As filed with the Securities and Exchange Commission on October12, 1995
Registration No. 33- _________
FORM S-3
SECURITIES AND EXCHANGE COMMISSION
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 (Primary Standard (IRS
jurisdiction Industrial Employer
of incorporation or Classification Code Identific
organization) Number) ation
No.)
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 (512) 445-6606
including area code, of registrant's (Name, address, including zip code,
principal executive offices) and telephone number, including
area code, 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.
Calculation of Registration Fee
Proposed
Proposed maximum
Title of each class Amount to be maximum aggregate Amount of
of securities to be registered offering price offering registration
registered per unit* price fee
Common Stock, $.10
par value 1,859,333 shares $1.875 per share $3,486,249 $1,202.15
*Estimated solely for the purpose of determining the registration fee and
based upon the closing price quoted in the NASDAQ system for a share of
Electrosource, Inc. Common Stock on October 9, 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
Cover Pages of Prospectus Outside Back Cover
Pages of Prospectus
Item 3. Summary Information, Risk Summary of
Factors and Ratio of Earnings Prospectus; Risk
to Fixed Charges Factors
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
Information by Reference Page of Prospectus
Item 13. Disclosure of Commission Indemnification of
Position on Indemnification for Officers and
Securities Act Liabilities Directors
SUBJECT TO COMPLETION, DATED OCTOBER 12, 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 9, 1995, the closing price for a share of Common Stock
as reported on NASDAQ was $1.875 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 October 12, 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) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994;
(2) All other reports filed by the Company pursuant to
Section 13(a) or Section 15(d) of the Exchange Act since December
31, 1994;
(3) 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 Horizon. 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., and 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 fullfill 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 Horizon 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 June 30, 1995, the Company reported a negative balance
in shareholders equity of $1,625,494, although the amount of
shareholders equity has subsequently increased (to approximately
$1,374,506 on a pro forma basis as of June 30, 1995) due to the
conversion of certain outstanding convertible debentures. 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., and is a director of Watkins-Johnson
Corporation. 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, and 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
fullfill 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%
William 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, Cust.
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, Cust.
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 Horizon 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 Horizon 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 Horizon 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 Horizon 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.
USE OF PROCEEDS
The proceeds of this offering will be used for working capital
and general corporate purposes.
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 been
authorized by the Company. This
prospectus does not constitute
an offer to sell, or a ELECTROSOURCE, INC.
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 correct
as of any time subsequent to
its date. 1,859,333 Shares of
_______________________________ Common Stock
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE 2
SUMMARY OF PROSPECTUS 3
RISK FACTORS 4 October 12, 1995
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 Expense .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.
INTENTIONALLY LEFT BLANK
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 October
12, 1995.
ELECTROSOURCE, INC.
By: /s/ Michael G. Semmens
Michael G. Semmens, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael G. Semmens and
James M. Rosel, and each of them, his true and lawful attorney-in-
fact and agent, with full power of substitution, and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign this Registration Statement of
Electrosource, Inc. and any and all amendments (including post-
effective amendments) to this Registration Statement, and to file
the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, or any
substitute may lawfully do or cause to be done by virtue thereof.
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. Semmens President, Chief Executive October 11, 1995
Michael G. Semmens Officer and Chairman of the
Board (Principal Executive
Officer)
/s/ Charles L. Mathews Director October 11, 1995
Charles L. Mathews
/s/ Dr. Norman Hackerman Director October 11, 1995
Dr. Norman Hackerman
/s/ Richard S. Williamson Director October 11, 1995
Richard S. Williamson
/s/ John Malone Director October 11, 1995
John Malone
Director October __, 1995
Thomas S. Wilson
/s/ John Akin Director October 11, 1995
John Akin
/s/ Todd Templeton Director October 11, 1995
Todd Templeton
/s/ Frank Butler Director October 11, 1995
Frank Butler
Director October __, 1995
Nathan Morton
Director October __, 1995
William R. Graham
/s/ Michael Rosen Vice President, October 11, 1995
Michael Rosen Chief Financial Officer
and Treasurer
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit Sequentially
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. II-7
24.1 Consent of Ernst & Young LLP to
incorporation by reference of report on
financial statements. II-8
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)
October 4, 1995
Electrosource, Inc.
33800B Drossett Drive
Austin, Texas 78744
Re: Registration of Common Stock
Gentlemen:
Reference is made to the registration statement on Form S-3
(the "Registration Statement") filed with the Securities and
Exchange Commission by Electrosource, Inc. (the "Company") under
the Securities Act of 1933 relating to the distribution of
1,859,333 shares of the Common Stock, $.10 par value, ("Common
Stock"), of the Company by certain selling shareholders.
The opinions expressed herein are limited in all respects to the
substantive law of the State of Texas, the federal law of the
United States, and, to the extent applicable, the Delaware
General Corporation Law. We assume no responsibility as to the
application to or effect on the opinions expressed herein of the
laws of any other jurisdiction.
We have been furnished with and examined originals or copies,
certified or otherwise identified to our satisfaction, of all
such records of the Company, agreements and other instruments,
certificates of officers or representatives of the Company,
certificates of public officials, and other documents as we have
deemed necessary or desirable as a basis for the opinions
hereinafter expressed. As to questions of fact material to such
opinions, we have relied upon certificates of officers of the
Company where relevant facts were not independently verified or
established.
Based upon the foregoing, and subject in all respects to the
qualifications and limitations set forth herein, we are of the
opinion that the Common Stock to be distributed pursuant to the
Registration Statement is validly issued, fully paid, and
non-assessable.
The opinions expressed herein are rendered as of the date of
this opinion letter, and we expressly disclaim any obligation to
advise you of any changes or new developments occurring after the
date hereof that would or might affect any matters or opinions
set forth herein. This opinion letter is limited to the matters
stated herein, and no opinion is implied or may be inferred
beyond the matters expressly stated.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name in the "Legal
Matters" section of the prospectus included therein.
Very Truly Yours,
/s/ Bret Van Earp
Bret Van Earp
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-______________) 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
October 11, 1995
