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

                       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, 2003
                         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
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

         Company's telephone number, including area code: (713) 783-0443
--------------------------------------------------------------------------------
    (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

================================================================================
<PAGE>

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, 2003, were
$7,998,967. As of September 30, 2003, 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,
2003, (based upon the mean of the closing bid and asked price) held by
non-affiliates of the Company, was approximately $196,061.


                      DOCUMENTS INCORPORATED BY REFERENCE:


None
















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

                                   FORM 10-KSB

                            SPECTRASOURCE CORPORATION

                                TABLE OF CONTENTS
PART I
        Item  1.   Description of Business
        Item  2.   Description of Property
        Item  3.   Legal Proceedings
        Item  4.   Submission of Matters to a Vote of Security Holders

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

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

SIGNATURES

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

                                        3
<PAGE>

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 20 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

                                        4
<PAGE>

     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

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, 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.

The Company employs cost-saving proprietary marketing and delivery of bundled
product and service packages to customers, protected under various trade secret
laws.

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<PAGE>

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 20 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.

To help facilitate this growth, the Company is in the final stages of
restructuring its warehousing to utilize an address system that will allow
efficient locating for stocking and retrieving of products. The Company is also
completing plans for a restructuring of its showroom to a venue design that will
provide a smooth method of moving the customer traffic flow in a manner that
makes the selection process much easier and faster than provided in standard
showrooms.

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 55 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.

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<PAGE>

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.

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, periodically referred to hereinafter as the `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, 2003, the Company and its subsidiaries lease four 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.

                                        7
<PAGE>

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, 2003, 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.

Fiscal Year Ending September 30, 2003                     High           Low
-------------------------------------                     ----           ---
   1st Quarter                                            0.52           0.12
   2ndQuarter                                             0.35           0.10
   3rd Quarter                                            0.52           0.10
   4th Quarter                                            0.21           0.12

Fiscal Year Ending September 30, 2002                     High           Low
-------------------------------------                     ----           ---
   1st Quarter                                            0.80           0.30
   2nd Quarter                                            0.70           0.52
   3rd Quarter                                            0.51           0.30
   4th Quarter                                            0.51           0.25


As of September 30, 2003, the Company had approximately 485 shareholders of
record. The Company has never paid cash dividends and has no plans to pay any
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. Home Structure Sound provides residential structured
cabling - wiring for Internet, cable/satellite dish TV, and home security
systems. In conjunction with the acquisition, the three Principals 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 primary
reason for the acquisition is to accelerate the Company's entry into the
structured cabling market, an initiative for which the Company's Connect Source
division was not achieving at the desired rate prior to the acquisition. The
Company purchased the business operations of Home Structure Sound in a
transaction valued over $420,000. The acquisition was expected to accrete
Connect Source revenues in excess of $1 million during the first year
post-acquisition. In fact, Connect Source generated $1,660,000 of revenue during
fiscal year September 30, 2003, exceeding expectations.

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 300 monitoring
contracts, with the number of monitoring contracts increasing at the rate of
three per day as of year-end. Each contract generates, on average, $15/ month of
net cash flow. The Company is reasonably optimistic that it will secure
additional monitoring contracts over the next three fiscal years to generate, at
the end of year three, at least $500,000 in annual net cash flow solely from
monitoring services. However, no assurance can be given that the Company will
meet its goal. The monitoring contracts are readily

                                        8
<PAGE>

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 $225,000 at fiscal year end
September 30, 2003.

The Subsidiaries have had 20 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 plans to utilize this base, coupled with the cross
marketing of its product lines and the Home Network Division to optimize this
expansion.

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.

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

Sales

Revenues were $ 7,998,967 during fiscal year ended September 30, 2003 compared
to $ 6,647,730 for fiscal year ended September 30, 2002. The 20 % increase in
revenues compared to the fiscal year ended September 30, 2002 is primarily
attributable to a $1,489,151 increase in the revenues of Connect Source, a
direct result of the acquisition of Home Structure Sound. Revenues in the Gulf
Coast Fan division were stable at approximately $3,360,000, reflecting a
continuing demand for ceiling fan products. Revenues in the Builders Lighting
and Hardware division were relatively unchanged at $3,048,000, compared to
$3,080,828 a year ago. Within the lighting and hardware division, sales of
hardware products increased approximately $660,000, reflecting positive customer
reaction to the Company's initiatives to improve customer satisfaction in
product installation and service. The Company has increased its use of
predictive forecasting of customer demand in the Hardware division, enabling the
Company to minimize service and delivery delays caused by back ordered items.
The result of such process changes is to substantially improve the Company's
delivery and installation of hardware products within the scheduling parameters
demanded by the Company's residential home builders. The result is that the
Company experienced increased market share for its hardware products within a
particular residential planned development in which the Company competes against
other suppliers for a particular builder's orders. Revenues from lighting
products decreased approximately $907,000, reflecting decreased construction
activity in the high-end custom home market and in the multi-family market, both
served by the Company. The overall increase in the Company's revenues is
partially reflective of the expected increase in market share of structured
cabling business due to the acquisition of Home Structure sound, and to the
success of its business process changes instituted in the hardware division.
However, sustaining such increases, 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,
and hardware on behalf of a residential homebuilder in hundreds of homes in a
planned subdivision, or a portion thereof, could materially affect revenues from

                                        9
<PAGE>

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, 2003. Revenues from the two
largest customers during the fiscal year were:

1st  $936,318
2nd  $832,557

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 $ 5,072,256 for the fiscal year ended September 30, 2003,
resulting in Gross Profit of $ 2,926,711. Cost of Sales for the fiscal year
ended September 30, 2002 was $ 3,869,455, resulting in Gross Profit of $
2,778,275. The increase in Gross Profit of $148,436, or 5.4% compared to the
prior year, is attributable to increased gross revenue by the Connect Source
division, a direct result of the acquisition of Home Structure Sound. The Gulf
Coast Fan division experienced a decrease in gross profit, from $1,610,000, for
fiscal year ended September 30, 2002 to $1,337,000 for the fiscal year ended
September 30, 2003, on substantially similar sales. This decrease is
attributable to pricing pressures from competitors, reflecting a decreasing rate
of growth in the residential home building market, and resulting greater
competition from suppliers, of which the Company is one. Gross profit for the
Lighting and Hardware division remained relatively stable at $1,228,000. As
described in the analysis of Sales, above, decreases in demand for high-end
light fixtures plus a slowing multi-family residential market resulted in a
decrease in the gross profit generated by lighting products by approximately
$150,000, offset by a similar increase in gross profit from hardware products.
Decreased demand for high-end custom homes negatively impacted sales of designer
lighting products, which carry high gross margins. Sales volume, and the
resulting gross profit, from hardware products increased due to improved
customer satisfaction, resulting in more orders for the Company's product.

Other Operating Costs

Other Operating Costs were $ 2,625,502 during fiscal year ended September 30,
2003 compared to $2,242,429 for fiscal year ended September 30, 2002, an
increase of 17%. The increase is mainly attributable to increased insurance
costs, additional personnel added in connection with the acquisition of Home
Structure Sound by the Connect Source division, investments in reorganizing
distribution systems and additional sales staff in the fan, lighting, and
hardware divisions. The Company has doubled its sales force and has added
additional operations personnel at its San Antonio operations as part of its
initiative to increase market share. The Company expects to reap returns from
these initiatives in fiscal year 2004.

Interest Expense

Interest expense increased to $60,995 for the fiscal year ended September 30,
2003 compared to $58,626 for the fiscal year ended September 30, 2002.

                                       10
<PAGE>

Liquidity and Capital Resources

Net income after tax for the fiscal year ended September 30, 2003 was $19,741,
compared to $228,500 for the fiscal year ended September 30, 2002, on revenues
of $7,987,695 and $6,647,730 for the respective fiscal years. The decrease in
net income is generally traced to increased personnel and sales staff added to
generate increased market share, to profit pressures in the fan division from a
tightening multi-family residential construction market, to slower demand for
high-end lighting fixtures in the lighting division, and to start-up and
integration expenses relating to the acquisition of Home Structure Sound. During
the 4th quarter of fiscal year ended September 30, 2003, the Company
consolidated the operations management of its lighting, fan, and hardware
divisions, and is duplicating the customer service business process changes
instituted in the hardware division within the lighting division. Based on the
positive earnings results such process changes brought to the hardware division,
the Company expects similar positive results in the lighting division in the
future. In addition, industry activity in the 4th quarter of 2003 and in the 1st
quarter of fiscal year 2004 indicates a slightly improving construction
environment. The Company anticipates that resolution of integration and start-up
issues in the Connect Source division will result in improved earnings and cash
flow for that division. Net cash provided from operations for the period was
$30,635. During the period, Accounts Receivable increased $ 246,071, a 23%
increase compared to prior year, reasonably comparable to the 20% increase in
revenues. The Company has analyzed its accounts receivable and determined that
its reserve for uncollectable accounts is adequate at the balance sheet date.
Inventory increased $95,618, approximately $56,000 of which is attributable to
Connect Source to meet the growth of that division. Prepaid assets decreased
$115,954. Prepaid assets reflect prepaid purchases of inventory in route on the
balance sheet date. Changes in inventory balances should be read in conjunction
with changes in the prepaid asset account to gain a more meaningful
understanding of the amount of the Company's resources invested in product
inventory. Accounts Payable increased $153,828, approximately 25%, reasonably
comparable to the Company's 31% increase in cost of goods sold. Net cash used in
investing activities was $78,801 for the fiscal year ended September 30, 2003,
reflecting the purchase of fleet service trucks and computer network assets. Net
cash provided by financing activities was $34, 072 for the fiscal year ended
September 30, 2003. Short term debt decreased $208,000, to $598,600. 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.

Long-term debt and the portion due within one year at September 30, 2003, and
2002 consist of the following:

                                                   Balance at     Balance at
                                     Interest      September 30,  September 30,
                                       Rate        2003           2002
                                       ----        ----           ----

Notes payable                          0-7%        $  353,411     $ 153,224
Notes payable - Shareholders/
related parties                        0-8%         1,728,116      1,678,977
                                                   ----------     ----------
Total long-term debt                                2,081,527     $1,832,201
Less: Current maturities of long
term debt                                             235,596        177,445
                                                   ----------     ----------
Net long-term debt                                 $1,845,931     $1,654,756
                                                   ==========     ==========

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

                                       11
<PAGE>

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, 2003, 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 $1,226,072 balance of notes payable
to the Principal Shareholder, and is deferring the payment of $650,924 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
$200,000 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
-----------                                   ------
2004                                        $ 235,596
2005                                        1,249,260
2006                                          131,128
2007                                          122,280
2008 and thereafter                           347,176

Of the $1,249,260 amount due on long-term debt in 2005, $1,022,394 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.

Liquidity is expected to increase as funded start-ups are capitalized and the
Company should only require short-term cash advances to sustain normal
operations.

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.

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

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<PAGE>

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.

















                                       13
<PAGE>

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            50     Chief Executive Officer. Mr. Sheffield is a graduate
Sheffield                 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       52     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       46     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     58     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

                                       14
<PAGE>

                          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.

Leon D. Hogg       83     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     51     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   75     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

                                       15
<PAGE>

                          international financial 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, 2002 to September 30, 2003, 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

In his capacity as President, CEO, and Loan Guarantor, the CEO was granted stock
options during the fiscal year ended September 30, 2003 in the following
amounts:
<TABLE><CAPTION>
                                                           Percent of total
                                    Number of securities   options granted
                   Years services    underlying options    to employees in   Exercise price
      Name          were rendered         granted            fiscal year         ($/Sh)
<S>                      <C>               <C>                  <C>               <C>
Charles Sheffield        2003              25,000               20.12             0.22
</TABLE>

The CEO was paid no cash compensation. No other officer or employee of the
Company was compensated more than $100,000 during the fiscal year ended
September 30, 2003.

OPTION AND LONG-TERM COMPENSATION TABLES

On July 31, 2000, the Company adopted an incentive stock option plan. As of
September 30, 2003, 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                                             128,415
                                                                -------
     Total                                                      228,415
                                                                -------

                                       16
<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 2003, the Company awarded 50,000 stock options to Directors
for their service as a Director of the Company,

                        Number of securities       Exercise price    Expiration
    Director         underlying options granted        ($/Sh)           date
    --------         --------------------------        ------           ----

Charles Sheffield              10,000                   0.22           5 yrs.
Leon Hogg                      10,000                   0.20           5 yrs
Mike Newman                    10,000                   0.20           5 yrs
Geary Broadnax                 10,000                   0.20           5 yrs
William Sherrill               10,000                   0.20           5 yrs

In addition to the 50,000 options issued during fiscal year ended September 30,
2003, that Company previously issued 170,000 options to Directors for their
service as a Director of the Company. All options issued to Directors are
currently outstanding, none of which are in the money.

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,

                                       17
<PAGE>

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, 2003. 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%
                                       =========                    ======

The following table sets forth as of September 30, 2003, 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%
                                      =========                    ======

                                       18
<PAGE>

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, 2003, reporting the acquisition of a significant amount of assets. Both
Form 8-K's, and amendments, are incorporated by reference.


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, 2003 and 2002 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, 2003 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, 2003 and 2002 were

                                       19
<PAGE>

$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 in advance by our Board
of Directors.
































                                       20
<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         President, Chief                 December 29, 2003
----------------------        Executive Officer,
Charles Sheffield             Director


/s/ EA BUCHHOLTZ              Chief Financial Officer          December 29, 2003
----------------------
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.

















                                       21
<PAGE>

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

                                      INDEX


A. FINANCIAL STATEMENTS
   --------------------
   Report of independent certified public accountants

   Consolidated Balance sheet - September 30, 2003, and 2002

   Consolidated Statements of Income for the years ended September 30, 2003 and
   September 30, 2002

   Consolidated Statements of Shareholders' Equity for the years ended
   September 30, 2003 and September 30, 2002

   Consolidated Statements of Cash Flows for the years ended September 30, 2003
   and September 30, 2002

   Notes to Consolidated Financial Statements


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.





                                       22
<PAGE>

Eric C. Yartz PC
800 Bering, Suite 310
Houston, Texas 77057
713-839-8200



                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
of SpectraSource Corporation and its Subsidiaries

We have audited the accompanying consolidated balance sheets of SpectraSource
Corporation and its subsidiaries as of September 30, 2003 and September 30,
2002, and the related consolidated statements of income, of cash flows and of
changes in stockholders' equity for the years then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of SpectraSource
Corporation and its subsidiaries at September 30, 2003 and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.


/s/ Eric C. Yartz PC
Certified Public Accountant

Houston, Texas

May 4, 2006


                                       23
<PAGE>


                            SPECTRASOURCE CORPORATION
                           CONSOLIDATED BALANCE SHEET

<TABLE><CAPTION>
                                                           September 30,    September 30,
                                                                2003             2002
                                                            -----------      -----------
<S>                                                         <C>              <C>
ASSETS
   Current Assets
     Cash                                                       142,256          156,350
     Accounts Receivable, less bad debt reserve of
     $125,235 and $125,235, respectively                      1,303,293        1,057,222
     Prepaid Expenses                                                 0          115,954
     Inventory                                                1,229,860        1,134,242
                                                            -----------      -----------
   Total Current Assets                                       2,675,409        2,463,768

   Fixed Assets, net of accumulated depreciation
   of $495,715 and $399,878                                     417,787          451,068
   Goodwill, net of amortization of $0                          400,766          400,768
   Other Assets and Investments                                  38,069           30,816
   Deferred Tax Asset (Note 8)                                  376,489          347,207
                                                            ===========      ===========
Total Assets                                                  3,908,520        3,693,627

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
     Accounts payable and accrued expenses                      760,134          606,306
     Short Term Debt (Note 4)                                   598,600          806,600
     Current Maturities of Long Term Debt                       179,597          141,017
     Due To Affiliates                                           55,999           36,428
                                                            -----------      -----------
   Total Current Liabilities                                  1,594,329        1,590,351

   Long Term Debt (Note 5)
     Notes Payable                                              173,814           12,207
     Notes Payable, Shareholders                              1,474,107        1,522,548
     Due to Affiliates                                          198,010          120,001
                                                            -----------      -----------
   Total Long Term debt                                       1,845,931        1,654,756

   Stockholders' Equity (Deficit)
     Common stock, $.001 par value, 10,000,000 shares
     authorized, with 7,184,872 shares issued and
     outstanding at September 30, 2003 and September 30,
     2002, respectively                                          17,356           17,356
     Capital in excess of par value                           3,530,704        3,530,704
     Accumulated Deficit                                     (3,079,801)      (3,099,541)
                                                            -----------      -----------
   Total Stockholders' Equity                                   468,259          448,519
                                                            -----------      -----------
Total Liabilities and Stockholders' Equity                    3,908,520      $ 3,693,626
                                                            ===========      ===========
</TABLE>

        The Accompanying Notes are an integral part of these statements.

                                       24
<PAGE>

                            SPECTRASOURCE CORPORATION
              CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED
                           SEPTEMBER 30, 2003 AND 2002





                                                   September 30,   September 30,
                                                        2003          2002
                                                    ----------      ----------


Sales                                               $7,998,967      $6,647,730
Cost of Sales                                        5,072,256       3,869,455
                                                    ----------      ----------
Gross Profit                                         2,926,711       2,778,275

Other Operating Costs
   Selling and administrative expenses                 168,722          80,884
   Depreciation                                        112,084         107,280
   Other costs and operating expenses                2,625,502       2,242,429
                                                    ----------      ----------
Total Other Operating Costs                          2,906,308       2,430,593

                                                    ----------      ----------
Income from operations                                  20,403         347,682

Other Income:
   Interest Income                                           0              45
   Miscellaneous Other Income (Expense)                  5,918           3,812
                                                    ----------      ----------
Total Other Income                                       5,918           3,857
                                                    ----------      ----------
Income before income taxes                              26,322         351,539

Provision for income taxes (Note 8)                      6,581         123,039

                                                    ----------      ----------
Net Income                                          $   19,741      $  228,500
                                                    ==========      ==========

Basic earnings per common share                     $     0.00      $     0.03
Diluted earnings per common share                   $     0.00      $     0.03
Weighted average number of common shares             7,184,872       7,184,872


        The Accompanying Notes are an integral part of these statements.

                                       25
<PAGE>


                            SPECTRASOURCE CORPORATION
                       CONSOLIDATED STATEMENT OF CASH FLOW
                 FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002


                                                    September 30,  September 30,
                                                         2003           2002
                                                     -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income from operations                           $    19,740    $   228,500
Adjustments to reconcile net income:
   Depreciation                                          112,084        107,280
   Bad debt expense                                            0         63,924
   Deferred taxes                                        (29,282)       123,039
   (Increase) Decrease in Accounts Receivable           (246,071)      (215,545)
   (Increase) Decrease in Inventory                      (95,618)      (224,687)
   (Increase) Decrease in Prepaid Expenses               115,954        (80,091)
   Increase (Decrease) in Accounts Payable               153,828        264,520
   Increase (Decrease) in Due to Related Parties               0         28,639
                                                     -----------    -----------
Net cash provided/(used) in operating activities          30,635        295,579
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Long term asset purchases                             (78,801)      (116,394)
   (Increase) in long term Investments                   (62,817)
                                                     -----------    -----------
Net cash used in investing activities                    (78,801)      (179,211)
                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds (Repayment) of short term debt              (208,000)       (40,543)
   Proceeds (Repayment) of long term debt                151,745        (84,889)
   (Increase) Decrease in LT Other Assets                 (7,253)          --
   Increase (Decrease) in due to related parties          97,580           --

                                                     -----------    -----------
Net cash provided by financing Activities                 34,072       (125,432)
                                                     -----------    -----------

Net (Decrease) in cash and cash equivalents              (14,094)        (9,064)
Cash and equivalents, beginning of period                156,350        165,414
                                                     -----------    -----------
Cash and equivalents, end of period                  $   142,256    $   156,350
                                                     ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for Interest                               $    60,995    $    58,626

Acquisitions Note: In connection with the
acquisition of the operating assets of Home
Structure Sound in August, 2002, the Company
acquired assets with a fair market value of
$423,000 in exchange for a cash payment of
$45,000, the issuance of debt in the amount
of $184,000, and the issuance of stock valued
at $193,000.

        The Accompanying Notes are an integral part of these statements.

                                       26
<PAGE>

                            SPECTRASOURCE CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE><CAPTION>
                                                            Additional                     Total
                                       Common Stock            Paid       Accumulated   Stockholders'
                                   Shares       Amount      in Capital      Deficit        Equity
                                   ------       ------      ----------      -------        ------
<S>                              <C>          <C>           <C>           <C>            <C>
BALANCE, SEPTEMBER 30, 2001      $6,015,850   $   16,190    $3,338,043    $(3,328,041)   $   26,192

   LT Asset Purchase                339,400          339       192,661                      193,000
   Stock Compensation               829,622          827                                        827
   Net Income                                                                 228,500       228,500

                                 ----------   ----------    ----------    -----------    ----------
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
                                 ==========   ==========    ==========    ===========    ==========
</TABLE>

        The Accompanying Notes are an integral part of these statements.

                                       27
<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 all of the stock of three corporations
that are 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.

                                       28
<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, 2003, 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.

                                       29
<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 2003, 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, 2003. The Company does not expect adoption of SFAS No. 149 to have a
material impact on its consolidated financial statements.

In May 2003 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, 2003, and is generally effective at the beginning of the
first interim period beginning after June 15, 2003. 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

                                       30
<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
primary reasons for the acquisition is to accelerate the Company's entry into
the structured cabling market, an initiative for which the Company's Connect
Source division was not achieving at the desired rate prior to the acquisition.
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, 2003

          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.

Total amortization expense for the period was $1711. The estimated aggregate
amortization expense for each of the five succeeding fiscal years is as follows:

          FYE 2003                          $     500
          FYE 2004                                500
          FYE 2005                                500
          FYE 2006                                500
          FYE 2007                                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

                                       31
<PAGE>

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.

Subsequent to fiscal year end September 30, 2003, and prior to the completion of
the first calendar year after acquisition, in the judgment of management it does
not appear that Home Structure Sound will meet its target performance for the
first calendar year as specified in the purchase agreement. The Company is
currently undecided whether it will waive or enforce 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 initial 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, 2003, and September 30, 2002, the Company had short-term debt
of $598,600 and $806,600, 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, 2003, and
2002 consist of the following:

                                                  Balance at       Balance at
                                    Interest      September 30,    September 30,
                                      Rate        2003             2002
                                      ----        ----             ----

Notes payable                         0-7%        $   353,411      $   153,224
Notes payable - Shareholders/
 related parties                      0-8%          1,728,116        1,678,977
                                                  -----------      -----------
Total long-term debt                                2,081,527      $ 1,832,201
Less: Current maturities of
 long term debt                                       235,596          177,445
                                                  -----------      -----------
Net long-term debt                                $ 1,845,931      $ 1,654,756
                                                  ===========      ===========

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 $ 1,226,072 balance of the notes payable to the
Principal Shareholder, and is deferring the payment of $650,924 of principal due
the Principal Shareholder under the original terms of the notes.

                                       32
<PAGE>

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

            Fiscal Year                        Amount
            -----------                        ------
                2004                        $ 235,596
                2005                        1,249,260
                2006                          131,128
                2007                          122,280
        2008 and thereafter                   347,176

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, 2003,
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 only the employee, officer, and or director may then exercise the
vested portion. During fiscal year ended September, 30, 2003, the Company
granted 124,215 of incentive stock options to Officers, Directors, and
Employees.

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, and $14,102, and $2,050 for fiscal years ended in
2001, 2002, and 2003, 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, 2003 and 2002, and
changes during the years ending on those dates is presented below:


                                     2002                        2003
------------------------ --------------------------- ---------------------------
Incentive Stock Options   Shares    Weighted-Average  Shares    Weighted-Average
                                    Exercise Price              Exercise Price
------------------------ ---------- ---------------- ---------- ----------------
Outstanding at beginning
  of year                   32,245        .30          360,200         .31
------------------------ ---------- ---------------- ---------- ----------------
Granted                    327,955        .31          124,215         .2056
------------------------ ---------- ---------------- ---------- ----------------
Exercised                        0                           0
------------------------ ---------- ---------------- ---------- ----------------
Forfeited                        0                      36,000         .30
------------------------ ---------- ---------------- ---------- ----------------
Outstanding at End
  of Year                  360,200        .31          448,415         .2820
------------------------ ---------- ---------------- ---------- ----------------
Options exercisable at
  year end                 360,200        .31          448,415         .2820
------------------------ ---------- ---------------- ---------- ----------------
Weighted Average Fair
Value of Options granted
during the year               .043                       .0165
--------------------------------------------------------------------------------

                                       33
<PAGE>

The following table summarizes information about Incentive Options outstanding
at September 30, 2003:
<TABLE><CAPTION>
---------  -----------------------------------------------------  -----------------------------------
           Options Outstanding                                    Options Exercisable
---------  -----------------------------------------------------  -----------------------------------
                             Weighted
Range of   Number            Average           Weighted           Number            Weighted
Exercise   Outstanding at    Remaining         Average            Exercisable at    Average
Prices     9/30/03           Contractual Life  Exercise Price     09/30/03          Exercise Price
---------  ----------------- ----------------- -----------------  ----------------- -----------------
<S>             <C>            <C>                 <C>                 <C>               <C>
..30             219,200        5.41 years          .30                 121,200           .30
---------  ----------------- ----------------- -----------------  ----------------- -----------------
..34             105,000        4.00 years          .34                  35,000           .34
---------  ----------------- ----------------- -----------------  ----------------- -----------------
..20              89,215        5.00 years          .20                       0           .20
---------  ----------------- ----------------- -----------------  ----------------- -----------------
..22              35,000        5.00 years          .22                       0           .22
---------  ----------------- ----------------- -----------------  ----------------- -----------------
..20-.34         448,415        4.97 years          .31                 156,200           .31
---------  ----------------- ----------------- -----------------  ----------------- -----------------
</TABLE>

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, 2003     September 30, 2002
                                     ------------------     ------------------

Deferred tax provision                     $ 6,581               $ 123,039

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,
                                                        2003           2002
                                                        ----           ----

Allowance for doubtful accounts                       $ 36,416       $ 36,416
Net operating loss carryforwards (NOLs)                335,109        305,827
Capital loss carryforwards                                   0              0
Other                                                    4,964          4,964
                                                      --------       --------
Total deferred tax asset                              $376,489       $347,207
                                                      ========       ========

                                       34
<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, 2003, the Company's federal consolidated NOLs for income tax
purposes were $1,096,915. 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


NOTE 9. RELATED PARTY TRANSACTIONS

At September 30, 2003 and September 30, 2002, the balance due to related parties
controlled by the Principal Shareholder were $198,010 and $120,001,
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 2003, 2002, and 2001 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, 2003, 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                              28,800
          2005                              30,600
          2006                              32,400
          2007                              28,500
          2008                                  NA

                                       35
<PAGE>

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, 2003 and September 30, 2002, the
Company had no derivative financial instruments.

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 2003 and 2002. Earnings (loss) per share
("EPS") data is as follows for the years ended September 30, 2003 and 2002:

                                             2003            2002
                                             ----            ----
Thousands of shares                         7,185           6,016
Basic and Fully Diluted                      0.00            0.03


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 &    All
                       Gulf Coast    Source     Hardware     Other      Totals
                       ---------------------------------------------------------

Revenues - External     3,365,954   1,660,982   3,048,766              8,075,702
Intersegment revenue       63,808                  12,927                 76,735
Cost of Goods Sold      2,028,148   1,223,966   1,820,142              5,072,256
Depreciation               50,738      21,897      39,449                112,084
Interest Expense            1,369      25,256      34,370                 60,995
Segment profit            140,342     -28,767     -39,597    -52,237      19,741
Segment Assets          1,028,028     917,152    1,580624    382,716   3,908,520
Asset Expenditure          15,801                  63,000          0      78,801

                                       36
<PAGE>

Reconciliation

Revenues
Revenues - Segments     8,075,702
Intersegment              -76,735
                        ---------

Consolidated revenue    7,998,967
                        =========

Profit or Loss
Profit - Segments          71,978
Loss - Other              -52,237
                        ---------

Consolidated
Net Income                 19,741
                        =========

Assets
Assets - Segments       3,525,804
Assets- Other             382,716
                        ---------

Consolidated Assets     3,908,520
                        =========

Asset Expenditure
Segment                    78,801
Other                           0
                        ---------

                           78,801
                        =========

Interest revenue is an immaterial item. "Other Losses" in the amount of $52,237
consists of deferred tax expense in the amount of $6,581 and various headquarter
expenses, neither of which was allocated down to the segments. "Other Assets" in
the amount of $382,716 consists of deferred tax asset in the amount of $376,489,
which is not allocated to the segments, and leasehold improvements and
capitalized software at the headquarter level.

                                       37