FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

--------------------------------------------------------------------------------


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE
                           ACT OF 1934 (FEE REQUIRED)

                                       OR

[X]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 or  15(d)  OF THE  SECURITIES
                     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


--------------------------------------------------------------------------------



                           Telco Communications, Inc.

             to become known as Innovest Capital Sources Corporation

                        formerly Cody Capital Corporation



    Colorado                        33-1933 3-D                     84-1073083
(Incorporation)                 (Commission Number)                (IRS Number)


4 Normandy Drive, Kenner LA       (504) 466-7004                       70065
   (Address of principal         Telephone number                    (Zip Code)
    executive offices)

--------------------------------------------------------------------------------


Securities registered pursuant to Section 12(b) of the Act:     None

Securities registered pursuant to Section 12(g) of the Act:     Common Stock


Yes[x] No[ ] (Indicate by check mark whether the Registrant (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 for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)

No[ ] (Indicate by check mark whether if disclosure of delinquent filers
(ss.229.405) is not and will not to the best of Registrant's knowledge be
contained herein, in definitive proxy or information statements incorporated
herein by reference or any amendment hereto.)

As of December 31, 1997, the aggregate number of shares held by non-affiliates
was approximately 2,930,726 shares. Due to the limited market for the Company
securities, no estimate is being supplied herewith of the market value for such
securities.

As of December 31, 1997, the number of shares outstanding of the Registrant's
Common Stock was 50,000,000.

                        Exhibit Index is found on page 16

         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 1

<PAGE>






--------------------------------------------------------------------------------


                                     PART I


--------------------------------------------------------------------------------







         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 2

<PAGE>


                                Item 1. Business.



(a)  Historical Information.

     The Registrant Telco Communications, Inc. was incorporated in Colorado on
December 9, 1987, as Cody Capital Corporation. The Registrant was organized to
seek out and complete a merger or acquisition of other companies or businesses.
The Company completed a public offering in 1989 in which it raised a net, after
offering expenses, of $96,631. An investment was made in Telco of Baton Rouge,
which was a provider of long distance telephone services to institutional,
commercial and residential customers located in Louisiana and Texas; however,
the Issuer never realized any return from that investment. In 1994, the Issuer
was forced to file for Chapter 11 Bankruptcy protection. On March 11, 1994, the
Federal Bankruptcy Court for the Middle District of Louisiana appointed a
Trustee for the Bankruptcy Estate of the Registrant, the Court having converted
the case from Chapter 11 to Chapter 7 the preceding day. As a result of that
action, the Trustee in Bankruptcy was placed in control of the affairs of the
Registrant replacing the Board of Directors previously serving.

     On March 26, 1996, upon motion of the Trustee, the Court ordered that the
Corporation be sold to Mr. Miller L. Mays III, with no assets or liabilities
attached thereto. The sale was made pursuant to a Bill of Sale perfected on
April 12, 1996, pursuant to which Mr. Mays purchased the Corporation for
$1,000.00. The Sale was further pursuant to the following Order of March 25,
1996, by Louis M. Phillips, United States Bankruptcy Judge, United States
Bankruptcy Court, Middle District of Louisiana, In re: Telco Communications,
Inc., case number 91-01261-07: "IT IS ORDERED, ADJUDGED AND DECREED that the
trustee is authorized to sell to Miller L. Mays, III, 4 Normandy Drive, Kenner,
LA 70065 for the sum of $1,000.00 cash, with no warranty, the corporate shell of
Telco Communications, Inc. with all assets and all liabilities to remain in the
bankruptcy estate for liquidation by the trustee." Mr. Miller was accordingly
appointed and assumed the office of President and Sole Director of the Issuer
and appointed Karl E. Rodriguez to serve as Secretary, and additional director.
All Directors are to serve until the next meeting of shareholders.

     The Issuer emerged from Bankruptcy with no assets, liabilities and subject
to no claims or litigation, and carried an existing shareholder base of
2,655,726 shares and approximately 270 shareholders, and issued an additional
47,069,274 to or for Mr. Mays. In connection with the emergence from Bankruptcy
three former convertible debenture holders elected to convert their holdings to
common stock, resulting in an additional 275,000 shares, bringing the
post-emergence total, issued and outstanding, to the present 50,000,000 shares.

     On January 15, 1997, a Majority of Shareholders met and resolved to
re-elect existing directors and to elect James G. Mitchell additional Director.
On or about October 3, 1997, James G. Mitchell resigned as director and officer
of the issuer, citing the press of other business commitments. On January 15,
1997, a Majority of Shareholders met and resolved to authorize a change of the
name of the Corporation to Innovest Capital Sources Corporation. On or about
September 25, 1997, the Issuer amended its articles to change the par value to
"no par".

     About November 30, 1997, Intrepid International, S.A. (Intrepid), acquired
about 90% of the shares owned by Mays, or 42,043,174 shares of the common stock
of the Issuer, paying $90,000 for such block of stock, resulting in a change of
control of the Issuer, with no change in Management. As of the date of this
Report, the Issuer continues to be a development stage company.


         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 3

<PAGE>


(b)  The Business of Registrant.

     The Issuer has no current business, and has had no operations since its
emergence from Bankruptcy in 1996. During the period from April 1996 until the
end of the current fiscal year, December 31, 1997, Management has been engaged
int the search for new business opportunities without material results. The
Issuer continues to seek new business opportunities, including business
combinations, associations, joint venture, merger and/or acquisition programs to
achieve profitability for shareholders.


                               Item 2. Facilities.

     The Company has no employees or facilities, and enjoys the non-exclusive
office services of its Majority Shareholders.


                           Item 3. Legal Proceedings.

     There are no legal proceedings pending against the Company, known or
anticipated, as of the preparation of this Report.


          Item 4. Submission of Matters to a Vote of Security Holders.

     None during the period covered by this Annual Report.



         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 4

<PAGE>







--------------------------------------------------------------------------------


                                     PART II


--------------------------------------------------------------------------------







         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 5

<PAGE>


            Item 5. Market for Common Equity and Stockholder Matters.


(a)  Market Information.

     The Registrant Company has one class of securities, Common Voting Equity
Shares ("Common Stock"). The Company's Securities may be quoted in the
over-the-counter market, but there is no current market for them. Quotations
for, and transactions in the Securities are capable of rapid fluctuations,
resulting from the influence of supply and demand on relatively thin volume, and
possibly in response to unsubstantiated rumors. Of the Company's issued and
outstanding 50,000,000 shares of Common Stock as of December 31, 1996, all
shares, subject to an exception for the 47,069,274 shares believed to be owned
by affiliates of the Issuer, may be presently sold in compliance with Rule 144.
Rule 144 provides, among other things, and subject to certain limitations, that
a person, who is not an affiliate of the Issuer, holding Restricted Securities
for a period of two years may sell those securities, free of restriction in
brokerage transactions. Further, shares issued pursuant to 1933 Act
Registration, again subject to exceptions for affiliate ownership, are not
Restricted Securities, and are freely tradeable in brokerage transaction.
Affiliates are permitted by Rule 144 to sell affiliate-owned securities
(Restricted Securities held for more than one year, and Registered Affiliate
Control Securities) in limited amounts. Possible or actual sales of the
Company's Common Stock under Rule 144, or otherwise, may have a depressive
effect upon the price of the Company's Common Stock. By virtue of the matters
and history disclosed in this report, the shares of the Issuer's stock command
only a nominal value, and no actual market for the shares of this Issuer can be
said to exist.

(b)  Holders.

     Management calculates that the approximate number of holders of the
Company's Common Stock, as of December 31, 1997 was approximately 270.

(c)  Dividends.

     No cash dividends have been paid by the Company on its Common Stock and no
such payment is anticipated in the foreseeable future.


     Item 6. Management's Discussion and Analysis or Plan of Operation and
                             Results of Operations .

     The Issuer has no current business, and has had no operations in the last
two fiscal years. The Issuer has no capital resource and no liquidity. The
Company has been in the development stage since April 12, 1996, the date the
Trustee of the Bankruptcy estate sold the corporate shell. The company has
seeking new business opportunities, including business combinations,
associations, joint ventures, merger and /or acquisition programs to achieve
profitability for the shareholders. These factors raise issues about the
company's ability to continue as a going concern. The issuer will require
additional funds or forbearance from consultants to satisfy its cash
requirements for the beyond the next twelve months. As reflected in the
comparison of the Issuer's financial statements for the years ended December 31,
1997, with those of year end 1996, the shareholders equity has deceased from
zero to a negative 168,675, by reason of an accumulated deficit which increased
in the last fiscal year.


         Telco Communications, Inc. December 31, 1997 Form 10-KSB        Page 6

<PAGE>


              Item 7. Financial Statements and Supplementary Data.

     Reference is made to Auditors Reports for the periods from April 12, 1996,
to December 31, 1998, filed herewith. Those financial statements, attached
thereto and filed herewith, are incorporated herein by this reference as though
fully set forth herein.


                     Item 8. Change of Registrant's Auditor.

     Frank Chovanetz, CPA, Green & McElreath, 700 Louisiana, Suite 5200,
Houston, TX 77002- 2733 has been designated as and remains the Issuer's
Independent Auditor, having been engaged on or about August 20, 1997. The
Company's previous Audit was conducted by Gandre & Armstrong P.C and dated
September 25, 1989. There has been no disagreement or dispute of any kind or
sort with any auditor as to any matter.






         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 7

<PAGE>








--------------------------------------------------------------------------------


                                    PART III


--------------------------------------------------------------------------------









         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 8

<PAGE>


          Item 9. Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with ss.16(a) of the Exchange Act.


     a. The Directors and Executive Officers of the Company are set forth below.
All Officers and Directors shall serve until the next meeting of shareholders or
until their successors be elected or appointed.

Miller L. Mays III      James G. Mitchell(1)                   Karl E. Rodriguez
PRESIDENT/DIRECTOR            DIRECTOR              SECRETARY/TREASURER/DIRECTOR


(1)  Mr. Mitchell resigned as Director on or about October 3, 1997.

     (Please see Exhibit for Biography of Miller L. Mays III)

     (Please see Exhibit for Biography of Karl E. Rodriguez)


     b. Mr. Mays, who acquired control and office in 1996, did not file timely
Reports on Form 3, Form 4 or Form 5, with respect to his ownership of 47,000,000
shares, or changes thereof, during 1996 or 1997. Intrepid International, S.A.,
which acquired 90% of those shares, being 42,300,000 shares, in a non-brokerage
transaction, did not file timely Reports on Form 3 or Form 5 during 1997.

     All reports have been filed late.

     On or about January 27, 1998, following the period covered by this report,
the Issuer filed its Form 15 to withdraw from the reporting requirements of
ss.ss. 13 et seq. of the Securities Exchange AcT of 1934. The Issuer continues
to report voluntarily, pursuant to ss. 15(d).


                        Item 10. Executive Compensation.

     None of the Company's Officers or Directors presently receive any
compensation.


    Item 11. Security Ownership of Certain Beneficial Owners and Management.


                                  COMMON STOCK

     To the best of Registrant's knowledge and belief the following disclosure
presents, as of the date of this report, the total beneficial security ownership
of all Directors and Nominees, naming them, and by all Officers and Directors as
a group, without naming them, of Registrant, known to or discoverable by
Registrant, and the total security ownership of all persons, entities and
groups, known to or discoverable by Registrant, to be the beneficial owner or
owners of more than five percent of any

         Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 9

<PAGE>



voting class of Registrant's stock. Registrant has only one class of stock,
namely Common Voting Equity Shares.

<TABLE>
<CAPTION>
           SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS AND 5% OWNERS

=================================================================================================================
                 Name and Address of Beneficial Owner                       Amount and Nature            Percent
                                                                               of Ownership              of Class
-----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                       <C>   
      MILLER  L. MAYS III  President/Director                                   5,026,100                 10.05
      4 Normandy Drive
      Kenner LA 70065
-----------------------------------------------------------------------------------------------------------------
      KARL E. RODRIGUEZ   Secretary/Treasurer/Director                                  0                  0.00
      3131  Royal Street
      New Orleans LA 70117
-----------------------------------------------------------------------------------------------------------------
      JAMES G. MITCHELL   Director (1)                                                  0                  0.00
      Novotel Hotel Suite 408
      Conarty County, Guinea West Africa
=================================================================================================================
All Officers and Directors as a Group                                           5,026,100                 10.05
=================================================================================================================
-----------------------------------------------------------------------------------------------------------------
Intrepid International, S.A. (2)                                               42,043,174                 84.09
P. O. Box 8807
Panama City 5
Republic of Panama
=================================================================================================================
Other Affiliates                                                               42,043,174                 84.09
=================================================================================================================
=================================================================================================================
Total Shares Issued and Outstanding                                            50,000,000                100.00
=================================================================================================================
</TABLE>

(1)  Mr. Mitchell resigned as Director on or about October 3, 1997

(2)  Please refer to the following Item 13 for information and disclosure
     regarding Intrepid International, SA.


            Item 12. Certain Relationships and Related Transactions.

     (a) Intrepid International, S. A. ("Intrepid Panama") was incorporated in
the Republic of Panama in 1984 to offer financial services to natural resource
companies, primarily those engaged in the production of oil and gas. Following
the world wide collapse of oil prices in the mid-eighties, the Company broadened
the focus of its universe of support services to include a wider range of
companies, with an emphasis on public companies and private companies, companies
engaged in the transition from privately held to publicly held, and development
stage companies, whether public or private, requiring professional business and
corporate guidance. In August of 1997 the Company sought a United States
Representative and entered into a relationship with a group of corporate and
business specialists who, after contracting with the Company, incorporated as
Intrepid International, Ltd. ("Intrepid US") to provide the required
representation and agency for the Company in North America and Europe. Intrepid
US is incorporated in the State of Nevada. The officers and directors of
Intrepid International, S. A. (Panama) are comprised of three individuals;
Laurencio Jaen O., Teodoro F. Franco L. and Leopoldo Kennion G. All three of
these individuals are Panamanian citizens and each serves as an officer and a
director of the Intrepid Panama.

     Laurencio Jaen O., an original incorporator who has served as President and
Director of the Intrepid Panama since its inception in 1984, resides in Panama
City, Republic of Panama. He is, and

        Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 10

<PAGE>



has been for the past twenty five years, Vice President of Indiasa Corporation
("Indiasa"), a Panamanian corporation, which, through one of its subsidiaries,
Robmar International, is involved in the manufacture and distribution of
chemical products in Argentina and Brazil and which, through its former
subsidiary Indiasa Aviation Corporation, was, for eight years ending in 1981,
engaged in aviation consulting, the leasing, purchase and sale of aircraft, and
the operation of a cargo airline, primarily in Latin America. Mr. Jaen was a
founder of PAISA, Panama's international airline, served as president of the
Colon Free Zone (the world's largest free trade zone), and as Director of
Panama's Social Security Administration. He has also served as the President of
the Panamanian Chamber of Commerce, and as a member of the Board of Presidential
Advisors of the Republic of Panama.

     Teodoro F. Franco L., Secretary and a Director of the Intrepid Panama, has,
for thirty years, been a specialist in maritime and aviation law. Mr. Franco is
a partner in Franco and Franco, one of the most prestigious law firms in Panama
with offices around the world. In addition to his law practice he has served as
Panamanian Consul to Liverpool, England and for the past five years as
Ambassador to Great Britain. The firm of Franco and Franco is regarded with the
highest degree of integrity and professionalism in the business and political
community in Panama with its partners and several of its associates holding or
having held public office. Teodoro Franco's brother and partner, Dr. Juaquin F.
Franco, Jr., has held many public offices over the past four decades, most
recently as the Governor of Colon Province, the state containing the Atlantic
entrance to the Panama Canal and the Colon Free Zone. His nephew and associate
in the firm, Juaquin F. Franco, III, has served as the Minister of Commerce and
is currently a member of the House of Representatives and a candidate for
President of the Republic. The firm practices maritime, aviation and commercial
law and currently is the legal firm for: IBERIA (the Spanish national airline),
KLM (the Dutch national airline), VIASA (the Venezuelan national airline),
Aeroflot (the Russian national airline) and various smaller Latin American
national airlines as well as being the registered agents for thousands of ocean
going ships around the world flying the Panamanian flag. Mr. Franco brings to
Intrepid Panama a wealth of international legal, commercial and diplomatic
experience.

     Leopoldo Kennion G., Treasurer and a Director of the Intrepid Panama, is,
and has for twenty years, been a Certified Public Accountant specializing in
international accounting and is an associate in the law firm of Franco and
Franco. Mr. Kennion practices maritime, aviation and commercial accounting
serving the specialized needs of the transnational clients of Franco and Franco
by providing an interface between them and their auditors.

     J. Dan Sifford, Jr., is the United States Managing Director for Intrepid
International, S.A. (Panama). He is fluent in the Spanish Language. His
biographical information is found below.

     (b) Intrepid International, Ltd. ("Intrepid US") is a Nevada Corporation,
organized in 1997 to be the wholly-owned subsidiary United States agency of
Intrepid Panama. The officers and directors of Intrepid US are comprised of two
individuals; KIRT W. JAMES, and J. DAN SIFFORD, JR. Both of these individuals
are U. S. citizens.

     Kirt W. James, President and Director, has a lifelong background in
marketing and sales. From 1972 to 1987, Mr. James was responsible for sales and
business administrative matters for Glade N. James Sales Co., Inc.; and from
1987 to 1990 Mr. James built retail markets for American International Medical
Supply Co., a Public Intrepid US. In 1990 he formed and become President of HJS
Financial Services, Inc., and is responsible for day to day business of the firm
and consults Client's business and Product Development. During the past five
years Mr. James has been involved in the valuation, sale and acquisition of
numerous private businesses and planning for the entry of private corporations
into the public market place for their securities.

     J. Dan Sifford, Jr., Executive Vice President, Secretary/Treasurer and
Director, brings to the Intrepid US an extensive experience in Corporate
management and familiarity with transnational business, particularly in Latin
America. From 1970 to 1982, he was President and sole shareholder of Overseas

        Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 11

<PAGE>



Aviation Corporation, an all cargo airline, with operations throughout South
America and Africa. He was founder, President and Chief Executive Officer of
Airline of the Virgin Islands from 1982 until 1993. He served for many years as
President of Indiasa Corporation which, through one of its subsidiaries, was
involved in the manufacture and distribution of chemical products in Argentina
and Brazil, and which, through another subsidiary, was for eight years engaged
in aviation consulting, the leasing, purchase and sale of aircraft, and the
operation of a cargo airline, primarily in Latin America. In recent years he has
been engaged continuously in a wide variety of business activities, including
the development of new business ventures.


   Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)  Financial  Statements.   Reference is made to Auditors Reports for the
                              periods from April 12, 1996 to December 31, 1997,
                              filed herewith. Those financial statements,
                              attached thereto are incorporated herein by this
                              reference as though fully set forth herein.

(b   Form 8-K Reports.        Reports on Form 8-K were filed during the last
                              quarter covered by this Annual Report, concerning
                              a proposed acquisition and its failure to
                              materialize.

(c)  Exhibits.                Please see Exhibit Index, following.

                                 ---------------



        Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 12

<PAGE>


                                 Signature Page

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the individual capacities and on the date indicated.

     This Annual Report as of December 31, 1997, is executed April 30, 1998



                           Telco Communications, Inc.

             to become known as Innovest Capital Sources Corporation

                        formerly Cody Capital Corporation




                                       by




-----------------------------------          -----------------------------------
Miller L. Mays III                                             Karl E. Rodriguez
PRESIDENT/DIRECTOR                                  SECRETARY/TREASURER/DIRECTOR


        Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 13

<PAGE>




                                  Exhibit Index

                       Financial Statements and Documents
                       Furnished as a part of this Report

     The Issuer has changed its name to Innovest Capital Sources Corporation, to
become effective in 1998. The Audited Financial Statements presented herewith
were prepared in 1998 for the years ended 1997, and for that reason are prepared
in the name of Innovest Capital Sources Corporation.

================================================================================
Ex #                           FINANCIAL STATEMENTS                      Page #
================================================================================
                           Telco Communications, Inc.

             to become known as Innovest Capital Sources Corporation

                        formerly Cody Capital Corporation
================================================================================
F1   AUDITED FINANCIAL  STATEMENTS for the year ended December 31, 1997
     and for the period from April 12, 1996 (inception) to December 31,
     1997.
================================================================================


             (a-2) OTHER EXHIBITS Furnished as a part of this Report

     Table References refer to the number assigned each category of documents by
Reg ss. 229.601.

================================================================================
TABLE #  Ex #   Table Category / Description of Exhibit                     Page
                                                                             #
--------------------------------------------------------------------------------
  (3)           ARTICLES OF INCORPORATION AND BY-LAWS:
--------------------------------------------------------------------------------
          3.1   Articles of Incorporation of Cody Capital Corporation
--------------------------------------------------------------------------------
          3.2   Amendment of Articles: Name Change to
                 Telco Communication  April 11, 1989
--------------------------------------------------------------------------------
          3.3   Amendment of Articles: Name Change to
                Innovest Capital Sources Corporation  January 15, 1997
--------------------------------------------------------------------------------
          3.4   Amendment of Articles: Change the Common Stock 
                to No Par
                Innovest Capital Sources Corporation  September 25, 1997
--------------------------------------------------------------------------------
          3.5   By-Laws
--------------------------------------------------------------------------------
 (28)           OTHER DOCUMENTS
--------------------------------------------------------------------------------
         28.1   Biography of Miller L. Mays III
--------------------------------------------------------------------------------
         28.2   Biography of Karl E. Rodriguez
--------------------------------------------------------------------------------
         28.3   Form 15 (January 27, 1998) (subsequent event)
--------------------------------------------------------------------------------
                **********************
================================================================================


        Telco Communications, Inc. December 31, 1997 Form 10-KSB         Page 14
<PAGE>










                                   Exhibit F1

                AUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM

                      APRIL 12, 1996, TO DECEMBER 31, 1997












<PAGE>


                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)


                              FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT


                 YEAR ENDED DECEMBER 31, 1997 AND APRIL 12, 1996
                    (DATE OF INCEPTION) TO DECEMBER 31, 1997



<PAGE>


                        [LETTERHEAD OF GREEN & MCELREATH]


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders
Innovest Capital Sources Corporation
Kenner, Louisiana

We have  audited the  accompanying  balance  sheet of Innovest  Capital  Sources
Corporation  (a  development  stage  company) as of December 31,  1997,  and the
related statements of operations,  shareholders'  equity, and cash flows for the
year then ended and April 12, 1996 (date of  inception)  to December  31,  1997.
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 audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  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 audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Innovest  Capital  Sources
Corporation  as of December 31, 1997,  and the results of its operations and its
cash flows for the year then ended and April 12,  1996  (date of  inception)  to
December 31, 1997, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company is
in the development  stage and has had no business  operations  since  inception,
which  raises  substantial  doubt about the  Company's  ability to continue as a
going  concern.  The financial  statements do not include any  adjustments  that
might result from the outcome of this uncertainty.


April 10, 1998


                                        /s/ GREEN & MCELREATH



<PAGE>



                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                DECEMBER 31, 1997





                                     ASSETS

Intangible asset - value in excess of amounts
   allocable to identifiable assets                                   $   1,000
Impairment of intangible asset                                           (1,000)
Deferred tax asset                                                         --   
                                                                      ---------

    Total assets                                                      $    --   
                                                                      =========




                      LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued professional fees                                             $  32,025
Accrued interest expense                                                  2,240
Note payable                                                            134,410
                                                                      ---------

    Total liabilities                                                   168,675
                                                                      ---------

Common stock, no par, 50,000,000 shares authorized,
    issued and outstanding                                                1,000
Deficit accumulated during the development stage                       (169,675)
                                                                      ---------

    Total shareholders' equity                                         (168,675)

    Total liabilities and shareholders' equity                        $    --   
                                                                      =========


                       See notes to financial statements.




<PAGE>



                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
                           AND CUMULATIVE TOTALS SINCE
                                DATE OF INCEPTION


                                                                    Cumulative
                                                                      Totals
                                                                       Since
                                                                     Date of
                                                     1997           Inception
                                                 ------------      ------------

Revenues                                         $       --        $       --

Expenses:
    Interest expense                                   (2,240)           (2,240)
    Professional fees                                (166,435)         (166,435)
    Impairment of intangible asset                       --              (1,000)
                                                 ------------      ------------


Income before income taxes                           (168,675)         (169,675)

Income taxes                                             --                - __
                                                 ------------      ------------

Net loss                                         $   (168,675)     $   (169,675)
                                                 ============      ============


Net loss per share                               $    (.00337)     $    (.00339)
                                                 ============      ============


Weighted average number of
 common shares outstanding                         50,000,000        50,000,000
                                                 ============      ============


                       See notes to financial statements.


<PAGE>




                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF SHAREHOLDERS' EQUITY
                         FROM INCEPTION (APRIL 12, 1996)
                              TO DECEMBER 31, 1997


                                                                               
                                                                       Deficit  
                                                                     Accumulated
                                                 Common Stock,       During the 
                                           -----------------------  Development
                                             Shares        Amount       Stage
                                           ----------   ----------   ----------

Stock issued and outstanding
  on April 12, 1996, the date
  the corporate shell was separated
  from the bankruptcy estate               50,000,000   $    1,000         --

Net loss                                         --           --         (1,000)
                                           ----------   ----------   ----------

Balances at December 31, 1996              50,000,000   $    1,000   $   (1,000)

Net loss                                         --           --       (168,675)
                                           ----------   ----------   ----------

Balances at December 31, 1997              50,000,000   $    1,000   $ (169,675)
                                           ==========   ==========   ==========


                       See notes to financial statements.



<PAGE>


                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
                           AND CUMULATIVE TOTALS SINCE
                                DATE OF INCEPTION



                                                                      Cumulative
                                                                        Totals
                                                                         Since
                                                                       Date of
                                                         1997         Inception
                                                      ---------       ---------
CASH FLOWS PROVIDED
  BY OPERATING ACTIVITIES                             $    --         $    --

CASH FLOWS PROVIDED
  BY INVESTING ACTIVITIES                                  --              --

CASH FLOWS PROVIDED
  BY FINANCING ACTIVITIES                                  --              --   
                                                      ---------       ---------

NET INCREASE IN CASH                                       --              --

CASH AT BEGINNING OF PERIOD                           $    --              --   
                                                      ---------       ---------

CASH AT END OF PERIOD                                 $    --         $    --   
                                                      =========       =========



RECONCILIATION OF NET LOSS
   TO NET CASH FLOWS PROVIDED
   BY OPERATING ACTIVITIES:
     Net loss                                         $(168,675)      $(169,675)
     Adjustment to reconcile net
       loss to cash provided by
       operating activities -
         Accrued interest expense                         2,240           2,240
         Accrued professional fees                      166,435         166,435
         Impairment of intangible asset                    --             1,000
                                                      ---------       ---------

CASH FLOWS PROVIDED BY
   OPERATING ACTIVITIES                               $    --         $    --   
                                                      =========       =========


                       See notes to financial statements.


<PAGE>



                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 1997


1.   BASIS OF PRESENTATION

     Innovest  Capital Sources  Corporation  ("the Company") was incorporated as
     Cody Capital Corporation, a Colorado corporation,  on December 9, 1987. The
     Company completed a public offering in 1988. In 1989, Telco of Baton Rouge,
     Inc. was acquired and merged into Cody Capital Corporation, and the Company
     changed its name to Telco Communications, Inc

     In 1994, the Company filed for Chapter 11 bankruptcy protection,  which was
     subsequently  converted to Chapter 7 status by the  Bankruptcy  Court ("the
     Court"). As a result, a Trustee was placed in control of the affairs of the
     Company.  On March 26, 1996, upon motion by the Trustee,  the Court ordered
     that the corporate  shell be sold to Miller L. Mays III ("Mays").  Prior to
     the sale to Mays,  three former  convertible  debenture  holders  converted
     their  holdings  to common  stock,  which  resulted  in the  issuance of an
     additional  275,000  shares,  and brought the total  number of  outstanding
     shares to  2,930,226.  Mays acquired a majority  ownership  interest in the
     Company by  purchasing  from the trustee all the  authorized  but  unissued
     common shares  (47,069,774  shares) for $1,000.  Under the direction of the
     Court,  all assets,  liabilities  and business  operations  remained in the
     bankruptcy   estate,   and  all  prior   shareholders  of  record  remained
     shareholders subsequent to the sale. The corporate shell was separated from
     the bankruptcy estate immediately  following the sale. The sale occurred on
     April 12, 1996, which is the date of inception for the Company under audit.

     On January 15, 1997,  the  corporate  name was changed to Innovest  Capital
     Sources Corporation.

     The  Company  recognizes  income  and  expenses  on the  accrual  basis  of
     accounting.

     The Company  considers all highly  liquid  investments  with  maturities of
     three months or less to be cash equivalents.

     The  fair  value  of the  Company's  financial  instruments  which  consist
     primarily of accrued  professional fees and a note payable  approximate the
     carrying  amounts as  reported in the balance  sheet.  Management  does not
     believe the carrying amounts are impaired.



                                                                     (Continued)


<PAGE>


                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 1997



1.   BASIS OF PRESENTATION (Continued)

     Management uses estimates and assumptions in preparing financial statements
     in  accordance  with  generally  accepted  accounting   principles.   Those
     estimates  and  assumptions  affect  the  reported  amounts  of assets  and
     liabilities,  the disclosure of contingent assets and liabilities,  and the
     reported  amounts of revenues and expenses.  Actual results could vary from
     the estimates that were used.

     The office of the Company is located in Kenner,  Louisiana. The Company has
     no employees or facilities.  The records are maintained by the President at
     no expense to the Company.

     The Company has not  generated  revenues from  operations  nor is there any
     assurance of significant  revenues in the future.  Affiliated entities have
     offered  to loan the  Company  the  necessary  funds to cover any cash flow
     requirements for the next twelve months.  The Company is actively  pursuing
     various  other  funding  options,  including  equity  offerings,   business
     combinations, corporate alliances, or a combination of these methods. There
     can be no  assurance  that  the  Company  will  successfully  complete  the
     transition from a development stage company to profitability.


2.   INCOME TAXES

     Deferred income taxes are reported for temporary  differences between items
     of  income  or  expense  reported  in the  financial  statements  and those
     reported  for income tax  purposes.  The expense  entitled  "impairment  of
     intangible  asset" is a permanent  book/tax  difference,  and thus will not
     result in a current or deferred tax benefit or asset. At December 31, 1997,
     the  Company  had  available  a  net   operating   loss   carryforward   of
     approximately $168,675,  which will expire in 2013. Any future deferred tax
     asset  will be  offset  by a  valuation  allowance  until  such time as the
     Company  demonstrates  future  profitability.  At December  31,  1997,  the
     principal component of the deferred tax asset is as follows:

           Net operating loss carryforward         $ 57,350
           Valuation allowance                      (57,350)
                                                   --------

           Net deferred tax asset                  $   --  
                                                   ========


                                                                     (Continued)

<PAGE>


                      INNOVEST CAPITAL SOURCES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                          YEAR ENDED DECEMBER 31, 1997


3.   COMMON STOCK

     The  Corporation is authorized to issue  50,000,000  shares of one class of
     common  stock.  The  Articles of  Incorporation  were amended on August 31,
     1997,  to  change  the par  value  from  $.001  per  share  to no par.  All
     references in the  accompanying  financial  statements and notes to the per
     share amounts have been restated to reflect the change in par value.

4.    SUBSEQUENT EVENTS AND RELATED PARTIES

     In June 1996, the Company filed a Form 8-K with the Securities and Exchange
     Commission  relative to  agreements  reached with  Mortgage  Market,  Inc.,
     Surgimetrics  USA and  Telco  Holding  Corporation.  Subsequently,  a final
     agreement  among the parties could not be reached and the  agreements  were
     terminated.

     On or about June 23,  1997, a written  "offer to purchase"  the Company was
     entered  into with Solar  Energy  Limited.  On or about  October 1, 1997, a
     "letter of intent" was entered into to effectuate an acquisition and merger
     of the Company and Solar  Energy  Limited.  In  February  1998,  management
     determined  that a final  agreement  could not be reached and the agreement
     was terminated.

     In November 1997, Intrepid  International S.A.  ("Intrepid"),  a Panamanian
     corporation,  acquired  84.60% of the  outstanding  stock of the Company by
     acquiring 42,300,000 shares of the Company's  outstanding common stock from
     Mays. This resulted in a change of control of the Company.

     In 1997, the Company retained  Intrepid for its investment  banking,  legal
     and financial  services.  The services to be performed  include  public and
     shareholder  relations,   audit  coordination,   certificate  and  transfer
     coordination,  coordination of relationships  with market makers and broker
     dealers in the  securities  of the  Company and  various  other  consulting
     services.  Additionally,  Intrepid  will  assist  in  the  preparation  and
     coordination  of annual,  quarterly and current  filings as may be required
     pursuant to the Securities and Exchange Act of 1934 and  Regulations of the
     Securities and Exchange Commission promulgated pursuant to the 1934 Act. As
     of April 10,  1998,  the fees  incurred by Intrepid  totaled  $164,366  for
     services rendered subsequent to June 19, 1997.

     On October 15, 1997,  the Company  issued a note in the amount of $134,410,
     with 8%  interest,  due October 15,  1998,  to  Intrepid  for  professional
     services  incurred  through October 15, 1997. The note is convertible  into
     common stock of the Company at a conversion prices of $0.0336 per share.

                                                                     (Concluded)