FORM 10-K
               SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549

(Mark One)
[X]  ANNUAL  REPORT  PURSUANT  TO SECTION  13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999.
                               OR

[ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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

Securities registered pursuant                 None
 to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

             Common Stock, par value $1.00 per share
                        (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all
reported 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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

As of March 24, 2000,  13,154,300 common shares were
outstanding  and the aggregate market value of the common shares
held by non-affiliates (based on the closing price of these
shares of $16.00, as reported by NASDAQ at the close of business
on March 24, 2000) was approximately $210,468,800.

              DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference
into the indicated part or parts of this report:

Portions  of  the  Company's Definitive Proxy Statement  for  the
Annual  Meeting of Shareholders scheduled to be held on June  14,
2000, are incorporated by reference into Part III hereof.


                             PART I

Item 1.  Business.

General

Electrosource, Inc. ("ELSI" or the "Company"), is an energy
storage solutions company engaged in the manufacture of advanced
lead-acid, rechargeable storage batteries and the development of
related processes and technologies.  The Horizon battery
utilizes plate grids made from a patented coextruded wire and a
special paste mixture.  The Company is focusing its efforts on
development of Horizon battery technology for use in many
applications including hybrid power vehicles, electric vehicles,
neighborhood electric vehicles, electric scooters, lawn and
garden tools, power management and starting power.

The principal executive offices of the Company are located at
2809 Interstate 35 South, San Marcos, Texas 78666, and its
telephone number is (512) 753-6500.

Significant Events

During 1999, the Company continued to receive equity financing
under an Agreement, which was entered into on June 2, 1998, with
Kamkorp Limited, a private limited company incorporated in
England ("Kamkorp"), for up to $6,000,000 of equity financing.
Kamkorp is a management holding company, holding shares in a
number of companies including Frazer-Nash Research Ltd. (FNR),
Frazer-Nash Research, Inc. (FNRI), and Electrosource
International Ltd. (EIL).  Kamkorp also has options to purchase
an additional 3,000,000 shares at $1.00 under this original
agreement.  In addition, in October 1999 Kamkorp was granted the
option to purchase an additional 3,000,000 shares of the
Company's Common Stock at $1.00.  At December 31, 1999, Kamkorp
is the record holder of 7,480,000 shares or 61.6% of the
Company's 12,137,699 outstanding shares of Common Stock and is
the beneficial owner of 12,000,000 shares or 70% of the Company's
Common Stock.  Kamkorp appointed three members to the Company's
nine-member Board of Directors in 1998 under the original
Agreement (See Note G - Liquidity).

The Horizon Battery

The Company has concentrated its efforts on the design of a new
concept of lead-acid battery employing coextruded wire in plates
oriented in the horizontal plane, as opposed to the vertical
plane orientation of conventional batteries.  This battery
concept, named "Horizon," enables design of a lead-acid battery
with significantly higher energy density than is possible with
conventional battery design.  We believe the Horizon design may
ultimately prove to be more economical to manufacture than
conventional batteries due to the elimination of several steps in
the manufacturing process.  Several hundred prototypes and
production versions of the Horizon battery have been built and
tested in a variety of configurations.  Testing by the Company
and by third parties indicates that various configurations of the
battery meet or exceed some of the performance goals established
by major governmental and industry groups for electric vehicle
batteries.  The Company also believes the Horizon battery has a
number of applications other than electric vehicles, such as
hybrid powered vehicles, portable power tools such as lawn and
garden tools, electric power management, uninterruptible power
and for starting, lighting and ignition ("SLI") batteries for
automobiles and aircraft.  The Company has designed various
prototype batteries for such applications which are currently
under evaluation by customers.

Coextrusion Technology  The Company holds an exclusive license
for the development and commercial exploitation of patented
coextruded wire.  Coextrusion is a process by which one material
is extruded, or forced through a die, with uniform thickness,
onto a core material passing simultaneously through the same die.
The process is capable of extruding lead (or lead alloy) onto any
material having adequate tensile strength to pass at high speed
through the pressurized dies.  The Company refers to this process
as C2M technology.  Successfully coextruded core materials
include fiberglass, Kevlar and cross-linked carbon fiber yarns,
aluminum, copper and titanium wire and polypropylene, polyester,
nylon and polyethylene monofilament.

Coextruded lead wire facilitates the use in lead-acid batteries
of pure lead or extremely low concentration lead alloys, which
are difficult to cast repeatedly at the high rates required in
production.  The management of the Company believes that grids
made from such wire and used in lead-acid storage batteries have
improved corrosion resistance and, therefore, longer life, or
equivalent life with reduced total material content.

Energy-Active Material Formulation  The Company has also
developed a new type of energy-active material, or paste, for use
in lead-acid battery electrodes.  The Company also invented two
additional paste formulations, each of which may contribute to
the reduction of battery manufacturing cost.  The Company has
protected this proprietary technology as trade secrets, and does
not plan to apply for patents related to these formulations.  The
Company is continuing the development of these formulations in
connection with the Horizon battery project, but has no current
plans for separate commercialization of the energy active
material.

Battery Grid  The Company has patented the use of its coextruded
wire in electrodes for lead-acid batteries.  The claims in this
patent encompass not only the present method employed by the
Company of weaving the wire into a woven mesh to form the
"bigrids" but also any non-woven methods of using the coextruded
wire in lead-acid battery electrodes.

Compression Cage  During the development stage of the Company, we
learned through battery life testing that the plates and
separators in a sealed lead-acid battery must be kept under a
constant compression in order to achieve high cycle life. The
Company developed and patented an idea to encase the plates and
separators in a "compression cage" to comply with this
requirement.

Marketing

The worldwide market for lead-acid batteries can be classified
into the following major segments:

     Starting, Lighting and Ignition.  For engine starting
applications as used in aircraft, passenger cars, light and heavy
trucks, garden tractors and motorcycles.

     Motive Power.  For use in electric vehicles, hybrid
vehicles, industrial fork lifts, underground mining equipment,
golf carts and neighborhood electric vehicles.  Such batteries
undergo daily discharging and overnight recharging.

     Power Management.  For use in utility emergency power,
telecommunications, uninterrupted computer and other power
supplies and cellular radio.  Such batteries are typically used
as a secondary source of power.

     Portable Power.  Typically small, lead-acid batteries for
use in such items as portable power tools and outdoor power tool
products, as well as electrically driven medical equipment.

The Company has initiated strategic business relationships and
cooperative development agreements with companies and government
agencies in all of the above markets.  Management believes that
in 2000 some of these customers could move from test phases to
integration of Horizon technology into their commercial products.

Competition

The lead-acid battery industry is mature, well-established and
highly competitive.  The industry is characterized by a few major
domestic and foreign producers including Exide, Delphi, Johnson
Controls, Inc., GNB, Hawker and Yuasa, all of which have
substantially greater financial resources than the Company.
Accordingly, the Company's ability to succeed in this market
depends upon its ability to demonstrate superior performance and
cost attributes of its technology.  The Company has historically
concentrated its activities in the electric vehicle segment of
the market with a view to demonstrating improved energy to weight
and longer battery life in comparison to traditional lead-acid
batteries.  The principal competitors of the Company in the
electric vehicle market (Ovonics and Saft) have directed their
efforts to other battery types, such as nickel-cadmium and nickel-
metal hydride, rather than lead-acid formulations.  At least one
major automobile manufacturer and one major battery company are
known to have research and development projects underway to
develop lead-acid batteries for electric vehicles.


Patents and Protection of Technology

Prior to May 1990, the Company held an exclusive sublicense from
Tracor, Inc. ("Tracor") under several US patents covering the
coextruded wire and the coextrusion apparatus for producing
composite wire for use only in lead-acid battery applications.
In May 1990, Tracor assigned to the Company all rights under the
original license agreement between Tracor and Blanyer-Mathews,
the inventors of the coextrusion technology.  This assignment
terminated the sublicense between Tracor and the Company and
allowed the Company to apply the technology outside of the area
of lead-acid storage batteries, if any such applications are
available.  The license assigned to the Company expires
concurrently with the patents, the earliest of which expires in
2004, and requires payment of annual minimum royalties to Blanyer-
Mathews the greater of $100,000 or sales-based royalties equal to
1/2 percent of sales for battery applications.  The license
becomes non-exclusive in the event the Company defaults in its
obligation to pay the minimum royalty.  The license may be
terminated by the licensor in the event that the Company defaults
in its obligation to pay sales-based royalties or enters
bankruptcy.  The Company is responsible for the maintenance and
administration of the licensed patent.  Under the terms of the
assignment, the Company is to pay Tracor a royalty of four
percent on all technology sales unrelated to lead-acid storage
batteries for the term of the license.

In March 1990, a patent was issued to the Company covering an
energy-active material formulation, including the processes for
manufacturing this material.  In October 1990, a US patent was
issued to the Company for the Horizon battery design.  In
September 1989, a patent was issued to the Company covering the
battery grid and its producing method.  In April 1995, a patent
was issued to the Company covering the battery plate compression
assembly.  In 1999, the Company was granted a "composition-of-
matter" patent covering the lead-glass composite material
produced by the Company.  This provides an additional seventeen
years of protection of this critically important advanced
material on which the Horizon technology is based.

The know-how relating to the Company's energy-active material
formulation, the application of coextruded wire to battery
electrodes and certain manufacturing processes are confidential
and proprietary to the Company.

Research and Development

Initial research and development programs were directed toward
understanding the behavior of the wire in lead-acid battery
electrodes in various corrosive environments.  With the
development of the Horizon C2M battery concept, the focus of
research work has been redirected toward improving the
performance of the battery in the following areas; longer cycle
life, longer shelf life, and increased specific energy.  In
addition, programs are underway to reconfigure the Horizon
battery concept into a variety of applications. A limited number
of prototype Horizon batteries for specialized markets (see
"Marketing") continue to be built in attempts to optimize battery
electrical performance and life and to meet customer requests for
different battery configurations or performance.

The Company incurred approximately $1,300,000, $1,800,000, and
$2,500,000 in research and development costs in the years ended
December 31, 1999, 1998, and 1997, respectively, of which
approximately $448,000, $415,000, and $1,400,000 related to
customer sponsored research activities in the years ended
December 31, 1999, 1998, and 1997, respectively.

Backlog

The Company's backlog was approximately $1,892,000, $410,000, and
$210,000, respectively, in battery orders at December 31, 1999,
1998, and 1997. As of December 31, 1999, the Company has a
backlog of approximately $510,000 in project revenue.

Export Sales

During 1999, 1998, and 1997, the Company earned revenue of
approximately $1,286,000, $360,000, and $1,100,000, respectively,
from sales of Horizon batteries and project services to foreign
customers.

Customer Concentration

A significant portion of the Company's total revenue from battery
sales, project revenue and all other sources (approximately 6%,
39%, and 37% in 1999, 1998, and 1997, respectively) was generated
from Chrysler Corporation ("Chrysler"). In December 1997,
Chrysler announced its decision to use nickel-metal hydride
batteries made by a competitor in its electric vehicles.
Chrysler's purchase of a significant number of batteries from the
Company in the future is uncertain.

Approximately 19% of the Company's 1999 battery sales were to
Electrosource International Limited ("EIL"), an affiliate.
Management of the Company believes that sales to EIL will
increase as a percentage of total sales.  The Company is
economically dependent on this affiliate and its parent company,
Kamkorp Limited ("Kamkorp") (See Management's Discussion and
Analysis of Financial Condition and Results of Operations).
Kamkorp is a significant shareholder with representation on the
Company's Board of Directors. The Company is dependent on cash
payments from Kamkorp to continue operations on a day-to-day
basis.

EIL's customer for the batteries is Perusahaan Otomobil Elektrik
(Malaysia) ("POEM"), a Malaysian joint venture company in which
Kamkorp affiliates hold a minority interest, engaged in the
production of the electric vehicles developed by Kamkorp.

Raw Materials

The basic raw materials of lead-acid batteries are lead, sulfuric
acid and plastic, each of which is readily available. The Company
has experienced no material delays in obtaining timely delivery
of these materials.

Environmental Concerns

The Company's laboratory facility and manufacturing plant
includes an enclosed area specifically for the mixing of lead-
oxide paste and the application of such paste to battery
electrodes.  The air in these areas is continuously filtered to
remove lead particles.  Employees operating in these areas are
instructed in the use of safety equipment such as gloves,
protective aprons, and respirators and are required under
Occupational Safety and Health Administration ("OSHA") guidelines
to submit to blood monitoring tests on a periodic basis.  The
analysis of these tests are undertaken by an outside, independent
and OSHA approved laboratory and the results thereof are
communicated to the Company's employees.

The management of the Company believes that the energy-active
material developed by the Company may be safer to manufacture
than energy-active materials currently in general use due to
reductions in potential environmental hazards.  The active
material paste used in conventional batteries has a consistency
similar to wet cement and must be allowed to dry for two or three
days after being impressed into the grid of a battery plate.
When dried the plates produce fine lead dust as they are
transported in a plant through the battery assembly process.
This airborne dust poses a potential health risk to workers, and
there are OSHA regulations regarding allowable levels of airborne
lead in a battery plant for which manufacturers must devote
significant resources in prevention, treatment, and compliance.
The Company's energy-active material, on the other hand, has a
consistency similar to toothpaste and contains certain binders
which minimize the generation of lead dust, thus minimizing
worker exposure to airborne lead.

As a part of the battery manufacturing process, the Company
handles and disposes of various hazardous materials such as lead
and sulfuric acid. The Company is subject to strict environmental
regulations and has previously incurred significant costs in
installing equipment to manage and control hazardous substances
and pollution. As part of its on-going operations, the Company
incurred $75,000, $68,000, and $37,000 in non-capital
expenditures in 1999, 1998, and 1997, respectively, to properly
dispose of hazardous materials and waste. As a result of such
preventive measures, the Company has not incurred significant
remediation costs to date.  The management of the Company
believes that the Company is currently in compliance with all
applicable local, state, and federal environmental rules and
regulations in all material respects.

Management is not currently aware of any material infrequent or
non-recurring clean-up expenditures to be incurred in the future
based on present circumstances and conditions.

Employees

As of March 24, 2000, the Company employed 50 full-time
employees.

Item 2.  Properties.

All of the Company's operations are located in an 88,000 square
foot facility located in San Marcos, Texas at 2809 Interstate 35
South.  The monthly rental rate is currently $30,000 per month
and escalates over the life of the lease to $35,000 per month
until expiration in 2003.  The Company believes this site is
adequate for low-rate production requirements and possesses
enough expansion capacity if the Company elects to expand
capacity at this site.

Management believes that all personal property used by the
Company is in good condition.

Item 3.  Legal Proceedings.

In December 1996, the Company filed a petition in State Court in
Travis County, Texas, seeking, among other things, a declaratory
judgment that Horizon Battery Technologies, LTD. ("HBTL") had no
right to arbitration or monetary relief under a "Know-How License
Agreement".  HBTL contested jurisdiction and removed the
proceedings to the U.S. Federal Court.  The Federal District
Court ruled that it did not have personal jurisdiction over HBTL.
The Company successfully appealed in the U.S. Fifth Circuit Court
of Appeals.  In September 1999, the District Court granted
summary judgement in favor of the Company.  No further
proceedings are anticipated since no appeal was filed by HBTL.

The Company has approximately $1,000,000 of outstanding accounts
payable, most of which is payable to raw materials suppliers and
service providers, some of which is considerably past due.  One
vendor sued the Company in May 1999 for approximately $12,000 and
the suit was settled in the third quarter.  In the first quarter
of 2000, six vendors have filed suits against the Company.  Five
of these vendors have accepted pay out agreements for the amounts
owed and the remaining one is in negotiation for a pay out
agreement.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.



                            PART II


Item 5.  Market for the Registrant's Common Stock and Related
Shareholder Matters.

Trading Market for ELSI Common Stock

The Company's Common Stock has been traded in the over-the-
counter market and reported on NASDAQ under the symbol "ELSI"
since January 1988.  The following table sets forth, for the
periods indicated, the high and low bid price per share of Common
Stock as reported by NASDAQ.  Prices represent inter-dealer
quotations, without adjustment for retail markup, markdown or
commission, and may not represent actual transactions.

                      High       Low

1998
     First Quarter    2 5/8      3/8
     Second Quarter   3          19/32
     Third Quarter    2 9/16      7/8
     Fourth Quarter   1 5/8      5/8

1999
     First Quarter    3 1/4      5/8
     Second Quarter   1 7/8      1
     Third Quarter    1 5/8      13/16
     Fourth Quarter   5 3/4      13/16


The transfer agent and registrar for the Common Stock of the
Company is Harris Trust and Savings Bank, Shareholder Services
311-11, 311 West Monroe, Chicago, IL  60606 (phone 312-360-5475).

The approximate number of record holders of Common Stock at March
20, 2000, was 3,365.


Dividends and Dividend Policy

The Company has paid no dividends on its Common Stock to date and
does not anticipate paying dividends on the Common Stock
currently or in the foreseeable future.  Further, the Company
currently has a deficit in its "surplus" account (defined as the
excess of net assets over par value of shares outstanding) which,
under Delaware corporate law, precludes any distributions to
shareholders in a given year unless the Company reports net
income in that year or the preceding year, in which case
dividends could be paid to the extent of net income for the year
in which the dividend is declared and net income for the fiscal
year immediately preceding the year of declaration.  In the event
that the earnings of the Company permit payment of dividends
under Delaware law, the timing and amount of such dividends will
be determined by the Board of Directors in light of the Company's
earnings, financial condition and capital requirements.


Item 6.  Selected Financial Data.

                      (In thousands, except per share data)
                              Year Ended December 31,
                               1999      1998      1997      1996      1995

Revenues                      $2,203    $2,380    $3,244    $3,563     $3,278
Loss before
  Extraordinary Gain         $(3,466)  $(5,862)  $(7,833)  $(7,825)  $(20,508)
Extraordinary Gain                 -    $2,331         -         -          -
Net Loss                     $(3,466)  $(3,530)  $(7,833)  $(7,825)  $(20,508)
Basic (and diluted) Loss per
  Share-continuing operations $(0.34)   $(0.95)   $(1.91)   $(2.13)    $(9.76)
Basic (and diluted)
  Loss per Share              $(0.34)   $(0.57)   $(1.91)   $(2.13)    $(9.76)
Dividends per Share             None      None      None     None        None


                             As of Year Ended December 31
                                 1999      1998      1997      1996      1995

Working Capital (Deficit)      $(1,115)  $(2,287)  $(1,675)  $(2,845)   $1,556
Total Assets                    $5,407    $5,217    $8,006    $9,488   $15,277
Shareholders' Equity            $2,505    $2,162    $1,492    $3,847    $1,240
Long-Term Obligations                -       $72    $2,949    $1,768   $11,324

See Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations for discussion of material
uncertainties which may cause the data above not to be indicative
of the Company's future financial condition or results of
operations.

The foregoing should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.

Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

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 report, 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 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, the dependence of the Company
upon a few key customers, the invention of technology which might
limit the value of the Company's products, the invention or
discovery of new/alternative energy sources which might limit the
value of the Company's products, the lack of capacity of the
Company to manufacture products to fulfill new orders, delisting
of the Company's Common Stock on NASDAQ, delays in shipment or
cancellation of 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-Q and 8-K as filed with the Securities and Exchange
Commission.


Results of Operations

During 1999, the Company continued to receive equity financing
under an Agreement, which was entered into on June 2, 1998, with
Kamkorp Limited, a private company organized in England
("Kamkorp"), for up to $6,000,000 of equity financing.  Kamkorp
also has options to purchase an additional 3,000,000 shares at
$1.00 under this original agreement.  In addition, in October
1999 Kamkorp was granted the option to purchase an additional
3,000,000 shares of the Company's Common Stock at $1.00.  At
December 31, 1999, Kamkorp is the record holder of 7,480,000
shares or 61.6% of the Company's 12,137,699 outstanding shares of
Common Stock and is the beneficial owner of 12,000,000 shares or
70% of the Company's Common Stock.  Kamkorp appointed three
members to the Company's nine-member Board of Directors in 1998
under the original Agreement.

The Company continued to maintain operations with a
reduced workforce throughout the year as a result of limited
funding and the inability to generate battery orders sufficient
to warrant an increase in staffing.  While Kamkorp has provided
substantial amounts of financing to the Company to date
($7,480,000), Kamkorp is not legally required to make future
advances.  However, Kamkorp has acknowledged to the Company that
it intends to continue providing equity funding to the Company in 2000
to fund day-to-day operations.

The Company received a purchase order in June 1999 for 8,000
12H85 batteries from Electrosource International Limited ("EIL")
for delivery beginning in the third quarter of 1999 with
completion of the order in the first quarter of 2000.  The
Company delivered 444 batteries against this order during the
year ended December 31, 1999 and is scheduled to deliver the
remainder of the order in 2000.  EIL is the international
marketing company and is affiliated with Kamkorp.   The delivered
battery sales represent 19% of the battery sales for 1999.

The Company received a purchase order in December 1999 for 6,000
12C25 batteries from Frazer-Nash Research Limited (FNR) for
delivery beginning in the first quarter of 2000 with completion
of the order in April.  FNR is a private limited company
incorporated in England, and is a wholly owned subsidiary of
Kamkorp.  Its principle activity is the design and development of
advanced electric vehicles and a range of electronic products for
the consumer, telecommunications and automotive industries.  The
12C25 battery has been specified by Frazer-Nash Research Limited
as the battery for all of the electric vehicles to be supplied to
the Sydney 2000 Olympic Games. Frazer-Nash is the exclusive
supplier of electric vehicles to the Olympic Games.

In late 1998 management made the decision to concentrate all
research and development activity on developing new batteries
suitable for mass markets such as vehicles, UPS systems, hybrid
electric vehicles and electric vehicles.  The external
development programs which remain active are those with the
Defense Advanced Project Agency ("DARPA"), the Department of
Energy ("DOE") and Horizon Aircraft.  All others programs have
been terminated by the customer or the Company.  Such
terminations did not have a material adverse effect on the
financial position of the Company.

Sales of existing battery types did not increase as expected in
1999 due to delays in orders from Lockheed Martin and others
testing the battery for use in new products in emerging markets.
Generally, testing of products by customers has taken longer than
expected because of difficulties in integration of battery packs
in new products. Battery packs are being tested simultaneously
with other newly designed components in customer products.

Revenue

The Company generated project revenue of approximately
$1,603,000, $736,000, and $2,234,000 for the years ended December
31, 1999, 1998, and 1997, respectively.  Essentially all of the
remaining project revenue generated in 1999 was from cooperative
development and research agreements with DARPA and DOE for Hybrid
Electric Vehicle ("HEV") and Electric Vehicle ("EV")
applications.  All projects are for lead-acid batteries with the
exception of the DOE program in which the Company is working on a
lithium polymer which may eventually be used in batteries for a
wide variety of applications. During 1998, approximately $215,000
of revenue generated was from the final resolution and settlement
of a program with a customer which remains confidential.  Battery
orders from this customer are not expected in the near future, if
at all.  During 1997, approximately $1,500,000 of revenue was
generated from SMH Automobile S. A. ("SMH"), DARPA and Fiat for
the development and/or evaluation of batteries and battery packs
for HEV and EV applications and $645,000 was generated from
Chrysler for various engineering, environmental and other tests
performed on the 12H85 battery.  The SMH program was terminated
by the customer in 1998 and in late 1997 Chrysler announced its
decision to use nickel-metal-hydride batteries made by a
competitor.  Project revenue is expected to continue to decline
in 2000 as the Company focuses its efforts on sales of its
standard production batteries.

The Company had battery sales of approximately $490,000,
$955,000, and $915,000 for the years ending December 31, 1999,
1998, and 1997, respectively.  Approximately 19% and 38% of 1999
and 1998 battery sales, respectively,  were to EIL.  The Company
is economically dependent on Kamkorp and its affiliates (See
Liquidity and  Capital Resources section below.)  Management
expects sales to Kamkorp and its affiliates to increase as a
percentage of total battery sales and for the group to remain the
largest collective customer for Horizon batteries in 2000.
Approximately 26%, 28%, and 56% of 1999, 1998, and 1997, battery
sales, respectively, were to Chrysler.  Chrysler announced its
decision to use Nickel-Metal-Hydride batteries in its electric
minivan for the 1999 model year, however, it has continued to
order a small number of batteries from the Company for further
testing and evaluation.  However, Chrysler's purchase of a
significant number of batteries from the Company in the future is
uncertain. Approximately 32%, 12% and 28% of 1999, 1998 and 1997
battery sales, respectively, were to Lockheed Martin for use in
HEVs and EVs they are producing for fleet consumers for testing
and evaluation.  Sales of batteries to Lockheed Martin are
expected to increase in 2000. Lockheed Martin produces a drive
train used in hybrid buses manufactured by the Orion Bus Company
and others. The New York Transit Authority has been testing a
hybrid diesel bus on the streets of New York City manufactured by
Orion, which is powered by a Lockheed Martin drive train and
Electrosource batteries.  The tests have been completed and were
successful.  Following the favorable results, the New York
Transit Authority placed an order with Orion, in December 1999,
for the hybrid buses powered by Horizonr batteries.  However, the
amount and timing of any order for batteries for the Company
remains uncertain.  The remainder of battery sales in all years
were from numerous customers requesting batteries for testing and
evaluation.  Management expects the level of battery sales to
increase beginning in the second quarter of 2000, at which time
battery orders from EIL are expected to increase.


During 1999, the Federal Aviation Administration ("FAA") completed a
certification test plan for the Company's Helicopter battery, the
successful completion of which will allow the FAA to consider applications
for Supplemental Type Certificates ("STC's") to install and operate the
new battery in certain helicopters.  The Company plans to complete
certification testing and all actions required to obtain STC's required
to use the new battery in certain helicopters.  The schedule for completing
the FAA test plan, obtaining the initial STC and launching production
of this product remain uncertain.


The majority of these applications are in emerging markets and the
entry of final products into such markets is difficult to predict.

During 1998, the Company received a $1,104,275 purchase order
from Chrysler, which replaced an earlier purchase order for
$1,400,000.  The $1,104,275 purchase order was paid in full in
1998.  Chrysler designated $656,100 for the purchase order as a
cancellation fee from the previous order and $448,175 for
batteries to be delivered in 1998 and 1999.  During 1998, the
Company recorded $656,100 as income as all tasks necessary to
earn the income were performed and there were no further
obligations related to such revenue.  Approximately $171,000 of
the battery revenue remains deferred at December 31, 1999 and
will be recognized upon shipment of the batteries in 2000.

Costs and Expenses

Manufacturing costs decreased by approximately $1,095,000 or 31%
during 1999 as the Company continued to maintain
operations with a reduced workforce throughout the year.
Manufacturing costs have remained high as a percentage of battery
sales primarily due to the fact that the Company has not had the
capital required to further automate the production processes or
purchase materials at higher volumes to receive better pricing.
Fixed facility costs of leasing and maintaining its 88,000 square
foot facility are also a significant expense. Management expects
that manufacturing costs can decrease as a percentage of battery
sales if, and when, volume production begins; however, additional
capital will be required for manufacturing tooling required for
higher production volumes in order to achieve manufacturing
efficiencies and to lower raw material costs.

Selling, general and administrative costs decreased by
approximately $998,000 or 52% during 1999 primarily based on the
actions taken in February 1998 to reduce the workforce and to
control costs.  Costs were also reduced significantly for travel,
legal, accounting and consulting fees. Management expects
selling, general and administrative costs to remain relatively
constant in 2000 until battery orders and production levels
warrant additional support sales and administrative staff and
associated costs.

Research and development costs decreased by approximately
$543,000 or 30% in 1999 due to the decrease in work on programs,
primarily SMH and Chrysler. The amount of development work and
related costs have not decreased proportionately with revenue as
a larger proportion of development work and related costs were
incurred in 1999 on programs which did not generate revenue and
on cost-share programs which generate less revenue than
commercial programs.  Research and development costs had
increased by approximately $1,040,000 or 72% in 1997 due to the
significant increase in development work in 1997 associated with
the custom design of numerous batteries and battery packs for
customers (SMH, Fiat, SMUD, Black & Decker, Chrysler and another
which remains confidential), testing and evaluation of batteries
(aircraft and helicopter starting applications) and costs
associated with joint research and development efforts with
Corning to improve the Company's products, production processes
and automation. It is anticipated that the current level of
research and development expenditures will remain relatively
constant in 2000.

Depreciation and amortization costs decreased by approximately
$792,000 or 47% during 1999. The majority of the decrease is due
to the full amortization of purchased technology in October 1998,
which resulted in a monthly decrease of approximately $67,000 in
amortization.  The remainder of the decrease in 1999 is due to
the full depreciation of various production pieces of equipment
in 1999 which remain in use.

Interest costs decreased by approximately $345,000 or 95% during
1999.  Interest costs relate primarily to the Company's previous
debt obligations to Corning and have decreased due to the
Company's retirement of its obligations to Corning in June 1998.
During 1997 and early 1998, the Company issued Convertible Notes
Payable to Corning with a principal balance of $6,202,500 at face
interest rates of 5%. The Company was also amortizing discounts
on the Convertible Notes Payable. In June 1998, the Company paid
Corning $1,500,000 in cash in full settlement of its outstanding
obligations to Corning.  An extraordinary gain on the early
extinguishment of debt of approximately $3,500,000 was realized
from this transaction. Interest costs are expected to remain
relatively constant in 2000, unless significant debt is incurred.

As a part of the battery manufacturing process, the Company
handles and disposes of various hazardous materials such as lead
and sulfuric acid.  The Company is subject to strict
environmental regulations and has incurred significant costs in
installing equipment to manage and control hazardous substances
and pollution. As part of its on-going operations, the Company
incurred $75,000, $68,000 and $37,000, in non-capital
expenditures in 1999, 1998 and 1997, respectively, to properly
dispose of hazardous materials and waste.  As a result of such
preventive measures, the Company has not incurred significant
remediation costs.  Management is not currently aware of any
material infrequent or non-recurring clean-up expenditures to be
incurred in the future based on present circumstances and
conditions.

The Company did not experience any information technology
complications arising from the problems associated with the Year
2000.  The Company had previously completed an assessment of its
information technology systems' readiness for the Year 2000 and
believed that the modifications necessary for the Year 2000 would
not be significant.

During the years ended December 31, 1999, 1998 and 1997, the
Company issued approximately 3,700,000, 3,900,000 and 677,000
shares of Common Stock, respectively, as a result of a change in
control of the Company, financing transactions, purchases of
technology and equipment, payment of the Technology License
Payable and consulting services and the exercise of stock
options.  As a result of the increase in shares for these years,
the loss per share in each year was less than it would have been
based on the shares outstanding at the end of the preceding year.
Management of the Company believes that the issuance of shares in
these years was necessary to fund the increased working capital
and capital expenditure requirements.

Liquidity and Capital Resources

During 1999, the Company did not generate sufficient cash flow
from operations to fund its working capital needs.  The Company
continued to receive equity financing ($3,580,000 in 1999) under
an Agreement, which was entered into on June 2, 1998, with
Kamkorp Limited, a private company organized in the United
Kingdom ("Kamkorp"), for up to $6,000,000 in equity financing.
Kamkorp also has options to purchase an additional 3,000,000
shares at $1.00 under this Agreement.  In addition, in October
1999, Kamkorp was granted the option to purchase an additional
3,000,000 shares of the Company's Common Stock at $1.00.  At
December 31, 1999, Kamkorp is the record holder of 7,480,000
shares or 61.6% of the Company's 12,137,699 outstanding shares of
Common Stock and is the beneficial owner of 12,000,000 shares or
70% of the Company's Common Stock.  In accordance with the terms of the
Agreement, Kamkorp has nominated three members to the Company's nine-
member Board of Directors.  Additionally, the Company must obtain express
approval from Kamkorp for all important management policies and decisions
(See Note G - Liquidity).  While Kamkorp has provided substantial amounts
of financing to the Company to date, Kamkorp is not legally required
to make future advances.  However, Kamkorp has acknowledged to the
Company that it intends to continue equity funding to the Company
in 2000.

Funds generated in 1999 from the fund raising activities above
were used to maintain minimum production capabilities and to
sustain operations, to design and develop new battery products including
the 12C25 battery, and to pay for the lease and maintenance of its
88,000 square foot manufacturing facility.  Capital expenditures of
approximately $10,000 were incurred in 1999.

The Company received a purchase order in June 1999 for 8,000
12H85 batteries from Electrosource International Limited ("EIL")
for delivery beginning in the third quarter of 1999 with
completion of the order in the first quarter of 2000.  The
Company delivered 444 batteries against this order during the
year ended December 31, 1999 and is scheduled to deliver the
remainder of the order in 2000.  EIL is the international
marketing company and is affiliated with Kamkorp.  EIL's customer
for the batteries is Perusahaan Otomobil Elektrik (Malaysia)
("POEM"), a Malaysian joint venture company in which Kamkorp
affiliates hold a minority interest, engaged in the production of
the electric vehicles developed by Kamkorp.

The Company received a purchase order in December 1999 for 6,000
12C25 batteries from Frazer-Nash Research Limited for delivery
beginning in the first quarter of 2000 with completion of the
order in April.  The 12C25 battery has been specified by Frazer-
Nash Research Limited as the battery for all of the electric
vehicles to be supplied to the Sydney 2000 Olympic Games.  Frazer-
Nash is the exclusive supplier of electric vehicles to the
Olympic Games.

Cash balances have been depleted and the Company is currently
dependent on cash payments from Kamkorp and its affiliates to
continue operations on a day-to-day basis. The Company has
approximately $1,000,000 of outstanding accounts payable, most of
which is payable to raw material suppliers and service providers, some
of which is considerably past due. Cash generated from battery sales and
contracts with other customers is not sufficient to fund
operations. Cash payments from Kamkorp and its affiliates to date
have been sufficient to fund ongoing operations, but not to pay
the outstanding accounts payable or raw material purchases. If a
significant battery order is received, significant funding will
be required to pay the outstanding accounts payable and to order
raw materials.  The Company is discussing the possibility of
accelerated or additional financing from Kamkorp including
Kamkorp's exercise of its option to purchase the remaining
options to purchase 4,520,000 shares (the original agreement to
purchase 6,000,000 shares, plus options to purchase an additional
6,000,000 shares, less shares purchased as of December 31, 1999
of 7,480,000 shares) of the Company's Common Stock at $1.00 per
share.  Absent additional funding from Kamkorp or other sources,
the Company will not have the funds necessary to complete battery
orders from Kamkorp affiliates or other customers, or to pay all
outstanding obligations and will not be able to continue as a
going concern.

The Company's Common Stock is traded in the Over-the-Counter
Market and is reported on the Nasdaq Stock Markets ("Nasdaq"). 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 February 1, 1999, the Company received written notice
from Nasdaq that the closing bid price of its shares fell below
$1.00 for 30 consecutive business days and therefore did not meet
the Nasdaq minimum listing requirements. The written notification
stated that within 90 days of the notification, the Company's
closing bid price must be $1.00 or higher for ten consecutive
calendar days to satisfy the requirement.  This requirement was
met by mid-February 1999.  As of March 31, 1999, the Company's
net tangible assets were less than $2,000,000.  As a result, the
Company was not in compliance with the minimum listing
requirements of Nasdaq and advised Nasdaq of that fact.  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,
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
will be required to submit by the 20th of each month, an internal
balance sheet and statement of operations for the preceding
month's end.  The Company has complied with this requirement to
date.  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 would 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.

Other

In December 1996, the Company filed a petition in State Court in
Travis County, Texas, seeking, among other things, a declaratory
judgment that Horizon Battery Technologies, LTD. ("HBTL") had no
right to arbitration or monetary relief under a "Know-How License
Agreement".  HBTL contested jurisdiction and removed the
proceedings to the U.S. Federal Court.  The Federal District
Court ruled that it did not have personal jurisdiction over HBTL.
The Company successfully appealed in the U.S. Fifth Circuit Court
of Appeals.  In September 1999, the District Court granted
summary judgement in favor of the Company.  No further
proceedings are anticipated since no appeal was filed by HBTL.

Management of the Company believes that inflation does not have a
material effect on the Company's results of operations.

Item 8.  Financial Statements and Supplementary Data.

See Item 14(a) for an index of the financial statements and
schedules included as a part of this Annual Report on Form 10-K.

Item 9.  Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
As disclosed on Form 8-K on August 11, 1999, (amended on October
7, 1999) Ernst & Young LLP resigned as the Company's independent
auditors.  As disclosed on Form 8-K on November 23, 1999, Weaver
and Tidwell were appointed as the Company's independent auditors.


                           PART III

Item 10.  Directors and Executive Officers of Registrant.

Information with regard to directors and executive officers and
their business experience is set forth under "ELECTION OF
DIRECTORS" in the Company's Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on June 14, 2000, and
is incorporated herein by reference.

Information with regard to the filing of reports of ownership and
changes of ownership by the Company's directors, officers, and
persons who beneficially own more than ten percent of a
registered class of the Company equity securities is set forth
under "ELECTION OF DIRECTORS - Section 16(a) Disclosure" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 14, 2000, and is incorporated
herein by reference.

Item 11.  Executive Compensation.

Information with regard to executive compensation and pension or
similar plans is set forth under "ELECTION OF DIRECTORS -
Compensation of Executive Officers and Directors" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 14, 2000, and is incorporated
herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and
Management.

Information with regard to security ownership of certain
beneficial owners and management is set forth under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 14, 2000, and is incorporated
herein by reference.

Item 13.  Certain Relationships and Related Transactions.

Information with regard to certain transactions is set forth
under "ELECTION OF DIRECTORS - Compensation Committee Interlocks
and Insider Participation" and "ELECTION OF DIRECTORS - Certain
Relationships and Related Transaction" in the Company's
Definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on June 14, 2000, and is incorporated herein by
reference.


                             PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)(1)    The following financial statements of the Company are included
          in Item 8:
                                                                         Page
                                                                          No.

          Balance Sheets -- December 31, 1999 and 1998                    F-4

          Statements of Operations -- For the years ended
            December 31, 1999, 1998 and 1997                              F-5

          Statements of Shareholders' Equity -- For the years ended
            December 31, 1999, 1998 and 1997                              F-6

          Statements of Cash flows -- For the years ended
            December 31, 1999, 1998 and 1997                              F-7

          Notes to Financial Statements -- December 31, 1999              F-8

(a)(2)    Financial Statement Schedules

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are included in
the notes to financial statements, not required under the related
instructions or are inapplicable, and therefore have been omitted.

(a)(3)    Exhibits

     3.1  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).

     3.2  Certificate of Designation, Preferences, Rights and Limitations
          of 1992 Series A Preferred Stock and Series A-1 Preferred Stock
          of Electrosource, Inc. as filed of record with the Delaware
          Secretary of State on January 15, 1992 (filed as Exhibit 4.1 to
          Electrosource, Inc. Form 8-K Current Report for Issuers Subject
          to the 1934 Act Reporting Requirements filed December 24, 1991
          and incorporated herein by reference).

     3.3  Amendment to Restated Certificate of Incorporation of Electrosource,
          Inc., increase in authorized shares to 50,000,000 shares (filed as
          Exhibit 3.1 to Electrosource, Inc., Quarterly Report on Form 10-Q
          for quarter ended June 30, 1995 and incorporated herein by reference).

     3.4  Amendment to Restated Certificate of Incorporation of Electrosource,
          Inc., elimination of Certificate of Designation for Series A and
          Series A-1 Preferred Stock (filed as Exhibit 3.2 to Electrosource,
          Inc., Quarterly Report on Form 10-Q for quarter ended June 30, 1995
          and incorporated hereby by reference).

     3.5  Amendment to the Restated Certificate of Incorporation of
          Electrosource filed as of July 22, 1996 (filed as Exhibit 3.1
          to Electrosource, Inc. Quarterly Report on Form 10-Q for the
          quarter ended June 30, 1996 and incorporated herein by reference).

     3.6  Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 to
          Form 10 and incorporated herein by reference).

     3.7  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).

     3.8  Amendment to Bylaws of Electrosource, Inc. dated November 3, 1993
          (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).

     3.9  Amendment to Bylaws of Electrosource, Inc. dated June 23, 1994
          (filed as Exhibit 3.6 to Electrosource, Inc. Annual Report filed
          on Form 10-K for the period ended December 31, 1994 and incorporated
          herein by reference).

     3.10 Amendment to Bylaws of Electrosource, Inc. dated November 13, 1996
          (filed as Exhibit 3.10 to Electrosource, Inc. Annual Report filed on
          Form 10-K for the period ended December 31, 1996 and incorporated
          herein by reference).

     4.1  Warrant to purchase up to 5,424 shares of Electrosource, Inc. Common
          Stock issued to Rosehouse Ltd., a Bermuda-based institutional buyer,
          dated April 5, 1995 (filed as an Exhibit to Electrosource, Inc.
          Current Report on Form 8-K filed April 12, 1995 and incorporated
          herein by reference).

     4.2  Warrant to purchase up to 5,000 shares of Electrosource, Inc.
          Common Stock issued to Ally Capital Management, Inc. on April 17,
          1995 (filed as Exhibit 4.1 to Electrosource, Inc. Quarterly Report
          on Form 10-Q  for the quarter ended June 30, 1995 and incorporated
          herein by reference).

     4.3  Warrant to purchase up to 25,000 shares of Electrosource, Inc.,
          Common Stock, issued to Rosehouse Ltd., a Bermuda-based institutional
          buyer, dated July 27, 1995 (filed as Exhibit 4.4 to Electrosource,
          Inc. Quarterly  Report on Form 10-Q for quarter ended June 30, 1995
          and incorporated herein by reference).

     4.4  Warrant (Stock Option Agreement No. W12-101) to purchase up to 20,000
          shares of Electrosource, Inc., Common Stock, issued to Corning
          Incorporated dated December 31, 1997 for payment of that certain
          Project Annex dated October 20, 1997 (filed as Exhibit 4.16  to
          Electrosource, Inc. Annual Report on Form 10-K for the period  ended
          December 31, 1997 and incorporated herein by reference).

     4.5  Warrant (Stock Option Agreement No. W12-102A) to purchase up to
          70,000 shares of Electrosource, Inc., Common Stock, issued to Corning
          Incorporated dated December 31, 1997 for payment on that certain
          Project Annex dated October 20, 1997 (filed as Exhibit 4.17 to
          Electrosource, Inc. Annual Report on Form 10-K for the period ended
          December 31, 1997 and incorporated herein by reference).

     4.6  Warrant (Stock Option Agreement No. W12-103A) to purchase up to
          70,000 shares of Electrosource, Inc., Common Stock, issued to
          Corning Incorporated dated December 31, 1997 for payment on that
          certain Project Annex dated October 20, 1997 (filed as Exhibit 4.18
          to Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1997 and incorporated herein by reference).

     4.7  Warrant (Stock Option Agreement No. W12-102B) to purchase up to
          60,000 shares of Electrosource, Inc. Common Stock, issued to
          Corning Incorporated dated June 30, 1998 for payment of that certain
          Project Annex dated October 20, 1997 (filed as Exhibit 4.7 to
          Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1998 and incorporated herein by reference).

     4.8  Warrant (Stock Option Agreement No. W12-103B) to purchase up to
          60,000 shares of Electrosource, Inc. Common Stock, issued to
          Corning Incorporated dated June 30, 1998 for payment of that certain
          Project  Annex dated October 20, 1997 (filed as Exhibit 4.8 to
          Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1998 and incorporated herein by reference).

    10.1  Sublicense Agreement dated as of October 5, 1987 between
          Electrosource, Inc. and Tracor, Inc. (filed as Exhibit 10.4 to
          Form 10 and incorporated herein by reference).

    10.2  Patent and Technology Exclusive License Agreement dated August 14,
          1984 between Tracor, Inc. and Blanyer-Mathews Associates, Inc.
          ("BMA") (filed as Exhibit 10.9 to Registration Statement
          [No 33-30486] on Form S-1 filed August 14, 1989 hereinafter
          referred to as "Form S-1" and incorporated herein by reference).

    10.3  Amendment to Patent and Technology Exclusive License Agreement dated
          May 29, 1987 between Tracor, Inc. and BMA (filed as Exhibit 10.10
          to Form S-1 and incorporated herein by reference).

    10.4  Bonus Royalty Agreement dated May 26, 1989 among Electrosource, Inc.,
          Tracor, Inc., and BMA (filed as Exhibit 19 to Electrosource, Inc.
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1989 and
          incorporated herein by reference).

    10.5  Amendment to Bonus Royalty Agreement entered into as of November 30,
          1989 by and among BMA, Tracor, Inc. and Electrosource, Inc. (filed
          as Exhibit 10.17 to Post Effective Amendment No. 1 to Form S-1
          Registration Statement [No. 33-34581] filed December 11, 1989
          hereinafter referred to as "Post-Effective Amendment" and
          incorporated herein by reference).

    10.6  Assignment of Patent License dated as of May 14, 1990 by and between
          Electrosource, Inc. and Tracor, Inc. (joined by BMA for limited
          purposes described therein)(filed as Exhibit 10.20 to the Company's
          Annual Report on Form 10-K for the period ended December 31, 1990
          hereinafter referred to as the "1990 Form 10-K" and incorporated
          herein by reference).

    10.7  Letter Agreement dated as of January 15, 1991 between Electrosource,
          Inc. and BMA (filed as Exhibit 10.21 to the Company's 1990 Form 10-K
          and incorporated herein by reference).

    10.8  License Modification Agreement dated January 16, 1992 between Blanyer
          Mathews & Associates, Inc., Electrosource, Inc. and Battery Horizons,
          Ltd. (filed as Exhibit 10.23 to Electrosource, Inc. Annual Report
          on Form 10-K for the period ended December 31, 1991 and incorporated
          herein by reference).

    10.9  First Amendment to Assignment of Patent License dated April 2, 1992
          between Electrosource, Inc. and Tracor, Inc. (filed as Exhibit 10.58
          to Company's Registration Statement [No. 33-65248] on Form S-1 filed
          June 30, 1993 and incorporated herein by reference).

    10.10 Lease Agreement between William D. McMorris and Horizon Battery
          Technologies, Inc. dated August 17, 1993 (filed as Exhibit 10.42
          to Electrosource Inc. Annual Report on Form 10-K for the period
          ended December 31, 1994 and incorporated herein by reference).

    10.11 Lease Agreement between William D. McMorris and Electrosource, Inc.
          dated May 29, 1998 (filed as Exhibit 10.1 to Electrosource, Inc.
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
          and incorporated herein by reference).

    10.12 Amendment to Business Alliance and License Agreement dated
          November 1, 1995 between Electric Power Research Institute and
          Electrosource, Inc. (filed as Exhibit 10.2 to Electrosource, Inc.
          Quarterly Report on Form 10-Q for the quarter ended September 30,
          1995 and incorporated herein by reference).

    10.13 Stock Purchase Agreement together with the Asset and Technology
          License Agreement dated January 31, 1995 between BDM Technologies,
          Inc. and Electrosource, Inc. (filed as Exhibit 10.46 to
          Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1994 and incorporated herein by reference).

    10.14 First Amendment to Asset and Technology License Agreement between
          BDM International, Inc. and Electrosource, Inc. dated December 18,
          1997 (filed as Exhibit 10.17 to Electrosource, Inc. Annual Report
          on Form 10-K for the period ended December 31, 1997 and incorporated
          herein by reference).

    10.15 Equipment Lease Agreement dated September 7, 1995, between Salem
          Capital Corporation and Electrosource, Inc. (filed as Exhibit 10.65
          to Electrosource, Inc. Annual Report on Form 10-K for the period
          ending December 31, 1995 and incorporated herein by reference).

    10.16 Development Agreement and Agreement for Purchase of Machinery and
          Supplies between Electrosource, Inc., and Charles L. Mathews
          ("Contractor") dated November 1, 1995 (filed as Exhibit 10.68 to
          Electrosource, Inc. Annual Report on Form 10-K for the period ending
          December 31, 1995 and incorporated herein by reference).

    10.17 Agreement for Aircraft Starting Battery Distribution between
          Electrosource, Inc. and Horizon Aviation, Inc. dated February 13,
          1996 (filed as Exhibit 10.70 to Electrosource, Inc. Annual Report
          on Form 10-K for the period ending December 31, 1995 and incorporated
          herein by reference).

    10.18 Memorandum of Understanding between Electrosource, Inc. and Lockheed
          Martin Corporation dated March 15, 1996 (filed as Exhibit 10.1 to
          Electrosource, Inc. Quarterly Report on Form 10-Q for quarter ended
          March 31, 1996 and incorporated herein by reference).

    10.19 Subscription Agreements between participants and Electrosource,
          Inc. dated January 23, 1997 (filed as Exhibit 4.9 to Electrosource,
          Inc. Registration Statement [No. 333-25659] Form S-3 on April 23,
          1997 and incorporated herein by reference).

    10.20 Amendment Number One to Stock Purchase Warrant dated August 18, 1998,
          issued under Subscription Agreements between participants and
          Electrosource, Inc. dated January 23, 1997 (filed as Exhibit 10.2
          to Electrosource, Inc. Quarterly Report on Form 10-Q for the quarter
          ended September 30, 1998 and incorporated herein by reference).

    10.21 Note Purchase and Option Agreement for $4 million dated March 27,
          1997 between Electrosource, Inc. and Corning Incorporated (filed as
          Exhibit 4.1 to Electrosource, Inc. Quarterly Report on Form 10-Q for
          quarter ended March 31, 1997 and incorporated herein by reference).

    10.22 5% Convertible Promissory Note for $100,000 dated September 27, 1997
          between Electrosource, Inc. and Corning Incorporated for payment of
          interest due on the Note Purchase and Option Agreement dated
          March 27, 1997 (filed as Exhibit 10.31 to Electrosource, Inc. Annual
          Report on Form 10-K for the period ended December 31, 1997 and
          incorporated herein by reference).

    10.23 5% Convertible Promissory Note for $102,500 dated March 27, 1998
          between Electrosource, Inc. and Corning Incorporated for payment of
          interest due on the Note Purchase and Option Agreement dated
          March 27, 1997 and Promissory Note dated September 27, 1997 (filed
          as Exhibit 10.32 to Electrosource, Inc. Annual Report on Form 10-K
          for the period ended December 31, 1997 and incorporated herein by
          reference).

    10.24 Amendment No. 1 dated December 22, 1997 to Stock Option Agreement
          dated March 27, 1997 between Corning Incorporated and Electrosource,
          Inc. (filed as Exhibit 10.33 to Electrosource, Inc. Annual Report on
          Form 10-K for the period ended December 31, 1997 and incorporated
          herein by reference).

    10.25 Research and Development Umbrella Agreement dated July 1, 1997
          between Corning Incorporated and Electrosource, Inc. (filed as
          Exhibit 10.34 to Electrosource, Inc. Annual Report on Form 10-K for
          the period ended December 31, 1997 and incorporated herein by
          reference).

    10.26 Project Annex dated October 20, 1997 to the Development Umbrella
          Agreement dated as of July 1, 1997 by and between Corning
          Incorporated and Electrosource, Inc., being further defined in
          Exhibit 1, Project Proposal, Physical and Chemical Description of
          Battery Electrode "Moss." (filed as Exhibit 10.35 to Electrosource,
          Inc. Annual Report on Form 10-K for the period ended December 31,
          1997 and incorporated herein by reference).

    10.27 Project Annex dated October 20, 1997 to the Development Umbrella
          Agreement dated as of July 1, 1997 by and between Corning
          Incorporated and Electrosource, Inc., being further defined in
          Exhibit 1, Project Proposal, Engineering Resources (filed as
          Exhibit 10.36 to Electrosource, Inc. Annual Report on Form 10-K
          for the period ended December 31, 1997 and incorporated herein
          by reference).

    10.28 Project Annex dated October 20, 1997 to the Development Umbrella
          Agreement dated as of July  1, 1997 by and between Corning
          Incorporated and Electrosource, Inc., being further defined in
          Exhibit 1, Project Proposal, Characterization of Electrode Materials
          and Collector Grid Materials (filed as Exhibit 10.37 to Electrosource,
          Inc. Annual Report on Form 10-K for the period ended December 31, 1997
          and incorporated herein by reference).

    10.29 Amendment dated June 15, 1998 to May 29, 1998 Agreement terminating
          Notes between Corning Incorporated and Electrosource, Inc. for a
          one-day extension for payment (filed as Exhibit 10.3 to Electrosource,
          Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
          and incorporated herein by reference).

    10.30 Stock Purchase Agreement dated June 2, 1998 between Kamkorp and
          Electrosource, Inc. (filed as Exhibit 4.1 to Electrosource, Inc.
          Form 8-K dated June 11, 1998 and incorporated herein by reference).

    10.31 Registration Rights Agreement dated June 2, 1998 between Kamkorp and
          Electrosource, Inc. (filed as Exhibit 4.2 to Electrosource, Inc.
          Form 8-K dated June 11, 1998 and incorporated herein by reference).

    10.32 Form of Severance Agreement between officers/key employees and
          Electrosource, Inc. dated May 18, 1998 (filed as Exhibit 10.4 to
          Electrosource, Inc. Quarterly Report on Form 10-Q for the quarter
          ended June 30, 1998 and incorporated herein by reference).

    10.33 Purchase Order for Horizon Batteries Pack Development Program between
          Fiat Auto and Electrosource, Inc. dated September 30, 1996 (filed as
          Exhibit 10.40 to Electrosource, Inc. Annual Report on Form 10-K for
          the period ended December 31, 1997 and incorporated herein by
          reference).

    10.34 Frame-Development Contract dated March 14, 1997 between SMH Automobile
          S.A. and Electrosource, Inc. (filed as Exhibit 10.41 to Electrosource,
          Inc. Annual Report on Form 10-K for the period ended December 31, 1997
          and incorporated herein by reference).

    10.35 Summary Contract Amendment Terms dated November 12, 1997 for Frame-
          Development Contract dated March 14, 1997 between SMH Automobile S.A.
          and Electrosource, Inc. (filed as Exhibit 10.42 to Electrosource, Inc.
          Annual Report on Form 10-K for the period ended December 31, 1997 and
          incorporated herein by reference).

    10.36 Severance Agreement between James M. Rosel and Electrosource, Inc.
          effective August 31, 1998 (filed as Exhibit 10.1 to Electrosource,
          Inc. Quarterly Report on Form 10-Q for the quarter ended September 30,
          1998 and incorporated herein by reference).

    10.37 Purchase Order Number ES1001 between Electrosource International and
          Electrosource, Inc. dated June 15, 1998 for 5,800 batteries (filed as
          Exhibit 10.49 to Electrosource, Inc. Annual Report on Form 10-K for
          the period ended December 31, 1998 and incorporated herein by
          reference).

    10.38 Purchase Order Number ES1002 (amendment to Purchase Order Number
          ES1001) between Electrosource International and Electrosource, Inc.
          dated March 3, 1999 (filed as Exhibit 10.50 to Electrosource, Inc.
          Annual Report on Form 10-K for the period ended December 31, 1998
          and incorporated herein by reference).

The following exhibits filed under Paragraph 10 of Item 601 are the Company's
compensation plans and arrangements:

    10.39 Director Indemnification Agreement dated September 1, 1993 between
          Electrosource, Inc. and Dr. Norman Hackerman (filed as Exhibit 10.57
          to Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1993 and incorporated herein by reference).

    10.40 Director Indemnification Agreement dated June 22, 1995 between
          Electrosource, Inc. and Nathan Morton (filed as Exhibit 10.2 to
          Electrosource, Inc. Quarterly Report on Form 10-Q for the quarter
          ended June 30, 1995 and incorporated herein by reference).

    10.41 Director Indemnification Agreement dated March 3, 1997 between
          Electrosource, Inc. and Richard E. Balzhiser (filed as Exhibit 10.51
          to Electrosource, Inc. Annual Report on Form 10-K for the period
          ended December 31, 1997 and incorporated herein by reference).

    10.42 Director Indemnification Agreement dated June 2, 1998 between
          Electrosource, Inc. and Kamal Siddiqi (filed as Exhibit 10.5 to
          Electrosource, Inc. Quarterly Report on Form 10-Q for the period
          ended June 30, 1998 and incorporated herein by reference).

    10.43 Director Indemnification Agreement dated June 2, 1998 between
          Electrosource, Inc. and Clifford Winckless (filed as Exhibit 10.6
          to Electrosource, Inc. Quarterly Report on Form 10-Q for the period
          ended June 30, 1998 and incorporated herein by reference).

    10.44 Director Indemnification Agreement dated June  2, 1998 between
          Electrosource, Inc. and Roger Musson (filed as Exhibit 10.7 to
          Electrosource, Inc. Quarterly Report on Form 10-Q for the period
          ended June 30, 1998).

    10.45 Director Indemnification Agreement dated December 23, 1998 between
          Electrosource, Inc. and William F. Griffin (filed as Exhibit 10.64
          to Electrosource, Inc. Annual Report on Form 10K for the period
          ended December 31, 1998 and incorporated herein by reference).

    10.46 Director Indemnification Agreement dated December 23, 1998 between
          Electrosource, Inc. and James M. Rosel (filed as Exhibit 10.65 to
          Electrosource, Inc. Annual Report on Form 10K for the period ended
          December 31, 1998 and incorporated herein by reference).

    10.47 Director Indemnification Agreement dated August 16, 1999 between
          Electrosource, Inc. and Benny E. Jay.

    10.48 1996 Stock Option Plan for Electrosource, Inc. (filed as Exhibit 4.2
          to Registration Statement [No. 333-31101] on Form S-8 and incorporated
          herein by reference).

    10.49 1999 Stock Option Plan for Electrosource, Inc. (filed as Exhibit 4
          to Form 10Q for the quarter ended June 30, 1999 and incorporated
          herein by reference).

    24.1  Consent of Weaver and Tidwell LLP

    24.2  Consent of Ernst & Young LLP

    27.   Financial Data Schedule


(b)       Reports on Form 8-K.

          Reports on Form 8-K filed during the quarter ended December 31,
          1999 were:

              November 9, 1999  Grant of 3,000,000 options to Kamkorp, Ltd.
              November 23, 1999 Appointment of Weaver and Tidwell as
                                independent auditors.


                           SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                          ELECTROSOURCE, INC.

                          By:              /s/
Date:                        Benny E. Jay, President/Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act
of  1934,  this  report has been signed below  by  the  following
persons on behalf of the Registrant and in the capacities and  on
the dates indicated.

       Signature                      Title             Date


                         Director,                  March 24, 2000
/s/                      President and
Benny E. Jay             Chief Executive Officer


/s/                      Director                   March 24, 2000
Richard E. Balzhiser


/s/                      Director                   March 22, 2000
William F. Griffin


/s/                      Director                   March 22, 2000
Norman Hackerman


                         Director                   ___________
Nathan P. Morton


/s/                      Director and              March 23, 2000
Roger Musson             Chief Financial Officer


/s/                      Director                  March 22, 2000
James M. Rosel


/s/                      Director                  March 23, 2000
Kamal Siddiqi


/s/                      Director                  March 23, 2000
Clifford G. Winckless


/s/                      Vice President            March 24, 2000
Don C. Perriello         Treasurer and
                         Chief Accounting Officer



                           ELECTROSOURCE, INC.

                   Audited Financial Statements

                         December 31, 1999


Audited Financial Statements


     Report of Independent Auditors for 1999                      F-2
     Report of Independent Auditors for 1998 and 1997             F-3
     Balance Sheets                                               F-4
     Statements of Operations                                     F-5
     Statements of Shareholders' Equity                           F-6
     Statements of Cash Flows                                     F-7
     Notes to Financial Statements                                F-8



                  REPORT OF INDEPENDENT AUDITORS




Shareholders and Board of Directors
Electrosource, Inc.


We  have  audited the accompanying balance sheet of  Electrosource,
Inc.,  as  of  December  31, 1999, and  the  related  statements  of
operations, shareholders' equity, and cash flows for the year ended
December   31,   1999.    These  financial   statements   are   the
responsibility of the Company's management.  Our responsibility  is
to  express an opinion on these financial statements based  on  our
audit.

We  conducted  our  audit  in accordance  with  generally  accepted
auditing  standards.   Those standards require  that  we  plan  and
perform the audit to obtain reasonable assurance about whether  the
financial statements are free of material misstatement.   An  audit
includes  examining,  on  a  test basis,  evidence  supporting  the
amounts and disclosures in the financial statements.  An audit also
includes  assessing the accounting principles used and  significant
estimates  made  by management, as well as evaluating  the  overall
financial  statement  presentation.   We  believe  that  our  audit
provides a reasonable basis for our opinion.

In  our opinion, the financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of
Electrosource,  Inc. at December 31, 1999, and the results  of  its
operations and its cash flows for year ended December 31, 1999,  in
conformity with generally accepted accounting principles.

The  accompanying financial statements have been prepared  assuming
that  the Company will continue as a going concern.  As more  fully
described  in Note O, the Company has incurred recurring  operating
losses,  has  a  working  capital deficit  and  revenues  have  not
resulted  in  sufficient  cash flow to sustain  operations.   These
conditions  raise substantial doubt about the Company's ability  to
continue  as  a  going concern.  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  outcome  of
this uncertainty.


         /s/
Weaver and Tidwell LLP


Fort Worth, Texas
March 14, 2000




                  REPORT OF INDEPENDENT AUDITORS



Shareholders and Board of Directors
Electrosource, Inc.


We  have  audited the accompanying balance sheet of  Electrosource,
Inc.  as  of  December  31,  1998, and the  related  statements  of
operations,  shareholders' equity, and cash flows for each  of  the
two  years  in the period ended December 31, 1998.  These financial
statements are the responsibility of the Company's management.  Our
responsibility  is  to  express  an  opinion  on  these   financial
statements based on our audits.

We  conducted  our  audits  in accordance with auditing  standards
generally accepted in the United States.  Those standards require
that  we  plan  and perform the audit to obtain reasonable assurance
about whether  the financial statements are free of material misstatement.
An  audit includes  examining,  on  a  test basis,  evidence  supporting
the amounts and disclosures in the financial statements.  An audit also
includes  assessing the accounting principles used and  significant
estimates  made  by management, as well as evaluating  the  overall
financial  statement  presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

In  our opinion, the financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of
Electrosource,  Inc. at December 31, 1998 and the  results  of  its
operations  and  its cash flows for each of the two  years  in  the
period  ended  December  31,  1998, in  conformity  with accounting
principles generally accepted in the United States.

The  accompanying financial statements have been prepared  assuming
that  the Company will continue as a going concern.  As more  fully
described  in Note O, the Company has incurred recurring  operating
losses,  has  a  working  capital deficit  and  revenues  have  not
resulted  in  sufficient  cash flow to sustain  operations.   These
conditions  raise substantial doubt about the Company's ability  to
continue  as  a  going concern.  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  outcome  of
this uncertainty.


                            /s/  Ernst & Young LLP


Austin, Texas
March 5, 1999, except for Note O,
     As to which the date is April 12, 1999




                        ELECTROSOURCE, INC.
                          Balance Sheets

                                                          December 31
                                                      1999           1998
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                       $  157,008     $  207,246
  Trade receivables                                1,417,736        109,520
  Inventories                                        167,569        350,464
  Prepaid expenses and other assets                   45,247         29,938
TOTAL CURRENT ASSETS                               1,787,560        697,168

PROPERTY AND EQUIPMENT, Net                        2,753,849      3,462,157

INTANGIBLE ASSETS
  Technology license agreement                     3,048,674      3,048,674
  Less:  accumulated amortization                 (2,235,217)    (2,046,397)

NET INTANGIBLE ASSETS                                813,457      1,002,277

OTHER ASSETS                                          52,500         55,500
TOTAL ASSETS                                    $  5,407,366   $  5,217,102


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                              $  1,044,086   $    948,528
  Accrued liabilities                              1,399,285      1,308,346
  Deferred revenue and advance
    payment on batteries                             387,421        649,893
  Current portion of capital lease obligations        71,513         77,006

TOTAL CURRENT LIABILITIES                          2,902,305      2,983,773

CAPITAL LEASE  OBLIGATIONS (less current portion)          -         71,512

COMMITMENTS AND CONTINGENCIES (Notes H, I and O)

SHAREHOLDERS' EQUITY
  Common Stock, par value $1.00 per share,
    authorized 50,000,000 shares; issued and
    outstanding 12,137,699 in 1999 and
    8,434,531 in 1998                             12,137,699     8,434,531
  Preferred Stock, par value $1.00 per share;
    authorized 10,000,000 shares, no shares
    issued or outstanding                                  -             -
  Common Stock subscription receivable              (467,663)     (467,663)
  Warrants (Note J)                                        -             -
  Paid in capital                                 51,552,599    51,446,508
  Accumulated deficit                            (60,717,574)  (57,251,559)
                                                   2,505,061     2,161,817
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $  5,407,366  $  5,217,102

See notes to financial statements.



                             ELECTROSOURCE, INC.
                          Statements of Operations

                      For the years ended December 31,
                                          1999          1998           1997

REVENUES
  Battery sales                      $  381,434    $  593,864    $  914,901
  Battery sales - Frazer-Nash/EIL       108,990       360,850             -
  Project revenue                     1,602,797       735,719     2,233,923
  Cancellation fee                            -       656,100             -
  Miscellaneous Income                  109,499             -             -
  Interest income                            87        33,218        94,849
                                      2,202,807     2,379,751     3,243,673

COSTS AND EXPENSES
  Manufacturing                       2,469,023     3,564,176     3,448,677
  Selling, general and administrative   915,107     1,913,128     2,468,778
  Research and development            1,260,918     1,803,632     2,490,677
  Technology license and royalties      100,000       100,000       110,000
  Depreciation and amortization         907,203     1,699,305     1,915,942
  Interest expense                       16,571       362,040       453,506
  Loss on payment of capital lease            -             -       189,316
                                      5,668,822     9,442,281    11,076,896
LOSS BEFORE INCOME TAXES             (3,466,015)   (7,062,530)   (7,833,223)

INCOME TAX BENEFIT                            -     1,200,895             -
LOSS BEFORE EXTRAORDINARY GAIN       (3,466,015)   (5,861,635)   (7,823,223)
EXTRAORDINARY GAIN FROM EARLY
  EXTINGUISHMENT OF DEBT, NET OF
  TAX OF $1,200,895 (NOTE F)                  -     2,331,150             -

NET LOSS                            $(3,466,015)  $(3,530,485)  $(7,833,223)

BASIC (AND DILUTED) LOSS PER SHARE
BEFORE EXTRAORDINARY GAIN           $     (0.34)  $     (0.95)  $     (1.91)
BASIC (AND DILUTED) LOSS PER SHARE  $     (0.34)  $     (0.57)  $     (1.91)

WEIGHTED AVERAGE SHARES OUTSTANDING   10,071,303    6,180,010     4,106,695

See notes to financial statements.



                              ELECTROSOURCE, INC.
                       Statements of Shareholders' Equity
[CAPTION]
<TABLE>                                                      Common Stock                     Total
                                    Common       Paid In    Subscriptions  Accumulated    Shareholders'
                                     Stock       Capital      Receivable     Deficit         Equity
<S>                                <C>          <C>             <C>       <C>              <C>
Balance at January 1, 1997        $3,857,912   $45,876,668           -   $(45,887,851)    $ 3,846,729

Shares issued in Regulation D
  offering                           109,397       545,453            -              -        654,850
Shares issued Technology License      76,668     1,172,016            -              -      1,248,684
Shares issued for capital lease
  obligations and equipment
  purchases                          127,500       708,945            -              -        836,445
Shares issued for operating lease
  and other obligations              299,304       467,663     (467,663)             -        299,304
Shares issued for consulting services  6,000        58,800            -              -         64,800
Exercises of options and warrants     57,750       246,383            -              -        304,133
Stock options issued for technical
  and consulting services                  -       480,000            -              -        480,000
Stock options issued in conjunction
  Convertible Notes Payable                -     1,590,580            -              -      1,590,580
Net loss for year ended
  December 31, 1997                        -             -            -     (7,833,223)    (7,833,223)
Balance at December 31, 1997       4,534,531    51,146,508     (467,663)   (53,721,074)     1,492,302

Shares issued to Kamkorp           3,900,000             -            -              -      3,900,000
Stock options issued for technical
  and consulting services                  -       300,000            -              -        300,000
Net loss and comprehensive income
  for year ended December 31, 1998         -             -            -     (3,530,485)    (3,530,485)
Balance at December 31, 1998       8,434,531    51,446,508     (467,663)   (57,251,559)     2,161,817

Shares issued to Kamkorp (Note G)  3,580,000             -            -              -      3,580,000
Stock options exercised under
  1996 Stock Option Plan              86,918        49,432            -              -        136,350
Shares issued for exercise
  of Warrants                         36,250        56,659            -              -         92,909
Net loss for year ended
  December 31, 1999                        -             -            -     (3,466,015)    (3,466,015)
Balance at December 31, 1999     $12,137,699   $51,552,599    $(467,663)  $(60,717,574)    $2,505,061

See notes to financial statements.
</TABLE>

                        ELECTROSOURCE, INC.
                     Statements of Cash Flows


                                          1999          1998           1997
OPERATING ACTIVITIES
  Net loss                           $(3,466,015)   $(3,530,485)   $(7,833,223)
    Adjustments to reconcile net loss
      to net cash used in operating
      activities:
        Equity instruments issued
          for consulting services              -        300,000        544,800
       Depreciation of property, plant
         and equipment                   718,383        788,945        922,822
       Amortization of intangible
         assets                          188,820        859,070        993,120
       Amortization of prepaid lease
         expense                               -        299,304              -
       Extraordinary gain from early
         extinguishment of debt,
         Net of tax                            -     (2,331,150)             -
       Amortization of discounts on
         convertible notes payable and
         deferred financing costs              -        169,569        188,728
       Interest expense paid in
         convertible notes payable
         or common stock                       -        193,002        100,000
       Loss on payment of capital lease        -              -        189,316
       Deferred tax benefit                    -     (1,200,895)             -
    Changes in operating assets and liabilities:
      (Increase) decrease in trade
        receivables                   (1,308,216)       298,710       (160,599)
      (Increase) decrease in inventories 182,895        (28,175)       (73,054)
      (Increase) decrease in prepaid
        expenses and other assets        (12,309)        (2,485)        86,865
      Increase in accounts payable
        and accrued liabilities          186,497         69,348        378,934
      Increase (decrease) in deferred
        revenue and advance payments
        on batteries                    (262,472)       217,294       (724,429)
CASH USED IN OPERATING ACTIVITIES     (3,772,417)    (3,897,948)    (5,386,720)

INVESTING ACTIVITIES
  Purchases of property and
    equipment, net                       (10,075)       (86,643)      (134,458)
CASH USED IN INVESTING ACTIVITIES        (10,075)       (86,643)      (134,458)

FINANCING ACTIVITIES
  Proceeds from issuances of convertible
    notes payable and related warrants
    to purchase Common Stock                   -      1,000,000      5,000,000
  Payment of notes payable and
    capital lease obligations            (77,005)    (1,572,685)      (685,968)
  Proceeds from issuances of common
    stock, net                         3,809,259      3,900,000        958,983
  Decrease in restricted cash                  -         81,604        663,220
CASH PROVIDED BY FINANCING ACTIVITIES  3,732,254      3,408,919      5,936,235

INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                       (50,238)      (575,672)       415,057

Cash and cash equivalents at
  beginning of period                    207,246        782,918        367,861

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                       $  157,008     $  207,246     $  782,918

See notes to financial statements.



                  NOTES TO FINANCIAL STATEMENTS
                       ELECTROSOURCE, INC.
                        December 31, 1999


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization:    Electrosource,   Inc.   (the   "Company")    was
incorporated  as  a  Delaware corporation on June  3,  1987.  The
Company designs and manufactures advanced lead-acid batteries for
use  in  motive power and starting applications. The majority  of
revenue  recognized through December 31, 1999  has  been  derived
from the development and sales of batteries for electric vehicles
and  hybrid electric vehicles to automotive manufacturers in  the
United States, England and Malaysia.

Cash   and   Cash  Equivalents:  The  Company's  cash  and   cash
equivalents  consist of cash and short-term  investments  with  a
maturity of three months or less when purchased.

Inventories:  Inventories are stated at the lower of cost  (on  a
standard, direct materials and direct labor cost basis) or market
value.

Property  and Equipment: Property and equipment are  recorded  at
cost.  The  Company has also capitalized equipment in  accordance
with  the  terms of related leases. Depreciation of property  and
equipment  (including amounts recorded under capitalized  leases)
is  computed  using the straight-line method over  the  estimated
useful  lives of the assets or the respective lease term, ranging
from 3 to 10 years.

Technology  License  Agreement  and  Purchased  Technology:   The
Company  has  been  assigned  all  license  rights  relating   to
coextruded wire by the original licensee (See Note D.)  The  cost
of  this  license is being amortized over the legal life  of  the
patents  on  the  technology  (17  years).  The  patents   expire
beginning  in  2004.  On November 1, 1995, the  Company  obtained
intellectual  property  rights (purchased  technology)  developed
under  a  Research and Development Agreement  (See Note D.)   The
cost of this purchased technology was fully amortized in 1998. On
an   ongoing  basis,  the  Company  reviews  the  valuation   and
amortization  of  its intangibles, taking into consideration  any
events or circumstances which might have diminished their value.

Project  Revenue: Projects are accounted for under the percentage
of  completion  method, wherein revenue is  recognized  based  on
cumulative  costs incurred and the estimated cost to complete  as
such relates to total contract price.  All costs are expensed  as
incurred  and  losses on contracts are estimated  and  recognized
when  it  becomes  apparent a loss is  to  be  incurred.  Certain
projects  are billed quarterly or upon the completion of contract
milestones.

Stock   Compensation:  The  Company  accounts   for   its   stock
compensation  arrangements  under  the  provisions  of  APB   25,
"Accounting for Stock Issued to Employees."

Basic  and  Diluted Loss Per Share: Basic and  diluted  loss  per
share is based on the weighted 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.

Business  Segments: The Company is engaged in the manufacture  of
advanced  lead-acid,  rechargeable  storage  batteries  and   the
development  of related processes and technologies.  Accordingly,
the Company considers itself to be in one operating segment.

Comprehensive Income: In 1997 the Financial Accounting  Standards
Board issued Statement 130, Reporting Comprehensive Income ("SFAS
130").  SFAS  130  establishes new rules for  the  reporting  and
display  of comprehensive income and its components.  The Company
adopted SFAS 130 effective January 1, 1998, but did not have  any
comprehensive income as defined in SFAS 130 during 1999, 1998  or
1997.

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes: The Company reports income taxes in accordance with
the Financial Accounting Standards Board's Statement of Financial
Accounting  Standards  No.  109, "Accounting  for  Income  Taxes"
("SFAS  109").   SFAS 109 requires that deferred tax  assets  and
liabilities  be  determined based on the difference  between  the
financial statement and tax bases of assets and liabilities using
enacted  tax  rates  in  effect  for  the  years  in  which   the
differences are expected to reverse.

Advertising  Costs:   The  Company expenses  costs  of  producing
advertising  and  sales  related materials  as  incurred.   These
expenses  for  the years ended December 31, 1999, 1998  and  1997
were $4,000, $4,400, and $0, respectively.

Use  of  Estimates:  The preparation of financial  statements  in
conformity with generally accepted accounting principles requires
management  to  make estimates and assumptions  that  affect  the
amounts  reported  in the financial statements  and  accompanying
notes.  Actual results could differ from those estimates.


NOTE B - INVENTORIES

                                        1999          1998
      Raw materials                   $121,027     $147,235
      Work in progress                  46,222       61,499
      Finished goods                       320      141,730
      Total Inventories               $167,569     $350,464

NOTE C - PROPERTY AND EQUIPMENT

                                        1999         1998
      Office equipment              $   801,610   $  801,610
      Production and lab equipment    5,398,365    5,388,291
      Leasehold im  provements          875,919    1,301,018
                                      7,075,894    7,490,919
      Less - accumulated depreciation
        and amortization             (4,322,045)  (4,028,762)
      Total Property and Equipment   $2,753,849   $3,462,157

NOTE D - INTANGIBLE ASSETS

Technology License Agreement
At  its  inception, the Company obtained an exclusive  sublicense
for  the development, manufacture and commercial exploitation  of
coextruded wire for lead-acid battery applications.  The  Company
is  responsible  for  the maintenance and administration  of  the
licensed  patent  and  has  an obligation  to  pay  the  original
licensee  a  royalty  of  four percent on  all  technology  sales
unrelated  to lead-acid, storage batteries for the  term  of  the
License  Agreement.  The Company is obligated to pay the licensor
a  royalty  of one-half of one percent of net sales of coextruded
wire and wire-related products, with a minimum annual royalty  of
$100,000.

Purchased Technology
In   November   1995,  the  Company  completed  a  research   and
development agreement with the Electric Power Research  Institute
("EPRI").   In  accordance  with the terms  of  a  November  1995
amendment to the agreement, the Company issued 215,800 shares  of
Common  Stock  in  exchange  for  the  transfer  of  intellectual
property rights (purchased technology) and the transfer of  title
to  certain  equipment  which  had  been  purchased  by  EPRI  in
connection  with research activity undertaken by the Company.  In
addition, pursuant to the terms of such agreement, certain member
utilities of EPRI have elected to receive royalties at  the  rate
of  one-tenth of one percent on the Company's sales  of  products
containing  licensed technology and on other revenues derived  by
the   Company  from  license  fees,  joint  ventures  and   other
arrangements involving the licensed technology.


NOTE E - ACCRUED LIABILITIES

                                          1999        1998
      Payroll and related items         $249,253    $111,174
      Due to BDM (Note H)                767,950     722,774
      Other                              382,082     474,398
      Total Accrued Liabilities       $1,399,285  $1,308,346


NOTE F - CONVERTIBLE NOTES PAYABLE

In  June  1998, in conjunction with the terms of a Stock Purchase
Agreement  ("Agreement")  with  Kamkorp  Limited  ("Kamkorp"),  a
company  organized  in England, the Company executed  a  separate
agreement  with Corning Incorporated ("Corning")  to  retire  the
full  $6,293,002  in outstanding Convertible  Notes  Payable  and
accrued  interest owed to Corning, in exchange for $1,500,000  in
cash.  The  transaction  was completed  on  June  16,  1998.  The
Convertible  Notes Payable and accrued interest  had  a  carrying
amount  of $5,032,045 (after unamortized discount of $1,260,957),
resulting  in an extraordinary gain from the early extinguishment
of  debt  of  $2,331,150,  net of tax of  $1,200,895.  Basic  and
diluted  earnings per share for the extraordinary gain  from  the
early  extinguishment  of  debt were $0.38  for  the  year  ended
December 31, 1998. The $1,500,000 was provided to the Company  by
Kamkorp  from the sale of 1,500,000 shares of Common Stock  under
the terms of the Agreement (See Note G).

Cash  interest  paid  by  the Company was approximately  $17,000,
$22,000 and $128,000 in 1999, 1998 and 1997, respectively.


NOTE G - LIQUIDITY

Under the terms of an Agreement entered into with the Company  in
June  1998, Kamkorp Limited ("Kamkorp") agreed to provide  up  to
$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.   These
latest  options  expire  as to 2,000,000 shares  in  six  months,
500,000  shares  in  nine months, and 500,000  shares  in  twelve
months.   Kamkorp  is the beneficial owner of  12,000,000  shares
representing 70.0% of the Company's Common Stock if  all  options
to Kamkorp are exercised.  As of March 14, 2000, Kamkorp has paid
for  and  been  issued  8,130,000  shares  at  $1.00  per  share,
representing  62% of the Company's outstanding  Common  Stock  at
that date.

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.

As of December 31, 1999, Kamkorp is the record owner of 7,480,000
shares or 61.6% of the Company's 12,137,699 outstanding shares of
Common Stock and, including options to purchase Common Stock, the
beneficial  owner  of 12,000,000 shares or 70% of  the  Company's
Common  Stock  (assuming purchase of the  full  6,000,000  shares
available under the Agreement and full exercise of the option  to
purchase  6,000,000 shares). The Company granted  Kamkorp  demand
and  piggyback  registration rights  with  respect  to  all  such
shares.

During  the year ended December 31, 1999, 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.  Kamkorp has acknowledged to the Company  that  it
intends  to continue equity funding to the Company in 2000.   The
Company  has  approximately $1,000,000  of  outstanding  accounts
payable, most of which is payable to raw materials suppliers  and
service  providers, some of which is considerably past due.   One
vendor sued the Company in May 1999 for approximately $12,000 and
the  suit was settled in the third quarter.  In the first quarter
of  2000, six vendors have filed suits against the Company.  Five
of these vendors have accepted pay out agreements for the amounts
owed  and  the  remaining one is in negotiation  for  a  pay  out
agreement.   Funding from Kamkorp, additional battery orders,  or
other  financing  will be required in the year 2000  to  continue
operations  and  to maintain compliance with the minimum  listing
standards of the Nasdaq Stock Markets ("Nasdaq").  The Company is
discussing the possibility of accelerated financing from Kamkorp,
which  could be provided under the terms of the Agreement through
Kamkorp's exercise of all or a portion of its options to purchase
the balance of 4,520,000 shares of the Company's Common Stock  at
$1.00 per share.


NOTE H - LEASE AND OTHER COMMITMENTS

The  Company  leases  various plant and  office  facilities,  and
production,  office and warehouse equipment under  operating  and
capital  leases  expiring between 2000 and 2003.  Future  minimum
annual rentals under lease arrangements at December 31, 1999  are
as follows:


         Fiscal Year             Capital           Operating
                                  Leases             Leases
            2000                $ 75,473          $  408,636
            2001                       -             370,135
            2002                       -             420,000
            2003                       -             385,000
                 Thereafter            -                   -
                                $ 75,473          $1,583,771
     Less imputed interest        (3,961)
     Present value of capital
       lease obligations        $ 71,512


The  Company's  monthly  rental rate on its  88,000  square  foot
facility  is  approximately  $30,000  per  month,  escalating  to
$35,000 per month in 2001. The lease expires in November 2003.

Rental  expense for operating leases for the years ended December
31, 1999, 1998 and 1997 was approximately $484,000, $905,000, and
$898,000,  respectively.  Sublease rental income of approximately
$29,000,  $189,000 and $119,000 was received in  1999,  1998  and
1997, respectively.

In  December  1997, the Company issued 299,304 shares  of  Common
Stock  to  BDM Technologies, Inc. ("BDM") (now part  of  TRW)  as
partial  payment for past obligations owed to BDM  for  occupancy
related  costs ($314,875, which the Company had accrued)  and  as
prepayment  under  operating leases for  manufacturing  equipment
which  are  guaranteed by BDM ($452,092).  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 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 accept a minimum of
$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
obligations.  The Company recorded the shares issued  to  BDM  at
fair  market  value on the date of the agreement  ($766,967)  and
recorded  a subscription receivable ($467,663) for the difference
between the fair market value of the shares and the minimum value
for  such  shares  accepted  by BDM which  will  be  recorded  as
permanent equity upon final determination of the number of shares
to  be  issued.  The Company's market price was below  $2.56
per  share for most of 1999; however, it has recently been above the
$2.56  price, and as reported by the NASDAQ Stock Market at the close
of business on March 14, 2000, the closing price was $12.75.  BDM has
not notified the Company of an  intent  to sell  such shares in the
near term; however, unless the value  of the  Company's  Common Stock
remains above the  $2.56  per  share level, additional shares of
Common Stock or cash will be required to settle these obligations
under the terms of this agreement.



NOTE I - CONTINGENCIES

In  December 1996, the Company filed a petition in State Court in
Travis  County, Texas, seeking, among other things, a declaratory
judgment that Horizon Battery Technologies, LTD. ("HBTL") had  no
right to arbitration or monetary relief under a "Know-How License
Agreement".    HBTL  contested  jurisdiction  and   removed   the
proceedings  to  the  U.S. Federal Court.  The  Federal  District
Court ruled that it did not have personal jurisdiction over HBTL.
The Company successfully appealed in the U.S. Fifth Circuit Court
of  Appeals.   In  September  1999, the  District  Court  granted
summary   judgement  in  favor  of  the  Company.    No   further
proceedings are anticipated since no appeal was filed by HBTL.

The  Company  is  also  involved in certain  other  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.

Trade  receivables are composed of balances due  from  a  limited
customer  base.   Although the Company  has  a  concentration  of
credit  risk  related  to the industries in which  its  customers
participate and to the limited number of customers comprising the
trade   receivable  balance,  the  Company  has  not  experienced
significant collection losses from these respective customers.

Activity in the Company's allowance for doubtful accounts was  as
follows:


                                         Additions
<TABLE>
<CAPTION>                    Balance at  Charged to  Charged to   Write-Off of   Balance at
                             Beginning    Costs and     Other     Uncollectible    End of
     Description              of Period    Expense    Accounts       Accounts      Period
<S>                             <C>         <C>           <C>            <C>          <C>

Year ended December 31, 1999    - 0 -       - 0 -       - 0 -          - 0 -        - 0 -

Year ended December 31, 1998    - 0 -       - 0 -       - 0 -          - 0 -        - 0 -

Year ended December 31, 1997   $15,599    ($15,599)     - 0 -          - 0 -        - 0 -
</TABLE>

NOTE J - SHAREHOLDERS' EQUITY

In  1997,  the  Company  sold  109,397  shares  of  Common  Stock
(combined  with  warrants  to purchase  Common  Stock  at  prices
ranging  from  $5.25  to $7.56 per share)  for  net  proceeds  of
approximately  $655,000. During 1998, the warrants were  repriced
to $2.56 per share.

Stock Option Plans
The  Company  has  elected to follow Accounting Principles  Board
Opinion No. 25, "Accounting for Stock Issued to Employees"  ("APB
25")  and  related Interpretations in accounting for its employee
stock  options because, as discussed below, the alternative  fair
value  accounting  provided for under  FASB  Statement  No.  123,
"Accounting for Stock-Based Compensation," requires use of option
valuation  models  that were not developed  for  use  in  valuing
employee stock options.  Under APB 25, because the exercise price
of  the Company's employee stock options equals the market  price
of  the  underlying stock on the date of grant,  no  compensation
expense is recognized.

The  Company  has two stock option plans, the 1996  Stock  Option
Plan  ("1996 Plan"), which received shareholder approval in 1997,
authorizing 960,000 shares and the 1999 Stock Option Plan  ("1999
Plan"),  which received shareholder approval in 1999, authorizing
1,000,000  shares.   Both Plans provide for  the  grant/award  of
options to employees, directors and consultants at the discretion
of  the Compensation/Stock Option Committee to purchase shares of
the  Company's Common Stock at a price not less than 100% of  the
market  price  of such stock on the date the option  is  granted.
These  options  generally become exercisable in three  stages  in
equal  portions at six months, eighteen months and thirty  months
after the date of grant and expire up to ten years from the  date
of grant.

In  August 1998, the Board of Directors approved the repricing of
all  employee stock options effective on that date.  Accordingly,
461,833 employee stock options with exercise prices ranging  from
$5.28  to $37.50 per share were repriced to an exercise price  of
$1.56 per share, the fair value of the Company's Common Stock  on
that  date.   The  repricing had no impact on vesting  schedules.
Director and consultant stock options were not repriced.

Pro  forma information regarding net loss and loss per  share  is
required by FASB Statement 123 and has been determined as if  the
Company  had accounted for its employee stock options  under  the
fair  value method of that Statement.  The fair value  for  these
options  was estimated at the date of grant using a Black-Scholes
option   pricing   model  with  the  following   weighted-average
assumptions  for  1999  1998  and 1997,  respectively:  risk-free
interest  rates  of 5.0%, 5.0% and 5.3%; dividend  yield  of  0%;
volatility factors of the expected market price of the  Company's
common  stock  of  1.91,  1.76 and .80;  and  a  weighted-average
expected life of the option of five years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions  and  are fully transferable.  In  addition,  option
valuation   models   require  the  input  of  highly   subjective
assumptions   including  the  expected  stock  price  volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the  fair  value estimate, in management's opinion, the  existing
models  do  not necessarily provide a reliable single measure  of
the fair value of its employee stock options.

For  purposes of pro forma disclosures, the estimated fair  value
of  the options is amortized to expense over the options' vesting
period.  The Company's pro forma information follows:

                                1999        1998        1997

Pro forma stock-based
  compensation expense        $428,133    $873,222    $1,320,661
Pro forma net loss          $3,894,148  $4,403,707    $9,153,884
Pro forma loss per share        $(0.39)     $(0.71)       $(2.23)

The   effects  of  applying  Statement  No.  123  for  pro  forma
disclosures are not necessarily indicative of future amounts  due
to  the  prospective adoption of FASB Statement No. 123's effects
on reported net income for future years.

A  summary  of changes in common stock options during 1997,  1998
and 1999 is as follows:

                                                 Range of Exer.  Weighted-Avg.
                                        Shares    Prices ($)     Exer. Price($)

Options outstanding January 1, 1997    495,765    5.28 - 37.50       14.13
     Granted                           298,131    2.94 -  7.75        6.79
     Exercised                         (31,500)       5.28            5.28
     Surrendered                       (28,100)   5.28 - 35.00        9.50
Options outstanding December 31, 1997  734,296    2.94 - 37.50       11.71
     Granted                           603,418    1.00 -  2.50        1.51
     Exercised                               -               -           -
     Surrendered                      (648,037)   1.56 - 37.50       10.82
Options outstanding December 31, 1998  689,677    1.00 - 37.50        3.62
     Granted                           280,083    1.00 -  1.75         .73
     Exercised                         (86,918)   1.563 - 1.75         .85
     Surrendered                      (186,366)   1.563 -35.00        1.99
Options outstanding December 31, 1999  696,476    1.00 - 37.50        8.06

Options exercisable, December 31,
        1997                           525,145    2.94 - 37.50       13.37
        1998                           210,844    1.00 - 37.50        8.33
        1999                           463,064    1.00 - 37.50        8.02

The  weighted-average fair value of options granted during  1999,
1998   and   1997  was  $1.57,  $1.42,  and  $4.60   per   share,
respectively.

A  summary of option information by exercise price as of December
31, 1999 follows:

             Total Options Outstanding          Currently Exercisable
                      Weighted-   Weighted-
             Number    Average     Average      Number    Weighted-
Exercise       of     Exercise    Remaining       Of       Average
Price ($)    Options    Price   Contractual    Options   Exercise Price

1.00 - 1.44  137,350     1.06        9.15       67,350        1.03
       1.56  267,548     1.56        7.35      225,541        1.56
1.62 - 1.75  184,084     1.75        9.07       62,679        1.64
2.16 - 6.94   81,687     5.69        7.04       81,687        5.69
7.00 -17.50   10,407    12.65        7.02       10,407        7.02
      27.50    9,900    27.50        6.83        9,900       27.50
      37.50    5,500    37.50        6.83        5,500       37.50
1.00 -37.50  696,476     2.81        8.11      463,064        3.46

Warrants
The  Company has issued numerous warrants associated with various
debt  and  equity  financings and other agreements  with  varying
expiration dates through 2005.

The  Company entered into a technical development agreement  with
Corning  in  September  1997  to jointly  improve  the  Company's
products, production processes and automation.  The Company  paid
Corning  for  such services by issuing warrants  at  agreed  upon
values  and  exercise prices.  The Company expensed the  warrants
issued  in  1998  and  1997  at their  estimated  fair  value  of
approximately $300,000 and $400,000, respectively. The  technical
development agreement was terminated in 1998.

The  following table represents a summary of warrant activity for
the three years ended December 31, 1999:

                                         Warrants    Price Per Warrant ($)

Warrants outstanding January 1, 1997       394,423      15.30  -  55.00
     Issued                              1,277,383       4.00  -   9.00
     Exercised                             (26,250)           5.25
     Expired                               (56,499)     16.13  -  55.00
Warrants outstanding December 31, 1997   1,589,057       4.00  -  50.00
      Issued                               120,000            7.12
      Exercised                                  -             -
      Expired                             (300,000)     30.00  -  40.00
Warrants outstanding December 31, 1998   1,409,057       4.00  -  50.00
      Issued                                     -             -
      Exercised                            (36,250)           2.563
      Expired                             (500,000)      4.00  -  6.00
Warrants outstanding December 31, 1999     872,807       4.00  -  6.00


Reserved Shares
At  December 31, 1999, shares of the Company's Common Stock  were
reserved as follows for issuance under:

      Stock option plans                         1,841,582
      Exercise of warrants                         872,807
      Stock Purchase Agreement (Note G)          4,520,000
      BDM Agreement (Note H)                       767,663
                                                 8,002,052


NOTE K - REVENUE

Project
The Company generated approximately $1,155,000 of project revenue
for  the  year  ended December 31, 1999, 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  Company also   had   $100,000   of   other  income
from   Electrosource International, Ltd. ("EIL") for marketing
assistance to  complete negotiations  for  an  order  of 8,000  of
the  Company's  12H85 batteries.  This order from EIL follows receipt
of an order  from Perusahaan Otomobile Elektrik (Malaysia) Sdn. Bdh. ("POEM").
The remaining   revenue  generated  in  1999  was  from   cooperative
development  and  research agreements with the  Defense  Advanced
Research  Projects  Agency ("DARPA") and with the  Department  of
Energy  ("DOE").  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.   Similar  programs  were  in  progress  in  1998.
Project  revenues  were expected to decrease throughout  1999  as
some of the DARPA programs were completed in early 1999.

During   1997,   the   Company  generated  project   revenue   of
approximately $645,000 from Chrysler Corporation ("Chrysler") for
various  environmental and other tests performed on  the  Horizon
battery.  The majority of remaining project revenue generated  in
1997  (approximately 65%) was from SMH, DARPA and Fiat  Auto  for
the  development and/or evaluation of batteries  for  hybrid  and
electric vehicle applications.

SMH is located in Switzerland, DARPA and DOE in the United States
and Fiat Auto in Italy.

Batteries
Approximately  19% of the Company's 1999 battery  sales  were  to
EIL.  The  Company is economically dependent on Kamkorp  and  its
affiliates (See Notes G and O). Approximately 26%, 30% and 56% of
the  Company's  1999, 1998 and 1997 battery sales,  respectively,
were  to  Chrysler.  In  December 1997,  Chrysler  announced  its
decision  to  use  nickel-metal-hydride  batteries  made   by   a
competitor in its EPIC Minivan. Accordingly, Chrysler's  purchase
of  a  significant number of batteries from the  Company  in  the
future is uncertain.

Capacity Maintenance
In  July  1996,  the Company received a $3,000,000  payment  from
Chrysler.  Chrysler  designated $2,366,000  of  this  payment  as
compensation for continued capacity maintenance and ramp-up costs
incurred by the Company in relation to its role as a supplier  to
the  automaker for its electric vehicle EPIC Minivan Program  and
$634,000 for various engineering, research and development (ER&D)
efforts.  During 1996, the Company recorded $2,366,000
as  income  as  all  tasks  necessary to  earn  the  income  were
performed and there were no further obligations related  to  such
revenue.  The Company recorded $634,000 as deferred revenue which
was  recognized  in  income  in  1997  as  the  ER&D  tasks  were
performed.

Cancellation Fee
During  1998,  the Company received a $1,104,275  purchase  order
from  Chrysler,  which  replaced an earlier  purchase  order  for
$1,400,000.  The $1,104,275 purchase order was paid  in  full  in
1998.  Chrysler designated $656,100 of the purchase  order  as  a
cancellation  fee  from  the  previous  order  and  $448,175  for
batteries to be delivered in the future. During 1998, the Company
recorded  $656,100 as income as all tasks necessary to  earn  the
income  were  performed  and there were  no  further  obligations
related  to  such revenue. Approximately $171,000 of the  battery
revenue  remains  deferred  at December  31,  1999  and  will  be
recognized upon shipment of the batteries.

During  1999,  1998  and  1997, the  Company  earned  revenue  of
approximately $1,286,000, $360,000, and $1,100,000 (61%, 15%, and
34%  of total revenue), respectively, from sales of batteries and
project  services to foreign customers. The majority of 1999  and
1998  revenue from foreign customers was from EIL and Frazer-Nash
Research Limited (See Note O). The majority of 1997 revenue  from
foreign  customers  was  from  SMH (Switzerland)  and  Fiat  Auto
(Italy).


NOTE L - INCOME TAXES

Deferred  income taxes reflect the net tax effects  of  temporary
differences between the carrying amount of assets and liabilities
for  financial reporting purposes and the amounts used for income
tax  purposes.  Significant components of the Company's  deferred
tax asset at December 31, 1999 and 1998 are as follows:


                                                         1999         1998
 Deferred Tax Assets:
   Net operating loss and other tax carry-forwards  $ 17,556,179  $ 16,165,976
   Book depreciation in excess of tax depreciation     1,940,134     2,158,793
   Inventory, accruals and other                         288,772       444,121
 Total deferred tax assets                            19,785,085    18,768,890
 Less valuation allowance                            (19,785,085)  (18,768,890)
     Deferred tax assets, net                        $         -   $         -


The   reconciliation  of  income  tax  provision   (benefit)   on
continuing  operations  computed at  the  United  States  federal
statutory  tax  rates to income tax expense for the  years  ended
December 31, 1999, 1998 and 1997 are as follows:

                                                    1999    1998     1997
      Income tax benefit at statutory U.S.
        federal income tax rate                   (34.0%)  (34.0%)  (34.0%)
      Operating losses not benefited               34.0%    17.0%    34.0%
      Effective income tax rate                     0.0%   (17.0%)    0.0%

The  Company's valuation allowance increased by $1.0  million  in
1999  and  $1.1  million in 1998, primarily as a  result  of  net
operating  losses which were generated but may not be realizable.
At  December 31, 1999, the Company had net operating  loss  carry
forwards  of  approximately $50 million, which will  expire  from
2002   through   2019,  research  and  development   credits   of
approximately  $400,000 and foreign tax credits of  approximately
$120,000  which expire beginning in 2002 and 2000,  respectively.
Ownership  changes as defined in the Internal Revenue  Code  have
resulted   in  severe  limitations  on  the  utilization   of   a
significant portion of the Company's net operating loss and other
tax carry forwards.




NOTE M - RELATED PARTY TRANSACTIONS

During  1995, the Company entered into agreements with a director
of  the  Company  for  the development of certain  machinery  and
materials  as  well  as  general consulting.   The  Company  paid
$32,000  and  $103,000 under such agreements in  1997  and  1996,
respectively.  The Company may also purchase machinery  developed
in accordance with this agreement at its option for an additional
fee.  During 1997, the Company also began purchasing certain  raw
materials  from  the  former director. The Company  paid  $5,900,
$44,000,  and  $65,000 for such materials during 1999,  1998  and
1997,   respectively.   In  addition,  the  Company  has   leased
approximately   4,000  square  feet  in  the  former   director's
manufacturing facility for a monthly cost of $400  and  has  paid
$3,400  in  1999 and $4,800 annually under such agreement  during
1997 and 1998.


NOTE N - EMPLOYEE BENEFIT PLAN

The  Company  sponsors  a  qualified  defined  contribution  plan
covering all eligible employees.  The Company matches twenty-five
percent  of  a  participant's voluntary  contributions  up  to  a
maximum  of  four  percent of a participant's compensation.   The
Company's   contribution   expense  was  approximately   $31,000,
$30,000, and $33,000 in 1999, 1998 and 1997, respectively.


NOTE O - ABILITY TO CONTINUE AS A GOING CONCERN

The  Company  has continued to incur operating losses.   Revenues
have  not resulted in sufficient cash flows to sustain operations
and  at December 31, 1999 there is a net working capital deficit.
As  a  result,  the  Company  is dependent  on  Kamkorp  and  its
affiliates to continue operations on a day to day basis.

Under the terms of an Agreement entered into with the Company in June 1998,
Kamkorp Limited ("Kamkorp") agreed to provide up to $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.  These latest
options expire as to 2,000,000 shares in six months, 500,000 shares in
nine months, and 500,000 shares in twelve months.  Kamkorp is the
beneficial owner of 12,000,000 shares representing 70.0% of the Company's
Common Stock if all options to Kamkorp are exercised.  As of March 14,
2000, Kamkorp has paid for and been issued 8,130,000 shares at $1.00
per share, representing 62% of the Company's outstanding Common Stock
at that date.

As  of  December 31, 1999, Kamkorp has purchased 7,480,000 shares
of  the  Company's  Common Stock.  Kamkorp's obligation  to  make
these  purchases  is dependent upon the absence of  any  material
change  in the financial position, business or prospects  of  the
Company and upon certain other conditions precedent, such as  the
absence of litigation, absence of defaults on other contracts and
agreements, and compliance with environmental regulations.   From
January 1 through March 14, 2000, Kamkorp purchased an additional
650,000  shares  of  Common Stock at $1.00 per  share.   Although
Kamkorp  has  provided substantial amounts of  financing  to  the
Company to date, Kamkorp is not legally required to provide  this
funding.  Kamkorp has acknowledged to the Company that it intends
to continue equity funding to the Company in 2000.

The  Company  received a purchase order in June  1999  for  8,000
12H85  batteries from Electrosource International Limited ("EIL")
for  delivery  beginning  in  the  third  quarter  of  1999  with
completion  of  the  order in the first  quarter  of  2000.   The
Company  delivered 444 batteries against this  order  during  the
year  ended  December 31, 1999 and is scheduled  to  deliver  the
remainder  of  the  order  in 2000.   EIL  is  the  international
marketing company and is affiliated with Kamkorp.   These battery
sales represent 19% of the battery sales in 1999.

The  Company received a purchase order in February 2000 for 6,000
12C25  batteries from Frazer-Nash Research Limited  for  delivery
beginning  in  the first quarter of 2000 with completion  of  the
order  in April.  The 12C25 battery has been specified by Frazer-
Nash  Research  Limited as the battery for all  of  the  electric
vehicles to be supplied to the Sydney 2000 Olympic Games.  Frazer-
Nash  is  the  exclusive  supplier of electric  vehicles  to  the
Olympic Games.

The  Company's  Common  Stock is traded in  the  Over-the-Counter
Market and is reported on the Nasdaq Stock Markets ("Nasdaq"). 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 February 1, 1999, the Company received written  notice
from  Nasdaq that the closing bid price of its shares fell  below
$1.00 for 30 consecutive business days and therefore did not meet
the Nasdaq minimum listing requirements. The written notification
stated  that  within 90 days of the notification,  the  Company's
closing  bid  price must be $1.00 or higher for  ten  consecutive
calendar  days  to satisfy the requirement. This requirement  was
met  by  mid-February 1999.  As of March 31, 1999, the  Company's
net  tangible assets were less than $2,000,000.  As a result, the
Company   was   not  in  compliance  with  the  minimum   listing
requirements of Nasdaq and advised Nasdaq of that fact.  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 would be required to submit by the  20th  of
each month, an internal balance sheet and statement of operations
for  the  preceding month's end.  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 would 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.




                     Washington, D.C.  20549




            ________________________________________

                           EXHIBITS TO
                            FORM 10-K


        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934


     For the fiscal year ended               Commission File
     December 31, 1999                        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 office)                    (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
     3.1  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).

     3.2  Certificate of Designation, Preferences, Rights     --
          and  Limitations  of  1992 Series  A  Preferred
          Stock   and  Series  A-1  Preferred  Stock   of
          Electrosource, Inc. as filed of record with the
          Delaware Secretary of State on January 15, 1992
          (filed  as  Exhibit 4.1 to Electrosource,  Inc.
          Form 8-K Current Report for Issuers Subject  to
          the   1934  Act  Reporting  Requirements  filed
          December  24, 1991 and incorporated  herein  by
          reference).

     3.3  Amendment    to    Restated   Certificate    of     --
          Incorporation of Electrosource, Inc.,  increase
          in   authorized  shares  to  50,000,000  shares
          (filed  as Exhibit 3.1 to Electrosource,  Inc.,
          Quarterly Report on Form 10-Q for quarter ended
          June  30,  1995  and  incorporated  herein   by
          reference).

     3.4  Amendment    to    Restated   Certificate    of     --
          Incorporation    of    Electrosource,     Inc.,
          elimination  of Certificate of Designation  for
          Series  A and Series A-1 Preferred Stock (filed
          as   Exhibit   3.2   to  Electrosource,   Inc.,
          Quarterly Report on Form 10-Q for quarter ended
          June  30,  1995  and  incorporated  hereby   by
          reference).

     3.5  Amendment   to  the  Restated  Certificate   of     --
          Incorporation of Electrosource filed as of July
          22,    1996   (filed   as   Exhibit   3.1    to
          Electrosource, Inc. Quarterly Report on Form 10-
          Q  for  the  quarter ended June  30,  1996  and
          incorporated herein by reference).

     3.6  Bylaws of Electrosource, Inc. (filed as Exhibit     --
          3.2  to  Form  10  and incorporated  herein  by
          reference).

     3.7  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).

     3.8  Amendment  to  Bylaws  of  Electrosource,  Inc.     --
          dated November 3, 1993 (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).

     3.9  Amendment  to  Bylaws  of  Electrosource,  Inc.     --
          dated  June 23, 1994 (filed as Exhibit  3.6  to
          Electrosource, Inc. Annual Report filed on Form
          10-K for the period ended December 31, 1994 and
          incorporated herein by reference).

     3.10 Amendment  to  Bylaws  of  Electrosource,  Inc.     --
          dated November 13, 1996 (filed as Exhibit  3.10
          to  Electrosource, Inc. Annual Report filed  on
          Form  10-K  for the period ended  December  31,
          1996 and incorporated herein by reference).

     4.1  Warrant  to  purchase up  to  5,424  shares  of     --
          Electrosource,  Inc.  Common  Stock  issued  to
          Rosehouse  Ltd., a Bermuda-based  institutional
          buyer, dated April 5, 1995 (filed as an Exhibit
          to Electrosource, Inc. Current Report on Form 8-
          K  filed April 12, 1995 and incorporated herein
          by reference).

     4.2  Warrant  to  purchase up  to  5,000  shares  of     --
          Electrosource, Inc. Common Stock issued to Ally
          Capital  Management, Inc.  on  April  17,  1995
          (filed  as  Exhibit 4.1 to Electrosource,  Inc.
          Quarterly  Report on Form 10-Q for the  quarter
          ended June 30, 1995 and incorporated herein  by
          reference).

     4.3  Warrant  to  purchase up to  25,000  shares  of     --
          Electrosource,  Inc., Common Stock,  issued  to
          Rosehouse  Ltd., a Bermuda-based  institutional
          buyer,  dated July 27, 1995 (filed  as  Exhibit
          4.4 to Electrosource, Inc. Quarterly Report  on
          Form  10-Q for quarter ended June 30, 1995  and
          incorporated herein by reference).

     4.4  Warrant (Stock Option Agreement No. W12-101) to     --
          purchase  up to 20,000 shares of Electrosource,
          Inc.,   Common   Stock,   issued   to   Corning
          Incorporated  dated  December  31,   1997   for
          payment  of  that certain Project  Annex  dated
          October  20,  1997 (filed as  Exhibit  4.16  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

     4.5  Warrant  (Stock Option Agreement No.  W12-102A)     --
          to    purchase   up   to   70,000   shares   of
          Electrosource,  Inc., Common Stock,  issued  to
          Corning  Incorporated dated December  31,  1997
          for payment on that certain Project Annex dated
          October  20,  1997 (filed as  Exhibit  4.17  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

     4.6  Warrant  (Stock Option Agreement No.  W12-103A)     --
          to    purchase   up   to   70,000   shares   of
          Electrosource,  Inc., Common Stock,  issued  to
          Corning  Incorporated dated December  31,  1997
          for payment on that certain Project Annex dated
          October  20,  1997 (filed as  Exhibit  4.18  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

     4.7  Warrant  (Stock Option Agreement No.  W12-102B)     --
          to    purchase   up   to   60,000   shares   of
          Electrosource,  Inc. Common  Stock,  issued  to
          Corning  Incorporated dated June 30,  1998  for
          payment  of  that certain Project  Annex  dated
          October  20,  1997  (filed as  Exhibit  4.7  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1998  and
          incorporated herein by reference).

     4.8  Warrant  (Stock Option Agreement No.  W12-103B)     --
          to    purchase   up   to   60,000   shares   of
          Electrosource,  Inc. Common  Stock,  issued  to
          Corning  Incorporated dated June 30,  1998  for
          payment  of  that certain Project  Annex  dated
          October  20,  1997  (filed as  Exhibit  4.8  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1998  and
          incorporated herein by reference).

   10.1  Sublicense  Agreement dated as  of  October  5,     --
          1987  between Electrosource, Inc.  and  Tracor,
          Inc.  (filed  as Exhibit 10.4 to  Form  10  and
          incorporated herein by reference).

   10.2   Patent   and   Technology   Exclusive   License     --
          Agreement dated August 14, 1984 between Tracor,
          Inc.   and  Blanyer-Mathews  Associates,   Inc.
          ("BMA")  (filed as Exhibit 10.9 to Registration
          Statement  [No  33-30486]  on  Form  S-1  filed
          August  14,  1989 hereinafter  referred  to  as
          "Form   S-1"   and   incorporated   herein   by
          reference).

   10.3   Amendment  to  Patent and Technology  Exclusive     --
          License  Agreement dated May 29,  1987  between
          Tracor, Inc. and BMA (filed as Exhibit 10.10 to
          Form S-1 and incorporated herein by reference).

   10.4   Bonus  Royalty  Agreement dated  May  26,  1989     --
          among  Electrosource, Inc., Tracor,  Inc.,  and
          BMA (filed as Exhibit 19 to Electrosource, Inc.
          Quarterly  Report on Form 10-Q for the  quarter
          ended June 30, 1989 and incorporated herein  by
          reference).

   10.5   Amendment  to  Bonus Royalty Agreement  entered     --
          into  as of November 30, 1989 by and among BMA,
          Tracor, Inc. and Electrosource, Inc. (filed  as
          Exhibit 10.17 to Post Effective Amendment No. 1
          to  Form  S-1 Registration Statement  [No.  33-
          34581]  filed  December  11,  1989  hereinafter
          referred  to as "Post-Effective Amendment"  and
          incorporated herein by reference).

   10.6   Assignment of Patent License dated  as  of  May     --
          14, 1990 by and between Electrosource, Inc. and
          Tracor,   Inc.  (joined  by  BMA  for   limited
          purposes  described therein) (filed as  Exhibit
          10.20 to the Company's Annual Report on Form 10-
          K  for  the  period  ended  December  31,  1990
          hereinafter referred to as the "1990 Form 10-K"
          and incorporated herein by reference).

   10.7   Letter  Agreement dated as of January 15,  1991     --
          between  Electrosource, Inc. and BMA (filed  as
          Exhibit  10.21 to the Company's 1990 Form  10-K
          and incorporated herein by reference).

   10.8   License  Modification Agreement  dated  January     --
          16,  1992 between Blanyer Mathews & Associates,
          Inc., Electrosource, Inc. and Battery Horizons,
          Ltd.  (filed as Exhibit 10.23 to Electrosource,
          Inc.  Annual Report on Form 10-K for the period
          ended December 31, 1991 and incorporated herein
          by reference).

   10.9   First Amendment to Assignment of Patent License     --
          dated April 2, 1992 between Electrosource, Inc.
          and  Tracor,  Inc. (filed as Exhibit  10.58  to
          Company's Registration Statement [No. 33-65248]
          on   Form   S-1   filed  June  30,   1993   and
          incorporated herein by reference).

   10.10  Lease Agreement between William D. McMorris and     --
          Horizon Battery Technologies, Inc. dated August
          17,   1993   (filed   as   Exhibit   10.42   to
          Electrosource Inc. Annual Report on  Form  10-K
          for  the  period ended December  31,  1994  and
          incorporated herein by reference).

   10.11  Lease Agreement between William D. McMorris and     --
          Electrosource, Inc. dated May 29,  1998  (filed
          as   Exhibit   10.1   to  Electrosource,   Inc.
          Quarterly  Report on Form 10-Q for the  quarter
          ended June 30, 1998 and incorporated herein  by
          reference).

   10.12  Amendment  to  Business  Alliance  and  License     --
          Agreement   dated  November  1,  1995   between
          Electric    Power   Research   Institute    and
          Electrosource, Inc. (filed as Exhibit  10.2  to
          Electrosource, Inc. Quarterly Report on Form 10-
          Q  for the quarter ended September 30, 1995 and
          incorporated herein by reference).

   10.13  Stock  Purchase  Agreement  together  with  the     --
          Asset  and  Technology License Agreement  dated
          January 31, 1995 between BDM Technologies, Inc.
          and Electrosource, Inc. (filed as Exhibit 10.46
          to Electrosource, Inc. Annual Report on Form 10-
          K  for  the period ended December 31, 1994  and
          incorporated herein by reference).

   10.14  First Amendment to Asset and Technology License     --
          Agreement between BDM International,  Inc.  and
          Electrosource,  Inc. dated  December  18,  1997
          (filed as Exhibit 10.17 to Electrosource,  Inc.
          Annual Report on Form 10-K for the period ended
          December  31, 1997 and incorporated  herein  by
          reference).

   10.15  Equipment  Lease Agreement dated  September  7,     --
          1995,  between  Salem Capital  Corporation  and
          Electrosource, Inc. (filed as Exhibit 10.65  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ending December 31,  1995  and
          incorporated herein by reference).

   10.16  Development   Agreement   and   Agreement   for     --
          Purchase  of  Machinery  and  Supplies  between
          Electrosource,  Inc., and  Charles  L.  Mathews
          ("Contractor") dated November 1, 1995 (filed as
          Exhibit  10.68  to Electrosource,  Inc.  Annual
          Report  on  Form  10-K for  the  period  ending
          December  31, 1995 and incorporated  herein  by
          reference).

   10.17  Agreement   for   Aircraft   Starting   Battery     --
          Distribution  between Electrosource,  Inc.  and
          Horizon Aviation, Inc. dated February 13,  1996
          (filed as Exhibit 10.70 to Electrosource,  Inc.
          Annual  Report  on  Form 10-K  for  the  period
          ending   December  31,  1995  and  incorporated
          herein by reference).

   10.18  Memorandum     of     Understanding     between     --
          Electrosource,   Inc.   and   Lockheed   Martin
          Corporation  dated  March 15,  1996  (filed  as
          Exhibit  10.1 to Electrosource, Inc.  Quarterly
          Report on Form 10-Q for quarter ended March 31,
          1996 and incorporated herein by reference).

   10.19  Subscription  Agreements  between  participants     --
          and  Electrosource, Inc. dated January 23, 1997
          (filed  as  Exhibit 4.9 to Electrosource,  Inc.
          Registration Statement [No. 333-25659] Form S-3
          on  April  23, 1997 and incorporated herein  by
          reference).

   10.20  Amendment Number One to Stock Purchase  Warrant     --
          dated    August   18,   1998,   issued    under
          Subscription  Agreements  between  participants
          and  Electrosource, Inc. dated January 23, 1997
          (filed  as Exhibit 10.2 to Electrosource,  Inc.
          Quarterly  Report on Form 10-Q for the  quarter
          ended   September  30,  1998  and  incorporated
          herein by reference).

   10.21  Note  Purchase  and  Option  Agreement  for  $4     --
          million    dated   March   27,   1997   between
          Electrosource,  Inc.  and Corning  Incorporated
          (filed  as  Exhibit 4.1 to Electrosource,  Inc.
          Quarterly Report on Form 10-Q for quarter ended
          March  31,  1997  and  incorporated  herein  by
          reference).

   10.22  5%  Convertible  Promissory Note  for  $100,000     --
          dated September 27, 1997 between Electrosource,
          Inc.  and  Corning Incorporated for payment  of
          interest  due on the Note Purchase  and  Option
          Agreement  dated  March  27,  1997  (filed   as
          Exhibit  10.31  to Electrosource,  Inc.  Annual
          Report  on  Form  10-K  for  the  period  ended
          December  31, 1997 and incorporated  herein  by
          reference).

   10.23  5%  Convertible  Promissory Note  for  $102,500     --
          dated  March  27,  1998 between  Electrosource,
          Inc.  and  Corning Incorporated for payment  of
          interest  due on the Note Purchase  and  Option
          Agreement  dated March 27, 1997 and  Promissory
          Note dated September 27, 1997 (filed as Exhibit
          10.32  to Electrosource, Inc. Annual Report  on
          Form  10-K  for the period ended  December  31,
          1997 and incorporated herein by reference).

   10.24  Amendment  No.  1 dated December  22,  1997  to     --
          Stock  Option  Agreement dated March  27,  1997
          between Corning Incorporated and Electrosource,
          Inc.  (filed as Exhibit 10.33 to Electrosource,
          Inc.  Annual Report on Form 1o-K for the period
          ended December 31, 1997 and incorporated herein
          by reference).

   10.25  Research  and  Development  Umbrella  Agreement     --
          dated July 1, 1997 between Corning Incorporated
          and Electrosource, Inc. (filed as Exhibit 10.34
          to Electrosource, Inc. Annual Report on Form 10-
          K  for  the period ended December 31, 1997  and
          incorporated herein by reference).

   10.26  Project  Annex dated October 20,  1997  to  the     --
          Development Umbrella Agreement dated as of July
          1, 1997 by and between Corning Incorporated and
          Electrosource, Inc., being further  defined  in
          Exhibit  1,  Project  Proposal,  Physical   and
          Chemical   Description  of  Battery   Electrode
          "Moss."    (filed   as   Exhibit    10.35    to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

   10.27  Project  Annex dated October 20,  1997  to  the     --
          Development Umbrella Agreement dated as of July
          1, 1997 by and between Corning Incorporated and
          Electrosource, Inc., being further  defined  in
          Exhibit   1,   Project  Proposal,   Engineering
          Resources   (filed   as   Exhibit   10.36    to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

   10.28  Project  Annex dated October 20,  1997  to  the     --
          Development Umbrella Agreement dated as of July
          1, 1997 by and between Corning Incorporated and
          Electrosource, Inc., being further  defined  in
          Exhibit  1,  Project Proposal, Characterization
          of   Electrode  Materials  and  Collector  Grid
          Materials   (filed   as   Exhibit   10.37    to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

   10.29  Amendment dated June 15, 1998 to May  29,  1998     --
          Agreement  terminating  Notes  between  Corning
          Incorporated and Electrosource, Inc. for a one-
          day  extension  for payment (filed  as  Exhibit
          10.3 to Electrosource, Inc. Quarterly Report on
          Form  10-Q for the quarter ended June 30,  1998
          and incorporated herein by reference).

   10.30  Stock  Purchase Agreement dated  June  2,  1998     --
          between Kamkorp and Electrosource, Inc.  (filed
          as  Exhibit 4.1 to Electrosource, Inc. Form 8-K
          dated June 11, 1998 and incorporated herein  by
          reference).

   10.31  Registration  Rights Agreement  dated  June  2,     --
          1998  between  Kamkorp and Electrosource,  Inc.
          (filed  as  Exhibit 4.2 to Electrosource,  Inc.
          Form  8-K  dated June 11, 1998 and incorporated
          herein by reference).

   10.32  Form    of    Severance    Agreement    between     --
          officers/key employees and Electrosource,  Inc.
          dated  May 18, 1998 (filed as Exhibit  10.4  to
          Electrosource, Inc. Quarterly Report on Form 10-
          Q  for  the  quarter ended June  30,  1998  and
          incorporated herein by reference).

   10.33  Purchase  Order  for  Horizon  Batteries   Pack     --
          Development  Program  between  Fiat  Auto   and
          Electrosource,  Inc. dated September  30,  1996
          (filed as Exhibit 10.40 to Electrosource,  Inc.
          Annual Report on Form 10-K for the period ended
          December  31, 1997 and incorporated  herein  by
          reference).

   10.34  Frame-Development Contract dated March 14, 1997     --
          between  SMH Automobile S.A. and Electrosource,
          Inc.  (filed as Exhibit 10.41 to Electrosource,
          Inc.  Annual Report on Form 10-K for the period
          ended December 31, 1997 and incorporated herein
          by reference).

   10.35  Summary Contract Amendment Terms dated November     --
          12,  1997 for Frame-Development Contract  dated
          March 14, 1997 between SMH Automobile S.A.  and
          Electrosource, Inc. (filed as Exhibit 10.42  to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

   10.36  Severance Agreement between James M. Rosel  and     --
          Electrosource, Inc. effective August  31,  1998
          (filed  as Exhibit 10.1 to Electrosource,  Inc.
          Quarterly Report on Form  10-Q for the  quarter
          ended   September  30,  1998  and  incorporated
          herein by reference).

   10.37  Purchase    Order    Number   ES1001    between     --
          Electrosource  International and Electrosource,
          Inc.  dated  June 15, 1998 for 5,800  batteries
          (filed as Exhibit 10.49 to Electrosource,  Inc.
          Annual Report on Form 10-K for the period ended
          December  31, 1998 and incorporated  herein  by
          reference).

   10.38  Purchase  Order  Number  ES1002  (amendment  to     --
          Purchase    Order   Number   ES1001)    between
          Electrosource  International and Electrosource,
          Inc.  dated  March  3, 1999 (filed  as  Exhibit
          10.50  to Electrosource, Inc. Annual Report  on
          Form  10-K  for the period ended  December  31,
          1998 and incorporated herein by reference).

The  following exhibits filed under Paragraph 10 of Item 601  are
the Company's compensation plans and arrangements:

   10.39  Director   Indemnification   Agreement    dated     --
          September  1, 1993 between Electrosource,  Inc.
          and  Dr.  Norman  Hackerman (filed  as  Exhibit
          10.57  to Electrosource, Inc. Annual Report  on
          Form  10-K  for the period ended  December  31,
          1993 and incorporated herein by reference).

   10.40  Director  Indemnification Agreement dated  June     --
          22, 1995 between Electrosource, Inc. and Nathan
          Morton (filed as Exhibit 10.2 to Electrosource,
          Inc.  Quarterly  Report on Form  10-Q  for  the
          quarter  ended  June 30, 1995 and  incorporated
          herein by reference).

   10.41  Director Indemnification Agreement dated  March     --
          3, 1997 between Electrosource, Inc. and Richard
          E.   Balzhiser  (filed  as  Exhibit  10.51   to
          Electrosource, Inc. Annual Report on Form  10-K
          for  the  period ended December  31,  1997  and
          incorporated herein by reference).

   10.42  Director  Indemnification Agreement dated  June     --
          2,  1998 between Electrosource, Inc. and  Kamal
          Siddiqi    (files    as   Exhibit    10.5    to
          Electrosource, Inc. Quarterly Report on Form 10-
          Q  for  the  period  ended June  30,  1998  and
          incorporated herein by reference).

   10.43  Director  Indemnification Agreement dated  June     --
          2,   1998   between  Electrosource,  Inc.   and
          Clifford  Winkless (filed as  Exhibit  10.6  to
          Electrosource, Inc. Quarterly Report on Form 10-
          Q  for  the  period  ended June  30,  1998  and
          incorporated herein by reference).

   10.44  Director  Indemnification Agreement dated  June     --
          2,  1998 between Electrosource, Inc. and  Roger
          Musson (filed as Exhibit 10.7 to Electrosource,
          Inc.  Quarterly  Report on Form  10-Q  for  the
          period ended June 30, 1998).

   10.45  Director   Indemnification   Agreement    dated     --
          December  23, 1998 between Electrosource,  Inc.
          and  William F. Griffin (filed as Exhibit 10.64
          to  Electrosource, Inc. Annual Report  on  Form
          10K  for the period ended December 31, 1998 and
          incorporated herein by reference).

   10.46  Director   Indemnification   Agreement    dated     --
          December  23, 1998 between Electrosource,  Inc.
          and  James M. Rosel (filed as Exhibit 10.65  to
          Electrosource, Inc. Annual Report on  Form  10K
          for  the  period ended December  31,  1998  and
          incorporated herein by reference).

   10.47  Director Indemnification Agreement dated August    E-10
          16,  1999 between Electrosource, Inc. and Benny
          E. Jay.

   10.48  1996  Stock Option Plan for Electrosource, Inc.     --
          (filed as Exhibit 4.2 to Registration Statement
          [No.  333-31101]  on Form S-8 and  incorporated
          herein by reference).

   10.49  1999  Stock Option Plan for Electrosource, Inc.     --
          (filed as Exhibit 4 to Form 10Q for the quarter
          ended June 30, 1999 and incorporated herein  by
          reference).

   24.1   Consent of Weaver and Tidwell LLP                  E-14


   24.2   Consent of Ernst & Young LLP                       E-15


   27.    Financial Data Schedule                            E-16