Top Source Announces $3,500,000 Equity Infusion
24 November 1998
Top Source Announces $3,500,000 Equity Infusion From Mennen Trust, and Other Financial Transactions
PALM BEACH GARDENS, Fla--Nov. 24, 1998--Top Source Technologies, Inc. (AMEX: TPS) announced today that it had entered into a series of three financial transactions intended to improve the Company's working capital and liquidity as well as eliminating the current possibility of large quantities of preferred stock being converted to common stock and sold in the marketplace:(1) The Company completed the sale in a private offering of $3,500,000
of Series B Convertible Stock ("Series B Preferred") to a family
trust in which Mr. G. Jeff Mennen, a director of the Company, is a
co-trustee. The Series B Preferred pays an annual dividend of 9%,
contains redemption features, and can be converted to common stock
of the Company commencing on November 1, 1999 at a 15% discount
from market. The Company is not obligated to file a registration
statement covering the underlying shares of common stock until
November 30, 1999. The Company also issued to the Trust warrants
to purchase 350,000 shares of common stock exercisable at $1.93
per share. If the Series B Preferred remains outstanding on May 1,
1999, the Company will issue the Trust an additional 50,000
warrants exercisable at $.50 over the April 30, 1999 closing
price.
(2) The Company, at a 20% premium, has redeemed $500,000 (one- half)
of the Company's Series A Preferred Stock ("Series A Preferred")
purchased by two foreign investors in May 1998. Concurrently, the
investors converted $150,000 of their Series A Preferred into
common stock and agreed not to convert any of their remaining
$350,000 of Series A Preferred into common stock until March 31,
1999.
(3) The Company has agreed to prepay $750,000 of 9% Senior
Subordinated Convertible Notes at a discount of $250,000 or 33%.
In return for accepting the discount, noteholders will receive
warrants to purchase 250,000 shares of the Company's common stock
exercisable at $1.78.
David Natan, Vice President and Chief Financial Officer of the Company, stated, "As a result of the tremendous confidence shown in the Company by Mr. Mennen, we have significantly solidified our financial position and laid the groundwork to fund operations and increase OSA-II marketing efforts. Currently, the TSA divestiture is on schedule with anticipated shareholders' approval expected during the December 15, 1998 Stockholders Meeting.
"Furthermore, Mr. Mennen's funding addresses the perceived market overhang as a result of the May 1998 Series A Preferred issuance. Despite the fact that these preferred stockholders have not sold any common stock and have supported the Company with the recent stock agreement modification, management believes that the price of the Company's common stock has been adversely affected by the fear of large sales of stock by these investors. This has not occurred, nor is it likely to occur, due to the Company's redemption of a substantial portion of their position."
Will Willis, Chairman and Chief Executive Officer, stated, "As supported by our recent press release regarding the Flying J strategic alliance and sale of 10 OSA-II units to Flying J, we continue to make strides to accelerate commercialization of our MotorCheckT on-site used oil analyzer. The recent restructuring of our balance sheet should enhance our ability to continue future OSA-II marketing efforts."
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.