<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

   X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR

  --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.

Commission File Number
----------------------
       1-10471

                         CRAFTMADE INTERNATIONAL, INC.
              
             (Exact name of registrant as specified in its charter)

          Delaware                                          75-2057054
----------------------------                            -------------------
(State or other jurisdiction                               (IRS Employer
of Incorporation or Organization)                       (Identification No.)

650 South Royal Lane, Suite 100, Coppell, Texas               75019
-----------------------------------------------              -------
  (Address of principal executive offices)                   Zip Code

Registrant's telephone number, including area code   (972) 393-3800
                                                    ----------------

Indicate by check mark whether the registrant (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 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    .
    ---     ---

7,458,831 shares of Common Stock were outstanding as of May 10, 1999.



                                       1
<PAGE>   2

                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                     Index to Quarterly Report on Form 10-Q

Part I.           Financial Information

                  Item 1.     Financial Statements (unaudited)

                              Condensed Consolidated Statements of Income for
                              the three months and nine months ended March 31,
                              1999 and 1998.

                              Condensed Consolidated Balance Sheets as of March
                              31, 1999 and June 30, 1998.

                              Condensed Consolidated Statement of Changes in
                              Shareholders' Equity for the nine months ended
                              March 31, 1999.

                              Condensed Consolidated Statements of Cash Flows
                              for the nine months ended March 31, 1999 and
                              1998.

                              Notes to Condensed Consolidated Financial
                              Statements.

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

                  Item 3.     Quantitative and Qualitative Disclosures
                              About Market Risk.

Part II.          Other Information

                  Item 1.     Legal Proceedings

                  Item 2.     Changes in Securities and Use of Proceeds

                  Item 3.     Defaults Upon Senior Securities

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

                  Item 5.     Other Information

                  Item 6.     Exhibits and Reports on Form 8-K



                                 2
<PAGE>   3
                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)


<TABLE>
<CAPTION>
                              FOR THE THREE MONTHS ENDED    FOR THE NINE MONTHS ENDED
                              --------------------------    -------------------------
                               March 31,      March 31,       March 31,      March 31,
                                 1998           1999            1998           1999
                              ---------      ---------       ---------      ----------
<S>                          <C>            <C>            <C>            <C>  
Net Sales                    $  9,189,898   $ 21,304,598   $ 29,727,351   $ 62,466,436
Cost of goods sold              5,539,644     12,843,513     17,911,962     40,004,737
                             ------------   ------------   ------------   ------------
   Gross profit                 3,650,254      8,461,085     11,815,389     22,461,699
                             ------------   ------------   ------------   ------------

Selling, general and
   administrative expenses      2,509,707      5,963,673      7,192,313     12,792,742
Interest expense, net             284,988        276,470        952,710      1,004,341
Depreciation and
   amortization                    94,414        202,593        283,539        598,325
                             ------------   ------------   ------------   ------------

Total expenses                  2,889,109      6,442,736      8,428,562     14,395,408
                             ------------   ------------   ------------   ------------

Income before
   income taxes and
   minority interest              761,145      2,018,349      3,386,827      8,066,291

Provision for
   income taxes                   274,012        736,905      1,217,087      2,706,715
                             ------------   ------------   ------------   ------------

Income before
   minority interest              487,133      1,281,444      2,169,740      5,359,576

Minority interest                    --            7,193           --         (616,232)
                             ------------   ------------   ------------   ------------

Net income                   $    487,133   $  1,288,637   $  2,169,740   $  4,743,344
                             ============   ============   ============   ============

Basic and diluted
   earnings per share        $       0.07   $       0.17   $       0.33   $       0.63
                             ============   ============   ============   ============

Cash dividends
   declared per
   common stock              $       0.02   $       0.02   $       0.06   $       0.06
                             ============   ============   ============   ============
</TABLE>


                      SEE ACCOMPANYING NOTES TO CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS

                                       3
<PAGE>   4

               CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                    ASSETS


<TABLE>
<CAPTION>
                                                             March 31,
                                                June 30,       1999
                                                  1998      (Unaudited)
                                               ---------   -----------
<S>                                          <C>          <C>
Current assets:
   Cash                                      $   924,541   $ 1,069,077   
   Accounts receivable - trade,                                          
      net of allowance                         7,562,404    14,536,270   
   Inventory                                   9,508,290    14,190,143   
   Prepaid expenses and other                                            
      current assets                             978,163     1,609,244   
                                             -----------   -----------

          Total current assets                18,973,398    31,404,734   
                                             -----------   -----------

Property and equipment, net                    9,306,318     9,703,595   
                                             -----------   -----------

Other assets:                                                            
      Goodwill, net                                 --       5,587,327   
      Other assets                                78,044        60,732   
                                             -----------   -----------
           Total other assets                     78,044     5,648,059   
                                             -----------   -----------
   
                                             $28,357,760   $46,756,388   
                                             ===========   ===========   
</TABLE>


                      SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS


                                       4
<PAGE>   5

                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                           March 31,
                                                           June 30,          1999
                                                            1998          (Unaudited)
                                                          ---------       -----------
<S>                                                     <C>              <C>
Current liabilities:
   Note payable, facility-
       current portion                                   $    679,369    $    772,459
   Revolving line of credit                                 7,000,000      10,000,000
   Accounts payable - trade and
   commissions                                                497,806       5,322,047
   Income taxes payable                                       366,997         973,906
   Other accrued liabilities                                  293,151         626,554
                                                         ------------    ------------

   Total current liabilities                                8,837,323      17,694,966
                                                         ------------    ------------

Note payable, facility - long term portion                  6,076,581       4,879,802
Other liabilities                                             106,171         107,105
                                                         ------------    ------------
        Total liabilities                                  15,020,075      22,681,873
                                                         ------------    ------------

Shareholders' equity:
   Series A cumulative, convertible, callable preferred
      stock, $1.00 par value, 2,000,000 shares
      authorized, 32,000 shares issued                         32,000          32,000
   Common stock, $.01 par value, 15,000,000 shares
      authorized, 9,299,035 and 6,197,025 shares
      issued as of March 31, 1999 and
      June 30, 1998, respectively                              61,970          92,990
   Additional paid-in capital                               7,210,333      12,402,215
   Retained earnings                                       13,912,831      18,254,264
                                                         ------------    ------------
                                                           21,217,134      30,781,469
   Less:  treasury stock, 1,806,174
      and 1,816,025 common shares at cost as
      of March 31, 1999 and June 30, 1998,
      respectively and 32,000 preferred shares
      at cost                                              (7,879,449)     (6,706,954)
                                                         ------------    ------------

      Total shareholders' equity                           13,337,685      24,074,515
                                                         ------------    ------------
                                                         $ 28,357,760    $ 46,756,388
                                                         ============    ============
</TABLE>

                      SEE ACCOMPANYING NOTES TO CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS

                                       5
<PAGE>   6

                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                    FOR THE NINE MONTHS ENDED MARCH 31, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                      Voting Common Stock         Series A     Additional 
                                    ------------------------      Preferred     Paid-In          Retained  
                                    Shares           Amount         Stock       Capital          Earnings  
                                    --------        --------     ----------  ------------      ------------
<S>                                <C>          <C>            <C>            <C>              <C>         
Balance as of June 30, 1998         6,197,025   $     61,970   $     32,000   $  7,210,333    $ 13,912,831 

TSI Acquisition                          --             --             --        5,212,682            --   

Cash Dividends                           --             --             --             --          (401,911)

Stock Split                         3,098,510         30,985           --          (30,985)           --   

Stock Repurchase                         --             --             --             --              --   

Exercise of Employee
Stock Options                           3,500             35           --           10,185            --   

Net Income for the Nine Months
Ended March 31, 1999                     --             --             --             --         4,743,344 
                                 ------------   ------------   ------------   ------------    ------------ 
                                    9,299,035   $     92,990   $     32,000   $ 12,402,215    $ 18,254,264 
                                 ============   ============   ============   ============    ============

<CAPTION>

                                     Treasury
                                      Stock
                                      Amount          Total
                                    ----------     -----------
<S>                               <C>            <C>
Balance as of June 30, 1998       $( 7,879,449)   $ 13,337,685

TSI Acquisition                      2,166,294       7,378,976

Cash Dividends                            --          (401,911)

Stock Split                               --              --

Stock Repurchase                      (993,799)       (993,799)

Exercise of Employee
Stock Options                             --            10,220

Net Income for the Nine Months

Ended March 31, 1999                      --         4,743,344
                                  ------------    ------------
                                  $( 6,706,954)   $ 24,074,515
                                  ============    ============
</TABLE>


     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                       6
<PAGE>   7


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                   FOR THE NINE MONTHS ENDED
                                                   -------------------------

                                                    March 31,      March 31,
                                                      1998           1999
                                                   ---------      ----------
<S>                                               <C>            <C>
Net cash provided by
      operating activities:                        $ 3,927,824    $ 5,283,257
                                                   -----------    -----------

Cash flows from investing activities:
      TSI acquisition                                     --       (2,040,569)
      Net additions to equipment                       (67,032)      (371,868)
                                                   -----------    -----------
      Net cash used for investing activities           (67,032)    (2,412,437)
                                                   -----------    -----------
Cash flows from financing activities:
      Principal payments on
         note payable                                 (915,791)    (1,140,637)
      Stock repurchase                                (244,000)      (993,799)
      Net proceeds from (principal payments for)
         revolving line of credit                   (3,000,000)       277,555
      Proceeds from exercise of
         stock options                                 109,375         10,220
      Distributions to minority interest
         shareholders in subsidiary                       --         (477,712)
      Cash dividends                                  (232,500)      (401,911)
                                                   -----------    -----------
      Net cash used for
         financing activities                       (4,282,916)    (2,726,284)
                                                   -----------    -----------
Net increase (decrease) in cash                       (422,124)       144,536
                                                   -----------    -----------
Cash at beginning of year                              615,173        924,541
                                                   -----------    -----------
Cash at end of period                              $   193,049    $ 1,069,077
                                                   ===========    ===========

                                                    FOR THE NINE MONTHS ENDED
                                                    -------------------------
Supplemental disclosures                            March 31,      March 31, 
   of cash flow information:                           1998           1999
                                                   -----------    -----------
Cash paid during the period:
Interest                                           $   952,710    $ 1,004,341
                                                   ===========    ===========

Income Taxes                                       $ 1,436,263    $ 2,800,000
                                                   ===========    ===========
</TABLE>

                      SEE ACCOMPANYING NOTES TO CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS


                                       7
<PAGE>   8

                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                  (Unaudited)

Non-cash disclosure:

On July 1, 1998, the Company acquired Trade Source International, Inc. for
approximately $11 million in a combination of approximately $3.6 million in
cash and approximately 656,000 shares of Craftmade's common stock valued at
$11.25 per share. In connection with the acquisition, cash was paid as follows:

<TABLE>
         <S>                                                 <C>
         Fair value of assets acquired
         (including goodwill)                                 $ 19,479,017
         Liabilities assumed                                    (8,478,991)
         Stock issued                                           (7,378,976)
                                                              ------------
         Cash paid                                               3,621,050
         Less:    cash acquired                                  1,580,481
                                                              ------------
         Net cash paid for acquisition                        $  2,040,569
                                                              ============
</TABLE>


                      SEE ACCOMPANYING NOTES TO CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS


                                       8
<PAGE>   9

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                 March 31, 1999
                                  (Unaudited)


Note 1 - BASIS OF PREPARATION AND PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and include all adjustments which are, in the opinion of management, necessary
for a fair presentation. The condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading;
however, it is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto which are incorporated by
reference in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998. The financial data for the interim periods may not necessarily
be indicative of results to be expected for the year.

Note 2 - TRADE SOURCE INTERNATIONAL, INC. ACQUISITION

On July 1, 1998, the Company consummated the plan of merger with Trade Source
International, Inc., a California corporation (TSI California) engaged in the
wholesale distribution of outdoor lighting fixtures to mass merchandisers. As a
result, the Company acquired TSI California from its existing shareholders and
merged it into the Company's wholly-owned subsidiary, Trade Source
International, Inc., a Delaware corporation (TSI Delaware). The total purchase
price was approximately $11 million paid in a combination of approximately $3.6
million cash and approximately 656,000 shares of Craftmade's common stock,
valued at approximately $7.4 million, that had previously been repurchased by
the Company related to the Company's stock repurchase program. This transaction
has been accounted for under the purchase method of accounting, and the results
of operations of TSI Delaware have been consolidated since July 1, 1998. The
excess of the purchase price over the estimated fair value of the acquired net
assets, which approximates $5.8 million, has been recorded as goodwill and is
being amortized over 15 years.


                                       9
<PAGE>   10

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                 March 31, 1999
                                  (Unaudited)


Note 2 - TRADE SOURCE INTERNATIONAL, INC. ACQUISITION (CONT'D)

Pro forma results from continuing operations, as if the acquisition had
occurred at the beginning of fiscal 1998, is as follows:

<TABLE>
<CAPTION>
                                            Three Months Ended                  Nine Months Ended
                                              March 31, 1998                      March 31, 1998
                                            ------------------                  ------------------
<S>                                         <C>                                 <C>
Revenues                                          $17,271,143                     $48,692,124
                                                  ===========                     ===========

Net Income                                        $   762,806                     $ 2,630,728
                                                  ===========                     =========== 
Basic and diluted
   earnings per common share                      $       .10                     $       .35
                                                  ===========                     ===========
</TABLE>

Note 3 - MINORITY INTEREST

At TSI's acquisition date, TSI held a 50% ownership of Prime Home Impressions
(PHI), a corporation established for the purpose of selling ceiling fan
accessories. The Company is able to exert control over the operations of PHI by
virtue of having a majority of the Board of Directors. As a result, the assets,
liabilities and earnings of PHI have been included in the Company's
consolidated financial statements. The non-company owned shareholder interest
has been accounted for as minority interest. The minority interest in the
accompanying Consolidated Balance Sheet at March 31, 1999 approximates
$259,000. Shareholder distributions are limited to proportionate interest in
the earnings of PHI.


                                      10
<PAGE>   11

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                 March 31, 1999
                                  (Unaudited)


Note 4 - EARNINGS PER SHARE

The following is a reconciliation of the numerator and denominator used in the
basic and diluted EPS calculations:

<TABLE>
<CAPTION>
                              FOR THE THREE MONTHS ENDED    FOR THE NINE MONTHS ENDED
                              --------------------------    -------------------------
                               March 31,      March 31,       March 31,      March 31,
                                 1998           1999            1998           1999
                              ---------      ---------       ---------      ----------
<S>                          <C>            <C>            <C>            <C>
Basic and Diluted EPS

Numerator:
Net Income                    $  487,133     $1,288,637      $2,169,740     $4,743,344     
                              ----------     ----------      ----------     ----------     

Denominator:                                                                               
Common Shares                                                                              
Outstanding                    6,551,625      7,551,489       6,534,137      7,550,496     
                              ----------     ----------      ----------     ----------     

Basic EPS                     $      .07     $      .17      $      .33     $      .63     
                              ==========     ==========      ==========     ==========     

Denominator:
Common Shares                                                                              
Outstanding                    6,551,625      7,551,489       6,534,137      7,550,496     
Options                           12,674         14,262          21,777         15,097     
                              ----------     ----------      ----------     ----------     
Total Shares                   6,564,299      7,565,751       6,555,914      7,565,593     
                              ==========     ==========      ==========     ==========     

Diluted EPS                   $      .07     $      .17      $      .33     $      .63     
                              ==========     ==========      ==========     ==========     
</TABLE>

Note 5 - STOCK SPLIT

On September 30, 1998, the Board of Directors declared a three-for-two split of
the Company's common stock effected in the form of a 50% stock dividend. New
shares were issued November 16, 1998 to holders of record as the close of
business on October 30, 1998. Common stock, additional paid-in capital and 
treasury stock as of March 31, 1999 and earnings per share and weighted average
share data for the three months and nine months ended March 31, 1999 and 1998
have been adjusted to reflect the stock split.


                                      11
<PAGE>   12

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                 March 31, 1999
                                  (Unaudited)

Note 6 - STOCK REPURCHASE

On March 17, 1999, the Company's Board of Directors authorized the Company to
buy back up to 200,000 shares of the Company's common stock. At March 31,1999,
the Company had repurchased 66,000 shares at an aggregate cost of $993,799.

Note 7 -  RELATED PARTY TRANSACTION

On December 31, 1998, the Company loaned an officer of TSI $500,000, bearing
interest at prime and secured by a perfected, first priority security interest
in and to 55,000 shares of the Company's common stock held by the borrower.
This loan has been repaid as of March 31,1999.

Note 8 - CONTINGENCIES

The lamp division is currently pursuing an aggressive strategy of inventory
reduction through select "seconds" retailers. The Company's management believes
that this process will be completed within this fiscal year. Management will
continue to closely monitor this division and its financial results to
determine the feasibility of this division continuing as a single-customer
manufacturer with limited overhead or the dissolution of this division. At the
current time, management believes that the continued reduction of inventory can
be accomplished at a slight profit.


                                      12
<PAGE>   13

ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement

With the exception of historical information, the matters discussed under
"Results of Operations" and "Liquidity and Capital Resources" contain
forward-looking statements. There are certain important factors which could
cause results to differ materially from those anticipated by some of the
forward-looking statements. Some of the important factors which could cause
actual results to differ materially from those in the forward-looking
statements include, among other things, changes from anticipated levels of
sales, whether due to future national or regional economic and competitive
conditions, changes in relationships with customers including, but not limited
to, the lamp division's relationship with its major customer, customer
acceptance of existing and new products, pricing pressures due to excess
capacity, raw material cost increases, change of tax rates, change of interest
rates, unfavorable economic and political developments in the Republic of
Taiwan, the location of the Company's principal vendor, declining conditions in
the home construction industry, resolution of the Year 2000 issue, and other
uncertainties, all of which are difficult to predict and many of which are
beyond the control of the Company.

On July 1, 1998, the Company acquired Trade Source International, Inc. (TSI).
As a result, the operations and financial position of TSI have been included in
the operations and financial position of the Company for the three months and
nine months ended March 31, 1999.

Results of Operations

Net sales increased $12,114,700 for the three months ended March 31, 1999 to
$21,304,598 from $9,189,898 for the same period last year. Net sales of TSI
represented $10,071,939 of this increase. For the nine months ended March 31,
1999, net sales were $62,466,436, an increase of $32,739,085 from sales of
$29,727,351 for the same nine month period last year. Net sales of TSI
represented $28,022,853 of this increase. The remaining increase of $2,042,761,
or 22.2%, and $4,716,232, or 15.9%, for the three months and nine months ended
March 31, 1999, respectively, was primarily the result of an increase of 24.4%
and 15.8%, respectively, in sales from the fan division. This growth has
primarily been attributable to a combination of the success of this division's
aggressive marketing strategy, initiated towards the end of fiscal 1998, of
innovative product design, competitive pricing and selective expansion of its
distribution base, and a strong housing market. The Company's management
anticipates that this marketing strategy, combined with the cross-marketing of
TSI's products through the fan division's distribution base, will yield growth
consistent with prior years. The Company's lamp division is continuing its
aggressive strategy of inventory reduction through select 


                                      13
<PAGE>   14

"seconds" retailers. The Company's management anticipates that the inventory
reduction will be completed within this fiscal year at a small profit.
Management will continue to closely monitor this division and its financial
results to determine the feasibility of continuing this division as a
single-customer manufacturer with limited overhead or dissolving this division.

Gross profit for the three month period ended March 31 increased to $8,461,085,
or 39.7% of net sales, in 1999 from $3,650,254, or 39.7% of net sales, in 1998.
Gross profit from TSI represented $3,649,806 of this increase. For the nine
months ended March 31, 1999, gross profit increased to $22,461,699, or 36.0% of
net sales, from gross profit of $11,815,389, or 39.7% of net sales, for the
same nine month period last year. Gross profit from TSI represented $7,616,828
of this increase. Total gross profit as a percentage of sales decreased
compared to last year, primarily as a result of the lower margins generated by
TSI's sales to mass merchandisers; however, these lower margins were partially
offset by increasing sales and margins in the fan division. The increase in
margins in the fan division, to 44.4% for the nine months ended March 31, 1999
from 41.0% for the same nine month period last year, was primarily attributable
to the success of this division's innovative, proprietary products that carry
higher margins. The Company's management anticipates that gross margins will
stabilize at current levels, for the near term, provided that the Company
continues to benefit from customer demand for its proprietary products and that
the aggressive inventory reduction of the lamp division does not adversely
affect overall Company margins.

Total selling, general and administrative expenses increased to $5,963,673, or
28.0% of net sales, for the three months ended March 31, 1999, from $2,509,707,
or 27.3% of net sales, for the same three month period last year. Total
selling, general and administrative expenses from TSI represented $2,756,360 of
this $3,453,966 increase. Total selling, general and administrative expenses
increased to $12,792,742, or 20.5% of net sales, for the nine months ended
March 31, 1999, from $7,192,313, or 24.2% of net sales, for the same nine month
period last year. Total selling, general and administrative expenses from TSI
represented $4,236,108 of this $5,600,429 increase. The remaining increases
were primarily attributable to increases in certain costs directly correlated
to sales, an increase in the Company's labor force, and its related costs,
necessary to support the Company's increasing sales and the additional
responsibilities resulting from the TSI acquisition, and the expensing of
certain costs associated with the TSI acquisition. Due to the relatively fixed
nature of the majority of the Company's selling, general, and administrative
expenses and the addition of TSI's sales, selling, general and administration
expenses as a percentage of sales has decreased compared to last year. The
Company's management anticipates that, for the near term, selling, general and
administrative expenses as a percentage of sales will begin to stabilize at the
current level.

Net interest expense decreased $8,518 to $276,470 for the three months ended
March 31, 1999 from $284,988 for the same three month period last year. Net
interest expense from 


                                      14
<PAGE>   15
TSI represented $16,299 of the net interest expense for the three months ended
March 31, 1999. Net interest expense for the nine months ended March 31,1999
increased $51,631 to $1,004,341, compared to $952,710 for the same nine month
period last year. Net interest expense from TSI represented $99,643 of this
increase. The Company utilized funds from its line of credit to provide the
approximately $3.6 million in cash required for the TSI acquisition. During the
nine months ended March 31, 1999, the Company paid down $3.5 million on its
line of credit and an additional $600,000 on its facility note payable by
utilizing the Company's excess cash flow. The Company's management intends to
continue this strategy of debt reduction as excess cash flow is available.

The $616,232 minority interest represents the 50% ownership of Prime Home
Impressions by a non-company owned shareholder.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash increased $144,536, from $924,541 at June 30, 1998 to
$1,069,077 at March 31, 1999. The Company's operating activities provided cash
of $5,283,257, primarily attributable to the Company's improved operations.

The $2,412,437 of cash used for investing activities related to the $2,040,569
of net cash paid for the TSI acquisition and the purchase of general warehouse
and office equipment for $371,868.

The $2,726,284 of cash used for financing activities was primarily the result
of the repurchase of 66,000 shares of the Company's common stock at an
aggregate cost of $993,799, distributions made to the minority interest of
Prime Home Impressions, LLC (PHI), a 50% owned subsidiary of TSI, of $477,712,
cash dividends of $401,911 and principal payments of $1,140,637 made towards
the notes payable, partially offset by the advance of $277,555 on the Company's
line of credit.

On July 1, 1998, the Company acquired TSI for approximately $11 million in a
combination of approximately $3.6 million cash and approximately 656,000 shares
of Craftmade's common stock. This transaction has been accounted for under the
purchase method of accounting, and the results of operations of TSI have been
consolidated for the three months and nine months ended March 31, 1999.

At March 31, 1999, subject to continued compliance with certain covenants and
restrictions, the Company had $14,000,000 available on its line of credit of
which $8,500,000 had been utilized. In addition, PHI had $2,000,000 available
on its line of credit, of which $1,500,000 had been utilized. The Company's
management believes that its current line of credit, combined with cash flows
from operations, is adequate to fund the Company's current operating needs,
make annual payments under the facility note payable approximating $1,400,000,
fund stock repurchases, provided that the Company's stock continues to
represent an attractive investment to the Company, fund the costs 


                                      15
<PAGE>   16
associated with Year 2000 compliance, as well as fund its projected growth over
the next twelve months. In addition, the Company is utilizing excess cash flow
to reduce outstanding indebtedness. It is management's intention to continue
this strategy of debt reduction as excess cash flow is made available.

At March 31, 1999, $5,652,261 remained outstanding under the twelve year note
payable for the Company's 378,000 square foot operating facility. The Company's
management believes that this facility will be sufficient for its purposes for
the foreseeable future.

YEAR 2000 ISSUE

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
00 as the year 1900 rather than the year 2000. The Year 2000 Issue potentially
not only impacts information technology systems, such as traditional computer
systems, but also non-information technology systems containing
microcontrollers or other embedded technology, such as elevators and other
equipment and machinery. The Year 2000 Issue could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. As a result, the Year 2000 Issue could
have a material adverse impact on the Company's business and its customers in
ways that cannot be fully determined at this time.

State of Readiness and Costs. The Company's analysis of the Year 2000 Issue
encompasses four phases: assessment, renovation, testing and implementation.
The assessment phase involves an investigation of the Company's systems for
potential Year 2000 Issues. The renovation phase involves the modification of
the Company's current systems, and the testing phase involves the validation of
these modifications. The implementation phase involves the ultimate use of the
converted system by the Company.

The Company is currently assessing all systems that could potentially be
affected by the Year 2000 Issue, including facility systems, telephone hardware
and software, out-sourced services, suppliers and customers. In anticipation of
the renovation of the Company's systems, the Company has purchased the upgrade
for its current computer software, the cost of which was approximately $12,000.
The Company plans to install and test this upgrade within the next three
months. By December 31,1999, the Company plans to upgrade and test systems, as
needed, that will already be Year 2000 compliant. At this time, the Company's
management cannot estimate the cost of any additional systems upgrades that
might be required. However, the Company anticipates that these costs are not
expected to have a material impact on the Company's financial position, results
of operations or cash flows in future periods.


                                      16
<PAGE>   17

In addition to the current assessment of its systems, the Company is working
with its key suppliers, vendors, customers and other third parties with which
it has a material relationship to assist such parties in achieving compliance
with respect to the Year 2000 Issue in those systems affecting the Company's
operations. Although the Company believes that such persons are working
diligently to properly address the Year 2000 Issue, the Company cannot
guarantee that these third parties will convert their systems in a timely
manner, or that a failure to convert by another company or a conversion that is
incompatible with the Company's systems would not have a material adverse
effect on the Company.

Risks and Contingency Plans. The Company is not currently able to estimate the
effect on its results of operations, liquidity and financial condition in the
event that its plan to address the Year 2000 Issue and its discussions with key
third parties are not successful.

Because the Company is not able to estimate the full impact of any potential
failure of its systems as a result of the Year 2000 Issue, the Company has not
to date developed a contingency plan with respect to such potential failures.
However, the Company intends to create a contingency plan by December 31, 1999.


                                      17
<PAGE>   18
ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK.

Not applicable.


                                      18
<PAGE>   19

                                    PART II

                               OTHER INFORMATION


Item 1.                    Legal Proceedings

                           not applicable

Item 2.                    Changes in Securities and Use of Proceeds

                           not applicable

Item 3.                    Defaults Upon Senior Securities

                           not applicable

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

                           not applicable

Item 5.                    Other Information

                           not applicable

Item 6.                    Exhibits and Reports on Form 8-K

                           a).      Exhibits

          3.1     Certificate of Incorporation of the Company, filed as Exhibit
                  3 (a) (2) to the Company's Post Effective Amendment No. 1 to
                  Form S-18 (File No. 33-33594-FW) and incorporated by
                  reference herein.

          3.2     Certificate of Amendment of Certificate of Incorporation of
                  the Company, dated March 24, 1992 and filed as Exhibit 4.2 to
                  the Company's Form S-8 (File No. 333-44337) and incorporated
                  by reference herein.

          3.3     Amended and Restated Bylaws of the Company, filed as Exhibit
                  3 (b) (2) to the Company's Post Effective Amendment No. 1 to
                  Form S-8 (File No. 33-33594-FW) and incorporated by reference
                  herein.

          4.1     Specimen Common Stock Certificate, filed as Exhibit 4.4 to
                  the Company's Registration Statement on Form S-3 (File No.
                  333-70823) and incorporated by reference herein.


                                      19
<PAGE>   20

         10.1     Earnest Money contract and Design/Build Agreement dated May
                  8, 1995, between MEPC Quorum Properties II, Inc. and
                  Craftmade International, Inc. (including exhibits),
                  previously filed as an exhibit in Form 10-Q for the quarter
                  ended December 31, 1995, and herein incorporated by
                  reference.

         10.2     Assignment of Rents and Leases dated December 21, 1995,
                  between Craftmade International, Inc. and Allianz Life
                  Insurance Company of North America (including exhibits),
                  previously filed as an exhibit in Form 10-Q for the quarter
                  ended December 31, 1995, and herein incorporated by
                  reference.

         10.3     Deed of Trust, Mortgage and Security Agreement made by
                  Craftmade International, Inc., dated December 21, 1995, to
                  Patrick M. Arnold, as trustee for the benefit of Allianz Life
                  Insurance Company of North America (including exhibits),
                  previously filed as an exhibit in Form 10-Q for the quarter
                  ended December 31, 1995, and herein incorporated by
                  reference.

         10.4     Second Amended and Restated Credit Agreement dated November
                  14, 1995 among Craftmade International, Inc., Nations Bank of
                  Texas, N.A., as Agent and the Lenders defined therein
                  (including exhibits), previously filed as an exhibit in Form
                  10-Q for the quarter ended December 31, 1995, and herein
                  incorporated by reference.

         10.5     Lease Agreement dated November 30, 1995 between Craftmade
                  International, Inc. and TSI Prime, Inc., previously filed as
                  an exhibit in Form 10-Q for the quarter ended December 31,
                  1995, and herein incorporated by reference.

         10.6     Revolving Credit Facility with Texas Commerce Bank,
                  previously filed as an exhibit in Form 10-K for the year
                  ended June 30, 1996, and herein incorporated by reference.

         10.7     Agreement and Plan of Merger, dated as of July 1, 1998, by
                  and among Craftmade International, Inc., Trade Source
                  International, Inc., a Delaware corporation, Neall and Leslie
                  Humphrey, John DeBlois, the Wiley Family Trust, James
                  Bezzerides, the Bezzco Inc. Employee Retirement Trust and
                  Trade Source International, Inc., a California corporation,
                  filed as Exhibit 2.1 to the Company's Current Report on Form
                  8-K filed July 15, 1998 (File No. 33-33594-FW) and herein
                  incorporated by reference.


                                      20
<PAGE>   21

         10.8     Voting Agreement, dated July 1, 1998, by and among James R.
                  Ridings, Neall Humphrey and John DeBlois, filed as Exhibit
                  2.1 to the Company's Report on Form 8-K filed July 15, 1998
                  (File No. 33-33594-FW) and herein incorporated by reference.

         10.9     Third Amendment to Credit Agreement, dated July 1, 1998, by
                  and among Craftmade International, Inc., a Delaware
                  corporation, Trade Source International, Inc., a Delaware
                  corporation, Chase Bank of Texas, National Association
                  (formerly named Texas Commerce Bank, National Association)
                  and Frost National Bank (formerly named Overton Bank and
                  Trust), filed as Exhibit 2.1 to the Company's Current Report
                  on Form 8-K filed July 15, 1998 (File No. 33-33594-FW) and
                  herein incorporated by reference.

        10.10     Consent to Merger by Chase Bank of Texas, National
                  Association and Frost National Bank, filed as Exhibit 2.1 to
                  the Company's Current Report on Form 8-K filed July 15, 1998
                  (File No. 33-33594-FW) and herein incorporated by reference.

        10.11     Employment Agreement, dated July 1, 1998, by and among
                  Craftmade International, Inc., Trade Source International,
                  Inc., a Delaware corporation, and Neall Humphrey, filed as
                  Exhibit 2.1 to the Company's Current Report on Form 8-K filed
                  July 15, 1998 (File No. 33-33594-FW) and herein incorporated
                  by reference.

        10.12     Employment Agreement, dated July 1, 1998, by and among
                  Craftmade International, Inc., Trade Source International,
                  Inc., a Delaware corporation, and Leslie Humphrey, filed as
                  Exhibit 2.1 to the Company's Current Report on Form 8-K filed
                  July 15, 1998 (File No. 33-33594-FW) and herein incorporated
                  by reference.

        10.13     Employment Agreement, dated July 1, 1998, by and among
                  Craftmade International, Inc., Trade Source International,
                  Inc., a Delaware corporation, and John DeBlois, filed as
                  Exhibit 2.1 to the Company's Current Report on Form 8-K filed
                  July 15, 1998 (File No. 33-33594-FW) and herein incorporated
                  by reference.

        10.14     Registration Rights Agreement, dated July 1, 1998, by and
                  among Craftmade International, Inc., Neall and Leslie
                  Humphrey and John DeBlois, filed as Exhibit 2.1 to the
                  Company's Current Report on Form 8-K filed July 15, 1998
                  (File No. 33-33594-FW) and herein incorporated by reference.


                                      21
<PAGE>   22

         27.1     Financial Data Schedule.

                           b).      Reports on Form 8-K

                                            None


                                      22
<PAGE>   23

                                   SIGNATURE

Pursuant to the requirements 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.


                                     CRAFTMADE INTERNATIONAL, INC.
                                     -----------------------------
                                             (Registrant)



Date     May 13, 1999                /s/ James R. Ridings
     ------------------              -----------------------------

                                     JAMES R. RIDINGS
                                     President and Chief
                                     Executive Officer



<PAGE>   24

                                INDEX TO EXHIBIT

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------
<S>                 <C>
 27.1               Financial Data Schedule
</TABLE>