STRATEGIC PARTNERS
May 10, 2001
HOUSTON --Tidel Technologies Inc.(Nasdaq:ATMS) reported second quarter 2001 revenues of $8,156,000 compared to year-earlier revenues of $18,663,000. Revenues for the six-month period ended March 31, 2001 were $24,852,000 compared to $32,445,000 a year earlier.
Net income for the second quarter of 2001 declined to $65,000 from $2,519,000 a year earlier. For the six-month period, net income dropped to $1,953,000 in 2001 from $4,000,000 a year earlier.
Tidel attributed the decline in income to a dramatic drop in business with Credit Card Center, the Philadelphia ISO that was its biggest distributor in 2000. Tidel did not sell any ATMs to CCC during the quarter ended March 31, 2001.
For the three-month and six-month periods ended March 31, 2000, revenues included sales to CCC of $10,850,432 and $18,787,833, respectively, or 58 percent of total revenues for each of the respective periods.
According to Tidel, business with all other customers increased for the three months ended March 31, 2001 when compared with prior periods. The company shipped 1,360 non-CCC ATMs for the quarter ended March 31, 2001, an increase of 40 percent over the 971 units shipped to non-CCC customers for the previous quarter, and a 32 percent increase over the 1,030 units for the same quarter in 2000.
Tidel says it is continuing to pursue the collection of its receivables from CCC and is currently in negotiations with CCC to resolve these amounts. In addition, Tidel has been working to perfect its security interests in the collateral supporting these receivables.
According to a company press release, Tidel says it has received no payments from CCC since its previous earnings announcement on Feb. 8. Management believes that the inventory, receivables and revenue streams comprising the collateral are sufficient to support the recoverability of all amounts, and accordingly, no reserves for collection loss are deemed necessary at this time.
In the event CCC is unable to repay all amounts due and Tidel cannot realize the full value of the underlying collateral, however, Tidel warned that it may incur a significant charge to earnings in future periods.
The company also announced that Dallas-based HBK Investments L.P, the holder of $15 million of the company's 6 percent subordinated convertible debentures, has a "put right" to require the company to pay all or a portion of the outstanding principal, together with any accrued interest, as of June 5, 2001. Management is currently engaged in discussions with the holder to modify the terms of the debt and eliminate the put right feature.
In the event that a mutually agreeable modification is not arranged and the holder exercises its put right, the company has the right to pay the put price in cash on or before Aug. 4, 2001. In that connection, the company is presently reviewing various financing alternatives with its senior lender as well as several other institutions.
In addition, the Acorn Fund, a holder of $3 million of the debentures, has a put right that is exercisable on June 26, 2001. Management intends to deal with this put right in a similar manner.
Tidel is counting on new exclusive and preferred distribution agreements to boost its business in the next two quarters.
"While it is not presently determinable if and when business might resume with CCC, we are optimistic about the outlook for Tidel for the year taken as a whole. We have executed a number of new exclusive and preferred distribution agreements resulting in a broader and more diversified customer base, thereby alleviating our problem with concentration of business within a small network of distributors," said James T. Rash, chairman and CEO of Tidel.
He added, "Although we generated some revenues from the new contracts during the most recent quarter, the full impact should develop during the next two quarters after the distributors wind down their business with previous suppliers. In addition, we are working with several end users to provide specific hardware and software solutions that could result in large orders of ATM equipment later this year."
