<PAGE>

                                                                    EXHIBIT 4.38

                               SECURITY AGREEMENT

To:                Laurus Master Fund, Ltd.
                   c/o Onshore Corporate Services, Ltd.
                   P.O. Box 1234 G.T
                   Queensgate House
                   South Church Street
                   Grand Cayman, Cayman Islands

Gentlemen:

      1. To secure the payment of all Obligations (as hereafter defined), we
hereby grant to you a continuing security interest in all of the following
property now owned or at any time hereafter acquired by us, or in which we now
have or at any time in the future may acquire any right, title or interest (the
"Collateral"): all accounts, inventory, equipment, goods, documents, instruments
(including, without limitation, promissory notes), contract rights, general
intangibles (including, without limitation, payment intangibles), chattel paper,
supporting obligations, investment property, letter-of-credit rights, trademarks
and tradestyles in which we now have or hereafter may acquire any right, title
or interest, all proceeds and products thereof (including, without limitation,
proceeds of insurance) and all additions, accessions and substitutions thereto
or therefor.

      2. The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations owing by us to you no matter how or when arising,
direct or indirect, absolute or contingent, liquidated or unliquidated,
including, without limitation, (i) all obligations owing by us to you under any
and all guaranty agreements; (ii) all obligations owing by Tidel Technologies,
Inc. ("Tidel") to you under the Convertible Term Note dated as of the date
hereof in the original principal amount of $6,450,000, as amended, modified and
supplemented from time to time or otherwise (the "Convertible Note ") and (iii)
all obligations owing by Tidel to you under the promissory note dated as of the
date hereof in the original principal amount of $400,000, as amended, modified
and supplemented from time to time or otherwise (the "Term Note," and, together
with the Convertible Note, the "Purchaser Notes").

      3. The term "Permitted Liens" as used herein shall mean (a) liens of
carriers, warehousemen, artisans, bailees, mechanics and materialmen incurred in
the ordinary course of business securing sums not overdue; (b) liens incurred in
the ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of governmental insurance or benefits,
relating to employees, securing sums (i) not overdue or (ii) being diligently
contested in good faith provided that adequate reserves with respect thereto are
maintained on our books in conformity with generally accepted accounting
principles ("GAAP"), (c) liens in your favor, (d) liens for taxes (i) not yet
due or (ii) being diligently contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of the company in conformity with GAAP provided, that, the lien shall have no
effect on the priority of your liens or the value of the assets in which you
have a lien and

<PAGE>

(e) zoning restrictions, easements, licenses, or other restrictions on the use
of real property or other minor irregularities in title thereto, so long as the
same do not materially impair the use, value or marketability of such real
estate.

      4. We hereby represent, warrant and covenant to you that:

            a. Tidel is a company validly existing, in good standing and formed
under the laws of the State of Delaware with an organization identification
number of 2142972, Tidel Engineering, L.P. ("Tidel Engineering") is a limited
partnership validly existing, in good standing and formed under the laws of the
State of Delaware with an organization identification number of 3020956, Tidel
Cash Systems, Inc. ("Tidel Cash Systems") is a company validly existing, in good
standing and formed under the laws of the State of Delaware with an organization
identification number of 2310971, AnyCard International Inc. ("AnyCard") is a
company validly existing, in good standing and formed under the laws of the
State of Delaware with an organization identification number of 2387909, and
Tidel Services, Inc. ("Tidel Services") is a company validly existing, in good
standing and formed under the laws of the State of Delaware with an organization
identification number of 3018673, and we will provide you thirty (30) days'
prior written notice of any change in the state of formation of Tidel, Tidel
Engineering, Tidel Cash Systems, AnyCard and/or Tidel Services;

            b. our legal names are as set forth on the signature page hereto and
are identical to those which are set forth in the public records of our
respective jurisdictions of organization, as amended through the date hereof;

            c. we are the lawful owner of the Collateral and have the sole right
to grant a security interest therein and will defend the Collateral against all
claims and demands of all persons and entities;

            d. we will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature ("Encumbrances"), except (i) to the extent said Encumbrance does not
secure indebtedness in excess of $100,000 in the aggregate and such Encumbrance
is removed or otherwise released within 10 days of the creation thereof or (ii)
for Permitted Liens;

            e. we will at our own cost and expense keep the Collateral in good
state of repair (ordinary wear and tear excepted) and will not waste or destroy
the same or any part thereof other than in the ordinary course discarding of
items no longer used or useful in our business;

            f. we will not without your prior written consent, (1) sell,
exchange, lease or otherwise dispose of the Collateral or any of our rights
therein, whether by sale, lease or otherwise, except for (x) the sale of
inventory in the ordinary course of business and (y) for the disposition or
transfer in the ordinary course of business during any fiscal year of obsolete
and worn-out equipment having an aggregate fair market value of not more than
$25,000 and only to the extent that (i) the proceeds of any such disposition
pursuant to clause (y) above are used to acquire replacement equipment which is
subject to your first priority security interest or are used to repay
Obligations or to pay general corporate expenses, or (ii) in the case of a
disposition

                                        2

<PAGE>

pursuant to clause (y) above following the occurrence of an Event of Default (as
hereafter defined) which continues to exist, the proceeds are remitted to you to
be held as cash collateral for the Obligations and/or (2) enter into any merger,
consolidation or other reorganization with or into any person or entity or
acquire all or a portion of the assets or capital stock of any person or entity
or permit any other person or entity to merge or consolidate with it.

            g. we will insure the Collateral against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as you shall
reasonably specify in amounts and under policies by insurers reasonably
acceptable to you and all premiums thereon shall be paid by us and the policies
delivered to you, and cause appropriate loss payable endorsements naming you as
lender's loss payee and additional insured. If we fail to do so, you may procure
such insurance and the cost thereof shall constitute Obligations;

            h. we will at all reasonable times allow you or your representatives
free access to and the right of inspection of the Collateral;

            i. we hereby indemnify and save you harmless from all loss, costs,
damage, liability and/or expense, including reasonable attorneys' fees, that you
may sustain or incur to enforce payment, performance or fulfillment of any of
the Obligations and/or in the enforcement of this Agreement or in the
prosecution or defense of any action or proceeding either against you or us
concerning any matter growing out of or in connection with this Agreement,
and/or any of the Obligations and/or any of the Collateral, except to the extent
caused by your own gross negligence or willful misconduct as determined by a
final, nonappealable judgment of a court of competent jurisdiction;

            j. with respect to all accounts arising out of contracts between us
and the United States of America, or any state, or any department, agency or
instrumentality of any of them (each, a "Government Contract"), we will so
notify you in writing and comply with any governmental notice or approval
requirements, including, without limitation, compliance with the Federal
Assignment of Claims Act,

            k. each of our accounts shall be a good and valid account
representing an undisputed bona fide indebtedness incurred by the account debtor
liable therefor, for a fixed sum as set forth in the invoice relating thereto
with respect to an unconditional sale and delivery upon the stated terms of
goods sold by us, or work, labor and/or services rendered by us, as applicable;

            l. the proceeds of all accounts shall be remitted by the applicable
account debtor to and be on deposit in the Pledged Account (as hereafter
defined). In the event we shall at any time receive any such proceeds, we shall
promptly deposit the same in the Pledged Account, and in any event, within three
(3) business days from receipt thereof; and

            m. we shall have no access to any funds on deposit in any Pledged
Account (as hereafter defined), except to the extent expressly set forth in the
Control Agreement (as hereafter defined) and we shall comply with the terms and
provisions of the Control Agreement. For purposes hereof, the following terms
shall have the following meanings: (1) "Control Agreement" shall mean the Multi
Party Blocked Account Agreement dated as of the date hereof

                                        3

<PAGE>

among us, you and JPMorgan Bank, as amended, modified and supplemented from time
to time, and (2) "Pledged Account" shall mean any separate deposit account in
which you have been granted by us a first priority perfected security interest.

      5. Following the occurrence and during the continuance of an Event of
Default, you shall have the right to instruct all of our account debtors to
remit payments on all accounts in accordance with your express written
instructions; provided, however, any account debtor liable under a Government
Contract shall be instructed on or prior to the date hereof to remit payments on
all accounts arising under the Government Contract to a Pledged Account or such
other address and/or deposit account as you shall direct in writing. With
respect to accounts arising from the Government Contract, we shall execute all
such documentation as you shall require so as to comply with the Federal
Assignment of Claims Act and to instruct the governmental agency party to the
Government Contract to remit all accounts arising thereunder to the Pledged
Account or such other address and/or deposit account as you shall direct in
writing. If, despite such instructions, we shall receive any payments with
respect to accounts, we shall receive such payments in trust for your benefit,
shall segregate such payments from our other funds and shall deliver or cause to
be deposited in the Pledged Account or delivered to you, in the same form as so
received with all necessary endorsements, all such payments as soon as
practicable, but in no event later than two (2) business days after our receipt
thereof. You shall have full power and authority to collect each account,
through legal action or otherwise, and may settle, compromise, or assign (in
whole or in part) the claim for any account, or otherwise exercise any other
right now existing or hereafter arising with respect to any account if such
action will facilitate collection.

      6. We shall be in default under this Agreement upon the happening and
during the continuation of any of the following events or conditions, each such
event or condition an "Event of Default":

            a. we shall fail to pay when due or punctually perform any of the
Obligations after expiration of any cure periods;

            b. any covenant, warranty, representation or statement made or
furnished to you by us or on our behalf was false in any material respect when
made or furnished;

            c. we shall breach any provision of this Agreement or any other
document, instrument or agreement delivered to you in connection with the
transactions contemplated hereby, as the same may be amended, modified and
supplemented from time to time, and such breach shall not have been cured during
any applicable cure or grace period;

            d. the loss, theft, damage, destruction, sale (other than the sale
of inventory in the ordinary course of business and/or the sale of obsolete or
worn out equipment having a sale value of not greater than $5,000 for any
individual item of equipment or $25,000 in the aggregate for all such items of
equipment sold during any fiscal year, so long as the proceeds of all such sales
are promptly (but in any event within three (3) business days following receipt
thereof) deposited in the Pledged Account) or encumbrance to or of any of the
Collateral or the making of any levy, seizure or attachment thereof or thereon
except to the extent, as applicable (a) any such

                                        4

<PAGE>

loss, theft, damage or destruction relates to Collateral having a value of less
than $50,000 in the aggregate during any fiscal year, (b) any such loss, theft,
damage or destruction relates to Collateral having a value of $50,000 or more in
the aggregate during any fiscal year, but only to the extent Laurus shall have
received insurance proceeds covering the value of such Collateral within
forty-five (45) days following the occurrence of any such event; provided,
however, in the event Laurus determines in the good faith exercise of its
reasonable discretion that any such loss, theft, damage or destruction relates
to a substantial portion of the Collateral, then, at Laurus's option, an Event
of Default shall be deemed to automatically result from such occurrence; and (d)
any such levy, seizure or attachment relates to Collateral having an aggregate
value of not greater than $100,000, but only to the extent such levy, seizure or
attachment has been removed or otherwise released within 10 days of the creation
or the assertion thereof;

            e. we shall become insolvent, cease operations, dissolve, terminate
our business existence, make an assignment for the benefit of creditors, suffer
the appointment of a receiver, trustee, liquidator or custodian of all or any
part of our property;

            f. any proceedings under any bankruptcy or insolvency law shall be
commenced by or against us and if commenced against us shall not be dismissed
within 30 days;

            g. we shall repudiate, purport to revoke or fail to perform any of
our obligations under the Note or any guaranty agreement made by us in favor of
you; or

            h. an Event of Default shall have occurred under and as defined in
the Note.

      7. Upon the occurrence and continuation of any Event of Default, you may
declare all Obligations immediately due and payable and you shall have the
remedies of a secured party provided in the Uniform Commercial Code (the "UCC")
as in effect in the State of New York, this Agreement and other applicable law.
Upon the occurrence and continuation of any Event of Default, you will have the
right to take possession of the Collateral and to maintain such possession on
our premises or to remove the Collateral or any part thereof to such other
premises as you may desire. Upon your request, we shall assemble the Collateral
and make the Collateral available to you at a place designated by you which is
reasonably convenient to both parties. If any notification of intended
disposition of any Collateral is required by law, such notification, if mailed,
shall be deemed properly and reasonably given if mailed at least ten (10) days
before such disposition, postage prepaid, addressed to us either at our address
shown herein or at any address appearing on your records for us. Any proceeds of
any disposition of any of the Collateral shall be applied by you to the payment
of all expenses in connection with the sale of the Collateral, including
reasonable attorneys' fees and other legal expenses and disbursements and the
reasonable expense of retaking, holding, preparing for sale, selling, and the
like, and any balance of such proceeds may be applied by you toward the payment
of the Obligations in such order of application as you may elect, and we shall
be liable for any deficiency.

      8. If we default in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on our part to be
performed or fulfilled under or pursuant to this Agreement, you may, at your
option without waiving your right to enforce this Agreement according to its
terms, immediately or at any time thereafter and without notice to us,

                                        5

<PAGE>

perform or fulfill the same or cause the performance or fulfillment of the same
for our account and at our sole cost and expense, and the cost and expense
thereof (including reasonable attorneys' fees) shall be added to the Obligations
and shall be payable on demand with interest thereon at the highest rate
permitted by law or, at your option, debited by you from the Pledged Account.

      9. We appoint you, any of your officers, employees or any other person or
entity whom you may designate as our attorney, with power to execute such
documents in connection with this Agreement on our behalf and to supply any
omitted information and correct patent errors in any documents executed by us or
on our behalf; to file financing statements against us covering the Collateral;
to sign our name on public records in connection with this Agreement; and to do
all other things you deem necessary to carry out this Agreement. We hereby
ratify and approve all acts of the attorney and, so long as the power of
attorney is used in connection with this Agreement, neither you nor the attorney
will be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law other than gross negligence or willful
misconduct. This power being coupled with an interest, is irrevocable so long as
any Obligations remains unpaid.

      10. No delay or failure on your part in exercising any right, privilege or
option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by you and then only to the extent therein set forth, and no
waiver by you of any default shall operate as a waiver of any other default or
of the same default on a future occasion. Your books and records containing
entries with respect to the Obligations shall be admissible in evidence in any
action or proceeding, shall be binding upon us for the purpose of establishing
the items therein set forth and shall constitute prima facie proof thereof. You
shall have the right to enforce any one or more of the remedies available to
you, successively, alternately or concurrently. We agree to join with you in
executing financing statements or other instruments to the extent required by
the Uniform Commercial Code in form satisfactory to you and in executing such
other documents or instruments as may be required or deemed necessary by you for
purposes of effecting or continuing your security interest in the Collateral.

      11. By your countersignature below, you hereby agree that, upon our
payment and performance in full of the Obligations, (a) you shall, in accordance
with Section 9-513 of the UCC, terminate all financing statements naming any of
us as a debtor which were made pursuant to this Agreement, and (b) with the
exception of this Section 11 and any other rights hereunder and under applicable
law which survive termination, this Agreement shall terminate.

      12. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and cannot be terminated orally. All of the
rights, remedies, options, privileges and elections given to you hereunder shall
enure to the benefit of your successors and assigns. The term "you" as herein
used shall include your company, any parent of your company, any of your
subsidiaries and any co-subsidiaries of your parent, whether now existing or
hereafter created or acquired, and all of the terms, conditions, promises,
covenants, provisions and warranties of this Agreement shall enure to the
benefit of and shall bind the representatives, successors and assigns of each of
us and them. You and we hereby (a) waive any and all right to

                                        6

<PAGE>

trial by jury in litigation relating to this Agreement and the transactions
contemplated hereby and we agree not to assert any counterclaim in such
litigation, (b) submit to the nonexclusive jurisdiction of any New York State
court sitting in the borough of Manhattan, the city of New York; provided that
nothing contained in this Agreement shall be deemed to preclude you from
bringing suit or taking other legal action in any other jurisdiction and (c)
waive any objection you or we may have as to the bringing or maintaining of such
action with any such court. We hereby waive personal service of process in any
such action and agree that service of such process may be made by registered or
certified mail addressed to us at the address set forth below.

      13. All notices from you to us shall be sufficiently given if mailed or
delivered to us at our address set forth below.

                       [SIGNATURE LINES ON FOLLOWING PAGE]

                                        7

<PAGE>

                     [SIGNATURE PAGE TO SECURITY AGREEMENT]

                                    Very truly yours,

                                    TIDEL TECHNOLOGIES, INC.

                                    By: /s/ James T. Rash
                                    Name: James T. Rash
                                    Title: President and Chief Executive Officer

                                    Address:

                                    TIDEL ENGINEERING, LP

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President & CEO

                                    Address:

                                    TIDEL CASH SYSTEMS, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    ANYCARD INTERNATIONAL, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    TIDEL SERVICES, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    Dated as of:  November 21, 2003

                                        8

<PAGE>

ACKNOWLEDGED:

LAURUS MASTER FUND, LTD.

By: /s/ Eugene Grin
    --------------------------------
Name: Eugene Grin
Title: Director

Dated as of:  November 25, 2003

                                        9