Top Source Reports Q3 Results

14 August 1998

Top Source Reports Fiscal 1998 Third Quarter Results

    PALM BEACH GARDENS, Fla.--Aug. 14, 1998-- Top Source Technologies, Inc. (AMEX:TPS) reported a net loss of $1,041,172 or ($.04) per share on revenue of $2,665,138 for the third fiscal quarter ended June 30, 1998, compared to net income of $10,803 or $.00 per share on revenue of $5,767,620 for the same quarter in 1997.
    The decline in revenues reflects lower sales of automotive overhead speaker systems, a business which the Company is in the process of divesting.
    The Company's fiscal third quarter loss of ($.04) per share reflects a one-time cash charge of $918,000 to record the Company's severance liability payable over a 30-month period to Stuart Landow, the Company's former Chairman, and additional non-cash severance expense of $167,000 relating to the time extension of Mr. Landow's stock options negotiated in return for a cash reduction of $195,000 in his severance payments. The Company's results also include a nonoperating profit of $1,030,000 relating to the receipt of a $1,450,000 in June 1998 of a non-refundable deposit on the sale of TSA.
    Will Willis, Chairman and Chief Executive Officer, stated, "Consistent with our prior communications, the Company isn't going to be profitable in the near term. However, to date our strategic plan to divest Top Source Automotive ("TSA"), launch the second generation MotorCheck(TM) On-Site Analyzer ("OSA-II"), and increase OSA visibility and revenue generation, is firmly on schedule."
    Willis further stated, "Recent multiple placements of seven revenue generating OSA units to a tire retailer in Jacksonville demonstrate that OSA is beginning to gain the acceptance for which our shareholders have long waited. Furthermore, the strategy to divest TSA to generate OSA expansion funds is progressing on schedule. Our proprietary technological edge, coupled with sufficient marketing and operating capital, should serve as a strong platform on which to build future revenues."
    David Natan, Top Source Technologies' Vice President and Chief Financial Officer stated, "Our current cash position of approximately $2,000,000, projected proceeds from the sale of TSA, and other sources of financing that we are exploring, will enable us to fund ongoing operations and the anticipated OSA-II inventory build-up necessary to support future potential multiple OSA placements."
    Top Source Technologies, Inc. develops, assembles and markets sophisticated technologies including the patented MotorCheck(TM) On-Site Analyzer, an "oil analysis mini-lab in a box," and proprietary Overhead Sound Systems.

    Forward-Looking Statements

    The statements discussed in the press release relating to the Company's expectations that it anticipates (1) selling the assets of TSA, (2) increasing the revenue generation from OSA units, and (3) obtaining sufficient sources of financing to fund ongoing operations are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The results anticipated by some or all of these forward- looking statements may not occur.
    Important factors that could cause actual results to differ materially from the forward looking statements include the following: (1) shareholder dissatisfaction with the terms of the transaction, (2) the inability of the purchaser to obtain financing to complete the TSA transaction, (3) unforeseen legal problems preventing the execution of the transaction, (4) unexpected manufacturing or technical problems with the OSA-II, (5) the Company's ability to market OSAs, (6) the acceptance of OSA technology by the marketplace, (7) potential future competition from third parties that may develop proprietary technology which either does not violate the Company's proprietary rights or is claimed not to violate the Company's proprietary rights, (8) the inability to attract major strategic OSA partners, and (9) the Company's inability to secure alternate sources of financing if the TSA transaction isn't executed.


                     TOP SOURCE TECHNOLOGIES, INC.
                            FINANCIAL TABLE
                              (UNAUDITED)
                              
                    Three Months Ended          Nine Months Ended
                         June 30                     June 30
                     1998        1997            1998        1997
                    
Total revenue      $2,665,138  $5,767,620     $9,281,904  $14,236,732

Income (loss) from 
 operations        (1,931,099)     57,631     (3,113,621)    (700,457)

Net other income      
 (expense)            894,169(1)  (51,362)       701,623(1)   (99,051)

Income (loss)       
 before income       
 taxes             (1,036,930)      6,269     (2,411,998)    (799,508)            

State income tax
 expense               (4,242)     (2,274)       (41,242)     (39,274) 

Income (loss) from 
 continuing
 operations        (1,041,172)      3,995     (2,453,240)    (838,782)             )

Income from               
 discontinued
 operations              --         6,808           --         68,741

Net income (loss)  (1,041,172)     10,803     (2,453,240)    (770,041)

(a)Basic net income 
   (loss) per common 
   share               ($0.04)      $0.00         ($0.09)      ($0.03)

(a)Basic weighted    
   average common
   shares
   outstanding      28,274,627  28,880,427     28,164,897   28,089,261

(a) Reflects the implementation of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share", which has no effect on the
Company's previously reported income (loss) per share.

(1) Includes gain on equity sale in subsidiary