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Top Source Reports Business Update

2 December 1999

Top Source Reports Business Update

    PALM BEACH GARDENS, Fla.--Dec. 2, 1999--Top Source Technologies, Inc. (AMEX: TPS) announced today that it expects a loss from operations of approximately $1,500,000, excluding Top Source Automotive, Inc. ("TSA"), for its fourth fiscal quarter ended September 30, 1999. This loss includes approximately $225,000 in one-time expenses associated with enhancing the OSA-II technology. For the full fiscal year ended September 30, 1999, the loss from operations excluding TSA, is expected to be approximately $3,600,000. Both 1999 quarterly and annual loss estimates exclude one-time gains of approximately $5,800,000 and $8,100,000, respectively, on the sale of substantially all of TSA's assets and certain TPS intellectual property rights used by TSA in the assembly of TSA sound systems. Audited financial results for the 1999 fiscal year will be reported by December 29, 1999. Additionally, the Company announced that it expects to report a loss of approximately $1,000,000 from operations for the first fiscal quarter, which ends on December 31, 1999.
    David Natan, Vice President and CFO stated, "The Onkyo America transaction significantly improved our cash position and liquidity. As of today, we have approximately $4,000,000 in unrestricted cash on hand and $500,000 of cash in escrow being held to cover unanticipated TSA liabilities. These cash totals exclude amounts that have been set aside by the Company to pay NCT Audio's 15% pro-rata portion of TSA's net asset sale proceeds, less certain offsets due to TSA. The Company has made no disbursement to NCT Audio because NCT Audio is disputing the amount due them."
    Will Willis, Chairman & CEO stated, "Although we are disappointed with the current level of OSA-II revenues and our inability to reach profitability in the time frame we expected, we remain confident that we are taking all necessary steps to build the foundation for a strong and profitable OSA-II business. With a new technology such as ours, it is very difficult to predict the timing of purchase orders. The amount of revenue recognition is further impacted by the customer's decision whether to lease or buy the unit outright. During fiscal 1999, we have made significant progress in placing units in all of our major target markets. By the end of December 1999, Speedco, an affiliate of Shell Oil/Equilon will have 27 leased units in place, up from only 7 Speedco leases at the same time last year. On an overall basis, by January 2000, we expect that the number of OSA-II units leased, sold, and on trial will have increased by approximately six times the number of units in place in January 1999."
    Mr. Willis further stated, "We are pleased that we have made significant progress in expanding our technology base beyond the OSA-II technology. In the near future, we expect to announce the details of other projects, which we believe will mark the initial steps in diversifying our product line offering."
    Top Source Technologies, Inc. develops, assembles, and markets the sophisticated and patented MotorCheck(TM) On-Site Analyzer, "an oil analysis mini-lab in a box".

    Forward-Looking Statements

    The statements discussed in this press release relating to the Company's expectations, (1) about loss projections for the fourth fiscal quarter of 1999, the full fiscal 1999 year, and for the first quarter of fiscal 2000, and (2) that the number of OSA-II unit sales, leases, and on trial by January 2000 will have increased by approximately six times over January 1999 levels, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The results anticipated by these forward-looking statements may not occur. Important factors that could cause actual results to differ materially from these forward-looking statements are (1) the completion of the fiscal 1999 audit, (2) unexpected negative events impacting the Company between December 1, and December 31, 1999, and (3) the receipt of purchase orders for approximately 10 OSA-II units for lease or purchase by January 1, 2000. Investors should consider information contained in documents filed by the Company with the Securities and Exchange Commission.