<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 March 31, 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 March 31, 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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                         ==============================

                                   FORM 10-QSB

                            SPECTRASOURCE CORPORATION

                                TABLE OF CONTENTS


PART I            Financial Information

Item  1.          Financial Statements (Unaudited)

            a)    Combined Balance Sheets at March 31, 2001 and September 30,
                  2000

            b)    Combined Statements of Income for the three and six months
                  ended March 31, 2001 and March 31, 2000

            c)    Combined Statements of Cash Flows for the six months ended
                  March 31, 2001 and March 31, 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>
                                                       March 31,   September 30,
                                                         2001           2000
                                                     -----------  --------------
                                                     (Unaudited)
<S>                                                  <C>            <C>
ASSETS
  Current Assets
   Cash                                              $   148,655    $   219,257
   Accounts Receivable, less allowances of $26,150
     and $18,653 respectively                            805,197      1,047,047
   Prepaid Expenses                                       75,948         64,997
   Inventory                                             932,783        918,052
                                                     -----------    -----------
  Total Current Assets                                 1,962,583      2,249,353

  Fixed Assets, net of accumulated depreciation of
    $298,412 and $256,851                                333,478        229,465
  Deferred Tax Asset                                     511,897        511,897
  Other Assets and Investments                            13,000         48,335
                                                     -----------    -----------
Total Assets                                         $ 2,820,958    $ 3,039,050
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
   Accounts payable and accrued expenses             $   646,460    $   811,720
   Short Term Debt                                       871,591        700,155
   Current Maturities of Long Term Debt                  282,503        177,027
   Due To Affiliates                                     172,167        150,819
                                                     -----------    -----------
  Total Current Liabilities                            1,972,721      1,839,721

  Long Term Debt
   Notes Payable, Banks                                   95,192         43,109
   Notes Payable, Shareholders                         1,142,375      1,236,947
                                                     -----------    -----------
  Total Long Term debt                                 1,237,567      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 March 31, 2001 and
    September 30, 2000                                    16,188         16,188
   Capital in excess of par value                      3,339,043      3,339,043
   Accumulated Deficit                                (3,744,561)    (3,435,958)
                                                     -----------    -----------
  Total Stockholders' Equity                            (389,330)       (80,727)
                                                     -----------    -----------
Total Liabilities and Stockholders' Equity           $ 2,820,958    $ 3,039,050
                                                     ===========    ===========
</TABLE>

                   See Notes to Combined Financial Statements.


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                            SPECTRASOURCE CORPORATION
                          COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                    Three Months         Six Months      Three Months         Six Months
                                                   Ended March 31,    Ended March 31,   Ended March 31,     Ended March 31,
                                                       2001               2001               2000               2000
                                                  ----------------   ----------------   ---------------    ---------------
                                                    (Unaudited)        (Unaudited)        (Unaudited)        (Unaudited)
<S>                                                 <C>                <C>                <C>                <C>
Sales                                               $ 1,378,334        $ 3,064,392        $ 1,604,929        $ 3,189,112
Cost of Sales                                           976,571          2,029,531            938,161          1,933,919
                                                    -----------        -----------        -----------        -----------
Gross Profit                                            401,763          1,034,861            666,768          1,255,193

Costs of Products Sold
   Selling and administrative expenses                  106,741            128,687             25,432             45,146
   Depreciation                                          24,452             41,567             14,232             33,058
   Other costs and operating expenses                   560,611          1,174,560            632,005          1,007,880
                                                    -----------        -----------        -----------        -----------
Total Costs of Products Sold                            691,804          1,344,814            671,669          1,086,084

                                                    -----------        -----------        -----------        -----------
Income from operations                                 (290,041)          (309,953)            (4,901)           169,109

Other Income:
   Interest Income                                          572              1,350               --                 3071

   Miscellaneous Other Income (Expense)                    --                 --              (20,430)           (20,430)
                                                    -----------        -----------        -----------        -----------
Total Other Income

                                                    -----------        -----------        -----------        -----------
Income before income taxes                             (289,469)          (308,603)           (25,331)           151,750
                                                    -----------        -----------        -----------        -----------
Net Income or (Loss)                                $  (289,469)       $  (308,603)       $   (25,331)       $   151,750
                                                    ===========        ===========        ===========        ===========

Basis earnings per common share                     $     (0.05)       $     (0.05)       $    (0.004)       $     0.026


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>
                                                                     Six Months Ended   Six Months Ended
                                                                      March 31, 2001      March 31, 2000
                                                                    ------------------  ----------------
                                                                       (Unaudited)        (Unaudited)
<S>                                                                    <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income From Operations                                             $(308,603)         $ 151,750
Adjustments to reconcile net income:
   Depreciation                                                           41,567             33,058
   Bad Debt Expense                                                       11,255              5,914
   Deferred Taxes                                                           --               49,346
   Other                                                                    --
   Net Reduction in Operating Expenses
     from Forgiveness of Liabilities
     by Related Parties                                                     --             (202,648)
   (Increase) Decrease in Accounts Receivable                            230,595            109,286
   (Increase) Decrease in Inventory                                      (14,731)            84,941
   (Increase) Decrease in Prepaid Expenses                               (10,951)           142,770
   (Decrease) Increase in Accounts Payable                              (165,260)          (284,760)
                                                                       ---------          ---------
Net cash used in operating activities                                   (216,128)            89,657
                                                                       ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property and equipment                                (145,580)              --
   Decrease in Long Term Deposits                                         35,335             44,522
                                                                       ---------          ---------
Net cash used in investing activities                                   (110,245)            44,522
                                                                       ---------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase in additional paid in capital                                   --                1,921
   Proceeds from (Payment of) short term debt                            171,436           (237,205)
   Proceeds from long term debt                                          111,972             67,330
   Principal payments of long term debt                                  (48,985)              --
   Proceeds from related party financing                                  21,348              4,798
                                                                       ---------          ---------
Net cash provided by financing Activities                                255,771           (163,156)
                                                                       ---------          ---------

Net Increase in cash and cash equivalents                                (70,602)           (28,997)
Cash and equivalents, beginning of period                                219,257            262,525
                                                                       ---------          ---------
Cash and equivalents, end of period                                    $ 148,655          $ 233,548
                                                                       =========          =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for Interest                                              $  47,296          $  49,165

</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 March 31, 2001 and for the three
months and six months ended March 31, 2001 and March 31, 2000, have been made.
The results of operations for the period ended March 31, 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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    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 second quarter ended March 31, 2001 reflect the
company's strategy in preparation for long term growth. In anticipation of
expansion in the fiber optics, lighting, and hardware divisions, the company has
incurred a significant short-term increase in expenses for strategic planning,
operations and accounting systems consolidation, and upfront marketing costs.
These expenses have not been offset by current revenues. It is expected that the
revenues over the next few years will justify these increased expenditures.

The quarter ended March 31 historically tends to be the down portion of the
cycle in the building industry. The results of operations reflect decreased
overhead contributions due to slower cyclical sales of quarter. Sales and
overhead contribution are expected to increase significantly with the summer
months.

In its continuing effort to increase efficiency and profitability, the company
has consolidated the administrative and sales functions of the Houston branch of
its subsidiary, Builders Source, Inc. into Builders Lighting & Hardware, Inc.
and the Dallas branch into Gulf Coast Fan & Light, Inc. This resulted in
non-recurring moving and administrative expenses during the quarter.

Upon detailed analysis of the company's inventory, the company has engaged in a
major sales effort to sell slow-moving product in an effort to reduce
warehousing costs and increase operating efficiency.



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These items were sold at a substantial discount below cost. This sales effort
contributed to the loss experienced this quarter.

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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