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EXHIBIT 3.1


                         RESCISSION AND GENERAL RELEASE

     This Rescission and General Release ("Release") is entered into this third
day of July, 2000, by and between PowerSource Corporation ("PowerSource") and
German Teitelbaum ("Teitelbaum") and arises out of and reference is hereby made
to the issuance of Common Stock Shares, $0.001 par value ("Common Stock"), of
PowerSource Corporation by PowerSource to Teitelbaum.

                                    RECITALS

     WHEREAS, on or about November 29, 1999, Teitelbaum was issued and forwarded
a stock certificate representing 200,000 shares of Common Stock of PowerSource;
on or about March 1, 2000, Teitelbaum was issued and forwarded a stock
certificate representing 215,450 shares of Common Stock of PowerSource; on or
about March 30, 2000, Teitelbaum was issued and forwarded a stock certificate
representing 130,000 shares of Common Stock of PowerSource; on or about March
30, 2000, Teitelbaum was issued and forwarded a stock certificate representing
104,000 shares of Common Stock of PowerSource (collectively referred to as the
"Stock Issuances" or "Certificates").

     WHEREAS, it is the desire of the parties to rescind the above mentioned
Stock Issuances and cause the Certificates to be returned to PowerSource and
retired.

     WHEREAS, the parties desire to issue to Teitelbaum stock options to
purchase up to 649,450 shares of PowerSource in lieu of the Stock Issuances and
as consideration for the return of the above mentioned Certificates.

     WHEREAS, it is the intention of the Teitelbaum and the Teitelbaum's
subsidiaries and assigns and/or agents, to relinquish, assign, release, free,
acquit and discharge PowerSource and all of its attorneys, assigns, companies,
subsidiaries and/or agents from any and all debt, liability, interest, claim,
actions, causes of action, demands, rights, damages, punitive damages, costs,
loss of service, expenses, compensation or responsibility which any of the
parties now have or may hereafter accrue on account of or in any way growing out
of any and all known or unknown, foreseen and unforeseen consequence resulting
or to result from the issuance and rescission of the Common Stock, including but
not limited to, the issuance of stock options in lieu of the Common Stock.

                                    AGREEMENT

     THEREFORE, in consideration of the foregoing and the terms and conditions
set forth herein, the parties hereto agree as follows:

1. That the Teitelbaum has accepted due and good consideration in the form of
stock options, receipt of which is hereby acknowledged, and agrees to and for
PowerSource's attorneys, heirs, executors, administrators, successors and
assigns release, acquit and forever discharge all attorneys, companies,
partnerships and individuals, associated or affiliated or otherwise connected
therewith PowerSource, and individually or collectively, their or its agents,
servants, attorneys, successors, heirs, executors, associations or partnerships
of and from any and all claims, actions, causes of actions, demands, rights,
damages, punitive damages, costs, loss of service, expenses and compensation
whatsoever, which Teitelbaum now has or which may hereafter accrue on account of
or in any way growing out of any and all known and unknown, foreseen and
unforeseen consequence resulting or to result from the issuance and rescission
of the Common Stock, including but not limited to, the issuance of Common Stock
Options in lieu of the Common Stock.

2. The parties acknowledge that they are familiar with California Civil Code
Section 1542 and the effect of same and have discussed this matter with their
counsel. The Release and release language contemplated herein do not constitute
a release of or relief of any party to perform under this Agreement. Both
parties represent that they have had legal representation in the review of this
Release.


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3. That each party understands that this is a compromise and that nothing stated
herein is to be construed as an admission of liability or that liability is
reasonably clear on the part of the party or parties hereby released, and that
said releases deny liability therefore and intend merely to avoid litigation and
buy their peace or that fair market value of any services rendered by the
undersigned are fixed herein.

4. It is further understood and agreed that Teitelbaum waive all rights under
SECTION 1542 OF THE CIVIL CODE OF CALIFORNIA ("SECTION") and any similar law of
any state or territory of the United States are hereby expressly waived by each
party hereto. Said Section reads as follows:

         SS.1542. Certain claims not affected by general release. A general
release does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor.

5. Each party hereby declares and represents that the value of consideration,
Common Stock and Common Stock Options granted to each party hereto is uncertain
and indefinite and in making this Release it is understood and agreed that the
parties rely solely on the judgment, belief and knowledge of the nature, extent,
effect and duration of said value, and that the Release is made without reliance
upon any sole statement or representation of either party or parties hereby
released or their representatives or by any attorney or accountant by them
employed.

6. In further consideration of the aforesaid payment, each party hereby warrants
to the other that the each party is the sole owner of the above-mentioned claims
and demands and causes of action as stated; and does hereby agree and undertake
to indemnify and save the other party entirely harmless from any and all claims,
demands, liens or suits, including the expenses of defense thereof, which may
hereafter be asserted by any other person or persons claiming any interest in or
to the released claims, demands or causes of action or the proceeds of these
transactions. Each party also understands that certain tax ramifications may
result from the transactions, issuances of stock and issuances of stock options,
and that each party shall accept any liability resulting to it from same.

7. Each party further declares and represents that no promise, inducement or
agreement not herein expressed has been made to the other party, and that this
Release along with the Stock Option Agreement contains the entire agreement
between the parties hereto and hereby supercedes all former oral and/or written
agreements entered by the parties or any of them, and that the terms of this
Release are contractual and not a mere recital.

8. That this Release is entered pursuant to and to be interpreted in at all
times, whether by dispute or otherwise under the laws of the State of
California.

THE UNDERSIGNED HAS READ THE FOREGOING RELEASE AND FULLY UNDERSTAND SAME IN ITS
ENTIRETY.

Signed, sealed and delivered this third day of July, 2000.

FOR:  POWERSOURCE CORPORATION


/s/ E. Douglas Mitchell
---------------------------------------------
BY:  E. DOUGLAS MITCHELL, PRESIDENT





/s/ German Teitelbaum
---------------------------------------------
BY:  GERMAN TEITELBAUM



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