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 SEPTEMBER 30, 2001

                                       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 November  14,
2001.
<PAGE>


                                TELS Corporation


                                      INDEX


PART I. FINANCIAL INFORMATION                                             Page
                                                                          ----

          Condensed Consolidated Balance Sheet -
                  September 30, 2001 (Unaudited)                           3

          Condensed Consolidated Statement of Operations -
                  Three and Nine Months Ended September 30,
                  2001 and 2000 (Unaudited)                                4

          Condensed Consolidated Statement of Cash Flows -
                  Nine Months Ended September 30, 2001 and
                  2000 (Unaudited)                                         5

          Notes to Condensed Consolidated Financial Statements
                  (Unaudited)                                              7

          Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     8,9


PART II. OTHER INFORMATION


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


SIGNATURES                                                                10
<PAGE>


                                                                TELS CORPORATION
                                Condensed Consolidated Balance Sheet (Unaudited)

                                                              September 30, 2001
--------------------------------------------------------------------------------


              Assets
              ------

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

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

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

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

Liabilities:
     Accounts payable - Tel Electronics, Inc.                      $     39,794
     Accrued expenses                                                     3,334
                                                                   -------------

                  Total liabilities                                      43,128
                                                                   -------------

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                                             (4,995,780)
     Deferred compensation                                              (40,000)
                                                                   -------------

                  Total stockholders' deficit                           (43,128)
                                                                   -------------

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

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                      3
<PAGE>

<TABLE>
<CAPTION>

                                                                                             TELS CORPORATION
                                                   Condensed Consolidated Statement of Operations (Unaudited)

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

                                                Three Months Ended                 Nine Months Ended
                                                   September 30,                     September 30,
                                        ---------------------------------------------------------------------
                                                2001              2000             2001            2000
                                        ---------------------------------------------------------------------

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

Operating expenses                                  51,128                -          51,128                -
                                        ---------------------------------------------------------------------

         Loss from continuing
           operations before
           income tax provision                    (51,128)               -         (51,128)               -

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

         Loss from continuing
           operations                              (51,128)               -         (51,128)               -

Gain (loss) on disposal of
  discontinued operations                                -                -               -                -

Income from discontinued operations,
net of income taxes                                  6,044           75,897           5,940           91,064
                                        ---------------------------------------------------------------------

         Net (loss) income               $         (45,084) $        75,897  $      (45,188)  $       91,064
                                        ---------------------------------------------------------------------

Net income (loss) per share:
  Continuing operations                               (.01)               -            (.01)               -
  Discontinued operations                              .00              .02             .00              .02
                                        ---------------------------------------------------------------------

Net (loss) income per share -
  basic and diluted                      $            (.01) $           .02  $         (.01)  $          .02
                                        ---------------------------------------------------------------------

Weighted average shares -
  basic and diluted                              4,191,819        4,191,819        4,191,819       4,081,235
                                        ---------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                                                   4
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                                                                            TELS CORPORATION
                                                  Condensed Consolidated Statement of Cash Flows (Unaudited)

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


                                                                                Nine Months Ended
                                                                                  September 30,
                                                                      --------------------------------------
                                                                               2001               2000
                                                                      --------------------------------------
<S>                                                                     <C>                <C>
Cash flows from operating activities:
     Net (loss) income                                                  $         (45,188) $         91,064
     Income from discontinued operations                                           (5,940)          (91,064)
     Adjustments to reconcile net loss to net cash
       provided by operating activities:
         Non-cash compensation for services                                         8,000                 -
         Increase in:
           Accounts payable - Tel electronics, Inc.                                39,794                 -
           Accrued expenses                                                         3,334                 -
                                                                      --------------------------------------

     Net cash provided by continuing operations                                         -                 -
     Net cash provided by discontinued operations                                  28,725            90,851
                                                                      --------------------------------------

                  Net cash provided by
                  operating activities                                             28,725            90,851
                                                                      --------------------------------------

Cash flows from investing activities:
     Net cash used in continuing operations                                             -                 -
     Net cash used in discontinued operations                                     (37,441)          (71,379)
                                                                      --------------------------------------

                  Net cash used in
                  investing activities                                            (37,441)          (71,379)
                                                                      --------------------------------------

Cash flows from financing activities:
     Net cash used in continuing operations                                             -                 -
     Net cash used in discontinued operations                                     (36,360)          (14,576)
                                                                      --------------------------------------

                  Net cash used in
                  financing activities                                            (36,360)          (14,576)
                                                                      --------------------------------------

Net (decrease) increase in cash                                                   (45,076)            4,896

Cash at beginning of period                                                        45,076             3,467
                                                                      --------------------------------------

Cash at end of period                                                   $               -  $          8,363
                                                                      --------------------------------------



------------------------------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                                                 5
</TABLE>


<PAGE>

                                                                TELS CORPORATION
                      Condensed Consolidated Statement of Cash Flows (Unaudited)

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

Supplemental cash flow information:

During the nine months ended  September  30, 2001 and 2000,  the Company  issued
notes payable  totaling $70,608 and $25,000,  respectively,  for expenses due an
officer.  During the nine months ended  September 30, 2000,  the Company  issued
300,000 shares of stock valued at $96,000 in exchange for future  services to be
earned over three years.

During  the  nine  months  ended  September  30,  2001,  the  Company  sold  its
operations. The Company exchanged $676,332 of net liabilities for a contribution
of capital of $676,332.


--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                      6



                                                                TELS CORPORATION
                            Notes to Condensed Consolidated Financial Statements

                                                              September 30, 2001
--------------------------------------------------------------------------------


  1.   Interim           The financial  statements for the three and nine months
       Financial         ended  September  30,  2001 and  2000,  are  unaudited.
       Statements        However,  the  Company,  in its  opinion,  has made all
                         adjustments   (consisting   only  of  normal  recurring
                         accruals)  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, 2000 and 1999,  included in the  Company's
                         2000  Annual  Report  to the  Securities  and  Exchange
                         Commission  on Form  10-KSB.  The results for the three
                         and nine  months  ended  September  30,  2001,  are not
                         necessarily  indicative  of results for the year ending
                         December 31, 2001.

  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 2001.

  3.   Discontinued      As of  June  30,  2001,  TELS  discontinued  all of its
       Operations        existing    operations,    which   consisted   of   its
                         telecommunications  segment.  TELS had discontinued its
                         Contract  Manufacturing segment in 2000. Effective July
                         27, 2001,  TELS sold its  operations  to John and Diane
                         Gunter in  exchange  for their  assumption  of TELS net
                         liabilities of $676,332. No gain or loss was recognized
                         as the  discontinued  operations were  transferred to a
                         related  party and the gain  amount was  recorded  as a
                         contribution of capital.

                         Income from discontinued operations:

                                      Three Months Ended     Nine Months Ended
                                         September 30,        September 30,
                                     -------------------------------------------
                                     2001        2000       2001        2000
                                     -------------------------------------------

                         Sales     $ 212,459 $ 669,548  $ 1,312,222  $ 1,993,902

                         Operating $   6,044 $  75,897  $     5,940  $    91,064
                         income

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                      7


                                                                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 (i)
delays in the release of new products or new versions of existing products; (ii)
shortage of reliable market data for the telephone call management market; (iii)
changes in external  competitive  market  factors or in the  Company's  internal
budgeting  process  which  might  impact  trends  in the  Company's  results  of
operations;  (iv) anticipated  working capital or other cash  requirements;  (v)
changes in the  Company's  business  strategy  or an  inability  to execute  its
strategy  due  to  unanticipated   changes  in  the  market;  and  (vi)  various
competitive factors that may prevent the Company from competing  successfully in
the  marketplace.  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.

--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                      8


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

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

Results Of  Operations  For The Three Months And Six Months Ended  September 30,
2001 Compared To The Three Months And Six Months Ended September 30, 2000

Net sales during the third quarter of 2001  consisted only of those through July
27, 2001, as TELS sold all of its  operations on that date.  Sales for one month
of the third quarter in 2000 cannot be compared to those of 2001, as a result of
the cessation of all TELS operations on July 27, 2001.

There were no research and  development  costs for the third quarter of 2001, as
the Company  continued to reduce expenses and then sold all of its operations on
July 27, 2001.

Company expenses were reduced further in the third quarter as efforts  continued
to sustain operations.  As a result of the sale of the Company's operations,  no
detailed analysis of expenses and operations are 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 assumption 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 any such new Company liabilities will be paid from the proceeds of
a reverse merger.


--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                      9
<PAGE>


                                         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:  November 14, 2001                       By:  /s/ John L. Gunter
-------------------------                       --------------------------------
                                                     John L. Gunter
                                                     Chairman, CEO and
                                                     Principal Financial Officer



--------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.                     10