 5 years.  He
         holds a B.S. degree from the University of Wisconsin at Whitewater.

Director Compensation

         Directors of the Company receive $1,000 per meeting as compensation for
         their  services  as members of the Board of  Directors.  Directors  who
         serve on board committees receive $500 per committee meeting.

Board Committees and Meetings

         The  Board  of  Directors  has  established  an Audit  Committee  and a
         Compensation Committee.  The Committees are composed of Messrs. Britton
         and Clay,  both of whom are  independent,  non-officer  directors.  The
         Audit  Committee  is charged with  reviewing  the  Company's  financial
         statements,  the  scope  and  performance  of the  audit  and  nonaudit
         services provided by the Company's  independent auditors and overseeing
         the  Company's  internal   accounting   procedures.   The  Compensation
         Committee  administers the Company's 1997 Long-Term  Incentive Plan and
         1989   Stock   Option   Plan,   and   reviews,   evaluates   and  makes
         recommendations  to the  Board  with  respect  to such  matters  as the
         payment of direct salaries,  benefits and incentive compensation to the
         Company's executive officers and the senior management personnel of the
         subsidiaries.

         During the fiscal year ended  September 30, 1997,  the Audit  Committee
         and the  Compensation  Committee  each held one  meeting.  During  said
         fiscal year, the Board of Directors held a total of six meetings.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
         Company's directors and officers,  and persons who own more than 10% of
         a  registered  class  of its  equity  securities,  to file  reports  of
         ownership and changes in ownership of such equity  securities  with the
         Securities and Exchange  Commission  ("SEC") and NASDAQ.  Such entities
         are also required by SEC regulations to furnish the Company with copies
         of all Section 16(a) forms filed.

         Based solely on a review of the copies of Forms 5 filed on November 14,
         1997 and Form 3 filed  January 12, 1998 and  furnished  to the Company,
         Messrs.  Rash,  Britton,  Clay,  Levenick and Michael F. Hudson had the
         following  items  not filed on a timely  basis:  (i)  Messrs.  Rash and
         Britton  each had 8  transactions  on Form 4 due on or about  April 10,
         1997 and 2  transactions  on Form 5 due on or about  November 15, 1996,
         (ii) Mr. Clay had

                                       -4-


         9  transactions  on Form 4 due on or about  November  15,  1996,  and 1
         transaction  on Form 5 due on or about  November  15,  1994,  (iii) Mr.
         Levenick had 6 transactions on Form 4 due on or about April 10, 1997, 2
         transactions on Form 5 due on or about November 15, 1996, 1 transaction
         on Form 5 due on or about November 15, 1995, and 3 transactions on Form
         3 due on or about April 8, 1995, and (iv) Mr. Hudson had 2 transactions
         on Form 3 due on or about July 25, 1997.

                                       -5-


                              VOTING SECURITIES AND
                            PRINCIPAL HOLDERS THEREOF

The  following  table  sets  forth as of June 8,  1998,  the number of shares of
Common Stock  beneficially owned by (i) the only persons known to the Company to
be the  beneficial  owners of more than 5% of its  voting  securities  (ii) each
current director and executive officer of the Company  individually and (iii) by
all  current  directors  and the  executive  officers of the Company as a group.
Except as otherwise  indicated,  and subject to  applicable  community  property
laws,  each  person has sole  investment  and voting  power with  respect to the
shares shown.  Ownership  information is based upon information furnished by the
respective holders and contained in the Company's records.




                                                                             Amount and Nature
                                 Name and Address of Beneficial                of Beneficial                 Percent of
    Title of Class                            Owner                              Ownership                   Class (1)
- ----------------------       -------------------------------------       -----------------------        ------------------

                                                                                                         
Common Stock                   Alliance Developments                               1,437,362                       9.2%
                               One Yorkdale Road
                               Suite 510
                               North York, Ontario
                               M6A 3A1

Common Stock                   James L. Britton, III                                 813,500(2)                    5.1%
                               3272 Westheimer, #3
                               Houston, Texas 77098

Common Stock                   James T. Rash                                         630,000(3)(4)                 4.0%
                               5847 San Felipe, Suite 900
                               Houston, Texas 77057

Common Stock                   Jerrell G. Clay                                       304,605(2)                    1.9%
                               5847 San Felipe, Suite 900
                               Houston, Texas 77057

Common Stock                   Mark K. Levenick                                      300,000(5)                    1.9%
                               2310 McDaniel Dr.
                               Carrollton, Texas 75006

Common Stock                   Michael F. Hudson                                      50,000(6)                    0.3%
                               2310 McDaniel Dr.
                               Carrollton, Texas 75006

Common Stock                   Directors and Executive Officers                    2,098,105(7)                   12.8%
                               as a group (5 persons)

- ------------------------
(1)      Based upon 15,702,968 shares outstanding as of June 8, 1998.

(2)      Includes  100,000  shares  which could be acquired  within 60 days upon
         exercise of outstanding  warrants at exercise  prices of (i) $0.625 per
         share as to 50,000 shares and (ii) $1.00 per share as to 50,000 shares.

(3)      Includes  180,000  shares  which could be acquired  within 60 days upon
         exercise of outstanding  options and warrants at exercise prices of (i)
         $0.625 per share as to 50,000 shares, (ii) $1.00 per share as to 50,000
         shares and (iii) $1.6875 per share as to 80,000 shares.

                                       -6-


(4)      200,000 shares are being held in escrow,  the release  therefrom  being
         subject to the  direction  and  determination  of the  Vancouver  Stock
         Exchange or the British Columbia  Superintendent of Brokers, based upon
         the financial condition of the Company and other matters.

(5)      Includes  200,000  shares  which could be acquired  within 60 days upon
         exercise of outstanding  warrants and options at exercise prices of (i)
         $0.625  per  share as to 50,000  shares,  (ii)  $0.875  per share as to
         25,000 shares, (iii) $1.00 as to 50,000 shares, (iv) $1.25 per share as
         to 20,000 shares,  (v) $1.4375 per share as to 25,000 shares,  and (vi)
         $1.75 per share as to 30,000 shares.

(6)      Consists of 50,000  shares which could be acquired  within 60 days upon
         exercise  prices of (i) $0.875  per share as to 25,000  shares and (ii)
         $1.4375 per share as to 25,000 shares.

(7)      Includes the 100,000 shares for each of the two individuals referred to
         in Note (2) above,  the 180,000  shares  referred to in Note (3) above,
         the 200,000 shares referred to in Note (5) above, and the 50,000 shares
         referred to in Note (6) above  obtainable  upon exercise of outstanding
         warrants and options.

                                       -7-


                             EXECUTIVE COMPENSATION

The  following  table sets  forth the amount of all cash and other  compensation
paid by the  Company  for  services  rendered  during  the  fiscal  years  ended
September  30, 1997,  1996 and 1995 to James T. Rash,  the Chairman of the Board
and Chief Executive Officer ("CEO"), and the Company's other executive officers,
as such  term is  defined  in Item 402 of  Regulation  S-K,  whose  compensation
exceeded $100,000 during such fiscal years.

                           SUMMARY COMPENSATION TABLE


                                                   Annual Compensation                             Long-Term Annual
                                                   -------------------                             ----------------
                                                                                                     Compensation
                                                                                                     ------------
Name and Principal Position                Year                   Salary                 Bonus                    Options
- ---------------------------                ----                   ------                 -----                    -------

                                                                                                        
James T. Rash                              1997                     $182,292                $    --                      --
Chief Executive and                        1996                     $182,292                $    --                      --
Financial Officer                          1995                     $182,292                $40,000                      --

Mark K. Levenick                           1997                     $193,962                $97,500                 100,000
Chief Operating Officer                    1996                     $150,000                $90,000                      --
                                           1995                     $120,000                $62,500                  50,000

Michael F. Hudson                          1997                     $124,538                $62,500                  67,000
Executive Vice President                   1996                     $105,808                $63,000                      --
                                           1995                     $ 99,808                $ 5,000                  50,000


The options  granted to executive  officers in 1997 and 1995 become  exercisable
and vest over four-year and three-year  periods,  respectively.  No options were
exercised pursuant to the Company's 1997 Long-Term Incentive Plan and 1989 Stock
Option  Plan during the year ended  September  30,  1997.  The  following  table
provides  information  regarding the options granted to the respective optionees
during the fiscal year ended September 30, 1997 and the respective valuations at
September 30, 1997:




                                                                                                           Potential Realizable
                                                                                                         Value at Assumed Annual
                                                                                                           Rates of Stock Price
                                                                                                         Appreciation for Option
                                   Individual Grants                                                               Term
                     -------------------------------------------------                               ---------------------------
                                              % of Total
                         Number of             Options
                       Shares Under           Granted to           Exercise
                          Options            Employees in         Price Per          Expiration
           Name           Granted            Fiscal Year            Share               Date            5%($)            10%($)
           ----       --------------      ----------------     -------------      --------------        -----            ------

                                                                                                        
Mark K. Levenick              100,000           34.3%                2.50             8/27/07            157,000          398,000

Michael F. Hudson              67,000           23.0%                2.50             8/27/07            105,190          266,660




                                       -8-


                     OPTIONS EXERCISABLE AND RELATED VALUES
                               September 30, 1997

         The following  table provides the number of options  exercisable by the
respective directors and the respective valuations at September 30, 1997:




                                     Number of Unexercised Options at                       Value of Unexercised in-the-
                                            September 30, 1997                             Money Options at September 30,
                                                 (Shares)                                           1997 ($)(1)
                                                 --------                                           -----------
         Name                     Exercisable             Unexercisable                Exercisable             Unexercisable
         ----                     -----------             -------------                -----------             -------------

                                                                                                       
James T. Rash                          80,000                        --                  $155,000                 $     --

Mark K. Levenick                       83,334                   116,666                   186,043                  153,644

Michael F. Hudson                      33,334                    83,666                    82,293                  116,519



- -------------
(1)      Based on the closing  price of a share of Common Stock on September 30,
         1997 of $3.625 as reported on the Nasdaq Stock Market.

              COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
                            TIDEL TECHNOLOGIES, INC.,
                    PEER GROUP INDEX AND NASDAQ MARKET INDEX



                                                                      September 30,
                                  ------------------------------------------------------------------------------

                                           1993(1)           1994             1995             1996             1997
                                  ---------------   ---------------  ---------------  ---------------   ---------------


                                                                                                  
Tidel Technologies, Inc.                 $ 58.82          $ 33.33          $ 33.33          $ 68.63          $113.73
Peer group (2)                            168.18           211.36           265.01           220.96           254.17
NASDAQ Market Index                       130.05           265.01           167.10           195.08           265.16



- -----------------

(1)      Assumes $100  invested on September  30, 1992 and no dividends  paid in
         any year thereafter.

(2)      Peer group consists of companies  utilizing the category for Fabricated
         Metal  Products Not  Elsewhere  Classified,  SIC 3499.  The Company has
         utilized this category since October 1, 1992.

                                       -9-


                              EMPLOYMENT AGREEMENTS

Messrs.  Levenick  and Hudson,  both  executive  officers of the  Company,  have
employment  agreements  with  the  Company's  wholly  owned  subsidiary,   Tidel
Engineering,  Inc.,  which provide for minimum  annual  salaries of $195,000 and
$125,000,  respectively,  over a three-year  term ending July 2000, with certain
change of control  provisions.  Similarly,  three  non-executive  employees have
employment agreements with the Company's  wholly-owned  subsidiary which provide
for minimum annual salaries of $100,000, $100,000 and $75,000, respectively, for
the same term, which also contain change of control provisions.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

From time to time,  the Company  provides  certain  administrative  and clerical
services to two entities with whom James T. Rash, Chief Executive Officer of the
Company,  has an  affiliation.  Fees earned by the  Company  for these  services
totaled  $72,000  for the year ended  September  30,  1997.  Amounts  due to the
Company from these entities totaled $192,180 at September 30, 1997.

On March 30,  1997,  the  Company  received  notes with an  aggregate  principal
balance of  $743,000  in  connection  with the  exercise of warrants to purchase
Common Stock held by James T. Rash,  James L. Britton,  III, Jerrell G. Clay and
Mark K.  Levenick,  all  directors of the Company.  These notes bear interest at
10%, are secured by the  underlying  shares  issued,  and are due  September 30,
1998.  To date,  the Company has received  aggregate  payments of principal  and
interest  of  $360,937  and  $44,628,  respectively.  As of  June 8,  1998,  the
outstanding  principal of the notes was $360,937,  with accrued interest thereon
of $45,247.


            ITEM 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The  Board of  Directors  has  selected  KPMG Peat  Marwick  LLP to serve as the
Company's  independent  auditors.  KPMG  Peat  Marwick  LLP  has  served  as the
Company's independent auditors since October,  1991. While it is not required to
do so, the Board of Directors is  submitting  the  selection of that firm as the
Company's  independent auditors for the fiscal year ending September 30, 1998 to
stockholders for ratification in order to ascertain the stockholders views. Such
ratification  of the  selection  of KPMG  Peat  Marwick  LLP  will  require  the
affirmative  vote of the holders of a majority of the shares of Common  Stock of
the Company  entitled to vote thereon and represented at the Meeting.  The Board
of Directors will reconsider its selection should the stockholder votes evidence
disapproval.

Representatives  of KPMG Peat  Marwick  LLP are  expected  to be  present at the
Meeting and available to respond to appropriate questions.  Such representatives
will have the opportunity to make a statement if they desire to do so.

The Board of Directors unanimously  recommends that you vote for ratification of
the selection of KPMG PEAT MARWICK LLP. Broker  non-votes and proxy cards marked
"ABSTAIN"  with  respect  to this  proposal  will be  counted  towards a quorum.
Abstentions will be counted as a vote against this proposal and broker non-votes
will not be counted for purposes of  determining  whether this proposal has been
approved.


                                      -10-


                              STOCKHOLDER PROPOSALS

To be considered for presentation at the 1999 Annual Meeting of Stockholders,  a
stockholder  proposal  must be  received at the offices of the Company not later
than October 31, 1998.

                                  OTHER MATTERS

The Board of Directors knows of no other business which will be presented to the
Meeting.  If any other business is properly  brought  before the Meeting,  it is
intended  that proxies in the enclosed form will be voted in respect to any such
matters in accordance with the judgment of the persons voting the proxies.

Financial  statements  for the Company  and its  consolidated  subsidiaries  are
included in the Annual Report of the Company to stockholders for the fiscal year
ended  September  30,  1997  accompanying  this Proxy  Statement.  A copy of the
Company's  Annual Report on Form 10-K and any amendments  thereto filed with the
Securities  and  Exchange  Commission  is  available  without  charge  to  those
stockholders who would like more detailed information.  To obtain a copy, please
write to: Leonard L. Carr, Jr., Senior Vice  President,  5847 San Felipe,  Suite
900, Houston, Texas 77057.

Whether or not you intend to be  present at this  Meeting  you are urged to sign
and return your proxy promptly.

                                            By order of the Board of Directors,
                                            James T. Rash
                                            Chairman

Houston, Texas
June 25, 1998

                                      -11-


PROXY                       TIDEL TECHNOLOGIES, INC.
                           5847 SAN FELIPE, SUITE 900
                              HOUSTON, TEXAS 77057

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

         The undersigned hereby appoints James T. Rash, as Proxy, with the power
to appoint his substitute, and hereby authorizes him to represent and to vote as
designated  below all the shares of Common  Stock of Tidel  Technologies,  Inc.,
held of record by the  undersigned  on June 8, 1998,  at the  Annual  Meeting of
Stockholders  to be  held  on  July  29,  1998,  and  at  any  postponements  or
adjournments thereof. The proposals referred to below are described in the Proxy
Statement for the Annual Meeting of Stockholders dated June 25, 1998.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS:

1.       Election of Directors.  Nominees: James T. Rash; James L. Britton, III;
         Jerrell G. Clay; and Mark K. Levenick.
         [ ] FOR                    [ ] WITHHELD
         FOR, except withheld
         the following:________________________________________________________

2.       Selection  of  KPMG  Peat  Marwick  LLP  as the  Company's  independent
         auditors  for the fiscal year ending  September  30,  1998. [ ] FOR [ ]
         AGAINST [ ] ABSTAIN

3.       In their  discretion,  the  Proxies are  authorized  to vote such other
         business as may properly come before the meeting.

                  THIS  PROXY,  WHEN  PROPERLY  EXECUTED,  WILL BE  VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.  IF NO DIRECTION IS MADE,
THIS  PROXY WILL BE VOTED FOR  PROPOSALS  1 AND 2,  RESPECTIVELY.  A PROXY TO BE
EFFECTIVE  MUST BE RECEIVED BY HARRIS  TRUST AND SAVINGS  BANK C/O HARRIS  TRUST
COMPANY OF NEW YORK, 88 PINE STREET, 19TH FLOOR, NEW YORK, NY 10005.

                                             Dated: ___________________________

                                             ----------------------------------
                                                      (Signature)

                                             ----------------------------------
                                                      (Signature)

                                                Please sign your name exactly as
                                             it appears hereon.  When shares are
                                             held by joint tenants,  both should
                                             sign.  When  signing  as  attorney,
                                             executor, administrator, trustee or
                                             guardian, please give full title as
                                             such. If a corporation, please sign
                                             in full corporate name by President
                                             or other authorized  officer.  If a
                                             partnership,  please  sign  in full
                                             partnership   name  by   authorized
                                             person.