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 December 31, 2000

                         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 December 31, 2000, 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 December 31, 2000 and September
                  30, 2000

            b)    Combined Statements of Income for the three months ended
                  December 31, 2000 and December 31, 1999

            c)    Combined Statements of Cash Flows for the three months
                  ended December 31, 2000 and December 31, 1999

            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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                            SPECTRASOURCE CORPORATION
                             COMBINED BALANCE SHEET





                                                    DECEMBER 31,   SEPTEMBER 30,
                                                        2000           2000
                                                    -----------    -----------
                                                    (UNAUDITED)

ASSETS
  Current Assets
   Cash ..........................................   $   124,396    $   219,257
   Accounts Receivable, less allowances of $21,306
   and $18,653 respectively ......................       490,698      1,047,047
   Prepaid Expenses ..............................       145,200         64,997
   Inventory .....................................       978,303        918,052
                                                     -----------    -----------
  Total Current Assets ...........................     1,738,597      2,249,353

  Fixed Assets, net of accumulated depreciation of
  $273,966 and $256,851 ..........................       360,245        229,465
  Deferred Tax Asset .............................       511,897        511,897
  Other Assets and Investments ...................        17,447         48,335
                                                     -----------    -----------
Total Assets .....................................   $ 2,628,186    $ 3,039,050
                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
   Accounts payable and accrued expenses .........   $   245,421    $   811,720
   Short Term Debt ...............................       774,124        700,155
   Current Maturities of Long Term Debt ..........       203,611        177,027
   Due To Affiliates .............................       169,450        150,819
                                                     -----------    -----------
  Total Current Liabilities ......................     1,392,606      1,839,721

  Long Term Debt
   Notes Payable, Banks ..........................       149,460         43,109
   Notes Payable, Shareholders ...................     1,185,981      1,236,947
                                                     -----------    -----------
  Total Long Term debt ...........................     1,335,441      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 December 31,
   2000 and September 30, 2000 ...................        16,188         16,188
   Capital in excess of par value ................     3,339,043      3,339,043
   Accumulated Deficit ...........................    (3,455,092)    (3,435,958)
                                                     -----------    -----------
  Total Stockholders' Equity .....................       (99,861)       (80,727)
                                                     -----------    -----------
Total Liabilities and Stockholders' Equity .......   $ 2,628,186    $ 3,039,050
                                                     ===========    ===========

                 See Notes to Combined Financial Statements.

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                            SPECTRASOURCE CORPORATION
                          COMBINED STATEMENTS OF INCOME





                                                     THREE MONTHS   THREE MONTHS
                                                       ENDED          ENDED
                                                     DECEMBER 31,   DECEMBER 31,
                                                        2000           1999
                                                      ---------      ---------
                                                     (Unaudited)    (Unaudited)

Sales .........................................     $ 1,686,058      $ 1,584,183
Cost of Sales .................................       1,052,960          995,758
                                                    -----------      -----------
Gross Profit ..................................         633,098          588,425

Costs of Products Sold
  Selling and administrative expenses .........          21,946           19,714
  Depreciation ................................          17,115           18,826
  Other costs and operating expenses ..........         613,949          375,875
                                                    -----------      -----------
Total Costs of Products Sold ..................         653,010          414,415

                                                    -----------      -----------
Income from operations ........................         (19,912)         174,010

Other Income:
  Interest Income .............................             778            3,071
  Miscellaneous Other Income (Expense) ........            --               --
                                                    -----------      -----------
Total Other Income

                                                    -----------      -----------
Income before income taxes ....................         (19,134)         177,081

                                                    -----------      -----------
Net Income or (Loss) ..........................     $   (19,134)     $   177,081
                                                    ===========      ===========

Basis earnings per common share ...............     $    (0.003)     $      0.03

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

                 See Notes to Combined Financial Statements.

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                            SPECTRASOURCE CORPORATION
                         COMBINED STATEMENT OF CASH FLOW

                                                     THREE MONTHS   THREE MONTHS
                                                       ENDED          ENDED
                                                     DECEMBER 31,   DECEMBER 31,
                                                        2000           1999
                                                      ---------      ---------
                                                     (Unaudited)    (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income From Operations .......................     $ (19,134)     $ 177,081
Adjustments to reconcile net income:
  Depreciation ...................................        17,115         18,826
  Bad Debt Expense ...............................         2,705            396
  Deferred Taxes .................................          --           49,346
  Other ..........................................          --            1,268
  Net Reduction in Operating Expenses
  from Forgiveness of Liabilities by
  Related Parties ................................          --         (202,648)
  Decrease in Accounts Receivable ................       553,644        138,087
  (Increase) Decrease in Inventory ...............       (60,251)       184,564
  (Increase) Decrease in Prepaid Expenses ........       (80,203)       130,717
  Increase (Decrease) in Accounts Payable ........      (566,299)      (433,581)
                                                       ---------      ---------
Net cash used in operating activities ............      (152,423)        64,056
                                                       ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property and equipment ..........      (147,895)          --
  Decrease in Long Term Deposits .................        30,888         13,914
                                                       ---------      ---------
Net cash used in investing activities ............      (117,007)        13,914
                                                       ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock .......................
  Proceeds from (Payment of) short term debt .....          --          (77,612)
  Proceeds from (Payment of) long term debt ......       107,587         (7,845)
  Withdrawals against lines of credit ............        73,969           --
  Principal payments of Notes Payable to
  Shareholders ...................................       (25,618)          --
  Proceeds from (Payments of) related
  party financing ................................        18,631        (36,672)
                                                       ---------      ---------
Net cash provided by financing Activities ........       174,569       (122,129)
                                                       ---------      ---------

Net Increase in cash and cash equivalents ........       (94,861)       (44,159)
Cash and equivalents, beginning of period ........       219,257        262,525
                                                       ---------      ---------
Cash and equivalents, end of period ..............     $ 124,396      $ 218,366
                                                       =========      =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
  Cash paid for Interest .........................     $  27,013      $  16,395

                 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 December 31, 2000 and for the three
months ended December 31, 2000 and December 31, 1999, have been made. The
results of operations for the period ended December 31, 2000 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

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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.

    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 June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133").
SFAS 133, as amended, establishes accounting and reporting standards for
derivative instruments and hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities on the balance sheet
and measure those instruments at fair value. 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.

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.

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For the quarter ended December 31, 2000, the Company reported net loss of
($19,134) compared to net income of $177,081 for the quarter ended December 31,
1999. The difference between the quarters is primarily due to additional costs
incurred during the quarter ended December 31, 2000 to start the fiber optics
division and professional fees due to the merger in April 2000 that are not
expected to recur and due to recognition of reduction in operating expenses from
forgiveness of liabilities during the quarter ended December 31, 1999.

Total revenues grew to $1,686,058 in the quarter ended December 31, 2000 from
$1,584,183 in the quarter ended December 31, 1999. This represents approximately
6% increase in revenue at existing locations. The Company plans to open several
new locations over the next three years and begin the process of acquiring
market shares in new territories. A number of the customers of the Company are
among the largest builders in the Texas market as well as nationally. The
Company plans to utilize this base, coupled with the cross marketing of its
product lines and the fiber optics division to optimize this expansion.

The Company invested $131,077 in capital assets for the new fiber optics
division during the quarter ended December 31, 2000. Other than new markets the
Company has entered and is expected to enter in the future, no additional
material capital expenditures are planned.

As of December 31, 2000, the Company had a line of credit totaling $900,000
which expires June 15, 2000. Borrowings under this facility were $20,000 for the
quarter ended December 31, 2000.

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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