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, 1996.
                               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
     incorporation or organization)         Identification No.)

     2809 Interstate 35 South, San Marcos, Texas     78666
    (Address  of  principal  executive  offices)   (Zip Code)

    Registrant's telephone number, including area code (512) 753-6500

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

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

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

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  14, 1997, 4,143,475 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  $6.50
as reported by NASDAQ at the close of business on March 14, 1997)
was approximately $26,933,000.

              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  May  22,
1997, 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 initially in the manufacture of
advanced  lead-acid,  rechargeable  storage  batteries  and   the
development of related processes and technologies.  The  Horizonr
battery utilizes plate grids made from a patented coextruded wire
and  a  special paste mixture.  The Company is concentrating  its
efforts  upon development of Horizonr battery technology for  use
in  many  applications including hybrid power vehicles,  electric
vehicles,   neighborhood  electric  vehicles,  power  management,
portable systems 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.

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.  The Horizonr design  may  also  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, power tools, electric power management, uninterruptible
power  and  for starting, lighting and ignition ("SLI") batteries
for  automobiles.   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.  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  Horizonr  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,  it  was  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 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  successfully  demonstrated  the  ability   to
manufacture  the  Horizon battery in commercial  quantities.  The
Company  has  initiated  strategic  business  relationships   and
cooperative development agreements with companies and  government
agencies  in  all  of the above markets.  Management  anticipates
that  in  1997/1998 many of these customers will 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, Delfi,  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 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,  nickel-metal  hydride,
nickel-iron  and sodium-sulfur batteries, rather  than  lead-acid
formulations, although 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 patent, or in 2004, and requires payment of
annual  minimum  royalties to Blanyer-Mathews of the  greater  of
$100,000 or sales-based royalties equal to 1/2 percent of  sales.
The  license may be terminated by  the licensor in the event that
the Company defaults in its obligation to pay 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.  The Company is obligated
to  pay minimum annual royalties of $10,000 to Tracor for a five-
year  period  beginning  on the date  of  the  assignment.   Such
minimum  royalties  were to have begun in May  1991,  but  Tracor
deferred payment for two years, with the deferred amounts bearing
interest  at  8.5  percent.  The Company has made  all  scheduled
payments in accordance with the terms of the deferral agreement.

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 Horizonr 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.

The  know-how  relating  to the Company's energy-active  material
formulation  and  the application of coextruded wire  to  battery
electrodes is 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  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  in process to reconfigure  the  Horizon
battery   concept  into  a  number  of  different   applications.
Prototype  models  of 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 $1,450,000,  $3,455,000  and
$1,933,000  in research and development costs in the years  ended
December 31, 1996, 1995, and 1994, respectively.

Backlog

As  of  December 31, 1996 and 1995, the Company has a backlog  of
approximately  $520,000  and $100,000, respectively,  in  battery
orders.   As  of December 31, 1996, the Company has a backlog  of
approximately $1,950,000 in project revenue.

Export Sales

During 1996 and 1995, the Company sold approximately $208,000 and
$140,000, respectively, of Horizon batteries and related services
to foreign customers.

Customer Concentration

A significant portion of the Company's total revenue (81% and 83%
in  1996  and  1995,  respectively) was generated  from  Chrysler
Corporation  ("Chrysler").  Management is currently working  with
several customers to design and build prototype batteries  for  a
variety  of applications and believes that its sales to  Chrysler
will decrease as a percentage of total revenue.  However, loss of
this customer could have an adverse impact on operations.

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  management  of  the Company believes  that  the  Company  is
currently  in  compliance with all applicable local,  state,  and
federal  environmental  rules  and  regulations.   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 supervision and analysis of these
tests  are undertaken by an outside, independent agency  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  does  not  need  to  dry
completely  before  the  battery assembly  process  begins,  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 incurred significant  costs  in
installing  state-of-the-art  equipment  to  manage  and  control
hazardous substances and pollution. The Company expended  $8,000,
$385,000  and  $198,000 in 1996, 1995 and 1994, respectively,  in
capital expenditures for such equipment.  As part of its on-going
operations, the Company incurred $10,000, $170,000 and $80,000 in
non-capital expenditures in 1996, 1995 and 1994, respectively, to
properly  dispose of hazardous materials and waste.  As a  result
of  such  preventive  measures,  the  Company  has  not  incurred
significant  remediation costs and management  is  not  currently
aware of any infrequent or non-recurring clean-up expenditures to
be  incurred  in  the future based on present  circumstances  and
conditions.

Employees

As of March 14, 1997, the Company employed approximately 70 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 $25,000  per  month
and  escalates  over the life of the lease to $35,000  per  month
until  expiration in 2003.  The Company has an option to purchase
the  property and improvements for $2,678,000 until August  1997.
The  Company must pay the Lessor a fee of $30,000 upon expiration
of  the option if it is not exercised.  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.

The  Company  also leases premises covering approximately  30,000
square  feet  at  3800-B  Drossett Drive,  Austin,  Texas  (which
formerly  housed the executive offices and research  facilities).
The monthly gross rental rate on the amended lease escalates over
the  term of the lease from $12,000 per month to $15,500  in  the
final year of the term.  The lease expires in February 1999.   In
February  1997, the Company signed a sublease agreement  with  an
unrelated  party beginning in March 1997 through  February  1999.
The  monthly  rental  of  the facilities  from  the  sublease  is
approximately the same as the Company's monthly rental payments.

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

Item 3.  Legal Proceedings.

In  1994, the Company signed a "Know-How License Agreement"  (the
"Agreement")  with Horizon Battery Technologies, Ltd.,  ("HBTL"),
of  Bombay, India, calling for the completion of several detailed
subordinate  agreements with the ultimate purpose to license  the
manufacture and sale of batteries in India.  The effectiveness of
the  Agreement was conditioned upon the subsequent  execution  of
these  six related agreements, none of which were executed.   The
Company believes, therefore, the Agreement never became effective
and  has no force or effect.  Separately in 1995, HBTL agreed  to
pay  the Company $250,000 for a Preliminary Design Review ("PDR")
for  a  potential  manufacturing  facility  in  India  which  was
required  to  complete  one of the subordinate  agreements.   The
Company  received  $100,000 from HBTL and completed  the  PDR  in
1995.  The remaining $150,000 was never paid by HBTL, in spite of
repeated  demands  by  the Company.  After  further  negotiations
without  an  agreement being reached, the Company  notified  HBTL
that it was discontinuing discussions.

In  September  1996, the Company received a demand from  HBTL  to
arbitrate  damage  claims  for alleged breach  of  the  Agreement
between   the   Company  and  HBTL.   HBTL  claims   damages   of
approximately  $5,100,000  for  its  expenses  and  lost  profits
related  to  the  project.  The Company disputes  the  claim  for
damages  and will vigorously defend any actions taken by HBTL  to
pursue  the  claims.  The Company filed a petition in  the  State
District  Court  of Travis County, Texas, on December  19,  1996,
seeking, among other things, a declaratory judgment that HBTL has
no  right  to arbitration or monetary relief.  HBTL is contesting
jurisdiction  and on February 6, 1997 removed the proceedings  to
the  U.S.  District Court of the Western District of  Texas.   No
liability  has  been  recorded  in the  financial  statements  at
December  31, 1996 for this uncertainty, as management is  unable
to  express  an  opinion with respect to  the  likelihood  of  an
unfavorable outcome of this matter or to estimate the  amount  or
range  of potential loss should the outcome be unfavorable.   The
resolution  of  this  matter,  the outcome  of  which  cannot  be
determined at this time, could in the worst case have a  material
adverse effect on the financial position of the Company.


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
Stockholder 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.   Prices
have been adjusted to retroactively reflect a one-for-ten reverse
stock split which occurred on July 22, 1996.

                                  High      Low
          1995                                
               First Quarter     32 1/2    18 3/4
               Second Quarter    42 1/2    23 1/8
               Third Quart er    25 5/16   11 7/8
               Fourth Quarter    24 1/16   12 1/2
                                              
          1996                                
               First Quarter     17 13/16    10
               Second Quarter    15 15/16  5 15/16
               Third Quarter     10 5/8    4 1/2
               Fourth Quarter     9 3/8    4 13/32

The  transfer  agent and registrar for the Common  Stock  of  the
Company  is  Harris Trust Co. of New York, 77 Water  Street,  4th
Floor, New York, NY 10005.

The approximate number of record holders of Common Stock at March
14, 1997, was 3,742.

Dividends and Dividend Policy

The Company has paid no dividends on its Common Stock to date and
does  not  anticipate,  currently or in the  foreseeable  future,
paying  dividends  on  the Common Stock.   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,
                               
                             1996      1995       1994      1993     1992
                                                                
Revenues                    $3,563    $3,278     $4,614    $3,373     $544

Net Loss                   $(7,825) $(20,508)   $(8,543)    $(197) $(1,228)

Net Loss per Share          $(2.13)   $(9.76)    $(6.05)   $(0.29)  $(1.99)

Dividends per Share           None      None       None      None     None

                                    As of Year Ended December 31,

                             1996     1995       1994      1993      1992
                                                                
Working Capital (Deficit)  $(2,845) $ 1,556     $2,032    $1,122     $  251
                           
Total Assets                $9,488  $15,277     $9,318    $4,709     $2,802

Shareholders' Equity        $3,847  $ 1,240     $ (685)   $3,322     $2,421
                      
Long-Term Obligations       $1,768  $11,34      $7,107    $   33     $  200
 


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  discussion,  the  words
"expects", "believes", "anticipates" and similar expressions  are
intended to identify forward-looking statements.  Such statements
are  subject to certain risks and uncertainties which could cause
actual  results  to differ materially from those projected.   The
risks   and   uncertainties  that  may  affect  the   operations,
performance,  development and results of the  Company's  business
primarily  include delays in shipment or cancellation of  orders,
timing of future orders, customer reorganization, fluctuations in
demand  primarily associated with governmental mandates  for  the
production   of  zero  emission  vehicles  and  the  ability   to
successfully  commercialize  the Horizon  battery.   Readers  are
cautioned  not  to place undue reliance on these  forward-looking
statements  which speak only as of the date hereof.  The  Company
undertakes  no  obligation to republish  revised  forward-looking
statements  to  reflect events or circumstances  after  the  date
hereof  or  to  reflect  the occurrence of unanticipated  events.
Readers  are  also  urged to carefully review  and  consider  the
various  disclosures made by the Company which attempt to  advise
interested  parties  of the factors which  affect  the  Company's
business in this report and in the Company's periodic reports  on
Forms  10-Q  and  8-K  filed  with the  Securities  and  Exchange
Commission.

Results of Operations

The  Company's  results of operations during 1996 and  late  1995
were  significantly  impacted by changes  in  the  zero  emission
vehicle  ("ZEV")  mandates  established  by  the  California  Air
Resource  Board  ("CARB") in an effort to improve California  air
quality.   (Electric vehicles ("EVs") are the only vehicles  that
qualify  as "Zero Emission.") The ZEV mandate originally required
that  2  percent of vehicles sold in California by 1998  be  ZEV.
The  2  percent rule would have increased to 5 percent  in  2000,
2001, and 2002 (an approximate total of 190,000 vehicles for  all
five  years).   The  mandate stepped up  the  requirement  to  10
percent  (approximately 100,000 vehicles)  in  2003  and  was  to
continue  at  that rate for successive years.  This  mandate  was
challenged  by  automakers and was reevaluated by CARB  in  1995,
causing  uncertainty  in the EV market.  In December  1995,  CARB
announced a cancellation of the mandate for 1998 through 2002, in
return   for  an  agreement  from  the  automakers  to   continue
development  of EV's, maintain production capacity  and  place  a
limited  amount of vehicles on the road prior to 2003.  According
to  CARB, each of the "Big Seven" automakers (GM, Ford,
Chrysler,  and  four Japanese auto manufacturers) have  signed  a
Memorandum  of  Agreement  with  CARB  agreeing  to  maintain  EV
production capacity of 5,000 EVs per year and to sell  a  limited
number   of   EVs   in  California  in  1998,  1999   and   2000.
Massachusetts and New York have maintained mandates for ZEV sales
following  California's original plan beginning with a 2  percent
ZEV requirement in 1998.  These mandates have been challenged  by
automakers, but remain in effect.

The  Company's  primary sources of funds from 1992  through  1996
were  obtained  from companies interested in the development  and
manufacture  of  a lead-acid battery for EVs.  During  1995,  the
Company focused substantial resources on purchasing machinery and
implementing  production processes to significantly increase  the
capacity   of   the   manufacturing  facility  and   successfully
demonstrated  the  ability  to produce  the  Horizon  battery  in
commercial  quantities  primarily for electric  vehicles.   As  a
result  of  these  efforts,  the Company  received  a  production
purchase order from Chrysler Corporation ("Chrysler") in December
1995 for up to $80 million in battery sales cumulatively over the
following three years.  Shortly after the receipt of the Chrysler
order,  CARB  announced the ZEV mandate cancellation until  2003.
As  a  result, orders did not materialize as anticipated and  the
Company  expects battery orders from Chrysler to be substantially
reduced  from its original order in the near-term.  At this  time
the  Company  is  unable to quantity the  amount  and  timing  of
batteries which may be ordered from Chrysler.  In July 1996,  the
Company   received   a  $3,000,000  payment  from   Chrysler   as
compensation for the 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 Powered  Interurban
Commuter  ("EPIC") program and for various engineering,  research
and development efforts ("ER&D").

With  CARB's ruling to delay mandated sales of EVs in California,
automakers   reduced  their  projected  1996-1998  EV  production
numbers   substantially.   In  1995,  the  Company  had  received
substantial    purchase    orders   and   established    business
relationships  with  several small vehicle  conversion  companies
(established  to  retrofit  vehicles  for  electric  propulsion).
These  companies  have  either  gone  out  of  business  or  have
refocused  efforts in other markets.  To date,  the  Company  has
sold only limited quantities of the two production Horizon models
to companies other than Chrysler.

As  a result of much lower than anticipated mandate-related sales
of  lead-acid batteries in 1996, the Company refocused efforts to
market  the  Horizon battery to OEMs producing  EVs  and  hybrid-
electric  vehicles ("HEV") in domestic and international  markets
that  have  been  driven  by  consumer  demand  rather  than   by
government  legislation.  The Company also expanded efforts  into
other  areas  of  the growing world-wide market for  rechargeable
batteries  including:   portable power, starting,  lighting,  and
ignition   ("SLI"),  and  power  management.   The  Company   has
developed  or  is working toward strategic business relationships
and   cooperative  development  agreements  with  companies   and
government  agencies  such  as Black  &  Decker  (portable  power
tools),  Lockheed Martin (HEVs), Fiat Auto (EVs  and  HEVs),  the
Defense  Advanced Project Agency ("DARPA" - EVs  and  HEVs),  and
Horizon  Aircraft  (aircraft starting), and others  which  remain
confidential.  In 1996 and early 1997, the Company designed seven
new  Horizon battery designs; five of which have advanced to  the
prototype stage.  Management now believes it has opportunity  for
volume sales with some of these companies and other OEMs expected
to begin in late 1997, which is later than initially anticipated.
However,  the  placement of such orders  is  dependent  on  final
customer acceptance of prototypes, the ability of the Company  to
build  large  volumes of various battery types at  a  competitive
price  and government certification of certain battery types  for
particular uses.

Horizon   technology   allows  for   design   flexibility   while
maintaining    expected  performance  characteristics   and   the
potential   for   low-cost  manufacturing  techniques;   however,
extensive  engineering  design  is  required  to  customize  each
Horizon  module to meet the unique size, weight, and  performance
characteristics    required    for    different     applications.
Additionally,  two factors have affected progress with  potential
applications: product performance problems early in  1995,  which
were corrected in mid-1995, and questions regarding the Company's
ability  to  continue  as  a going concern.   These  factors  are
evaluated  carefully  by customers before entering  an  agreement
with  the  Company  or  placing large orders  for  the  Company's
products.

Management  believes  that revenue from  cooperative  development
agreements,  contracts and battery sales will increase  in  1997;
however,  such  revenue is not expected to be  adequate  to  fund
operations prior to late 1997 when large quantity battery  orders
may  materialize.  Until then, additional sources of debt  and/or
equity   financing  will  be  required  to  sustain   operations.
However,  the  placement of such orders  is  dependent  on  final
customer acceptance of prototypes, the ability of the Company  to
build  large  volumes of various battery types at  a  competitive
price  and government certification of certain battery types  for
particular  uses.   Management is attempting to raise  additional
funds,  primarily in the form of strategic partner  relationships
and  license agreements with customers and organizations that can
aid the penetration of target markets and can assist financially;
however  there  can  be no assurance that  such  funding  can  be
obtained  on  terms acceptable to the Company, if  at  all.   The
Company recently completed an interim $500,000 loan with a  large
manufacturing  company and is discussing other arrangements  with
that company which could result in additional debt or capital  to
the  Company.   However,  there is no assurance  that  any  other
agreements with the manufacturing company will be made.

Revenue

The  Company generated project revenue of approximately $295,000,
$989,000  and $2,902,000 for the years ending December 31,  1996,
1995  and 1994, respectively.  During 1996, the Company generated
approximately  $115,000  in  project revenue  from  Chrysler  for
various  environmental and other tests performed on  the  Horizon
battery.  The remainder of project revenue generated in 1996  was
from various customers with whom the Company is developing and/or
refining prototype batteries for various electric vehicle and non-
electric  vehicle applications (FIAT, Black & Decker,  DARPA  and
others  which  remain  confidential).  Management  believes  that
revenue  from  project agreements which decreased from  1994-1996
may  increase  beginning in 1997 as the Company has  repositioned
itself  into  its target markets with major OEMs and  expects  to
finalize  and  complete project agreements to  design  and  build
prototype  batteries;  however, the amount  and  timing  of  such
revenue  is uncertain.  Approximately $797,000 of project revenue
in  1995  and  $846,000 in 1994 was generated under an  agreement
with  Chrysler for the retrofit of the Horizon battery for  their
NS  Electric  Minivan Program.  The program  concluded  in  1995.
Project  revenue  of $100,000 generated during 1995  was  from  a
program  to  perform a Preliminary Design Review  ("PDR")  for  a
potential  manufacturing  facility in  India.   This  review  was
concluded  in  1995 and work under this program  was  terminated.
Approximately  $2,056,000 of project revenue in 1994  was  earned
under  an  agreement  with the Electric Power Research  Institute
("EPRI")  for  the  development  and  commercialization  of   the
Company's  proprietary advanced lead-acid battery.  This  program
concluded in 1994.

The  Company  had  battery  sales  of  $823,000,  $1,196,000  and
$378,000  for the years ending December 31, 1996, 1995 and  1994,
respectively.  Approximately 50% of the Company's 1996  and  1995
battery  sales, were generated from Chrysler.  In  1996,  battery
sales  to  Chrysler were primarily to fill orders  in  accordance
with  the production purchase order placed in December 1995.   In
1995, battery sales to Chrysler were primarily for testing of the
battery  in their NS Electric Minivan Program, which resulted  in
the  receipt  of the production purchase order from  Chrysler  in
December 1995.  The remainder of battery sales generated  in  all
years  were  from  numerous  customers requesting  batteries  for
testing  and evaluation.  Management expects the level of battery
sales  to increase beginning in late 1997 or 1998 as the  Company
receives  an  increase  in orders under the  Chrysler  production
purchase order and from others currently testing various types of
batteries.   However,  the  amount  and  timing  of  orders  from
Chrysler and others is uncertain and could be impacted materially
by the California, New York, and Massachusetts mandates.

In  July  1996,  the Company received a $3,000,000  payment  from
Chrysler.   Chrysler  designated $2,366,00  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  ER&D  efforts.   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  will  be  recognized  in income  as  the  ER&D  tasks  are
performed.

The  Company also generated $1,000,000 and $800,000 in  1995  and
1994,   respectively,  in  license  fees  under  a   Distribution
Agreement  with  Mitsui  Engineering  &  Shipbuilding  Co.,  Ltd.
("MES")  for  the  export  and  exclusive  distribution  of   the
Company's  Horizon battery in Japan.  In March 1996, the  Company
completed  a Termination Agreement with MES which terminated  the
Distribution  Agreement  and settled  all  outstanding  financial
matters  with  MES, including the conversion of  all  outstanding
Convertible  Notes Payable owed to MES (approximately $3,000,000)
to Common Stock of the Company at $38.00 per share.

Additionally,  the Company generated revenue of $410,000  in  the
year  ended  December  31,  1994  from  an  agreement  with   BDM
Technologies, Inc. ("BDM") for technical support in developing  a
low rate initial production line for the Horizon battery. The BDM
agreement ended in 1994.

Costs and Expenses

Total costs and expenses decreased significantly during the  year
ended December 31, 1996 compared to 1995. During 1996, management
implemented cost control measures to conserve cash and to  reduce
expenses,  particularly in light of the change in the  California
mandates.   Costs were also reduced as a result of  increases  in
productivity.   Generally, total costs were  higher  in  1995  as
compared  to  1996,  as in 1995, the Company  began  to  purchase
machinery  and implement production processes to manufacture  the
Horizon  battery  in  commercial  quantities  and  increased  the
production,  marketing and administrative staffs  accordingly  in
anticipation  of  the  production purchase  order  received  from
Chrysler  in  December  1995.   During  1995,  the  Company  also
incurred  significant  nonrecurring costs  to  replace  batteries
which  failed  to perform as expected due to early  manufacturing
problems  as  well  as  improper  storage  and  charging  of  the
batteries by customers.  Additionally, the Company issued 136,000
shares of unregistered, restricted shares of Common Stock in 1995
which   were  valued  at  $1,468,000  and  charged  to   expense,
associated with investor/public relations services to be provided
by  a  consulting  firm.   Significant research  and  development
expenditures  were  also  incurred  in  1995  which  resulted  in
technical  achievements in specific energy, power and cycle  life
from  batteries   produced on the manufacturing  line,  not  just
laboratory  prototypes.  Interest costs were higher  in  1995  as
well  due  to the incurrance in 1995 of approximately $13,000,000
in Convertible Debt financing which generally converted within 90
days  of  the  respective  financing.   Interest  costs  in  1995
included  $2,603,250 (recorded during 1996 as  a  restatement  to
1995  financial  statements) related to the  conversion  discount
from  market on the Convertible Notes Payable (generally 20-25%).
The  discount  was amortized over the period beginning  with  the
issuance  of  the  debt to the first date that  conversion  could
occur  (generally  60  days).  Interest costs  of  $141,750  were
recorded  in  1996  for the Convertible Notes Payable  issued  in
1995.  There were no Convertible Notes Payable issued in 1996.

Since  sales did not materialize as anticipated in late 1995  and
into  1996, management began a cost reduction program.   Staffing
was reduced by approximately 50% during 1996 and the capacity  of
the  San  Marcos plant was increased through upgrades and further
refinement  of  the  production  processes.   During  late  1996,
management   made   the  decision  to  consolidate   its   Austin
headquarters into the San Marcos manufacturing plant  to  further
reduce  costs.   Manufacturing costs  have  remained  high  as  a
percentage of battery sales during 1996 due to the fact that  the
Company has maintained the minimum production level necessary  to
demonstrate  the  ability to manufacture the Horizon  battery  in
commercial  quantities,  even though  battery  sales  of  current
battery models were significantly less than expected.  Management
expects  manufacturing  costs  to decrease  as  a  percentage  of
battery sales when volume production begins; however, the  timing
and  amount  of  battery  orders  is  uncertain.   Management  is
continuing  its efforts to control costs and reduce monthly  cash
expenditures.

Even  though total costs and expenses decreased in 1996  compared
to 1995, certain non-cash expenses significantly increased during
1996  compared  to  1995.   Depreciation and  amortization  costs
nearly  doubled  from  1995  because  a  significant  amount   of
equipment  and  intangibles were acquired during  1995  and  were
depreciated/amortized for the entire period in 1996 compared to a
shorter  period in 1995.  In addition, during 1996,  the  Company
disposed  of  approximately $526,000 of equipment  which  was  no
longer in use.

Prior to June 1994, total costs were substantially lower, as  the
Company   was   primarily  performing  research  and  development
activity  related  to  the Horizon battery,  and  costs  for  the
production facility were borne by a strategic corporate  partner.
In  the  fourth  quarter  of  1994, the  Company  formalized  its
arrangement with BDM and agreed to a Technology License Agreement
whereby  the Company licensed BDM's manufacturing technology  for
use  in  producing the Horizon battery.  In accordance  with  the
terms  of  the agreement, the Company agreed to pay BDM:  $80,000
cash;  issue 170,000 shares of Common Stock in equal installments
over a three year period; issue 20,000 shares of Common Stock  if
the  Company decides to maintain the license beyond the  original
three  year term; and to grant 100,000 options to purchase Common
Stock  at  $40.00 per share.  The Company also agreed to  acquire
BDM's  interest in the corporate joint venture formed by BDM  and
the  Company  in  1993 for 10,000 shares of  Common  Stock.   The
Common Stock issued to BDM is unregistered; however, BDM has been
given  certain demand and "piggyback" registration  rights.   The
Company recorded an expense of $3,819,350 in 1994 for the license
of  this  manufacturing  technology  and  will  have  no  further
expenses related to this technology in the future.

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  state-of-the-art  equipment  to  manage  and  control
hazardous substances and pollution. The Company expended  $8,000,
$385,000  and  $198,000 in 1996, 1995 and 1994, respectively,  in
capital expenditures for such equipment.  As part of its on-going
operations, the Company incurred $10,000, $170,000 and $80,000 in
non-capital expenditures in 1996, 1995 and 1994, respectively, to
properly  dispose of hazardous materials and waste.  As a  result
of  such  preventive  measures,  the  Company  has  not  incurred
significant  remediation costs and management  is  not  currently
aware of any infrequent or non-recurring clean-up expenditures to
be  incurred  in  the future based on present  circumstances  and
conditions.

During  the  years ended December 31, 1996, 1995  and  1994,  the
Company  issued  approximately  844,000,  1,500,000  and  200,000
shares  of  Common Stock, respectively, as a result of  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 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  1996, the Company did not generate sufficient  cash  flow
from operations to fund its working capital needs.  Net cash used
in  operating  activities was approximately  $3,300,000  in  1996
(down  from $15,200,000 in 1995).  As a result, the Company  sold
292,084 shares of Common Stock which resulted in net proceeds  to
the  Company of $2,547,000 during the year (down from $19,000,000
of  external funding raised in 1995).  Included in cash flow from
operations  in  1996 is a $3,000,000 payment  from  Chrysler  for
compensation for continued capacity maintenance, ER&D 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.   Funds generated in 1996 were used to maintain  minimum
production  capabilities and a core staff to sustain  operations.
Capital expenditures of approximately $384,000 were made in order
to  further automate the production process and reduce  operating
costs.   During 1996, the Company significantly reduced operating
costs  by  reducing personnel approximately 50% and consolidating
its   Austin  headquarters  into  the  San  Marcos  manufacturing
facility.   These  cost  reductions  were  achieved  while  still
increasing the Company's production capacity.

Management  expects  the  level  of  battery  sales  to  increase
beginning  in  late 1997 as the Company receives an  increase  in
orders  under  the Chrysler production purchase  order  and  from
others  currently  testing various types of batteries.   However,
due  to  weakened government mandates, management does not expect
sales  from Chrysler to reach levels originally projected in  the
near-term.  In addition, management expects revenue from  project
agreements to increase from current levels beginning in late 1997
or 1998 as the Company finalizes project agreements to design and
build   prototype  batteries  and  delivers  such  products   and
services.   The  timing and amount of battery sales  and  revenue
from  project  agreements  is uncertain.    Management  does  not
expect sales from these orders or services to generate sufficient
funds   to  support  its  overall  working  capital  and  capital
expenditure  needs through 1997.  Additional debt  and/or  equity
financing will be necessary to sustain operations.

In  January  1997, the Company completed a private  placement  of
109,397  shares of Common Stock with its executive  officers  and
certain  other accredited investors which generated net  proceeds
of  $680,508.   In  connection with this  offering,  the  Company
issued  616,383 warrants with exercise prices ranging from  $5.25
to  $7.56 per share.  All warrants have a two-year term from date
of issue.  The portion of the private placement sold to executive
officers ($250,000) may have to be repaid by the Company  if  the
purchase of such shares is not approved by the shareholders.

In  January  1997, the Company filed a registration statement  on
Form  S-3  for the sale of 160,000 shares issued to Ally  Capital
Corporation  ("Ally") as prepayment for capital lease obligations
owed  by  the  Company.  The shares will be  sold  by  Ally,  the
proceeds  of  which  will  be used to satisfy  lease  obligations
(approximately $900,000 as of March 14, 1997).  If  the  proceeds
from  the  sale of such shares are not sufficient to satisfy  the
lease  obligations  due  to fluctuations in  market  prices,  the
Company  will,  on a one time basis, issue additional  shares  of
Common Stock or pay cash to Ally to make up the deficiency.  Ally
will retain any overage from the sale of such shares in excess of
the  lease  obligations.  Upon payment of all lease  obligations,
letters  of  credit  of  $663,000  which  securitize  the   lease
obligations  will be canceled and certificates of deposit  of  an
equal  amount that collaterialize the letters of credit  will  be
released.    Management  does  not  expect   to   complete   this
transaction until the second quarter of 1997.  See Note Q in  the
financial   statements  for  further  discussion  regarding   the
accounting for these shares as of December 31, 1996.

Subsequent to December 31, 1996, the Company received $500,000 in
the  form of an unsecured promissory note bearing interest at  5%
from  an unrelated "Fortune 500" manufacturing company with  whom
the  Company is pursuing additional relationships.  The  note  is
payable on demand at any time after May 7, 1997.  The lender  may
credit  the note against any purchase price it agrees to pay  for
any  other  securities; however, there is no assurance  that  any
other business arrangements will be completed with the lender.

The  Company does not anticipate significant capital expenditures
in  1997 to satisfy anticipated demand for battery orders.  There
were no significant capital commitments at December 31, 1996.

Convertible debentures of $250,000 will mature on April 12, 1997.
These  debentures  are  convertible  into  Common  Stock   at   a
conversion price equal to 80% of the average closing price of the
Common  Stock  for  the five business days immediately  preceding
such time as the debentures are converted.

As  of March 14, 1997, the Company had approximately $550,000  of
unrestricted  cash  available.   Management  is  continuing   its
efforts  to control costs and believes it has sufficient cash  to
continue  operations through the first quarter of 1997,  however,
it will be necessary to raise additional financing before the end
of  the  second  quarter of 1997 to sustain operations  and  fund
anticipated  growth.  Management believes that the cash  shortage
from  operations  will decrease in 1997.  If anticipated  project
agreements  are  finalized and volume orders  for  batteries  are
received, additional external financing for operations may not be
necessary  in  late  1997.  However, the  timing  and  amount  of
battery orders and revenue from project agreements are uncertain.

The  Company  has  historically been able to  raise  funds  on  a
repeated  basis to sustain operations.  Management  is  currently
attempting  to raise additional funds, primarily in the  form  of
strategic  partner  relationships  and  license  agreements  with
customers  and organizations that can aid penetration  of  target
markets  and  can assist financially; however, there  can  be  no
assurance that such funding can be obtained on favorable terms 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  1994, the Company signed a "Know-How License Agreement"  (the
"Agreement")  with Horizon Battery Technologies, Ltd.,  ("HBTL"),
of  Bombay, India, calling for the completion of several detailed
subordinate  agreements with the ultimate purpose to license  the
manufacture and sale of batteries in India.  The effectiveness of
the  Agreement was conditioned upon the subsequent  execution  of
these  six related agreements, none of which were executed.   The
Company believes, therefore, the Agreement never became effective
and  has no force or effect.  Separately in 1995, HBTL agreed  to
pay  the Company $250,000 for a Preliminary Design Review ("PDR")
for  a  potential  manufacturing  facility  in  India  which  was
required  to  complete  one of the subordinate  agreements.   The
Company  received  $100,000 from HBTL and completed  the  PDR  in
1995.  The remaining $150,000 was never paid by HBTL, in spite of
repeated demands by the Company.

In  September  1996, the Company received a demand from  HBTL  to
arbitrate  damage  claims for alleged breach  of  the  Agreement.
HBTL  claims damages of approximately $5,100,000 for its expenses
and  lost profits related to the Agreement.  The Company disputes
the  claim  for  damages and will vigorously defend  any  actions
taken  by  HBTL to pursue the claims.  The Company  has  filed  a
petition in Travis County, Texas, seeking, among other things,  a
declaratory  judgment that HBTL has no right  to  arbitration  or
monetary relief.  HBTL is contesting jurisdiction and is  seeking
removal  of  the  proceedings to the U.S.  Federal  Courts.   The
Company  has not recorded a liability in the financial statements
at  December  31,  1996 for this uncertainty,  as  management  is
unable  to determine the likelihood of an unfavorable outcome  of
this  matter or to estimate the amount or range of potential loss
should the outcome be unfavorable.  The resolution of this matter
could,  in the worst case, have a material adverse effect on  the
financial position of the Company.

On   June  26,  1996,  the  Company's  shareholders  approved  an
amendment  to the Company's Restated Certificate of Incorporation
that  effected  a one-for-ten reverse stock split.   The  Company
amended  its  Certificate of Incorporation on July  22,  1996  to
effect  the reverse split.  Pursuant to this amendment, each  ten
shares  of  Common  Stock outstanding immediately  prior  to  the
reverse  split ("Old Shares") were reclassified as one  share  of
new  Common Stock ("New Shares").  The par value per share of the
Common  Stock has correspondingly increased from $0.10 per  share
to  $1.00 per share.  No fractional New Shares were issued  as  a
result  of the reverse split; rather, each shareholder whose  Old
Shares  were not evenly divisible by ten received one  additional
New  Share  for  the fractional New Share that  such  shareholder
would  otherwise be entitled to have received as a result of  the
reverse  split.   All  references  in  this  report  and  in  the
financial  statements to share and per share  amounts  have  been
restated to retroactively reflect the reverse split.

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.

None

                            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 May 22, 1997, 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 May 22, 1997, 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 May 22, 1997, 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 May 22, 1997, 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  May  22,  1997, 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, 1996 and 1995             F-3

     Statements of Operations--For the years
       ended December 31, 1996, 1995, and 1994                F-4

     Statements of Shareholders' Equity -- For
       the years ended December 31, 1996, 1995 and 1994       F-5

     Statements of Cash Flows--For the years
       ended December 31, 1996, 1995, and 1994                F-6

     Notes to Financial Statements--
       December 31, 1996                                      F-7

   (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.

   (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).

          3.10  Amendment to Bylaws of Electrosource, Inc.  dated
          November 13, 1996.

          4.1  Letter Agreement between Rosehouse Ltd., a Bermuda-
          based  institutional  Buyer, and  Electrosource,  Inc.,
          dated   July  25,  1995  (filed  as  Exhibit   4.7   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter ended June 30, 1995, and incorporated herein by
          reference).

          4.2   Letter Agreement between ACM Advisors of  Zurich,
          Switzerland,  and Electrosource, Inc., dated  July  27,
          1995  (filed  as  Exhibit 4.8 to  Electrosource,  Inc.,
          Quarterly  Report on Form 10-Q for quarter  ended  June
          30, 1995, and incorporated hereby by reference).

          4.3  Offshore Securities Subscription Agreement between
          Rosehouse  Ltd.,  a Bermuda-based institutional  Buyer,
          and Electrosource, Inc., dated July 27, 1995 (filed  as
          Exhibit  4.10 to Electrosource, Inc., Quarterly  Report
          on  Form  10-Q  for quarter ended June  30,  1995,  and
          incorporated herein by reference).

          4.4  Form of 10% Convertible Debentures entered into by
          each  participant with Electrosource, Inc., dated  July
          27,  1995 (filed as Exhibit 4.9 to Electrosource, Inc.,
          Quarterly  Report on Form 10-Q for quarter  ended  June
          30, 1995, and incorporated herein by reference).

          4.5   Warrant  to  purchase up to 1,000,000  shares  of
          Electrosource,  Inc.,  Common  Stock,  issued  to   ACM
          Advisors,  Zurich,  Switzerland, dated  July  27,  1995
          (filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
          Report  of  Form 10-Q for quarter ended June 30,  1995,
          and incorporated herein by reference).

          4.6   Warrant  to  purchase up to 1,000,000  shares  of
          Electrosource,  Inc.,  Common  Stock,  issued  to   ACM
          Advisors,  Zurich,  Switzerland, dated  July  27,  1995
          (filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
          Report  on  Form 10-Q for quarter ended June 30,  1995,
          and incorporated herein by reference).

          4.7   Warrant  to  purchase up  to  250,000  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).

          4.8  Representative Subscription Agreement entered into
          by  each participant with Electrosource, Inc., dated on
          the  date  of  execution  (filed  as  Exhibit  4.1   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference.).

          4.9   Letter  Agreement between Shoreline  Pacific,  an
          institutional  Buyer,  and Electrosource,  Inc.,  dated
          October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
          Inc.,  Quarterly Report on Form 10-Q for quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.10 Offshore Securities Subscription Agreement between
          participants and Electrosource, Inc., dated October 10,
          1995  (filed  as  Exhibit 4.3 to  Electrosource,  Inc.,
          Quarterly  Report  on  Form  10-Q  for  quarter   ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.11  Letter  Agreement between Shoreline  Pacific,  an
          institutional  Buyer,  and Electrosource,  Inc.,  dated
          October   25,   1995   (filed   as   Exhibit   4.4   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference).

          4.12 Offshore Securities Subscription Agreement between
          participants  and Electrosource, Inc.,  dated  November
          29,  1995 (filed as Exhibit 4.5 to Electrosource, Inc.,
          Quarterly  Report  on  Form  10-Q  for  quarter   ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.13 Form of 8% Convertible Debentures entered into  by
          each   participant  with  Electrosource,  Inc.,   dated
          November   29,   1995   (filed  as   Exhibit   4.6   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference).

          4.14  Offshore Securities Subscription Agreement  dated
          February 22, 1996 between Arbinter Omnivalor, S.A.  and
          Electrosource,   Inc.  (filed   as   Exhibit   4.1   to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.15  Offshore Securities Subscription Agreement  dated
          May  2,  1996  between  Arbinter  Omnivalor,  S.A.  and
          Electrosource,   Inc.  (filed   as   Exhibit   4.2   to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.16  Warrants  to  purchase up  to  22,789  shares  of
          Electrosource,  Inc.  Common  Stock,  issued  to  three
          principals of Pacific Shoreline dated October 20,  1995
          and  issued as of May 9, 1996 (filed as Exhibit 4.3  to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.17  Warrants  to  purchase up  to  56,700  shares  of
          Electrosource,  Inc.  Common  Stock,  issued  to  three
          principals of Pacific Shoreline dated December 5,  1995
          and  issued as of May 9, 1996 (filed as Exhibit 4.4  to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.18  Warrant  to  purchase  up  to  50,000  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).

          4.19  Warrant  to  purchase  up  to  90,000  shares  of
          Electrosource,   Inc.,   Common   Stock,   issued    to
          Oppenheimer  &  Co.,  Inc. (Investment  Bankers)  dated
          April  28, 1995 (filed as Exhibit 4.2 to Electrosource,
          Inc.,  Quarterly  Report on Form 10-Q for  the  quarter
          ended  June  30,  1995,  and  incorporated  herein   by
          reference).

          4.20   1988  Non-Employee  Director  Option   Plan   of
          Electrosource, Inc. (filed as Exhibit 4.2 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-22223]  filed  June  7,  1988,   and
          incorporated herein by reference).

          4.21  Amendment  No.  1  to 1988 Non-Employee  Director
          Stock  Option  Plan (filed as Exhibit 4.3 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-49042]  filed  July  12,  1990,  and
          incorporated herein by reference).

          4.22  Amendment  No.  2  to 1988 Non-Employee  Director
          Stock  Option  Plan (filed as Exhibit 4.4 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-49042]  filed  June  30,  1992,  and
          incorporated herein by reference).

          4.23 1993 Non-Employee Consultant Stock Option Plan for
          Electrosource,   Inc.  (filed   as   Exhibit   4.2   to
          Registration   Statement  on  Form  S-8   [Registration
          Statement  #  33-65386],  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 Form S-1 Registration Statement,  file
          number  33-30486,  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  Warrant  to  purchase  up  to  50,000  shares  of
          Electrosource,  Inc., Common Stock, issued  to  BMA  on
          April 12, 1988 (filed as Exhibit 10.11 to Form S-1  and
          incorporated herein by reference).

          10.5  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).

          10.6  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, file  number  33-34581,  filed
          December  11, 1989 (hereinafter referred to  as  "Post-
          Effective  Amendment No. 1 to Form S-1  filed  December
          11,  1989  (hereinafter referred to as  "Post-Effective
          Amendment") and incorporated herein by reference).

          10.7  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 hereby incorporated by reference).

          10.8  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).

          10.9  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).

          10.10      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   on   Form    S-1
          [Registration  Statement No. 33-65248] filed  June  30,
          1993, and incorporated herein by reference).

          10.11      Lease  Agreement  dated  December  9,  1987,
          between Electrosource, Inc., and Crow-Gottesman-Hill, a
          Limited Partnership (filed as Exhibit 10.15 to Form  S-
          1, and incorporated herein by reference).

          10.12      Lease Agreement between Aetna Life Insurance
          Company  and  Electrosource, Inc., dated  February  22,
          1992  (filed  as Exhibit 10.25 to Electrosource,  Inc.,
          Annual  Report  on  Form  10-K  for  the  period  ended
          December   31,   1991,  and  incorporated   herein   by
          reference).

          10.13      First  Amendment to Lease Agreement  between
          Aetna  Life Insurance Company and Electrosource,  Inc.,
          dated  February  24, 1993 (filed as  Exhibit  10.27  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.14      Second Amendment to Lease Agreement  between
          Aetna  Life Insurance Company and Electrosource,  Inc.,
          dated  March  1,  1996  (filed  as  Exhibit  10.14   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995).

          10.15     EPRI Agreement RP2415-15 dated July 20, 1992,
          between   Electrosource,  Inc.,  and   Electric   Power
          Research   Institute  (filed  as   Exhibit   10.42   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.16      EPRI  Agreement RP2415-15, Amendment  No.  1
          dated  November 12, 1992, between Electrosource,  Inc.,
          and Electric Power Research Institute (filed as Exhibit
          10.43 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1992,   and
          incorporated herein by reference).

          10.17      EPRI  Agreement RP2415-15, Amendment  No.  2
          dated  January  27, 1993, between Electrosource,  Inc.,
          and Electric Power Research Institute (filed as Exhibit
          10.44 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1992,   and
          incorporated herein by reference).

          10.18       Amendment   No.  3  to  Agreement   between
          Electrosource,   Inc.  and  Electric   Power   Research
          Institute, Inc. dated March 22, 1993 (filed as  Exhibit
          10.53 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1993,   and
          incorporated herein by reference).

          10.19       Amendment   No.  4  to  Agreement   between
          Electrosource,   Inc.  and  Electric   Power   Research
          Institute,  Inc.  dated  December  6,  1993  (filed  as
          Exhibit  10.53 to Company's Registration  Statement  on
          Form  S-1  [Registration Statement No. 33-73582]  filed
          December 24, 1993, and incorporated by reference).

          10.20     Business Alliance and License Agreement dated
          September  17, 1993, between Electrosource,  Inc.,  and
          Electric  Power  Research Institute (filed  as  Exhibit
          10.61  to Company's Registration Statement on Form  S-1
          [Registration  Statement No. 33-65248] filed  June  30,
          1993, and incorporated herein by reference). *

          10.21      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 Form 10-Q for the  quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          10.22      Shareholders Agreement dated April 25, 1993,
          between Electrosource, Inc. and BDM Technologies,  Inc.
          (filed  as  Exhibit  10.60  to  Company's  Registration
          Statement on Form S-1 [Registration Statement  No.  33-
          65248] filed June 30, 1993, and incorporated herein  by
          reference). *

          10.23     Stock Purchase Agreement dated as 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).

          10.24      Operating  Lease Agreement  between  Horizon
          Battery Technologies, Inc., BDM Technologies, Inc., and
          Electrosource, Inc., dated June 20, 1994 (filed  as  an
          Exhibit  to  the Company's Form 10-Q/A No.  1  for  the
          period ended June 30, 1994, and incorporated herein  by
          reference).

          10.25      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).

          10.26       Distributorship  Agreement  between  Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource, Inc., dated July 7, 1994  (filed  as  an
          Exhibit  to  the Company's Form 10-Q/A No.  1  for  the
          period ended June 30, 1994, and incorporated herein  by
          reference).

          10.27      A  Convertible Promissory Note in  favor  of
          Mitsui Engineering and Shipbuilding Co., Ltd. was dated
          October  26, 1994 (filed as an Exhibit to the Company's
          October  26, 1994, Form 8-K and incorporated herein  by
          reference).

          10.28      The  Note Purchase Agreement between  Mitsui
          Engineering    and   Shipbuilding   co.,    Ltd.    and
          Electrosource, Inc., dated October 26, 1994  (filed  as
          an  Exhibit to the Company's October 26, 1994, Form 8-K
          and incorporated herein by reference).

          10.29     Notice of Intent to Terminate Distributorship
          Agreement  between Mitsui Engineering and  Shipbuilding
          Co.,  Ltd.  and Electrosource, Inc., dated December  5,
          1995 (filed as an Exhibit to the Company's December 22,
          1995 Form 8-K, and incorporated herein by reference).

          10.30      A  Convertible Promissory  Replacement  Note
          between  Mitsui Engineering and Shipbuilding Co.,  Ltd.
          and Electrosource, Inc., dated March 6, 1996 (filed  as
          Exhibit  10.33 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.31      A Convertible Promissory Note between Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource, Inc., dated October 26, 1995  (filed  as
          Exhibit  10.34 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.32      A Convertible Promissory Note between Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource,  Inc., dated March  6,  1996  (filed  as
          Exhibit  10.35 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.33      Termination Agreement between Electrosource,
          Inc. and Mitsui Engineering and Shipbuilding Co., Ltd.,
          dated  March  6,  1996  (filed  as  Exhibit  10.36   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.34      Offshore  Securities Subscription  Agreement
          between Williams DeBroe, a British institutional buyer,
          and Electrosource, Inc., dated June 13, 1994 (filed  as
          an Exhibit to the Company's July 21, 1994, Form 8-K and
          incorporated herein by reference).

          10.35     Representative Subscription Agreement entered
          into  by each participant with Electrosource, dated  on
          the  date  of  execution (filed as an  Exhibit  to  the
          Company's  October 18, 1994, Form 8-K and  incorporated
          herein by reference).

          10.36      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          buyer, and Electrosource, Inc., dated January 25,  1995
          (filed as an Exhibit to the Company's January 26,  1995
          Form 8-K, and incorporated herein by reference).

          10.37      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          buyer,  and  Electrosource, Inc., dated March  9,  1995
          (filed  as an Exhibit to the Company's March  10,  1995
          Form 8-K, and incorporated herein by reference).

          10.38      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          Buyer   with   Form  of  Convertible   Debenture,   and
          Electrosource,  Inc., dated April  4,  1995  (filed  as
          Exhibits to the Company's April 12, 1995 Form 8-K,  and
          incorporated hereby by reference).

          10.39      Warrant to purchase up to 54,237  shares  of
          Electrosource, Inc., Common Stock, issued to  Rosehouse
          Ltd.,  a Bermuda-based institutional buyer, dated April
          5, 1995 (filed as an Exhibit to the Company's April 12,
          1995 Form 8-K, and incorporated herein by reference).

          10.40      Subcontract Number 21614-TTS-7 between AECT,
          Inc.,  and  Electrosource, Inc., dated March 21,  1994,
          (filed  as Exhibit 10.43 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.41      Purchase  Agreement between  Quantum  Energy
          Systems  and  Technology LLC and  Electrosource,  Inc.,
          dated  November  14, 1994, (filed as Exhibit  10.44  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1994, and incorporated herein
          by reference).

          10.42     Equipment Lease Agreement dated April 6, 1995
          between  Ally  Capital Corporation  and  Electrosource,
          Inc.  (filed  as  Exhibit 10.1 to Electrosource,  Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          10.43     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).

          10.44      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).

          10.45       Purchase Order between Chrysler Corporation
          and  Electrosource, Inc., dated January 9, 1996  (filed
          as  Exhibit 10.69 to Electrosource, Inc. Annual  Report
          on  Form 10-K for the period ending December 31,  1995,
          and incorporated herein by reference).

          10.46       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).

          10.47        Joint   Development   Agreement    between
          Electrosource,  Inc.  and Black & Decker  (U.S.)  Inc.,
          dated  March  8,  1996  (filed  as  Exhibit  10.71   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period  ending  December  31,  1995,  and  incorporated
          herein by reference).

          10.48        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).

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

          10.49      Form  of Director Indemnification  Agreement
          (filed  as Exhibit 10.8 to Electrosource, Inc.,  Annual
          Report  on Form 10-K for the period ended December  31,
          1987, and incorporated herein by reference).

          10.50       Director  Indemnification  Agreement  dated
          January  16,  1992,  between Electrosource,  Inc.,  and
          Charles   Mathews   (filed   as   Exhibit   10.26    to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1991, and incorporated herein
          by reference).

          10.51       Director  Indemnification  Agreement  dated
          February  12,  1992, between Electrosource,  Inc.,  and
          John  Malone  (filed as Exhibit 10.30 to Electrosource,
          Inc.,  Annual Report on Form 10-K for the period  ended
          December   31,   1991,  and  incorporated   herein   by
          reference).

          10.52       Director  Indemnification  Agreement  dated
          November  4,  1992,  between Electrosource,  Inc.,  and
          Thomas   S.   Wilson   (filed  as  Exhibit   10.41   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.53       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).

          10.54     Director Indemnification Agreement dated June
          23,  1994, between Electrosource, Inc., and Michael  G.
          Semmens,  (filed  as  Exhibit 10.72  to  Electrosource,
          Inc.,  Annual Report on Form 10-K for the period  ended
          December   31,   1994,  and  incorporated   herein   by
          reference).

          10.55       Director  Indemnification  Agreement  dated
          November  2,  1994,  between Electrosource,  Inc.,  and
          Richard  S.  Williamson, (filed  as  Exhibit  10.73  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1994, and incorporated herein
          by reference).

          10.56     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).

          10.57     Director Indemnification Agreement dated June
          22,  1995, between Electrosource, Inc., and William  R.
          Graham  (filed as Exhibit 10.1 to Electrosource,  Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          June 30, 1995, and incorporated herein by reference).

          10.58     1987 Stock Option Plan of Electrosource, Inc.
          (filed  as  Annex  A,  pages  44  to  48  of  Company's
          Information  Statement  filed  October  16,  1987,  and
          incorporated herein by reference).

          10.59     Amendment No. 1 to 1987 Stock Option Plan  of
          Electrosource, Inc., dated February 19, 1992  (filed as
          Exhibit 4.3 to Company's Registration Statement on Form
          S-8  [Registration Statement No. 33-49049]  filed  June
          30, 1992, and incorporated herein by reference).

          10.60     Amendment No. 2 to 1987 Stock Option Plan  of
          Electrosource,   Inc.  (filed  as  Exhibit   10.36   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.61     Amendment No. 3 to 1988 Non-Employee Director
          Stock   Option   Plan  (filed  as  Exhibit   10.40   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.62     Amendment No. 4 to 1988 Non-Employee Director
          Stock   Option   Plan  (filed  as   Exhibit   10.3   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          the  quarter  ended  June  30, 1995,  and  incorporated
          herein by reference).

          10.63     1994 Stock Option Plan of Electrosource, Inc.
          (filed   as   Exhibit  10.4  to  Electrosource,   Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          June 30, 1995, and incorporated herein by reference).

          10.64     Consulting Agreement dated September 1, 1992,
          between   Electrosource,  Inc.,  and  Norman  Hackerman
          (filed  as Exhibit 10.45 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1992, and incorporated herein by reference).

          10.65      Consulting Agreement dated August  1,  1993,
          between  Electrosource,  Inc.,  and  Norman  Hackerman,
          (filed  as Exhibit 10.71 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.66      Agreement dated December 19,  1995,  between
          Electrosource,  Inc. and Robert M. Trembath  (filed  as
          Exhibit 10.103 to Electrosource, Inc. Annual Report  on
          Form 10-K for the period ending December 31, 1995,  and
          incorporated herein by reference).

          10.67      Consulting Agreement dated January 1,  1993,
          between  Electrosource, Inc., and  Wilburn  B.  Laubach
          (filed  as Exhibit 10.48 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1992, and incorporated herein by reference).

          10.68      Consulting Agreement dated February 5, 1992,
          between Electrosource, Inc., and John D. Malone  (filed
          as  Exhibit 10.49 to Electrosource, Inc., Annual Report
          on  Form  10-K for the period ended December 31,  1992,
          and incorporated herein by reference).

          10.69      Consulting Agreement dated August 11,  1992,
          between Electrosource, Inc., and Ralph E. White  (filed
          as  Exhibit 10.52 to Electrosource, Inc., Annual Report
          on  Form  10-K for the period ended December 31,  1992,
          and incorporated herein by reference).

          10.70     Consulting Agreement dated September 1, 1995,
          between  Electrosource,  Inc., and  Liviakis  Financial
          Communications, Inc. (filed as Exhibit 10.3 to Form 10-
          Q  for  the  quarter  ended  September  30,  1995,  and
          incorporated herein by reference).

          10.71      Offer of Employment dated October 11,  1994,
          between  Electrosource, Inc., and Michael L. Weinstein,
          (filed  as Exhibit 10.74 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.72      Separation, Release and Indemnity  Agreement
          dated  September 23, 1995, between Electrosource,  Inc.
          and  Michael L. Weinstein (filed as Exhibit  10.113  to
          Electrosource,  Inc. Annual Report  on  Form  10-K  for
          period  ending  December  31,  1995,  and  incorporated
          herein by reference).

          10.73      Offer  of  Employment dated  May  26,  1994,
          between  Electrosource, Inc., and  Michael  G.  Semmens
          (filed as an Exhibit to the Company's Form 10-Q/A No. 1
          for  the  period ended June 30, 1994, and  incorporated
          herein by reference).

          10.74      Consulting Agreement dated August  1,  1995,
          between Donald C. Perriello and Electrosource, Inc. (as
          filed  Exhibit  10.115  to Electrosource,  Inc.  Annual
          Report  on Form 10-K for the period ended December  31,
          1995, and incorporated herein by reference).

          10.75      Consulting Agreement dated December 1, 1995,
          between  William  Griffin and Electrosource,  Inc.  (as
          filed  Exhibit  10.116  to Electrosource,  Inc.  Annual
          Report  on Form 10-K for the period ended December  31,
          1995, and incorporated herein by reference).

          10.76      Employment Agreement dated March  25,  1996,
          between William F. Griffin and Electrosource, Inc.  (as
          filed  Exhibit 10.2 to Form 10-Q for the  period  ended
          March 31, 1996, and incorporated herein by reference).

          10.77      Consulting Agreement dated  March  4,  1995,
          between Beacon Advisors, Inc. (Langhorne Reid, III) and
          Electrosource,  Inc.  (as  filed  Exhibit   10.117   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.78      Consulting Agreement dated January 1,  1996,
          between  Jack J. Guy and Electrosource, Inc. (as  filed
          Exhibit 10.118 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.79     Consulting Agreement dated November 15, 1994,
          between Richard C. Baker dba Talbot Management Services
          and  Electrosource, Inc. (as filed  Exhibit  10.119  to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.80      Consulting Agreement between  Electrosource,
          Inc. and Richard J. Goranflo, dated March 29, 1996. (as
          filed  Exhibit 10.1 to Form 10-Q for the  period  ended
          June 30, 1996, and incorporated herein by reference).

          10.81      Consulting Agreement between  Electrosource,
          Inc.  and James Jordan, dated April 6, 1996. (as  filed
          Exhibit 10.2 to Form 10-Q for the period ended June 30,
          1996, and incorporated herein by reference).

          10.82      Consulting Agreement between  Electrosource,
          Inc.  and  Robert H. Schwartz d/b/a Jeremiah  Partners,
          dated May 18, 1996. (as filed Exhibit 10.3 to Form 10-Q
          for  the  period ended June 30, 1996, and  incorporated
          herein by reference).

          10.83      Consulting Agreement between  Electrosource,
          Inc.  and  Len Grzanka dated July 15, 1996.  (as  filed
          Exhibit 10.4 to Form 10-Q for the period ended June 30,
          1996, and incorporated herein by reference).

          10.84      Consulting Agreement between  Electrosource,
          Inc.  and  Rick Blanyer dated September  1,  1996.  (as
          filed  Exhibit 10.1 to Form 10-Q for the  period  ended
          September   30,  1996,  and  incorporated   herein   by
          reference).

          24.1 Consent of Ernst & Young LLP.

          27   Financial Data Schedule

*    Confidential  treatment of certain information contained  in
     this Agreement has been requested pursuant to Rule 406,  and
     the   Agreement  has  therefore  been  omitted   and   filed
     separately with the Commission.


(b)       Reports on Form 8-K.

          Reports  on  Form  8-K filed during the  quarter  ended
          December 31, 1996 were:

          None.

                           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/
                                      Michael G. Semmens, President
Date:  March 25, 1997

      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

      /s/                   President, Director           March 25, 1997
Michael G. Semmens          (Chief Executive Officer)


     /s/                    Director                      March 25, 1997
Richard Balzhiser


     /s/                    Director                      March 25, 1997
William R. Graham


     /s/                    Director                      March 25, 1997
Norman Hackerman


     /s/                    Director                      March 25, 1997
John D. Malone


     /s/                    Director                      March 25, 1997
Charles L. Mathews


     /s/                    Director                      March 25, 1997
Nathan Morton


                            Director                      March __, 1997
Richard S. Williamson


     /s/                    Director                      March 25, 1997
Thomas S. Wilson




     /s/                    Vice President Finance        March 25, 1997
James M. Rosel                and General Counsel
                            (Chief Financial Officer)


     /s/                    Controller/Treasurer          March 25, 1997
Mary Beth Koenig            (Principal Accounting Officer)


                        ELECTROSOURCE, INC.
                                 
                   Audited Financial Statements
                                 
                                 
                                 
                         December 31, 1996
                                 


Audited Financial Statements

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



                  REPORT OF INDEPENDENT AUDITORS








Shareholders and Board of Directors
Electrosource, Inc.


We  have  audited the accompanying balance sheets of Electrosource,
Inc.,  as of December 31, 1996 and 1995, and the related statements
of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996.  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  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  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, 1996 and 1995, and the  results
of its operations and its cash flows for each of the three years in
the  period  ended December 31, 1996, 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 P, the Company has incurred recurring  operating
losses  and  has experienced cash flow shortages at various  times.
Management's plans in regard to these matters are also described in
Note  P.   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.

As  discussed  in  Note G, the Company has restated  its  financial
statements as of December 31, 1995 and for the year then  ended  to
recognize  interest expense for the discount feature of convertible
debentures  convertible to common stock at  a  discount  to  market
price.






Austin, Texas
February 28, 1997


                        ELECTROSOURCE, INC.
                          Balance Sheets
                                 
                                              December 31
                                          1996           1995
ASSETS                                                         
                                                               
CURRENT ASSETS                                                 
  Cash and cash equivalents            $ 367,861    $ 2,083,032
  Trade receivables (net of allowance
      for doubtful accounts of $15,599
      in 1996 and $36,223 in 1995)       247,631      1,535,749
  Inventories                            249,235        404,755
  Prepaid expenses and other assets      164,319        245,133
TOTAL CURRENT ASSETS                   1,029,046      4,268,669
                                                               
PROPERTY AND EQUIPMENT, Net            4,787,019      6,009,334
                                                               
INTANGIBLE ASSETS                                              
  Technology license agreement         3,048,674      3,048,674
  Purchased technology                 2,412,886      2,412,886
  Less:  accumulated amortization     (2,607,093)    (1,613,973)
NET INTANGIBLE ASSETS                  2,854,467      3,847,587
                                                               
RESTRICTED CASH                          744,824        744,824
OTHER ASSETS                              72,950        406,787
TOTAL ASSETS                          $9,488,306    $15,277,201
                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY                           
                                                               
CURRENT LIABILITIES                                            
  Accounts payable                    $  704,841     $  876,746
  Accrued liabilities                  1,103,751      1,237,920
  Deferred revenue and advance
    payments on batteries              1,157,028              -
  Current  portion of capital lease
    obligations                          658,226        598,420  
  Convertible notes payable              250,000              -
TOTAL CURRENT LIABILITIES              3,873,846      2,713,086
                                                               
CONVERTIBLE NOTES PAYABLE                      -      8,020,000
TECHNOLOGY LICENSE PAYABLE             1,248,684      2,178,014
CAPITAL LEASE OBLIGATIONS
  (less current portion)                 519,047      1,126,252  

COMMITMENTS AND CONTINGENCIES (Note H)
                                                               
SHAREHOLDERS' EQUITY                                           
  Common Stock, par value $1.00 per
    share, authorized  50,000,000
    shares; issued and outstanding
    3,857,912 in 1996 and
    3,013,782 in 1995                  3,857,912      3,013,782
  Preferred Stock, par value $1.00
    per share; authorized 10,000,000
    shares, no shares issued or                -              -
    outstanding
  Warrants (Note K)                            -              -
  Paid in capital                     45,876,668     36,289,050
  Accumulated deficit                (45,887,851)   (38,062,983)
                                       3,846,729      1,239,849
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY                 $ 9,488,306    $15,277,201
                                                               
See notes to financial statements.                             


                        ELECTROSOURCE, INC.
                     Statements of Operations
                                 
                           For the years ended December 31
                            1996         1995         1994
                                                             
REVENUES                                                     
  Battery sales         $  822,698  $ 1,195,597    $  377,666
  Project revenue          295,015      989,433     2,901,690
  Capacity maintenance
    revenue              2,365,535            -             -
  Interest income           79,263       93,354        74,400
  License fees                   -    1,000,000       800,000
  Revenue from joint
    venture partner              -            -       410,414
  Royalty revenue                -            -        50,000
                         3,562,511    3,278,384     4,614,170
                                                             
COSTS AND EXPENSES                                           
  Manufacturing          3,661,320    9,365,660     2,210,748
  Selling, general and
    administrative       3,108,909    6,329,776     4,485,650
  Research and
    development          1,450,658    3,454,578     1,932,685
  Technology license
    and royalties          111,271      110,000     3,929,350
  Depreciation and
    amortization         2,042,007    1,167,461       446,602
  Interest expense         487,717    3,238,954        72,000
  Loss on disposal of
    equipment              525,497            -             -
                        11,387,379   23,666,429    13,077,035
LOSS BEFORE INCOME
TAXES                   (7,824,868) (20,388,045)   (8,462,865)
                                                             
INCOME TAXES
 (ALL FOREIGN)                   _      120,000        80,000
                                                             
NET LOSS               $(7,824,868)$(20,508,045)  $(8,542,865)
                                                             
LOSS PER SHARE         $     (2.13)$      (9.76)  $     (6.05)
                                                             
AVERAGE SHARES
OUTSTANDING              3,667,776    2,102,295     1,411,989
                                                             
See notes to financial statements.


                        ELECTROSOURCE, INC.
                Statements of Shareholders' Equity
                                 
                          For the years ended December 31, 1996, 1995 and 1994
                                                                    Total
                           Common     Paid In    Accumulated    Shareholders'
                            Stock     Capital      Deficit          Equity
                                                                     
Balance at
January 1, 1994         $1,317,280  $11,017,174  $ (9,012,073)    $ 3,322,381

Stock options exercised     12,816      131,189             -         144,005
Warrants exercised          14,800      318,200             -         333,000
Shares issued in
  Regulation S offering    120,000    2,551,556             -       2,671,556
Shares issued in
  Regulation D offering     48,550    1,337,924             -       1,386,474
Net loss for year ended
  December 31, 1994                                (8,542,865)     (8,542,865)
Balance  at
  December 31, 1994      1,513,446   15,356,043   (17,554,938)       (685,449)
                                                                     
Shares issued in
  Regulation S offering    372,164    4,987,836             -       5,360,000
Shares issued for
  Technology License        66,666    1,026,664             -       1,093,330
Stock options exercised     11,950      131,595             -         143,545
Conversion of Convertible
  Notes Payable            617,123    7,266,104             -       7,883,227
Shares issued for
  consulting services      136,000    1,332,800             -       1,468,800
Shares issued in
  Regulation D offering     80,633      806,333             -         886,966
Shares issued for equipment
  and purchased technology 215,800    2,778,425             -       2,994,225
Adjustment for conversion                                            
  discount on Convertible
  Notes Payable
  (See Note G)                   -    2,603,250             -       2,603,250
Net loss for year ended                                            
  December 31, 1995
  (See Note G)                   -            -   (20,508,045)    (20,508,045)
Balance at December 31, 1995
  (As Restated - Note G) 3,013,782   36,289,050   (38,062,983)      1,239,849
                                                                     
Shares issued in
  Regulation S offerings   292,084    2,254,908             -       2,546,992
Conversion of Convertible
  Notes Payable            484,828    6,176,048             -       6,660,876
Conversion discount on
Convertible Notes Payable        -      141,750             -         141,750
Reverse Split - Fractional
  Shares (One-for-Ten)       1,353       (1,353)            -               -
Shares issued for
  Technology License        56,665      872,665             -         929,330
Shares issued for
  consulting services        6,000       58,800             -          64,800
Shares issued for
  equipment                  3,200       14,800             -          18,000
Stock options issued for
  consulting services            _       70,000             -          70,000
Net loss for year ended
  December 31, 1996              -            -    (7,824,868)     (7,824,868)
Balance at
  December 31, 1996     $3,857,912  $45,876,668  $(45,887,851)    $ 3,846,729
                                                                     
See  notes  to  financial statements.



                        ELECTROSOURCE, INC.
                     Statements of Cash Flows
                                 
                                         For the years ended December 31
                                       1996           1995           1994
OPERATING ACTIVITIES                                               
  Net loss                         $(7,824,868)   $(20,508,045)   $(8,542,865)
  Adjustments to reconcile net
    loss to net cash used in
    operating activities:
      Common Stock issued for
        Technology License                   -               -      3,271,343
      Equity instruments issued
        for consulting services        134,800       1,468,800              -
      Depreciation and amortization  2,042,007       1,167,461        446,602
      Amortization of deferred
        financing costs                 48,349         104,891              -
      Non-cash interest expense
        (conversion discount)          141,750       2,603,250              -
      Interest expense paid in
        common stock                   105,103         190,000              -
      Decrease in deferred revenue           -      (1,000,000)             -
      Loss on disposal of equipment    575,497               -              -
  Changes in operating assets and
    liabilities:
      (Increase) decrease in trade
        receivables                    288,118         942,562        (39,929)
      (Increase) decrease in
        inventories                    155,520        (173,099)      (231,656)
      (Increase) decrease in prepaid                                
        expenses and other assets       80,814        (220,482)        12,429
      Increase (decrease) in
        accounts payable and
        accrued liabilities           (234,813)        240,130      1,280,005
      Increase in deferred revenue
        and advance payments on
        batteries                    1,157,028               -              -
CASH USED IN OPERATING ACTIVITIES   (3,330,695)    (15,184,532)    (3,804,071)
                                                                   
INVESTING ACTIVITIES                                               
  Purchases of property and
    equipment, net                    (384,069)     (3,640,537)    (2,603,218)
CASH USED IN INVESTING ACTIVITIES     (384,069)     (3,640,537)    (2,603,218)
                                                                   
FINANCING ACTIVITIES                                               
   Proceeds from convertible
     notes payable                           -      12,780,000      3,800,000
   Payment of notes payable and
     capital lease obligations        (547,399)       (330,490)      (735,179)
   Proceeds from issuances of
    common stock, net                2,546,992       6,390,511      4,535,035
   Proceeds from sale and
     leaseback transactions                  -       1,998,064              -
   Debt issuance and lease
     financing costs                         -      (1,378,450)             -
   Increase in restricted cash               -        (744,824)             -
CASH PROVIDED BY FINANCING
ACTIVITIES                           1,999,593      18,714,811      7,599,856

INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                    (1,715,171)       (110,258)     1,192,567
                                                                   
Cash and cash equivalents at
  beginning of period                2,083,032       2,193,290      1,000,723
                                                                   
CASH AND CASH EQUIVALENTS AT END OF
PERIOD                              $  367,861     $ 2,083,032    $ 2,193,290
                                                                   
See notes to financial statements.                                 



                  NOTES TO FINANCIAL STATEMENTS
                       ELECTROSOURCE, INC.
                        December 31, 1996


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 four major markets:  motive power, portable power,  power
management, and starting applications.  The majority  of  revenue
recognized  through  December 31, 1996, has been  generated  from
domestic customers.

During  1993,  the  Company and BDM Technologies,  Inc.  ("BDM"),
under  a strategic alliance, formed Horizon Battery Technologies,
Inc.  ("HBTI")  in  order  to establish  and  operate  a  limited
capability  facility  for manufacturing  and  producing  advanced
technology  batteries.  Each partner maintained a  50%  interest.
During 1994, the Company finalized a Technology License Agreement
with  BDM  and  obtained  an exclusive  license  to  use  certain
technologies  under  development by BDM for  the  manufacture  of
batteries.  In addition, the Company purchased BDM's interest  in
HBTI for 100,000 shares of Common Stock.  (See also Note H.)

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 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 Notes D and L.)
The  cost  of  this purchased technology is being amortized  over
three  years.   On  an  ongoing  basis,  management  reviews  the
valuation  and  amortization  of  its  intangibles,  taking  into
consideration  any  events  or  circumstances  which  might  have
diminished their value.

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

Loss Per Share:  Loss per share is based on the average number of
shares of common stock outstanding during each period.  Since the
Company has experienced net operating losses, outstanding options
and warrants to purchase common stock have an antidultive effect.
Therefore, options and warrants were not included in the 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 operating  in  one  business
segment.

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.

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.

Reclassification:  Certain reclassifications have  been  made  to
the   1995   financial  statements  to  conform  with  the   1996
presentation.


NOTE B - INVENTORIES
                                     1996         1995
                                                      
             Raw materials         $151,841     $289,725
             Work in progress        31,406       80,729
             Finished goods          65,988       34,301
                                   $249,235     $404,755


NOTE C - PROPERTY AND EQUIPMENT

                                            1996               1995
        Office equipment                $  751,342         $  739,677
                                                      
        Production and lab equipment     5,062,475          5,340,172
        
        Leasehold improvements           1,290,197          1,468,384
           
                                         7,104,014          7,548,233

        Less - accumulated depreciation                     
            and amortization            (2,316,995)        (1,538,899)
 
        Total Property and Equipment   $ 4,787,019        $ 6,009,334
     

Production  equipment  of  $2,067,895  has  been  capitalized  in
accordance with the terms of related leases at December 31, 1996.
Accumulated  depreciation  for such  equipment  was  $589,614  at
December 31, 1996.


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.  In May 1990,
the  licensee,  with  the consent of the licensor,  assigned  the
rights under the original License Agreement to the Company.  This
assignment provides the Company with unrestricted applications of
the licensed technology and effectively terminates the Sublicense
Agreement between the licensee and the Company.  Previous to this
assignment,  the  Company's  use of the  technology  was  limited
specifically  to  products and components associated  with  lead-
acid,  storage  batteries.  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.  A minimum annual royalty
of  $10,000 was due for a five year period beginning on the  date
of  the assignment.  Such royalty payments were to have begun  in
May  1991, but the licensee agreed to defer each payment for  two
years.  The deferred minimum royalty payments accrue interest  at
the  rate  of  8.5 percent per year, from the original  due  date
until  paid.   The  Company has made all  scheduled  payments  in
accordance with the terms of the deferral 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").   (See  Note L.)  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.   The  shares  were valued at  $2,994,225;  recorded  as
$581,339 to equipment and $2,412,886 to purchased technology.  In
addition, pursuant to the terms of such agreement, certain member
utilities of EPRI have elected to receive royalties at  the  rate
of  one-half  of  one  percent on 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 - RESTRICTED CASH

In  connection with lease transactions completed during 1995, the
Company   was  required  to  collateralize  the  obligations   by
establishing standby letters-of-credit in the amount of $744,824.
These  letters-of-credit are collateralized  by  certificates  of
deposit of an equal amount.


NOTE F - ACCRUED LIABILITIES

                                           1996            1995
                                                    
       Payroll and related items       $  240,030      $  306,579
       Due to BDM (occupancy related)     407,269         178,083
       Other                              456,452         753,258
                                                    
                                       $1,103,751      $1,237,920


NOTE G - CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable consist of the following:

                                   1996       1995
                                                    
        Convertible Notes - 10%          $ 250,000        $  250,000 
        Convertible Notes - 5%                   -         3,990,000
        Convertible Notes - 8%                   _         3,780,000
                                           250,000         8,020,000
        Less Current Maturities           (250,000)                0
        Total Convertible Notes Payable  $       0        $8,020,000

In  October  1994,  the  Company entered into  a  5%  Convertible
Promissory  Note  with Mitsui Engineering and  Shipbuilding  Co.,
Ltd.  ("MES")  for  $3,800,000 maturing  in  October  2004,  with
interest  due and payable semi-annually in the form of additional
notes  payable.   A note payable in the amount  of  $190,000  was
issued in October 1995 for interest for the year then ended  with
the  same  terms and conditions as the original note.   In  March
1996,  MES  applied $1,000,000 of its Convertible  Notes  Payable
against $1,000,000 of outstanding license fees to the Company.  A
Replacement Note for $2,800,000 was issued at that time with  the
same  terms  and conditions as the original note.  In July  1996,
MES  converted  the  Replacement  Note  (and  subsequent  accrued
interest)  into  81,841 shares of Common Stock  at  a  conversion
price of $38.00 per share.

In  April  1995, the Company issued $6,000,000 of 10% Convertible
Debentures  (the  "April  1995  Debentures")  resulting  in   net
proceeds to the Company of $5,375,000.  The April 1995 Debentures
are convertible into Common Stock at a conversion price equal  to
80% of the average closing price of the Common Stock for the five
business  days immediately preceding such time as the  debentures
are  converted and mature on April 12, 1997.  Interest is payable
quarterly.  Warrants to purchase 5,424 shares of Common Stock  at
a  price  of $36.875 per share, exercisable until April 5,  2000,
were  issued to the purchasers of the April 1995 Debentures.   As
of  December  31,  1996,  April  1995  Debentures  with  a  total
principal  amount of $5,750,000 have been converted into  379,548
shares of Common Stock.

In  July  1995, the Company issued $3,000,000 of 10%  Convertible
Debentures (the "July 1995 Debentures") resulting in net proceeds
to  the  Company  of $2,700,000.  The July 1995  Debentures  were
convertible  into Common Stock at a price equal  to  80%  of  the
closing price of the Common Stock on the business day immediately
preceding  such  time as the debentures were  converted,  not  to
exceed  120% of the closing bid price on July 27, 1995 of $15.30.
In  addition, warrants to purchase 100,000 shares of Common Stock
at  a price of $30.00 per share, and an additional 100,000 shares
at  a  price  of $40.00 per share, exercisable until January  27,
1998,  were  issued to an agent of the holders of the  July  1995
Debentures.  In addition, warrants to purchase 25,000  shares  of
Common  Stock  at  a price of $15.30 per share, the  closing  bid
price  on  July 27, 1995, exercisable until July 27,  2000,  were
issued to another agent for this transaction.  As of December 31,
1996, all of the July 1995 Debentures were converted into 237,578
shares of Common Stock.

In November 1995, the Company issued $3,780,000 of 8% Convertible
Debentures  (the  "November 1995 Debentures")  resulting  in  net
proceeds  to  the  Company  of  $3,477,600.   The  November  1995
Debentures  and  related accrued interest were  convertible  into
Common Stock at a price equal to 75% of the average closing price
of  the  Common  Stock  for  the five business  days  immediately
preceding the respective conversion date.  In addition,  warrants
to purchase 5,670 shares of Common Stock at a price of $15.60 per
share,  exercisable until November 10, 1997, were  issued  to  an
agent  of  the  holders of the November 1995 Debentures.   As  of
December   31,  1996,  all  of  the  November  1995   Convertible
Debentures  and  related  interest were  converted  into  402,987
shares of Common Stock.

Previously,   the  Company  accounted  for  the   conversion   of
convertible  debentures,  issued  with  conversion  rights  at  a
discount  to  market,  as  sales of securities  and  treated  the
discount  as  a  cost  of capital.  The Securities  and  Exchange
Commission  recently  announced that it believes  such  discounts
should  be treated as interest expense.  Accordingly, the Company
has restated its financial statements for the year ended December
31,  1995  to  reclassify  the  discount  (generally  20-25%)  as
interest  expense  and  record it as a cost  of  borrowing.   The
discount  was  amortized  over  the  period  beginning  with  the
issuance  of  the  debt to the first date that  conversion  could
occur  (generally  60 days).  The restatement increased  the  net
loss  for  the year ended December 31, 1995 by $2,603,250  ($1.24
per  share)  and increased the accumulated deficit  and  paid  in
capital  by  the  same  amount.  In  addition,  the  Company  has
recorded  an additional $141,750 in interest expense  related  to
the quarter ended March 31, 1996.

Cash  interest  paid  by the Company was approximately  $241,000,
$342,000 and $72,000 in 1996, 1995 and 1994, respectively.


NOTE H - TECHNOLOGY LICENSE PAYABLE

Through its funding to HBTI for development of a low rate initial
production line for the Horizon battery, BDM owned the rights  to
certain  technologies  for  the manufacture  of  such  batteries.
During 1994, the Company finalized a Technology License Agreement
with  BDM.   Under  the  terms  of this  agreement,  the  Company
obtained  an exclusive license to use certain technologies  under
development by BDM for the manufacture of batteries.  The Company
agreed  to pay BDM: $80,000 cash; issue 170,000 shares of  Common
Stock  in  thirty-six equal installments; issue 20,000 additional
shares  of  Common Stock if the Company decides to  maintain  the
license  beyond  the  original three  year  term;  grant  100,000
options  to  purchase  Common Stock  exercisable  at  $40.00  per
share; and buy BDM's interest in HBTI for 10,000 shares of Common
Stock.  The Company recorded an expense of $3,819,350 in 1994 for
this  transaction based on the fair market value of  the  various
components of the transaction.  This was treated as an expense as
the  technological  feasibility of the  manufacturing  technology
licensed had not been completely proven and the Company  at  that
time had no alternative future uses for this technology.


NOTE I - 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 1997 and 2003.  Future  minimum
annual rentals under lease arrangements at December 31, 1996  are
as follows:

                                    Capital Leases              
                                         Sale/                  Operating
      Fiscal Year           Total      Leasebacks     Other      Leases      
                                                                 
          1997           $  764,637    $  751,342    $13,295    $  897,331
          1998              403,864       399,349      4,515       899,887
          1999               90,576        90,576          _       441,070
          2000               75,480        75,480          _       370,934
          2001                    _             _          _       365,000
          Thereafter              _             _          _       805,000
                          1,334,557     1,316,747     17,810    $3,779,222
Less imputed interest      (157,284)     (154,959)    (2,325)           
Present value of capital
  lease obligations      $1,177,273    $1,161,788    $15,485           

During  1995, the Company completed two agreements  to  sell  and
lease  back  $1,998,064  of capital equipment.   The  leases  are
collateralized  by letters-of-credit in the amount  of  $663,220.
The amount of the letters-of-credit can be reduced if the Company
completes  an  offering of securities with net  proceeds  of  $20
million or more.  In connection with this transaction, the lessor
was granted warrants to purchase 7,500 shares of Common Stock  at
an  exercise  price of $40.00 per share, exercisable until  April
17,  2000.   In  January 1997, the Company filed  a  registration
statement on Form S-3 to register 160,000 shares of the Company's
Common  Stock  which were issued to the Lessor for prepayment  of
the  equipment  lease obligations.  (See Note Q.)   Other  leased
equipment  is collateralized by a letter-of-credit in the  amount
of $81,604.

The  Company's  monthly  rental rate on its  88,000  square  foot
facility is approximately $25,000 per month, expiring in November
2003.   The  Company has an option to purchase the  property  and
improvements  for  $2,678,000 until August 1997.   The  Company's
obligations under this lease are guaranteed by BDM.  The  Company
must  pay  the  Lessor a fee of $30,000 upon  expiration  of  the
option  if  it  is not exercised.  Rental expense  for  operating
leases  for the years ended December 31, 1996, 1995 and 1994  was
approximately $824,000, $858,000 and $497,000, respectively.

In September 1995, the Company engaged Liviakis Financial
Communications, Inc. ("Liviakis") to provide consulting  services
for  a two year period.  As consideration for these services, the
Company issued 136,000 unregistered, restricted shares of  Common
Stock to Liviakis, which were valued at $1,468,800 and charged as
an  expense  in  1995, and agreed to issue an  additional  12,000
unregistered,  restricted shares of Common Stock to  Liviakis  in
six  installments over a two year period which are being expensed
as earned over the respective period.

NOTE J - CONTINGENCIES

In  1994, the Company signed a "Know-How License Agreement"  (the
"Agreement") with Horizon Battery Technologies, Ltd. ("HBTL"), of
Bombay,  India,  calling for the completion of  several  detailed
subordinate  agreements with the ultimate purpose to license  the
manufacture and sale of batteries in India.  The effectiveness of
the  Agreement was conditioned upon the subsequent  execution  of
these  six related agreements, none of which were executed.   The
Company believes, therefore, the Agreement never became effective
and  has no force or effect.  Separately in 1995, HBTL agreed  to
pay  the Company $250,000 for a Preliminary Design Review ("PDR")
for  a  potential  manufacturing  facility  in  India  which  was
required  to  complete  one of the subordinate  agreements.   The
Company  received  $100,000 from HBTL and completed  the  PDR  in
1995.  The remaining $150,000 was never paid by HBTL, in spite of
repeated demands by the Company.

In  September  1996, the Company received a demand from  HBTL  to
arbitrate  damage  claims for alleged breach  of  the  Agreement.
HBTL  claims  damages  of  approximately  $5.1  million  for  its
expenses and lost profits related to the Agreement.  The  Company
disputes  the  claim for damages and will vigorously  defend  any
actions  taken  by HBTL to pursue the claims.   The  Company  has
filed  a  petition in Travis County, Texas, seeking, among  other
things,  a  declaratory  judgment  that  HBTL  has  no  right  to
arbitration  or monetary relief.  HBTL is contesting jurisdiction
and  is  seeking removal of the proceedings to the  U.S.  Federal
Courts.   The  Company  has  not  recorded  a  liability  in  the
financial statements at December 31, 1996 for this uncertainty as
management   is  unable  to  determine  the  likelihood   of   an
unfavorable outcome of this matter or to estimate the  amount  or
range  of potential loss should the outcome be unfavorable.   The
resolution  of  this  matter could, in the  worst  case,  have  a
material adverse effect on the financial position of the Company.

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,  the  Company  has  not  experienced   significant
collection losses from these respective customers.

Activity in the Company's allowance for doubtful accounts was  as follows:
<TABLE>
<CAPTION>
                                                    Additions                
                                  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, 1996  
Reserves and allowances deducted
from asset accounts:   
  Allowance for doubtful accounts  $36,223       $15,599        - 0 -         $(36,223)      $15,599
                                                          
Year ended December 31, 1995
Reserves and allowances deducted
from asset accounts:
  Allowance for doubtful accounts   $7,500      $278,653        - 0 -        $(249,930)     $36,223

Year ended December 31, 1994
Reserves and allowances deducted
from asset accounts:
  Allowance for doubtfull accounts   - 0 -        $7,500        - 0 -            - 0 -       $7,500
</TABLE>

NOTE K - SHAREHOLDERS' EQUITY


Reverse Stock Split
On   June  26,  1996,  the  Company's  shareholders  approved  an
amendment  to the Company's Restated Certificate of Incorporation
that  effected  a one-for-ten reverse stock split.   The  Company
amended  its  Certificate of Incorporation on July  22,  1996  to
effect the reverse split.  Pursuant to this amendment,  each  ten
shares  of  Common  Stock outstanding immediately  prior  to  the
reverse  split ("Old Shares") were reclassified as one  share  of
new  Common Stock ("New Shares").  The par value per share of the
Common  Stock was correspondingly increased from $0.10 per  share
to  $1.00 per share.  No fractional New Shares were issued  as  a
result  of  the reverse split.  In lieu thereof, each shareholder
whose  Old  Shares were not evenly divisible by ten received  one
additional  New  Share for the fractional  New  Share  that  such
shareholder  would otherwise be entitled to have  received  as  a
result  of  the  reverse split.  All references in the  financial
statements  to share and per share amounts have been restated  to
retroactively reflect the reverse split.

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  a 1987 Stock Option Plan, a 1988  Non-Employee
Director Stock Option Plan, a 1993 Non-Employee Consultant  Stock
Option  Plan and a 1994 Stock Option Plan (collectively  referred
to  as  the  "Plans").  The Plans provide for the grant/award  of
options  at  the  discretion  of  the  Compensation/Stock  Option
Committee  to  purchase shares of the Company's Common  Stock  at
prices  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 beginning six months after  the  date
of  grant and expire up to ten years from the date of grant.   As
of December 31, 1996, there are 60,922 shares available for grant
under the Plans.

Management is seeking shareholder approval of a 1996 Stock Option
Plan ("1996 Plan"), under which all outstanding options under the
Plans  presently in place would be aggregated and the Plans would
be  terminated.   Management is seeking shareholder  approval  of
960,000  shares  in the 1996 Plan, an increase of 588,165  shares
currently  authorized  under the Plans.   Grants  of  options  to
purchase  247,144  shares,  approved by  the  Compensation  Stock
Option  Committee under the 1996 Plan, have not been included  in
the  information  below  as  the 1996 Plan  requires  shareholder
approval.

Pro  forma information regarding net loss and loss per  share  is
required  for 1996 and 1995 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 1995 and 1996, respectively:  risk-free
interest rates of 6.1% and 6.0%; dividend yield of 0%; volatility
factors  of  the  expected market price of the  Company's  common
stock of .93 and 1.0; 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:

                                                        1996           1995
                                                          
      Pro forma stock-based compensation expense    $  873,410    $   422,610
      Pro forma net loss                             8,698,278     20,930,655
      Pro forma loss per share                            2.37           9.96

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 1994,  1995
and 1996 is as follows:
                                                                    Weighted
                                                      Range of       Average
                                                      Exercise      Exercise
                                          Shares       Prices ($)     Price ($)
                                                          
Options outstanding January 1, 1994      111,101     10.60-46.25      22.56
     Granted                             109,000     28.75-37.50      34.86
     Exercised                           (12,816)    10.60-18.75      11.24
     Surrendered                          (8,000)       40.00         40.00
Options outstanding December 31, 1994    199,285     10.60-46.25      29.31
     Granted                              75,500     13.72-33.75      25.06
     Exercised                           (11,950)    10.60-23.10      12.01
     Surrendered                         (24,900)    18.75-35.00      31.07
Options outstanding December 31, 1995    237,935     10.60-46.25      28.65
     Granted                             106,625      5.28-13.00      11.40
     Exercised                                 _               _          _
     Surrendered                         (68,767)    12.50-46.25      31.78
Options outstanding December 31, 1996    275,793      5.28-37.50      21.20
                                                       
Options exercisable, December 31
                 1994                     81,525     10.60-46.25      21.33
                 1995                    132,602     10.60-46.25      27.01
                 1996                    181,880      5.28-37.50      21.80

The weighted-average fair value of options granted during 1996 and 1995 was 
$7.62 and $15.58 per share, respectively.

A summary of option information by exercise price as of December 31, 1996 
follows:

              Total Options Outstanding              Currently Exercisable
                                           Weighted-
                               Weighted     Average                  Weighted-
                    Number      Average    Remaining    Number        Average
                      of       Exercise   Contractual     of         Exercise
                   Options      Price         Life      Options        Price
                                                      
  5.28 - 10.00      11,392     $ 5.67         4.61       11,392       $ 5.67
 10.01 - 15.00     126,151      11.86         6.53       70,338        11.64
 15.01 - 20.00      20,200      16.80         3.58       15,400        17.17
 20.01 - 25.00       5,750      23.10         1.01        5,750        23.10
 25.01 - 30.00      17,900      27.76         7.22       13,067        27.74
 30.01 - 35.00      82,400      34.86         4.46       55,600        34.86
 35.01 - 37.50      12,000      36.98         2.03       10,333        37.10
  5.28 - 37.50     275,793     $21.20         5.35      181,880       $21.80

Warrants
The  Company has issued numerous warrants associated with various
debt  and equity financings with varying expiration dates through
July  2000.  The following table represents a summary of  warrant
activity for the three years ended December 31, 1996:

                                                              Price Per
                                                Warrants     Warrant ($)

       Warrants outstanding January 1, 1994      18,800         22.50
             Issued                              48,550     25.00 - 35.00
             Exercised                          (14,800)        22.50
             Expired                             (4,000)        22.50
       Warrants outstanding December 31, 1994    48,550     25.00 - 35.00
             Issued                             245,844     15.30 - 40.00
       Warrants outstanding December 31, 1995   294,394     15.30 - 40.00
       Warrants outstanding December 31, 1996   294,394     15.30 - 40.00

Reserved Shares
At  December 31, 1996, shares of the Company's Common Stock  were
reserved as follows for issuance under:

                   Stock option plans               371,835
                   BDM transaction                  176,668
                   Conversion of the          
                     April 1995 Debentures           45,000
                   Exercise of warrants             294,423
                   Liviakis consulting agreement      6,000
                                                    893,926


NOTE L - REVENUE

Project
The Company generated project revenue of approximately $2,056,000
in  1994  under an agreement with EPRI for continuing efforts  to
develop and commercialize the Company's proprietary advanced lead-
acid  battery.   On November 1, 1995, the Company  completed  its
Research and Development Agreement with EPRI.  (See Note D.)

In  August  1994,  Chrysler  awarded  the  Company  a  $1,600,000
contract to custom fit the Horizon battery to prototypes  of  
Chrysler's   NS   electric   minivan.    The   Company   recorded
approximately $778,000 and $846,000 in project revenue under this
agreement in 1995 and 1994, respectively.

During   1996,   the   Company  generated  project   revenue   of
approximately  $115,000 from Chrysler for  various  environmental
and  other tests performed on the Horizon battery.  The remainder
of  project  revenue  generated in 1996 was  from  agreements  to
design and provide prototype batteries to various customers for a
variety of applications.

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.  The Company recorded $2,366,000 as income as all  tasks
necessary to earn the income had been performed and there were no
further   obligations  related  to  such  revenue.   The  Company
recorded $634,000 as deferred revenue which will be recognized in
income as the ER&D tasks are performed.

Batteries
Approximately  50% of the Company's 1996 and 1995  battery  sales
were to Chrysler.


NOTE M - 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, 1996, and 1995, are as follows:

                                                         1996            1995
  Deferred Tax Assets:
    Net operating loss and other tax carry-forwards  $11,432,000    $ 9,064,000
    Book depreciation in excess of tax depreciation      576,000        263,000
    Accruals and other                                   730,000      1,163,000
  Total deferred tax assets                           12,738,000     10,490,000
  Less valuation allowance                           (12,738,000)   (10,490,000)
         Deferred tax assets, net                    $         _    $         _

The  reconciliation of income tax computed at the  United  States
federal  statutory tax rates to income tax expense for the  years
ended December 31, 1996, 1995 and 1994 are as follows:

                                           1996        1995        1994
  Income tax benefit at statutory
       U.S. federal income tax rate       (34.0%)     (34.0%)     (34.0%)
  Increase in valuation allowance          34.0%       35.6%       34.0%
  Other                                     0.0%       (0.9%)       0.9%
  Effective income tax rate                 0.0%        0.7%        0.9%

The  Company's valuation allowance increased by $2.2 million  and
$6.4  million during the years ended 1996 and 1995, respectively,
as  a result of net operating losses which were generated but may
not  be  realizable.  At December 31, 1996, the Company  had  net
operating loss carryforwards of approximately $37 million,  which
will  expire  from  2002 through 2011, research  and  development
credits  of  approximately $35,000 and  foreign  tax  credits  of
approximately $200,000 which expire beginning in 2009  and  1999,
respectively.  Ownership changes have resulted in utilization  of
the Company's net operating losses being limited.


NOTE N - RELATED PARTY TRANSACTIONS

Certain  directors  of the Company are also shareholders  of  the
licensor of coextruded wire technology.

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
$103,000  and  $17,000 under such agreements in  1996  and  1995,
respectively, and has committed to pay approximately  $9,000  per
month through July 1997.  The Company may also purchase machinery
developed in accordance with this agreement at its option for  an
additional   fee.    In   addition,  the   Company   has   leased
approximately  4,000 square feet in the director's  manufacturing
facility through December 1, 1997 for a total cost of $4,800.

NOTE O - EMPLOYEE BENEFIT PLAN

The  Company  sponsors  a  qualified  defined  contribution  plan
covering  all full-time 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  $18,000,
$20,000 and $22,000 in 1996, 1995 and 1994, respectively.


NOTE P - ABILITY TO CONTINUE AS A GOING CONCERN

During   1996,   management  focused  attention   on   developing
relationships  with  customers to design  and  provide  prototype
batteries  for  a  variety of electric vehicle  and  non-electric
vehicle applications and made progress toward integration of  the
Horizon  battery technology into certain products.  In  addition,
management  significantly reduced operating costs.   However,  to
date  such efforts have not resulted in sufficient cash  flow  to
sustain  operations.  Although management is  making  efforts  to
improve cash flow from operations, additional debt and/or  equity
financing will be necessary.

In   January  and  March  1997,  the  Company  completed  private
placements  of  debt and equity generating net  proceeds  to  the
Company  of  $1,180,508.  (See Note Q.)  Management is continuing
to  control costs and believes it has sufficient cash to continue
operations at current levels through the first quarter  of  1997;
however,  it  will  be  necessary to raise  additional  financing
before  the  end  of  the  second  quarter  of  1997  to  sustain
operations and fund anticipated growth.

The  Company has historically raised funds to sustain operations.
Management  is  currently attempting to raise  additional  funds,
primarily  in  the  form of strategic partner  relationships  and
license agreements with customers and organizations that can  aid
penetration of target markets and can assist financially; however
there  can  be no assurance that such funding 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.


NOTE Q - SUBSEQUENT EVENTS

In  January  1997, the Company completed a private  placement  of
109,397  shares of Common Stock with its executive  officers  and
certain  other accredited investors which generated net  proceeds
of  $680,508.   In  connection with this  offering,  the  Company
issued  616,383  warrants with a term of two years  and  exercise
prices ranging from $5.25 to $7.56 per share.

In  January  1997, the Company filed a registration statement  on
Form  S-3  for the sale of 160,000 shares issued to Ally  Capital
Corporation  ("Ally") as prepayment for capital lease obligations
owed  by  the  Company.   The shares will be sold  by  Ally,  the
proceeds  of  which will be used to satisfy the lease obligations
(approximately  $1,050,000  as of December  31,  1996).   If  the
proceeds  from  the  sale of such shares are  not  sufficient  to
satisfy  the  lease  obligations due to  fluctuations  in  market
prices,  the Company will, on a one time basis, issue  additional
shares  of  Common  Stock or pay cash to  Ally  to  make  up  the
deficiency.  Ally will retain any overage from the sale  of  such
shares  in excess of the lease obligations.  Upon payment of  all
lease   obligations,  letters  of  credit  for   $663,000   which
securitize   the   lease  obligations  will   be   canceled   and
certificates of deposit of an equal amount that collateralize the
letters  of  credit  will be released.  The 160,000  shares  were
issued  and  outstanding as of December 31, 1996,  but  were  not
recorded  as  shareholders' equity in  the  financial  statements
because the aggregate amount of consideration for the transaction
had  not  been determined and the lease obligation had  not  been
satisfied at December 31, 1996.

Subsequent to December 31, 1996, the Company received $500,000 in
the  form of an unsecured demand note bearing interest at 5% from
an  unrelated  corporation  with whom  the  Company  is  pursuing
additional relationships.


                     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, 1996             Number 0-16323



           __________________________________________
                                
                                
                       ELECTROSOURCE, INC.
     (Exact name of Registrant as specified in its charter)
                                
                                
               Delaware                          742466304
          (State or other jurisdiction
(I.R.S. Employer
          of incorporation or organization)
Identification No.)

          2809 Interstate 35 South                       78666
          San Marcos, Texas                       (Zip Code)
          (Address of principal
          executive offices)

            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

                        INDEX TO 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).

          3.10  Amendment to Bylaws of Electrosource, Inc.  dated
          November 13, 1996.

          4.1  Letter Agreement between Rosehouse Ltd., a Bermuda-
          based  institutional  Buyer, and  Electrosource,  Inc.,
          dated   July  25,  1995  (filed  as  Exhibit   4.7   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter ended June 30, 1995, and incorporated herein by
          reference).

          4.2   Letter Agreement between ACM Advisors of  Zurich,
          Switzerland,  and Electrosource, Inc., dated  July  27,
          1995  (filed  as  Exhibit 4.8 to  Electrosource,  Inc.,
          Quarterly  Report on Form 10-Q for quarter  ended  June
          30, 1995, and incorporated hereby by reference).

          4.3  Offshore Securities Subscription Agreement between
          Rosehouse  Ltd.,  a Bermuda-based institutional  Buyer,
          and Electrosource, Inc., dated July 27, 1995 (filed  as
          Exhibit  4.10 to Electrosource, Inc., Quarterly  Report
          on  Form  10-Q  for quarter ended June  30,  1995,  and
          incorporated herein by reference).

          4.4  Form of 10% Convertible Debentures entered into by
          each  participant with Electrosource, Inc., dated  July
          27,  1995 (filed as Exhibit 4.9 to Electrosource, Inc.,
          Quarterly  Report on Form 10-Q for quarter  ended  June
          30, 1995, and incorporated herein by reference).

          4.5   Warrant  to  purchase up to 1,000,000  shares  of
          Electrosource,  Inc.,  Common  Stock,  issued  to   ACM
          Advisors,  Zurich,  Switzerland, dated  July  27,  1995
          (filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
          Report  of  Form 10-Q for quarter ended June 30,  1995,
          and incorporated herein by reference).

          4.6   Warrant  to  purchase up to 1,000,000  shares  of
          Electrosource,  Inc.,  Common  Stock,  issued  to   ACM
          Advisors,  Zurich,  Switzerland, dated  July  27,  1995
          (filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
          Report  on  Form 10-Q for quarter ended June 30,  1995,
          and incorporated herein by reference).

          4.7   Warrant  to  purchase up  to  250,000  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).

          4.8  Representative Subscription Agreement entered into
          by  each participant with Electrosource, Inc., dated on
          the  date  of  execution  (filed  as  Exhibit  4.1   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference.).

          4.9   Letter  Agreement between Shoreline  Pacific,  an
          institutional  Buyer,  and Electrosource,  Inc.,  dated
          October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
          Inc.,  Quarterly Report on Form 10-Q for quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.10 Offshore Securities Subscription Agreement between
          participants and Electrosource, Inc., dated October 10,
          1995  (filed  as  Exhibit 4.3 to  Electrosource,  Inc.,
          Quarterly  Report  on  Form  10-Q  for  quarter   ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.11  Letter  Agreement between Shoreline  Pacific,  an
          institutional  Buyer,  and Electrosource,  Inc.,  dated
          October   25,   1995   (filed   as   Exhibit   4.4   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference).

          4.12 Offshore Securities Subscription Agreement between
          participants  and Electrosource, Inc.,  dated  November
          29,  1995 (filed as Exhibit 4.5 to Electrosource, Inc.,
          Quarterly  Report  on  Form  10-Q  for  quarter   ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          4.13 Form of 8% Convertible Debentures entered into  by
          each   participant  with  Electrosource,  Inc.,   dated
          November   29,   1995   (filed  as   Exhibit   4.6   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          quarter  ended  September 30,  1995,  and  incorporated
          herein by reference).

          4.14  Offshore Securities Subscription Agreement  dated
          February 22, 1996 between Arbinter Omnivalor, S.A.  and
          Electrosource,   Inc.  (filed   as   Exhibit   4.1   to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.15  Offshore Securities Subscription Agreement  dated
          May  2,  1996  between  Arbinter  Omnivalor,  S.A.  and
          Electrosource,   Inc.  (filed   as   Exhibit   4.2   to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.16  Warrants  to  purchase up  to  22,789  shares  of
          Electrosource,  Inc.  Common  Stock,  issued  to  three
          principals of Pacific Shoreline dated October 20,  1995
          and  issued as of May 9, 1996 (filed as Exhibit 4.3  to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.17  Warrants  to  purchase up  to  56,700  shares  of
          Electrosource,  Inc.  Common  Stock,  issued  to  three
          principals of Pacific Shoreline dated December 5,  1995
          and  issued as of May 9, 1996 (filed as Exhibit 4.4  to
          Electrosource, Inc. Quarterly Report on Form  10-Q  for
          quarter  ended March 31, 1996, and incorporated  herein
          by reference).

          4.18  Warrant  to  purchase  up  to  50,000  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).

          4.19  Warrant  to  purchase  up  to  90,000  shares  of
          Electrosource,   Inc.,   Common   Stock,   issued    to
          Oppenheimer  &  Co.,  Inc. (Investment  Bankers)  dated
          April  28, 1995 (filed as Exhibit 4.2 to Electrosource,
          Inc.,  Quarterly  Report on Form 10-Q for  the  quarter
          ended  June  30,  1995,  and  incorporated  herein   by
          reference).

          4.20   1988  Non-Employee  Director  Option   Plan   of
          Electrosource, Inc. (filed as Exhibit 4.2 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-22223]  filed  June  7,  1988,   and
          incorporated herein by reference).

          4.21  Amendment  No.  1  to 1988 Non-Employee  Director
          Stock  Option  Plan (filed as Exhibit 4.3 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-49042]  filed  July  12,  1990,  and
          incorporated herein by reference).

          4.22  Amendment  No.  2  to 1988 Non-Employee  Director
          Stock  Option  Plan (filed as Exhibit 4.4 to  Company's
          Registration   Statement  on  Form  S-8   [Registration
          Statement  No.  33-49042]  filed  June  30,  1992,  and
          incorporated herein by reference).

          4.23 1993 Non-Employee Consultant Stock Option Plan for
          Electrosource,   Inc.  (filed   as   Exhibit   4.2   to
          Registration   Statement  on  Form  S-8   [Registration
          Statement  #  33-65386],  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 Form S-1 Registration Statement,  file
          number  33-30486,  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  Warrant  to  purchase  up  to  50,000  shares  of
          Electrosource,  Inc., Common Stock, issued  to  BMA  on
          April 12, 1988 (filed as Exhibit 10.11 to Form S-1  and
          incorporated herein by reference).

          10.5  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).

          10.6  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, file  number  33-34581,  filed
          December  11, 1989 (hereinafter referred to  as  "Post-
          Effective  Amendment No. 1 to Form S-1  filed  December
          11,  1989  (hereinafter referred to as  "Post-Effective
          Amendment") and incorporated herein by reference).

          10.7  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 hereby incorporated by reference).

          10.8  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).

          10.9  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).

          10.10      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   on   Form    S-1
          [Registration  Statement No. 33-65248] filed  June  30,
          1993, and incorporated herein by reference).

          10.11      Lease  Agreement  dated  December  9,  1987,
          between Electrosource, Inc., and Crow-Gottesman-Hill, a
          Limited Partnership (filed as Exhibit 10.15 to Form  S-
          1, and incorporated herein by reference).

          10.12      Lease Agreement between Aetna Life Insurance
          Company  and  Electrosource, Inc., dated  February  22,
          1992  (filed  as Exhibit 10.25 to Electrosource,  Inc.,
          Annual  Report  on  Form  10-K  for  the  period  ended
          December   31,   1991,  and  incorporated   herein   by
          reference).

          10.13      First  Amendment to Lease Agreement  between
          Aetna  Life Insurance Company and Electrosource,  Inc.,
          dated  February  24, 1993 (filed as  Exhibit  10.27  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.14      Second Amendment to Lease Agreement  between
          Aetna  Life Insurance Company and Electrosource,  Inc.,
          dated  March  1,  1996  (filed  as  Exhibit  10.14   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995).

          10.15     EPRI Agreement RP2415-15 dated July 20, 1992,
          between   Electrosource,  Inc.,  and   Electric   Power
          Research   Institute  (filed  as   Exhibit   10.42   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.16      EPRI  Agreement RP2415-15, Amendment  No.  1
          dated  November 12, 1992, between Electrosource,  Inc.,
          and Electric Power Research Institute (filed as Exhibit
          10.43 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1992,   and
          incorporated herein by reference).

          10.17      EPRI  Agreement RP2415-15, Amendment  No.  2
          dated  January  27, 1993, between Electrosource,  Inc.,
          and Electric Power Research Institute (filed as Exhibit
          10.44 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1992,   and
          incorporated herein by reference).

          10.18       Amendment   No.  3  to  Agreement   between
          Electrosource,   Inc.  and  Electric   Power   Research
          Institute, Inc. dated March 22, 1993 (filed as  Exhibit
          10.53 to Electrosource, Inc., Annual Report on Form 10-
          K   for  the  period  ended  December  31,  1993,   and
          incorporated herein by reference).

          10.19       Amendment   No.  4  to  Agreement   between
          Electrosource,   Inc.  and  Electric   Power   Research
          Institute,  Inc.  dated  December  6,  1993  (filed  as
          Exhibit  10.53 to Company's Registration  Statement  on
          Form  S-1  [Registration Statement No. 33-73582]  filed
          December 24, 1993, and incorporated by reference).

          10.20     Business Alliance and License Agreement dated
          September  17, 1993, between Electrosource,  Inc.,  and
          Electric  Power  Research Institute (filed  as  Exhibit
          10.61  to Company's Registration Statement on Form  S-1
          [Registration  Statement No. 33-65248] filed  June  30,
          1993, and incorporated herein by reference). *

          10.21      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 Form 10-Q for the  quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          10.22      Shareholders Agreement dated April 25, 1993,
          between Electrosource, Inc. and BDM Technologies,  Inc.
          (filed  as  Exhibit  10.60  to  Company's  Registration
          Statement on Form S-1 [Registration Statement  No.  33-
          65248] filed June 30, 1993, and incorporated herein  by
          reference). *

          10.23     Stock Purchase Agreement dated as 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).

          10.24      Operating  Lease Agreement  between  Horizon
          Battery Technologies, Inc., BDM Technologies, Inc., and
          Electrosource, Inc., dated June 20, 1994 (filed  as  an
          Exhibit  to  the Company's Form 10-Q/A No.  1  for  the
          period ended June 30, 1994, and incorporated herein  by
          reference).

          10.25      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).

          10.26       Distributorship  Agreement  between  Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource, Inc., dated July 7, 1994  (filed  as  an
          Exhibit  to  the Company's Form 10-Q/A No.  1  for  the
          period ended June 30, 1994, and incorporated herein  by
          reference).

          10.27      A  Convertible Promissory Note in  favor  of
          Mitsui Engineering and Shipbuilding Co., Ltd. was dated
          October  26, 1994 (filed as an Exhibit to the Company's
          October  26, 1994, Form 8-K and incorporated herein  by
          reference).

          10.28      The  Note Purchase Agreement between  Mitsui
          Engineering    and   Shipbuilding   co.,    Ltd.    and
          Electrosource, Inc., dated October 26, 1994  (filed  as
          an  Exhibit to the Company's October 26, 1994, Form 8-K
          and incorporated herein by reference).

          10.29     Notice of Intent to Terminate Distributorship
          Agreement  between Mitsui Engineering and  Shipbuilding
          Co.,  Ltd.  and Electrosource, Inc., dated December  5,
          1995 (filed as an Exhibit to the Company's December 22,
          1995 Form 8-K, and incorporated herein by reference).

          10.30      A  Convertible Promissory  Replacement  Note
          between  Mitsui Engineering and Shipbuilding Co.,  Ltd.
          and Electrosource, Inc., dated March 6, 1996 (filed  as
          Exhibit  10.33 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.31      A Convertible Promissory Note between Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource, Inc., dated October 26, 1995  (filed  as
          Exhibit  10.34 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.32      A Convertible Promissory Note between Mitsui
          Engineering    and   Shipbuilding   Co.,    Ltd.    and
          Electrosource,  Inc., dated March  6,  1996  (filed  as
          Exhibit  10.35 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.33      Termination Agreement between Electrosource,
          Inc. and Mitsui Engineering and Shipbuilding Co., Ltd.,
          dated  March  6,  1996  (filed  as  Exhibit  10.36   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.34      Offshore  Securities Subscription  Agreement
          between Williams DeBroe, a British institutional buyer,
          and Electrosource, Inc., dated June 13, 1994 (filed  as
          an Exhibit to the Company's July 21, 1994, Form 8-K and
          incorporated herein by reference).

          10.35     Representative Subscription Agreement entered
          into  by each participant with Electrosource, dated  on
          the  date  of  execution (filed as an  Exhibit  to  the
          Company's  October 18, 1994, Form 8-K and  incorporated
          herein by reference).

          10.36      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          buyer, and Electrosource, Inc., dated January 25,  1995
          (filed as an Exhibit to the Company's January 26,  1995
          Form 8-K, and incorporated herein by reference).

          10.37      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          buyer,  and  Electrosource, Inc., dated March  9,  1995
          (filed  as an Exhibit to the Company's March  10,  1995
          Form 8-K, and incorporated herein by reference).

          10.38      Offshore  Securities Subscription  Agreement
          between  Rosehouse Ltd., a Bermuda-based  institutional
          Buyer   with   Form  of  Convertible   Debenture,   and
          Electrosource,  Inc., dated April  4,  1995  (filed  as
          Exhibits to the Company's April 12, 1995 Form 8-K,  and
          incorporated hereby by reference).

          10.39      Warrant to purchase up to 54,237  shares  of
          Electrosource, Inc., Common Stock, issued to  Rosehouse
          Ltd.,  a Bermuda-based institutional buyer, dated April
          5, 1995 (filed as an Exhibit to the Company's April 12,
          1995 Form 8-K, and incorporated herein by reference).

          10.40      Subcontract Number 21614-TTS-7 between AECT,
          Inc.,  and  Electrosource, Inc., dated March 21,  1994,
          (filed  as Exhibit 10.43 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.41      Purchase  Agreement between  Quantum  Energy
          Systems  and  Technology LLC and  Electrosource,  Inc.,
          dated  November  14, 1994, (filed as Exhibit  10.44  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1994, and incorporated herein
          by reference).

          10.42     Equipment Lease Agreement dated April 6, 1995
          between  Ally  Capital Corporation  and  Electrosource,
          Inc.  (filed  as  Exhibit 10.1 to Electrosource,  Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          September   30,  1995,  and  incorporated   herein   by
          reference).

          10.43     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).

          10.44      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).

          10.45       Purchase Order between Chrysler Corporation
          and  Electrosource, Inc., dated January 9, 1996  (filed
          as  Exhibit 10.69 to Electrosource, Inc. Annual  Report
          on  Form 10-K for the period ending December 31,  1995,
          and incorporated herein by reference).

          10.46       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).

          10.47        Joint   Development   Agreement    between
          Electrosource,  Inc.  and Black & Decker  (U.S.)  Inc.,
          dated  March  8,  1996  (filed  as  Exhibit  10.71   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period  ending  December  31,  1995,  and  incorporated
          herein by reference).

          10.48        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).

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

          10.49      Form  of Director Indemnification  Agreement
          (filed  as Exhibit 10.8 to Electrosource, Inc.,  Annual
          Report  on Form 10-K for the period ended December  31,
          1987, and incorporated herein by reference).

          10.50       Director  Indemnification  Agreement  dated
          January  16,  1992,  between Electrosource,  Inc.,  and
          Charles   Mathews   (filed   as   Exhibit   10.26    to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1991, and incorporated herein
          by reference).

          10.51       Director  Indemnification  Agreement  dated
          February  12,  1992, between Electrosource,  Inc.,  and
          John  Malone  (filed as Exhibit 10.30 to Electrosource,
          Inc.,  Annual Report on Form 10-K for the period  ended
          December   31,   1991,  and  incorporated   herein   by
          reference).

          10.52       Director  Indemnification  Agreement  dated
          November  4,  1992,  between Electrosource,  Inc.,  and
          Thomas   S.   Wilson   (filed  as  Exhibit   10.41   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.53       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).

          10.54     Director Indemnification Agreement dated June
          23,  1994, between Electrosource, Inc., and Michael  G.
          Semmens,  (filed  as  Exhibit 10.72  to  Electrosource,
          Inc.,  Annual Report on Form 10-K for the period  ended
          December   31,   1994,  and  incorporated   herein   by
          reference).

          10.55       Director  Indemnification  Agreement  dated
          November  2,  1994,  between Electrosource,  Inc.,  and
          Richard  S.  Williamson, (filed  as  Exhibit  10.73  to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1994, and incorporated herein
          by reference).

          10.56     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).

          10.57     Director Indemnification Agreement dated June
          22,  1995, between Electrosource, Inc., and William  R.
          Graham  (filed as Exhibit 10.1 to Electrosource,  Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          June 30, 1995, and incorporated herein by reference).

          10.58     1987 Stock Option Plan of Electrosource, Inc.
          (filed  as  Annex  A,  pages  44  to  48  of  Company's
          Information  Statement  filed  October  16,  1987,  and
          incorporated herein by reference).

          10.59     Amendment No. 1 to 1987 Stock Option Plan  of
          Electrosource, Inc., dated February 19, 1992  (filed as
          Exhibit 4.3 to Company's Registration Statement on Form
          S-8  [Registration Statement No. 33-49049]  filed  June
          30, 1992, and incorporated herein by reference).

          10.60     Amendment No. 2 to 1987 Stock Option Plan  of
          Electrosource,   Inc.  (filed  as  Exhibit   10.36   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.61     Amendment No. 3 to 1988 Non-Employee Director
          Stock   Option   Plan  (filed  as  Exhibit   10.40   to
          Electrosource, Inc., Annual Report on Form 10-K for the
          period ended December 31, 1992, and incorporated herein
          by reference).

          10.62     Amendment No. 4 to 1988 Non-Employee Director
          Stock   Option   Plan  (filed  as   Exhibit   10.3   to
          Electrosource, Inc., Quarterly Report on Form 10-Q  for
          the  quarter  ended  June  30, 1995,  and  incorporated
          herein by reference).

          10.63     1994 Stock Option Plan of Electrosource, Inc.
          (filed   as   Exhibit  10.4  to  Electrosource,   Inc.,
          Quarterly  Report  on Form 10-Q for the  quarter  ended
          June 30, 1995, and incorporated herein by reference).

          10.64     Consulting Agreement dated September 1, 1992,
          between   Electrosource,  Inc.,  and  Norman  Hackerman
          (filed  as Exhibit 10.45 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1992, and incorporated herein by reference).

          10.65      Consulting Agreement dated August  1,  1993,
          between  Electrosource,  Inc.,  and  Norman  Hackerman,
          (filed  as Exhibit 10.71 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.66      Agreement dated December 19,  1995,  between
          Electrosource,  Inc. and Robert M. Trembath  (filed  as
          Exhibit 10.103 to Electrosource, Inc. Annual Report  on
          Form 10-K for the period ending December 31, 1995,  and
          incorporated herein by reference).

          10.67      Consulting Agreement dated January 1,  1993,
          between  Electrosource, Inc., and  Wilburn  B.  Laubach
          (filed  as Exhibit 10.48 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1992, and incorporated herein by reference).

          10.68      Consulting Agreement dated February 5, 1992,
          between Electrosource, Inc., and John D. Malone  (filed
          as  Exhibit 10.49 to Electrosource, Inc., Annual Report
          on  Form  10-K for the period ended December 31,  1992,
          and incorporated herein by reference).

          10.69      Consulting Agreement dated August 11,  1992,
          between Electrosource, Inc., and Ralph E. White  (filed
          as  Exhibit 10.52 to Electrosource, Inc., Annual Report
          on  Form  10-K for the period ended December 31,  1992,
          and incorporated herein by reference).

          10.70     Consulting Agreement dated September 1, 1995,
          between  Electrosource,  Inc., and  Liviakis  Financial
          Communications, Inc. (filed as Exhibit 10.3 to Form 10-
          Q  for  the  quarter  ended  September  30,  1995,  and
          incorporated herein by reference).

          10.71      Offer of Employment dated October 11,  1994,
          between  Electrosource, Inc., and Michael L. Weinstein,
          (filed  as Exhibit 10.74 to Electrosource, Inc., Annual
          Report  on Form 10-K for the period ended December  31,
          1994, and incorporated herein by reference).

          10.72      Separation, Release and Indemnity  Agreement
          dated  September 23, 1995, between Electrosource,  Inc.
          and  Michael L. Weinstein (filed as Exhibit  10.113  to
          Electrosource,  Inc. Annual Report  on  Form  10-K  for
          period  ending  December  31,  1995,  and  incorporated
          herein by reference).

          10.73      Offer  of  Employment dated  May  26,  1994,
          between  Electrosource, Inc., and  Michael  G.  Semmens
          (filed as an Exhibit to the Company's Form 10-Q/A No. 1
          for  the  period ended June 30, 1994, and  incorporated
          herein by reference).

          10.74      Consulting Agreement dated August  1,  1995,
          between Donald C. Perriello and Electrosource, Inc. (as
          filed  Exhibit  10.115  to Electrosource,  Inc.  Annual
          Report  on Form 10-K for the period ended December  31,
          1995, and incorporated herein by reference).

          10.75      Consulting Agreement dated December 1, 1995,
          between  William  Griffin and Electrosource,  Inc.  (as
          filed  Exhibit  10.116  to Electrosource,  Inc.  Annual
          Report  on Form 10-K for the period ended December  31,
          1995, and incorporated herein by reference).

          10.76      Employment Agreement dated March  25,  1996,
          between William F. Griffin and Electrosource, Inc.  (as
          filed  Exhibit 10.2 to Form 10-Q for the  period  ended
          March 31, 1996, and incorporated herein by reference).

          10.77      Consulting Agreement dated  March  4,  1995,
          between Beacon Advisors, Inc. (Langhorne Reid, III) and
          Electrosource,  Inc.  (as  filed  Exhibit   10.117   to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.78      Consulting Agreement dated January 1,  1996,
          between  Jack J. Guy and Electrosource, Inc. (as  filed
          Exhibit 10.118 to Electrosource, Inc. Annual Report  on
          Form  10-K for the period ended December 31, 1995,  and
          incorporated herein by reference).

          10.79     Consulting Agreement dated November 15, 1994,
          between Richard C. Baker dba Talbot Management Services
          and  Electrosource, Inc. (as filed  Exhibit  10.119  to
          Electrosource, Inc. Annual Report on Form 10-K for  the
          period ended December 31, 1995, and incorporated herein
          by reference).

          10.80      Consulting Agreement between  Electrosource,
          Inc. and Richard J. Goranflo, dated March 29, 1996. (as
          filed  Exhibit 10.1 to Form 10-Q for the  period  ended
          June 30, 1996, and incorporated herein by reference).

          10.81      Consulting Agreement between  Electrosource,
          Inc.  and James Jordan, dated April 6, 1996. (as  filed
          Exhibit 10.2 to Form 10-Q for the period ended June 30,
          1996, and incorporated herein by reference).

          10.82      Consulting Agreement between  Electrosource,
          Inc.  and  Robert H. Schwartz d/b/a Jeremiah  Partners,
          dated May 18, 1996. (as filed Exhibit 10.3 to Form 10-Q
          for  the  period ended June 30, 1996, and  incorporated
          herein by reference).

          10.83      Consulting Agreement between  Electrosource,
          Inc.  and  Len Grzanka dated July 15, 1996.  (as  filed
          Exhibit 10.4 to Form 10-Q for the period ended June 30,
          1996, and incorporated herein by reference).

          10.84      Consulting Agreement between  Electrosource,
          Inc.  and  Rick Blanyer dated September  1,  1996.  (as
          filed  Exhibit 10.1 to Form 10-Q for the  period  ended
          September   30,  1996,  and  incorporated   herein   by
          reference).

          24.1 Consent of Ernst & Young LLP.

          27   Financial Data Schedule

*         Confidential treatment of certain information contained
          in  this Agreement has been requested pursuant to  Rule
          406,  and the Agreement has therefore been omitted  and
          filed separately with the Commission.