Surge Board Announces the Resignation of James A. Miller and Election of Lawrence Chariton to the Board of Directors

Business Wire, August 1, 2001

Business Editors

DEER PARK, N.Y.--(BUSINESS WIRE)--Aug. 1, 2001

Surge Components, Inc. (NASDAQ SC: SPRS; Boston Stock Exchange: SRD) announced today that effective as of July 25, 2001, James A. Miller has resigned his position as a member of the Board of Directors.

Mr. Miller cited the lack of appropriate or relevant information given to him, specifically the filing of Surge's last two quarterly reports without his advice, review or approval, as reasons for his resignation. Surge disputes this contention and has correspondence between Ira Levy, President of Surge, and Mr. Miller, which evidences Mr. Miller's receipt and opportunity to comment on Surge's last quarterly report prior to the filing of such quarterly report.

Surge also announces that on August 1, 2001, Lawrence Chariton was elected as a member of the Board of Directors to fill the vacancy left by Mr. Miller's resignation. Mr. Chariton graduated Hofstra University in 1979 with a Bachelor's Degree in accounting. For the last 25 years, Mr. Chariton has worked as a sales manager for Linda Shop, a retail jewelry business, and is involved in charitable organizations benefitting the State of Israel.

Surge Receives Non-Compliance Notification from Nasdaq

Surge has also received notification from the staff of The Nasdaq Stock Market that it is not in compliance with the maintenance requirements of the Nasdaq SmallCap Market. There can be no assurance that Surge will be able to achieve compliance with Nasdaq's requirements and that its common stock will remain listed on the Nasdaq SmallCap Market. The effects of delisting would include more limited information as to the market prices of Surge's common stock, less liquidity for its common stock and less news coverage of Surge. Delisting may adversely affect investors' interest in Surge's securities and materially adversely affect the trading market and prices for such securities and Surge's ability to issue additional securities or to secure additional financing. The maintenance requirement issue is in addition to the previously disclosed Nasdaq inquiry as to the "questionable" payments.

About the Company

Surge Components, Inc. is a supplier of electronic products and components. These products include capacitors and discrete components. The Company's products are typically utilized in the electronic circuitry of diverse products, including automobiles, cellular telephones, computers, consumer electronics, garage door openers, household appliances, power supplies and smoke detectors. Surge's products are sold to both original equipment manufacturers and to distributors of Surge's product lines.

The Company's Challenge/Surge, Inc. subsidiary engages in the electronic components and products broker distribution business. Challenge purchases name brand electronic components and products, typically from domestic manufacturers and authorized distributors, to fill specific customer orders. These devices are typically utilized in a number of diverse products, including automobiles, cellular telephones, computers, consumer electronics, garage door openers, household appliances, power supplies and smoke detectors. Challenge purchases these components and products in the open market on the best available terms and generally keeps small inventories. Challenge's revenues are principally derived from the mark-up on the sale of these products. During the latter part of 1999, Challenge began selling new audible product lines which require maintaining higher inventory levels for these speaker, fan and buzzer products. Challenge has added sales representative organizations throughout the United States, as well as some distributors, to help develop this new line of business.

Safe Harbor Statement

This press release contains "forward-looking statements." Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause actual financial or operating results, performances or achievements expressed or implied by such forward-looking statements not to occur or be realized. Potential risks and uncertainties include, among other things, such factors as: the Company's business strategies and future plans of operations; general economic conditions in the United States and elsewhere, as well as the economic conditions affecting the industries in which the Company operates; the Company's historical losses; the decline in sales by the Company's Challenge subsidiary due to the current surplus of electronic component parts in the broker distributor market; the competitive environments within the electronic components industry; the Company's ability to raise additional capital, if and as needed; the cost-effectiveness of the Company's product development activities; political and regulatory matters affecting the foreign countries in which the Company operates or purchases goods and materials; and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. Readers are urged to carefully review and consider the various disclosures made by the Company in its reports filed with the SEC. The forward-looking statements made in this press release speak only as of the date hereof and the Company disclaims any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.