FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission file number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2809 Interstate 35 South, San Marcos, Texas 78666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (512) 753-6500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes __ No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 14,486,428
shares as of November 13, 2000.
INDEX TO FINANCIAL STATEMENTS
September 30, 2000
ELECTROSOURCE, INC. COMMISSION FILE NUMBER 0-16323
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheets at September 30, 2000 (Unaudited)
and December 31, 1999 Page 3
Condensed Statements of Operations for the three and
nine months ended September 30, 2000 and 1999 (Unaudited) Page 4
Condensed Statements of Cash Flows for the three and nine
months ended September 30, 2000 and 1999 (Unaudited) Page 5
Notes to Condensed Financial Statements (Unaudited) Page 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited) Page 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Page 12
Item 2. Changes in Securities Page 12
Item 3. Defaults On Senior Securities Page 12
Item 4. Submission of Matters to a Vote of Security Holders Page 12
Item 5. Other Information Page 12
Item 6. Exhibits and Reports on Form 8-K Page 12
INDEX TO EXHIBITS Page 15
Part I - Financial Information
Item 1. Financial Statements
Electrosource, Inc.
Condensed Balance Sheets
September 30, 2000 December 31,
(Unaudited) 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,203 $ 157,008
Trade receivables 3,301,682 1,417,736
Inventories 203,600 167,569
Prepaid expenses and other assets 53,802 45,247
TOTAL CURRENT ASSETS 3,575,287 1,787,560
PROPERTY AND EQUIPMENT (net of
accumulated depreciation of $4,781,514
in 2000 and $4,322,045 in 1999) 2,654,212 2,753,849
INTANGIBLE ASSETS (net of Accumulated
Amortization of $2,376,832 in 2000 and
$2,235,217 in 1999) 671,842 813,457
OTHER ASSETS 50,250 52,500
TOTAL ASSETS $6,951,591 $5,407,366
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,084,988 $1,044,086
Accrued liabilities 2,042,006 1,399,285
Deferred revenue and advance
payments on batteries 269,625 387,421
Current portion of capital lease
obligations 78,809 71,513
TOTAL CURRENT LIABILITIES 3,475,428 2,902,305
CAPITAL LEASE OBLIGATIONS
(less current portion) 82,873 -
SHAREHOLDERS' EQUITY (DEFICIT)
Common Stock, par value $1.00 per
share; authorized 50,000,000 shares;
issued and outstanding 14,486,428,
in 2000 and 12,137,699 in 1999 14,486,428 12,137,699
Preferred Stock, par value $1.00 per
share; authorized 10,000,000 shares;
no shares issued or outstanding
issued or outstanding - -
Common Stock subscription receivable (467,663) (467,663)
Warrants - -
Paid in capital 52,187,605 51,552,598
Accumulated deficit (62,813,080) (60,717,573)
3,393,290 2,505,061
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,951,591 $ 5,407,366
See notes to financial statements.
Electrosource, Inc.
Condensed Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues
Battery sale $239,496 $152,230 $ 749,532 $ 427,204
Project revenue 514,975 632,312 1,591,258 1,097,498
Other income 9,836 53,338 24,808 108,154
Interest income 4 13 1,666 77
764,311 837,893 2,367,264 1,632,933
Costs and expenses
Manufacturing 671,289 569,167 2,190,022 1,897,466
Selling, general and
administrative 278,628 171,635 1,057,501 736,290
Research and
development 197,461 387,795 519,589 939,843
Technology license
and royalties 25,000 25,000 75,000 75,000
Depreciation and
amortization 187,740 223,589 601,086 690,687
Interest expense 13,146 3,866 19,573 13,292
1,373,264 1,381,052 4,462,771 4,352,578
Loss before
income taxes (608,953) (543,159) (2,095,507) (2,719,645)
Income taxes - - - -
Net loss $(608,953) $(543,159) $(2,095,507) $(2,719,645)
Net loss per
common share $(0.04) $(0.05) $(0.16) $(0.28)
Average common shares
outstanding 14,338,473 10,695,327 13,456,447 9,652,391
See notes to condensed financial statements.
Electrosource, Inc.
Condensed Statements of Cash Flows Unaudited)
Nine Months Ended September 30,
2000 1999
OPERATING ACTIVITIES
Net loss $ (2,095,507) $(2,719,645)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 601,084 684,486
Non-cash interest expense 2,250 44,888
Changes in operating assets
and liabilities:
Increase in trade receivables (1,883,946) (915,009)
(Increase) Decrease in inventories (36,031) 176,986
Increase in prepaid expenses
and other assets (8,555) (70)
Increase (decrease)in accounts
payable and accrued liabilities 683,623 (40,200)
Decrease in deferred revenue and
advance payments on batteries (117,796) (253,134)
CASH USED IN OPERATING ACTIVITIES (2,854,878) (3,021,698)
INVESTING ACTIVITIES
Purchases of property and equipment, net (218,786) (56,890)
CASH USED IN INVESTING ACTIVITIES (218,786) (56,890)
FINANCING ACTIVITIES
Payment of capital lease obligations (50,877) -
Proceeds from issuances of
common stock, net 2,983,736 2,877,186
CASH PROVIDED BY FINANCING ACTIVITIES 2,932,859 2,877,186
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (140,805) (201,402)
Cash and cash equivalents
at beginning of period 157,008 207,246
CASH AND CASH EQUIVALENTS AT END OF PERIOD 16,203 5,844
See notes to financial statements.
Item 1 Notes to Condensed Financial Statements (Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals, considered necessary
for a fair presentation have been included. These interim financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999, and are not necessarily indicative of results
for the entire year.
NOTE B - INVENTORIES
2000 1999
Raw materials $117,620 $121,027
Work in progress 76,949 46,222
Finished goods 9,031 320
$203,600 $167,569
NOTE C - PROPERTY AND EQUIPMENT
2000 1999
Office equipment $ 801,610 $ 801,610
Self constructed assets in
progress 241,183 -
Production and lab equipment 5,517,014 5,398,365
Leasehold improvements 875,919 875,919
7,435,726 7,075,894
Less - accumulated depreciation
and amortization (4,781,514) (4,322,045)
Total Property and Equipment $2,654,212 $2,753,849
NOTE D - CONTINGENCIES
In June of 2000, the Company entered into two engagement letters with an
investment banking firm in connection with the Company's efforts to raise
additional capital. Subsequently, negotiations with respect to a proposed
sale of securities terminated. The investment banker has notified the
Company that it believes the Company owes the banking firm a total of
$200,000 under the break-up provision of the engagement letters. The
Company disputes the claim. Also, the Company is involved in certain
contingencies incidental to its business. While the ultimate results of
these matters cannot be predicted with certainty, management does not
expect them to have a material adverse effect on the financial position
of the Company.
NOTE E - EARNINGS PER SHARE
Basic and diluted loss per share is based on the average number of shares
of common stock outstanding during each period. Since the Company has
experienced net operating losses, outstanding options and warrants to
purchase common stock have an antidilutive effect. Therefore, such options
and warrants were not included in the diluted loss per share calculation.
NOTE F - LIQUIDITY
Under the terms of an Agreement entered into with the Company in June 1998,
Kamkorp Limited ("Kamkorp") has provided $6,000,000 of equity funding for
6,000,000 Common Shares ("shares") at $1.00 per share. In addition,
Kamkorp was granted an option to purchase up to 3,000,000 shares at $1.00
per share under the initial agreement. On October 27, 1999, the Company
granted Kamkorp an option to purchase an additional 3,000,000 shares of
its Common Stock at a price of $1.00 per share. As of November 13, 2000,
Kamkorp has exercised 2,500,000 of these shares and notified the Company
that it will exercise the remaining 500,000. As of September 30, 2000,
Kamkorp is the record owner of 6,130,000 shares or 42.3% of the Company's
14,486,428 outstanding shares of Common Stock and, including options to
purchase Common Stock, the beneficial owner of 8,776,500 shares or 51% of
the Company's Common Stock (assuming the purchase of the 2,646,500
unexercised shares remaining under the Agreement). Kamkorp has purchased
2,000,000 shares (13.8%) and 723,500 shares (5.0%) under the Agreements
and assigned the stock to Kamkorp Holdings Limited ("KHL") and Kamkorp
Microelectronics SA ("KM"), respectively. Neither KHL or KM are
subsidiaries of Kamkorp Limited. The Company has issued 500,000 (3.5%)
shares to Park Tower Management Limited at the request of Kamkorp Limited
under the Agreement. The Company granted Kamkorp demand and piggyback
registration rights with respect to all such shares.
In accordance with the terms of the Agreement, Kamkorp nominated three
members of the Company's Board of Directors, who were unanimously approved
by the Board of Directors, and has the ability to ultimately have control
of the Board of Directors. Additionally, pursuant to the terms of the
Agreement, the Company must obtain approval from Kamkorp for all important
management policies and decisions, which include the following:
a. the issuance of Common Stock or any security which provides
for the right to acquire Common Stock, or any other capital stock
of the Company;
b. overall policy decisions relating to business direction and
manufacturing capacity;
c. any agreement or commitment that materially affects or
modifies the intellectual property owned by the Company;
d. approval of the annual operating budget, capital budget,
overhead budgets and business plans of the Company;
e. approval of any merger, consolidation, partnership or joint venture;
f. approval of transfer of any assets of the Company with a fair
market value greater than $100,000;
g. incurring indebtedness for borrowed money, granting any material
pledge or security interest in the assets of the Company;
h. increasing the size of the Company's Board of Directors;
i. amending the Company's Certificate of Incorporation or Bylaws;
j. entering into any transaction involving an amount greater than, or
having a value in excess of $100,000 or involving a term or
commitment for more than 12 months; and
k. other various management policies and decisions.
During the nine months ended September 30, 2000, existing battery orders
and contract work have not been adequate to sustain the Company on an
ongoing basis and the Company continues to be dependent on cash payments
from Kamkorp and its affiliates to continue operations on a day-to-day basis.
The Company anticipates that funds will be available from Kamkorp in an
amount sufficient to sustain operations; however, Kamkorp is not obligated
to provide this funding.
The Company has approximately $1,078,000 of outstanding accounts payable,
as of November 10, 2000, most of which is payable to raw materials
suppliers and service providers, some of which is considerably past due.
In the first nine months of 2000, several vendors and service providers
have filed suits against the Company. Payout agreements were worked out
with most of these vendors and service providers. Currently, the Company
is in default on most of these payout agreements. One of these agreements
was with the Hays County Tax Assessor-Collector for unpaid property taxes.
On July 31, 2000, the Company was served a Tax Search and Seizure Warrant
by Hays County for the collection of $195,359 in cash or the equivalent in
personal property owned by the Company. Subsequently, the Company has paid
the total amount that was due to the Hays County Tax Assessor-Collector.
Another of these agreements was with an equipment leasing firm which
repossessed equipment in October since the Company was unable to continue
making the agreed payments. The Company is making efforts to satisfy these
old obligations while continuing to produce limited quantities of batteries
for its customers.
As of November 10, 2000 the Company has not met its obligations to pay
certain monthly operating costs including building rent, utilities,
corporate insurance premiums, worker's compensation insurance premiums,
payroll, employee health and life insurance premiums, payments to the
Internal Revenue Service for payroll taxes, 401(k) contributions and
employee expense reports.
Funding from Kamkorp, additional battery orders, or other financing will
be required to continue operations. There can be no assurance that the
Company will obtain such additional funding or battery orders.
The Company's Common Stock is traded in the Over-the-Counter Market and is
reported on the Nasdaq Stock Markets. In order to maintain listing by
Nasdaq under rules which went into effect in February 1998, the Company must
maintain a minimum $2,000,000 of net tangible assets (total assets,
excluding goodwill, minus total liabilities) and the Company's closing
price cannot fall below $1.00 per share for 30 consecutive trade dates.
On April 15, 1999, the Company received notice from Nasdaq that it was
concerned that the Company may not be able to sustain compliance with the
continued listing requirements of Nasdaq in light of the "going concern"
opinion from its independent auditor. To address this concern Nasdaq
requested a detailed letter from the Company on or about April 30, 1999,
discussing the timeline for resolution of these items and a discussion
explaining why the Company believes it will be able to sustain compliance
with the continued listing standards of Nasdaq. The Company complied with
this request on April 30, 1999. Additionally, on May 20, 1999, the Company
received notice that since the Company failed to meet the requirement for
net tangible assets of $2 million on the March 31, 1999 Form 10-Q, the
Company would be required to submit before June 4, 1999, a proposal for
achieving compliance. This proposal was submitted June 3, 1999. The
Nasdaq Staff responded to both of these issues in a letter dated July 14,
1999. The Staff reviewed the Company's plan for regaining and maintaining
compliance and stated while the Staff has determined that the Company will
not be delisted due to its previously cited failures to comply, they have
determined to apply more stringent reporting requirements. The Company was
required to submit an internal balance sheet and statement of operations
for the period ended July 31, 1999 by August 20, 1999. Thereafter, until
further notice, the Company has been required to submit by the 20th of
each month, an internal balance sheet and statement of operations for the
preceding month's end. To date, the Company has complied with this
requirement. The Company is required to keep Nasdaq apprised of all
material events and any changes in its financial statements. Should the
Company fail to maintain $2 million net tangible assets, the Staff will
issue a formal delisting letter to the Company. If the Company does not
continue to maintain the required listing criteria, it is likely that the
Company's shares would be delisted from the Nasdaq Small Cap Market at a
time specified by Nasdaq, in which event the shares could be quoted on
the Over-the-Counter ("OTC") Bulletin Board and/or the Pink Sheets of the
National Quotation Board ("NQB"). In such trading markets, brokers and
dealers effecting trades in the Common Stock would become subject to the
Securities and Exchange Commission rules covering trading in "penny stocks."
Becoming subject to the "penny stock" rules would likely have a material
adverse effect on both the price and trading liquidity of the Company's
Common Stock.
If the Company were delisted from Nasdaq, it would likely be more difficult
to obtain additional funding. There can be no assurance that additional
funding which will generate sufficient cash to sustain operations can be
obtained on terms acceptable to the Company, if at all. The financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
The Company's cash balance decreased from $157,008 to $16,203 during the
nine months ended September 30, 2000, as a result of operating losses in
excess of equity sales. The Company sold an additional 650,000; 723,500;
and 500,000 shares of Common Stock to Kamkorp for $1.00 per share in the
quarters ended March 31, June 30 and September 2000 respectively (the
723,500 shares were assigned to Kamkorp Microelectronics SA); participants
in the Company's stock option plans exercised options for 139,721; 41,533
and 10,195 shares of Common Stock in the aggregate for a total consideration
of approximately $282,399; $72,054 and $17,617, and 280,830 and 2,950
warrants were exercised for a total consideration of approximately $730,604
and $7,561. Subsequent to September 30, 2000 the Company was notified that
it was Kamkorp's intention to exercise an additional 500,000 shares of its
Common Stock to Kamkorp at $1.00 per share to provide needed working capital.
As of November 10, 2000 the Company has not met its obligations to pay
certain monthly operating costs including building rent, utilities,
corporate insurance premiums, worker's compensation insurance premiums,
payroll, employee health and life insurance premiums, payments to the
Internal Revenue Service for payroll taxes, 401(k) contributions and
employee expense reports. Funding from Kamkorp, additional battery orders,
or other financing will be required to continue operations. There can be no
assurance that the Company will obtain such additional funding or battery
orders. Inventories increased from $167,569 to $203,600.
Results of Operations:
Revenues. The Company had battery sales of approximately $239,000 and
$750,000 for the three and nine months ended September 30, 2000 compared
to $152,000 and $427,000 for the three and nine months ended September 30,
1999. Approximately 59% (three months) and 41% (nine months) of the year
2000 battery sales were to Frazer-Nash Research LTD and Electrosource
International LTD, collectively (Kamkorp Limited affiliated companies).
Approximately 26% (three months) and 23% (nine months) of the year 2000
battery sales were to Chrysler and Lockheed Martin, collectively.
Approximately 36% of the first nine months of 1999 battery sales were to
Lockheed Martin for use in Hybrid Electric Vehicles ("HEV") and Electric
Vehicles ("EV") they were producing for testing and evaluation. The
majority of the remainder of the first nine months of 1999 battery sales
(30%) were to Chrysler Corporation. These purchases were for testing and
evaluation of the Horizon battery in the EPIC Minivan Program.
The Company had project revenue of approximately $515,000 and $1,591,000
for the three and nine months ended September 30, 2000 compared to $632,000
and $1,097,000 for the three and nine months ended September 30, 1999.
Seventy-nine and sixty-two percent of the revenue generated in the first
nine months of 2000 and 1999, respectively, was under agreements with
Frazer-Nash Research Limited and Frazer-Nash Research, Inc. for the
continued research and development of the Company's battery technology.
The balance of the revenue generated in 2000 and 1999 was from cooperative
development and research agreements with the Defense Advanced Research
Projects Agency ("DARPA") and with the Department of Energy ("DOE") and
other smaller projects. The DARPA programs are for various HEV and EV
applications. The DOE program is for the development of core technology
for a lithium polymer material eventually to be used in batteries.
Costs and Expenses. Total costs were nearly identical for the three and
nine months ended September 30, 2000 compared to the same periods in 1999.
Manufacturing costs have remained high as a percentage of battery sales,
primarily due to the lack of capital required to further automate the
production processes, materials being purchased in low volumes and the
fixed facility cost for leasing and maintaining the 88,000 square foot
manufacturing and office facility. Management expects that manufacturing
costs can decrease as a percentage of battery sales as volume production
begins; however, additional capital will be required to significantly
reduce labor and raw material costs per battery.
Selling, general and administrative costs increased for the three and
nine months ended September 30, 2000 compared to the same period in 1999
primarily due to an increase in marketing and business related travel costs,
patent protection costs, and penalties, late charges and legal fees
resulting from past due accounts, financing activities and general corporate
counsel.
Research and development costs decreased for the three and nine months
ended September 30, 2000 compared to the same period in 1999 due to the
completion of the cooperative development and research agreements with the
Defense Advanced Research Projects Agency and with the Department of Energy,
and because the Company has been continuing research and development of
its technology with Frazer-Nash as discussed above.
Depreciation and amortization costs decreased for the three and nine months
ended September 30, 2000 compared to the same period in 1999 primarily due
to the full depreciation of various pieces of production equipment during
1999 and 2000 which remain in use.
Interest costs increased for the three and nine months ended September 30,
2000 compared to the same period in 1999 as the Company is incurring
significant interest charges on past due accounts.
Liquidity and Capital Resources. Liquidity and Capital Resources have been
discussed in detail under "NOTE F - LIQUIDITY" to the interim financial
statements, which is incorporated into this Item 2 by reference.
In addition to the disclosures under that Note, in December 1997, the Company
issued 299,304 shares of Common Stock to BDM as partial payment for past
obligations owed to BDM for occupancy related costs (which the Company has
accrued) and as prepayment under operating leases for manufacturing equipment
which are guaranteed by BDM. The number of shares issued was determined
based on the fair market value of the shares at the date of the agreement
($2.56 per share). When the shares are sold by BDM, the proceeds will be
used to satisfy these past and future obligations. If the proceeds from
the sale of such shares are not sufficient to satisfy the obligations, the
Company will issue additional shares of Common Stock or pay cash to BDM to
make up the deficiency. BDM has agreed to reduce amounts owed to it by
at least $1.00 per share or $299,304 for the shares issued. BDM will
retain any overage from the sale of such shares in excess of the amounts
owed. The Company's closing market price as reported by Nasdaq on
November 10, 2000 was $2.00.
In the first nine months of 2000, several vendors and service providers
have filed suits against the Company. Payout agreements were worked out
with most of these vendors and service providers. Currently, the Company
is in default on most of these payout agreements. One of these agreements
was with the Hays County Tax Assessor-Collector for unpaid property taxes.
On July 31, 2000, the Company was served a Tax Search and Seizure Warrant
by Hays County for the collection of $195,359 in cash or the equivalent in
personal property owned by the Company. Subsequently, the Company has paid
the total amount that was due to the Hays County Tax Assessor-Collector.
Another of these agreements was with an equipment leasing firm which
repossessed equipment since the Company was unable to continue making
payments. The Company is making efforts to satisfy these old obligations
while continuing to produce limited quantities of batteries for its customers.
In June of 2000, the Company entered into two engagement letters with an
investment banking firm in connection with the Company's efforts to raise
additional capital. Subsequently, negotiations with respect to a proposed
sale of securities terminated. The investment banker has notified the
Company that it believes the Company owes the banking firm a total of
$200,000 under the break-up provision of the engagement letters. The
Company disputes the claim.
From time to time the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological development, new products, research and development
activities and similar matters. The Private Securities Litigation Reform Act
of 1995 provides a safe harbor for forward-looking statements. In order
to comply with the terms of the safe harbor, the Company notes that a
variety of factors could cause the Company's actual results and experience
to differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements. When used in this
discussion, the words "expects," "believes," "anticipates" and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. The risks and
uncertainties that may affect the operations, performance, development and
results of the Company's business primarily include completion of existing
battery orders, uncertainty as to receipt of additional orders, inability to
obtain additional debt or equity financing, continued willingness and
ability of Kamkorp and its affiliates to provide agreed upon financing,
currency controls and other uncertainties arising from Malaysia and Far
East economies upon which the Company is dependent for equity financing
and battery sales, delisting of the Company's Common Stock on Nasdaq,
delays in shipment or cancellation of orders, timing of future orders,
customer reorganization, fluctuations in demand primarily associated with
governmental mandates for the production of zero emission vehicles and the
ability to successfully commercialize the Horizon battery. Readers are
cautioned not to place undue reliance on these forward-looking statements
which speak only as of the date hereof. The Company undertakes no obligation
to republish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and
consider the various disclosures made by the Company which attempt to advise
interested parties of the factors which affect the Company's business in this
report and in the Company's periodic reports on Forms 10-K and 8-K filed with
the Securities and Exchange Commission.
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
The Company sold 500,000 shares of its Common Stock under the
Agreement with Kamkorp Limited at a price of $1.00 per share
in cash during the third quarter of 2000. There were no
underwriters involved in the sale, and no underwriting discounts
or commissions. The securities were sold pursuant to exemptions
under Section 4(2) of the Securities Act of 1933 and Regulation D
thereunder; the offering was to a single sophisticated, accredited
investor in a transaction not involving public solicitation or
advertising.
Item 3. Defaults on Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Effective July 28, 2000, Ms. Audrey Dearing retired from her
position as Corporate Secretary.
Effective October 12, 2000, Mr. Don Perriello was appointed
as Assistant Corporate Secretary.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. Consulting Agreement-A. Dearing
27. Financial Data Schedule.
(b) Reports on Form 8-K.
Reports on Form 8-K filed during the quarter ended September 30, 2000
and up to the date of this filing on Form 10-Q were:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Date: November 13, 2000
ELECTROSOURCE, INC.
/s/
Benny E. Jay
President, Chief Executive Officer
/s/
Don C. Perriello
Vice President, Treasurer and
Chief Accounting Officer
Washington, D.C. 20549
EXHIBITS TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission File
September 30, 2000 Number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2809 Interstate 35 South, San Marcos, Texas 78666
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(512) 753-6500
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of Class)
INDEX TO EXHIBITS
No. Description Page
10 Consulting Agreement-A. Dearing 16
27 Financial Data Schedule 27
