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

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 August 14, 2002.
                           ----------------                    ----------------
<PAGE>


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

                                      INDEX
                                      -----


PART I. FINANCIAL INFORMATION                                             Page
                                                                          ----


          Condensed Balance Sheet -
                  June 30, 2002 (Unaudited)                                 3

          Condensed Statement of Operations -
                  Three and Six Months Ended June 30,
                  2002 and 2001 and Cumulative Amounts
                  (Unaudited)                                               4

          Condensed Statement of Cash Flows -
                  Six Months Ended June 30, 2002 and 2001
                  and Cumulative Amounts(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                                                                 11

CERTIFICATION                                                              12

<PAGE>


                                                                TELS CORPORATION
                                                   (A Development Stage Company)
                                             Condensed Balance Sheet (Unaudited)

                                                                   June 30, 2002
--------------------------------------------------------------------------------

         Assets
         ------

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

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

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

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

Liabilities:
     Accounts payable - TEL electronics, Inc.                 $         144,436
     Accrued expenses                                                    18,333
                                                              ------------------

             Total liabilities                                          162,769
                                                              ------------------

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                  (188,829)
     Deferred compensation                                              (16,000)
                                                              ------------------

             Total stockholders' deficit                               (162,769)
                                                              ------------------

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


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

<TABLE>
<CAPTION>

                                                                                           TELS CORPORATION
                                                                              (A Development Stage Company)
                                                              Condensed Statement of Operations (Unaudited)

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



                                            Three Months Ended          Six Months Ended
                                                 June 30,                   June 30,
                                         -----------------------------------------------------  Cumulative
                                             2002         2001         2002          2001         Amounts
                                         ------------------------------------------------------------------

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

Operating expenses                            40,096             -       86,393             -      194,769
                                         ------------------------------------------------------------------

         Loss from continuing
           operations before income
           tax provision                     (40,096)            -      (86,393)            -     (194,769)

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

         Loss from continuing
           operations                        (40,096)            -      (86,393)            -     (194,769)

Income (loss) from discontinued
  operations, net of income taxes                  -       (16,784)           -          (104)       5,940
                                         ------------------------------------------------------------------

         Net loss                        $   (40,096)   $  (16,784)  $  (86,393)   $     (104)  $ (188,829)
                                         ------------------------------------------------------------------

Net loss per share:
  Continuing operations                  $     (0.01)   $        -   $    (0.02)   $        -   $    (0.05)
  Discontinued operations                          -             -            -             -            -
                                         ------------------------------------------------------------------

Net loss per share -
  basic and diluted                      $     (0.01)   $        -   $    (0.02)   $        -   $    (0.05)
                                         ------------------------------------------------------------------

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

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

<TABLE>
<CAPTION>

                                                                                           TELS CORPORATION
                                                                              (A Development Stage Company)
                                                              Condensed Statement of Cash Flows (Unaudited)
-----------------------------------------------------------------------------------------------------------



                                                                  Six Months Ended
                                                                       June 30,
                                                             ------------------------------   Cumulative
                                                                   2002           2001          Amounts
                                                             ---------------------------------------------
<S>                                                          <C>              <C>            <C>
Cash flows from operating activities:
     Net loss                                                $      (86,393)  $      (104)   $   (188,829)
     (Income) loss from discontinued operations                           -           104          (5,940)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
         Non-cash compensation for services                          16,000             -          32,000
         Increase in:
           Accounts payable - Tel electronics, Inc.                  60,393             -         144,436
           Accrued expenses                                          10,000             -          18,333
                                                             ---------------------------------------------

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

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

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

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

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

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

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

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

Cash at end of period                                        $            -   $         -    $          -
                                                             ---------------------------------------------

Supplemental cash flow information:
     Cash paid:

         Interest                                            $            -   $         -    $          -
                                                             ---------------------------------------------

         Income taxes                                        $            -   $         -    $          -
                                                             ---------------------------------------------
----------------------------------------------------------------------------------------------------------
See notes to condensed financial statements.                                                             5
</TABLE>
<PAGE>

                                                                TELS CORPORATION
                                                   (A Development Stage Company)
                                         Notes to Condensed Financial Statements

                                                                   June 30, 2002
--------------------------------------------------------------------------------

  1.   Interim           The financial  statements  for the three and six months
       Financial         ended June 30, 2002 and 2001, are  unaudited.  However,
       Statements        the 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 and six months
                         ended June 30, 2002, will not necessarily 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
       Operations        its 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
                                                   (A Development Stage Company)
                                         Notes to Condensed Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------


  3.   Discontinued           Income from discontinued operations:
       Operations
       Continued

                         Three Months Ended           Six Months Ended
                              June 30,                    June 30,
                     --------------------------------------------------------
                           2002          2001          2002          2001
                     --------------------------------------------------------

 Sales                $         -  $    536,621    $        -  $    1,099,763
                     --------------------------------------------------------

 Operating income    $          -  $    (16,784)   $        -  $         (104)
                     --------------------------------------------------------


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


                                                                TELS CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                         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;  (iii) the  Company's  strategy  to  increase  its size;  and (iv) the
Company's ability to successfully  increase its size through  acquisition/merger
activity.

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  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
                                                   (A DEVELOPMENT STAGE COMPANY)
                                         MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                   FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                                       Continued

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

Results Of Operations For The Three and Six Months Ended June 30, 2002
Compared To The Three and Six Months Ended June 30, 2001

There were no sales during the three and six months ended June 30, 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 and six months ended
June 30, 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 and six months ended June 30, 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 and other official business related to the remaining public shell, 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
                                                   (A DEVELOPMENT STAGE COMPANY)
                                         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.

In this regard,  the Company  signed a non-binding  letter of intent on June 14,
2002  with  what it deems to be an  acceptable  merger  candidate.  The  Company
disclosed  the execution of this letter of intent in a press release on June 15,
2002.  The letter of intent has been  extended  through  August 16,  2002 as the
Company and the merger candidate continue their due diligence investigations and
negotiation of the definitive agreement. While no binding agreement has yet been
signed,  the Company  anticipates  that such an agreement will be signed and the
merger completed prior to August 30, 2002.


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

(a)  Exhibits:

                  None.

--------------------------------------------------------------------------------
                                                                              10
<PAGE>


                                                                TELS CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                       Continued

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

                                   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:  August 14, 2002                          By:  /s/ John L. Gunter
        ---------------                               ------------------------
                                                       John L. Gunter
                                                       Chairman and President


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

--------------------------------------------------------------------------------
                                                                              11
<PAGE>


                                                                TELS CORPORATION
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                       Continued

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


                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly  Report of TELS  Corporation (the "Company") of
Form 10-QSB for the period  ending June 30, 2002,  as filed with the  Securities
and Exchange  Commission on the date hereof (the  "Report"),  I, John L. Gunter,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002, that, to
the best of my knowledge and belief:

         (1)  the Report fully complies with the  requirements  of Section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

         (2)  the information  contained in the Report fairly  presents,  in all
              material   respects,   the  financial   condition  and  result  of
              operations of the Company.


Dated:  August 14, 2002                              By:  /s/ John L. Gunter
        ---------------                                   ----------------------
'                                                         John L. Gunter
                                                          Chairman and President

--------------------------------------------------------------------------------
                                                                              12
<PAGE>