Electrosource Inc. Announces Financing Agreement With Majority Shareholder, Kamkorp Ltd. Not Completed

    SAN MARCOS, Texas--May 17, 2001--Electrosource Inc. ("the Company") said today that the previously announced (April 24, 2001) financing agreement with its majority shareholder, Kamkorp Ltd., ("Kamkorp"), a private holding Company headquartered in the United Kingdom has not been consummated.
    Under terms of the aforementioned agreement, on or before 30 April, 2001 Kamkorp was to complete its purchase of the remaining 1,773,624 shares of a five-year option granted to Kamkorp in June 1998 to purchase three million (3,000,000) shares of Electrosource Inc., common stock at par value ($1.00). The agreement further granted Kamkorp a new option to purchase an additional three million (3,000,000) shares of Electrosource Inc., common stock at par value ($1.00). The new option term was for ten (10) months and was to become effective upon the Company's receipt of funds from Kamkorp's timely purchase of the 1,773,624 shares. The new option provided for Kamkorp to exercise its rights to purchase the Company's common stock at a rate of not fewer than three hundred thousand (300,000) shares per month beginning 30 May, 2001 and continuing for ten (10) months through 28 February 2002.
    In accordance with the agreement, Kamkorp did exercise its option to purchase 1,200,000 shares and forwarded funds to the Company on the agreed schedule. However, Kamkorp did not exercise its option to purchase the remaining 573,624 shares by April 30, 2001. Therefore, the new option granting Kamkorp the right to purchase 3,000,000 additional shares of the Company's Common Stock failed to become effective as planned. The Company will continue its efforts to secure essential capital.

This release contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in this release. Risks include financial risks, development risks, manufacturing risks, uncertainty of market acceptance, delay in shipment or cancellation of orders, customer reorganization, as well as other risks that are detailed from time to time in the company's Securities and Exchange Commission filings.