As filed with the Securities and Exchange Commission on November 30, 1995
Registration No. 33- 63361
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
AMENDMENT NO. 1
to
FORM S-3
Registration Statement
Under
The Securities Act of 1933
ELECTROSOURCE, INC.
(Exact name of issuer as specified in its charter)
Delaware 8731 742466304
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or Classification Code Number) Identification No.)
organization)
3800B Drossett Drive Michael G. Semmens, President
Austin, Texas 78744-1131 Electrosource, Inc.
(512) 445-6606 3800B Drossett Drive
(Address, including zip code, and Austin, Texas 78744-1131
telephone number, including area code (512) 445-6606
of registrant's principal executive (Name, address, including zip code,
offices) and telephone number, including area,
of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. Following box checked.
Calculation of Registration Fee
Proposed Proposed
Title of each class of Amount to be maximum maximum Amount of
securities to be registered offering aggregate registration fee
registered unit* offering
price
Common Stock, $.10 par 1,859,333 $1.8125 $3,370,041 $1,202.15
value
*Estimated solely for the purpose of determining the registration fee and
and based upon the average of the high and low prices quoted in the NASDAQ
system for a share of Electrosource, Inc. Common Stock on October 10, 1995.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Page 1 of 22 Pages.
An Exhibit Index appears on Page 20
ELECTROSOURCE, INC.
CROSS REFERENCE SHEET
Information Required by Form S-3 Caption in Prospectus
Item 1. Forepart of the Registration Outside Front Cover
Statement and Outside Front Page of Prospectus
Cover Page of Prospectus
Item 2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
Item 3. Summary Information, Risk Factors Summary of Prospectus;
Ratio of Earnings to Fixed Risk Factors
Charges
Item 4. Use of Proceeds Not Applicable
Item 5. Determination of Offering Price Not Applicable
Item 6. Dilution Dilution
Item 7. Selling Security Holders Selling Security Holders
Item 8. Plan of Distribution The Offering
Item 9. Description of Securities to be Not Applicable
Registered
Item 10. Interests of Named Experts and Not Applicable
Counsel
Item 11. Material Changes Recent Developments
Item 12. Incorporation of Certain Inside Front Cover Page of
Information by Reference Prospectus
Item 13. Disclosure of Commission Position Indemnification of Officers and
on Indemnification for Directors
Securities Act Liabilities
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1995
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such State.
PROSPECTUS
ELECTROSOURCE, INC.
1,859,333 Shares of Common Stock, $.10 par value
The shares offered hereby are outstanding shares of the Common Stock, $.10
par value per share ("Common Stock"), of Electrosource, Inc., a Delaware
corporation (the "Company"), which are being sold by the Selling Shareholders
named herein. The Company will not receive any part of the proceeds from the
sale of such shares.
The Company has agreed to bear all costs of the preparation,
filing and prosecution of the registration statement of which this
Prospectus is a part. Such expenses are estimated to be
approximately $16,300 for the offering.
The Company has been advised that the sale of the shares may be
made from time to time by or for the account of the Selling
Shareholders in the over-the-counter market through broker-dealers.
These sales will be made at market prices prevailing at the time of
sale. The broker-dealers may act as agents of the Selling
Shareholders or may purchase any of the shares as principal and
thereafter may sell such shares from time to time in the over-the-
counter market at prices prevailing at the time of sale or at
negotiated prices. Neither the security to be offered nor the
selling method to be used may be varied.
Broker-dealers used by the Selling Shareholders may be deemed to
be "underwriters" as defined in the Securities Act of 1933. In
addition, the Selling Shareholders may be deemed to be underwriters
within the meaning of the Securities Act of 1933 with respect to the
Common Stock offered hereby.
The Common Stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") under the symbol "ELSI." On October 10,
1995, the closing price for a share of Common Stock as reported on
NASDAQ was $1.8125 per share.
SEE "RISK FACTORS", ON PAGE 4 OF THIS PROSPECTUS, FOR A
DISCUSSION OF CERTAIN IMPORTANT FACTORS INVOLVED IN THIS
OFFERING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 30, 1995
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports and other information with
the Securities and Exchange Commission (the "Commission"). Such
reports, together with proxy statements and other information filed
by the Company, can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at certain of its Regional Offices
located at: 7 World Trade Center, New York, New York 10007; and Room
1204, Everett McKinley Dirksen Building, 219 South Dearborn Street,
Chicago, Illinois 60604. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Company has filed with the Commission a registration statement
under the Securities Act of 1933, as amended, with respect to the
securities offered hereby (the "Registration Statement"). As
permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. Such additional information
can be inspected at the principal office of the Commission, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
the Registration Statement can be obtained from the Commission at
prescribed rates by writing to the Commission at such address.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which are on file with the commission,
are hereby specifically incorporated by reference into this
prospectus:
(1) All other reports filed by the Company pursuant to Section
13(a) or Section 15(d) of the Exchange Act since December 31, 1994;
The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994;
Electrosource, Inc., Quarterly Report on Form 10-Q for the quarter
ended March 30, 1995;
Electrosource, Inc., Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995;
Amendment No. 1 to Electrosource, Inc., Form 10-Q for the quarter
ended June 30, 1995;
Electrosource, Inc., Quarterly Report on Form 10-Q for the quarter
ended September, 1995;
Form 8-K dated January 16, 1995;
Form 8-K dated March 10, 1995;
Form 8-K dated April 3, 1995;
Form 8-K dated April 12, 1995;
Form 8-K dated October 10, 1995;
Form 10-C dated January 27, 1995;
Form 10-C dated June 5, 1995;
Form 10-C dated June 20, 1995;
Form 10-C dated July 17, 1995;
Form 10-C dated July 24, 1995;
Form 10-C dated September 8, 1995;
Form 10-C dated October 13, 1995;
Form 10-C dated October 20, 1995.
(2) The description of the Company's Common Stock set forth
under the captions "Description of Electrosource, Inc. Common Stock"
and "Purposes and Effects of Certain Provisions of the
Electrosource, Inc. Certificate and the Electrosource, Inc. Bylaws"
in the Information Statement filed as Exhibit 28.1 to the Company's
Registration Statement on Form 10 filed October 19, 1987 (as amended
by Form 8 Amendments filed January 8, 1988 and January 13, 1988),
which description of the Company's Common Stock was incorporated by
reference into the Registration Statement on Form 10 in response to
Item 11, "Description of Registrant's Securities to be Registered."
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to December 31,
1994, and prior to the termination of the offering shall be deemed
to be incorporated by reference into this prospectus.
The Company will provide without charge to each person, including
any beneficial owner, to whom this prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference in this
prospectus (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically
incorporated by reference into the information that this prospectus
incorporates). Requests should be directed to Electrosource, Inc.,
Corporate Secretary, 3800B Drossett Drive, Austin, Texas 78744-1131,
telephone (512) 445-6606.
SUMMARY OF PROSPECTUS
The following summary is qualified in its entirety by, and should
be read in conjunction with, the more detailed information and
financial statements contained elsewhere in this prospectus and in
the documents incorporated by reference herein.
The Company
Electrosource, Inc. (the "Company") is engaged in the development
and commercial application of technologies related to lead-acid,
rechargeable storage batteries and ancillary products. The Company's
principal activity is the development, manufacture and sale of a new
lead-acid battery concept called Horizonr. See "The Company," below.
The principal executive offices of the Company are located at
3800B Drossett Drive, Austin, Texas 78744-1131, and its telephone
number is (512) 445-6606.
Recent Developments
Appointment of Directors. In June 1995 the Board of Directors of
the Company elected two additional directors, Nathan Morton and
William R. Graham.
Change in Executive Officer. The Vice President of
Communications, Michael L. Weinstein, ceased employment with the
Company on September 15, 1995. Liviakis Financial Communications,
Inc., has been engaged by the Company for financial communications.
Issuance of Shares. In September 1995 the Company issued 1,360,000
shares of its Common Stock to Liviakis Financial Communications,
Inc., which have been valued at $1,468,800, $1.08 per share, which
is 75 percent of the market value of $1.44 per share on the date of
issuance. In addition, the Company agreed to issue an additional
120,000 shares of Common Stock over the succeeding twenty-four
months. The shares are unregistered and no registration rights have
been granted.
Threatened Litigation. On September 26, 1995, the Company
received a communication from Rosehouse, Ltd. ("Rosehouse"), an
investment firm through which the Company has effected a number of
financings, asserting that the Company has breached an oral
agreement with Rosehouse regarding the sale of six hundred seventy
thousand shares of the Company's common stock to a client of
Rosehouse. Rosehouse in its letter has demanded that the Company
fulfill its obligations under the agreement asserted and sell the
shares in question to its client. Management has informed Rosehouse
that the Company does not intend to consummate the transaction in
question. The Company intends to defend any action taken by
Rosehouse vigorously; however, as no specific assertions have been
made, no estimate of loss, if any, can be reasonably predicted.
See "Recent Developments," below.
The Offering
The shares offered hereby are 1,859,333 outstanding shares of the
Company's Common Stock, $.10 par value per share, which are being
sold by the Selling Shareholders named herein. The Company will not
receive any part of the proceeds from the sale of such shares.
The sale of the shares may be made from time to time by or for the
account of the Selling Shareholders in the over-the-counter market
through broker-dealers. These sales will be made at market prices
prevailing at the time of sale. The broker-dealers may act as agents
of the Selling Shareholders or may purchase any of the shares as
principal and thereafter may sell such shares from time to time in
the over-the-counter market at prices prevailing at the time of sale
or at negotiated prices. Neither the security to be offered nor the
selling method to be used may be varied.
The Company has agreed to bear all costs of preparing, filing and
processing the registration statement of which this prospectus is a
part. Such expenses are estimated to be approximately $16,300 for
the offering.
RISK FACTORS
An investment in the Common Stock offered hereby involves a high
degree of risk. The following factors should be considered in
evaluating an investment in the Company.
Contingencies Related to Business Plan and Commercialization of
Product. In June 1994 the Company determined to become the North
American manufacturer of the Horizonr battery, while continuing its
previous plans with respect to licensing of third party
manufacturers overseas. The shift from research and development to
manufacturing will require significant additional outlays for
capital equipment as well as greatly increased managerial and
production staffing, which will in turn require significant amounts
of new capital. There can be no assurance that the Company will be
able to raise this capital on terms satisfactory to the Company, or
at all. Development of the Horizon batteries and manufacturing
processes continue and there is no assurance that the battery will
be successfully commercialized.
Limited Cash Resources. The Company had approximately $1,100,000
in unrestricted cash available at September 26, 1995. The Company is
in discussions concerning potential sources of additional capital.
If the Company is able to close certain financing transactions and
to meet its sales forecasts, management believes that there will be
sufficient cash resources to finance operations through the end of
1995. Otherwise, the Company may not be able to continue operations.
Possible Loss of Trading Liquidity. The Company's Common Stock is
currently traded on the NASDAQ market. Listing standards for NASDAQ
stocks require a minimum of $1,000,000 in shareholders equity. At
September 30, 1995, the Company reported a negative balance in
shareholders equity of $1,144,036, although the amount of
shareholders equity has subsequently increased (to approximately
$1,362,527 on a pro forma basis as of September 30, 1995) due to the
conversion of certain outstanding convertible debentures and the
sale of common stock subsequent to September 30, 1995. Unless the
Company achieves profitability on a sustainable basis or is able to
raise sufficient new equity capital to offset operating losses such
that shareholders equity remains above the minimum required level,
its shares may no longer be eligible for trading on the NASDAQ
system. Loss of NASDAQ trading privileges would have a material
adverse effect on the liquidity of any investment in the Company's
Common Stock, and would constitute an event of default with respect
to indebtedness of the Company having an outstanding principal
amount as of September 26, 1995, of approximately $2,900,000.
Limited Operating History. The Company has only a limited
operating history. The Company was incorporated in June 1987 and
became subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in January
1988. The Company was until the first quarter of 1995 a development
stage company. The Company has generated a net loss from the
development program in each fiscal quarter since inception. There
can be no assurance that the Company will be able to generate
sufficient income to cover losses. The likelihood of the Company's
future success must be considered in light of the risks, expenses,
difficulties and delays frequently encountered in connection with
the operation and development of a new business and research and
development activities generally.
Termination of Technology License. The Company holds the rights to
develop and use the coextrusion technology in the field of lead-acid
battery applications under an exclusive license from Blanyer-Mathews
Associates, Inc. ("Blanyer-Mathews"). This license is subject to
termination by Blanyer-Mathews in the event that the Company enters
bankruptcy proceedings or defaults in its obligation to pay
royalties. Loss of the rights to the coextrusion technology would
have a severe adverse impact upon the Company's continued viability.
Loss of Trade Secret Protection. The Company has elected to
protect certain aspects of its technology under state trade secret
laws, rather than under federal patent laws. Trade secret protection
requires that the Company preserve the confidentiality of the
technology subject to trade secret status. In the event that such
confidentiality cannot be maintained, or if third parties can
successfully "reverse-engineer" the affected technology, trade
secret status may be lost. Loss of trade secret protection would
allow third parties to utilize the technology without obtaining a
license from the Company.
Competition. The lead-acid battery industry is highly competitive
and includes a number of firms, many with greater financial,
technological, manufacturing, marketing and other resources and
longer operating histories than the Company. There is no assurance
that the Company will be able to compete successfully in this highly
competitive environment due to the Company's limited financial
resources and lack of established products.
Conflicts of Interest. Charles Mathews and John Malone, directors
of the Company, are also directors of Blanyer-Mathews, which holds
the coextrusion patents under which the Company is a licensee. This
relationships may give rise to conflicts of interest on the part of
such persons in connection with transactions of the Company
involving Blanyer-Mathews in which such persons may have an
incentive to put the interests of Blanyer-Mathews above those of the
Company.
Dependence on Key Personnel. Executive management of the Company
is primarily the responsibility of Michael Semmens, President, Chief
Executive Officer and Chairman of the Board. The loss of Mr. Semmens
or other executives could have a material adverse effect on the
Company. Michael Weinstein, Vice President of Communications,
ceased employment with the Company on September 15, 1995.
Dilution. The market price of $1.72 per share of Common Stock as
of September 25, 1995, was substantially greater than the Company's
actual net negative tangible book value of ($0.17) per outstanding
share of Common Stock at June 30, 1995. Purchasers of Common Stock
at the recent market price will suffer an immediate dilution of
$1.89 per share, measured by the difference between the market price
and the Company's net negative tangible book value per share. See
"Dilution."
Certain Antitakeover Effects. Certain provisions contained in the
Delaware General Corporation Law and in the Company's Restated
Certificate of Incorporation and bylaws may make it difficult for
any third party to effect or attempt an acquisition of the Company
without the approval of the Company's Board of Directors. The
Restated Certificate of Incorporation also divides the Company's
Board of Directors into three classes serving staggered terms. This
provision may hinder or delay any attempt to gain control of the
Company by replacing the Board of Directors. Such potential
antitakeover effects may depress the market value of the Common
Stock. In addition, certain provisions of the Company's Restated
Certificate of Incorporation and bylaws require the affirmative vote
of 90% of the Company's outstanding Common Stock.
Absence of Dividends. The Company has never declared or paid any
dividends on its outstanding Common Stock, and it is unlikely that
it will do so in the foreseeable future.
THE COMPANY
Electrosource, Inc. (the "Company") is engaged in the development
and commercial application of technologies related to lead-acid,
rechargeable storage batteries and ancillary products. The Company's
principal activity is the development, manufacture and sale of a new
lead-acid battery concept called Horizon. The Horizon battery
utilizes plate grids made from a patented coextruded wire. The
plates are oriented in a horizontal plane rather than the vertical
plane, as is the practice in conventional batteries. Current
activities are concentrated upon development of Horizon concept
batteries for use in electric vehicles. The Company is also
developing new processes for the energy-active material for use in
both Horizon and conventional batteries.
The continued development of the Horizon battery, as well as the
continued viability of the Company as a going concern, are
contingent upon the Company's ability to raise substantial amounts
of new capital. The Company does not currently have commitments for
any such financing, and there can be no assurance that the necessary
financing will be obtained. The offering described in this
prospectus will not result in any proceeds to the Company. See "Risk
Factors."
The principal executive offices of the Company are located at
3800B Drossett Drive, Austin, Texas 78744-1131, and its telephone
number is (512) 445-6606.
RECENT DEVELOPMENTS
Changes in Management. In June 1995 the Board of Directors of the
Company voted to increase the size of the board from ten to twelve
members and to appoint Nathan Morton and William R. Graham to fill
the newly created vacancies. Mr. Morton was until December 1993
chairman and chief executive officer of CompUSA, a computer
superstore chain, and is currently president and chief executive
officer of Open Environment Corporation, a publicly-traded software
company. Dr. Graham is a senior vice president of The Defense Group,
Inc., a closely-held company specializing in systems engineering and
technical assistance for the U.S. Government. Dr. Graham also is a
director of Watkins-Johnson Corporation, a publicly held company
listed on the New York Stock Exchange making electronics and
semiconductor production equipment. From 1990 to 1993, Dr. Graham
was a director and president of C-COR Electronics, Inc. Benny E.
Jay resigned from the Board of Directors in July, 1995.
Change in Executive Officer. The employment of Michael Weinstein,
Vice President of Communications, ceased on September 15, 1995.
Liviakis Financial Communications, Inc., has been engaged for
financial communications.
Issuance of Shares. In September 1995 the Company entered into an
agreement with Liviakis Financial Communications, Inc. ("Liviakis"),
whereby Liviakis will provide investor and public relations services
to the Company. As consideration for these services, the Company has
issued 1,360,000 shares of Common Stock to Liviakis which have been
valued at $1,468,000, $1.08 per share, which is 75 percent of the
market value of $1.44 on the date of issuance. In addition, the
Company agreed to issue an additional 120,000 shares of Common Stock
over the succeeding twenty-four months. These shares are not
registered and no registration rights have been granted.
Threatened Litigation. On September 26, 1995, the Company
received a communication from Rosehouse, Ltd. ("Rosehouse"), an
investment firm through which the Company has effected a number of
financings, asserting that the Company has breached an oral
agreement with Rosehouse regarding the sale of six hundred seventy
thousand shares of the Company's common stock to a client of
Rosehouse. Rosehouse in its letter has demanded that the Company
fulfill its obligations under the agreement asserted and sell the
shares in question to its client. Management has informed Rosehouse
that the Company does not intend to consummate the transaction in
question. The Company intends to defend any action taken by
Rosehouse vigorously; however, as no specific assertions have been
made, no estimate of loss, if any, can be reasonably predicted.
THE OFFERING
The shares to be offered pursuant to this prospectus are
outstanding shares of the Company's Common Stock, par value $.10 per
share, acquired by the Selling Shareholders in certain private
offerings by the Company.
The shares of Common Stock offered hereby may be sold from time to
time by the Selling Shareholders. Such sales must be made in the
over-the-counter market through broker-dealers at the then
prevailing market price. Neither the security to be offered nor the
selling method may be varied.
There is no underwriter or coordinating broker acting in
connection with this offering. Each Selling Shareholder may be
deemed an "underwriter" within the meaning of the Securities Act of
1933 (the "Securities Act") with respect to the shares of Common
Stock offered by him. The Company and each Selling Shareholder have
agreed to indemnify one another against certain liabilities,
including liabilities under the Securities Act.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or
discounts from Selling Shareholders in amounts to be negotiated
immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales.
The Company has agreed to bear all costs of preparing, filing and
processing the registration statement of which this prospectus is a
part. Such expenses are estimated to be approximately $16,300 for
the offering.
SELLING SECURITY HOLDERS
Certain of the Selling Shareholders participated in an offering of
secured notes and warrants by the Company in December 1992 and
January 1993. Under the terms of this offering, the Company sold
promissory notes having an aggregate principal amount of $750,000
secured by substantially all of the assets of the Company; these
notes bore interest at 10% per annum and were paid in full at their
maturity in 1994. Purchasers of notes in the December 1992 tranche
of this offering received one warrant to purchase one share of
Common Stock at an exercise price of $1.625 per share for each
dollar in principal amount of notes purchased. Purchasers of notes
in the January 1993 tranche received one warrant to purchase one
share of Common Stock at an exercise price of $2.25 per share for
each $1.25 in principal amount of notes purchased. Substantially all
of the warrants issued in connection with this offering have been
exercised, and the shares of Common Stock offered pursuant to this
Prospectus include 567,500 [LESS SHARES SOLD UNDER PREVIOUS
PROSPECTUS] shares issued upon such exercise. The following table
sets forth the principal amount of secured notes purchased by each
of the Selling Shareholders.
Name of Selling Shareholder Principal Amount of Secured
Notes Purchased
Carol Cavanaugh $200,000
Jim and Brenda Phillips $92,500
John Vitt (1) $75,000
Michael P. Krasny $50,000
Mitchel Wong $50,000
Todd Templeton $50,000
Arlington Guenther $50,000
Mabery Properties, Inc. Employee $40,000
Defined Benefit Plan (2)
Fred B. Dulock $7,500
(1) Includes $50,000 in principal amount of notes purchased by John
Vitt Self-Employed Retirement Plan.
(2) The assets of this benefit plan were subsequently distributed
on a rollover basis to individual retirement accounts for the
sole beneficiaries, Jack D. and Darlene M. Mabery.
Todd Templeton is a member of the Company's Board of Directors. As
such, he has been awarded options to purchase 55,000 shares of
Common Stock at an exercise price of $3.75 per share pursuant to the
Company's 1988 Non-Employee Director Stock Option Plan. He is
eligible for reimbursement by the Company for costs of attending
board and committee meetings, but has not requested any such
reimbursement.
The remainder of the Selling Shareholders participated in
offerings of Common Stock and warrants in October 1994 and September
1995. The purchase price of the 485,500 shares of Common Stock sold
in the October 1994 offering ranged from $3.00 to $3.125. For each
two shares of Common Stock purchased, participants in the offering
received one warrant to purchase a share of Common Stock at $4.50
per share, exercisable for twelve months following the closing of
the offering, and one warrant to purchase a share of Common Stock at
$5.50 per share, exercisable for twenty-four months following the
closing. The Company subsequently extended the expiration date of
the twelve-month warrants to September 1996. The September 1995
offering involved the sale of 806,333 shares of Common Stock at a
purchase price of $1.10 per share to purchasers in the prior
offering. The exercise prices of warrants issued in the prior
offering and held by purchasers in the 1995 offering were lowered to
$2.50 and $3.50 per share from $4.50 and $5.50 per share, and the
exercise period of these warrants was extended to September 1997.
None of such warrants have been exercised as of the date of this
prospectus. The shares of Common Stock offered pursuant to this
Prospectus include the shares issued in connection with these
offerings.
The following table sets forth certain information with respect to
each Selling Shareholder as of September 15, 1995, and after giving
effect to the sale of the shares offered hereby.
Name of Selling Shares Shares to Shares Percentage
Shareholder Owned be Offered Owned of
Prior to Following Outstandin
Offering Offering g Shares
Jim Phillips (1) 360,700 276,500 84,200 .34%
Carol Cavanaugh 461,500 200,000 261,500 1.07%
Dan Malone 125,000 125,000 0 .00%
Jay Templeton 120,000 120,000 0 .00%
The Wilson Charitable
Remainder Trust 120,000 100,000 20,000 .08%
Stan Caskey 197,600 84,000 113,600 .46%
Steve Caskey 197,600 84,000 113,600 .46%
First London
Securities Corp. 73,353 67,000 6,353 .03%
Rhoda Trembath 201,666 66,666 135,000 .55%
Lawrence E. Gordon 115,000 65,000 50,000 .20%
John Vitt (2) 70,000 60,000 10,000 .04%
Drake Goodwin &
Company 60,000 60,000 0 .00%
Wm. J.McCool and Joan
M.McCool TEN COM 116,000 60,000 56,000 .23%
Fred B. Dulock 138,000 46,000 92,000 .38%
Michael P. Krasny 40,000 40,000 0 .00%
Mitchel Wong 59,000 40,000 19,000 .08%
Todd Templeton 322,600 40,000 282,600 1.15%
Arlington Guenther 50,000 40,000 10,000 .04%
Alfred R. Dixon, Jr.
TR UA Jan 30 92 FBO
Alfred R. Dixon,Jr. 78,000 40,000 38,000 .15%
J. Carl Ganter 72,000 40,000 32,000 .13%
James E. Gray 50,000 40,000 10,000 .04%
Bill Kemp 36,100 40,000 96,100 .39%
Carter H. Compton 120,000 30,000 90,000 .37%
Raymond James,
Custodian for
Rollover IRA for
benefit of Jack D.
Mabery (3) 41,200 30,000 11,200 .05%
Michael G. Semmens 21,067 15,667 5,400 .02%
Dorothy D.Winchester 12,500 12,500 0 .00%
Raymond James,
Custodian for
Rollover IRA for
benefit of
Darlene M. Mabery(3) 16,200 10,000 6,200 .03%
James C. Ganter 10,000 10,000 0 .00%
M. Sheppard Strong 10,000 10,000 0 .00%
Sharratt Family
Trust Cust FBO
Marilyn Sharratt
IRA UA Jan 31 94 4,500 4,500 0 .00%
Charles G. and
Ruth Drake 2,500 2,500 0 .00%
(1) Includes 40,000 shares acquired upon exercise of warrants purchased by
Mr. Phillips from another participant in the 1993 offering of notes and
warrants.
(2) Includes 40,000 shares held by John Vitt Self-Employed Retirement Plan.
(3) Represents shares acquired on exercise of warrants purchased by the
Mabery Properties, Inc. Employee Defined Benefit Plan and subsequently
distributed to rollover individual retirement accounts for the
beneficiaries of that plan.
Michael G. Semmens is President, Chief Executive Officer and
Chairman of the Board of the Company. He was hired in June 1994 at
an annual base salary of $200,000 and a $50,000 signing bonus. Mr.
Semmens' Letter of Employment provided for a three-year employment
contract, with a provision for a one year's salary severance in the
event of termination. The Letter of Employment included the above
terms and an annual performance based bonus of up to 50 percent of
base compensation. In addition, the implementation of a management
incentive program for which Mr. Semmens would be eligible was
authorized. Mr. Semmens was granted options to purchase 475,000
shares of Common Stock under the Company's 1987 Stock Option Plan.
Of the total, 325,000 shares vest on a schedule allowing exercise of
options covering one-third of such shares at six, eighteen and
thirty months after the date of grant. Options for the remaining
150,000 shares become exercisable as to 75,000 shares if the market
price of the Company's Common Stock equals or exceeds $5.00 per
share for a period of ten trading days and become exercisable as to
an additional 75,000 shares if the market price equals or exceeds
$10.00 per share for a period of ten trading days. The exercise
price of all options is $3.50 per share, which was equal to the
market price of the Common Stock as of the date of grant. All
options expire in June 1999.
Prior to joining the Company, Mr. Semmens served as an officer of
BDM Technologies, Inc. ("BDM"). In April 1993 the Company and BDM
entered into an agreement calling for the formation of a new entity,
Horizon Battery Technologies, Inc. ("HBTI"), to establish pilot
production capacity for the Horizonr battery and seek joint venture
partners for subsequent large scale production. BDM funded the
development, the construction and initial operation of a limited
rate production facility for Horizonr batteries. On April 7, 1994,
the Company reached agreement (the "Initial Agreement") with BDM
with respect to the acquisition of BDM's interest in HBTI and in the
limited rate production facility designed to produce Horizonr
batteries. This agreement has been superseded by a letter agreement
amending its terms and by further definitive agreements (the "Final
Agreement"), which were executed effective January 31, 1995, in
respect of the transaction. Under the Final Agreement, the
Technology License Agreement, the Company agreed to license BDM's
manufacturing technology for use in producing the Horizonr battery.
The Company also agreed to the issuance of 100,000 shares of Common
Stock to acquire BDM's interest in HBTI, paid an initial license fee
of $80,000 to BDM for the license of BDM's manufacturing technology,
and will issue 1,700,000 shares of Common Stock in installments over
a three-year term with the right to renew the license for a period
equal to the life of the licensed technology upon issuance of an
additional 200,000 shares of Common Stock. BDM received a three-year
option to purchase an additional 1,000,000 shares of Common Stock at
$4.00 per share. The Company will pay all lease and operating costs
with respect to the facilities and certain equipment in cash at a
cost of approximately $51,000 per month as well as assume certain
contingent environmental liabilities and other contingent
liabilities. During 1994, the Company paid $302,072 for the sublease
of such facilities and equipment. BDM is entitled to designate one
nominee for election to the Board of Directors of the Company
following the consummation of the transaction. BDM has "piggy-back"
and demand registration rights with respect to all shares of Common
Stock received in the transaction.
Dan Malone is the brother of John Malone, a director of the
Company; Jay Templeton is the brother of Todd Templeton, who is also
a director of the Company. Thomas Wilson, a director of the Company,
is co-trustee of the Wilson Charitable Remainder Trust. J. Carl
Ganter is a consultant to the Company and has been awarded options
to purchase 40,000 shares of Common Stock at an exercise price of
$3.75 per share and 24,000 shares at an exercise price of $2.75 per
share under the Company's Non-Employee Consultant Stock Option Plan.
These options expire in 1996 and 2000, respectively.
Certain of the Selling Shareholders have participated in other
private offerings of Company securities.
In January 1992, the Company sold an issue of convertible
preferred stock to Battery Horizons, Ltd. ("Battery Horizons"), for
an aggregate purchase price of $1,500,000. The convertible preferred
stock was converted into 6,400,000 shares of Common Stock in 1993,
and the Company registered the distribution by Battery Horizons of
the Common Stock received on conversion under the Securities Act of
1933. Battery Horizons bore all costs of such registration. Rhoda
Trembath was a principal shareholder in New Battery, Inc., the
general partner of Battery Horizons. The following Selling
Shareholders were limited partners in Battery Horizons:
Name Percentage Interest
in Battery Horizons
Todd Templeton 4.3%
Rhoda Trembath 4.2%
Carol Cavanaugh 3.8%
James C. Ganter 2.5%
Carter H. Compton 1.9%
Jim Phillips 1.8%
Fred B. Dulock 1.3%
Stan Caskey 1.3%
Steve Caskey 1.3%
Bill Kemp 1.3%
Jack D. and Darlene M. Mabery 0.5%
Dan Malone 0.4%
First London Securities Corporation acted as placement agent for
the Company in an overseas offering of 1,200,000 shares of Common
Stock effected in June and July 1994 that resulted in net proceeds
to the Company of approximately $2,675,000. First London received
fees and commissions totaling $353,444 for its services in
connection with such offering.
DILUTION
At June 30, 1995, the Company had a net negative tangible book
value of ($0.17) per share of Common Stock outstanding. "Net
tangible book value per share" represents the amount of total
tangible assets of the Company, reduced by the amount of total
liabilities of the Company, divided by the number of shares of
Common Stock outstanding. Purchasers of Common Stock for cash at the
assumed offering price of $1.72 per share (based on the market price
of a share of Common Stock as quoted by NASDAQ on September 25,
1995) will therefore incur an immediate dilution of $1.89 per share
from the assumed offering price measured by the difference between
the assumed offering price and the Company's net tangible book value
per share.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Restated Certificate of Incorporation provides that
a director of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that such provisions will not
eliminate or limit the liability of a director (i) for a breach of
the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) with
respect to unlawful payments of dividends or unlawful stock
purchases or redemptions for which the director is liable under
Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derives an
improper personal benefit.
The Company's Bylaws provide that, to the extent permitted by law,
the Company will indemnify each of its directors, and authorize the
purchase of insurance with respect thereto. The Bylaws also provide
that the Company may indemnify its officers, employees or agents who
are made or threatened to be made defendants or respondents to any
threatened, pending or completed action, suit or proceeding due to
such person's service to the Company or to certain other entities at
the request of the Company, so long as such person acted in good
faith and in a manner he reasonably believed to be not opposed to
the best interests of the Company. Such indemnification may be made
only upon a determination that such indemnification is proper in the
circumstances because the person to be indemnified has met the
applicable standard of conduct to permit indemnification under the
law.
In addition to indemnification provided pursuant to the Company's
Restated Certificate of Incorporation and Bylaws, the Company has
entered into a Director Indemnification Agreement with each director
of the Company providing for, among other things, (i)
indemnification by the Company of each director to the full extent
authorized or permitted by Delaware statutes; (ii) maintenance by
the Company of director and officer insurance coverage for the
benefit of each director of up to $2,000,000, subject to
availability at premiums not substantially disproportionate to the
amount of coverage; (iii) indemnification by the Company of each
director in connection with settlements under certain circumstances;
(iv) procedures relating to independent review of determinations
regarding director indemnification (including special provisions in
case of a change in control of the Company); and (v) the advancement
of expenses to directors in connection with matters for which the
director is entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding)
is asserted against the Company by such director, officer or
controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon
for the Company by Bret Van Earp, Attorney at Law, 100 Congress
Avenue, Suite 1800, Austin, Texas 78701.
EXPERTS
The financial statements of the Company appearing in the Company's
Current Report on Form 8-K dated October 10, 1995, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their
report thereon (which contains an explanatory paragraph with respect
to the Company's ability to continue as a going concern as discussed
in Note R to the financial statements) included therein and
incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and
auditing.
No dealer, salesman or other
person has been authorized to
give any information or to make
any representation not contained
in this prospectus in connection
with the offer contained herein,
and, if given or made, such
information or representation
must not be relied upon as having ELECTROSOURCE, INC.
been authorized by the Company.
This prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy,
any securities in any
jurisdiction to any person to
whom it is not lawful to make any
such offer or solicitation in
such jurisdiction. Neither the
delivery of this prospectus nor
any sale made hereunder shall,
under any circumstances, create
an implication that there has
been no change in the affairs of
the Company since the date hereof
or that the information herein is 1,859,333 Shares of
correct as of any time subsequent
to its date. Common Stock
_________________________________
_____
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE 2
SUMMARY OF PROSPECTUS 3 November 30, 1995
RISK FACTORS 4
THE COMPANY 6
RECENT DEVELOPMENTS 6
THE OFFERING 6
SELLING SECURITY HOLDERS 6
USE OF PROCEEDS 9
DILUTION 9
INDEMNIFICATION OF OFFICERS
AND DIRECTORS 9
LEGAL MATTERS 10
EXPERTS 10
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the estimated expenses expected to be
incurred in connection with the issuance and distribution of the
securities registered hereby:
SEC Registration Fee $ 1,100.00
Printing Costs 200.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 5,000.00
Blue Sky Fees and Expenses .00
Total $16,300.00*
_________________
*The Company will bear all costs of the offering.
Item 15. Indemnification of Directors and Officers
See "Indemnification of Officers and Directors" in the Prospectus,
which is hereby incorporated by reference.
Item 16. Exhibits
The following exhibits are filed with or incorporated by reference
into this registration statement:
4.1 Restated Certificate of Incorporation of Electrosource, Inc.
(filed as Exhibit 3.1 to Electrosource, Inc., Registration
Statement on Form 10 filed October 19, 1987, as amended by
Form 8 Amendments filed January 8, 1988 and January 13, 1988
(hereinafter referred to as "Form 10") and incorporated
herein by reference).
4.2 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to Electrosource,
Inc. Quarterly Report on Form 10-Q filed August 14, 1995 and
incorporated herein by reference).
4.3 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 to
Electrosource, Inc., Registration Statement on Form 10 filed
October 19, 1987, as amended by Form 8 Amendments filed
January 8, 1988 and January 13, 1988 (hereinafter referred
to as "Form 10") and incorporated herein by reference).
4.4 Amendment to Bylaws of Electrosource, Inc., pursuant to a
Certificate of Secretary dated May 25, 1990 (filed as
Exhibit 3.3 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1991, and incorporated
herein by reference).
4.5 Amendment to Bylaws of Electrosource, Inc. (filed as Exhibit
3.5 to Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1993, and incorporated herein
by reference).
4.6 Amendment to Bylaws of Electrosource, Inc. (filed as Exhibit
3.6 to Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1994, and incorporated herein
by reference).
5 Opinion of Bret Van Earp, Attorney at Law.
24.1 Consent of Ernst & Young LLP to incorporation by reference
of report on financial statements.
24.2 Consent of Bret Van Earp (included in opinion filed as
Exhibit 5)
25 Power of Attorney (see page II-4 of the Registration
Statement)
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933 (to the extent that the information
require to be included in a post-effective amendment is contained
in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement);
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
reflect a fundamental change in the information set
forth in the registration statement (to the extent
that the information require to be included in a post-
effective amendment is contained in periodic reports
filed with or furnished to the Securities and Exchange
Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this
registration statement); and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
With respect to the undertaking required by paragraph (h) of
Item 512 of Regulation S-K, see "Indemnification of Officers and
Directors" in the Prospectus, which is incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Austin, State of Texas, on November 30,
1995.
ELECTROSOURCE, INC.
By: /s/ Michael G. Semmens
Michael G. Semmens, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the date indicated.
Signature Title Date
/s/ Michael G. President, Chief December 1, 1995
Semmens Executive Officer
Michael G. Semmens and Chairman of the Board
(Principal Executive Officer)
*/s/ Charles L. Mathews Director December 1, 1995
Charles L. Mathews
*/s/ Dr. Norman Hackerman Director December 1, 1995
Dr. Norman Hackerman
*/s/ Richard S. Williamson Director December 1, 1995
Richard S. Williamson
*/s/ John Malone Director December 1, 1995
John Malone
*/s/ Thomas S. Wilson Director December 1, 1995
Thomas S. Wilson
*/s/ John Akin Director December 1, 1995
John Akin
*/s/ Todd Templeton Director December 1, 1995
Todd Templeton
*/s/ Frank Butler Director December 1, 1995
Frank Butler
*/s/ Nathan Morton Director December 1, 1995
Nathan Morton
*/s/William R. Graham Director December 1, 1995
William R. Graham
/s/ Mary Beth Koenig Controller/Treasurer December 1, 1995
Marcy Beth Koenig (Principal Accounting Officer)
* Signed by James M. Rosel under Power of Attorney for respective
directors.
EXHIBIT INDEX
Sequentially
Exhibit Number Numbered Page
4.1 Restated Certificate of Incorporation of Electrosource,
Inc. (filed as Exhibit 3.1 to Electrosource, Inc.,
Registration Statement on Form 10 filed October 19,
1987, as amended by Form 8 Amendments filed January 8,
1988 and January 13, 1988 (hereinafter referred to as
"Form 10") and incorporated herein by reference).
4.2 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q filed
August 14, 1995 and incorporated herein by reference).
4.3 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 to
Electrosource, Inc., Registration Statement on Form 10
filed October 19, 1987, as amended by Form 8 Amendments
filed January 8, 1988 and January 13, 1988 (hereinafter
referred to as "Form 10") and incorporated herein by
reference).
4.4 Amendment to Bylaws of Electrosource, Inc., pursuant
to a Certificate of Secretary dated May 25, 1990
(filed as Exhibit 3.3 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
4.5 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.5 to Electrosource, Inc., Annual Report on
Form 10K for the period ended December 31, 1993, and
incorporated herein by reference).
4.6 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.6 to Electrosource, Inc., Annual Report on
Form 10K for the period ended December 31, 1994, and
incorporated herein by reference).
5 Opinion of Bret Van Earp, Attorney at Law *
24.1 Consent of Ernst & Young LLP to incorporation by
reference of report on financial statements.
24.2 Consent of Bret Van Earp (included in opion filed as *
Exhibit 5)
25 Power of Attorney (see page II-4 of the Registration *
Statement)
* Previously filed.
EXHIBIT 24.1
Consent of Ernst & Young LLP
Independent Auditors
We consent to the reference to our firm under the
caption "Experts" in the Registration Statement (Form S-
3 No. 33-63361) and related Prospectus of
Electrosource, Inc. for the registration of 1,859,333
shares of its common stock and to the incorporation by
reference therein of our report dated February 13,
1995, except for Note Q, as to which the date is March
10, 1995, and Note R, as to which the date is October
6, 1995, with respect to the financial statements and
schedule of Electrosource, Inc. included in its Current
Report on Form 8-K dated October 10, 1995, filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Austin, Texas
November 24, 1995
