U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                              ---------------------
                                    Form 10QSB
                              ---------------------

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities exchange Act of1934


For Quarter Ending September 30, 1999
Commission File Number 001-15071



                             PowerSource Corporation

                 (Name of Small Business Issuer in its charter)

                              ---------------------

         Nevada                                          61-1180504
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)



3660 Wilshire Boulevard, Suite 1104
Los Angeles, California                                          90010
(Address of principal executive office)                       (Zip Code)

                                 (213) 383-4443
                         (Registrant's Telephone Number)

Indicate by Check mark whether the registration (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or of such shorter period that the
registrant was required to file such reports), and 92) has been subject to
such filing requirements for the past 90 days.

Yes   *                No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Weighted Number of shares are 5,480,761 of common stock, no par value.

Page 1

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 Statements in this discussion which are
not historical facts may be considered  "forward looking  statements" within the
meaning of Section 21E of the  Securities  Act of 1934,  as  amended,  including
projected sales based on orders,  estimated cost savings and savings that may be
generated  from  restructuring.  The words  "believe",  "expect",  "anticipate",
"estimate",  and similar expressions  identify forward looking  statements.  Any
forward  looking  statement  involves  risk and  uncertainties  that could cause
actual  events  or  results  to  differ,  perhaps  materially,  from the  events
described in the forward looking statements.  Readers are cautioned not to place
undue reliance on these forward looking  statements.  The Company  undertakes no
obligation to publicly update or revise any forward looking  statement,  whether
as a result of new information, future events or otherwise. The risks associated
with the Company's forward looking statements  include,  but are not limited to,
risks   associated   with  the   Company's   history  of  losses  and  uncertain
profitability,  reliance on a large customer, risks associated with competition,
general economic  conditions,  reliance on key management and production people,
future capital needs,  dilution,  effects of outstanding  notes and  convertible
debentures, limited public market, low stock price, and lack of liquidity.


     The following  discussion and analysis  should be read in conjunction  with
the  Consolidated  Financial  Statements,  related  notes and other  information
included in this quarterly report of Form 10-QSB.


Part I. Financial Information

Quarter Ended  September 30, 1999


                                     GENERAL


     The  following  financial  information  is  submitted  in  response  to the
requirements  of FORM  10-QSB and does nor  purport to be  financial  statements
prepared in accordance with generally accepted  accounting  principles.  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed or omitted,  although the Company  believes the  disclosures  that are
made are adequate to make the information presented not misleading.  Further, in
the opinion of the management,  the interim financial  statements reflect fairly
the financial position and results of operations for the period indicated.

     The results of  operations  for the quarter  ended as stated  above are not
necessarily  indicative  of results to be  expected  for the entire  year ending
fiscal year ending December 31st.

Page 2

Item 1.                         Financial Statements

     The balance sheet of PowerSource  Corp.  (the  "Company") as of the Quarter
stated  above,  and the related  statement  of income and  changes in  financial
position and note thereto are incorporated  herein by reference to the Company's
quarterly report.

Item 2.         Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

Results of Operations
---------------------

     For the quarter  revenues  totaled $450k.  This represents an increase over
$210k revenues from the previous quarter of 1999.  Expenses this quarter totaled
$413,350,  which translates to a income from operations this quarter of $36,650.
This revenue resulting from the marketing territory sale.

Liquidity and Capital Resources
---------------------------------

     PowerSource  has  successfully  obtained  a surety  bond  needed to satisfy
Automated Power Exchange requirements for purchasing power in California.

On September 9, 1999 a bond for $150,000  was  obtained  from  Frontier  Pacific
Insurance Company. In addition,the  Company is negotiating with Prestige Capital
Corporation  in  obtaining  line of  credit  over  $2,000,000  against  accounts
receivables.

Inflation
---------

     The rate of  inflation  does not have a  material  impact of the  Company's
results  of  operations  and is not  expected  to have  much of an impact in the
future.  The  primary  cost  component  in goods  sold to  customers  subject to
inflationary  pressures is electrical  power.  The contract the Company has with
its customers is that these costs are automatically  passed along to the end-use
customers as the Company incurs them.

Page 3

Part II.  Other Information

Item 1.           Legal Proceedings - None

Item 2.           Change in Securities - None

Item 3.           Defaults upon Senior Securities - None

Item 4.           Submission of Matters to a vote of Security Holders - None

Item 5.           Other Information - None

Item 6.     Exhibit      EX-27




                                   SIGNATURES

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


POWERSOURCE CORPORATION


/s/ E. Douglas Mitchell
----------------------
E. Douglas Mitchell
President

/s/ Roman Gordon
----------------------
Roman Gordon
Chairman of Board

Dated:  November 11, 1999
Los Angeles, California


<PAGE>
 Page 4


                             Powersource Corporation

                                  BALANCE SHEET

                     SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                  (UNAUDITED)


          ASSETS

                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --

      CURRENT ASSETS:

      Cash and cash equivalents ..................     $  2,337              620
      Accounts receivable ........................      349,260          199,500
      Letter of credit ...........................            -           26,000
      Other receivable ...........................          365                -
                                                         ------           ------
                Total current assets .............      351,962          226,120

      EQUIPMENT, FIXTURE AND FURNITURE:                  57,848            8,640



      OTHER ASSETS:

      Organization expenses ......................        3,250            4,000
      Investment in oil and gas properties .......      535,000          535,000
      Deferred interest ..........................       18,841                -
                                                        -------
                Total other assets ...............      557,091          539,000
                                                        -------          -------

                                                       $966,901         $773,760
                                                       ========         ========

<PAGE>




                             Powersource Corporation

                                   BALANCE SHEET

                     SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)
                                   (Continued)

                      LIABILITIES AND STOCKHOLDER'S EQUITY


                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --
 CURRENT LIABILITIES:


   Accounts payable .............................    $  34,105         $  36,028
   Payroll tax payable ..........................        1,152               542
   Income tax payable ...........................        7,683               800
   Interest payable .............................        9,800             5,600
   Loan Payable .................................          500                 -
   Notes payable - Computer System (Current Portion)    21,289                 -
                                                        ------            ------
   Total current liabilities ....................       74,579            42,970

 LONG-TERM LIABILITIES

   Notes payable - Computer System ..............       49,674                 -
   Notes payable ................................       67,700           116,000
                                                        ------           -------

   Total long-term liabilities ..................      117,374           116,000

 STOCKHOLDER'S EQUITY:

   Common stock, par value $ .001,
   50,000,000 shares authorized, 5,408,761
   shares issued and outstanding including ......       5 ,408             5,408

   Paid-in Capital in excess of par value .......      269,046           128,781
   Preferred stock, par value $ 100
   5,350 shares issued and outstanding ..........      535,000           535,000
   Retained earnings (accumulated deficit) ......      (34,506)         (54,399)
                                                      --------         --------
   Total stockholder's equity ...................      774,948           614,790
                                                       -------

                                                     $ 966,901          $773,760
                                                      =========        =========

<PAGE>




                             Powersource Corporation

                    STATEMENT OF INCOME AND ACCUMULATED DEFICIT

                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)


                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --
    REVENUES:

          Net sales ............................   $   450,000       $   210,000

          Cost of sales.........................             0                 0
                                                             -                 -

        Total revenues .........................       450,000           210,000

    EXPENSES:

          Selling expenses .....................        32,413            26,911
          General and administrative expenses ..       380,937           231,088
                                                        ------            ------
               Total expenses ..................       413,350           257,999
                                                        ------            ------

               Income from operation .............      36,650          (47,999)

    OTHER INCOME (LOSS) (EXPENSE)

           Interest expense ....................       (8,274)           (5,600)
                                                       ------            ------

    Income(loss) before provision for income taxes     28,376           (53,599)

    PROVISION FOR INCOME TAXES .................        8,483                800
                                                          ---                ---

           Net Income(loss) ....................        19,893          (54,399)

    ACCUMULATED DIFICIT - JANUARY 1, 1999 ......      (54,399)           (1,356)
                                                      -------           -------
    PRIOR PERIOD ADJUSTMENT ....................            -              1,356

    ACCUMULATED DIFICIT - END OF PERIOD ........    $ (34,506)         $(54,399)
                                                    =========         =========

    Earnings (loss) per Common Share                   (0.021)           (0.010)
    WEIGHTED NUMBER OF SHARES OUTSTANDING            5,480,761         5,408,161

<PAGE>



                             Powersource Corporation

                             STATEMENT OF CASH FLOWS

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)


                                                          9/30/99       12/31/98
                                                          - -- --       -- -- -

    CASH FLOWS FROM OPERATING ACTIVITIVES:

    Net income .....................................    $   19,893  $   (54,399)
    Adjustment to reconcile net income to net
    cash provide (used) by operating activities:
    Amortization ...................................           750          1000
    Depreciation ...................................        11,114         2,024
    Decrease (increase) in:
    Accounts receivable ............................      (149,760)    (199,500)
    Note receivable ................................        26,000      (26,000)
    Deferred interest ..............................       (18,841)            -
    Organization expenses ..........................             -       (5,000)
    Other receivable ...............................          (365)            -
    Increase (decrease) in)
    Accounts payable ...............................        (1,922)     (36,028)
    Payroll tax payable ............................           608           542
    Income tax payable..............................         6,883           800
    Interest payable ...............................         4,200         5,600
    Loan payable...................................            550             -
                                                             -----
    Net cash provided (used) by operating activities     (100,890)     (238,905)
                                                            ======       ======

    CASH FLOWS FROM INVESTING ACTIVITIES:

           Acquisition of assets ...................       (60,322)     (10,664)
           Investment in oil and gas property ......             -     (535,000)
                                                            -------      -------
    Net cash provided (used) by operating activities       (60,322)    (545,664)
                                                             -------     -------

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Notes payable ..................................        22,664       116,000
    Issuing common stock ...........................             -       134,189
    Issuing preferred stock ........................             -       535,000
    Additional paid in capital .....................        140,265            -
                                                            ------
    Net cash provided (used) by financing activities        162,929      785,189

    NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS        1,717          620

    CASH AND CASH EQUIVALENTS - BEGINING OF YEAR ....           620            -
                                        --- ----               ---

    ASH AND CASH EQUIVALENTS - END OF YEAR...........    $    2,337          620
                                                               ===           ===

<PAGE>


<TABLE>

                             Powersource Corporation

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)

<CAPTION>

AS OF DECEMBER 31, 1998 AND 1997
--------------------------------

                                                                 COMMON           PAID-IN
                                                                  STOCK          CAPITAL IN   PREFERRED    RETAINED
                                                         SHARES        AMOUNT   EXCESS OF PAR   STOCK      EARNINGS       TOTAL
                                                         ------        ------   -------------   -----      --------       -----

       <S>                                              <C>         <C>           <C>        <C>        <C>             <C>
       Balance January 1, 1998 ......................   1,356,000   $    1,356   1,268,475              $(1,698,336)     $(1,356)


       Forgivness of Due to parent company ..........                   (1,356) (1,268,475)               1,698,338      428,505
                                                                                             ----------  ----------   ----------
 BALANCE ON DECEMBER 31,1997.........................   1,356,000        1,356                          $    (1,356) $          0

       Founders shares issued May 12, 1998..........    3,642,004        3,642       --              --         --            --

       Sales of option shares pursuant to ...........
       Re organization agreement: Feb. 12, 1998 .....     169,157          169   $   42,310          --         --         42,479
                                                                                             ----------  ----------   ----------

       Sale of 5,350 shares pursuant to
       Re organization agreement: Feb. 12,1998 ......                     --           --    $  535,000                  535,000
                                                                                             ----------  ----------   ----------

       Sales of additional option shares from Sep. 16
       Through Dec. 31, 1998                              241,000          241       86,471                               86,712



       Prior period adjustment ......................                                                         1,356        1,356

       Net income ...................................       --              --       --            --       (54,599)     (54,599)


  BALANCE ON DECEMBER 31, 1998 ......................   5,408,161   $    5,408   $  128,781  $  535,000  $  (54,399)  $  614,790

                                                        =========   ==========   ==========  ==========  ==========   ==========

AS OF SEPTEMBER 30, 1999
-------------------


       Balance January 1, 1999 ......................   5,408,161   $    5,408       128,781     535,000   $(54,399)   $ 614,790

       Changes in paid in capital....................      72,600           72       140,265                             140,265


              Net loss ..............................          --           --          --          --       19,893       19,893


  BALANCE ON SEPTEMBER 30, 1999 ......................   5,480,761   $    5,480   $   269,046  $  535,000  $ (34,506)   $ 774,948

                                                         =========   ==========    ==========  ==========  ==========  ==========
</TABLE>
<PAGE>




                          NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)


  1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      Reporting Entity
      ----------------
PowerSource  Corporation (a Nevada Corporation),  formerly known as American Gas
Corporation,  was originally formed in March of 1990. PowerSource Corporation is
registered electric service provider and through the assistance of certain other
companies,  has procured  permits to provide  electric  service to  residential,
commercial and industrial customers located in the state of California.

      Use of Estimates
      ----------------
Management  uses estimates and  assumptions in preparing  financial  statements.
Those  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities,  disclosure  of  contingent  assets and  liabilities,  and reported
revenues and expenses. Actual results could differ from those estimates.

      Property and Equipment
      ----------------------
Property and equipment are stated at cost.  Depreciation is provided principally
on the straight- line method over cost recovery  periods  prescribed by Internal
Revenue  Service,  which  approximated  the  useful  lives  of the  assets.  The
estimated useful lives are as follows:

      Machinery and equipment .....................     5 - 15 years
      Furniture and fixtures ......................     7 years
      Computer equipment and software..............     5 years
      Vehicles and automotive equipment............     7 years

Leasehold  improvements are amortized by the straight-line  method over a period
of 31.5  years  for book and tax  purposes.  Expenditures  for  maintenance  and
repairs are charged to operations as incurred, while renewals and betterment are
capitalized.

      Organization Expenses
      ---------------------
Organization  expenses  include legal fees,  licensing  fees,  and certain other
organization costs, which will be amortized using the straight-line  method over
a period of five years.

<PAGE>



                             Powersource Corporation

                          NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)
                                   (Continued)

     INCOME TAXES
     ------------
The Company  recognizes the tax effect of transactions in the year in which such
transactions  enter into determination of net income regardless of when they are
reported for tax  purposes.  The Company has adopted the  Statement of Financial
Accounting Standards No. 109 (Accounting for Income Taxes) in computing deferred
income taxes. Deferred income taxes, when shown, result primarily from different
depreciation methods for book and tax purposes.


2 PROPERTY AND EQUIPMENT

Property and equipment consist of the following

                                         9/30/99       12/31/98
                                         - -- --       -- -- --

    Furniture and Fixtures .......     $  8,758        $  1,906
    Office Equipment .............       62,228           8,758
                                         ------          ------
         TOTAL                           70,986          10,664

    Less: Accumulated depreciation       13,138         (2,024)
                                         ------          ------
         TOTAL                         $ 57,848        $  8,640
                                       ========        ========

4 INVESTMENT IN OIL AND GAS PROPERTIES

In February 1998, PowerSource Ltd. (a Nevada Corporation) entered into a plan of
reorganization  with American Gas  Corporation  (a Nevada  Corporation),  then a
wholly owned subsidiary of Kensington  International Holding Corporation AKA The
Kensington Company, Inc. (a Minnesota Corporation and referred to hereinafter as
"Kensington" ), a fully reporting  public company.  Kensington  retained fifteen
(15%) percent  (200,000 shares of the then issued common stocks) and was granted
5,350 shares of American Gas Corporation's  series A, $100 par value,  preferred
stock.  The series A preferred  stock is  convertible  to common stock,  in five
years, at $10 per share. On May 12, 1998,  American Gas  Corporation's  name was
changed to PowerSource

<PAGE>


                             Powersource Corporation

                          NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)
                                   (Continued)

4 INVESTMENT IN OIL AND GAS PROPERTIES (Continued)

corporation and became the Company.  The acquisition was accounted for under the
purchase method of accounting.  As of the date of  acquisition,  the Company has
recorded an investment in oil and gas properties as follows:

                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --

    Equipment ...................................      $300,000         $300,000
    Pipelines ...................................       200,000          200,000
    Rights of Way................................        35,000           35,000
       Total                                           $535,000         $535,000

This value has been  estimated by an appraisal and management of the Company and
its realization is contingent upon the Company's investment of about $100,000 as
stated below in note (7)  commitments.  To date the Company has not invested any
funds and has not entered into any contract for the proposed improvement.

5 COMMON STOCK WARRANTS

PowerSource  Corporation has a total of four class of common stock warrants. The
warrants  range in  exercise  prices  from $.10 per share to $6.50 per share and
expire anywhere from 60 days from the date of issue through December 31, 1999.

6 NOTES PAYABLE
     Notes payable as of September 30, 1999 consisted of the following:

                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --
 Note payable to Senator Associates, Ltd.
 is unsecured with interest as 7%, all interest
 and principal due on Septemeber 10, 1999 .....   $  67,700.00      $  80,000.00
 Letter of credit from Bankers Trust ..........              -         26,000.00
 Note payable to German Teitelbaum ...........               -         10,000.00
    Total                                         $  67,700.00        116,000.00
                                                        ======             =====

<PAGE>



                             Powersource Corporation

                          NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)
                                   (Continued)



7 LONG TERM NOTES PAYABLE

     Note payable to Comprehensive Leasing  $1774.08
     per month plus interest accrued at 29.07% collaterized
     by computer system with a net book value of
      $60,713.47
                                                        9/30/99         12/31/98
                                                        - -- --         -- -- --

                                                $       70,963                 -

     Less amount due within one year                    21,289                 -
                                                      --------           -------


                                                $       49,674                 -
                                                       =======           =======



8 COMMITMENTS

The  management  has committed to invest an estimated  amount of $100,000 on the
Rosewood gas field to bring the lease and easement current, clean and repair the
wells and  pipelines,  install a new  compressor  and reconnect to the Texas Gas
Pipeline.

The company  currently  pays  $2,104 per month.  The lease,  including  options,
extends through March 31, 2000.

Future minimum payments under the lease as of March 31, 1999, are as follows:

                                                          9/30/99       12/31/98
                                                          - -- --       -- -- --

     Period ending     December 31, 1999               $   6,312         $25,248
                       March 31, 2000                      6,312           6,312
                                                           -----           -----
                       Total                           $  12,624        $ 31,560
                                                         =======         =======
<PAGE>






                             Powersource Corporation

                            SUPPLEMENTARY INFORMATION

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)


<PAGE>




                             Powersource Corporation

                          SCHEDULE 1 - SELLING EXPENSES

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)

                                                 9/30/99          12/31/98
                                                    - -- --       -- -- --
                                                                 Percent of
                                                 Amount          Net Sales
                                                 ------            ------
    Automated Power Exchange .............
    Advertising ...........................     $ 14,175              2.61%
    Entertainment & travel ................       18,238              5.91%
                                                  -----

      TOTAL ...............................     $ 32,413             10.89%
                                                 =======            =======


<PAGE>



                             POWERSOURCE CORPORATION

                SCHEDULE 2 - GENERAL AND ADMINISTRATIVE EXPENSES

                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                   (UNAUDITED)

                                     9/30/99                        12/31/98
                                     - -- --                         -- -- --


                                         Percent of                  Percent of
                               Amount    Net sales          Amount    Net sales
                         -------------------------         ---------------------


Alamr & Security            $       100     0.02%      $        -             -
Amortization expense                750     0.17%           1,000          0.48%
Auto expenses                     6,301     1.40%           1,332          0.63%
Bank charges                        958     0.21%             959          0.46%
Commission                        4,817     1.07                -              -
Computer expense                  1,787     0.40%           1,346          0.64%
Consulting fee                   52,288    11.62%          29,955         14.26%
Depreciation                     11,114     2.47%           2,024          0.96%
Dues & subscriptions              5,117     1.14%             383          0.18%
Gifts                               476     0.11%               -             -
Insurance                         9,481     2.11%             846          0.40%
Lease-equipment                     150     0.03%               -             -
Legal & professional services    11,088     2.46%          90,130         42.92%
License & permits                   972     0.22%           3,080          1.47%
Marketing                           964     0.21%               -             -
Office expenses                   5,785     1.29%           1,005          0.48%
Office supplies                   5,278     1.17%           3,141          1,50%
Outside service                  88,283    19.62%          26,900         12.81%
Parking                           3,417     0.76%           2,410          1.15%
Postage and delivery              6,202     1.38%           5,827          2.77%
Printing and reproductions       14,288     3.18%          21,789         10.38%
Professional service             43,673     9.71%               -             -
Penalty                             182     0.04%               -             -
Repair & maintenance              2,788     0.62%             250          0.12%
Rent                             19,322     4.29%          19,275          9.18%
Salaries-Office                  40,674     9.04%           9,023          4.30%
Salaries-Officers                15,125     3.36%               -             -
Taxes-Business                      311     0.07%               -             -
Taxes-Payroll                     6,633     1.47%             668          0.32%
Telephone                        17,595     3.91%           9,745          4.64%
Wire fee                            440     0.10%               -             -



         TOTAL            $     376,359   83.65%      $  231,088        110.04%
                               ========  ========        ========      ========