SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]      Quarterly Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended June 30, 2004

[ ]      Transition Report pursuant to 13 or 15(d) of the Securities Exchange
         Act of 1934
         For the transition period                 to
                                   ----------------  -------------------


                         Commission File Number 0-12993
                                                -------

                                TELS CORPORATION
               --------------------------------------------------
        (Exact name of small Business Issuer as specified in its charter)

         Utah                                           87-0373840

(State or other jurisdiction of             (IRS Employer Identification No.)
Incorporation or organization)


207 S Main
Pratt, Kansas                                                   67124

(Address of principal executive offices)                      (Zip Code)

Issuer's telephone number, including area code:               (620) 672-3472

                                 Former Address:
                        2459 Washington, Drive, Suite 104
                                 Eagan, MN 55121

      --------------------------------------------------------------------
             (Former name, former address and former fiscal period,
                         if changed since last report)

Check  whether the issuer (1) 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 issuer was  required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days   [X] Yes [ ] No

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest  practicable date:  31,379,411 shares of $0.02 par value
common stock outstanding as of August 19, 2004.


<PAGE>

PART I - FINANCIAL INFORMATION


Item 1.           FINANCIAL STATEMENTS

Consolidated Balance Sheet as of June 30, 2004 (unaudited)

Consolidated Statement of Operations for the Three and Nine Months ended June
30, 2004 and June 30, 2003 (unaudited)

Consolidated Statement of Cash Flows for the Nine Months Ended June 30, 2004 and
2003 (unaudited)

Notes to Consolidated Financial Statements (unaudited)

                                       1
<PAGE>

TELS CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements (Unaudited)
June 30, 2004


                                       2
<PAGE>

<TABLE>
<CAPTION>

                                                                  TELS CORPORATION AND SUBSIDIARIES
                                                                         Consolidated Balance Sheet

                                                                          June 30, 2004 (Unaudited)
---------------------------------------------------------------------------------------------------


        Assets
        ------
<S>                                                                                        <C>
Current assets:
  Cash and cash equivalents                                                     $           39,995
  Accounts receivable, net of allowance for doubtful accounts of $24,609                    58,919
  Commissions receivable, net of allowance for doubtful accounts of $49,957                 17,827
  Employee receivables                                                                       1,400
  Prepaid expenses                                                                          25,173
                                                                                ------------------

        Total current assets                                                               143,314

  Property and equipment, net of accumulated depreciation of $99,817                        75,587
  Customer base, net of accumulated amortization of $172,133                               457,324
  Other assets                                                                               7,371
                                                                                ------------------

        Total assets                                                            $          683,596
                                                                                ------------------

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

        Liabilities and Stockholders' Equity
        ------------------------------------

Current liabilities:
  Accounts payable                                                                          39,103
  Accrued liabilities                                                                      180,763
  Current portion of long-term debt                                                         61,987
                                                                                ------------------

        Total current liabilities                                                          281,853

Long-term debt                                                                              19,886
Related party note payable                                                                  21,000
Related party debentures, net of discount of $58,196                                       103,554
                                                                                ------------------

        Total liabilities                                                                  426,293
                                                                                ------------------

Commitments and contingencies                                                                    -

Stockholders' equity:
  Series A convertible preferred stock, $1.00 par value; authorized
    10,000,000 shares, no shares issued and outstanding                                          -
  Common stock, $.02 par value; authorized 50,000,000 shares,
    issued 31,379,411 shares issued and outstanding                                        627,588
  Additional paid-in capital                                                             1,057,817
  Receivable from stockholder                                                             (214,600)
  Accumulated deficit                                                                   (1,213,502)
                                                                                ------------------

        Total stockholders' equity                                                         257,303
                                                                                ------------------

        Total liabilities and stockholders' equity                              $          683,596
                                                                                ------------------

--------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                      3
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                                            TELS CORPORATION AND SUBSIDIARIES
                                                             Consolidated Statement of Operations (Unaudited)

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

                                                     Three Months Ended              Nine Months Ended
                                                         June 30,                       June 30,
                                               --------------------------------------------------------------
                                                    2004               2003           2004           2003
                                               --------------------------------------------------------------
<S>                                            <C>                <C>             <C>            <C>
Revenues:
  Services                                     $        155,960   $           -   $    402,873   $         -
  Commissions                                           150,941         142,154        441,727        595,164
                                               --------------------------------------------------------------

        Total revenues                                  306,901         142,154        844,600        595,164

Expenses:
  Salaries and commissions                              251,062          71,436        742,717        298,207
  General and administrative                            346,453          84,896        770,975        265,195
  Related party management fee                                -          20,881         32,466         79,758
  Interest                                               16,873               -         20,691              -
                                               --------------------------------------------------------------

        Total                                           614,388         177,213      1,566,849        643,160
                                               --------------------------------------------------------------

        Loss before income taxes                       (307,487)        (35,059)      (722,249)       (47,996)

Provision (benefit) for income taxes                          -               -              -              -
                                               --------------------------------------------------------------

Net loss                                       $       (307,487)  $     (35,059)  $   (722,249)  $    (47,996)
                                               --------------------------------------------------------------

Loss per share - basic and diluted             $          (0.01)  $       (0.00)  $      (0.03)  $      (0.00)
                                               --------------------------------------------------------------

Weighted average shares - basic and diluted          31,332,000      22,693,000     27,429,000     22,693,000
                                               --------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                                4

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  TELS CORPORATION AND SUBSIDIARIES
                                                               Consolidated Statement of Cash Flows

                                                             Nine Months Ended June 30, (Unaudited)
---------------------------------------------------------------------------------------------------



                                                                           2004          2003
                                                                    -------------------------------
<S>                                                                 <C>              <C>
Cash flows from operating activities:
  Net loss                                                          $    (722,249)   $      (47,996)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
      Bad debt expense                                                    133,280                 -
      Depreciation and amortization                                        86,965               142
      Issuance of common stock for services                                55,000                 -
      Issuance of warrants for services                                    63,682                 -
      (Increase) decrease in:
        Accounts receivable                                               (84,246)                -
        Commissions receivable                                            (10,421)           38,796
        Employee receivable                                                12,704            43,349
        Related party receivable                                                -            31,776
        Prepaid and other assets                                          (22,990)           (2,217)
      (Decrease) increase in:
        Cash overdraft                                                    (28,880)                -
        Accounts payable                                                    2,322           (29,851)
        Accrued liabilities                                                78,620           (40,620)
        Related party payable                                                   -            (3,380)
                                                                    -------------------------------

           Net cash used in
           perating activities                                           (436,213)          (10,001)
                                                                    -------------------------------

Cash flows from investing activities:
  Advances to subsidiaries prior to acquisition of subsidiaries           (46,750)                -
  Purchases of equipment                                                  (43,084)                -
                                                                    -------------------------------

           Net cash used in investing activities                          (89,834)                -
                                                                    -------------------------------

Cash flows from financing activities:
  Payment of long-term debt                                               (40,395)                -
  Payment of related party note payable                                   (27,510)                -
  Proceeds from related party note payable                                 21,000                 -
  Proceeds from related party debentures                                   98,263                 -
  Proceeds from issuance of common stock                                  524,184                 -
  Offering costs from issuance of common stock                             (9,500)                -
                                                                    -------------------------------

           Net cash provided by financing activities                      566,042                 -
                                                                    -------------------------------

           Net change in cash and cash equivalents                         39,995           (10,001)

Cash and cash equivalents at beginning of period                                -            10,548
                                                                    -------------------------------

Cash and cash equivalents at end of period                          $      39,995    $          547
                                                                    -------------------------------

---------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.                                      5

</TABLE>
<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)

                                                                   June 30, 2004
--------------------------------------------------------------------------------


1.   Organization       Organization
     and                TELS Corporation ("TELS") (the Company) was incorporated
     Significant        under  the laws of the State of Utah in  February  1981.
     Accounting         The Company's  primary  operations  from October 1, 2002
     Policies           through  January 2004 consisted of introducing  customer
                        securities  and  commodities  transactions  to  clearing
                        brokers  through  its 100%  owned  subsidiary  Strategic
                        Futures and Options, Inc.

                        In January  2004,  the Company  added to its  operations
                        when it  entered  into a  Share  Exchange  Agreement  to
                        acquire  all of the  issued  and  outstanding  shares of
                        common stock of both Pathway  Advisors,  Inc.  (Pathway)
                        and Hampton and  Hampton,  P.A.  (Hampton).  The Company
                        issued  a total  of 6  million  shares  of  unregistered
                        common stock to acquire these  entities,  valued at $.10
                        per share.  This  transaction  was  reported on Form 8-K
                        filed  February 5, 2004.  Hampton and Pathway's  primary
                        operations  include  accounting,  tax return preparation
                        and financial advising services.

                        In March 2004, the Company completed a Private Placement
                        under a Private Placement  Memorandum dated November 26,
                        2003.   The   Company   issued   1,992,982   shares   of
                        unregistered common stock in exchange for $299,000. Each
                        share of stock had one warrant  attached that allows the
                        holder to purchase one share of common stock at $.50 per
                        share and the warrant  expires 3 years after the date of
                        issuance.  The Company  issued  125,000 shares of common
                        stock in  satisfaction of offering costs related to this
                        Private Placement.

--------------------------------------------------------------------------------
                                                                               6

<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)
                                                                       Continued
                                                                   June 30, 2004
--------------------------------------------------------------------------------


1.   Organization       The  Company  completed  a  Private  Placement  under  a
     and                Private Placement Memorandum dated January 28, 2004. The
     Significant        Company  issued  32,350 units in exchange for  $323,000.
     Accounting         Each unit consists of the following:  $5 (face value) in
     Policies           convertible  debt;  10  shares  of  unregistered  common
     Continued          stock;  and  10  common  stock  purchase  warrants.  The
                        convertible debt accrues interest quarterly at an annual
                        rate of 8.5% (effective rate of 26.5%),  matures 3 years
                        after  the date of  issuance,  and is  convertible  into
                        common stock at a conversion price of $1 per share. Each
                        warrant  allows  for the  purchase  of 1 share of common
                        stock at $1.50 per share and the warrants expire 3 years
                        after the date of issuance.  The Company  issued  80,000
                        shares  and an  additional  $9,500  in  satisfaction  of
                        offering costs related to this Private Placement.

                        The  $323,000 in  consideration  received for the common
                        stock,  warrants and  convertible  debt  included in the
                        32,350 units issued was allocated  according to the fair
                        value of the  common  stock  and the  fair  value of the
                        warrants using the Black-Scholes pricing model, with the
                        remaining  consideration  allocated to convertible debt,
                        which   was   discounted   by   approximately   $64,000.
                        Approximately  $98,000 was allocated to convertible debt
                        ($162,000  face value),  $129,000 to common  stock,  and
                        $96,000 to warrants.

                        In February  2004, the Company signed a Letter of Intent
                        to acquire W.H.  Williams CPA,  Inc. of Olathe,  Kansas.
                        The approximate purchase price, including real estate is
                        $275,000, which management believes will be completed as
                        an all cash transaction.

                        Accrued  liabilities  includes $22,000 at June 30, 2004,
                        which  represents  amounts  collected,  net of  expenses
                        paid, on behalf of W.H. Williams CPA, Inc. since signing
                        the letter of intent in February 2004.


--------------------------------------------------------------------------------
                                                                               7

<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)
                                                                       Continued
                                                                   June 30, 2004
--------------------------------------------------------------------------------


2.   Basis of           The  Company's   accompanying   unaudited   consolidated
     Presentation       condensed  financial  statements  have been  prepared in
                        accordance with accounting principles generally accepted
                        in the United  States of America for  interim  financial
                        information and the instructions to Form 10-QSB and Item
                        310 of  Regulation  SB of the  Securities  and  Exchange
                        Commission (the "SEC"). Accordingly,  these consolidated
                        condensed financial statements do not include all of the
                        disclosures required by accounting  principles generally
                        accepted  in  the  United  States  of  America.  In  the
                        Company's opinion, all adjustments (consisting of normal
                        and recurring  adjustments)  considered  necessary for a
                        fair presentation have been included.  Operating results
                        for the three and nine  months  ended June 30,  2004 are
                        not  necessarily  indicative  of the results that may be
                        expected  for the year ended  September  30,  2004.  The
                        accompanying  consolidated  financial statements and the
                        notes  thereto  should be read in  conjunction  with the
                        Company's audited  consolidated  financial statements as
                        of and for the year ended  September 30, 2003  contained
                        in the Company's Form 10-KSB.

                        Certain amounts in the consolidated financial statements
                        for  2003  have  been  reclassified  to  conform  to the
                        current period presentation.


3.   Going              As of June 30, 2004,  the Company has a working  capital
     Concern            deficit,  has  experienced   recurring  net  losses  and
                        negative cash flows from operations. These factors raise
                        substantial   doubt  about  the  Company's   ability  to
                        continue as a going  concern.  Management  believes that
                        sufficient  cash can be generated to continue as a going
                        concern  by (1)  raising  capital  through  issuance  of
                        equity and debt,  (2)  continuing  to  increase  revenue
                        through  obtaining  new  customers  and  (3)  minimizing
                        operating costs. However, there can be no assurance that
                        management's plans will be successful.  The accompanying
                        financial  statements  do not  include  any  adjustments
                        relating to the  recoverability  and  classification  of
                        asset carrying amounts or the amount and  classification
                        of  liabilities  that might result should the Company be
                        unable to continue as a going concern.

--------------------------------------------------------------------------------
                                                                               8

<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)
                                                                       Continued
                                                                   June 30, 2004
--------------------------------------------------------------------------------


4.   Stock-Based        Stock-Based Compensation
     Compensation       The   Company   accounts   for   stock-based    employee
                        compensation using the intrinsic-value method prescribed
                        by APB Opinion No. 25,  Accounting  for Stock  Issued to
                        Employees, and related interpretations. The Company also
                        presents  pro forma  earnings  and earnings per share in
                        its  consolidated  financial  statements  as required by
                        SFAS No. 123,  Accounting for Stock-Based  Compensation.
                        No options  were  issued or vested  during the three and
                        nine  months  ended June 30,  2004 and 2003;  therefore,
                        there would be no effect on net income and  earnings per
                        share  if  the   Company  had  applied  the  fair  value
                        recognition  provisions  of FASB  Statement  No.  123 to
                        stock-based employee compensation.

                        Stock options and warrants granted to non-employees  for
                        services are accounted  for in accordance  with SFAS 123
                        which  requires  expense  recognition  based on the fair
                        value  of  the  options/warrants  granted.  The  Company
                        calculates  the  fair  value  of  options  and  warrants
                        granted using the Black-Scholes pricing model.

5.   Earnings Per       The  computation  of basic  earnings per common share is
     Common             based  on  the   weighted   average   number  of  shares
     Share              outstanding during the period.

                        The computation of diluted  earnings per common share is
                        based  on  the   weighted   average   number  of  shares
                        outstanding  during the  period,  plus the common  stock
                        equivalents  that would arise from the exercise of stock
                        options outstanding, using the treasury stock method and
                        the average market price per share during the period.

6.   Customer           In  January  2004,  the  Company  entered  into a  Share
      Base              Exchange  Agreement  to  acquire  all of the  issued and
                        outstanding  shares  of  common  stock  of both  Pathway
                        Advisors,  Inc. (Pathway) and Hampton and Hampton,  P.A.
                        (Hampton).  The  Company  issued  a total  of 6  million
                        shares of  unregistered  common  stock to acquire  these
                        entities,  a valued  consideration of $600,000 ($.10 per
                        share).


--------------------------------------------------------------------------------
                                                                               9

<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)
                                                                       Continued
                                                                   June 30, 2004
--------------------------------------------------------------------------------


6.   Customer           The Company  recorded an  intangible  asset of $531,000,
     Base               which  represents the customer base acquired,  valued at
     Continued          the  difference  between the  $600,000 in  consideration
                        issued and the $69,000 fair value of the tangible assets
                        acquired.

                        The components of the net tangible  assets  acquired are
                        as follows:

                           Accounts receivable                      $    58,000
                           Employee receivables                           2,000
                           Property and equipment                        40,000
                           Other assets                                  12,000
                           Company advances                             (47,000)
                           Cash overdraft                               (28,000)
                           Accounts payable                             (22,000)
                           Accrued liabilities                          (39,000)
                           Long-term debt                              (122,000)
                           Receivable from stockholder                  215,000
                                                                    ------------

                                                                    $    69,000
                                                                    ===========

                        The Company is  amortizing  the customer  base using the
                        straight-line  method over its estimated  useful life of
                        36 months.  Amortization  expense  from the  acquisition
                        date to June 30, 2004, was approximately $172,000.

                        The Company periodically  evaluates the remaining useful
                        life of the intangible asset to determine whether events
                        and  circumstances  warrant a revision to the  remaining
                        period of  amortization.  The Company also  periodically
                        reviews the  intangible  asset for  impairment  and will
                        recognize an impairment  loss if the intangible  asset's
                        carrying  amount is not  recoverable  and  exceeds  fair
                        value.

7.   Related Party      A Company  related  through  common  ownership  provided
     Transaction        certain  administrative  services  to the  Company.  The
                        total  management fee expense was  approximately  $0 and
                        $21,000  for the three  months  ended June 30,  2004 and
                        2003,  and $32,000 and $80,000 for the nine months ended
                        June  30,  2004  and  2003,  respectively.  The  related
                        Company no longer  provides  administrative  services to
                        the  Company  and  no  related  party  payable   remains
                        outstanding at June 30, 2004.

--------------------------------------------------------------------------------
                                                                              10

<PAGE>


                                               TELS CORPORATION AND SUBSIDIARIES
                          Notes to Consolidated Financial Statements (Unaudited)
                                                                       Continued
                                                                   June 30, 2004
--------------------------------------------------------------------------------


7.   Related Party      On June 25,  2004  the  Company  entered  into a line of
     Transaction        credit agreement with Advisor Financing, Inc., a company
     Continued          related through common ownership.  No borrowing limit is
                        expressly  set in the terms of the  agreement.  The line
                        accrues  interest  quarterly  at an annual rate of 9.5%,
                        matures March 25, 2005, and has an  outstanding  balance
                        of $21,000 at June 30, 2004.

8.   Business           The Company  operated under the following segments as of
     Segment            June 30, 2004:

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                             June 30,2004
                                                -------------------------------------------
                                                 Accounting      Brokerage     Consolidated
                                                 ----------      ---------     ------------
<S>                                             <C>             <C>            <C>
Revenues from external customers                $   158,000     $   149,000    $   307,000

Segment profit (loss) before income taxes           (47,000)       (260,000)      (307,000)


                                                           Nine Months Ended
                                                             June 30,2004
                                                -------------------------------------------
                                                 Accounting      Brokerage     Consolidated
                                                 ----------      ---------     ------------

Revenues from external customers                $   413,000     $   432,000    $   845,000

Segment profit (loss) before income taxes          (130,000)       (592,000)      (722,000)

Identifiable assets                                 576,000         108,000        684,000

</TABLE>
--------------------------------------------------------------------------------
                                                                              11


<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

FORWARD LOOKING STATEMENTS

The information in this discussion  contains  forward-looking  statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  These
forward-looking statements involve risks and uncertainties, including statements
regarding the Company's capital needs,  business strategy and expectations.  Any
statements  contained  herein that are not statements of historical facts may be
deemed  to be  forward-looking  statements.  In some  cases,  you  can  identify
forward-looking  statements  by  terminology  such as "may",  "will",  "should",
"expect",  "plan",  "Intend",  "anticipate",  "believe",  estimate",  "predict",
"potential"  or  "continue",  the  negative  of such  terms or other  comparable
terminology.  Actual  events or  results  may  differ  materially.  The  Company
disclaims any obligation to publicly  update these  statements,  or disclose any
difference  between its actual results and those reflected in these  statements.
The information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.

GENERAL

For the period ended June 30, 2004, our primary focus has been the operations of
both Hampton & Hampton, P.A. ("Hampton") and Pathway Advisors, Inc. ("Pathway").
Since the resignation of our former president, Ron Wolfbauer, in order to reduce
our operating  costs, we have  considerably  reduced the operations of Strategic
Futures and Options, Inc. ("Strategic") to a single office in Minnesota.

Strategic  is a  registered  introducing  broker  with the  Commodities  Futures
Trading Commission ("CFC") and a member of the National Futures Association. Its
revenues consist primarily of brokerage  commissions.  Brokerage commissions are
generated  through  customer  trades.   Current  management  believes  that  the
commodities  industry  is highly  volatile  and that even with a well  qualified
staff,  profitable  operations  within  Strategic may not be  obtainable  or, if
obtainable,  may not warrant management's  attention.  Management is considering
various  alternatives to  restructuring  Strategic  business plan.  However,  no
decision has been made to date.


                                       12
<PAGE>

Hampton is a  multi-service  accounting firm with five branch offices located in
the  State  of  Kansas  specializing  in  individual  and  business  tax  return
preparation,  tax planning strategies, and accounting for small business owners.
Other  services  entail  planning  for  retirement,  social  security and estate
transfer. Hampton has plans to expand into the Kansas City, Kansas market and in
furtherance  thereof has an  agreement  in  principal to acquire the practice of
W.H.  Williams,  CPA, Inc.  (Williams) at a cost of $175,000 and the  commercial
real estate at a cost of $100,000. The agreement provides for payment of $50,000
at closing, $50,000 on the six month anniversary date, and then $25,000 per year
on the first, second and third anniversary date of the closing.  The real estate
will be financed by Mr.  Williams  on a contract  for deed.  Since March 1, 2004
when we signed  our  letter of intent to  acquire  Williams  we have not had the
$50,000 required to close the transaction.  However, we have assumed operational
control  of the  Williams  office.  We have  converted  the client  billing  and
collection system to Hampton's system. The revenue, accounts payable and payroll
are all being processed out of our Pratt,  Kansas,  office.  The net collections
and disbursements  totaling $21,000 has been recorded as an accrued liability on
the balance  sheet at June 30, 2004 (see Note 1). We hope to close our  purchase
transaction  with Mr.  Williams  during the fourth  quarter of fiscal 2004.  Von
Hampton  serves as the  president of Hampton as well as the  president and chief
executive officer of Tels.

Pathway has been primarily focused on investor relations and raising capital for
Tels. Pathway also serves as relationship  manager between Tels and our clients.
Pathway builds  relationships of trust with our clients by seeking to understand
their needs and helping them get the right  services to achieve their  financial
goals.  In  the  process  of  building  these  relationships,  Pathway  has  the
opportunity to explain the various  services  offered by our  multi-disciplinary
financial  services  company.  These  opportunities  to cross-sell  our services
result in  satisfied  customers  and  additional  sales for TELS.  In the future
Pathway's   emphasis  will  be  focused  on   introducing   investment   banking
relationships to clients.  Pathway will identify structure and arrange financing
for clients and various investment  opportunities.  Revenue will be generated by
fees for services rendered. Pathway will also receive fees in the form of equity
participation.  Heath H.  Hampton  serves as  president  of  Pathway  and is the
brother of Von Hampton. Pathway is located in Topeka, Kansas.

Our  financial  statements  for the  period  ended  June 30,  2004  reflect  the
consolidated  operations of our subsidiary  Strategic Futures and Options,  Inc.
(Strategic)  for the  three  and  nine  months  ended  June  30,  2004,  and our
subsidiaries  Hampton and Pathway  from  January 27, 2004 (date of  acquisition)
through  June  30,  2004.  Since  we did not have  similar  operations  in prior
quarters,  our  comparative  numbers  may not  accurately  reflect any growth in
Hampton and Pathway's operations prior to the acquisition by the Company.

RESULTS OF OPERATIONS

During the three and nine months  ended June 30, 2004 we  generated  revenues of
$306,901 and $844,600,  respectively.  This compares to revenues of $142,154 and
$595,164,  respectively,  for the comparable  periods in 2003.  The  significant
increase in revenues is attributable to service  revenues  generated by Hampton.
Hampton was acquired in January 2004 and as such its comparative numbers are not
included in the financial statements.


                                       13
<PAGE>

The  increases  in revenues  have not kept pace with the  increase in  expenses.
Expenses  for the three and nine months  ended June 30, 2004 were  $614,388  and
$1,566,849, respectively, as compared to $177,213 and $643,160, respectively, in
the comparative prior year periods.  Salaries and commissions expenses increased
for the three and nine months ended June 30, 2004 and 2003  comparatively,  from
$71,436 and  $298,207 to $251,062  and  $742,717,  respectively.  A  significant
portion of this expense is attributable to salaries paid to Strategic's brokers.
At this time there are not any brokers receiving a salary. All brokers currently
on  staff  are paid on a  commission  only  basis.  General  and  administrative
expenses  for the three and nine months  ended June 30, 2004 as compared to June
30,  2003  increased  from  $84,896  and  $265,195  to  $346,453  and  $770,975,
respectively.  The increase in general and administrative  expenses is primarily
due to the acquisition of Hampton and Pathway. In addition,  Strategic's general
and administrative expenses increased due to opening a second office in January,
2004  that has been  subsequently  closed.  Furthermore,  we have  significantly
reduced Strategic's operations in order to reduce these expenses.

We incurred  net losses of $307,487  and  $722,249 for the three and nine months
ended June 30, 2004 as compared to net losses of $35,059 and $47,996 in 2003. Of
this total,  approximately  $260,000  and $592,000  are  attributable  to losses
incurred by our  brokerage  segment  during the three and nine months ended June
30, 2004, respectively.  Net losses of $47,000 and $130,000 were attributable to
the  accounting  segment  during the three and nine months  ended June 30, 2004,
respectively.  Management  believes  that by focusing on the  operations of both
Hampton  and  Pathway it will be able to  curtail  the  escalating  consolidated
losses.

LIQUIDITY AND CAPITAL RESOURCES

Our total current assets as of June 30, 2004 were $143,314. We had approximately
$39,995  in  cash,  $58,919  in  accounts  receivable,  $17,827  in  commissions
receivable,  $1,400 in employee receivables and $25,173 in prepaid expenses.  In
addition to our current assets,  we had property and equipment of  approximately
$75,587,  $457,324 in intangible assets  (consisting of costs paid for Hampton's
customer base) and $7,371 in assets we have  categorized  as "other".  The total
dollar value of our assets at June 30, 2004 is $683,596.  Investors are urged to
review  Note 6 in the  notes  to the  consolidated  financial  statements  for a
clearer understanding of the $457,324 that we have recorded as a customer base.

As of June  30,  2004 we had  $281,853  in  current  liabilities  consisting  of
approximately  $39,103 in accounts payable,  $180,763 in accrued liabilities and
$61,987  representing  the  current  portion  of  long-term  debt.  We also  had
long-term debt of approximately $144,440. We had total liabilities of $426,293.

We have a working capital deficit of $138,539. Management's previous decision to
expand Strategic's  operations has depleted its capital resources.  Although the
accounting  segment has incurred  losses  during the three and nine months ended
June 30, 2004, the earnings before  depreciation  and amortization are positive.
Therefore,  we expect the  tightening  of  Strategic  and the  expansion of both
Hampton and Pathway  operations to be sufficient to cover our short-term capital
needs.

Additional capital has also been generated from the sale of the Company's equity
securities to prospective investors and in furtherance thereof, through the date
of this filing,  we have raised a total of  $514,684,  net of $9,500 in offering
costs, from the sale of our securities to investors. We may seek further funding
from  prospective  investors  if we are not  able to meet  our  ongoing  capital
requirements.  However, there can be no assurance that we will be able to sell a
sufficient  quantity of our  securities  to satisfy  our  operating  needs.  The
Company may also require other sources of funding to finance the  acquisition of
W.H. Williams CPA. Right now, we do not have any third party commitments to fund
our  operations  and  there can be no  assurance  that we will be able to secure
funding in the future.  Without  sufficient sources of cash, we may be forced to
curtail our operations.

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<PAGE>

The accompanying  consolidated  financial statements have been prepared assuming
that we will  continue as a going  concern.  We have an  accumulated  deficit of
$1,213,502 and a working capital deficiency of $138,539 as of June 30, 2004, and
had net losses and cash used in operations of $722,249 and $436,213 respectively
for the nine months ended June 30, 2004. The consolidated  financial  statements
do not  include  any  adjustments  that might be  necessary  if we are unable to
continue as a going concern.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Our planned  operation  is  dependent  upon our  ability to expand our  existing
business operations and secure additional  financing.  Changes in interest rates
may make the cost of  securing  additional  financing  beyond  our  reach.  As a
result,  we may not be able to fully  implement  our business  plan. We may also
secure additional  funding through the sale of a combination of debt and equity.
Changes in the  financial  markets,  changes in the price of our common stock or
any type of  regulatory  sanctions  may make it very  difficult for us to secure
additional funding through the sale of our securities.

We compete in highly  competitive  markets.  The  accounting  and the  brokerage
industry as well as the financial markets are highly competitive and fragmented.
Our success will also be  dependent  upon general  economic  conditions  and the
ability to accomplish our goals, of which there can be no assurance.

ITEM 4.  CONTROLS AND PROCEDURES.

As  required  by Rule  13a-15  under the  Securities  Exchange  Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and  operation of our  disclosure  controls and  procedures as of the end of the
filing period covered by this report.  This evaluation was carried out under the
supervision  and with the  participation  of our President  and Chief  Executive
Officer,  Mr. Von Hampton.  Based upon that  evaluation,  it was concluded  that
certain  disclosure  controls and  procedures  are effective in timely  alerting
management to material information relating to us required to be included in our
periodic SEC  filings.  There have been no  significant  changes in our internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date we carried out the evaluation.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that  information  required  to be  disclosed  in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required  to be  disclosed  in our  reports  filed  under  the  Exchange  Act is
accumulated and communicated to Mr. Hampton to allow timely decisions  regarding
required disclosure.

CHANGE IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls or in other
factors that could  significantly  affect those  controls  since the most recent
evaluation of such controls.


                                       15
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Previously  entered  default  judgments  have been  vacated  by the Court in the
following  proceedings  which have been filed against the Company's  subsidiary,
Strategic Futures and Options, Inc.:

Patt Brown v. International  Strategic Assets, Inc., Ron Wolfbauer and Strategic
Futures  and  Options  Inc.  (Case No.  C7-04-7680  filed in the First  Judicial
Circuit of Minnesota).  The Plaintiff,  in a multiple  count  complaint  alleges
breach of contract,  consumer fraud,  fraud,  conversion  fraudulent  transfers,
conversion,  deceptive  trade  practices  and  unjust  enrichment.  The  various
allegations  involve delivery of 40.5 ounces of platinum coins to the Defendants
and the failure to pay approximately $13,000.

Steven C. Davis vs.  International  Strategic Assets Inc. Investment  Strategies
Inc.,  Strategic  Futures & Options,  Inc. and Ronald  Wolfbauer (Case No. C1-04
7609 filed in the First  Judicial  District of Minnesota).  The Plaintiff  seeks
approximately  $51,000 and  alleges  failure to pay the  required  consideration
after Plaintiff delivered certain rare coins to Defendants.

The LFR Editorial Profit Sharing Plan, vs. International Strategic Assets, Inc.,
Investment Strategies, Inc., Strategic Futures & Options and Ron Wolfbauer (Case
No. C2-04 7733 filed in the First Judicial District of Minnesota). The Plaintiff
seeks  $92,000  and  alleges  failure to pay the  required  consideration  after
Plaintiff delivered 383 Liberty XF Gold Coins to the Defendants.

Each of the lawsuits arises out of certain actions taken by our former president
in connection  with the operation of his privately  held company,  International
Strategic Assets.  Strategic has been named as an alter ego of Ron Wolfbauer and
International Strategic Assets.

We believe that we will be successful in defending  these matters on the merits.
However,  if we are  unsuccessful  we  believe  that our  total  exposure  to be
approximately  $156,000.  A liability  has not been  recorded  in the  financial
statements  for  the  Company's  potential  exposure  since  the  likelihood  or
unlikelihood of an unfavourable outcome is not yet determinable.

Strategic  has  recently  been  named in  another  lawsuit,  Charles  and Susant
Waldorff vs.  International  Strategic Assets, Inc. Strategic Futures & Options,
Inc, and Ron Wolfbauer.  The lawsuit was filed in the First Judicial District of
the  State  of  Minnesota  in  the  county  of  Dakota.  The  complaint  alleges
conversion,  unjust  enrichment and breach of fiduciary duty in connection  with
the Plaintiff's delivery to Defendants of approximately  $247,000 to be used for
the  purchase  of gold and silver  coins.  We intend to  vigorously  defend this
lawsuit  and believe we have  meritorious  defenses.  A  liability  has not been
recorded in the financial  statements for the Company's potential exposure since
the  likelihood  or  unlikelihood   of  an  unfavourable   outcome  is  not  yet
determinable.

ITEM 2.  CHANGES IN SECURITIES

During the quarter ended June 30, 2004,  121,500  shares were issued in exchange
for cash of $44,955 (common stock portion of units sold under Private  Placement
Memorandum dated January 28, 2004), 80,000 shares were issued in satisfaction of
offering costs and 50,000 shares were retired.  Common stock issued and issuable
under subscription agreements were as follows:

                                       16
<PAGE>


                              Date of Issuance              No. of Shares

                                    04/12/04                  20,000
                                    04/19/04                  10,000
                                    04/22/04                   7,500
                                    04/23/04                   5,000
                                    04/27/04                  15,000
                                    04/28/04                  10,000
                                    04/29/04                  15,000
                                    05/03/04                  10,000

                              Date of Issuance              No. of Shares

                                    05/05/04                   7,000
                                    05/10/04                   5,000
                                    05/14/04                  17,000
                                    06/16/04                  80,000

The shares were issued  pursuant to an exemption from  registration  afforded by
Regulation D Rule 506 subscribed for shares in the Company's private placement.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were  submitted to our security  holders for a vote during the fiscal
quarter ended June 30, 2004.

ITEM 5.           OTHER INFORMATION

Not Applicable

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K


                                       17
<PAGE>


a) Exhibit
Number                         Description of Exhibit

31.1     Certification  of President and Chief Executive  Officer pursuant to 18
         U.S.C.  Section  1350  as  adopted  pursuant  to  Section  302  of  the
         Sarbanes-Oxley Act of 2002

31.2     Certification of Chief Financial Officer and Controller  pursuant to 18
         U.S.C.  Section  1350  as  adopted  pursuant  to  Section  302  of  the
         Sarbanes-Oxley Act of 2002

32.1     Certification  of President and Chief Executive  Officer pursuant to 18
         U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of the
         Sarbanes-Oxley Act of 2002

32.2     Certification of Chief Financial Officer and Controller  pursuant to 18
         U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of the
         Sarbanes-Oxley Act of 2002

b) On  February  4,  2004 we filed a report on Form 8-k in  connection  with the
acquisition by Tels of both Hampton & Hampton and Pathway Advisors.

On May 12, 2004 an amended Form 8-k for current report referencing items 2 and 7
was  filed   providing   additional   information  to  the  SEC  regarding  Tels
acquisition.

On May 24,  2004,  we filed Form 8-k  pertaining  to the  resignation  of Ronald
Wolfbauer as officer and director of Tels.

SIGNATURES
----------

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                                  Tels Corporation
                                                  (Registrant)

                                              By: /s/ Von Hampton
Date:    August 23, 2004                      ------------------------------
------------------------                          Von Hampton, President





In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed by the following  persons on behalf of the  Registrant in the  capacities
and on the dates indicated.



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