U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-Q SB

               [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

             FOR THE TRANSITION PERIOD FROM _________ TO __________


                           Commission File No. 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
incorporation or organization)                               Identification No.)



705 East Main Street, American Fork, Utah                                  84003
-----------------------------------------                             ----------
(Address of principal executive offices)                              (Zip Code)

         Issuer's telephone number, including area code: (801) 756-9606
                                                         --------------


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Securities  Exchange  Act during the past 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.

                                        YES   X                   NO



The Issuer had outstanding 4,191,819 shares of common stock on May 15, 2002.
                           ---------                           ------------
<PAGE>

                                TELS Corporation
                                ----------------


                                      INDEX
                                      -----


PART I. FINANCIAL INFORMATION                                            Page


          Condensed Balance Sheet -
                  March 31, 2002 (Unaudited)                               3

          Condensed Statement of Operations -
                  Three Months Ended March 31,
                  2002 and 2001 (Unaudited)                                4

          Condensed Statement of Cash Flows -
                  Three Months Ended March 31,
                  2002 and 2001 (Unaudited)                                5

          Notes to Condensed Financial Statements
                  (Unaudited)                                             6-7

          Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     8-10


PART II. OTHER INFORMATION


          Item 6.  Exhibits and Reports on Form 8-K                        10


SIGNATURES                                                                 10

<PAGE>

                                                                TELS CORPORATION
                                             Condensen Balance Sheet (Unaudited)

                                                                  March 31, 2002
--------------------------------------------------------------------------------


              Assets
              ------

Assets:
     Cash                                                     $             -
                                                              ---------------

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

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

              Liabilities and Stockholders' Deficit
              -------------------------------------

Liabilities:
     Accounts payable - Tel electronics, Inc.                 $       117,340
     Accrued expenses                                                  13,333
                                                              ---------------

                  Total liabilities                                   130,673
                                                              ---------------

Commitments and contingencies                                               -

Stockholders' deficit:
     Common stock, $.02 par value.  Authorized 50,000,000
       shares; issued and outstanding 4,191,819 shares                 83,835
     Additional paid-in capital                                     4,995,073
     Accumulated deficit                                           (5,036,848)
     Deficit accumulated during the development stage                (148,733)
     Deferred compensation                                            (24,000)
                                                              ---------------

                  Total stockholders' deficit                        (130,673)
                                                              ---------------

                  Total liabilities and stockholders' deficit $             -
                                                              ---------------


--------------------------------------------------------------------------------
See notes to condensed financial statements.                                   3
<PAGE>

<TABLE>
<CAPTION>


                                                                                             TELS CORPORATION
                                                                Condensed Statement of Operations (Unaudited)

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



                                                              Three Months Ended
                                                                   March 31,
                                                     --------------------------------------       Cumulative
                                                             2002               2001                 Amounts
                                                     --------------------------------------------------------

<S>                                                  <C>                   <C>                  <C>
Net sales                                            $                -    $             -      $          -

Operating expenses                                               46,297                  -           154,673
                                                     --------------------------------------------------------

         Loss from continuing operations
         before income tax provision                            (46,297)                 -          (154,673)

Income tax provision                                                  -                  -                 -
                                                     --------------------------------------------------------

         Loss from continuing operations                        (46,297)                 -          (154,673)

Income from discontinued operations, net of
  income taxes                                                        -             16,680             5,940
                                                     --------------------------------------------------------

         Net (loss) income                           $         (46,297)    $        16,680      $   (148,733)
                                                     --------------------------------------------------------

Net (loss) income per share:
  Continuing operations                              $            (0.01)   $             -      $      (0.03)
  Discontinued operations                                             -                  -                 -
                                                     --------------------------------------------------------

Net (loss) income per share -
  basic and diluted                                  $            (0.01)   $             -      $      (0.03)
                                                     --------------------------------------------------------

Weighted average shares -
  basic and diluted                                           4,191,819          4,191,819         4,191,819
                                                     --------------------------------------------------------

-------------------------------------------------------------------------------------------------------------
See notes to condensed financial statements.                                                               4
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                                                      TELS CORPORATION
                                                         Condensed Statement of Cash Flows (Unaudited)

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



                                                            Three Months Ended
                                                                March 31,
                                                    -----------------------------------   Cumulative
                                                          2002              2001            Amounts
                                                    --------------------------------------------------
<S>                                                  <C>               <C>               <C>
Cash flows from operating activities:
     Net (loss) income                               $       (46,297)  $        16,680   $    (148,733)
     Income from discontinued operations                           -           (16,680)         (5,940)
     Adjustments to reconcile net (loss) income to
       net cash used in operating activities:
         Non-cash compensation for services                    8,000                 -          24,000
         Increase in:
           Accounts payable - Tel electronics, Inc.           33,297                 -         117,340
           Accrued expenses                                    5,000                 -          13,333
                                                    --------------------------------------------------

     Net cash used in continuing operations                        -                 -               -
     Net cash used in discontinued operations                      -            (9,235)        (28,725)
                                                    --------------------------------------------------

                  Net cash used in
                  operating activities                             -            (9,235)        (28,725)
                                                    --------------------------------------------------

Cash flows from investing activities:
     Net cash used in continuing operations                        -                 -               -
     Net cash used in discontinued operations                      -            (6,972)        (37,441)
                                                    --------------------------------------------------

                  Net cash used in
                  investing activities                             -            (6,972)        (37,441)
                                                    --------------------------------------------------

Cash flows from financing activities:
     Net cash used in continuing operations                        -                 -               -
     Net cash used in discontinued operations                      -           (25,547)        (36,360)
                                                    --------------------------------------------------

                  Net cash used in
                  financing activities                             -           (25,547)        (36,360)
                                                    --------------------------------------------------

Net decrease in cash                                               -           (41,754)        (45,076)

Cash at beginning of period                                        -            45,076          45,076
                                                    --------------------------------------------------

Cash at end of period                                $             -   $         3,322   $           -
                                                    --------------------------------------------------

Supplemental cash flow information:
     Cash paid:

         Interest                                    $             -   $        37,837   $           -
                                                    --------------------------------------------------

         Income taxes                                $             -   $             -   $           -
                                                    --------------------------------------------------

------------------------------------------------------------------------------------------------------
See notes to condensed financial statements.                                                         5
</TABLE>

<PAGE>
                                                                TELS CORPORATION
                                         Notes to Condensed Financial Statements

                                                                  March 31, 2002
--------------------------------------------------------------------------------


1. Interim              The  financial  statements  for the three  months  ended
   Financial            March 31, 2002 and 2001,  are  unaudited.  However,  the
   Statements           Company,  in  its  opinion,  has  made  all  adjustments
                        (consisting  only  of  normal   recurring   adjustments)
                        necessary  to  present  fairly the  financial  position,
                        results of  operations  and cash  flows for the  periods
                        presented.  The financial  statements  and notes thereto
                        should  be  read  in  conjunction   with  the  financial
                        statements  and notes for the years ended  December  31,
                        2001 and 2000,  included  in the  Company's  2001 Annual
                        Report to the Securities and Exchange Commission on Form
                        10-KSB. The results for the three months ended March 31,
                        2002,  will not be  indicative  of results  for the year
                        ending December 31, 2002.

                        Effective  July 27, 2001,  the Company  transferred  its
                        operations to a  shareholder  of the Company in exchange
                        for his assumption of the Company's net liabilities.  As
                        a result of the Company's  disposition  of its operating
                        activities,  the  Company  does  not  have  any  revenue
                        generating activities and has become a development stage
                        company  as  defined  by  SFAS  No.  7 at  the  time  of
                        disposition.


2. Earnings Per         Basic  earnings  per  share  excludes  dilution  and  is
   Share                computed by dividing  net  earnings  available to common
                        stockholders  by the weighted  average  number of common
                        shares outstanding for the period.  Diluted earnings per
                        share reflect the potential dilution that could occur if
                        options or warrants to issue common stock were exercised
                        into common stock.  There were no stock options  granted
                        in 2002.


3. Discontinued         As of June 30, 2001, the Company discontinued all of its
   Operations           existing  operations,  which  consisted  of the  design,
                        manufacture  and  sale of  telecommunications  and  call
                        accounting   products   to  hotels,   motels  and  small
                        businesses.   Effective   July  27,  2001,  the  Company
                        transferred  its  operations  to a  shareholder  of  the
                        Company in exchange for his  assumption of the Company's
                        net  liabilities of $676,332.  No gain was recognized as
                        the  discontinued   operations  were  transferred  to  a
                        related  party and the gain  amount  was  recorded  as a
                        contribution of capital.

--------------------------------------------------------------------------------
                                                                               6
<PAGE>


                                                                TELS CORPORATION
                                         Notes to Condensed Financial Statements
                                                                       Continued

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


3. Discontinued         Income from discontinued operations:
   Operations
   Continued                                          Three Months Ended
                                                          March 31,
                                                 ----------------------------
                                                       2002          2001
                                                 ----------------------------

                         Sales                   $          -  $    563,142
                                                 ----------------------------

                        Operating income         $          -  $     16,680
                                                 ----------------------------

--------------------------------------------------------------------------------
                                                                               7
<PAGE>


                                                                TELS CORPORATION
                                         MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Management's Discussion And Analysis Of Financial Condition And Results
Of Operations

The   following   Management    Discussion   and   Analysis   contains   certain
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform  Act  of  1995,  including,  among  others:  (i)  results  of
operations  (including  expected  changes in  Company  gross  profit  margin and
selling,  general and  administrative  expenses);  (ii) the  Company's  business
strategy for increasing sales; (iii) the Company's strategy to increase its size
and customer base; (iv) the Company's ability to successfully  increase its size
through   acquisition/merger   activity;   and  (v)  the  Company's  ability  to
distinguish itself from its current and future competitors.

These  forward-looking  statements  are based largely on the  Company's  current
expectations  and are  subject  to a number of risks and  uncertainties.  Actual
results could differ materially from these forward-looking statements. Important
factors to  consider  in  evaluating  such  forward-looking  statements  include
changes in the  Company's  business  strategy  or an  inability  to execute  its
strategy due to unanticipated changes in the market. In light of these risks and
uncertainties,  there can be no assurance  that the events  contemplated  by the
forward-looking statements contained herein will in fact occur.

                                    OVERVIEW

As reported in the Company's Form 8-K report filed with the Securities  Exchange
Commission on August 7, 2001, the Company  transferred its operations to Dr. and
Mrs. John L. Gunter on July 27, 2001, in exchange for the  assumption by Dr. and
Mrs.  Gunter of  approximately  $1.7  million of the  Corporation's  liabilities
(liabilities of approximately  $1,700,000 and assets of approximately $1,024,000
were  transferred  totaling  $676,000  of net  liabilities).  Specifically,  the
Company's  operations,  all conducted through its wholly-owned  subsidiary,  TEL
electronics,  Inc.,  were split off to Dr. and Mrs.  Gunter and the public shell
Company was left with  essentially no assets and no  liabilities.  In connection
with the transaction,  the Company received a letter from a recognized valuation
and fairness  opinion firm that the  transaction was fair from a financial point
of view to the Company's shareholders.  As a result of the transfer, the Company
has no expectation of generating income in the foreseeable future.


--------------------------------------------------------------------------------
                                                                               8
<PAGE>


                                                                TELS CORPORATION
                                         MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                                       Continued

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


Results Of Operations For The Three Months Ended March 31, 2002
Compared To The Three Months Ended March 31, 2001

There were no sales during the three months ended March 31, 2002, as the Company
transferred  all of its operations on July 27, 2001. As a result of the transfer
of the Company's operations, no detailed analysis of sales is included here.

There were no research  and  development  costs for the three months ended March
31, 2002, as the Company  transferred all of its operations on July 27, 2001. As
a result of the transfer of the Company's  operations,  no detailed  analysis of
research and development costs is included here.

Company  expenses  incurred  during the three months ended March 31, 2002,  were
reduced to survival  levels only and funds were  borrowed  from a principal  for
these  expenses.  As a result of the transfer of the  Company's  operations,  no
detailed analysis of expenses and operations is included here.

Liquidity and Capital Resources
-------------------------------

As of July 27, 2001,  the Company  disposed of its  operating  activities.  As a
result of the transfer of the Company's operating  subsidiary and assumptions of
all  liabilities  except for future  liabilities  or  obligations of the Company
under an employment  agreement between the Company and Dr. Gunter and for public
reporting,  the liquidity of the Company has improved  since June 30, 2001. As a
result  of the  transfer,  the  Company  does not have  any  revenue  generating
activities and thus no expectation of income for the foreseeable future.

The  Company  will need to borrow  funds to cover  ongoing  reporting  and other
expenses,  and management anticipates that any such new Company liabilities will
be paid from the proceeds of a merger.

--------------------------------------------------------------------------------
                                                                               9
<PAGE>


                                                                TELS CORPORATION
                                         MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                                       Continued

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

Outlook: Issues and Uncertainties
---------------------------------

Notwithstanding  the transfer of its operating assets, the Board of Directors of
the Company  believes that the Company has value as a "public  shell".  To avoid
the costs of becoming a public company,  ongoing businesses are sometimes merged
with  and  into  entities,  such  as  the  Company,  that  have  an  established
shareholder base and are required to file reports with the Commission. The Board
is looking  for an  appropriate  business  with which the  Company  can merge to
increase  shareholder  value.  Such an  entity  needs to be  located  as soon as
possible  due to the  Company's  lack of  revenues  and  inability  to cover the
expenses  of being a  "public  company"  and  having  to file  reports  with the
Commission.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

         (a)      Exhibits:

                  None.

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                     TELS Corporation

Dated:  May 15, 2002                                 By:  /s/ John L. Gunter
--------------------                                 ---------------------------
                                                     John L. Gunter
                                                     Chairman, CEO and
                                                     Principal Financial Officer



                                                     By:  /s/ P. Diane Gunter
                                                     ---------------------------
                                                     P. Diane Gunter
                                                     Secretary and Treasurer



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