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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-KSB

        Annual Report Pursuant to Section 13 or 15 (d) of The Securities
                              Exchange Act of 1934
                  For the Fiscal Year Ended September 30, 2004
                         Commission File Number -018515

                            SPECTRASOURCE CORPORATION

             (Exact Name of Registrant as specified in its charter)


            NEVADA                                       93-0960302
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)


               14900 WESTHEIMER, STE X, HOUSTON, TEXAS 77082-1504
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                    (Address of Principal Executive Offices)


         Company's telephone number, including area code: (281) 558-3032
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    (Former name and address of Company, if changed from last annual report.)


          SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
                                      None

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:
                         ($0.001) Par Value Common Stock


Indicate by check mark whether the Company: (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 such shorter period that the Company was required to
file such reports); Yes (X) No () and (2) has been subject to such filing
requirements for the past ninety (90) days; Yes (X) No ()

The issuer's revenues for the twelve months ended September 30, 2004, were
$9,064,928. As of September 30, 2004, there were 7,184,872 shares of ($0.001)
par value Common Stock (the Company's only class of voting stock) outstanding.
The aggregate market value of the common shares of the Company on September 30,
2004, (based upon the mean of the closing bid and asked price) held by
non-affiliates of the Company, was approximately $43,057.

                    DOCUMENTS INCORPORATED BY REFERENCE: None
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                         ==============================

                                   FORM 10-KSB

                            SPECTRASOURCE CORPORATION

                                TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----

PART I.....................................................................   3

     Item  1.  Description of Business.....................................   3
     Item  2.  Description of Property.....................................   6
     Item  3.  Legal Proceedings...........................................   6
     Item  4.  Submission of Matters to a Vote of Security Holders.........   6

PART II....................................................................   6

     Item  5.  Market for Common Equity and Related
               Stockholder Matters.........................................   6
     Item  6.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations.........................   7
     Item  7.  Financial Statements........................................  11
     Item  8.  Changes in and Disagreements with Accountants
               On Accounting and Financial Disclosure......................  11
     Item 8A.  Controls and Procedures.....................................  11

PART III...................................................................  12

     Item  9.  Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a) of
               the Exchange Act............................................  12
     Item  10. Executive Compensation......................................  15
     Item  11. Security Ownership of Certain Beneficial
               Owners and Management.......................................  16
     Item  12. Certain Relationships and Related Transactions..............  16
     Item  13. Exhibits and Reports on Form 8-K............................  16
     Item  14. Audit Fees..................................................  17

SIGNATURES.................................................................  18

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

                                        2
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PART I

ITEM 1.  BUSINESS

DESCRIPTION OF THE COMPANY'S BUSINESS

SpectraSource Corporation (the Company) was organized under the laws of the
State of Nevada on September 21, 1987.

Through its subsidiaries, (the Subsidiaries) the Company provides products and
services to residential and commercial builders and developers, the
telecommunications market, commercial business applications, building owners,
and the general consumer market. These products and services, bundled and
marketed in one turnkey package to afford synergistic cost savings to its
customers, include packaged sales and installation of lighting, ceiling fans,
entry hardware, fiber optics, structured cabling, security monitoring, and
electrical components for residential and commercial uses.

Through its subsidiaries, SpectraSource has served the Texas and Gulf Coast new
construction markets for 21 years, maintaining a customer base of over 150
leading residential builders with state and national presence. It also maintains
an individual customer base to which it target markets post-construction
services and products.

The Company's subsidiaries and their respective lines of business are:

GULF COAST FAN & LIGHT, INC.

Gulf Coast Fan & Light manufactures, installs and supplies the trademarked Old
Jacksonville ceiling fan, under an exclusive licensing agreement, to residential
builders in the Texas market.

Strict manufacturing quality specifications, low
manufacturing costs, and lifetime warranties combine to position the Old
Jacksonville line an industry standard for homebuilders in the Gulf Coast
construction market, as witnessed by a 99.3% satisfaction rate on customer
surveys.

Industry leading manufacturing quality specifications that distinguish Gulf
Coast Fan from other fan manufacturers include:

     o    Multi-Electroplated Finish - to withstand 100% humidity ratings

     o    Swivel Mounting system - absorbs the torque and vibration and relieves
          the stress to the mounting system

     o    Steel Hanging Ball, rather than plastic - for strength and durability

     o    Cast Metal Hanging Bracket, instead of stamped metal - for improved
          stability and alignment

     o    Fans secured to downrods with a triple attachment system - to maintain
          position and safety

     o    Multiple capacitors, low tolerance blade alignment to blade irons and
          motor, anti-vibration and anti-loosening gaskets, micro blade
          balancing, and the use of moisture depleted high quality hardwood and
          composite blades - for quiet and smooth operation

     o    High Quality Energy Efficient Motor - contains fine silicon steel
          stators and rotors, evenly displaced and tightly bound fine copper
          windings, and perma-sealed ball bearings

Products:
Ceiling Fans Design and Import
Ceiling Fan Distribution
Ceiling Fan Installation

                                        3
<PAGE>

CONNECT SOURCE COMMUNICATIONS, INC.

Connect Source sells and installs infrastructure cabling, wiring, and network
systems for the residential and commercial building market. Connect Source
equips homes to readily receive state of the art telecommunications services
such as telephone, digital video and music, dedicated Internet connectivity,
community intranet, voicemail, home automation, and security, Through its
WATCHDOG security division, Connect Source also provides 24-our home security
monitoring.

Products:
Fiber Optic Risers
Fiber Optic Backbone
Home Network Systems
Interface Panels
Structured Cabling
Security Monitoring

BUILDERS LIGHTING & HARDWARE, INC.

Builders Lighting & Hardware is a major supplier of residential and commercial
lighting and hardware fixtures to the residential and commercial building
markets, with its signature 25,000 square foot retail showroom and warehousing
facility in Houston, Texas.

Products:
Electrical Components
Lighting
Hardware

Segment information for the subsidiaries (or "divisions" or "segments") is more
fully discussed in Note 13 to the Company's Financial Statements.

DESCRIPTION OF TECHNOLOGY

Gulf Coast designs, manufactures, through a third party contract manufacturer,
and is the sole distributor of the Old Jacksonville Ceiling Fan brand under a
licensing agreement with U.S. Ceiling Fan Corp., a company controlled by the
Company's Principal Shareholder.

Builders Lighting and Hardware distributes and wholesales lighting, hardware,
and electrical components to the residential and commercial building industry.
Its products are branded and commodity items, many of which are available though
competing companies.

Connect Source markets its trademarked WATCHDOG security surveillance systems.

                                        4
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FEDERAL REGULATION

All of the products marketed by the Company meet Underwriters Laboratory ("UL")
standards, as required by Federal regulations. There are no other significant
regulations that affect the business apart from those regulations affecting
commercial enterprises in general. Compliance with environmental laws is an
insignificant cost to the Company.

MARKETING

Through its Subsidiaries, the Company markets its products with direct sales,
retail stores, the Internet, telephone sales, and other marketing techniques.
The Subsidiaries have competed in the commercial and residential building
industry for 21 years, and benefit from an excellent reputation in their
respective markets. Since the consolidation of its subsidiaries product
divisions earlier this year, the Company has unified its sales force and has
begun to cross-markets to the customer bases of its respective subsidiaries.

The Company is planning a nationwide expansion based on utilizing many of its
existing customers' national presence to move into new markets served by these
customers. This, coupled with cross-market selling and its ability to produce
substantial volume cost savings through vertical integration in the
manufacturing, purchasing, and distribution product and service mix, is expected
to provide growth in both revenue and profits over the next few years.

RETURNS AND WARRANTIES

The Company offers a limited lifetime warranty on its products under the
licensed name Old Jacksonville and a one-year warranty on all installation work.
It passes through whatever warranty is in existence from the manufacturer of
other products sold. The Company allows credit on items from which it receives
credit from the manufacturers. No significant returns and warranty losses have
been experienced.

EMPLOYEES

At fiscal year end, the Company and its subsidiaries had approximately 68 full
time employees.

CUSTOMERS AND SUPPLIERS

The Company's principal customers are homebuilders, multi-family and commercial
developers, commercial contractors, supply houses and the general public. The
Company sells and distributes to a customer network of over 150 of the largest
homebuilders nationwide, with a predominant presence in Texas. Two customers
each accounted for greater than 10% of the Company's revenue.

The Company purchases its inventory from a number of national and international
manufacturers and distributors, none of which account for a significant
percentage of the Company's purchases.

COMPETITION

There is substantial competition in the wholesale electrical components and
hardware, some of which competitors have more resources than the Company. The
Company's success depends on vertical integration in its fan division, its
methods of delivery, and the cross marketing of each division's precision built
products with industry leading technical quality to a broad repeat customer
base, offering a continually expanding line of goods and services to its target
market at attractive prices, providing prompt delivery and service, while
maintaining a low-cost overhead structure. National economic conditions
impacting the construction industry may affect the Company's performance.

                                        5
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BUSINESS DEVELOPMENT

Effective April 28, 2000, Charles Sheffield increased his ownership of the
Company pursuant to a reverse acquisition in which the Company exchanged its
common stock for the common stock of three corporations controlled by Mr.
Sheffield: Gulf Coast Fan & Light, Inc. (Gulf Coast); Builder Source, Inc.
(Builder Source); and Builders Lighting and Hardware, Inc (Builders Lighting).
As a result of the reverse acquisition, Charles Sheffield became the Company's
principal shareholder ('Principal Shareholder').

In mid-2000, the Company's subsidiary, Connect Source Communications, Inc.
(Connect Source) formed a fiber optics and structured cabling division to sell
and install fiber optics and structured cabling products to existing and new
customers in the commercial and residential building industry.

In September, 2002, the Company purchased the operating assets, and hired the
key personnel, of Home Structure Sound, an unincorporated entity engaged in the
residential structured cabling and home network business similar to Connect
Source. In October, 2002, the Company introduced its security monitoring service
under the proprietary trademark name 'WATCHDOG Surveillance'. The Company
presently provides home security system wiring. Providing surveillance system
monitoring complements the Company's existing business and provides a source of
recurring revenue streams.


ITEM 2.  PROPERTIES

As of September 30, 2004, the Company and its subsidiaries lease three locations
in Houston, Dallas and San Antonio totaling approximately 33,000 square feet of
office and warehouse space. All leases are at current market rates. The
properties are adequately insured, and are suitable and adequate for their
intended use.

The Company has no current or planned direct or indirect investments in real
estate, real estate mortgages, or real estate activities. Any such investment is
subject to approval by the Board of Directors.


ITEM 3.  LEGAL PROCEEDINGS

None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The table below sets forth the high and low bid price of common stock through
September 30, 2004, as reported by Reuters. Such over-the-counter market
quotations reflect inter-dealer prices without retail mark-up, markdown, or
commissions, and may not necessarily represent actual transactions.

                                        6
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Fiscal Year Ending September 30, 2004                  High           Low

   1st Quarter                                         0.25           0.05
   2ndQuarter                                          0.25           0.15
   3rd Quarter                                         0.15           0.15
   4th Quarter                                         0.30           0.12

Fiscal Year Ending September 30, 2003                  High           Low

   1st Quarter                                         0.52           0.12
   2nd Quarter                                         0.35           0.10
   3rd Quarter                                         0.52           0.10
   4th Quarter                                         0.21           0.12


As of September 30, 2004, the Company had approximately 485 shareholders of
record. The Company has never paid cash dividends and has no plans to pay cash
dividends in the foreseeable future.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Plan of Operations

As more fully discussed in Note 3 to the Company's financial Statements, on
August 30, 2002, the Company purchased 100% of the inventory, work-in-process,
and goodwill, the company name of "Home Structure Sound", of Home Structure
Sound, an unincorporated entity in the same line of business as the Company's
Connect Source subsidiary. During the fiscal year ended September 30, 2003,
Connect Source introduced its WATCHDOG security monitoring service, a home
security monitoring service. As the seller/ installer of security system wiring,
Connect Source is maximizing the initial contact with the homeowner to sell the
complementary monitoring service to the homeowner. As of year-end the Company
had secured over 980 monitoring contracts, an increase of 680 during this fiscal
year. The number of monitoring contracts is increasing at the rate of two per
day as of year-end. Each contract generates, on average, $15/ month of gross
profit. The Company is reasonably optimistic that it will secure additional
monitoring contracts over the next two fiscal years to generate, at the end of
year three, at least $500,000 in annual gross profit solely from monitoring
services. However, no assurance can be given that the Company will meet its
goal. The monitoring contracts are readily transferable should the Company wish
to monetize the contracts. Based on the industry average life of each contract,
the Company estimates that the fair market value of its existing pool of
contracts is $700,000 at fiscal year end September 30, 2004.

The Subsidiaries have had 21 years of profitability with positive cash flows
from operations, creating the ability to sustain operations and to finance the
new operations of other subsidiaries. The Company expects that the cash
requirements for operations for the next fiscal year will be provided from its
subsidiaries. There is no present assurance, however, that these activities will
sustain their respective levels of cash flow over the long-term.

Through nationwide expansion as well as acquisitions, the Company plans to
capitalize on its market strength, which is to offer a bundled package of
lighting, hardware, ceiling fan and structured cabling products and services at
one overall lower cost to its wholesale customers. A number of these customers
are among the largest builders in the Texas and Gulf Coast market as well as
nationally.

The Company is developing targeted marketing initiatives to solicit homeowners
to whom the Company, through a residential homebuilder, sold its products during
a home's original construction. Using its extensive sales database of homes that
contain the Company's lighting, fan, and hardware products, the Company can
effectively target these homeowners as product styles change, the age of the
home indicates it is due for remodeling, or as the products near the end of
their respective lives.

                                        7
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Sales

Revenues were $ 9,064,928 during fiscal year ended September 30, 2004 compared
to $ 7,998,967 for fiscal year ended September 30, 2003. The 13 % increase in
revenues compared to the fiscal year ended September 30, 2003 is primarily
attributable to a $1,050,437 increase in the revenues of Connect Source. Fiscal
year 2004 marks the second straight year of double digit revenue growth in the
Connect Source division, a direct result of the acquisition of Home Structure
Sound. Revenues in the Gulf Coast Fan division were relatively unchanged at
approximately $3,165,000, compared to $3,365,000 a year ago, reflecting a
continuing demand for ceiling fan products. Revenues in the Builders Lighting
and Hardware division were relatively unchanged at $3,188,046, compared to
$3,048,000a year ago. Within the lighting and hardware division, sales of
hardware products were relatively unchanged at $1,828,000, compared to
$1,846,000 a year ago. Revenues from lighting products increased approximately
$293,000, to $1,353,000 from $1,060,000 a year ago. The overall increase in the
Company's revenues is reflective of the expected increase in market share of
Connect Source, the structured cabling business. However, sustaining such
increases, in any of the Company's divisions, from one fiscal year to the next,
may depend, in part, on the fulfillment, in any fiscal year, of a significant
order from a residential homebuilder in planned subdivision developments. An
order of this nature, for the sale and installation of ceiling fans, lighting
fixtures, hardware, or structured cabling, on behalf of a residential
homebuilder in hundreds of homes in a planned subdivision, or a portion thereof,
could materially affect revenues from one fiscal year to the next. Whereas the
Company has the intent and expectation of continuing to maintain and increase
its market share of the residential homebuilding market, both its ability to
secure these large orders and the vitality of the residential construction
market as a whole can have a material effect on the Company's revenues.

Two customers each accounted for more than 10% of the Company's consolidated
revenues during the fiscal year ended September 30, 2004. Revenues from the two
largest customers during the fiscal year were:

1st  $1,522,117
2nd  $945,013

Revenues from these customers were generated from the sale and installation of
ceiling fans, lighting fixtures, hardware, and structured cabling and wiring in
homes built in planned subdivisions by these customers.


Cost of Sales

Cost of Sales was $ 6,033,196 for the fiscal year ended September 30, 2004,
resulting in Gross Profit of $ 3,031,732. Cost of Sales for the fiscal year
ended September 30, 2003 was $ 5,072,256, resulting in Gross Profit of $
2,926,711. The increase in Gross Profit was $105,021, an increase of 3.5 %,
compared to the prior year. Gross Profit as a percentage of Sales was 33.4%,
compared to 36.5% in the prior year. The decrease in Gross Profit as a
percentage of Sales is generally attributable to the increase in revenue in the
Connect Source division as a percentage of consolidated revenue. The Connect
Source division typically realizes gross profit percentages 5-7% lower than the
other divisions of the Company, due primarily to the fact that Connect Source's
revenue mix is weighted more to lower margin installation revenue than to
product sale revenue, compared to the other divisions. The $1,050,437 revenue
growth in the Connect Source division resulted in higher gross profit for the
Company, but at a marginally

                                        8
<PAGE>

lower gross profit as a percentage of sales. Gross Profit for the Connect Source
division was $763,331, or 28% as a percentage of Sales, compared to $437,016, or
26%, for the prior year. Gross Profit for the Gulf Coast Fan division was
$1,242,540, or 39% as a percentage of sales, compared to $1,274,000, or 39%, for
the prior year. Gross profit for the Lighting and Hardware division was
$1,011,408, or 32% as a percentage of sales, compared to $1,215,697, or 40%, for
the prior year. Lighting and Hardware's decrease in gross profit as a percentage
of sales is due primarily to a write down of slow moving inventory in the amount
of $85,000.

Other Operating Costs

Other Operating Costs were $ 2,900,902 during fiscal year ended September 30,
2004 compared to $2,625,502 for fiscal year ended September 30, 2003, an
increase of 10.5 %. The increase is mainly attributable to a $43,000 increase in
insurance costs and a $160,000 increase in salary costs.

Interest Expense

Interest expense decreased to $ 54,431 for the fiscal year ended September 30,
2004 compared to $60,995 for the fiscal year ended September 30, 2003.

Liquidity and Capital Resources

Net loss after tax for the fiscal year ended September 30, 2004 was ($56,742),
compared to net income of $19,741 for the fiscal year ended September 30, 2003,
on revenues of $9,064,928 and $7,987,695 for the respective fiscal years. Net
cash provided from operations for the period was $289,000. Depreciation expense
increased by $28,000 compared to the prior fiscal year, reflecting depreciation
of additions to the Company's vehicle fleet. During the period, Accounts
Receivable decreased $23,600 compared to the prior year. Accounts Receivable as
a percentage of Sales was 13.8% at September 30, 2004, compared to 16.29% for
the previous year. The Company increased its reserve for uncollectible accounts
by $70,000 for the fiscal year end September 30, 2004. Inventory decreased
$295,464, as of September 30, 2004 compared to September 30, 2003. The decrease
in inventory balance includes a charge for slow moving inventory in the amount
of $85,000. The Company is placing greater focus on controls relating to
inventory and accounts receivable in its effort to maximize working capital.
Other assets decreased $3,500. Accounts Payable decreased $85,882. Net cash used
in investing activities was $76,207 for the fiscal year ended September 30,
2004, reflecting the purchase of fleet service trucks. Net cash used in
financing activities was $265,808 for the fiscal year ended September 30, 2004.
Decreases in long term debt in the amount of $55,123 represents payments of
fleet vehicle notes. Decreases in amounts due to related parties was $295,229,
representing $56,000 of principal payments on the acquisition note relating to
the purchase of Home Structure Sound, the sellers of which became shareholders
and employees of the Company, and $240,000 repayments of working capital
advances from affiliates of the Company, including the Principal Shareholder.
Short term debt increased 84,544, to $684,144. This amount represents working
capital lines of credit with commercial banks on a revolving basis bearing
interest at the current prime rate. These lines of credit expire within twelve
months from the date of issuance. These lines of credit are secured by a blanket
U.C.C. security filing on inventory, accounts receivable, furniture and fixed
assets, and are personally guaranteed by the Principal Shareholder.

                                       9
<PAGE>

Long-term debt and the portion due within one year at September 30, 2004, and
2003 consist of the following:

                                                     Balance at     Balance at
                                         Interest   September 30,  September 30,
                                           Rate         2004           2003
                                         --------   ------------   ------------

Notes payable                              0-7%     $    243,468   $    353,411
Notes payable - Shareholders/
  related parties                          0-8%        1,487,707      1,728,116
                                                    ------------   ------------
Total long-term debt                                $  1,731,175   $  2,081,527
Less: Current maturities of long term debt               182,773        235,596
                                                    ------------   ------------
Net long-term debt                                  $  1,548,402   $  1,845,931
                                                    ============   ============

Notes Payable are borrowings from commercial institutions and automobile
manufacturers to finance vehicle and equipment purchases, and are secured by the
assets purchased. The terms of these notes are generally five years, most of
which bear no interest. On April 28, 2000, the Company issued $1,440,000 in
principal amount of Notes Payable to Shareholders to effect the acquisition of
Gulf Coast as described in Note 2 of the financial statements. The $1,440,000 of
the Notes Payable to Shareholders is collateralized by the common stock of the
subsidiaries. On August 30, 2002, the Company issued $184,000 of principal
amount of Notes Payable in connection with the purchase of Home Structure Sound,
the sellers of which became shareholders of the Company. The $184,000 is
unsecured and bears no interest. The Company, with the consent of the Principal
Shareholder, is not currently accruing interest expense on the $1,206,000
balance of notes payable to the Principal Shareholder, and is deferring the
payment of $690,000 of principal otherwise currently due the Principal
Shareholder under the original terms of the notes. The Principal Shareholder
intends to continue to defer payments of principal and interest on the
$1,440,000 until such time as the Company's cash flow is sufficient to discharge
the obligation without impacting the operations of the Company. Notes Payable
also includes approximately $120,000 of long-term borrowings from companies
controlled by the Principal Shareholder. Such loans are unsecured and bear no
interest rate.

The principal payments required to be made on long-term debt during the next
five years are shown below:

Fiscal Year                                    Amount
2005                                          182,773
2006                                          839,836
2007                                          139,389
2008                                          140,796
2009 and thereafter                           226,161

Of the $839,836 amount due on long-term debt in 2006, $690,598 is attributable
to the deferral of principal on the $1,440,000 note payable to the Principal
Shareholder. Such amount can be expected to be furthered deferred if warranted
by the cash needs of the Company.

Safe Harbor Statement Under Private Securities Litigation Reform Act of 1995:
The above statements in regard to SpectraSource Corporation and its affiliates
and subsidiaries which are not purely historical are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including SpectraSource Corporation's beliefs, expectations, hopes or intentions
regarding the future. All forward-looking statements are made as of the date
hereof and are based on information available to the parties as of such date. It
is important to note that actual outcome and the actual results could differ
materially from those in such forward-looking statements. Factors that could
cause actual results to differ materially include risks and uncertainties such
as technological, legislative, corporate and marketplace changes.

                                       10
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ITEM 7.  FINANCIAL STATEMENTS

The information required by this item is included in a separate section of this
Annual Report beginning after Part IV.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 8A.          CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.
    -------------------------------------------------

The chief executive officer and the chief financial officer, after evaluating
the Company's "disclosure controls and procedures" (as defined in Securities
Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-15(e)) have
concluded that as of the end of the period covered by this Annual Report on Form
10-KSB, the Company's disclosure controls and procedures are effective to ensure
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms.

(b) Changes in internal controls.
    -----------------------------

There were no changes in internal controls, financial reporting or in other
factors that occurred during the period covered by this Annual Report on Form
10-KSB that could significantly affect the Company's internal controls over
financial reporting, nor were there any significant deficiencies or material
weaknesses in internal controls over financial reporting. As a result, no
corrective actions were required or undertaken.








                                       11
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PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS


BUSINESS EXPERIENCE

 NAME                  AGE                          POSITION
 ----                  ---                          --------

Charles                 51         Chief Executive Officer. Mr. Sheffield is a
Sheffield                          graduate of the University of Houston with a
                                   BBA in Finance. In 1973 he founded Sheffield
                                   Construction Co., Inc., which became U. S.
                                   Design & Construction Corp. when he marketed
                                   this company national in the early and
                                   mid-1980's. In the 20 years he headed this
                                   company, Mr. Sheffield expanded it from a
                                   small local firm to a leading national
                                   contractor. During this period, Mr. Sheffield
                                   also founded Gulf Coast Fan & Light, Inc.
                                   (1984), a major supplier of ceiling fans and
                                   electrical components. This base was expanded
                                   into a group of companies that provide a host
                                   of electrical, hardware, fiber optics, and
                                   structured cabling products to the
                                   residential and commercial markets.



EA Buchholtz            53         Chief Financial Officer. Mr. Buchholtz
                                   graduated from the University of Texas at
                                   Austin with a BBA degree in Accounting and
                                   General Business. He is also a Certified
                                   Public Accountant. Prior to joining the
                                   company in 2001, Mr. Buchholtz was controller
                                   and treasurer for Albis Corporation. The
                                   company is a manufacturer and distributor of
                                   plastic resins. In addition to his financial
                                   duties, he was also instrumental in the
                                   design and implementation of numerous
                                   financial and operational systems. He also
                                   previously held various financial positions
                                   primarily in the oil service industry.

Beruk Zewdie            47         Vice President and Controller. Mr. Zewdie
                                   holds a degree in business and accounting
                                   from the University of Houston. Prior to his
                                   joining the Company in 1987, he held various
                                   positions in accounting and operations.

Michael Newman          59         Director. Mr. Newman graduated from Clemson
                                   University with a degree in mathematics. He
                                   served as a management consultant with
                                   Deloite and Touche in Washington, D.C. before
                                   buying an oil and gas trucking firm in
                                   Mississippi, which he expanded and sold to a
                                   public exploration company and continued to
                                   serve as President until l991. He returned to
                                   Texas where he purchased and operated several
                                   Texas and California franchises of the New
                                   Horizons Computer Learning Centers. He
                                   subsequently sold the built-up business back
                                   to the franchisor and continued to serve as
                                   President. He recently purchased a Florida
                                   Region Franchise of New Horizons Computer
                                   Learning Centers.

                                       12
<PAGE>

Leon D. Hogg            84         Director. Mr. Hogg has been a Director of the
                                   Company since February 27, 1995. Mr. Hogg is
                                   a retired commercial banker who served as
                                   President of Therapy Lasers, Inc. from 1995
                                   to April, 2000. He has since served the
                                   company in the capacity of public relations,
                                   director, and secretary. He holds a
                                   bachelor's degree in business from the
                                   University of North Texas When operating his
                                   mortgage banking firm, Lee Hogg & Co. Inc.,
                                   Mr. Hogg arranged financing for apartment
                                   buildings, office buildings and undeveloped
                                   property for many projects in the Houston
                                   area.

Geary Broadnax          52         Director. Mr. Broadnax, after studying
                                   electrical engineering and photography at
                                   Virginia Tech, became a photographer and
                                   later, Director of Photography for the
                                   Houston Post. In 1992 Mr. Broadnax founded
                                   AllSource, Inc., a systems integration
                                   company, which became ranked 2nd (second) on
                                   the list of Houston's 100 Fastest Growing
                                   Companies. In 1995, Mr. Broadnax expanded to
                                   become an Internet provider. This company,
                                   Insync Internet Services, Inc, became the
                                   number one fastest growing technology company
                                   in the 1998 Houston 100 Fastest Growing
                                   Companies list. In 2000, he sold Insync to
                                   Reliant Energy and Mr. Broadnax became the
                                   Senior Vice President of Reliant Energy
                                   Communications. After fulfilling the terms of
                                   his employment contract with Reliant, he
                                   purchased his latest company, Empowerment,
                                   Inc., a 7-year old CRM (customer relationship
                                   and management) software company. He now
                                   serves as its Chairman and CEO.

William Sherrill        76         Director. Mr. Sherrill graduated from the
                                   University of Houston with a Bachelors of
                                   Business Administration and obtained his MBA
                                   from the Harvard Graduate School of Business
                                   Administration. He has served as a Governor
                                   of the Federal Reserve System in Washington
                                   D. C., Director of the Federal Deposit
                                   Insurance Corporation, Treasurer of the City
                                   of Houston, Chief Administrative Officer of
                                   the City of Houston, Executive Assistant to
                                   the Mayor and Port Commissioner of the Port
                                   of Houston, and Commissioner to the United
                                   Nations Commission for UNESCO. In private
                                   industry, he has served as President of
                                   Associates Corporation of North America, a
                                   multi-billion dollar international financial

                                       13
<PAGE>

                                   services corporation, as a member of Gulf and
                                   Western's Board of Directors, Chairman,
                                   President and CEO of Dasa Corporation, a
                                   multi-million dollar telephonics and
                                   electronics company with international
                                   offices and distribution. He has also served
                                   as President of a Commercial Bank and a
                                   Federal Credit Union, as well as Executive
                                   Vice President of a Savings and Loan
                                   Association. As a financial consultant, he
                                   has assisted corporations structuring
                                   acquisitions, mergers and spin-offs. Mr.
                                   Sherrill now teaches Entrepreneurship as an
                                   Executive Professor at the University of
                                   Houston's College of Business Administration.


COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT

Section 16 (a) of the Securities Exchange Act of 1934 as amended, (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten-percent
shareholders are required by the Securities and Exchange Commission regulations
to furnish the Company with copies of all Section 16 (a) forms they file.

During the period from September 30, 2003 to September 30, 2004, all Section 16
(a) filing requirements applicable to its current officers, directors and
greater than ten-percent beneficial owners were complied with.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The CEO, through an affiliate, was paid $60,000 cash compensation during the
year ended September 30, 2004. No other officer or employee of the Company was
compensated more than $100,000 during the fiscal year ended September 30, 2004.

OPTION AND LONG-TERM COMPENSATION TABLES

On July 31, 2000, the Company adopted an incentive stock option plan. As of
September 30, 2004, under this incentive stock option plan, total cumulative
options on 228,415 shares have been awarded to 55 employees according to the
following schedule, none of which are in-the-money:

                 TOTAL CUMULATIVE OUTSTANDING OPTIONS UNDER ISO

      Name                         Position                    Underlying Shares

Charles Sheffield          President, CEO, Director                  100,000
All Other Employees                                                   86,505
                                                                     -------
     Total                                                           186,505
                                                                     -------
                                       14
<PAGE>

PENSION PLANS AND OTHER BENEFIT OR ACTUARIAL PLANS

The Company has a 401k plan in which employees contribute a portion of their
salaries. The Company then has the option to match a portion of the employee
contribution. In the past, the Company has typically matched, within certain
restrictions, 25% of the employee contribution.

The Company has a medical insurance plan in which it pays 75% of covered
employees' cost of insurance coverage for the covered individual.

EMPLOYMENT CONTRACTS AND TERMINATION AGREEMENTS

The Company has no standard employment arrangements or termination agreements
with any named executive officer or director.

DIRECTOR COMPENSATION

The Company has no standard arrangement by which its directors are compensated.
During fiscal year 2004, no compensation was paid to Directors.

COMPENSATION COMMITTEE REPORT

The Company's Compensation Committee consists of all Directors. There were no
items to report.

STOCK PERFORMANCE CHART

A graph comparing the Company's commutative total return to stockholders in
terms of stock price appreciation plus dividends during the previous five years
to a broad market index, such as the S&P 500, has not been presented due to the
Company's inactivity in recent years and the resulting lack of any significant
stock price appreciation or dividends.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the stock ownership of each person known by the
Company to be the beneficial owner of five percent or more of the Company's
common stock as of September 30, 2004. Unless otherwise indicated, each person
has beneficial voting and investment power with respect to the shares owned.

Name and Address of Beneficial Owner    Number of Shares     Percentage of Total

Charles Sheffield
14900 Westheimer
Houston, Texas 77082
                                           5,475,232(A)             75.67%

(A) Includes shares owned directly and shares owned indirectly by related
entities, as follows:

Name and Address of Beneficial Owner    Number of Shares     Percentage of Total

Charles Sheffield
U.S. Design & Construction, Inc.            5,460,855                75.47%
                                               14,377                   .2%
                                            ---------              --------
   Total                                    5,475,232                75.67%
                                            =========              ========

                                       15
<PAGE>

The following table sets forth as of September 30, 2004, the common stock
ownership of all officers and directors of the Company:

Name and Address of Beneficial Owner    Number of Shares     Percentage of Total


Leon D. Hogg
6701 Sands Point, Suite 15                     100,400                 1.4%
Houston, Texas 77074

Charles Sheffield
14900 Westheimer                             5,475,232               75.67%
Houston, Texas 77082

All Officers Not Listed Above
                                                14,500                 0.2%
                                             ---------             --------
All Officers and Directors as a Group
                                             5,590,132               77.26%
                                             =========             ========

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective April 28, 2000, the Principal Shareholder acquired control of the
Company pursuant to the acquisition as described in Item 1 above.

An affiliated company, controlled by the Principal Shareholder, wholesales
ceiling fans of lower quality and lower price points than the Company's
products.

Under a licensing agreement with a company controlled by the Principal
Shareholder, Gulf Coast Fan & Light is the exclusive licensee of the Old
Jacksonville brand of ceiling fan. The Company is not charged for the use of the
license.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a.   Listing of Exhibits

     - Exhibit 31.1: Certification of Chief Executive Officer Pursuant to
     Section 302 of the Sarbanes-Oxley Act of 2002.

     - Exhibit 31.2: Certification of Chief Financial Officer Pursuant to
     Section 302 of the Sarbanes-Oxley Act of 2002.

     - Exhibit 32.1: Certification of Chief Executive Officer Pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002.


b.   On September 6, 2002, the Company filed a Form 8-K, such 8-K amended on
     July 3, 2004, reporting the acquisition of a significant amount of assets.
     Both Form 8-K's, and amendments, are incorporated by reference.

                                       16
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed for professional services rendered by our principal
accountant for the audit of our annual financial statements, review of financial
statements included in our quarterly reports and other fees that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for the fiscal years ended September 30, 2004 and 2003 were
$42,000 and $42,000, respectively.

Audit Related Fees

The aggregate fees billed for assurance and related services by our principal
accountant that are reasonably related to the performance of the audit or review
of our financial statements, other than those previously reported in this Item
14, for the fiscal years ended September 30, 2004 and 2002 were $0 and $0,
respectively.

Tax Fees

The aggregate fees billed for professional services rendered by our principal
accountant for tax compliance, tax advice and tax planning for the fiscal years
ended September 30, 2004 and 2003 were $6,000 and $6,000, respectively. These
fees related to the preparation of federal and state income tax returns.

Audit Committee

The Company's Board of Directors functions as its audit committee. All of the
services described above in this Item 14 were approved by the Board of
Directors.

                                       17
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons, in the capacities and on the dates indicated, have signed
this Report on Form 10-KSB below.

        NAME                           TITLE                          DATE
        ----                           -----                          ----

/s/ CHARLES SHEFFIELD             Chief Executive Officer,      January 11, 2005
--------------------------        Director
Charles Sheffield


/s/ EA BUCHHOLTZ                  Chief Financial Officer       January 11, 2005
--------------------------
EA Buchholtz




SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANT WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT:

NOT APPLICABLE.







                                       18
<PAGE>

                   SPECTRASOURCE CORPORATION AND SUBSIDIARIES
                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                         REQUIRED BY ITEMS 8 AND ITEM 13

                                      INDEX


A. FINANCIAL STATEMENTS
   --------------------

   Consolidated Balance sheet - September 30, 2004, and 2003...............  20

   Consolidated Statements of Income for the years ended
   September 30, 2004 and September 30, 2003...............................  21

   Consolidated Statements of Cash Flows for the years ended
   September 30, 2004 and September 30, 2003...............................  22

   Consolidated Statements of Shareholders' Equity for the years
   ended September 30, 2004 and September 30, 2003.........................  23

   Notes to Consolidated Financial Statements..............................  24


B. FINANCIAL STATEMENT SCHEDULES
   -----------------------------

   Schedules are omitted because of the absence of the conditions under which
   they are required, or because the information required by such omitted
   schedule is contained in the financial statements or the notes thereto.









                                       19
<PAGE>


                            SPECTRASOURCE CORPORATION
                           CONSOLIDATED BALANCE SHEET


UNREVIEWED UNAUDITED                                September 30,  September 30,
                                                         2004           2003
                                                     -----------    -----------
ASSETS
   Current Assets
     Cash                                                 89,854        142,256
     Accounts Receivable, less bad debt reserve
     of $135,495 and $125,235, respectively            1,256,364      1,303,293
     Prepaid Expenses                                          0
     Inventory                                           934,395      1,229,860
                                                     -----------    -----------
   Total Current Assets                                2,280,613      2,675,409

   Fixed Assets, net of accumulated depreciation
   of $546,959 and $495,715                              383,424        417,787
   Goodwill, net of amortization of $0                   400,000        400,766
   Other Assets and Investments                           35,362         38,069
   Deferred Tax Asset (Note 8)                           400,689        376,489
                                                     -----------    -----------

Total Assets                                           3,500,088      3,908,520
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
     Accounts payable and accrued expenses               674,252        760,134
     Short Term Debt (Note 4)                            683,144        598,600
     Current Maturities of Long Term Debt                124,777        179,597
     Due To Affiliates                                    57,996         55,999
                                                     -----------    -----------
   Total Current Liabilities                           1,540,169      1,594,329

   Long Term Debt (Note 5)
     Notes Payable                                       118,691        173,814
     Notes Payable, Shareholders                       1,307,711      1,474,107
     Due to Affiliates                                   122,000        198,010
                                                     -----------    -----------
   Total Long Term debt                                1,548,402      1,845,931

   Stockholders' Equity (Deficit)
     Common stock, $.001 par value, 10,000,000
     shares authorized, with 7,184,872 shares
     issued and outstanding at September 30,
     2004 and September 30, 2003, respectively            17,356         17,356
     Capital in excess of par value                    3,530,704      3,530,704
     Accumulated Deficit                              (3,136,543)    (3,079,801)
                                                     -----------    -----------
   Total Stockholders' Equity                            411,517        468,259
                                                     -----------    -----------
Total Liabilities and Stockholders' Equity             3,500,088    $ 3,908,520
                                                     ===========    ===========


        The Accompanying Notes are an integral part of these statements.

                                       20
<PAGE>

                            SPECTRASOURCE CORPORATION
              CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED
                           SEPTEMBER 30, 2004 AND 2003


UNREVIEWED UNAUDITED                                September 30,  September 30,
                                                         2004           2003
                                                     -----------    -----------


Sales                                                $ 9,064,928    $ 7,998,967
Cost of Sales                                          6,033,196      5,072,256
                                                     -----------    -----------
Gross Profit                                           3,031,732      2,926,711

Other Operating Costs
   Selling and administrative expenses                   111,626        168,722
   Depreciation                                          110,571        112,084
   Other costs and operating expenses                  2,900,902      2,625,502
                                                     -----------    -----------
Total Other Operating Costs                            3,123,099      2,906,308

                                                     -----------    -----------
Income from operations                                   (91,367)        20,403

Other Income:
   Interest Income                                             0
   Miscellaneous Other Income (Expense)                   10,425          5,918
                                                     -----------    -----------
Total Other Income                                        10,425          5,918

                                                     -----------    -----------
Income before income taxes                               (80,942)        26,322

Provision for income taxes (Note 8)                      (24,200)         6,581

                                                     -----------    -----------
Net Income                                           $   (56,742)   $    19,741
                                                     ===========    ===========

Basic earnings per common share                      $     (0.01)   $      0.00
Diluted earnings per common share                    $     (0.01)   $      0.00
Weighted average number of common shares               7,184,872      7,184,872


        The Accompanying Notes are an integral part of these statements.

                                       21
<PAGE>

                            SPECTRASOURCE CORPORATION
                       CONSOLIDATED STATEMENT OF CASH FLOW
                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003

UNREVIEWED UNAUDITED

                                                     September 30, September 30,
                                                         2004          2003
                                                      ----------    ----------
CASH FLOWS FROM OPERATING ACTIVITIES

Net income from operations                               (56,742)       19,740
Adjustments to reconcile net income:
   Depreciation                                          110,571       112,084
   Bad debt expense                                       70,611             0
   Deferred taxes                                        (24,200)      (29,282)
   (Increase) Decrease in Accounts Receivable            (23,682)     (246,071)
   (Increase) Decrease in Inventory                      295,464       (95,618)
   (Increase) Decrease in Prepaid Expenses                 3,473       115,954
   Increase (Decrease) in Accounts Payable               (85,882)      153,828
   Increase (Decrease) in Due to Related Parties               0
                                                      ----------    ----------
Net cash provided/(used) in operating activities         289,613        30,635
                                                      ----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Long term asset purchases                             (76,207)      (78,801)
   (Increase) in long term Investments
                                                      ----------    ----------
Net cash used in investing activities                    (76,207)      (78,801)
                                                      ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds (Repayment) of short term debt                84,544      (208,000)
   Proceeds (Repayment) of long term debt                (55,123)      151,745
   (Increase) Decrease in LT Other Assets                 (7,253)
   Increase (Decrease) in due to related parties        (295,229)       97,580

                                                      ----------    ----------
Net cash provided by financing Activities               (265,808)       34,072
                                                      ----------    ----------

Net (Decrease) in cash and cash equivalents              (52,403)      (14,094)
Cash and equivalents, beginning of period                142,257       156,350
                                                      ----------    ----------
Cash and equivalents, end of period                       89,854       142,256
                                                      ==========    ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for Interest                                    54,431        60,995


        The Accompanying Notes are an integral part of these statements.

                                       22
<PAGE>

                            SPECTRASOURCE CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE><CAPTION>
                                                                                             Total
                                                                                             -----
UNAUDITED UNREVIEWED                Common Stock        Additional Paid    Accumulated   Stockholders'
                                                        ----------------   -----------   -------------
                                  Shares       Amount     in Capital         Deficit         Equity
                                  ------       ------     ----------         -------         ------
<S>                            <C>           <C>         <C>             <C>               <C>
BALANCE, SEPTEMBER 30, 2002     $7,184,872    $17,356     $3,530,704      $(3,099,541)      $448,519

   Net Income                                                                  19,741         19,741

                                ---------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2003     $7,184,872    $17,356     $3,530,704      $(3,079,801)      $468,259

   Net Income                                                                 (56,742)       (56,742)

                                ---------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2004     $7,184,872    $17,356     $3,530,704      $(3,136,543)      $411,517
                                =====================================================================
</TABLE>













        The Accompanying Notes are an integral part of these statements.

                                       23
<PAGE>

                            SPECTRASOURCE CORPORATION
                   NOTES TO THE COMBINED FINANCIAL STATEMENTS


NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

SpectraSource Corporation (the Company), through its four subsidiaries, markets
products and services to the telecommunications market, commercial business
applications, building owners, residential and commercial builders and
developers, and the general consumer market. These products and services include
fiber optics, structured cabling, home network systems, electrical components,
lighting, ceiling fans, and associated hardware.

On April 28, 2000, the Company acquired 100% of the stock of three corporations
engaged in supplying fixtures to the residential and commercial construction
industry: Gulf Coast Fan & Light, Inc. (Gulf Coast); Builder Source, Inc.
(Builder Source); and Builders Lighting and Hardware, Inc. (Builders Lighting)
(collectively referred to as the "Acquired Companies").

As a result of these acquisitions, the Company's Principal Shareholder received
as consideration for his interests in the Acquired Companies a total amount of
4,301,000 shares of the Company's common stock. Upon consummation of these
acquisitions, the Principal Shareholder, directly and indirectly through his
control of a corporation that owns stock in the Company, owned 4,734,876 shares
which represented approximately 81% of the Company's outstanding common stock as
of April 28, 2000.

The transaction between the Company and the Acquired Companies has been
reflected in the accompanying financial statements as a reorganization of
entities under common control whereby the historical basis of assets and
liabilities of the Acquired Companies are carried forward as the recorded basis
for the Company.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries after elimination of all significant inter-company
transactions.

      USE OF ESTIMATES
The preparation of these financial statements requires the use of certain
estimates by management in determining the Company's' combined assets,
liabilities, revenues and expenses. Actual results could differ from those
estimates.

      CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments that are readily
convertible into cash and have a maturity of three months or less. Cash
equivalents are stated at cost, which approximates fair market value.

      REVENUE RECOGNITION
Revenue from product sales is recognized as risk and title to the product
transfer to the customer, which usually occurs when shipment, delivery, or
installation, whichever is applicable, is made. The Company accrues for
allowances for doubtful accounts based on its experience. The Company recognizes
income on security monitoring contracts as the monitoring services are rendered.

                                       24
<PAGE>

      INVENTORIES
Inventories are carried at the lower of cost or market, using average cost.
Materials and supplies are valued using the average cost method.

      PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated depreciation. Property
and equipment is depreciated on the straight-line method over their estimated
useful lives, which in the opinion of management is adequate to allocate the
cost of the property and equipment over their estimated useful lives.
Expenditures for renewals, replacements, and betterments are capitalized.
Maintenance and repairs are charged to operating expenses as incurred. Upon sale
or other disposition, the applicable amounts of asset cost and accumulated
depreciation are removed from the accounts and the net amount, less proceeds
from disposal, is charged against or credited to income.

      GOODWILL
Goodwill represents the excess of purchase price paid over the value assigned to
the net tangible and identifiable intangible assets of a business acquired. As
described below under Recent Accounting Standards, no amortization of goodwill
has been recorded; instead, goodwill will be reviewed for impairment based on
fair values.

      DEFERRED SOFTWARE COSTS
Costs to purchase and to develop software for internal use are deferred and
amortized on a straight-line basis over 5 years.

      INCOME TAXES
The Company follows the asset and liability approach to account for deferred
income taxes. Under this method, deferred taxes are recognized for temporary
differences between the book and tax basis of assets and liabilities. These
temporary differences are measured using the applicable enacted tax rates and
provisions of the enacted tax laws. Valuation allowances are provided against
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized.

      COMPREHENSIVE INCOME
Financial Accounting Standards Board ("FASB") Statement No. 130, "Reporting
Comprehensive Income", became effective for fiscal years beginning after
December 15, 1997, and establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. This Statement requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The Company
had no comprehensive income other than net income during the periods included in
the accompanying financial statements.

      EARNINGS PER COMMON SHARE
Earnings per common share is computed by dividing net income by the weighted
average number of common shares outstanding during the year.

      RECENT ACCOUNTING PRONOUNCEMENTS
In October, 2004, the FASB issued SFAS No. 147, ACQUISITIONS OF CERTAIN
FINANCIAL INSTITUTIONS--AN AMENDMENT OF FASB STATEMENTS NO. 72 AND 144 AND FASB
INTERPRETATION NO. 9, relating to required methods of accounting applicable in
the acquisition of financial institutions. This statement has no impact on the
Company.

                                       25
<PAGE>

In December 2002, the FASB issued Statement No. 148, "ACCOUNTING FOR STOCK-BASED
COMPENSATION-TRANSITION AND DISCLOSURE." This statement amends Statement No.
123, Accounting for Stock-Based Compensation, to provide alternative methods of
transition for an entity that voluntarily changes to the fair value method of
accounting for stock-based employee compensation. It also amends the disclosure
provisions of Statement No. 123 to require prominent disclosure about the
effects on reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. Statement No. 148 also requires
disclosure about those effects in interim financial information. The Company
adopted the disclosure requirements of Statement No. 148 in the accompanying
financial statements.

In April 2004, the FASB issued Statement No. 149, AMENDMENT OF STATEMENT 133 ON
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.
This Statement is effective for contracts entered into or modified after June
30, 2004. The Company does not expect adoption of SFAS No. 149 to have a
material impact on its consolidated financial statements.

In May 2004 the FASB issued SFAS No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL
INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY", which requires
that certain financial instruments be presented as liabilities that were
previously presented as equity or as temporary equity. Such instruments include
mandatory redeemable preferred and common stock, and certain options and
warrants. SFAS 150 is effective for financial instruments entered into or
modified after May 31, 2004, and is generally effective at the beginning of the
first interim period beginning after June 15, 2004. This standard has been
adopted and has had no impact on the Company.

NOTE 3. ACQUISITIONS

On April 28, 2000, the Company acquired all the stock of the Subsidiaries as
described below:

The acquisition of Gulf Coast was accomplished by the issuance of an aggregate
of 3,500,000 shares of the Company's Common Stock and a $1,000,000 10-year
promissory note, a $390,000 5-year promissory note and a $50,000 3-year
promissory note. Gulf Coast was incorporated in 1984 and designs and distributes
the Old Jacksonville Ceiling Fans under a licensing agreement with U.S. Ceiling
Fan Corp., a company controlled by the Company's Principal Shareholder.

The acquisition of Builders' Lighting was accomplished by the issuance of an
aggregate of 1,000,000 shares of the Company's Common Stock. Builders' Lighting
was incorporated in 1997 and distributes and wholesales lighting, hardware, and
electrical components to the residential and commercial building industry.

The acquisition of Builder Source was accomplished by the issuance of an
aggregate of 200,000 shares of the Company's Common Stock. Builder Source was
incorporated in 1996 and distributes and wholesales hardware and electrical
components to the residential and commercial building industry. The operations
of Builders Source have since been absorbed into Gulf Coast and Builder's
Lighting.

On August 30, 2002, the Company purchased 100% of the inventory,
work-in-process, goodwill, and the company name of "Home Structure Sound", of
Home Structure Sound, an unincorporated entity in the same line of business as
the Company's Connect Source subsidiary. Home Structure Sound provides
residential structured cabling - wiring for Internet, cable/satellite dish TV,
and home security systems. Home Structure Sound began operations in January,
2002 and ceased operations as a separate entity upon acquisition by the Company
on August 30, 2002. In conjunction with the acquisition, the three Principals

                                       26
<PAGE>

of Home Structure Sound became employees of the Company's Connect Source
division. The assets and operations of Home Structure Sound have been combined
and are included in the operations of the Company's Connect Source Division. The
results of operations of Home Structure Sound are included in the financial
statement of the Company beginning on the date of acquisition, August 30, 2002.
The aggregate purchase price paid for Home Structure Sound was $423,000,
consisting of cash in the amount of $45,000, long term debt in the amount of
$184,000, and 339,400 shares of the Company's common stock valued at $193,000.
The acquisition debt is unsecured, and bears no stated interest rate. Principal
payments on the acquisition debt are as follows:


                       FYE 2003                     $   52,506
                       FYE 2004                         55,999
                       FYE 2005                         57,996
                       FYE 2006                         17,499
                                                    ----------
                         Total                      $  184,000
                                                    ==========

 The following table summarizes the estimated fair values of the assets
acquired:

                   At August 30, 2004

                   Inventory                         $     12,232
                   Trademarks                              10,000
                   Goodwill                               400,768
                                                     ------------
                     Total Assets Acquired                423,000
                                                     ------------
                     Total Liabilities Assumed       $          0
                                                     ------------
                     Net Assets Acquired             $    423,000
                                                     ============


The trademarks are unregistered and are being amortized over 20 years. The
Goodwill equals the residual amount of consideration paid for Home Structure
Sound over the fair market value of the other assets acquired. The total amount
of Goodwill is expected to be amortizable over 15 years for tax purposes.
Pursuant to SFAS 142, Goodwill is not amortizable for financial statement
purposes and, instead, will be analyzed for impairment each period. 100% of the
Goodwill is reportable in the Connect Source Communications, Inc. segment.

The estimated aggregate amortization expense for each of the five succeeding
fiscal years is as follows:

                       FYE 2005                    $   500
                       FYE 2006                        500
                       FYE 2007                        500
                       FYE 2008                        500
                       FYE 2009                        500

The acquisition agreement provides that if the calendar year 2003 net profits,
computed without considering certain expense items such as headquarter general
and administrative charges allocated to connect Source, depreciation expense on
pre-existing assets of Connect Source, and interest expense on pre-existing debt
allocated to Connect Source, for the Home Structure Sound operations fall below
a floor of $180,000, the purchase price shall be adjusted by a percentage
deduction corresponding to the percentage below this floor. If, during the same
period, the net profits exceed $600,000, the purchase price shall be adjusted by
a percentage increase corresponding to the percentage above this ceiling, up to
a total of a fifty percent increase above the purchase price. Should such
contingency occur, the Company will account for it as an adjustment to the
original purchase price of Goodwill.

                                       27
<PAGE>

Home Structure Sound did not meet its target performance for the first calendar
year as specified in the purchase agreement. The Company waived enforcement of
the provisions of the purchase agreement that require a reduction of the
purchase price if the initial calendar year income targets are not met. Home
Structure Sound substantially exceeded both initial and second year gross
revenue targets and the Company is of the opinion that non-recurring integration
and transition issues accounted for the failure to meet first year net income
targets.

NOTE 4. SHORT TERM DEBT

At September 30, 2004, and September 30, 2003, the Company had short-term debt
of $683,144 and $598,600, respectively. Short-term debt consists of lines of
credit with commercial banks on a revolving basis bearing interest at the
current prime rate. These lines of credit expire within twelve months from the
date of issuance. These lines of credit are secured by a blanket U.C.C. security
filing on inventory, accounts receivable, furniture and fixed assets, and are
personally guaranteed by the Principal Shareholder.

NOTE 5. LONG TERM DEBT

Long-term debt and the amount due within one year at September 30, 2004, and
2003 consist of the following:

                                                    Balance at      Balance at
                                        Interest   September 30,   September 30,
                                          Rate         2004            2003
                                                   ------------    ------------

Notes payable                             0-7%      $  243,468      $  353,411
Notes payable - Shareholders/ related
parties                                   0-8%       1,487,707       1,728,116
                                                    ----------      ----------
Total long-term debt                                $1,731,175       2,081,527
Less: Current maturities of long term debt             182,773         235,596
                                                    ----------      ----------
Net long-term debt                                  $1,548,402      $1,845,931
                                                    ==========      ==========

Notes Payable to banks are borrowings from commercial institutions to finance
vehicle and equipment purchases and are secured by the assets purchased. On
April 28, 2000, the Company issued $1,440,000 in principal amount of Notes
Payable to Shareholders to effect the acquisition of Gulf Coast as described in
Note 2 above. This portion of the Notes Payable to Shareholders is
collateralized by the common stock of the subsidiaries. On August 30, 2002, the
Company issued $184,000 of principal amount of Notes Payable in connection with
the purchase of Home Structure Sound, the sellers of which became shareholders
of the Company. This portion of the Note Payable to Shareholders is unsecured.
The Company, with the consent of the Principal Shareholder, is not currently
accruing interest expense on $ 1,206,000 balance of the notes payable to the
Principal Shareholder, and is deferring the payment of $690,000 of principal due
the Principal Shareholder under the original terms of the notes.

                                       28
<PAGE>

The principal payments required to be made on long-term debt during the next
five years are shown below:

            Fiscal Year                        Amount
            -----------                        ------
                2005                          182,773
                2006                          839,836
                2007                          139,389
                2008                          140,796
        2009 and thereafter                   226,161

NOTE 6. INCENTIVE STOCK OPTION PLAN

On July 31, 2000, the Company adopted a Stock Incentive Plan (the Plan). The
Company may grant incentive stock options (ISOs), non-qualified stock options
(NSOs), restricted stock options, performance units and bonus stock to officers,
directors, consultants, or key-employees. The number of shares of Common Stock
authorized for issuance under the Plan is 1,500,000. As of September 30, 2004,
only incentive stock options have been granted under the Plan. Incentive stock
options have a maximum life of 10 years and a minimum exercise value of no less
than 100% of the fair market value of the stock at the grant date, except that
in the case of an employee owning more than 10% of the combined voting power of
all classes of stock, whether directly or indirectly, the options shall have a
maximum life of 5 years, and the option price shall be not be less than 110% of
such fair market value on the date of grant. The option price for each
non-qualified stock option shall not be less than 50% of the fair market value
on the date the option is granted. All options are non-transferable other than
by will or the laws of descent and distribution. Unless otherwise specifically
provided by the Company's Stock Option Committee of the Board of Directors on
the date of the grant, granted options vest on a cumulative basis of 33 1/3% of
the total number of shares covered thereby on the first, second, and third
anniversary dates of the grant. Options may terminate if employment is
terminated and the employee, officer, and or director may then only exercise the
vested portion. During fiscal year ended September, 30, 2004, the Company
granted no incentive stock.

The Company accounts for the fair value of its grants in accordance with SFAS
123, as amended by SFAS 148. The compensation cost that has been charged against
income for the Plan was $0, $2,050, and $14,102 for fiscal years ended in 2004,
2003, and 2002, respectively.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for the 2003 grants: dividend yield of 0%, expected volatility
of 20.00%, risk-free interest rate of 3.0%, and expected life of 5-10 years.

A summary of the status of the Plan as of September 30, 2004 and 2003, and
changes during the years ending on those dates is presented below:
<TABLE><CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                             2004                                2003
-------------------------------------------------------------------------------------------------------------
                                                       Weighted-Average                    Weighted-Average
Incentive Stock Options                    Shares       Exercise Price        Shares        Exercise Price
---------------------------------------- ---------- ----------------------- ---------- ----------------------
<S>                                       <C>               <C>              <C>                <C>
Outstanding at beginning of year           448,415           .31              360,200            .31
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Granted                                          0           .31              124,215           .2056
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Exercised                                        0                                  0
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Forfeited                                   41,910           .31               36,000            .30
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Outstanding at End of Year                 406,505           .31              448,415           .2820
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Options exercisable at year end            348,406           .31              448,415           .2820
---------------------------------------- ---------- ----------------------- ---------- ----------------------
Weighted Average Fair Value of Options
granted during the year                          0                              .0165
-------------------------------------------------------------------------------------------------------------
</TABLE>
                                       29
<PAGE>

The following table summarizes information about Incentive Options outstanding
at September 30, 2004:

--------- ----------------------------------------- -------------------------
          Options Outstanding                       Options Exercisable
--------- ----------------------------------------- -------------------------
                        Weighted          Weighted                 Weighted
Range of  Number        Average           Average   Number         Average
Exercise  Outstanding   Remaining         Exercise  Exercisable    Exercise
Prices    at 9/30/04    Contractual Life  Price     at 09/30/04    Price
--------- ------------- ----------------- --------- ------------- -----------
..30         220,000        2.51 years       .30        202,933      .30
--------- ------------- ----------------- --------- ------------- -----------
..34         100,000        2.51 years       .34         92,242      .34
--------- ------------- ----------------- --------- ------------- -----------
..20          66,905        3.50 years       .20         33,631      .20
--------- ------------- ----------------- --------- ------------- -----------
..22          19,600        2.00 years       .22         19,600      .22
--------- ------------- ----------------- --------- ------------- -----------
..20-.34     406,505        2.64 years       .31        348,406      .30
--------- ------------- ----------------- --------- ------------- -----------

NOTE 7.    EMPLOYEE 401(K) PLAN

The Company has an Employee 401(k) Plan for all full-time employees. The plan
provides a tax deferred contribution by the Company, at the Company's option, of
up to 100% of the current year contributions for each employee with one year of
vesting service, to the extent that such contribution does not exceed 10% of the
total annual compensation. The Company typically matches 25% of the employee
contribution. Total pre-tax contributions per employee are limited each year by
the Internal Revenue Service.

NOTE 8.    FEDERAL INCOME TAX

The provision for federal income taxes consisted of:

                                September 30, 2004         September 30, 2003
                                ------------------         ------------------

Deferred tax provision               ($15,735)                    $6,581

The Company's deferred income tax asset at the expected federal statutory rate
of 31% are composed of the following differences between financial and tax
reporting:

                                                September 30,  September 30,
                                                     2004           2003
                                                ------------   ------------

Allowance for doubtful accounts                   $ 42,000        $ 36,416
Net operating loss carryforwards (NOLs)            343,574         335,109
Capital loss carryforwards                                               0
Goodwill and other                                  15,115           4,964
                                                ---------------------------
Total deferred tax asset                           400,689        $376,489
                                                ===========================

                                       30
<PAGE>

Based on historical performance, the Company believes that sufficient future
taxable income will be generated to realize the entire deferred tax asset prior
to expiration of any NOLs and that the realization of the deferred tax asset is
more likely than not and therefore no valuation allowance has been established
for deferred tax assets.

As of September 30, 2004, the Company's federal consolidated NOLs for income tax
purposes were $1,177,857. If not utilized, the Company's federal consolidated
NOLs will expire as follows:

              Year                                    Amount
              ----                                    ------

              2007                                    34,915
              2008                                   542,000
              2010                                   389,000
              2012                                    78,000
              2019                                    35,000
              2020                                    18,000
              2025                                    80,942

NOTE 9. RELATED PARTY TRANSACTIONS

At September 30, 2004 and September 30, 2003, the balance due to related parties
controlled by the Principal Shareholder were $120,000 and $198,010,
respectively. Transactions with these related parties include advancement of
funds for inventory and operating expenses.

Under a licensing agreement with a company controlled by the Principal
Shareholder, Gulf Coast Fan & Light is the exclusive licensee of the Old
Jacksonville brand of ceiling fan. Payments made under the license agreement for
fiscal years ended 2004, 2003, and 2002 were $0, $0, and $0, respectively.
Currently, no license fee is being assessed the Company under the licensing
agreement.

NOTE 10. LEASES

The Company leases various facilities and equipment under non-cancelable lease
arrangements for varying periods. As of December 31, 2004, future minimum lease
payments for the next five years and thereafter, relating to all non-cancelable
operating leases with terms in excess of one year were as follows:

              Year                                    Amount
              ----                                    ------

              2004                                    30,600
              2005                                    32,400
              2006                                    28,500
              2007                                        NA
              2008                                        NA

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL
INSTRUMENTS

The carrying amounts of cash, accounts receivable, accounts payable, short term
notes payable, and accrued expenses approximate fair value because of the short
maturity of these items. These fair value estimates are subjective in nature and
involve uncertainties and matters of significant judgment, and, therefore,
cannot be determined with precision. Changes in assumptions could significantly
affect these estimates. During September 30, 2004 and September 30, 2003, the
Company had no derivative financial instruments.

                                       31
<PAGE>

NOTE 12. EARNINGS PER SHARE

Basic and Diluted Earnings per Share--Basic earnings per share for income (loss)
before extraordinary items for the periods presented are computed based upon the
weighted average number of shares outstanding for the periods. Diluted earnings
per share for income (loss) before extraordinary items include the effect of
outstanding stock options issued under the incentive stock option plan. These
stock options were antidilutive in 2004 and 2003. Earnings (loss) per share
("EPS") data is as follows for the years ended September 30, 2004 and 2003:

                                             2004            2003
                                             ----            ----

Thousands of shares                         7,185           7,185

Basic and Fully Diluted                     (0.01)           0.00


NOTE 13.  SEGMENT INFORMATION

The Company identifies its segments based on differences in products and
services, as follows:

Gulf Coast Fan & Light, Inc. - ceiling fans systems for the residential and
commercial building market.

Connect Source Communications, Inc. - cabling, wiring, and network systems for
the residential and commercial building market.  Security monitoring.
Builders Lighting & Hardware, Inc. - residential and commercial lighting and
hardware fixtures.


The segments are managed as one business unit, utilizing the same sales force,
customer service force, operations management, and headquarter support staff.

                                                Builder's
                                    Connect    Lighting &
                       Gulf Coast    Source     Hardware   All Other    Totals
                       ---------------------------------------------------------

Revenues - External     3,165,463   2,711,419   3,188,046         0    9,064,928
Intersegment revenue       61,593                                         61,593
Cost of Goods Sold      1,922,923   1,948,088   2,176,638   -14,453    6,033,196
Depreciation               38,306      25,958      20,139    26,168      110,571
Interest Expense              416      30,688      19,848     3,480       54,431
Segment profit             29,240      43,426    -155,378    25,970      -56,742
Segment Assets            755,100     978,963   1,315,804   450,222    3,500,089
Asset Expenditure          28,143                  23,069    24,995       76,207

Reconciliation

Revenues
Revenues - Segments     9,126,521
Intersegment              -61,593
                       ----------

Consolidated revenue    9,064,928
                       ==========

                                       32
<PAGE>

Profit or Loss
Profit - Segments         -82,712
Profit - Other             25,970
                       ----------

Consolidated Net
Income                    -56,742
                       ==========

Assets
Assets - Segments       3,256,944
Assets- Other             243,145
                       ----------

Consolidated Assets     3,500,089
                       ==========

Asset Expenditure
Segment                    51,212
Other                      24,995
                       ----------

                           76,207
                       ==========

Interest revenue is an immaterial item. "Profit-Other" in the amount of $25,970
consists of deferred tax benefit in the amount of $24,200 and various
headquarter expenses, neither of which is allocated down to the segments. "Other
Assets" in the amount of $450,222 consists of deferred tax asset in the amount
of $400,689, which is not allocated to the segments, and leasehold improvements
and capitalized software at the headquarter level. "Asset Expenditure - Other"
in the amount $24,995 consists of fleet vehicles at the headquarter level.






                                       33