Top Source Extends TSA Sale

27 May 1999

Top Source Extends TSA Sale

    PALM BEACH GARDENS, Fla.--May 26, 1999--Top Source Technologies, Inc. (AMEX: TPS) announced today that it has granted NCT Audio Inc ("NCT Audio") a second extension of time until July 15, 1999 to maintain their exclusive right to purchase substantially all of the assets of Top Source Automotive, Inc. ("TSA").
    In exchange for this extension, NCT Audio relinquished 25% of its minority equity ownership in TSA. As a result, NCT Audio now has a 15% minority interest in TSA. Under the of the terms of the original Asset Purchase Agreement between the two companies, approved by Top Source shareholders in December 1998, NCT Audio agreed to purchase the assets of TSA for $10,000,000 in cash no later than March 31, 1999. On March 30, 1999, TPS granted NCT Audio an extension of time until May 28, 1999 to close the transaction.
    To date, NCT Audio has made $3,500,000 in non-refundable cash payments toward the purchase consideration. As a result of the notification to TPS by NCT Audio that it will be unable to close by May 28, 1999, NCT Audio incurred a penalty of $350,000 plus interest. In addition, NCT Audio forfeits all minority earnings in TSA until May 2000, unless it is able to close by July 15, 1999. To close the transaction, NCT Audio must pay TPS approximately $6,711,000 no later than July 15, 1999. The $6,711,000 is comprised of the original balance of $6,500,000, approximately $204,000 in unpaid penalty fees, and approximately $7,000 in accrued interest on the unpaid penalty fees. In the event NCT Audio is unable to close the transaction by July 15, 1999, they will remain 15% minority owners of TSA, and be required to sell their position on a pro rata basis, if TSA is sold to another company.
    The Company further announced that it had signed a non-binding letter-of-intent with Onkyo America ("Onkyo"), a subsidiary of Onkyo Corporation in Japan, to buy TSA in the event that NCT Audio is unable to close on the TSA transaction by July 15, 1999. In connection with the signing of the letter of intent, Onkyo will deposit $250,000 in earnest money into an escrow account. This amount is refundable to Onkyo, only if NCT Audio closes on the transaction, or if Onkyo is unable to obtain financing on favorable terms by August 1, 1999. The purchase terms of the letter of intent are materially the same as the NCT Audio transaction.
    Will Willis, Chairman & CEO stated, "Given the uncertainty of NCT Audio's ability to complete the purchase of TSA by July 15th, we have secured a viable alternative potential buyer. Onkyo Corporation is a high-quality supplier of speakers to the OEM automotive market with an excellent management team."
    Shinobu Shimojima, President and CEO of Onkyo America, stated, "Our intent is not to interfere in any manner whatsoever with Top Source's NCT Audio transaction. However, in the event that NCT Audio does not close by July 15, 1999, we are poised to move quickly to purchase the assets of TSA as part of our own roll-up strategy within the automotive audio market. TSA's business and management team will help to contribute to our profitability and capabilities in providing competitive products in the OEM's and aftermarket industry."
    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.