<PAGE>

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

 Annual Report Pursuant to Section 13 or 15 (d) of The Securities Exchange Act
                                     of 1934
                  For the Quarterly Period Ended June 30, 2001
                         Commission File Number 0-18515

                            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)

                     10450 WESTOFFICE, HOUSTON, TEXAS 77042
          ------------------------------------------------------------
                    (Address of Principal Executive Offices)

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

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); and (2) has been subject to such filing requirements for the
past ninety (90) days; Yes (X) No ( )

As of June 30, 2001, there were 6,015,850 shares of ($0.001) par value Common
Stock (the Company's only class of voting stock) outstanding.


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<PAGE>

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

                                   FORM 10-QSB

                            SPECTRASOURCE CORPORATION

                                TABLE OF CONTENTS


PART I      Financial Information

Item  1.    Financial Statements (Unaudited)

            a)    Combined Balance Sheets at June 30, 2001 and September 30,
                  2000

            b)    Combined Statements of Income for the three and nine months
                  ended June 30, 2001 and June 30, 2000

            c)    Combined Statements of Cash Flows for the Nine months ended
                  June 30, 2001 and June 30, 2000

            d)    Notes to Combined Financial Statements

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

PART II     Other Information

Item  6.    Exhibits and Reports on form 8-K

SIGNATURES

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


PART I      FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS (UNAUDITED)



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<PAGE>

                          SPECTRASOURCE CORPORATION
                            COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
                                                       June 30,    September 30,
                                                        2001           2000
                                                     -----------   -------------
                                                     (Unaudited)

<S>                                                  <C>            <C>
ASSETS
   Current Assets
      Cash                                           $   179,549    $   219,257
      Accounts Receivable, less allowances
        of $29,930 and $18,653 respectively              853,676      1,047,047
      Prepaid Expenses                                    75,973         64,997
      Inventory                                          858,817        918,052
                                                     -----------    -----------
   Total Current Assets                                1,968,015      2,249,353


   Fixed Assets, net of accumulated depreciation
     of $296,796 and $256,851                            374,922        229,465
   Deferred Tax Asset                                    511,897        511,897
   Other Assets and Investments                           13,000         48,335
                                                     -----------    -----------
Total Assets                                         $ 2,867,834    $ 3,039,050
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
      Accounts payable and accrued expenses          $   460,968    $   811,720
      Short Term Debt                                    835,465        700,155
      Current Maturities of Long Term Debt               282,503        177,027
      Due To Affiliates                                  153,514        150,819
                                                     -----------    -----------
   Total Current Liabilities                           1,732,450      1,839,721


   Long Term Debt
      Notes Payable, Banks                               152,684         43,109
      Notes Payable, Shareholders                      1,139,645      1,236,947
                                                     -----------    -----------
   Total Long Term debt                                1,292,329      1,280,056
   Stockholders' Equity (Deficit)
      Common stock, $.001 par value, 100,000,000
        shares authorized and 6,015,850 shares
        issued and outstanding at June 30, 2001
        and September 30, 2000                            16,188         16,188
      Capital in excess of par value                   3,339,043      3,339,043
      Accumulated Deficit                             (3,512,176)    (3,435,958)
                                                     -----------    -----------
   Total Stockholders' Equity                           (156,945)       (80,727)
                                                     -----------    -----------
Total Liabilities and Stockholders' Equity           $ 2,867,834    $ 3,039,050
                                                     ===========    ===========
</TABLE>


                 See Notes to Combined Financial Statements.



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                            SPECTRASOURCE CORPORATION
                          COMBINED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                      Three Months       Nine Months        Three Months       Nine Months
                                                     Ended June 30,     Ended June 30,     Ended June 30,     Ended June 30,
                                                          2001              2001                2000              2000
                                                      -----------        -----------        -----------        -----------
                                                      (Unaudited)        (Unaudited)        (Unaudited)        (Unaudited)
<S>                                                   <C>                <C>                <C>                <C>
Sales                                                 $ 1,616,636        $ 4,681,028        $ 1,847,200        $ 5,036,312
Cost of Sales                                             867,067          2,896,598          1,114,711          3,048,630
                                                      -----------        -----------        -----------        -----------
Gross Profit                                              749,569          1,784,430            732,489          1,987,682

Costs of Products Sold
   Selling and administrative expenses                     58,818            187,505             25,662             70,808
   Depreciation                                            32,104             73,671             13,872             46,930
   Other costs and operating expenses                     426,451          1,601,011            590,553          1,598,433
                                                      -----------        -----------        -----------        -----------
Total Costs of Products Sold                              517,373          1,862,187            630,087          1,716,171

                                                      -----------        -----------        -----------        -----------
Income from operations                                    232,196            (77,757)           102,402            271,511

Other Income:
   Interest Income                                            323              1,673               --                3,071

   Miscellaneous Other Income (Expense)                      (134)              (134)                              (20,430)
                                                      -----------        -----------        -----------        -----------
Total Other Income                                            189              1,539               --              (17,359)

                                                      -----------        -----------        -----------        -----------
Income before income taxes                                232,385            (76,218)           102,402            254,152
                                                      -----------        -----------        -----------        -----------
Net Income or (Loss)                                  $   232,385        $   (76,218)       $   102,402        $   254,152
                                                      ===========        ===========        ===========        ===========

Basis earnings per common share                       $      0.04        $     (0.01)       $      0.02        $      0.04


Weighted average number of common shares                6,015,850          6,015,850          5,830,263          5,830,263

</TABLE>

                   See Notes to Combined Financial Statements.


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                            SPECTRASOURCE CORPORATION
                         COMBINED STATEMENT OF CASH FLOW

<TABLE>
<CAPTION>
                                                                 Nine Months Ended       Nine Months Ended
                                                                      June 30,               June 30,
                                                                        2001                   2000
                                                                --------------------    -------------------
                                                                     (Unaudited)            (Unaudited)
<S>                                                                  <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) Net Income From Operations                                    $ (76,218)              $ 254,152
Adjustments to reconcile net income:
   Depreciation                                                         73,671                  46,930
   Bad Debt Expense                                                      6,485                   4,434
   Deferred Taxes                                                         --                    49,346
   Other                                                                  --                      --
   Net Reduction in Operating Expenses from
   Forgiveness of Liabilities by Related Parties                          --                  (202,648)
   Decrease (Increase) in Accounts Receivable                          186,886                (225,104)
   Decrease in Inventory                                                59,235                 137,752
   Increase in Prepaid Expenses                                        (10,976)                131,708
   Decrease in Accounts Payable                                       (350,752)               (183,033)
                                                                     ---------               ---------
Net cash used in operating activities                                 (111,669)                 13,537
                                                                     ---------               ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   (Acquisition) Disposition of property and equipment                (219,128)                  2,560
   Decrease in Long Term Deposits                                       35,335                  44,530
                                                                     ---------               ---------
Net cash used in investing activities                                 (183,793)                 47,090
                                                                     ---------               ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase in additional paid in capital                                 --                     1,921
   Proceeds from (Payment of) short term debt                          135,310                (231,323)
   Proceeds from long term debt                                        187,790                  54,972
   Principal payments of long term debt                                (70,041)                (24,095)
   Proceeds from related party financing                                 2,695                  15,563
                                                                     ---------               ---------
Net cash provided by financing Activities                              255,754                (182,962)
                                                                     ---------               ---------

Net Increase (Decrease) in cash and cash equivalents                   (39,708)               (122,335)
Cash and equivalents, beginning of period                              219,257                 262,525
                                                                     ---------               ---------
Cash and equivalents, end of period                                  $ 179,549               $ 140,190
                                                                     =========               =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for Interest                                            $  39,460               $  37,586
</TABLE>


                   See Notes to Combined Financial Statements.


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                            SPECTRASOURCE CORPORATION
                   NOTES TO THE COMBINED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

The accompanying interim financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These combined financial statements should be read in conjunction
with the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 2000.

In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows as of June 30, 2001 and for the three
months and nine months ended June 30, 2001 and June 30, 2000, have been made.
The results of operations for the period ended June 30, 2001 are not necessarily
indicative of the operating results for the full year.

    PRINCIPLES OF COMBINATIONS

The combined 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.

    REVENUE RECOGNITION

The Company recognizes revenue at the time of sale. The Company accrues for
allowances for doubtful accounts based on its experience.

    INVENTORIES

Inventories are carried at the lower of cost, on a first-in first-out basis, or
market.

    PROPERTY AND EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation. Property
and equipment is depreciated on an accelerated depreciation 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.


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<PAGE>

    INCOME TAXES

The Company follows the asset and liability approach to account for 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.

    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 December 1999, the Securities Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB "101), `Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
Management does not expect the pronouncement to have a material effect on the
Company's financial statements in the near future.


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

Results of operations for the third quarter ended June 30, 2001 reflect the
company's strategy in preparation for long-term growth as well as the increase
in seasonal activity during this time of year. The Company continues to incurr
significant expenses for accounting systems consolidation and development of its
website for on-line shopping. The consolidation of the accounting system is
expected to be completed by the Company's fiscal year end.

The increase in sales reflect the forecasted higher level of activity in
regional construction. A sales focus on high margin products brought about a
substantial increase in the gross margin. The Company also is moving toward a
higher focus on its purchasing power to obtain large volume discounts from
suppliers.

Benefits of consolidating the administrative and sales forces of the various
subsidiaries are also reflected in the third quarter results of operations.

In addition, the Company's profitability is increasing due to the lower level of
legal and professional fees that the Company incurred to perfect the merger and
acquisition of the various subsidiaries in the previous six months.

The Company anticipates that fourth quarter operating results should continue to
be strong due to the higher construction activity typically experienced through
this part of the year.


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<PAGE>

Certain statements contained in this Quarterly Report on Form 10-QSB, including,
without limitation, statements containing the words "believes", "anticipates",
"estimates", "expects", "projections", and words of similar import, constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned not to put undue reliance
on forward-looking statements. All forward-looking statements are made as of the
date hereof and are based on information available to the parties as of such
date. The Company does not undertake any obligation to update any
forward-looking statements to reflect events or circumstances after the date of
this Form 10-QSB. 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 future economic conditions, corporate and marketplace
changes, all as more fully described in the Company's Report on Form 10-K for
the period ended September 30, 2000 under Management's Discussion and Analysis
of Financial Conditions and Results of Operations "Assumptions Underlying
Certain Forward-Looking Statements and Factors that May Affect Future Results"
and elsewhere from time to time in the Company's other SEC reports.



PART I.     OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K
            None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report on Form 10-QSB to be signed on its behalf by the undersigned,
therunto duly authorized.


SPECTRASOURCE CORPORATION

By: /s/ CHARLES E. SHEFFIELD
    -----------------------------------------------
    Charles E. Sheffield, Chief Executive Officer,
    President and Director




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