-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M5ObtvQKeLP3lseOqZZCCVtdDpW6PcQEN6zHF0K4xT+9i9jeSdkBt/ayOLpYTd/7 2Y9zzffbhbSpxsEC6tcg1w== 0000890566-98-001008.txt : 19980518 0000890566-98-001008.hdr.sgml : 19980518 ACCESSION NUMBER: 0000890566-98-001008 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIDEL TECHNOLOGIES INC CENTRAL INDEX KEY: 0000842695 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 752193593 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-17288 FILM NUMBER: 98625351 BUSINESS ADDRESS: STREET 1: 5847 SAN FELIPE STE 900 STREET 2: SAN FELIPE PLZ CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7137838200 MAIL ADDRESS: STREET 1: 5847 SAN FELIPE STREET 2: SUITE 900 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MEDICAL TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 10-Q/A 1 As filed with the Securities and Exchange Commission on May 15, 1998. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file Number 000-17288 TIDEL TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 75-2193593 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5847 San Felipe, Suite 900 Houston, Texas 77057 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713)783-8200 ---------------------- Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES [X] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares of Common Stock outstanding as of the close of business on May 15, 1998 was 15,690,698. TIDEL TECHNOLOGIES, INC. I N D E X PAGE NUMBER ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1998 and September 30, 1997 (unaudited)..................... 1 Consolidated Statements of Operations for the three months and six months ended March 31, 1998 and 1997 (unaudited)................................... 2 Consolidated Statements of Cash Flows for the six months ended March 31, 1998 and 1997 (unaudited) .......................................... 3 Notes to Consolidated Financial Statements (unaudited)................................. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 6 PART II. OTHER INFORMATION: Item 1. Legal Proceedings......................................... 9 Item 2. Changes in Securities..................................... 9 Item 3. Defaults Upon Senior Securities........................... 10 Item 4. Submission of Matters to a Vote Of Security Holders..................................... 10 Item 5. Other Information......................................... 10 Item 6. Exhibits and Reports on Form 8-K.......................... 10 SIGNATURE............................................................... 10 TIDEL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, September 30, ASSETS 1998 1997 ------------ ------------ Current Assets: Cash and cash equivalents .......................... $ 1,645,364 $ 1,549,331 Trade accounts receivable, net of allowance of $798,461 and $750,347, respectively ............ 8,182,979 8,732,080 Notes and other receivables ........................ 643,710 852,514 Inventories ........................................ 5,853,762 4,208,360 Prepaid expenses and other assets .................. 192,940 233,273 ------------ ------------ Total current assets ........................... 16,518,755 15,575,558 Investment in 3CI, at market value ..................... 1,021,227 553,505 Property, plant and equipment, at cost ................. 2,254,020 2,126,726 Accumulated depreciation ........................... (1,340,534) (1,189,409) ------------ ------------ Net property, plant and equipment .............. 913,486 937,317 Intangible assets, net of accumulated amortization of $752,948 and $692,814, respectively ................ 740,889 801,023 Deferred tax asset ..................................... 448,022 318,810 Other assets ........................................... 80,104 77,238 ------------ ------------ Total assets ................................... $ 19,722,483 $ 18,263,451 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term notes payable ........................... $ 642,968 $ 948,697 Accounts payable ................................... 2,304,832 3,239,412 Accrued liabilities ................................ 1,625,922 2,328,917 ------------ ------------ Total current liabilities ...................... 4,573,722 6,517,026 Long-term debt ......................................... 4,254,604 3,654,604 ------------ ------------ Total liabilities .............................. 8,828,326 10,171,630 ------------ ------------ Commitments and contingencies Shareholders' Equity: Common stock, $.01 par value, authorized 100,000,000 shares; issued and outstanding 15,570,968 and 14,851,050 shares, respectively ................ 155,710 148,511 Additional paid-in capital ......................... 13,915,898 13,387,412 Accumulated deficit ................................ (2,269,707) (4,026,262) Stock subscriptions receivable ..................... (382,063) (424,437) Unrealized loss on investment in 3CI ............... (525,681) (993,403) ------------ ------------ Total shareholders' equity ..................... 10,894,157 8,091,821 ------------ ------------ Total liabilities and shareholders' equity ..... $ 19,722,483 $ 18,263,451 ============ ============
See accompanying notes to consolidated financial statements. 1 TIDEL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Six Months Ended March 31, Ended March 31, ------------------------------ ------------------------------ 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Revenues .................................. $ 9,147,923 $ 6,802,255 $15,175,909 $13,058,391 Cost of sales ............................. 5,690,349 4,512,266 9,519,830 8,553,647 ----------- ----------- ----------- ----------- Gross profit .......................... 3,457,574 2,289,989 5,656,079 4,504,744 Selling, general and administrative ....... 1,773,618 1,526,806 3,483,061 3,091,770 Depreciation and amortization ............. 110,614 115,003 217,926 223,333 ----------- ----------- ----------- ----------- Operating income ...................... 1,573,342 648,180 1,955,092 1,189,641 Interest expense, net ..................... 104,928 134,887 198,537 270,953 ----------- ----------- ----------- ----------- Net income ................................ $ 1,468,414 $ 513,293 $ 1,756,555 $ 918,688 =========== =========== =========== =========== Basic earnings per share: Income from continuing operations ..... $ 0.09 $ 0.04 $ 0.11 $ 0.07 =========== =========== =========== =========== Net income ............................ $ 0.09 $ 0.04 $ 0.11 $ 0.07 =========== =========== =========== =========== Weighted average common shares outstanding ....................... 15,552,746 12,820,305 15,411,857 12,623,014 =========== =========== =========== =========== Diluted earnings per share: Income from continuing operations ..... $ 0.09 $ 0.04 $ 0.10 $ 0.07 =========== =========== =========== =========== Net income ............................ $ 0.09 $ 0.04 $ 0.10 $ 0.07 =========== =========== =========== =========== Weighted average common and dilutive shares outstanding ....... 17,045,861 15,205,313 17,044,128 14,938,434 =========== =========== =========== ===========
See accompanying notes to consolidated financial statements. 2 TIDEL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended March 31, ---------------------------- 1998 1997 ----------- ----------- Cash flows from operating activities: Net income ............................................ $ 1,756,555 $ 918,688 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization ..................... 217,926 223,333 Deferred tax benefit .............................. (129,212) -- Changes in assets and liabilities: Trade accounts receivable, net ................ 549,101 (1,405,439) Notes and other receivables ................... 208,804 (55,627) Inventories ................................... (1,645,402) (750,595) Prepaid expenses and other assets ............. 37,467 (101,127) Accounts payable and accrued liabilities ...... (1,637,575) 1,292,973 ----------- ----------- Net cash provided by (used in) operating activities (642,336) 122,206 ----------- ----------- Cash flows from investing activities: Purchases of property, plant and equipment ............ (133,961) (432,613) Proceeds from sale of property, plant and equipment ... -- 39,150 ----------- ----------- Net cash used in investing activities ............. (133,961) (393,463) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of notes payable ............... 600,000 895,000 Repayments of notes payable ........................... (305,729) (1,816,869) Proceeds from exercise of warrants .................... 535,685 1,580,816 Payments of stock subscriptions ....................... 42,374 -- ----------- ----------- Net cash provided by financing activities ......... 872,330 658,947 ----------- ----------- Net increase in cash and cash equivalents ......... 96,033 387,690 Cash and cash equivalents at beginning of period .......... 1,549,331 582,108 ----------- ----------- Cash and cash equivalents at end of period ................ $ 1,645,364 $ 969,798 =========== =========== Supplemental disclosure of cash flow information: Cash paid for interest ................................ $ 228,164 $ 300,645 =========== =========== Cash paid for taxes ................................... $ 329,212 $ -- =========== =========== Supplemental disclosure of noncash financing activities: Exercise of warrants in exchange for notes receivable . $ -- $ 743,000 =========== =========== Exercise of warrants in exchange for retirement of note payable ...................................... $ -- $ 38,750 =========== =========== Conversion of note payable to common stock ............ $ -- $ 60,000 =========== ===========
TIDEL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) (1) CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated balance sheets and related interim consolidated statements of operations and cash flows of Tidel Technologies, Inc. (the "Company"), a Delaware corporation, are unaudited. In the opinion of management, these financial statements include all adjustments (consisting only of normal recurring items) necessary for their fair presentation in accordance with generally accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended September 30, 1997. (2) INVENTORIES Inventories consist of the following at March 31, 1998 and September 30, 1997: March 31, September 30, 1998 1997 ------------- ------------ Raw materials $ 5,179,617 $ 3,635,349 Work in process 457,888 379,708 Finished goods 550,656 492,636 Other (demo) 207,601 212,667 ------------- ------------ 6,395,762 4,720,360 Inventory reserve (542,000) (512,000) ------------- ------------ $ 5,853,762 $ 4,208,360 ============ =========== (3) EARNINGS PER SHARE Basic earnings per share is computed by dividing the income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the income available to common shareholders by the weighted average number of common shares and dilutive potential common shares. The following is a reconciliation of the numerators and denominators of the basic and diluted per-share computations for income from continuing operations and net income for the three months and six months ended March 31, 1998 and 1997: 4
Income Shares Per Share (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- ------ THREE MONTHS ENDED MARCH 31, 1998: - ---------------------------------- Basic EPS: Income available to common shareholders ....... $1,468,414 15,552,746 $0.09 Diluted EPS: Effect of dilutive options and warrants ....... 1,493,115 Income available to common shareholders ....... $1,468,414 17,045,861 $0.09 THREE MONTHS ENDED MARCH 31, 1997: - ---------------------------------- Basic EPS: Income available to common shareholders ....... $ 513,293 12,820,305 $0.04 Diluted EPS: Effect of dilutive options and warrants ....... 102,243 2,385,008 Income available to common shareholders ....... $ 615,536 15,205,313 $0.04 SIX MONTHS ENDED MARCH 31, 1998: - -------------------------------- Basic EPS: Income available to common shareholders ....... $1,756,555 15,411,857 $0.11 Diluted EPS: Effect of dilutive options and warrants ....... 1,632,271 Income available to common shareholders ....... $1,756,555 17,044,128 $0.10 SIX MONTHS ENDED MARCH 31, 1997: - -------------------------------- Basic EPS: Income available to common shareholders ...... $ 918,688 12,623,014 $0.07 Diluted EPS: Effect of dilutive options and warrants ....... 70,175 2,271,000 Effect of convertible notes ................... 1,243 44,420 Income available to common shareholders ....... $ 990,106 14,938,434 $0.07
(4) INVESTMENT IN 3CI The Company owns 680,818 shares of the common stock of 3CI Complete Compliance Corporation. The investment is carried at market value. 5 (5) LITIGATION The Company and its subsidiaries are each subject to certain litigation and claims arising in the ordinary course of business. In the opinion of the management of the Company, the amounts ultimately payable, if any, as a result of such litigation and claims will not have a materially adverse effect on the Company's financial position. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company develops, manufactures, sells and supports products designed for specialty retail marketers, including automated teller machines and related software (the "AnyCard" or "ATM" products); electronic cash security systems (the "Timed Access Cash Controller" or "TACC" products); and underground fuel storage monitoring and leak detection devices (the "Environmental Monitoring System" or "EMS" products). PRODUCT REVENUES Total revenues increased $2,345,668, or 34%, for the second quarter of fiscal 1998 over the comparable quarter of 1997. On a year-to-date basis, revenues increased $2,117,518, or 16%, compared to the same period of the prior fiscal year. As discussed below, a significant increase in AnyCard sales was the principal factor in the Company's revenue growth. Revenue by product is detailed in the following table: Three months ended Six months ended March 31, March 31, ----------------- ------------------- NET PRODUCT REVENUES (IN 000'S) 1998 1997 1998 1997 ------------------------------- ------ --------- -------- -------- AnyCard $ 6,576 $ 4,497 $ 10,127 $ 8,724 TACC 1,705 1,501 3,293 2,838 Parts, service and other 670 529 1,291 1,050 EMS 197 275 465 446 -------- -------------------------------- $ 9,148 $ 6,802 $ 15,176 $ 13,058 ======== ======== ======== ======== AnyCard product sales for the quarter ended March 31, 1998 increased 46% over the comparable period in 1997. On a year-to-date basis, AnyCard product sales increased 16% when compared to the same period in 1997. Demand for all of the Company's ATM products continues to be strong, with a significant increase in demand during the quarter ended March 31, 1998 due to the introduction of the color display upgrade package for all ATM models. Management believes AnyCard product sales should continue to increase throughout the remainder of the year. 6 TACC product sales increased 14% for the quarter ended March 31, 1998, when compared to the same period in 1997. On a year-to-date basis, TACC product sales increased 16% when compared to the same period in 1997. Management believes TACC product sales should continue to be strong throughout the remainder of the year due to the development of new customers as a result of increased marketing efforts. All marketing activities for EMS products have terminated as the marketing focus of the Company has shifted to its two other product lines. Certain existing customers have continued to purchase these products, however, to complete retrofit projects that are currently in progress. Parts, service and other revenues vary directly with sales of finished goods, and have increased accordingly. GROSS PROFIT, OPERATING EXPENSES AND NON-OPERATING ITEMS Gross profit was 38% and 34% of revenues for the quarters ended March 31, 1998 and 1997. On a year-to-date basis, gross profit increased from 35% of revenues in 1997 to 37% of revenues in 1998. The increase was primarily due to improvements in ATM product design and engineering resulting in lower costs. As a percentage of revenues, selling, general and administrative expense was 19% and 22% in the respective second quarters of fiscal 1998 and 1997. On a year-to-date basis, selling, general and administrative expense was 23% of revenues in 1998, compared to 24% of revenues in 1997. Management believes that selling, general and administrative expense, as a percentage of revenues, should continue to decrease over the remainder of the year. Depreciation and amortization decreased slightly during fiscal 1998 due to fewer additions of property, plant and equipment. Interest expense decreased slightly during fiscal 1998 as a result of a decline in average rates for borrowed funds. LIQUIDITY AND CAPITAL RESOURCES The financial position of the Company continues to improve primarily as a result of profitable operations and the infusion of capital from the exercise of warrants, as reflected in the following key indicators as of March 31, 1998 and September 30, 1997: March 31, September 30, 1998 1997 ------------ ----------- Shareholders' equity $ 10,894,157 $ 8,091,821 Tangible net worth 10,153,268 7,290,798 Working capital 11,945,033 9,058,532 7 The improvement in working capital is principally due to increased inventories and the repayment of current liabilities. The increase in inventories arose from a build-up of raw materials related to overall higher sales expectations. The repayment of current liabilities was facilitated by improved collections of accounts and notes receivable. During fiscal 1997, the Company's wholly owned subsidiary entered into a revolving credit agreement with a bank. The revolving credit agreement provides for borrowings up to $5,000,000 at the prime rate, with certain LIBOR alternatives, until May 31, 1999. The Company plans to increase the maximum borrowing limit to $7,000,000 during the quarter ending June 30, 1998. At March 31, 1998, $4,254,604 was outstanding pursuant to the revolving credit agreement. The Company continues to own 680,818 shares of 3CI common stock subsequent to its divestiture of a majority interest in February 1994. The Company has no immediate plans for the disposal of the shares, and accordingly, the shares may be utilized to collateralize borrowings. At present, 480,818 shares are pledged to secure an outstanding note payable in the principal amount of $400,000. The Company's registration statement covering the offering and sale by selling shareholders of the common stock underlying all of the Company's 5,517,500 outstanding warrants was declared effective on January 29, 1997. During the six-month period ended March 31, 1998, warrants to purchase 719,918 shares were exercised generating net proceeds to the Company of approximately $536,000. As of March 31, 1998, the Company has outstanding warrants to purchase 1,702,692 shares of common stock, which if exercised would generate proceeds to the Company of approximately $1,472,000. The Company's research and development budget for fiscal 1998 has been estimated at $1,650,000. The majority of these expenditures are applicable to enhancements of the existing product lines, development of new automated teller machine products and the development of new technology to facilitate the dispensing of products such as postage stamps, money orders, and prepaid telephone cards, as well as multiple denominations of currency. During the six months ended March 31, 1998, $730,371 was expended for research and development. With its present capital resources, its potential capital from the exercise of warrants, and with its borrowing facility, the Company should have sufficient resources to meet its operating needs for the foreseeable future and to provide for debt maturities and capital expenditures. The Company does not anticipate paying dividends on shares of its common stock in the foreseeable future. SEASONALITY The Company can experience seasonal variances in operations and historically has its lowest dollar volume sales months between November and March. The Company's operating results for any particular quarter may not be indicative of the results for the future quarter or for the year. 8 MAJOR CUSTOMERS AND CREDIT RISKS The Company generally does not require collateral or other security from its customers and would incur an accounting loss equal to the carrying value of the accounts receivable if a customer failed to perform according to the terms of the credit arrangements. Sales to major customers were as follows for the three and six months ended March 31, 1998 and 1997: Three months ended Six months ended MARCH 31, MARCH 31, ----------------------- ------------------------- 1998 1997 1998 1997 ---------- ---------- ----------- ----------- Customer A $1,475,712 $ 73,785 $ 2,184,896 $ 740,005 Customer B 158,297 1,802,920 293,199 2,277,994 Foreign sales accounted for 2% and 7% of the Company's total sales during the three months ended March 31, 1998 and 1997, respectively, and 3% and 6% of the Company's total sales during the six months ended March 31, 1998 and 1997, respectively. FORWARD-LOOKING STATEMENTS This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, (including without limitation, the Company's future gross profit, selling, general and administrative expense, the Company's financial position, working capital and seasonal variances in the Company's operations, as well as general market conditions) though the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES Not applicable. 9 ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A) EXHIBITS 27 -- Financial Data Schedule B) REPORTS ON FORM 8-K The Company filed no Reports on Form 8-K during the quarter ended March 31, 1998. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIDEL TECHNOLOGIES, INC. (Registrant) DATE: May 15, 1998 By: /s/ JAMES T. RASH --------------------------------- James T. Rash Principal Executive and Financial Officer EX-27 2
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS SEP-30-1998 MAR-31-1998 1,645,364 0 8,182,979 798,461 5,853,762 16,518,755 2,254,020 1,340,534 19,722,483 4,573,722 4,254,604 0 0 155,710 10,738,447 19,722,483 15,175,909 15,175,909 9,519,830 9,519,830 0 0 198,537 1,756,555 0 1,756,555 0 0 0 1,756,555 .11 .10
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