<PAGE>2

              UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION

          Washington, D.C. 20549

                  FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

For the fiscal year ended December 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from to

          Commission File Number: 0-25632

          GUINNESS TELLI*PHONE CORPORATION
    (Exact name of registrant as specified in its charter)

    NEVADA                                  68-0310550
(State or Jurisdiction                     I.R.S. Employer
of Incorporation)                       Identification Number)

655 Redwood Hwy., # 111, Mill Valley, CA 94941-3009
(Address of principal executive offices) (Zip Code)

Registrant's telephone number including area code:
(415) 389-9442

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for, such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X   No
                                       ---     ---

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by
nonaffiliates of the registrant, based upon the closing price on
November 30, 1999, was approximately $3,821,465.00

There is no current market for the Registrant's common stock.
The number of outstanding shares of the Registrant's Common Stock
on November 30, 1999 was 24,792,243.



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                 TABLE OF CONTENTS

                      PART I

ITEM 1. BUSINESS                                       5
(a) Overview                                           5
(b) Registrant's Plan of Operation                     7
Necessity to Raise Additional Capital                 13
Research and Development to be Performed              13
Anticipated Material Acquisition of Plant and
Equipment                                             14
Anticipated Material Changes in Number
of Employees                                          14
Material Areas Peculiar to Registrant's Business      14

(c) Financial Information about Industry Segments     14

(d) Narrative Description of Business                 14
Telli Phone Products and Services                     14
Status of Product                                     20
Sources and Availability of Raw Materials             21
Patents, Trademarks, Licenses Franchises and
Concessions                                           21
Seasonal Business                                     22
Significant Working Capital Required                  23
Dependence on a Critical Mass of Users                23
Backlog Orders                                        23
Government Regulation                                 24
Competition                                           24
Research and Development                              27
Environmental Impacts                                 28
Employees and Management of Growth                    28

(e) Financial Information about Foreign and
Domestic Operations and Export Sales                  29
Revenues from Prior Operations                        29

(f) Factors Affecting Company's Business
  Operating Results and Financial Condition           29

ITEM 2. PROPERTIES                                    42

ITEM 3. LEGAL PROCEEDINGS                             42

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS                                   42

                      PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS                           43
Market Information                                    43
Holders                                               43
Dividends                                             43

ITEM 6. SELECTED FINANCIAL DATA                       44

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION                    44
Overview                                              44
Liquidity and Capital Resources                       45

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA   47

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
 DISCLOSURE                                           59

                      PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS             60
Backgrounds of Directors and Executive Officers       60
Directorships                                         62
Involvement in Certain Legal Proceedings              62
Promoters and Control Persons                         62

ITEM 11. EXECUTIVE COMPENSATION                       62


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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT                                 63
Controlling Interest                                  63
Security Ownership of Management                      63

ITEM 13. CERTAIN RELATIONSHIPS AND
   RELATED TRANSACTIONS                               63
Notes Due By Lawrence A. Guinness; Dilution of
Guinness' Ownership in the Company                    63

                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K                               64



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                    PART 1

ITEM 1. BUSINESS

(a) Overview

Guinness Telli*Phone Corporation (OTC Bulletin Board Stock Symbol
"TELI"), a Nevada corporation, is the developer of an online
system that gives households a fast, free, simple-to-use, local
online service and the Telli Pages. The Telli Pages instantly
delivers detailed, up-to-the-minute, local information via a
personal computer or a Telli Screen connected to a telephone.
The system is easier to use than an ATM.

The Telli Pages is an electronic version of the printed yellow
pages directory and includes detailed community news, schedules,
agendas, events, and classifieds.

Unlike the Internet, which requires significant training and lots
of spare time, Telli Pages is accessed quickly and easily using a
simple telephone keypad. Guided by numbered statements, people
make choices that are instantly analyzed by the Telli Pages
proprietary authored indexing system. This quick simulated
conversation zips you to local listings displaying current
details you need. The Telli Pages includes telephone business
listings, retail advertising and current specials, community
newsletters and notices, school agendas and reports, and
classified buy and sell ads.

The first Telli Pages Directory is stationed in a computer at the
Company's offices in Mill Valley, California. It is connected to
the local telephone system and operates as the server for the
Marin County Telli Pages. (The Pacific Bell Marin Yellow Pages
serves approximately 100,000 households and generates $20 million
in annual advertising revenues.)

The Company has taken the telephone yellow pages directory (a
multi-billion dollar industry) and improved on it. The
inexpensive Telli Pages can be updated instantly, and as often as
needed.

- All businesses have a free name and address listing.
Connected to their free listings are Telli Pages of unlimited,
inexpensive space to write extensive information about their
products and services.

- Advertisers can update their Telli Pages at any time and at no
additional cost, so information and specials will be
up-to-the-minute.

- An intelligent, interactive, on-screen touch-tone indexing
system allows people to target information on personal topics
quickly and efficiently.

- With a Telli Screen, Telli Pages are always instantly and
conveniently available on a screen next to your telephone.

The Telli Pages provides residents of the community with a "small
town" visual

communication forum for local businesses,
organizations, associations, groups, and residents to distribute
reviews, schedules, newsletters, and reports, and reserve or
purchase tickets, food and merchandise, and distribute special
discount offers and preferred commercial arrangements.



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The Company will introduce the Telli Pages to individual
communities through a promotional campaign whereby people with
personal computers will be able to download the free Telli Pages
system to their personal computers for direct access to Telli
Pages servers. Later the Company plans to distribute free Telli
Screens to households in each area to establish a critical mass
of users at minimal cost.

Revenues for the Company's products will be generated initially
from storage of pages of commercial advertising and community
information in the Telli Pages Directory at an initial minimum
monthly rate of $30.00 per page, fees from special advertising
screens loaded into Telli Screens for off line reference, and
licensing fees from companies and organizations with online
servers that wish to communicate or transact business with Telli
Screen users. The Company also plans to promote the sale of
complete Telli Phone systems to businesses, associations, and
government agencies to establish internal telecommunications
information networks.

The Company's initial marketplace is householders, especially
people who do not have the time or inclination to use a personal
computer to exchange information through a world wide online
system, and a large marketplace of individuals, businesses, and
local groups whose primary interest is communicating and doing
business with consumers and residents who reside within the few
miles surrounding their location (a reported $72 billion market
in local advertising). In the Company's opinion, Telli Pages
users can reference local information faster, with greater ease,
and at less cost than surfing the Internet through a personal
computer.

Guinness Telli*Phone Corporation, a Nevada corporation,
(hereinafter referred to either as "Registrant" or "the Company")
was originally incorporated on July 8, 1993 as U.S. Telli*Phone
Corporation. Effective August 4, 1993, U.S. Telli*Phone
acquired all of the outstanding shares of Innstar Corporation, an
inactive company having no assets, in exchange for 1,551,480
shares of the Company's stock. Innstar Corporation was then
merged into the Company. U.S. Telli*Phone did not receive any
consideration beyond the exchange of shares. The merger was
accounted for as a recapitalization and Innstar had no assets,
liabilities or operations to include in the accompanying
financial statements. The purpose of the merger was to acquire a
company whose shares were registered with the Securities and
Exchange Commission and to change its domicile to Nevada which is
where U.S. Telli*Phone was incorporated.

The corporate name was changed to Guinness Telli*Phone
Corporation effective on September 13, 1993. On March 15, 1994,
through a series of agreements among Registrant, CoNetCo, a
California Corporation, and Lawrence A. Guinness, CoNetCo's
founder and its principal shareholder, Registrant, pursuant to a
Reorganization in accordance to section 368 (a)(1)(b) of the
Internal Revenue Code, as amended, acquired all of the issued and
outstanding stock of CoNetCo in exchange for 11,041,000 shares of
the common stock of the Company.

The Company, through this acquisition, acquired the rights to a
telephone and community news and information computer software
online directory (the "Telli Pages Directory") and the Telli
Phone, a combined telephone and computer communications product
with a small screen, that has the ability of accessing the Telli
Pages Directory through ordinary telephone lines. The Telli
Phone has the potential of replacing the standard telephone now
used in virtually every household and office in the United
States. Through the Telli Phone's combined digital answering
machine and interactive networking access system, users will have
the ability to send, receive, and store vast amounts of
electronic information and transactions locally and worldwide.

Effective February 18, 1990 (as amended by the March 15, 1994
agreement), CoNetCo, currently the Company's wholly-owned
subsidiary, acquired from CoNetCo's major stockholder the assets
of the businesses known as Guinness Productions, Inc. and
Guinness Computer Television Corp. (the Guinness Companies) in
exchange for 8,000,000 shares of CoNetCo stock and royalty


<PAGE>7

rights. The assets acquired from the Guinness Companies
consisted primarily of product development efforts performed by
the Guinness Companies to further develop the Telli Phone. For
accounting purposes, all costs incurred by the Guinness Companies
to develop the Telli Phone were expensed in accordance with
Financial Accounting Standards Board Statements No. 2,
Accounting for Research and Development Costs. The assets
acquired from the Guinness Companies have been valued at their
historical cost basis and not current fair market value, if any,
because all entities are under common control. The liabilities
incurred and assumed by the Guinness Companies during its
development of the Telli Phone were assumed by the shareholder of
the Guinness Companies. The liabilities assumed by the Guinness
Companies' shareholder total approximately $7.2 million, which
include approximately $2.3 million of investor notes payable and
related delinquent compounded interest of $3.6 million. Such
liabilities were incurred by the Guinness Companies primarily
during the years 1982 to 1989. Such liabilities assumed have
been treated as a capital contribution and increased paid-in
capital. CoNetCo and the Guinness Companies are predecessors of
the Company and their activities are included in the cumulative
financial data. Included in the deficit accumulated during
development stage is approximately $7.2 million relating to the
Guinness Companies.

 (b) Registrant's Plan of Operation

The Company's general plan of operation beginning with the
calendar year 2000 is to introduce the Telli Pages to the
marketplace within a single community, promote the Telli Pages
Directory in the marketplace and prepare for large scale
production of Telli Screens.

The bulk of the effort required to bring Telli Screens to the
large scale production stage will take place in parallel with the
market introduction of the Telli Pages accessed through personal
computers.

The first Telli Pages server is stationed in the Company's
administrative offices in Mill Valley, California. The computer
operating as the server contains the Company's proprietary online
operating system for the Telli Pages Directory and over 10,000
programs that operate the indexing system for navigating the Telli
Pages Directory. As of August 1999, the server contains the up-to-date
listings for all retail businesses and schools in Marin County. During
the Fall of 1999 the Company will add the listings for all professional
businesses and services. The server is connected to the local telephone
system and is fully operational.

Working models of the Telli Phone and Telli Screen have been
produced for Alpha testing purposes. The Telli Phone and Telli
Screen proprietary operating system is functional including
application software for the telephone and speaker phone,
answering machine, address book, auto-dialer, screen graphics and
text, access to the Telli Pages, and engineering functions for
the Telli Phone's hardware components. The Telli Phone smart
card reader is installed and commercial software application
programs will be developed when the product is in the
marketplace.

During the Telli Pages introduction, available through personal
computers, the Company's engineers will design an inexpensive
Telli Screen and Telli Phone computer board to eliminate many
hardware components necessary for the operation of a personal
computer but unnecessary for the successful operation of Telli
Screens and Telli Phones as the everyday consumer products for
which they were designed. The Company has received estimates
from consultants experienced in the manufacture of computer
appliances of a price of less than $200 per Telli Screen when
produced in volume. It is difficult to predict an accurate price
until the Company learns the level of consumer response to the
Telli Pages to determine the size of Telli Screen production runs
that are most feasible.

The Company expects that there will be many methods of financing
for the manufacture of Telli Screens to allow the Company to
order large runs and reduce the cost to manufacture Telli Screens
and establish Telli Pages Directories in additional geographical


<PAGE>8

areas throughout the United States. These will include strategic
alliances with various major retailers and online service
providers, franchising of Telli Pages Directory territories, the
sale of Telli Pages Directory rights for hotels and resorts, and
long term credit and leasing arrangements with banks and
manufacturers of Telli Screen and Telli Phone equipment.

The Company expects that the first community Telli Pages
Directory will quickly establish a significant standard for
accessing important local, everyday information. Through this
success the Company plans to install Telli Pages Directory sites
in communities across the United States within areas defined by
the local telephone calling areas.

To this end, the Company has begun discussions with major
financial groups that have indicated interest in financing the
Company's expansion plans.


Telli Pages Directory Access Area

The Telli Pages Directory Computer Station is located in Mill
Valley, California. The office is in a building adjacent to
Highway 101, the main artery freeway running through Marin County
servicing all its main populated areas. The building contains
small businesses, medical offices and retail establishments,
including a deli, hair salon, and a major restaurant.

Mill Valley is 20 minutes north of the center of San Francisco
across the Golden Gate Bridge. To the south it borders the town
of Sausalito, a popular tourist center. To the west is Mount
Tamalpais, a huge State Recreational Area. Across the freeway to
the east are the wealthy towns of Tiburon and Belvedere. To the
north is the Town of Corte Madera with the largest shopping
center in the North Bay and just beyond is the City of San
Rafael, a large metropolitan center with a population of over
50,000.

The area of Marin to be covered by the Telli Pages Directory
contains approximately 100,000 households. This represents less
than 5% of the total population of the Bay Area. The median
income in Marin County is over $53,000 per household.

Most of the population in and around Mill Valley works in San
Francisco. The people live in expensive homes and care about
their community, their children's education and protecting their
quality of life. There are Little League Baseball teams, soccer
leagues, Boy Scout Troops, service clubs, recreation centers,
church groups, sailing clubs, and hiking and biking trails.

Pacific Bell's Yellow Pages for Marin County generates
advertising revenues in excess of $20 million annually from
approximately 40,000 listings. It produces 461,000 purchases
every month (National Yellow Pages Monitor Ratings). The cost of
a 1.5" x 1.5" column ad (black type only) is $48.00 per month.
The cost of a 3" x 1.5" column ad (black type only) is $111.50
per month.

Unlike the Telli Pages that can be continually revised and
updated, the Yellow Pages is printed only once a year. Due to
its inflexible format, it does not contain much advertising from
major department stores, grocery stores, recreation departments
(clubs, community centers, etc.), real estate brokers, airlines,
ground transportation agencies, movie and live theaters,
government agencies, consumer agencies, or service bureaus.

The Yellow Pages does not allow for advertising from individuals
such as tutors of academic studies or sports, house cleaners and
maintenance, entertainers (for parties, etc.), local rentals
(tools, sports equipment), and second hand items (books, clothes,
etc.).


<PAGE>9

Individuals cannot distribute controlled advertising to generate
part-time extra income through arts, crafts, and hobbies.
Through the Telli Pages people could offer sewing, baking,
maintenance, video production, and word processing. Collectors
of baseball cards to antiques could trade and barter.


Corporate Marketing Plan

The potential advantage of the Telli Pages is that retail outlets
can communicate with households near their place of business to
encourage them to stop by. Telli Pages offer advertisers the
opportunity to issue a variety of specials and discounts on a
day-to-day basis to target individual buying patterns. In this
way they can attract a large audience of local customers over a
long period of time to maintain a constant flow of business.

The initial success of the Telli Pages is dependent on the the
number of households with personal computers and ultimately on
the Company's ability to supply Telli Screens to a great number
of homes in a concentrated area within a very short period of
time. The Company believes that its ultimate success to secure
advertising revenues will be dependent upon its ability to assure
advertisers that a concentrated mass of householders near their
places of business will have access to their promotional pages
and use the Telli Pages Directory on an ongoing basis. In this
way the Company will be able to encourage advertisers to move
their advertising dollars from the yellow pages to the Telli
Pages.

Within each area where a Telli Pages Directory is to be
established, the Company will select an affluent community with a
concentration of population around a large retail center. After
establishing a Telli Pages Directory that can be accessed
directly from personal computers, the Company will begin
delivering Telli Screens free of charge to the homes of families
with school age children.

To encourage parents to accept free Telli Screens in their homes
and use the Telli Pages, the Company will maintain an up-to-date
school directory with daily classroom homework assignments,
teacher's notes, school news, and district information.

Telli Pages operators who work with retail establishments in the
area will be assigned individual schools where they will organize
and maintain procedures for securing data and entering it in the
appropriate sections of the Telli Pages Directory school news
section in a timely manner. In the high schools, students
wanting a part-time job may be hired to assist the Telli Pages
operators.

In its research the Company has found that many schools,
teachers, and parent volunteers have been excited about the Telli
Pages school directory and many have agreed to assist in helping
to keep the directory up-to-date. In return for their
participation the Company has offered to issue small grants to
classrooms, schools, or district foundations.

At a minimum, the Company feels that it can expect a best efforts
agreement from schools to cooperate with the program. School
districts are in the process of attempting to establish an
electronic line of communication between the home and the school.
Many school districts have been installing voice-mail systems to
automatically report student absences to the home and for parents
to access a voice recording of important announcements and
homework assignments. In some cases where a voice-mail system
has been installed, it costs the school district as much as $10
per student per month.

Many school districts have established web sites but parents
complain that it takes too long to find the sites and access the
information contained. Since schools do not have an organized
professional system for maintaining these web sites, the
information contained is usually out of date. Many needed
services can be available to school districts through the Telli
Pages at no cost to the district, and with the added bonus of
generating income for the schools.


<PAGE>10

Through this campaign local retail establishments can promote the
fact that they are supporting their local schools through the
Telli Pages Directory. Conversely, parents will be encouraged
to patronize those retail establishments that advertise in the Telli
Pages.

Building Directory Listings

The Company will hire Telli Pages operators and supply them with
Telli Phone terminals to enter information onto the Telli Pages
similar to the method the yellow pages uses to update their
information once a year. Many of these operators will work from
their homes. The Company plans to concentrate on hiring people
with children who will appreciate the opportunity to work from
home.

Telli Pages operators will be assigned a specific set of
commercial accounts in their area that they will call on a
regular basis to:

- inform their assigned businesses, groups, and associations
of the advantages of listing in the Telli Pages Directory
and encouraging them to list in the Telli Pages

- assist advertisers by entering their information under
their listing in the Telli Pages Directory

- help advertisers to keep their information current by
editing their TelliPages or by modifying their listing
categories

- inform advertisers of new ideas that they may incorporate
in their listings to increase their business or new
programming systems that the Company may develop from time
to time to improve their consumer communications


Company Sponsored Advertising

The Company plans to send advertising packages to all businesses
in the area served by the Telli Pages Directory. The package
will provide them with information on the Telli Screens, the
Telli Phone, and the Telli Pages Directory. It will announce
that Telli Screens are being introduced into their area and that
many affluent consumers, located near their place of business,
will have access to Telli Screens and the Telli Pages Directory.

They will be informed that a listing of the name of their
establishment, the address, and telephone number already appears
in the Telli Pages Directory along with those of their
competitors under the appropriate categories. The package will
include a return postage paid Telli Pages Data Listing Card for
them to create one Telli Page of information that they would like
to see available to consumers under their listing in the Telli
Pages Directory. They will be offered one free listing of one
advertising Telli Page of information "on approval" for a
period of 60 days to give them a chance to evaluate the Telli
Pages as an advertising medium.

To support this mailing program, the Company will purchase
significant advertising space in the local newspapers to promote
the fact that "Telli Pages are here" and Telli Screens have
been installed in households in the area. The purpose of the
advertising program will be to encourage support for the Telli
Pages throughout the community, make merchants aware of the
marketplace available to them to encourage them to return their
Telli Pages Data Listing Cards as soon as possible, and to
evaluate the response to the Telli Pages from people and
businesses in the adjoining areas where Telli Screens have not
yet been distributed to households ("market research to evaluate
and determine future budgeting for advertising, promotion, and
the production of Telli Screens").


<PAGE>11

Free Newspaper and Magazine Articles

Human interest stories and Telli Pages background articles will
be prepared by the Company and sent to the local newspaper,
magazine, radio, and television stations. Some of the articles
to be written or subjects to be promoted are:

a) Telli Pages, the local schools, and funding for education

b) Telli Pages vs. the old yellow pages

c) Telli Pages, Telli Screens and their use by government and
local politicians

d) Telli Pages and their importance to community groups and
associations

e) ideas from people and businesses in the community on how
they are using the Telli Pages.

Workshops, Sales Demonstrations, and Seminars

A small marketing staff will work with local clubs, associations,
and community groups to conduct workshops and demonstrations in
the geographic area served by the Telli Pages Directory. The
purpose will be to demonstrate Telli Screens and the Telli Pages
Directory to business and professional members of the community
and inform them of the advantages provided everyone by
communicating through the Telli Pages.

The marketing staff will encourage these people to work with the
local Telli Pages operators to help them understand how the Telli
Pages are used in the community, how to use Telli Pages to their
benefit, and how easy it is to create and update Telli Pages of
information. In addition, the marketing staff will assist
advertisers in using the media to draw people's attention to
their Telli Pages Directory listings.

Members of local groups, associations, and organizations will be
invited to attend seminars in the Company's offices to learn the
many functions of Telli Screens and the Telli Pages and how to
promote their use through their network of members to reduce
their costs, simplify their operations, and generate income.
People attending these seminars will be invited to take a Telli
Screen home and test it with members of their household.

The Company believes that a cooperative marketing effort among
many people, businesses, and organizations who agree to use the
Telli Pages Directory to broadcast information will encourage the
growth of the Telli Pages into other communities. Through
advertising and articles in the local media, the information
available through the Telli Pages will be highlighted by those
who have created it.

Telli Phone User Smart Cards

As the success of Telli Pages builds, the Company intends to
issue Telli Phones and plastic Telli Phone smart cards
("Telli*Cards") to users of the Telli Pages Directory for a
monthly fee. Businesses in the community will be encouraged to
offer special discounts to Telli Phone users who show their cards
at the time of purchase. These offers may not be advertised or
made available through any other medium. As a result, businesses
will be able to determine the return they are experiencing from
the use of the Telli Pages.

The First Telli Pages Directory Operation

The Company will introduce Telli Screens to the marketplace in a
single local community in cooperation with local groups like the
Chamber of Commerce. During the initial stage of the product's
introduction the Company will debug its systems, modify any
design flaws to insure that the products meet the needs of the
marketplace, and establish verification of the Company's Business
Plan. The Company expects that:


<PAGE>12

a) The Telli Pages Directory can be distributed successfully and
families will come to rely on the Telli Pages as their primary
source of school news and student information.

b) People will come to rely on the Telli Pages Directory as their
local telephone book.

c) The Telli Pages will grow within the community primarily
through promotion and support from local businesses and
community groups who will use them for their own benefit.

d) People will come to rely on Telli Screens as the new home
communications appliance to replace their telephone yellow
pages book.

e) Major information providers will demonstrate their confidence
that Telli Screens will allow them to expand their marketplace
beyond users of personal computers by purchasing Telli Phone
licensing contracts to reach Telli Pages users.

f) The Telli Pages Directory will operate successfully and
profitably as a small business within a single community.


Product Distribution

The initial success of each Telli Pages Directory will be the
Company's ability to create a critical mass of users in a
community within a short period of time. The Company's goal will
be to deliver a Telli Screen to the home of every family with
school age children within a nucleus of the area served by a
Telli Pages Directory. Each Telli Pages Directory area will be
comprised of approximately 5 different districts called "Telli
Pages Access Units".

The Company plans to offer school districts encompassing the most
affluent Telli Pages Access Unit in each Telli Pages area a plan
whereby they can generate funds for school projects. A Company
representative will conduct a workshop at meetings of the P.T.A.,
and meetings of other parent groups responsible for raising funds
for schools in the district. At these meetings, parents will be
shown the Telli Screen and the Telli Pages Directory including
the school news and information directory. The Company will work
with school representatives to establish a group of parent
volunteers to help enter school district information and class
news in the school news section of the Telli Pages Directory.

A Company marketing representative will conduct teacher workshops
at every school within the school district to familiarize
teachers with the Telli Screen, the Telli Pages Directory, and
the process by which funds will be generated for the school
district. A Telli Phone will be left in the school office or
teachers lounge for teachers to operate and discover ways they
can use the school news and information section of the Telli
Pages Directory. By allowing the teachers this hands-on
experience, they will become familiar with the school directory
section of the Telli Pages Directory. Some teachers may be
interested in writing material that will be published by the
Company and distributed through the Telli Pages.

DEL MAR SCHOOL 435-1468
105 Avenida Miraflores Tiburon, CA 94920

1. SCHOOL BULLETIN

2. GRADE and CLASS NEWS

3. EVENTS and MEETINGS

4. P.T.A. DIRECTORY and NEWS

5. GENERAL INFORMATION and RULES

6. YOUR CHILD (Confidential)

7. LEAVE A MESSAGE FOR A TEACHER

TYPE a NUMBER - then PRESS the SEND key.

<PAGE>13

Necessity to Raise Additional Capital

It is the opinion of the Company, that it will be necessary to
raise additional funds to meet the expenditures required for
operating the business of the Company. The Company has been in
the development stage since inception and has no history of
revenues. Realization of the Company's objectives is dependent
upon the Company's ability to pay its obligations, raise
additional capital and introduce its product to the marketplace
to establish the success of future operations. The success of
the product in the marketplace, and the ability of the Company to
continue as a going concern cannot be determined at this time.
The report of the independent Certified Public Accountant
expresses substantial doubt about the Company's ability to
continue as a going concern.

The Company will require funds for:

- Office Rent and General Office Expense
- Administrative Salaries (CEO, CFO, and Secretary)
- Product Development Salaries (Engineer, Editor, and
Programmers)
- Telli Phone and Telli Screen Prototype Engineering
Expense
- Data Base Software Programming Expense
- Capital Purchases:
- Central Computer for Telli Pages Directory
- Telli Phone and Telli Screen Production Models for
Market Introduction (100-200)
- Marketing Expense
- Legal and Audit Expense

The Company plans to use a variety of means to raise the required
capital, including the sale of Common or Preferred Stock or debt
instruments and the right to receive a percentage of the income
from Telli Pages advertising revenues.

Most of those funds will be used to establish a fully operational
Telli Pages Directory central computer system with a number of
commercial listings. In addition, the Company plans to have
distributed at least two hundred Telli Screens to households
within the area served by the Marin Telli Pages Directory. Once
the system is in place the Company believes a significant value
will have been established for its technology.


Research and Development to be Performed

The Company has no plans for the establishment of any significant
new research projects during the year 1999. Additional
programming development of a cosmetic nature is required to
maintain the Telli Pages Directory for use by the general
public.

The Company's engineers plan to upgrade the Telli Phone operating
system to interface with the new Telli Pages server design,
implement protocol for the Telli Pages system operating through
Telli Screens, and implement security features for the Telli
Pages to protect users. The Company intends to implement remote
authoring software to enable businesses and consumers to
conveniently input, from the field, advertising and other
community information in the pages tied to their listings in the
Telli Pages Directory.

In addition to entering Telli Pages of advertising and
information for various groups in Marin County under their
listings in the Telli Pages Directory, the Company editors will
modify the Telli Pages indexing system during the market
introduction to correct any difficulties users may have
responding to Telli Screen software while using the Telli Pages
Directory.

Also during the market introduction stage, the Company engineers
will redesign the production board in the Telli Screen and Telli
Phone to operate using a CAD PC board design using a new chip.
This will enable Telli Screen and Telli Phone production models
to use the latest technology. With continual software upgrading


<PAGE>14

through automatic downloads from Telli Pages servers while users
are online, Telli Phone technology and the Telli Pages system
should remain constantly up-to-date and ahead of other technology.

The Company also intends to design custom keypad digital keys for
the Telli Screen and the Telli Phone, modify all the analog keys
and functions, and optimize the interior of the Telli Screen and
Telli Phone for full scale production at the lowest possible
price and government compliance. The Company intends to complete
additional software systems for the Telli Phone including
functions such as fax, e-mail, voice messaging, notepad writer,
metering, user interfacing systems, and smart card functions.

During the final stages of the introduction of Telli Screens, the
Company plans to implement Telli Pages tracking devices that will
check user telephone ID codes for security and track user
movement in the Telli Pages Directory to generate marketing
reports. On completion of the initial market introduction the
Company plans to have completed engineering specifications for
the Telli Pages system architecture.


Anticipated Material Acquisition of Plant and Equipment

The Company does not plan to set up any manufacturing facilities
of its own, therefore it will not be making any material
acquisition of plant and equipment within the next fiscal year of
operations.

Approximately 80% of the capital required to establish a Telli
Pages Directory within a limited geographical area for the market
introduction will be used to set up and purchase Telli Screens
and the central server to store the Telli Pages Directory. The
Company believes that there will be no market for this equipment
other than for use by the Company to operate the Telli Pages
Directory.

Following the market introduction, the Company believes that over
60% of the capital required to maintain a Telli Pages Directory
within a specific geographical area and increase the number of
users and advertisers to the Telli Pages Directory in that area
will be used for the purchase of Telli Screens, Telli Phones and
other computer equipment.

Anticipated Material Changes in Number of Employees

The Company presently employs a CEO, CFO, Secretary, Systems
Engineer and Programmer, and design engineer. Within the first
six months of 2000 the Company plans to employ at least one
hardware engineer, two technicians, four software engineers, two
programmers, a marketing director, and online licensing director,
an advertising director, and five administrative assistants.


Material Areas Peculiar to Registrant's Business

The Company is not aware of any areas of its business not similar
to the publishing and distribution of interactive information
through the telephone network.

(c) Financial Information About Industry Segments

The Company's business is focused in one industry segment.

(d) Narrative Description of Business

Telli Phone Products and Services

The Telli Pages Directory System

The Company believes that Telli Phone and Telli Screen hardware
and Telli Pages software navigational tools and services are
uniquely positioned to capitalize on the shortcomings of the
Internet as an advertising medium, a system that requires people
to be computer literate, and a system where participation
requires a substantial investment into computer equipment and
software.

<PAGE>15

The Company believes that by supplying consumers with access to
media properties focused on local interest areas, local
demographic groups, and community geographical areas, the Company
can provide advertisers with a greater ability to target their
advertising messages to relevant audiences.

The Telli Pages Directory

The Telli Pages Directory is a library of information stored in a
computer maintained by the Company and located in the community
being served. The Company has programmed an intelligent,
interactive indexing system into the Directory establishing
categories where information can be entered by businesses,
groups, and associations within the community.

These authors can update their information at any time directly from a
Telli Phone or by calling a Telli Pages Directory operator.

The principal elements of any computer information network are
the computer software programs through which the central computer
and the end-user terminals interact and the pages of information
contained in the computer programming system. The computer
programming system determines the manner in which information is
presented on terminal screens and the ease with which users can
connect with the appropriate pages of information. The pages of
information stored in the computer programming system make up the
library of information and their content impacts directly on the
usefulness of the network.

THE TELLI PAGES DIRECTORY

1. THE TELLI PAGES GUIDELINE
Information on Commercial Products and Services

2. THE COMMUNITY ONLINE
Information and News from Community
Organizations

3. THE TELLI PAGES BUY AND SELL
Items for Sale from Telli Pages Users

The intelligence of the authored Telli Pages programming system
is unique compared to the operation of other online systems. The
brain of the Telli Pages server is made up of individual
programmed concept cells. Each cell contains a complete software
program developed by an author experienced in the subject matter
being presented and edited by an editor experienced in the
Guinness Tri-Stage Learning Systems programming techniques. The
cells are linked and work together to to help users find pages of
information on specific topics.

Users respond to pages of information displayed on the Telli
Screen. The cell programs evaluate the thought processes
indicated by each response and display additional pages of
information. These pages may be further questions for
clarification, a list of options, a presentation of ideas for a
greater perspective of the options that may be explored within a
particular subject, or a page of information about the subject.

The Telli Pages Directory is divided into three main categories.
Each category has been separated into many subjects and each
subject has been dissected into multi-level topics. The Telli
Pages software system contains over 10,000 connecting subject and
topic programmed cells resulting in a system with a high level of
intelligence that allows people to simply "talk" to the Telli
Screen to locate what they want. At the present time, using a
telephone keypad, users enter numbers corresponding to their
choices from the options displayed on the screen.

GUIDELINE (free access) - Listings of all retail businesses
and service vendors in the area connected to various subject
categories and linked to a page where they can write
information about their location, products, services, and
special offers. Advertisers may enter, update, or change
their information at any time through a Telli Phone or by
calling a Telli Pages Directory operator.


<PAGE>16

COMMUNITY NEWS AND INFORMATION (free access) - A library of
information for local government and service organizations to
list their services, meetings, special events, educational
information, and programs offered.

BUYLINE (free access and listings) - A two line entry for
users to list buy and sell merchandise, garage sales, and
other items or services. Telli Pages linked to their
listings are available for a minimum of $30 per month to
display additional information. Information may be entered,
changed, or updated in the pages by users at any time for no
additional charge.

Authors, businesses, groups, associations and users with listings
are assigned coded pages within the topic cells linked to their
listings. For a minimum of $30 per page per month they can store
and enter details about their ideas, products, or services.
Through a Telli Phone Authoring Subscription people can write,
edit, and update their information at any time on a Telli Phone,
or a personal computer with a modem, using the Company's AMENU
authoring and programming system. At the push of a button, their
pages of information are sent to the Telli Pages server via
telephone lines where they are automatically placed in the
appropriate sections of the Telli Pages Directory. Since each
topic cell has the potential of containing pages of information
from many sources, users have the opportunity of analyzing
specific topics from a variety of angles.

The Telli Pages Directory is maintained by the Company in a
central computer, connected to the local telephone system, and
located in the community served by the Telli Pages Directory
listings. The central computer is designed to support over 64
telephone line connections and each telephone line supports one
Telli Screen or Telli Phone. It is expected that each server
will service at least 1,500 Telli Pages users due to the fact
that not all users will be communicating with the server at the
same time.

The Company has not conducted a test of the ability of the server
to support a large number of users accessing the Telli Pages
Directory at the same time. There is no assurance that the
software in the server will be successful in accommodating a
large number of users. It may be necessary for the Company to
purchase additional central computers to reduce the number of
users accessing a single computer at one time. This may result
in a substantial increase in the amount of working capital
necessary to operate a community server and provide adequate
service for users of the Telli Pages Directory.

The Telli Screen

The Telli Screen is an LCD screen with a telephone keypad.
Inside the case is a high powered personal computer with a modem.
People operate the Telli Screen by pressing keys on the Telli
Screen's telephone keypad. They are guided by instructions that
are displayed on the Telli Screen.

The internal operations of the Telli Screen are controlled by
proprietary software developed by the Company. The software
which controls the operation of the Telli Screen can be accessed
only by a Telli Pages central computer. To access a central
computer the telephone number for the computer must be entered
into the Telli Screen's automatic dialing system from a Telli
Pages server. In this way the Company will be able to assess
licensing fees and transaction fees for the use of Telli Screens
for anything other than accessing the Telli Pages Directory.

Telli Screen Internal Hardware Components

Present Telli Screen models include the following essential
components:

a) a 640 x 480 mono LCD screen with backlight and
controller on top of the base behind the keypad;
b) a base with one TTL serial port and one parallel port;
c) a 16 key keypad that operates with a RTC battery;
d) a 3.8" x 3.8" cpu board with 2M of RAM and 2M of Flash
memory;
e) a 3.8" x 1.5" 14.4K modem board;

<PAGE>17

f) a 1.5" x 3.8" DC/DC power supply board;
g) an IR keyboard reader; and
h) the cpu processor is a 486 elan sc410 33-66 mhz plus
crystal, with one 1M x 16 RAM chip and four 4m chips
and a 2M x 8 Flash disk with rom dos, data light bios,
vga bios and flash file.

The Telli Phone

The Telli Phone is a Telli Screen with additional
telecommunications features. The Company does not plan to make
Telli Phones available to the marketplace until after the initial
success of Telli Screens. Telli Phones will be rented to Telli
Pages users for a monthly fee.

People operate the Telli Phone by pressing keys on the Telli
Phone's telephone keypad or on the optional remote control
keyboard. They are guided by instructions that are displayed on
the Telli Phone screen.

The internal operations of the Telli Phone are controlled by
proprietary software developed by the Company. The software
which controls the operation of the Telli Phone can be accessed
only by a Telli Phone central computer. People can make ordinary
telephone calls from the Telli Phone but to access a central
computer the telephone number for the computer must be entered
into the Telli Phone's automatic dialing system from a Telli
Pages server. In this way the Company will be able to assess
licensing fees and transaction fees for the use of the Telli
Phone for anything other than accessing the Telli Pages Directory
or as a telephone and personal answering system.


Telli Phone Internal Hardware Components

The Telli Phone includes the following essential components:

a) a two-line telephone with 16 telephone keys;
b) a speaker and microphone;
c) a 33,600 baud modem chip set (data rate higher with
compression) which includes data, fax, and voice;
d) a PC-XT 20 MHz processor, 386sl SMOS card IO motherboard, 1M
x 8 DRAM memory and 2M x 8 FLASH program and data storage;
e) a 6.5",80 character 25 line LCD screen with 640 x 480
graphics grid;
f) ROM based custom real time executive controlling the phone;
and,
g) an external custom XT infra red keyboard.

The Telli Phone can serve as a digital answering machine with 16
minutes of storage. It has full voice mail features including
the ability to create, edit, and send faxes. The Telli Phone has
an address book that can store up to 500 names, addresses, and
phone numbers with the ability of dialing automatically from the
list and sending voice, data, or fax messages. The phone can
up/down load data while on line with a network or directly from a
PC via an external serial port. In addition, the Telli Phone
supports a dot matrix printer, card swipe reader and scanner
pen.

Basic Customer Features

The Company proposes to have available the following features on
the first Telli Phones that it intends to distribute to the
marketplace:

a) touch tone dialing;
b) speakerphone;
c) personal auto dial directory for storing telephone numbers
and other information relating to directory listings that
will display on dialing;
d) automatic redial of last number dialed;
e) call freezing to prevent calls being made to numbers that
involve charges including long distance and toll calls;
f) automatic recorded voice and/or data message taking;
g) calculator;
h) automatic multi-dial calling from a list of numbers;
i) a hold button;

<PAGE>18

j) two telephone line capability;
k) conference calling if two telephone lines are connected;
and,
l) a smart card reader.


Optional Add-on Features

The following optional add-on features are planned to be
available for Telli Pages users for an additional monthly fee:

a) expanded memory;
b) appointment and information reminder;
c) visual, on-screen caller identification (actual name of
caller if listed in personal directory) to avoid having to
answer unwanted calls or calls to members of the household
who are not available (can be used without having to
subscribe to Caller ID from the telephone company);
d) distinctive ringing to alert members of the household who an
incoming call is for;
e) message leaving for storing individual messages that may be
picked up by designated callers when they call;
f) multiple message sending to automatically send a recorded
voice or data message to a list of people; and,
g) messages forwarded automatically to another number.


Summary of Telli Phone Features

AUTO SCREEN DIALING - Over 500 telephone numbers and related
personal reference notes can be stored in the Telli Phone
auto-dial screen display directory. Telephone calls are made
by pressing the number on the telephone keypad that corresponds
to the correct listing on the screen. As the number is being
automatically dialed, prerecorded personal notes relative to
that listing are displayed on the Telli Phone screen for
convenient reference during the call.

MESSAGE TAKING - The Telli Phone automatically answers
incoming calls and digitally stores voice messages, faxes,
printed memos, and correspondence. This information may be
reviewed later on the Telli Phone screen (voice through the
speaker) or the Telli Phone will send it to another location
where it may be listened to, viewed, or printed out on a fax
machine.

Since messages are in digital format, they may be erased
individually (keeping some and deleting others). Codes may be
entered so each member of the business or household may view
only his or her messages, maintaining privacy.

MESSAGE LEAVING - Voice messages, faxes, or other typed memos
may be recorded in the Telli Phone to be picked up later by
specific authorized callers.

MESSAGE SENDING - Voice messages, faxes, typed messages, and
correspondence may be recorded on the Telli Phone and
automatically sent to one or more people. Information can be
sent to a large audience by using the auto dialing directory.

CALLER IDENTIFICATION - When activated, the Telli Phone asks
callers to identify themselves by entering their telephone
number on the keypad of their telephone. The Telli Phone scans
its directory, displays the caller's name on its screen, and
then begins ringing. If the caller is not in the Telli Pages
Directory, or if the caller is reluctant to enter a telephone
number, the Telli Phone will switch on its answering system to
record the caller's incoming message.

If the Telli Phone Subscriber has "Caller ID" from the local
telephone company, the Telli Phone immediately checks its
directory and displays the name of the caller. If the

telephone number is not found, it may be because the caller is
not calling from a recognized phone, therefore, the Telli Phone
asks the caller to enter his or her telephone number as a
double check.

<PAGE>19

APPOINTMENT AND INFORMATION REMINDER - The Telli Phone will
ring at specified times and display or broadcast information
previously recorded.

CALL FREEZING - Passcodes may be recorded to restrict the use
of the Telli Phone for normal calling, long distance calling,
dialing specific area codes like "800" or "900" numbers, or
individual numbers.

SMART CARD READER - A credit card size smart card is
available and may be inserted into the Telli Phone to enhance
its features. The card can be used to store and maintain

information accessed through the Telli Phone including
telephone and mailing lists, banking transactions, faxes,
messages, correspondence, voice recordings, and health,
medical, and insurance information.

EXTERNAL KEYBOARD - A wireless IR keyboard is available for
typing information and faxes from the Telli Phone.

EXTERNAL PRINTER AND OTHER PORTS - The Telli Phone has inputs
to plug in an external printer, monitor, fax machine, disk
drive, and computer keyboard.


The Telli Pages Central Computer (the "Server")

The Telli Pages Directory is stored in a computer that resides in
the Company's offices in Mill Valley, California. The central
computer functions through a proprietary operating system that
contains a simple software mapping structure. The central
computer has 36 disks and each disk is divided into approximately
300 files through a geometric plotting procedure. Each file is
divided further into approximately 300 sections and each section
contains numerous categories containing pages of information.

Telli Pages Authoring and Programming Language

The Telli Pages Directory contains display pages of information
written by editors trained in Guinness Tri-Stage Learning
Systems. The pages of information are composed from a small
strategic set of questions that the editors feel are important in
determining the mind set of the users viewing the display. Telli
Pages users read the information on the screen and press keys on
the telephone keypad to indicate decisions that they have made
about the information displayed, thus supplying answers to the
editor's questions.

Attached to each page of information is a small computer program
written by a Telli Pages

Editor that transforms users choices into instruction codes. These
codes direct the computer to specific disk locations, files, and
sections where pages of information appropriate to each user's response
can be found.  Each page of information may solicit more answers for
clarification, display additional material to help users focus on
the issues most important to them, or present the information
that will meet their needs.

Guinness Telli*Phone Corporation does not want an editorial staff
limited by their engineering skills in computer programming.
Therefore, the Company has written a software authoring program
that allows anyone without any programming experience to create
pages of information and instruction codes in the central
computer. The Company's authoring and display programming system
is called AMENU.

AMENU is a central application computer software program that
establishes the guidelines for writing Telli Pages Directory
programs and the pages of information that represent the content
of the Telli Pages Directory. The program is written in
Assembler Language and takes up approximately 64K of memory.
AMENU interprets a Telli Pages Editor's instructions into a
language understood by the central computer's operating system
and sees that the author's instructions are carried out.



<PAGE>20

The AMENU Authoring Program has two significant parts.

AMENU Directional Software

Using ordinary English and a few simple codes, Telli Pages
Editors can design AMENU Directional Programs for users. Each
AMENU Directional Program displays one page of information and
contains the parameters for evaluating each user's response to
determine the next page of information to be displayed.

AMENU Display Software

The AMENU Display Software allows display screen editors to
create pages of information as easily as typing a page on an
ordinary typewriter. What appears on the Telli Pages Editor's
terminal screen is exactly what will appear on the user's
screen.

Special Telli Phone formatting codes and graphics codes are
available for authors who want to create more sophisticated pages
of information. These special codes may be entered into the page
by pressing specially marked keys on a Telli Phone remote control
keyboard.

The Telli Pages Security Program

The Company has written a security software program that
prohibits Telli Pages users from entering or changing information
in the Telli Pages Directory without receiving prior
authorization. Each user's account file contains details about a
user's privileges in using the Telli Pages Directory that is
linked to the Telli Pages tracking code. Every time users send
information to the Telli Pages Directory, the central computer
checks his or her account to determine whether or not they are
authorized to proceed.


Telli Screen and Telli Phone Installation

The Telli Screen and the Telli Phone, like a fax machine, plug
into ordinary telephone outlets and operate through existing
telephone lines without any additional telecommunication device
or installation charges from the local telephone company.


Status of Product

A Telli Pages Directory presently resides in a central server
located at the Company's business office. Only a few directory
listings have accompanying pages of advertising. These pages
were created for demonstration and testing purposes. Presently
the Company believes it has entered enough listings in the Telli
Pages Directory to to make it a profitable product in Marin
County.

Beginning in January of 2000 the Company plans to send a mailing
to all businesses within the Marin County area telling them that
they are listed in the Telli Pages Directory and encouraging them
to create pages of information about their products and services
tied to their listings. Through a telemarketing program, Telli
Pages operators will assist them in creating their first Telli
Pages Directory information pages.

During the introduction of the product into the marketplace the
Company plans to contract a manufacturer to manufacture large
runs of Telli Screens. To facilitate this the Company's
engineer, Mr. Richard Morse, is redesigning the main mother board
of the Telli Screen and Telli Phone to eliminate many of the
hardware components that were present for development and testing
purposes but are not necessary to the operation as a device to
distribute the Telli Pages. Management anticipates that
approximately four months of hardware and software engineering
will be required to design a final high run production model of
Telli Screens and later Telli Phones.

The Company plans to establish strategic alliances with
manufacturers of hardware products to manufacture Telli Screens
and Telli Phones on its behalf.

<PAGE>21

Management must emphasize that the Company has not developed
Telli Screens as products to generate profits in themselves. The
Company views Telli Screens as vehicles to distribute the Telli
Pages and promote the Company's software products. It anticipates
that there will be enough local Telli Pages advertising revenues
to enable it to supply customers with Telli Screens, free of
charge, for as long as they are users of the Telli Pages
Directory.

The Company estimates that initially it will cost $300 for each
Telli Screen assembled. The Company has received estimates from
consultants experienced in the manufacture of consumer computer
products of a price of less than $200 per Telli Screen for full
production. It is difficult to predict an accurate price until
the Company learns from its introduction into the marketplace the
level of consumer response to the Telli Pages Directory to
determine the size of runs that are most feasible. If the
Company's product is very successful then there will be available
to the Company many methods of financing the manufacture of Telli
Screens that will allow the Company to order larger runs andfurther
reduce manufacturing costs.

The cost of engineering is relative to the cost of manufacturing
the product. The more engineering done prior to manufacturing
the product, the lower the cost to manufacture the product. The
Company will not be able to determine the amount of engineering
it is prepared to do until it sees the results of the initial
market introduction.

The Company plans that the majority of the cost to make these
changes will be absorbed by the manufacturer of Telli Screens as
a condition of strategic alliances with manufacturers. To
negotiate strategic alliances that will be to the benefit of the
Company will require that the product's market introduction
reveal significant statistics to insure the potential success of
the Telli Pages Directory in the marketplace.

The Company plans to introduce the Marin County Telli Pages to
the marketplace in January 2000 and begin delivering Telli
Screens to homes by mid-2000.

By January 2000 the Company plans to have a major marketing
effort underway to sell advertising pages in the Directory. By
Fall of 2000 it plans to have manufactured a minimum of 5,000
Telli Screens and to have distributed this first production run
of Telli Screens to over 5,000 households within Southern Marin
County, California.

Sometime before the end of 2000 the Company expects to have
signed a contract with at least one major corporation to license
Telli Phone technology to communicate with Telli Pages users
through Telli Screens from their own server.


Sources and Availability of Raw Materials

The Company does not plan to manufacture Telli Screens itself,
nor does it have any significant expertise in this area.
However, Telli Screens will be manufactured from the same
materials used to manufacture personal computers and telephones.
The Company is not aware of any problem that exists at the
present time or that is projected to occur within the near future
that will materially affect the source and availability of raw
materials for the manufacture and supply of personal computers
and telecommunications equipment.

It is expected that the Telli Pages will have a significant
impact on the use and production of the yellow pages telephone
book that may reduce the need for paper to protect our trees.


Patents, Trademarks, Licenses, Franchises and Concessions

The Company's success and ability to compete in the marketplace
is dependent in part upon its proprietary technology.
Principally, the Company is a publisher of information and
therefore relies on trade secret and copyright laws of the United

<PAGE>22

States and worldwide to protect its content, authoring systems,
and programming technology. To distribute its works the Company
will purchase existing hardware technology from computer hardware
developers and manufacturers.

On July 31, 1996, the Company filed a U.S. Trademark Application
with the Assistant Commissioner for Trademarks in Arlington,
Virginia for the name "Telli Phone", with declaration, Under 15
U.S.C. 1051(b), as amended (Intent to Use) for the following
goods:

COMMUNICATION DEVICE CONTAINING ANSWERING MACHINE, VOICE/MAIL,
FAX, MODEM, AND COMPUTER SCREEN TO PROVIDE INTERACTIVE NETWORK
CAPABILITY

The application was rejected on January 28, 1998 on the grounds
that "the mark is merely descriptive of the goods, which resemble
telephones."

The Company will file another application with U.S. Patent and
Trademark Office when the product is being introduced to the
marketplace. With the product in the marketplace, the Company
anticipates being successful with this application.

The Company does not presently hold any patents, trademarks,
licenses, franchises, or concessions. It does not feel that any
patents or trademarks, other than the above, it may hold or may
apply for in the future will affect materially its ability to
create information or distribute that information to the
marketplace. The Company feels that the success of its business
is dependent on the kind of information it distributes and not
the technology used to distribute it. The Company believes that
factors such as the technological and creative skills of its
personnel, new product developments, frequent product
enhancements, name recognition, and reliable product maintenance
are more essential to establishing and maintaining a technology
leadership position.

There can be no assurance that others will not develop
technologies that are similar or superior to the Company's
technology. The source code for the Company's proprietary
software is protected both as a trade secret and as a copyrighted
work. The Company generally enters into confidentiality or
license agreements with its employees, consultants, and vendors,
and generally controls access to and distribution of its
software, documentation and other proprietary information.
Despite these precautions, it may be possible for a third party
to copy or otherwise obtain and use the Company's products or
technology without authorization, or to develop similar
technology independently. In addition, effective copyright and
trade secret protection may be unavailable or limited in certain
foreign countries. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy
aspects of the Company's products or content or to obtain and use
information that the Company regards as proprietary. Policing
unauthorized use of the Company's products or content is
difficult. There can be no assurance that the steps taken by the
Company will prevent misappropriation of its technology or
content or that such agreements will be enforceable. In
addition, litigation may be necessary in the future to enforce
the Company's intellectual property rights, to protect the
Company's trade secrets, to determine the validity and scope of
the proprietary rights of others, or to defend against claims of
infringement, invalidity, or liability. Such litigation could
result in substantial costs and diversion of resources and could
have a material adverse effect on the Company's business,
operating results, or financial condition.

Except for acquiring a local business license in areas where it
plans to establish a Telli Pages Directory, the Company is not,
at this time, subject to any federal, state, or local licensing
requirements or regulations.


Seasonal Business

The Company feels that directories of information are so diverse
that the use of them to provide information or to acquire
information is generally not seasonal except for fluctuations

<PAGE>23

during vacation and holiday periods. The Company will be
providing consumers with access to information from the Telli
Pages Directory and will sell space in the Telli Pages Directory
to businesses and organizations to advertise their products and
services. While there may be an increase in advertising revenues
leading up to the holiday season in December, the Company does
not expect any increase to materially effect its flow of income
or play any role in any change in its profits.


Significant Working Capital Required, Critical Mass of Users

The Company business requires it to purchase a significant amount
of equipment and then to attempt to generate income from its use

on a month to month basis. The Company will need significant
revenues from paid advertising in the Telli Pages Directory to
support its capital expenditures. To generate significant income
from businesses and organizations wishing to advertise in the
Telli Pages Directory, it must distribute enough Telli Screens to
create a critical mass of users within the area the Telli Pages
Directory is intended to serve. No one can guess how many users
will be required to obtain that critical mass, or the amount of
equipment, including Telli Screens, that will have to be
purchased and distributed to create this critical mass of users.

The Company has developed specific plans in an attempt to reduce
the size of the critical mass of users that will be required to
generate enough income from advertisers in the Telli Pages
Directory to maintain its operations. These strategies are:

- Limiting the marketplace to a confined area (a small
community) where the critical mass of users needed to
generate income will be minimal, the flow of word of mouth
advertising will be maximum, and where there will be a number
of businesses that primarily serve households close to their
establishments.

- Entering the name and address of every business within the
geographic area to be served by the Telli Pages Directory to
provide a product that will have limited but immediate use.

- Offering free pages of advertising in the Telli Pages
Directory to businesses operating within the area to be
served by the Telli Pages Directory, for the first few months
of operations to immediately begin building the Telli Pages
Directory and giving users the opportunity to compare the
effectiveness of the Telli Pages Directory to traditional
directories.


- Delivering a number of free Telli Screens to selected homes
with high income families within the area to be served to
create a minimum mass of preferred customers for potential
advertisers.


Dependence on a Critical Mass of Users

The business of the Company will not be successful until enough
advertising revenues are generated to cover its monthly expenses.
If the Company is not able to reach a critical mass of users,
significant enough to attract enough businesses to advertise in
the Telli Pages Directory the Company will sustain substantial
losses and may not be able to attract any additional capital to
expand its user base and reach the necessary critical mass of
users.


Backlog Orders

The Company has not yet gone to the marketplace with its product
and therefore has no backlog orders of any kind.



<PAGE>24

Government Regulation

The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to
businesses generally, and there are currently few laws or
regulations directly applicable to access or conduct commerce on
the Internet or for access through an online service or to
establish an online service. However, due to the increasing
popularity and use of the Internet and other online services, it
is possible that a number of laws and regulations may be adopted
with respect to the Internet and online services in general,
covering issues such as user privacy, pricing, and
characteristics and quality of products, services, and content.
For example, the adoption of any laws or regulations that would
prohibit distribution of obscene, lascivious, or indecent
communications on the Internet may cause the Company to limit the
scope of its products and services in the marketplace and
increase its cost of doing business or otherwise have an adverse
effect on the Company's business, operating results, or financial
condition. Moreover, the applicability to the Internet, other
online services, the Telli Pages Directory, and the Telli Screen
and Telli Phone of existing laws governing issues such as
property ownership, libel, and personal privacy is uncertain.


Competition

The Company plans to distribute Telli Screens to users to
encourage them to enhance their existing telephones with Telli
Screens. Users will be able to keep their Telli Screens free of
charge for as long as they remain users of the Telli Pages
Directory and the Company is able to generate enough revenues
from paid advertising in the Telli Pages Directory to support its
monthly operations. At this time the Company sees no competition
from computer hardware and telecommunications equipmentmanufacturers
and vendors.

Although the Company has targeted online community information,
local directory services, and telecommunications products for
consumers who are not computer literate, other companies offer
products similar to the Company's software and publishing
products and target the same customers as the Company. The
Company believes its ability to compete depends on many factors
within and outside its control, including the timing and market
acceptance of the products developed by the Company and its
competitors, performance, price, reliability, and customer
service and support.

The marketplace for online products and services is highly
competitive and competition is expected to continue to increase
significantly. In addition, the Company expects the market for
online advertising, to the extent it develops, to be intensely
competitive. There are no substantial barriers to entry, and the
Company expects that competition will continue to intensify.
Although the Company believes that the diverse segments of the
online market will provide opportunities for more than one
supplier of products and services similar to those of the
Company, it is possible that a single supplier may dominate one
or more market segments.

The Company competes with other providers of online navigational
tools, products, and services, including directory and Web server
review services and search engine services. Many companies offer
competitive products or services addressing certain of the
Company's target markets, including online companies like America
Online/Netscape and the French Minitel; suppliers of Internet
products and services such as Microsoft and Yahoo; the Regional
Bell Operating Companies offering Yellow Pages and
telecommunication products and services like voice mail and
caller identification; MCI and other companies offering Internet
connections; Cisco with its new cable modem which allows home
users to plug a telephone directly into the Internet; newspaper
publishing companies offering local and classified advertising
including, in many cases, telecommunication and online community
information and news; printers, distributors, agencies, and clubs
offering or managing retail discount coupons and redemption
certificates and awards.


<PAGE>25

In addition, entities that sponsor or maintain high-traffic Web
sites and manufacturers of telecommunications and computer
equipment could develop or acquire simple search and navigation

functions that would produce simple computerized information
products and services that compete with those offered by the
Company.

Many of the Company's competitors are substantially larger than
the Company and have significantly greater financial, technical,
and marketing resources. As a result, they may be able to
respond more quickly to new or emerging technologies and changes
in customer requirements, or to devote greater resources to the
development, promotion, and sale of their products than the
Company. It is also possible that new competitors may emerge and
acquire significant market share to the extent that smaller
providers of online tools, services, or products may be acquired
by, receive investments from, or enter into other commercial
relationships with larger, well-established and well-financed
companies, such as Microsoft, AOL/Netscape, Regional Bell
Operating Companies, and long distance telecommunications
companies like AT&T, MCI, and Sprint. Possible new competitors
include large foreign corporations, major telecommunicationscompanies,
and other entities with substantial resources.

The most significant market where the Company competes is in the
area of telephone directories. The Telli Pages Directory will
compete primarily with the local Telephone Company Yellow Pages
directory in areas where it establishes a Telli Pages Directory
central server. Specifically, it may be competing for
advertising dollars. Even though the local Telephone Companies
are regulated by the State Public Utilities Commissions, they
have, unlike the Company, major financial resources available to
them. If the Yellow Pages publishers see the Telli Pages
Directory as a major threat to their profits, it is possible that
they would use their resources to attempt to eliminate
competition from the Telli Pages Directory. How the Telephone
Companies would attempt to eliminate competition from the Telli
Pages Directory is not clear at this time.

Since 1983 many major organizations have spent hundreds of
millions of dollars in an attempt to establish an interactive
telecommunications service for the home. Most of the methods
tried have involved an attempt to encourage consumers to attach a
videotex telecommunications/terminal box to their television sets
for people to access interactive listings and directories through
their televisions. These systems are no longer in use due to the
lack of customer demand.

More recently, some organizations with significant financial
resources have made similar attempts at establishing an
interactive service in the home through the television set by
encouraging consumers to attach cablevision/terminal boxes to
their television sets. WebTV Networks introduced the first
mass-market information appliance in 1996, a little black box
attached to the TV which connects to the World Wide Web and to
e-mail. The second generation appliance, WebTV Plus has several
new features and provides an electronic TV listing in addition to
the features of the earlier model. These terminals are connected
to outside fiber optic cable systems and are promoted principally
as a means of receiving home movies on demand. These services
are available only to a limited marketplace and it is too soon to
project how much consumers will utilize the service or be willing
to pay for it. As reported in the Wall Street Journal, 2/27/98,
Microsoft has supported this entertainment format with its $425
million acquisition of WebTV Networks Inc. and its $1 billion
investment in Comcast Corp.

Some organizations have attempted to offer consumer oriented
interactive directory services to the householder through
personal computers. It has been reported that $1 billion has
been invested into the Prodigy service, with about 2.3 million
subscribers, which has yet to show a significant profit. As
reported in the Interactive Services Report, Prodigy's ran an ad
campaign that was targeted to those who were frustrated with
experiences using the Internet and to encourage people to use
Prodigy as an alternative to America Online, with its
approximately 18 million subscribers, which is currently the most
popular and profitable of the consumer oriented computer networks

<PAGE>26

in spite of occasional access problems. Now, with the recent
addition of Netscape, AOL reaches about 75% of all Internet
users. Attempts have also been made by financial organizations
to offer home banking services through a telephone which includes
a computer processor, a modem, and a digital video screen.

Many businesses, schools, local government agencies and
associations are using the Internet and setting up their own home
pages on the World Wide Web, encouraging the computer-literate to
contact them for information and transactions. To date, these
attempts have met varying degrees of success, and some of them
are as yet unproven. As announced in the 2/21/97 issue of
Information & Interactive Services Report, Digital City Inc., a
spin off from America Online, and associated with the Tribune
Co., offers service to the PC marketplace in 13 cities. As a
network of online community information, it has launched a
national affiliate program targeted at newspapers and other media
wanting to increase their online presence.

Also competing online for the potentially huge market of "local"
advertising dollars will be CitySearch, funded by AT&T and Compaq
Computer Corp. which has expanded its menu of information in the
community, government and local news categories. It now features
multimedia sites with volunteer, nonprofit and government
Infosites. Microsoft now has a plan to unite its consumer
software offerings with its World Wide Web services in an effort
to establish Windows as the standard platform for a new
generation of Web based services. It is now focusing on a free
World Wide Web version of MSN and services and tools that will
help people do everyday things with offerings including Expedia
for travel, Carpoint for autos, MSNBC for news and a streamlined
Sidewalk. Slate, Microsoft's online magazine on politics and
culture, plans to eliminate the annual fee on the belief that
it's going to be easier to sell ads than subscriptions.

US West Media Group introduced its local Internet information
service called "DiveIn" in 10 local markets. It announced
3/01/99 the nation's first Internet-based enhanced TV service
with telephony, US West@TV, a set-top box for making and
receiving phone calls and some Internet features. AT&T is
developing a local Web information service called Hometown
Network, now being test marketed in Sacramento. Zip2, another
newspaper affiliate network (Knight-Ridder and Landmark
Communications), plans to offer automotive and real estate
listings, arts and entertainment guides, and Yellow Pages and
community mapping services, with editorial content generated by
local affiliates.

Popular portal site Yahoo, partnering with Online Anywhere, is
entering the emerging market of wireless handheld devices and
Internet appliances Yahoo has a relationship with PageNet to
deliver its content to pagers and with 3Com for service to its
Palm Pilots.

All of these services could be accessible to Telli Pages users
through Telli Screens once Telli Screens are distributed in the
marketplace and if the pricing makes access practicable. All
basically promise the same thing; movie reviews, restaurant
listings and reservation capabilities plus community and school
information, area maps and travel information.

A new generation of telephones with screens for accessing the
Internet are currently being tested. These phones, which are
less expensive and easier to use than computers are expected to
bring millions of new users to the Web's home pages, although
none support industry-standard Web browsers. In the months ahead
Cidco Inc., Philips Consumer Communications and Mitsui Comtek
Corp. plan to sell screen phones that can perform many of the
data communications functions of the PC.

Cidco's iPhone offers several telephony options plus e-mail,
yellow and white page directories for many US locations as well
as limited Internet access as its InfoGear browser doesn't
implement some common Web technologies. Philips Home Services
conducted a test in Garden City, New York using Philips screen
phones and Oracle Corporation's InterOffice software enabling
6,500 businesses and consumers to access the Web and send and
receive e-mail. The Philips screen phone utilizes special

<PAGE>27

software to translate Web graphics to telephone compatible text
based menus and contains Web content developed by Garden City's
newspaper, including movie listings and local notices.
US West conducted a small trial of its TransPhone screen phone in
Spokane, Washington claiming it a test of the concept rather than
the device. Motorola has developed a screen phone as has
Northern Telecom whose phone was released in early 1997 using Sun
Microsystems Inc.'s Java language to translate data from Web
pages into a format readable on the phone's small screen.
Navitel Communication's TouchPhone which shipped in spring 1997,
uses Microsoft's Windows CE operating system and Web browser. It
allows users to surf the Net, exchange e-mail and voice mail, and
receive personalized information downloaded from the Web.

Uniden America and Intelidata Technologies screen phones connect
to the Internet, but to date display only plain text. Nokia's
wireless phone allows users to check e-mail and download bits of
data from the Web. AOL has announced making content available on
screen phones, rumored to be the French Minitel version. The
market research firm IDC expects that sales of such Internet
phone units will grow from 333,000 to 1.5 million in 1999. They
predict sales to reach 4.5 million by 2001. Various sources,
including Probe, a US research company, project a 9.5million
penetration level of smart phones in the US by the year 2000.
Smart phones and Internet phones should appeal to the 60 percent
of homes which do not have a personal computer. The US
Electronic Industries Association currently reports that 95
percent of households have a telephone, with 2.4 as the average
number of phones per household.

There is no assurance that the Company can compete successfully
for advertising dollars with other local media, the community
newspapers, radio, and T.V., or that the Company can compete with
current and future sources of competition or that the competitive
pressures faced by the Company will not have a material adverse
effect on the Company's business, results of operations and
financial condition.

The Company cannot make any assurances that it will be able to
obtain financing to take its products to the marketplace in a
profitable manner, or that if its products receive favorable
acceptance by the general consumer public, that it will have the
resources to sustain itself while competing with major
organizations with similar goals. The Company can provide no
assurance that it can protect itself from providing potential
competitors additional information from its business plan that
will assist them in determining ways to make their present
products successful in the marketplace. In addition, there can
be no assurance that the Company will not experience difficulties
that could delay or prevent the successful introduction and
marketing of its products or that they will meet the requirements
of the marketplace and achieve market acceptance. There can be
no assurance that the Company will be able to compete
successfully against current or future competitors or that
competitive pressures faced by the Company will not materially
adversely affect its business, operating results and financial
condition.


Research and Development

The Company's current development efforts are focused on product
enhancements. The Company believes that its software and its
software and engineering development team represent a significant
competitive advantage for the Company. The Company's ability to
attract and retain highly qualified employees will be the
principal determinant of its success in maintaining technological
leadership it its field. The Company intends to have a policy of
using equity-based compensation programs to reward and motivate
significant contributors among its employees. The Company
determined that, effective December 31, 1994, all significant
research and development had been completed regarding the
development of the Telli Phone.

In the last three fiscal years the Company has spent and accrued
approximately the following amounts on company-sponsored product
development activities determined in accordance with generally
accepted accounting principles. The entire amounts were spent


<PAGE>28

and accrued on activities relating to the enhancement of software
for the Company's new products, the Telli Screen and the TelliPhone.

1996      $ nil
1997      $ nil
1998      $ $30,234

The Company, including any of its predecessors, has not, during
each of the three fiscal years immediately prior to the filing of
this annual report, received any revenues from operations.

There can be no assurance that the Company will be successful in
getting the marketplace to accept its products or that the
Company will generate any significant income from the use of its
products in the marketplace. There can be no assurance that the
Company will be successful in developing and marketing new
software and hardware products and enhancements that meet
changing customer needs and in responding to such technological
changes or evolving industry standards. The Company's current
products are designed around certain standards, including, for
example, simple-to-use computer programming systems, and future
sales of the Company's products will be dependent, in part, on
industry acceptance of such standards. Microsoft and IBM are
each proposing alternative programming standards and widespread
adoption of either standard could have a material adverse effect
on the Company's business, operating results, or financial
condition.

In addition, there can be no assurance that the Company will not
experience difficulties that could delay or prevent the
successful development, introduction, and marketing of new
products and enhancements, or that its new products and
enhancements will adequately meet the requirements of the
marketplace and achieve market acceptance. Further, because the
Company has not yet commenced shipment of its products, there can
be no assurance that, despite testing by the Company and by
potential customers, errors will not be found in the Company's
products, or, if discovered, successfully corrected in a timely
manner. If the Company is unable to develop on a timely basis
new software products, enhancements to existing products, or
error corrections, or if such new products or enhancements do not
achieve market acceptance, the Company's business, operating
results, and financial condition will be materially adversely
affected.


Environmental Impacts

The Company does plan to manufacture the hardware necessary to
distribute its products and will use existing telecommunications
services to communicate with its users. The Company does not
feel that it is affected by any rules which have been enacted or
adopted regulating the discharge of material into the
environment. On the contrary, the Company feels that its system
may reduce the number of trees cut down every year to supply the
paper industry.


Employees and Management of Growth

The Company has five full time employees, including three in
administration and finance and two in research and product
development. The Company plans to hire an additional 17
employees, including one in hardware engineering, four in
software engineering, two in technical maintenance, three in
marketing, and seven in advertising sales and listings.

The Company's future success is substantially dependent on the
performance of its senior management, key technical personnel,
and marketing and sales team and its continuing ability to
attract and retain highly qualified technical, managerial,
marketing, and sales personnel. Competition for such personnel
is intense and there can be no assurance that the Company will be
able to retain its key managerial personnel in the future. None
of the Company's employees is represented by a labor union. The
Company has not experienced any work stoppages and considers its
relations with its employees to be good.


<PAGE>29

The Company intends to establish Telli Pages Directories in other
geographic locations, which will create additional operational
and management complexities, including the need for continual
updating and maintenance of directory listings. There can be no
assurance that the Company will be able to effectively manage the
expansion of its operations, that the Company's systems,
procedures, or controls will be adequate to support the Company's
operations, or that Company management will be able to achieve
the rapid execution necessary to fully exploit the market
opportunity for the Company's products and media properties. Any
inability to manage growth, if any, effectively could have a
material adverse effect on the Company's business, operating
results, and financial condition.


(e) Financial Information About Foreign and Domestic Operations
and Export Sales

The Company has had no history of operating revenues, domestic or
foreign. In addition, the Company will not be conducting any
business that would generate foreign sales in the foreseeable
future.


Revenues from Prior Operations

The Company, including any of its predecessors, has not, during
each of the three fiscal years immediately prior to the filing of
this annual report, received any revenues from operations.


(f) Factors Affecting Company's Business Operating Results and
Financial Condition

Development Stage Company; Limited Operating History

The Company has been in the development stage since its inception
and has not commenced a public operation of the Telli Pages
Directory, has not begun generating any advertising revenues for
the Telli Pages Directory, nor has it commenced shipment of any
Telli Screens. Accordingly, the Company has only a limited
operating history upon which an evaluation of the Company and its
prospects can be based. The Company and its prospects must be
considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving
markets. To address these risks, the Company must, among other
things, continue to respond to competitive developments, attract,
retain, and motivate qualified personnel, implement and
successfully execute its advertising sales strategy, develop and
market additional media properties, and continue to upgrade its
technologies and commercialize products and services
incorporating such technologies. There can be no assurance that
the Company will be successful in addressing such risks. The
report of the independent Certified Public Accountant expresses
substantial doubt about the Company's ability to continue as a
going concern.


No Assurance of Successful Operations

The Company will attempt to establish an online Telli Pages local
information directory. An internal test of its computer
information network was initiated in Marin County, California,
during March 1987, on a very limited scale, but it has not begun
any operations of the network involving the use of the Telli
Pages by the general public and has not received any revenues
from operations. There is no assurance that the Company will be
able to successfully commence or establish a large scale
operation of the Telli Pages Directory and no assurance that the
user public will accept a new way to access local community
information or that community businesses and groups will adopt
new communications strategies. The Company's receipt of
significant revenues is dependent on the successful operation of
the Telli Pages, the outcome of which cannot be determined at
this time. Any failure to develop or maintain the Telli Pages
could adversely affect the Company's business, results of


<PAGE>30

operations and financial condition. This condition raises
substantial doubt about the Company's ability to achieve or
sustain profitability.

No Revenues From Product Sales; Significant and Continuing
Operating Losses; Accumulated Deficit.

Since the incorporation of Guinness Productions, Inc., the first
predecessor of the Company, in November 1980, the Company has not
shipped any products nor generated any revenues from sales of its
products. Accordingly, the Company has no operating history upon
which an evaluation of its prospects can be made. There is no
assurance that the Company's operations will be successful or
that it will meet its stated objectives. Such prospects must be
considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of a new business in
the consumer computer telephony and information network
development industry, which is a continually evolving industry
characterized by an increasing number of market entrants and
intense competition, as well as the risks, expenses and
difficulties encountered in the shift from development to
commercialization of new products based on innovative technology.
There can be no assurance that the Company will be successful in
addressing such risks. As of December 31, 1998, the Company and
its predecessor had an accumulated deficit of $11,698,713 with
current liabilities of $2,646,620. The Company currently expects
to significantly increase its operating expenses to develop and
expand its sales and marketing operations, to fund greater levels
of product development, and to develop and commercialize
additional media properties. As a result of the foregoing
factors, the Company expects to continue to incur significant
losses on a quarterly and annual basis for the foreseeable
future. There can be no assurance that the Company will achieve
or sustain profitability. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."


Potential Fluctuations in Quarterly Operating Results

As a result of the Company's limited operating history, the
Company does not have historical financial data on which to base
planned operating expenses. Quarterly revenue and operating
results will depend substantially upon the advertising revenues
received within the quarter from the Telli Pages Directory, which
are difficult to forecast accurately. The Company may be unable
to adjust spending in a timely manner to compensate for any
unexpected revenues shortfall. Accordingly, any significant
shortfall of demand for the Company's products and services in
relation to the Company's expectations would have an immediate
adverse impact on the Company's business, operating results, and
financial condition. In addition, the Company plans to increase
its operating expenses to fund greater levels of research and
development, increase its sales and marketing operations, develop
new distribution channels, and broaden its customer support
capabilities. To the extent that such expenses precede or are
not substantially followed by increased revenues, the Company's
business, operating results and financial condition will be
materially adversely affected.

The Company's operating results may fluctuate significantly in
the future as a result of a variety of factors, many of which are
outside the Company's control. These factors include the number
of Telli Pages users operating Telli Screens within the
geographic area covered by the Telli Pages Directory, the level
of usage of the Telli Pages Directory, demand for Telli Pages
Directory advertising, seasonal trends in both Telli Pages usage
and advertising placements, the advertising budgeting cycles of
individual advertisers, the amount and timing of capital
expenditures and other costs relating to the expansion of the
Company's operations, the introduction of new products or
services by the Company or its competitors, pricing changes in
the industry, technical difficulties with respect to the use of
Telli Screens or accessing the Telli Pages through the telephone
system or other media properties developed by the Company,
general economic conditions and economic conditions specific to
the Telli Pages and online media. As a strategic response to
changes in the competitive environment, the Company may from time
to time make certain pricing, service, or marketing decisions or

<PAGE>31

acquisitions that could have a material adverse effect on the
Company's business, results of operations, and financial
condition. The Company also expects that it may experience
seasonality in its business, with advertising impressions (and
therefore revenues) being somewhat lower during the summer and
after year-end vacation and holiday periods, when usage of the
Telli Pages Directory may be expected to decline.

Due to all of the foregoing factors, in some future quarters the
Company's operating results may fall below the expectations of
securities analysts and investors. In such event, the trading
price of the Company's Common Stock would likely be materially
and adversely affected. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations."


Financial Condition of the Company

The Company does not have an earning history. In addition, the
Company is a development stage company which is in the process of
initiating a market introduction of its computer information
network and access device, the Telli Screen. The Company will
require additional capital to finance its current and proposed
operations. There is no assurance that the Company will be able
to raise any additional capital or that such additional capital
will be available at the time required by the Company to
successfully promote and operate the Telli Pages Directory.
There is no assurance of the Company's ability to receive
significant revenues from advertising in the Telli Pages, or
licensing fees to communicate through Telli Screens with Telli
Pages users.


New Concept and Emerging Markets; Uncertainty of Market
Acceptance and Commercialization Strategy

The utilization of combination telephone-information network
products for consumer applications represents a relatively new
business activity characterized by emerging markets and an
increasing number of market entrants who have introduced or are
developing an array of new telecommunications products and
services, some of which will compete in some segments (i.e. home
banking) against Telli Screens, Telli Phones, Telli Pages
Directories, and any other products which may be developed by the
Company. The Company is currently assessing market acceptance
and demand with the intent of minimizing the risks involved with
the financing and distribution of the Telli Pages Directory and
Telli Screens on a large scale. Market acceptance for the Telli
Pages Directory and Telli Screens will require substantial

marketing efforts and expenditure of funds to create awareness
and demand by potential customers. There can be no assurance
either that a market will develop or that it will become
sustainable.


Uncertainty of Market Acceptance of New Technology

The Telli Pages Directory involves the use of a new
communications device or tool. It may or may not be accepted by
the marketplace. Similar, but not identical, approaches have
been undertaken in the United Kingdom, where it had limited
success, and in France, where it is succeeding with government
assistance. Until the Company's marketing plans have been
completed, one will not know what degree of success can
reasonably be anticipated. Extensive use of the Telli Pages will
require what amounts to a cultural change in the user-public
comparable to the e-mail revolution now underway in America.
Whether a market will develop for the Company's products, or if
it develops more slowly than expected or becomes saturated with
more well-funded competitors, or if it cannot effectively manage
expansion, the Company's business, operating results, and
financial condition will be materially adversely affected.



<PAGE>32

Dependence on Continued Growth in Use of the Telli Pages

The Company's future success is substantially dependent upon
continued growth in the use of the Telli Pages Directory and
Telli Screens in order to support the sale of advertising in the
Telli Pages and other online media properties under development
by the Company. There is no assurance that communication or
commerce over the Telli Pages will develop or that content will
be provided. The Telli Pages may not prove to be a viable
commercial marketplace for a number of reasons, including
potentially inadequate development of the necessary
infrastructure, such as a reliable network backbone, or timely
development of performance improvements including high speed
modems. In addition, to the extent that the Telli Pages may
experience significant growth in the number of users and level of
use, there can be no assurance that the Telli Pages
infrastructure will continue to be able to support the demand
placed upon it by such potential growth. In addition, the Telli
Pages could lose its viability due to delays in the development
of adoption of new standards and protocols required to handle
increased levels of activity, or due to increased government
regulation. Changes in or insufficient availability of
telecommunications services to support the Telli Pages also could
result in slower response times and adversely affect usage of the
Telli Pages Directory. If use of the Telli Pages does not
continue to grow, or if the Company's infrastructure does not
effectively support growth that may occur, the Company's
business, results of operations, and financial condition would be
materially and adversely affected.


Uncertain Adoption of the Telli Pages as an Advertising Medium

Because the Company expects to derive most of its revenues in the
foreseeable future from the sale of pages of advertising in the
Telli Pages Directory, the future success of the Company is

highly dependent on the development of the Telli Pages as an
advertising medium. Some of the Company's potential advertisers
may have some limited experience or knowledge of advertising on
the World Wide Web through the Internet, however, the Company's
advertising customers have no experience with the Telli Pages as
an advertising medium, have not devoted a significant portion of
their advertising expenditures to Web-based advertising, and may
not find such advertising to be effective for promoting their
products and services relative to traditional print and broadcast
media. No standards have yet been widely accepted for the
measurement of the effectiveness of Web-based advertising, and
there can be no assurance that such standards will develop
sufficiently to support Web-based advertising as a significant
advertising medium. Moreover, critical issues concerning the
commercial use of the Internet (including security, reliability,
cost, ease of use and access, quality of service and acceptance
of advertising) remain unresolved and may negatively affect the
growth of Internet use and the acceptance of the Telli Pages as
an advertising medium. In addition, Telli Pages serve a very
limited marketplace unlike the Internet which has a worldwide
marketplace. If widespread commercial use of the Internet does
not develop, or if the Internet does not develop as an effective
and measurable medium for advertising, the success of the Telli
Pages and the Company's business, results of operations, and
financial condition will be materially and adversely affected.


Reliance on Advertising Revenues

The Company expects to derive substantially most of its revenues
from the sale of pages of advertising in the Telli Pages
Directory, and expects to continue to do so for the foreseeable
future. The Company has not introduced the Telli Pages Directory
to the marketplace, has not attempted to sell any pages of
advertising, and has not generated any revenues from the sale of
pages of advertising in the Telli Pages Directory. There can be
no assurance that advertisers will purchase advertisements in the
Company's Telli Pages Directory. The Company's ability to
generate advertising revenues will depend, among other factors,
on advertisers acceptance of the Telli Pages as an attractive and


<PAGE>33

sustainable medium, the development of a large base of users of
the Telli Pages and the effective development of media properties
that provide user demographic characteristics that will be
attractive to advertisers.


No Assurance of Content Development or Advertising Revenues

A key element of the Company's strategy involves the
implementation of a Telli Pages Directory operation and the
distribution of the Telli Pages within limited geographical
areas, to generate the maximum number of Telli Pages users
(critical mass) that will generate the maximum amount of
advertising revenues from the maximum number of advertisers, at
minimum cost. Each area targeted for the establishment of a
Telli Pages Directory will be approximately the same geographic
area covered by the local telephone directory for that area. In
these efforts, the Company will rely and will continue to rely
substantially on content development and localization efforts of
third parties. For example, businesses advertising products and
services, community groups and associations publishing news and
directory information, and individuals selling products and
services will create and update their pages of

information using
the Telli Phone or the assistance of local Telli Pages operators.
There can be no assurance that the Company's marketing and
educational efforts will encourage people to use the Telli Pages
Directory or that pages of information will be placed by third
parties in the Telli Pages Directory or that pages of information
placed in the Directory will encourage people to become users of
the Telli Pages or that the Telli Pages Directory will result in
significant revenue to the Company. Any failure of these parties
to develop and maintain high-quality and successful Telli Pages
also could result in dilution to the names Telli Phone and Telli
Pages, which could have a material adverse effect on the
Company's business, results of operations, and financial
condition.

The Company's future success also depends in part upon the timely
processing and updating of Telli Pages Directory listings created
by users, businesses, groups, and associations. The Company may
experience significant delays in the processing and updating of
information that could have a material adverse effect on the
usefulness of the Telli Pages Directory for users which could
have a material adverse effect on the Company's business, results
of operations, and financial condition.


Dependence on Third Party Distribution of Content

The Company will be dependent on local telephone companies to
provide transmission of Telli Pages Directory information to
users. The telephone companies may assess data transmission
rates that are sufficiently high to make use of the Telli Pages
too expensive for most users. In addition, disruptions in the
Company's ability to carry on its business due to phone system
transmission or equipment failures causing interruptions, delays
or cessations in service to users could result in a material
adverse effect on the Company's business, results of operations,
and financial condition.


Dependence on Suppliers of Telli Screen and Telli Phone
Components; Single Sources of Supply; Assembly of Telli Screens
and Telli Phones; Cost of Telli Screens and Telli Phones

The Company currently assembles Telli Screens and Telli Phones
from components or assemblies that are purchased from single
sources. The Company believes that there are alternative sources
of supply for most of the components and assemblies currently
purchased from single sources. Some of the components and
assemblies used by the Company for which there are not
immediately available alternative sources of supply are provided
to the Company under standard purchase arrangements. If a
shortage or termination of the supply of any one or more of such
components or assemblies were to occur, however, the Company's
business could be materially and adversely affected. In such
event, the Company would have to incur the costs associated with

<PAGE>34

redesigning the Telli Screen and Telli Phone to include available
components or assemblies or otherwise obtain adequate
substitutes, which costs could be material. Also, there is no
assurance that in redesigning Telli Phone products to include
available components or assemblies that the operation of Telli
Phone products could be materially and adversely affected. Any
delays with respect to redesigning Telli Phone products or
obtaining substitute components would materially and adversely
affect the Company's business, results of operations, and
financial condition.

There is no assurance that the components or assemblies
purchased, when delivered, that some or all the components will
not be defective or that all of the components can be delivered
in accordance with the intended delivery schedule. Significant
defects in the components and/or a delay in the delivery of the
components could significantly and adversely affect the success
of the Company's business, results of operations, and financial
condition.

The Company is designing its own main board to eliminate many of
the computer components presently used in the assembly of Telli
Phones and Telli Screens but not necessary for the operation of
the Telli Phone. Also, Telli Phone products are instruments
designed to handle a limited number of specific tasks and many
hardware components can be eliminated from the present model
because of the programming systems for the products are able to
do many of the tasks through software. The Company anticipates
that the unit price of a large run of Telli Phone and Telli
Screen main boards to be designed by the Company will
considerably reduce the present cost to assemble these products.
There is no assurance that the Company will be successful in
designing such a board or when designed that the products will
function with the capabilities of the previous models. If the
Company is not able to reduce the present cost of the assembly of
Telli Phone products there is substantial doubt about the
Company's ability to generate enough income to justify the cost
of its products in the marketplace. This condition would raise
substantial doubt about the Company's ability to continue as a
going concern.


Dependence on Reliable Source of Telli Phones and Telli Screens;
Limited Market for the Telli Phone and the Telli Screen

The Company plans to contract qualified manufacturers of computer
and telecommunications equipment to produce large runs of Telli
Phones and Telli Screens on its behalf. It also anticipates
being able to raise the capital required to purchase large runs
of these products. The Company believes that it will be able to
raise this capital through a variety of methods including the
sale of securities, debt financing, and limited partnerships.
There can be no assurance that the Company will be able to raise
the capital required to interest a manufacturer to produce large
runs of Telli Phones and Telli Screens or that if the financing
is available and a manufacturer produces large runs of these
products that some or all of the products will not be defective
or that all of the products can be delivered in accordance with
the intended delivery schedule. Significant defects in the Telli
Phones or Telli Screens and/or a delay in the delivery of the
products could significantly, materially, and adversely affect
the Company's business, results of operations, and financial
condition.

Although the Telli Phone can be used as an ordinary telephone
with stand-alone voice mail features, the Telli Phone and Telli
Screen are designed primarily for use as devices to access
information from the Telli Pages. The Company anticipates that,
if the Telli Pages are not successful, there may not be an
alternative computer information network to which the Company
could lease or sell Telli Phones and Telli Screens. The Company
further anticipates that it would realize a substantial loss on
the products if it were forced to lease or sell them for use
other than in a computer information network which would
materially and adversely affect the Company's business, results
of operations, and financial condition.


<PAGE>35

In the intensely competitive telephone-computer industry, large
companies such as NorTel, Panasonic, Philips, Uniden, Navitel,
Intelidata and Cidco which have significantly greater financial
and management resources than the Company, could produce
substitutes for the Telli Phone and Telli Screen appliances at a
better price. In that case it is possible that the Company could
use that source for its appliances. Also, there can be no
assurance that competitors will not identify, develop,
manufacture and offer products to the marketplace rendering the
Company's products obsolete.


Dependence on Reliable Computer Equipment for the Telli Pages
Server; Dependence on Additional Financing for Growth

The computer equipment that maintains the Telli Pages Directory
(the "Server") and the telecommunications assemblies connecting
the Server to the local telephone system are purchased from
single sources under standard purchase arrangements. The Company
believes that there are alternative sources of supply for most of
the equipment and assemblies currently purchased from single
sources. If a shortage or termination of the supply of any one
or more of such equipment and assemblies were to occur, the
Company's business could be materially and adversely affected.
Also, the Company anticipates that the continuing success of the
Telli Pages in the initial markets will depend on the Company's
ability to acquire additional equipment and assemblies to
establish Telli Pages Directory sites and distribute Telli
Screens into additional markets. The Company anticipates using
various financing methods including debt financing and equity
financing to raise capital for the purchase of additional
equipment and assemblies to establish additional Telli Pages
Directory sites. There is no assurance that these funds will be
raised or that if funds are raised and equipment and assemblies
are purchased that some or all the equipment and assemblies will
not be defective or that all of the equipment and assemblies can
be delivered in accordance with the intended delivery schedule.
Significant defects in the equipment and assemblies and/or a
delay in the delivery of the equipment and assemblies could
significantly and adversely affect the success of the Company's
business, results of operations, and financial condition.


Enhancement of Telli Screens, Telli Phones, and the Telli Pages
Directory

Substantially all of the Company's revenues in the foreseeable
future are expected to be derived from the purchase of
advertising pages in the Telli Pages, and the license of the
Company's software and the right to communicate with Telli Pages
users through their Telli Screens or Telli Phones from a computer
networking data base. Accordingly, broad acceptance of the
Company's software products and services by customers is critical
to the Company's future success, as is the Company's ability to
design, develop, test, and support new software products and
enhancements on a timely basis that meet changing customer needs
and respond to technological developments and emerging industry
standards.


To remain competitive, the Company must continue to enhance and
improve the responsiveness, functionality, and features of Telli
Screens, Telli Phones, Telli Pages, and the Telli Pages server,
as well as other branded media properties that may be developed.
There can be no assurance that the Company will be able to
successfully maintain competitive user response time or implement
new features and functions, such as user personalization and
protection, which will involve the development of increasingly
complex technologies. There can be no assurance that the Company
will not experience difficulties that could delay or prevent the
successful development, introduction, and marketing of new
products and enhancements, or that its new products and
enhancements will adequately meet the requirements of the
marketplace and achieve market acceptance.

Further, because the Company has only recently commenced shipment
of its products, there can be no assurance that, despite testing
by the Company and by current and potential customers, errors
will not be found in the Company's products, or, if discovered,

<PAGE>36

successfully corrected in a timely manner. In addition, any
enhancements of or improvements to Telli Screens, Telli Phones,
Telli Pages, Telli Pages servers, or new media properties may
contain undetected errors that require significant design
modifications, resulting in a loss of customer confidence and
user support and a decrease in the value of the Company's brand
name recognition. Any failure of the Company to effectively
develop and introduce these properties, or failure of such

properties to achieve market acceptance, could adversely affect
the Company's business, results of operations, and financial
condition.

Need for Additional Equipment

The Company anticipates that the Telli Screens and server
equipment to be acquired for the market launch will be sufficient
to successfully operate a single Telli Pages Directory in the
initial markets targeted by the Company. However, the Company
also anticipates that the continuing success of the Telli Pages
in the initial markets will depend on the Company's ability to
acquire additional Telli Screens and server equipment to expand
its network into additional markets. There is no assurance that
the Company will be able to acquire such additional Telli Screens
and server equipment or to successfully expand into additional
markets.


Lack of Intellectual Property Protection

The Company will apply for Copyright/Trademark protection of its
name when the product is introduced to the marketplace, but does
not possess any patent or registered intellectual property rights
with respect to any of its technology and has not filed any
concept patent applications. In addition, much of the technology
utilized in the development of Telli Phones and Telli Screens is
generally available to other manufacturers. Some of the
technology utilized in the Telli Phone and Telli Screen hardware
is licensed to the Company on a world-wide perpetual basis. The
Company may find that it has to make royalty or licensing
payments for using the technology of other companies. In
addition, other companies with greater financial, marketing and
other resources than the Company could produce products similar
to the Telli Screen, the Telli Phone, and the Telli Pages
Directory, which if produced, may have features, pricing and
other characteristics which would make them more acceptable to
the market than the products of the Company. Despite
precautions, there is the possibility of a third party accessing
and copying the Company's proprietary technology or independently
developing similar or superior technology. In this case,
litigation could have an adverse effect on the Company.

The Company depends in part upon certain technology and know-how
to differentiate its products from those of its competitors, and
relies on a combination of trade secret laws and nondisclosure
and confidentiality agreements with its employees, consultants,
researchers and advisors to protect its technology. There can be
no assurance that such laws or agreements will provide meaningful
protection for the Company's trade secrets or proprietary
know-how in the event of any unauthorized use or disclosure of
such trade secrets or know-how. In addition, others may obtain
access to or independently develop technologies or know-how
similar to the Company's. The telecommunications industry is
characterized by the existence of a large number of patents and
frequent litigation based on allegations of patent infringement.
Although the Company believes that its products and technology do
not infringe on the proprietary rights of others and has not
received any notice of claimed infringement, it is possible that
an infringement of proprietary rights may occur. In such event,
the Company may be required to modify its products or obtain a
license. There can be no assurance that the Company will have
the financial or other resources necessary to successfully defend
a claim of violation of proprietary rights. Failure to do any of
the foregoing could have a material adverse effect on the
Company. Furthermore, if the Company's products or technologies
are deemed to infringe patents or proprietary rights of others,


<PAGE>37

the Company could, under certain circumstances, become liable for
damages, which would have a material adverse effect on the
Company's business, results of operations, and financial
condition.


Dependence on Key Man; Need to Assemble Management Team

The Company's performance is dependent on its President and CEO,
Lawrence Guinness. The Company has no "key person" life
insurance policy, and his loss would adversely affect the
Company. Moreover, the Company's performance is dependent on
hiring and retaining high quality personnel for assembling a
management team, and developing marketing systems and personnel
to deal with expansion in the marketplace. There is competition
for top personnel and no assurance that the Company will be able
to attract, assimilate, or retain the necessary personnel which
could have an adverse effect on the business, operating results
or financial condition of the Company.


Substantial Dependence Upon Internal Operations; Personnel for
Growth

The Company plans to use its internal sales and marketing force
for the marketing and sale of its products and not outside,
unrelated third parties. The Company will be required to expand
its field sales force and telesales organization as it
establishes new Telli Pages Directory sites. Growth of the
Company could possibly be affected by its dependence on outside
sources for management, personnel and other resources for several
critical elements of its business including advertising and
marketing, technology, assembly, development of Telli Pages
Directory content and Telli Screen distribution among others.
There can be no assurance that such internal operations or
expansion will be successfully managed, that the cost of such
expansion will not exceed the revenues generated, or that the
Company's sales and marketing organization will be able to
successfully compete against the significantly more extensive and
well-funded sales and marketing operations of many of the
Company's current or potential competitors. The Company's
inability to effectively manage its internal expansion could have
a material adverse effect on the Company's business, operating
results, and financial condition.


Management of Growth

The rapid execution necessary for the Company to fully exploit
the market window for its products and services requires an
effective planning and management process. The Company's
potential rapid growth, which is essential to the Company's
success, has placed, and is expected to continue to place, a
significant strain on the Company's managerial, operational, and
financial resources. As of December 31, 1998 the Company had
five full-time employees, three in administration and finance and
two in research and product development. To manage its growth,
the Company must implement and improve its operational and
financial systems and expand, train, and manage its employee
base. For example, the Company is currently in the process of
building its internal maintenance and support organization, and
sales and marketing team. There can be no assurance that the
Company will be able to build or successfully implement this
organization or team on a timely basis. Further, the Company
will be required to manage multiple relationships with various
customers and third parties to generate revenues from licensing
its technology to other Information Providers to communicate and
transact business with its users. Although the Company believes
that it has made adequate allowances for the costs and risks
associated with this expansion, there can be no assurance that
the Company's systems, procedures, or controls will be adequate
to support the Company's operations or that Company management
will be able to achieve the rapid execution necessary to fully
exploit the market window for the Company's products and
services. The Company's future operating results will also
depend on its ability to expand its sales and marketing


<PAGE>38

organizations, implement and manage new distribution channels to
penetrate different and broader markets and expand its support
organization commensurate with the increasing base of its
installed products. If the Company is unable to manage growth
effectively, the Company's business, operating results, and
financial condition will be materially adversely affected.


Competition

Other companies offer products similar to the Company's products
and target the same customers as the Company. The Company
believes its ability to compete depends upon many factors within
and outside its control, including the timing and market
acceptance of the products developed by the Company and its
competitors, performance, price, reliability, and customer
service and support.

Many of the Company's competitors are substantially larger than
the Company and have significantly greater financial, technical,
and marketing resources. As a result, they may be able to
respond more quickly to new or emerging technologies and changes
in customer requirements, or to devote greater resources to the
development, promotion, and sale of their products than the
Company. It is also possible that new competitors may emerge and
acquire significant market share. Possible new competitors
include large foreign corporations, major telecommunications
companies, and other entities with substantial resources.

The most significant market where the Company competes is in the
area of telephone directories. The Telli Pages Directory will
compete primarily with the local Telephone Company Yellow Pages
directory in areas where it establishes a Telli Pages Directory
central computer system. Specifically, it may be competing for
advertising dollars. Even though the local Telephone Companies
are regulated by the State Public Utilities Commissions, they
have, unlike the Company, major financial resources available to
them. If the Yellow Pages publishers see the Telli Pages as a
major threat to their profits, it is possible that they would use
their resources to attempt to eliminate competition from the
Telli Pages Directory. How the Telephone Companies would attempt
to eliminate competition from the Telli Pages Directory is not
clear at this time.

Since 1983 many major organizations have spent hundreds of
millions of dollars in an attempt to establish an interactive
telecommunications service for the home. Most of the methods
tried have involved an attempt to encourage consumers to attach a
videotex telecommunications/terminal box to their televisions
sets for people to access interactive listings and directories
through their televisions. These videotext systems are no longer
in use due to the lack of customer demand. More recently, some
organizations with significant financial resources have made
similar attempts at establishing an interactive service in the
home through televisions by encouraging consumers to attach
cablevision/terminal boxes to their televisions sets, which are
still being tested. WebTV Networks introduced the first
mass-market information appliance in 1996, a little black box
attached to the TV which connects to the World Wide Web and to
e-mail. The second generation appliance, WebTV Plus has several
new features and provides an electronic TV listing in addition to
the features of the earlier model.

The Company cannot make any assurances that it will be able to
obtain financing to take its products to the marketplace, or that
if it is able to take its products to the marketplace and the
products receive favorable acceptance by the general consumer
public, that it will have the resources to sustain itself while
competing with major organizations with similar goals. The
Company can provide no assurance that it can protect itself from
providing potential competitors additional information from its
business plan that will assist them in determining ways to make
their present products successful in the marketplace. In
addition, there can be no assurance that the Company will not
experience difficulties that could delay or prevent the
successful introduction and marketing of its products or that
they will meet the requirements of the marketplace and achieve
market acceptance. There can be no assurance that the Company

<PAGE>39

will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company
will not materially adversely affect its business, operating
results and financial condition. See "Business...Competition."


Security Risks and System Disruptions; Lack of Product Liability
Insurance

The Company has developed software for a security protocol which
operates in conjunction with encryption and authentication
technology. Despite the existence of this technology, the
Company's products may be vulnerable to break-ins and similar
disruptive problems caused by Telli Pages users. Such computer
break-ins and other disruptions would jeopardize the security of
information stored in and transmitted through the computer
systems of the Company's servers and the computer systems of
other Telli Pages Information Providers, which may result in
significant liability to the Company and may also deter potential
customers. Persistent security problems continue to plague
public and private data networks. Break-ins reported in the
media occurred at General Electric Co. ("GE"), Sprint
Corporation ("Sprint") and IBM, as well as the computer systems
of NETCOM OnLine Communication Services, Inc. ("NETCOM"),
Netscape Communications Corporation ("NETSCAPE"), the San Diego
Supercomputer Center, and the Pentagon. Such incidents involved
hackers bypassing firewalls and often misappropriating
confidential information. Alleviating problems caused by third
parties may require significant expenditures of capital and
resources by the Company and may cause interruptions, delays, or
cessation of service to the Company's customers; such
expenditures or interruptions could have a material adverse
effect on the Company's business, operating results, and
financial condition. Moreover, the security and privacy concerns
of existing and potential customers as well as concerns related
to computer viruses, such as the recent Melissa incident, may
inhibit the growth of the Telli Pages marketplace generally, the
use of Telli Phone technology to communicate with consumers and
transact business, and the Company's customer base and revenues
in particular. The Company attempts to limit its liability to
customers, including liability arising from a failure of the
security features contained in the Company's products, through
contractual provisions. However, there can be no assurance that
such limitations will be enforceable. The Company currently does
not have product liability insurance to protect against these
risks and there can be no assurance that such insurance will be
available to the Company on commercially reasonable terms or at
all.

In addition, the Company will maintain secure Telli Pages servers
which contain customer information for public access. The
Company's advertising revenues from the Telli Pages Directory are
dependent in part upon the Company's ability to protect its
internal infrastructure and the pages of information in the Telli
Pages Directory against damage from physical break-ins, copyright
infringements, manipulation of information by unauthorized
persons, natural disasters, operational disruptions, and other
events. Any such break-in or damage or failure that causes
interruptions in the Company's operations or a loss of customer
confidence and user support and a decrease in the value of the
Company's brand name recognition could materially adversely
affect the Company's business, operating results, or financial
condition.


Extensive Capital Needs

The Company will have extensive capital needs to finance the
establishment and growth of its business. There will be a need
for Telli Screens, Telli Phones, Telli Pages server equipment,
marketing, overhead and further development. It is anticipated
that the Company may use a variety of means to raise capital,
including limited partnerships, joint ventures, franchising and
the sale of Common or Preferred Stock or debt instruments. There
is a risk that sufficient capital will not be raised. Income
will come from fees charged to individuals, businesses, groups,
and associations for the storage of their pages of information in
the appropriate sections of the Telli Pages Directory. The
Company intends to generate profits through licensing its

<PAGE>40

technology (software systems) to major retailers, commercial
organizations, agencies, groups, and associations who wish to
establish sites on the Telli Pages Directory and to communicate
and transact business with users in their homes over their Telli
Screens. There can be no assurance that this income will cover
the cost of Telli Screens and Telli Pages server equipment or the
overhead of the Company. In the event that the Company's plans
or the basis for its assumptions change or prove to be inaccurate
or the proceeds of its offerings or cash flow prove to be
insufficient to fund the Company's operations (due to
unanticipated expenses, loss of sales revenues, problems,
operating difficulties, or otherwise), the Company would be
required to seek additional financing. In such event, there can
be no assurance that additional financing will be available to
the Company on commercially reasonable terms, or at all.


Changing Regulatory Environment

The Company believes that the regulatory climate in the United
States over recent years has begun to influence the Regional Bell
Operating Company's (the "RBOC's") deployment of public
communication products. The Company believes that the RBOCs have
begun to upgrade their telecommunications product base with smart
products that reduce their cost of management, maintenance,
administration, and equipment that includes revenue enhancement
features. The deployment and business strategies of the public
communication divisions of the RBOCs have affected and will
continue to affect the Company's business. To the extent that
these business strategies were to change, for regulatory reasons
or otherwise, the Company's prospects would be materially and
adversely affected. On February 8, 1996, the President signed
into law the Telecommunications Act of 1996, which deregulates
many elements of the telecommunications industry as a means of
stimulating competition. The deregulation could affect the
telecommunications products industry. Although the Company
believes that deregulation generally will benefit the Company,
there can be no assurance that the Company will benefit from
deregulation or that it will not be adversely affected by
deregulation.


Government Regulation and Legal Uncertainties

Currently the Company's business is not affected by direct
regulation by any government agency other than by general
business regulations, but in the future, laws or regulations may

influence Company operations, as with the Exon Bill, passed by
the Senate to prohibit obscene, lascivious or indecent
communications on the Internet. The adoption of any such laws or
regulations would similarly apply to the Telli Pages and may
decrease the growth of the Telli Pages Directory, which could in
turn decrease the demand for the Company's products and increase
the Company's cost of doing business or otherwise have an adverse
effect on the Company's business, operating results, and
financial condition. Moreover, the applicability to the Telli
Pages of existing laws governing issues such as property
ownership, libel, and personal privacy is uncertain. Issues such
as privacy and libel may be addressed in the future by government
agencies reaching decisions or passing laws which could adversely
affect the Company's business, operating results, and financial
condition.


Concentration of Stock Ownership

The present directors, executive officers and their respective
affiliates beneficially own approximately 51.8% of the
outstanding Common Stock. As a result, these stockholders will
be able to exercise significant influence over all matters
requiring stockholder approval, including the election of
directors and approval of significant corporate transactions.
Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company.



<PAGE>41

Public Market

Although the Company's Common Stock became listed on the NASD OTC
Bulletin Board under the symbol "TELI" in 1997, there has been
little significant trading of the Company's Common Stock, and
there can be no assurance that a long term active public market
for the Common Stock will develop or be sustained.

Effects of Certain Charter Provisions; Antitakeover Effects of
Certificate of Incorporation; Bylaws and Nevada Law

The Board of Directors has the authority to issue up to 1,000,000
shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting
rights, of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future.
The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more
difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no
present plans to issue shares of Preferred Stock.


Dilution

It should be noted that there will be dilution of the issued and
outstanding shares of the Company by the issuance of shares for
future financing and by the installation of an Employee Stock
Option Plan. In addition, the Company may sell substantial
amounts of equities to investors in the future in order to meet
its capital needs. The Company's business can be characterized
as "capital intensive" and to the extent funds are not derived
from debt securities, borrowing or limited partnerships, equity
may be used.


Dividend Policy

The Company has never paid cash dividends on its Common Stock or
other securities. The Company currently anticipates that it will
retain all of its future earnings for use in the expansion and
operation of its business and does not anticipate paying any cash
dividends in the foreseeable future.


Notes Payable; Royalty Agreements

There are 17 individuals who advanced cash to the Company in
exchange for royalty rights (the "Royalty Holders"). Under the
agreement, the Company will pay royalties aggregating 2.267% of
the manufacturer's actual net price for which each Telli Phone
device is sold.

As part of CoNetCo's acquisition of Guinness Production, Inc.,
Guinness Computer Television Corporation (the "Guinness
Companies"), in the Agreement dated February 18, 1990, CoNetCo
also acquired all of the concepts previously developed by
Lawrence A. Guinness ("Guinness") in both Canada and the United
States. Part of the consideration for the acquisition of
Guinness' rights in the United States and Canada to the
theoretical models of the Telli Phone and the Telli Pages
Directory, as well as all of Guinness' rights to the products
previously developed by the Guinness Companies, was the issuance
to Guinness of Common Stock in CoNetCo and a continuing royalty
of 5% of all revenues generated by CoNetCo or any of its
subsidiaries.


Year 2000 Implications

See "Year 2000 Implications" Under ITEM 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS", page 54.



<PAGE>42

ITEM 2. PROPERTIES

The Company currently occupies and has a three year lease on
approximately 1200 square feet of space located in Mill Valley,
California, where it maintains its administrative offices and
Telli Pages server. In addition, the Company currently occupies
approximately 900 square feet of space in Sausalito, California,
approximately two miles from its administrative offices and
server, where it maintains its engineering, research, and product
development facilities. This space is leased on a month to month
basis and is sufficient to meet the current requirements of the
Company and the business which it conducts. All production of
the final product will, in the near future, be sub-contracted to
other manufacturers and suppliers.


The Company will be required to expand when operations commence.
There is adequate space for expansion in Marin County,
California, the area in which the Company is currently located.

The Company does not intend to consider setting up its own
facilities to manufacture Telli Screens and Telli Phones until
after the initial introduction of its products and the systems
which it is developing have been fully tested. Management
expects an increase in facilities requirements during 2000.


ITEM 3. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings.


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

No matter was submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders,
through the solicitation of proxies, or otherwise.




<PAGE>43

                              PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS


Market Information

The shares of stock of the Company are currently listed on the
National Association of Securities Dealers ("NASD") Over The
Counter Bulletin Board ("OTC") under the stock symbol TELI. There
has been little significant trading of the Company's Common Stock
and there can be no assurance that a long term active public
market for the Common Stock will develop or be sustained.

The following table sets forth the range of high and low prices
for the periods indicated:

                              1998                   1997
                          High       Low         High     Low

First quarter            $.50       $.10          --       --
Second quarter           $.55       $.10        $.87     $.06
Third quarter            $.44       $.12        $.56     $.12
Fourth quarter           $.50       $.12        $.50     $.06

There is currently no common equity that is subject to
outstanding options or warrants to purchase, or securities
convertible into common equity which have been issued by the
Company that are capable of being sold pursuant to Rule 144 under
the Act until two years after March 15, 1994. The Company has
not agreed to register any common equity for sale by security
holders.


Holders

As of November 30, 1999, there were 554 shareholders, holding a
total of 24,792,243 shares of Common Stock of the Company. The
Company has no knowledge of any matter since that date that would
effect any change to that total.

Lawrence A. Guinness, President and Director of the Company, is
the holder of 10,615,166 shares of the Common Stock of the
Company which represents 42.8% of the Company's common equity.
Other than Mr. Guinness, only one other person has a beneficial
ownership of five percent (5%) or more of the Common Stock in the
Company. Richard A. Morse, Vice President of Engineering and
Technology, is the holder of 1,250,000 shares of Common Stock
which represents 5.05% of the common equity.

Dividends

The Company is a development stage company and, since its
inception, has not yet generated any sales. As a result, it is
not in a position to declare any dividends, nor does it intend to
declare any dividends in the near future.



<PAGE>44

ITEM 6. SELECTED FINANCIAL DATA

                          FIVE YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                       1998           1997          1996           1995           1994
<S>                                     <C>            <C>           <C>            <C>            <C>
Net Sales                              None           None          None           None           None

Income (Loss)
from Continuing
Operations(A)                   $(1,103,606)     $(370,409)     $(491,369)    $(199,556)    $(353,954)

Income (Loss)
from Continued
Operations
Per Share                              (.07)          (.03)           (.04)         (.02)        (.03)

TOTAL ASSETS                       $225,750       $ 40,511        $ 39,528      $229,416      $19,828

Weighted
Average Number
of Common Shares
Outstanding(B)                   16,049,257     14,130,565      13,427,480    12,738,397   12,592,480

Long Term
Obligations(C)                         ---             ---             ---           ---          ---

Cash Dividends
Declared
Per Share                              None           None            None          None         None

(A) Cumulative results of operations since inception are losses
totaling $(11,698,713).

(B) Giving effect to amended agreement of March 15, 1994
increasing the 5,880,246 shares issued on February 18, 1990 to
8,000,000 shares.

(C) Excludes $435,000 of notes payable which are classified as a
current liability since the original due date was in 1991.

NOTE: CoNetCo, Guinness Productions, Inc., and Guinness
Computer Television Corporation are predecessors of the Company
and the financial data of the Company includes the predecessors.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

EXCEPT FOR HISTORICAL INFORMATION, THE DISCUSSION IN THIS REPORT
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW, AND THE RISKS DISCUSSED UNDER
THE CAPTION, "FACTORS AFFECTING COMPANY'S BUSINESS OPERATING
RESULTS AND FINANCIAL CONDITION" IN ITEM 1 OF THIS ANNUAL REPORT
ON FORM 10-K.


Overview

The Company was founded in 1993 and has been principally engaged
in the research and development activities related to an
advanced navigational and integrated applications software
system that enables people to exchange information and conduct
business over local telephone lines from a computerized consumer
telephone appliance (Telli Phone) with a display screen and
online capabilities for transmitting, receiving and processing
information. Prior to the formation of the Company, research
and development of the Telli Phone was undertaken through
predecessor companies, Guinness Productions and Guinness
Computer Television which commenced operations in 1981. The
cumulative operating results of the Company include those
operations of companies deemed to be predecessors to the
Company. As of December 31, 1994, the Company has determined
that research and development of the Telli Phone has been


<PAGE>45

completed. The Company's major emphasis during fiscal 1997 and
1998 has been the refinement of the Telli Phone and Telli Screen
and the generation of working capital.

Guinness Telli*Phone has generated no revenues and incurred
cumulative losses of approximately $11.7 million dollars since
inception, of which approximately $7.2 million of such losses
relate to those of the predecessor companies. The Company
expects to incur operating losses through 1999 as it continues
to devote the majority of its available financial resources to
the commercialization of the Telli Screen and Telli Phone.
Future profitability of the Company is dependent upon successful
commercialization of the Telli Screen and the Telli Phone.
Furthermore, as the Company attempts to achieve commercialization of
its products, it could encounter seasonality or other currently
unforeseen factors causing additional variability in its future
operating results. The report of the Certified Public Accountant
expresses substabtial doubt about the Company's ability to continue as
a going concern.


Liquidity and Capital Resources

The Company is not in a liquid position at this time nor does it
possess any assets that could be deemed liquid, other than cash
of approximately $100,000. Liquidity of the Company is expected
to be severely impacted until operations commence and revenues
are generated.

Since inception, the Company and its predecessors have funded
its research and development efforts by selling equity
securities and borrowing capital. Approximately $ 7 million of
additional paid-in capital represents liabilities of the
predecessor companies operations which were personally assumed
by the Company's principal shareholder.

During the first half of fiscal 2000, the Company plans to raise
a minimum of $550,000 through the private or public sale of
equity securities. The Company intends to use such funds for
the market introduction of the Telli Phone concept in a single
community. The following details the anticipated use of the
$550,000:

On the assumption the Company is able to raise capital to
finance the market introduction of the product, Management plans
to utilize the funds raised, as follows:

Investment Banker Consultant Fees                  25,000
Office Rent and Expense                            15,000
Administrative Salaries & Office Expense (CEO,
CFO, Engineer, Network Editor, Programmers)       150,000
Telli Screen/Phone Prototype Engineering Expense   25,000
Telli Screen/Phone Production Models (100-200)    150,000
Network Hardware Set Up Expense                    25,000
Network Software/Programming Expense               90,000
Preparatory Marketing Expense                      35,000
Initial Promotional Layout Expense                 10,000
Legal, Audit and Miscellaneous Expense             25,000
----------------------------------------------------------
Total                                            $550,000
==========================================================

The above expenses reflect the 6-month budget for the Company
while operating in a development mode. If capital is not raised
in a timely manner Management will either delay entry into the
marketplace or reduce the number of Telli Screens required for the
market introduction.

The Company anticipates that after the market introduction they
will need to raise additional working capital through the sale of
equity securities or the borrowing of capital. The Company's
current working capital is not adequate for the Company to
commence the market introduction. There can be no assurance that
any necessary working capital will be available on acceptable
terms or at all. If adequate funds are not available, the Company
may be required to change, delay, reduce or eliminate its product
commercialization.


<PAGE>46

For the market introduction of its products the Company plans to
produce a limited number of Telli Screens and begin distributing
them to homes in the Southern Marin County Area. The Company
anticipates being able to produce at least 200 Telli Screens for
this purpose.

During the market introduction, the Company's engineers will
design an inexpensive Telli Screen computer board that eliminates
many hardware components necessary for the operation of a personal
computer but unnecessary for the successful operation of the Telli
Screen and Telli Phone as the everyday consumer products for which
they were designed. For the initial market the Company estimates
that it will pay approximately $300 for the hardware components of
each Telli Screen assembled. The Company has received estimates
from consultants experienced in the manufacture of hardware
components of a price of less than $200 per Telli Screen. It is
difficult to predict an accurate price until the Company learns
from its market introduction the level of consumer response to the
Company's software products to determine the size of runs that are
most feasible. If the Company's product is very successful then
there will be available to the Company many methods of financing
the manufacture of Telli Phones that will allow the Company to
order larger runs and further reduce the cost to manufacture Telli
Screens and Telli Phones.

To this end, the Company has begun discussions with a major
manufacturer of telecommunications equipment that is capable of
producing Telli Screens and Telli Phones and at a favorable
price.

When the introduction of the Telli Pages Directory is underway the
Company plans to approach potential partners to renew discussions
to arrange financing through the licensing of its technology for
their use. The Company has no assurance that it will be able to
renew the discussions or, that if discussions are opened once
again, it will be successful in reaching any agreements with the
parties.

During 1998, the Company sold 24,750 shares of common stock for
approximately $5,000. Such proceeds were used to fund general and
administrative expenses of the Company. The Company also issued
2,550,000 shares of the common stock for various consulting
services performed. The stock was valued at $366,300. $266,300
related to stock issued for services rendered by December 31, 1998
was recorded as expense and $100,000 related to stock issued for
services to be rendered in 1999 was recorded as a prepaid expense
at December 31, 1998.

During 1996 the Company was advanced various non-interest bearing
funds from a minority shareholder to fund operating expenses. As
of December 31, 1996, total funds advanced were $250,000.
Approximately $122,000 of the funds were received directly by the
Company's primary shareholder. Although the primary shareholder
anticipates repaying such advances in the future, there is
currently no agreement requiring repayment. Accordingly, the
amount has been treated as officer's salary for the year ended
December 31, 1996. In January 1997, the minority shareholder
advanced additional funds totaling $73,000. In February 1997, the
Company and the minority shareholder completed negotiations to
convert the $343,000 of advances to common stock. The Company
issued 675,680 shares of stock under Regulation S of the
Securities Act of 1933 as repayment in full for such advances.

On October 19, 1995, the Company sold and issued a total of
700,000 shares of the common stock for a total of $301,000. On
December 15, 1995, the Company sold and issued a total of 135,000
shares of the common stock for a total of $101,250. The capital
has been used to secure the components that will be used to
produce Telli Phones for the market introduction and  to complete
the Telli Phone software to manage the components in the working model.

The Company has 17 notes, dated July 7, 1989, due to individuals
who advanced cash to the Company in exchange for promissory notes
and royalty rights. These notes continue to bear interest at 10%
per annum and all are in default. It is the intention of the
Company to offer stock to those note holders who wish to receive
common stock in Guinness Telli*Phone Corporation and a repayment
proposal for those investors who wish to receive cash. The


<PAGE>47

Company feels that it will not be in a position to determine the
conditions of such a proposal until the initial marketing of its
product is underway.

Management anticipates potential future revenues will be generated
from two primary sources.

(a) Purchases of commercial space in the Telli Pages Directory by
local businesses and community groups and associations.

(b) Licensing fees from organizations that wish to communicate
with Telli Pages users through their Telli Screens and Telli
Phones.

Management plans to explore the feasibility of selling franchises
to qualified organizations for the right to operate a Telli Pages
Directory within a defined geographical area as a method of
financing the establishment of new Telli Pages Directory
geographical sites.

As of December 31, 1998, the Company has a deferred tax asset of
approximately $1.8 million which is 100% reserved. See Footnote 5
of the audited financial statements for additional information.


Year 2000 Implications

Many currently installed computer systems and software products
are coded to accept only two-digit entries in the date code field
and cannot distinguish 21st century dates from 20th century dates.
These date code fields will need to distinguish 21st century dates
from 20th century dates and, as a result, many companies' software
and computer systems may need to be upgraded or replaced in order
to comply with such "Year 2000" requirements. The Company is in
the process of assessing the Year 2000 issue and expects to
complete the program before the new year. The Company has not
incurred material costs to date in this process, and currently
does not believe that the cost of additional actions will have a
material effect on its results of operations or financial
condition. Although the Company currently believes that its
systems are Year 2000 compliant in all material respects, its
current systems and products may contain undetected errors or
defects with Year 2000 date functions that may result in material
costs. Although the Company is not aware of any material
operational issues or costs associated with preparing its internal
systems for the Year 2000, the Company may experience serious
unanticipated negative consequences or material costs caused by
undetected errors or defects in the technology used in its
internal systems.

The Company's new computers are compliant according to the
manufacturer and our internally designed server has no known Year
2000 implications according to its designer, our head of
engineering. Our product does not rely on the date for any
application and will be introduced to the marketplace in 2000.

Finally, the Company is also subject to external forces that might
generally affect industry and commerce, such as utility or
transportation company Year 2000 compliance failures and related
service interruptions. Furthermore, the purchasing patterns of
potential advertisers may be affected by Year 2000 issues as
companies expend significant resources to correct their current
systems for Year 2000 compliance, which may materially adversely
affect the Company's business, operating results, or financial
condition.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Certified Public Accountants       F-1
Consolidated Financial Statements
Consolidated balance sheets                              F-2
Consolidated statements of operations                    F-3
Consolidated statements of stockholders' deficit         F-4
Consolidated statements of cash flows                    F-5
Summary of accounting policies                           F-6
Notes to financial statements                            F-8 - 11


<PAGE>48

Report of Independent Certified Public Accountants

Board of Directors
Guinness Telli*Phone Corporation
Mill Valley, California

We have audited the accompanying consolidated balance sheets of
Guinness Telli*Phone Corporation and Subsidiary (a development stage
company) as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' deficit, and cash flows for
each of the three years in the period ended December 31, 1998 and the
period from November 12, 1980 (inception) to December 31, 1998.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Guinness Telli*Phone Corporation and Subsidiary at December 31, 1998
and 1997, and results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998 and the period
from November 12, 1980 (inception) to December 31, 1998, in conformity
with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more
fully described in Note 1, the Company has been in the development
stage since its inception and has sustained recurring losses, has
negative working capital, is in default of its loan agreements, and has
a stockholders' deficit.  These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
Continuation as a going concern is dependent upon the Company's ability
to meet its past due debt obligations and future financing requirements
and the success of its future operations, the outcome of which cannot
be determined at this time.  The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. Management's plan regarding future operations is also
described in Note 1.

BDO Seidman LLP
San Francisco, CA
August 6, 1999
  except for notes 4, 6 an 10
  which are as of November 11, 1999

                  F-1


<PAGE>49

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheets



December 31,                             1998               1997
----------------------------------------------------------------------
Assets

Current
  Cash and cash equivalents           $105,913             $      87
  Prepaid expenses (Note 6)            100,000                14,587
----------------------------------------------------------------------
Total current assets                   205,913                14,674
Office equipment, net of accumulated
depreciation of $51,595 and $40,995     19,837                25,837
----------------------------------------------------------------------
                                      $225,750             $  40,511
======================================================================
Liabilities and Stockholders' Deficit

Current
  Notes payable (Note 3)                $435,000              $435,000
  Accounts payable                       583,518               543,587
  Payments and accruals for
    unissued stock (Note 6)              660,500                     -
  Accrued payroll                         34,053                     -
  Due to related parties (Note 9)        177,177                91,010
  Accrued interest payable (Note 3)      631,372               534,428
  Deferred royalty income (Note 3)       125,000               125,000
-----------------------------------------------------------------------
Total Liabilities                      2,646,620             1,729,025

Commitments, Contingencies and
  Subsequent Event (Notes 2, 4, 6 and 10)

Stockholders' Deficit (Notes 2, 3, 4 and 6)
  Common stock, $.001 par value; authorized,
    25,000,000 shares; issued and
    outstanding, 17,434,910 and 14,860,160    17,435                14,860
  Additional paid-in capital           9,260,408             8,891,733
  Deficit accumulated during
    development stage                (11,698,713)          (10,595,107)
-----------------------------------------------------------------------
                                      (2,420,870)           (1,688,514)
-----------------------------------------------------------------------
                                     $   225,750           $    40,511
=======================================================================

See accompanying  summary of accounting policies and notes to financial
statements.

                    F-2

<PAGE>50

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations

</TABLE>
<TABLE>
<CAPTION>
                                    Cumulative
                                        During                  Years Ended December 31,
                                     Development       ------------------------------------------
                                       Stage             1998             1997           1996
==================================================================================================
<S>                                     <C>               <C>              <C>             <C>
Operating Expenses
Research and development (Note 7)    $4,551,152        $       -           $    -        $     -
Interest expense (Note 3)             4,356,091           96,944           88,128         80,120
Officer's salary (Notes 2 and 7)        914,940          410,000           21,951        185,682
Rent                                    372,436           26,868           32,115         24,600
Other administrative expenses         1,504,094          569,794          228,215        200,967
--------------------------------------------------------------------------------------------------
Net Loss                           $(11,698,713)     $(1,103,606)       $(370,409)     $(491,369)
==================================================================================================
Basic and Diluted Earnings Per Share
Loss Per Share                                          $   (.07)        $   (.03)      $   (.04)
==================================================================================================
Weighted average common shares outstanding                16,049,257           14,130,565        13,427,000
==================================================================================================
</TABLE>
See accompanying  summary of accounting policies and notes to financial
statements.

                      F-3

<PAGE>51

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficit
<TABLE>
<CAPTION>
                                                                                    Deficit
                                                 (Note 6)                          Accumulated
                                                Common Stock          Additional     During
                                            --------------------       Paid In     Development
                                            Shares       Amount        Capital        Stage           Total
-----------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>             <C>              <C>            <C>
Stock issued for product rights               2,350,000    $  2,350        $     -               -     $   2,350
Stock issued for predecessor company assets,
  including assumption of predecessor
  company debt                                8,000,000       8,000       7,147,091              -     7,155,091
Sale of common stock                            141,000         141         134,364              -       134,505
Contributed capital by majority shareholder
  through sale of personal stock (Note 4)              -           -         285,366              -       285,366
Stock sold for cash of $240,570 and
  a receivable of $55,930                       550,000         550          295,950             -       296,500
Stock issued for all of the outstanding
  shares of Innstar Corporation               1,551,480       1,551                -             -         1,551
Contributed capital                                    -           -          99,580              -        99,580
Stock sold for cash of $301,000 and a
  receivable of $101,250                         835,000         835         401,415              -      402,250
Net loss from November 12, 1980 (inception)
  to December 31, 1995                                 -            -              -     $(9,733,329) (9,733,329)
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995                   13,427,480       13,427       8,363,766     (9,733,329) (1,356,136)
Net loss                                               -            -               -       (491,369)   (491,369)
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996                   13,427,480       13,427       8,363,766     (10,224,698) (1,847,505)
Stock issued for conversion of debt (Note 2)    675,680          676         322,724               -     323,400
Stock sold for cash                             207,000          207         178,293               -     178,500
Stock issued in exchange for consulting services   550,000          550          26,950               -      27,500
Net loss                                               -            -               -        (370,409)   (370,409)
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                   14,860,160       14,860       8,891,733     (10,595,107)  (1,688,514)
Stock sold for cash                              24,750           25           4,925               -        4,950
Stock issued in exchange for consulting
  and professional services                   2,550,000        2,550         363,750               -      366,300
Net loss                                               -            -               -      (1,103,606)  (1,103,606)
------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                   17,434,910    $  17,435      $9,260,408     $(11,698,713)$(2,420,870)
===============================================================================================================
</TABLE>
See accompanying  summary of accounting policies and notes to financial
statements.

                           F-4

<PAGE>52

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)
Consolidated Statements of Cash Flows


Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                      Cumulative
                                        During                  Years Ended December 31,
                                     Development       ------------------------------------------
                                       Stage             1998             1997           1996
==================================================================================================
<S>                                     <C>               <C>              <C>            <C>

Cash Used in Operating Activities
Net loss                              $(11,698,713) $(1,103,606)     $(370,409)        $(491,369)
Adjustments to reconcile net loss
  to cash used in operations:
     Depreciation                           51,595       10,600         10,600             7,732
     Deferred royalty income               125,000            -              -                 -
     Stock issued for consulting and
       professional services               393,800      366,300         27,500                 -
     Prepaid expenses                     (100,000)     (85,413)       (14,587)                -
     Increase (decrease) in accounts
       payable and due to related parties  760,695      126,098          3,864           (28,639)
     Accrual for unissued stock            540,500      540,500              -                 -
     Accrued payroll                        34,053       34,053              -                 -
     Increase in accrued interest          631,372       96,944         88,128            80,120
---------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities   (9,261,698)     (14,524)      (254,904)         (432,156)
---------------------------------------------------------------------------------------------------
Cash Used in Investing Activities
  Additions to fixed assets                (71,432)      (4,600)        (6,714)          (34,481)
---------------------------------------------------------------------------------------------------
Cash Provided by Financing Activities
     Contributed capital (Note 8)        7,543,938            -              -                 -
     Sale of stock and payment received
       for unissued stock                  979,525      124,950        178,500                 -
     Notes payable                         435,000            -              -                 -
     Stockholder advances                  323,400            -         73,400           277,195
     Collection of stock subscriptions
       receivable                          157,180            -              -           101,250
---------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 9,439,043     124,950        251,900           378,445
---------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and
     Cash Equivalents                       105,913     105,826         (9,718)           (88,192)
Cash and Cash Equivalents, beginning of year      -          87          9,805             97,997
---------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, end of year   $  105,913  $  105,913       $      87         $    9,805
===================================================================================================
</TABLE>

See accompanying  summary of accounting policies and notes to financial
statements.

                          F-5

<PAGE>53

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)

Summary of Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of Guinness
Telli*Phone Corporation (the Company) and its wholly-owned subsidiary,
CoNetCo, a California corporation. All significant intercompany
balances and transactions have been eliminated in consolidation. As
discussed below, the cumulative operating data of Guinness Productions,
Inc. and Guinness Computer Television Corp. are included in historical
financial information since they are deemed to be predecessor
companies.

Description of Business

The Company and its predecessors have been in the development stage
since inception. The Company is engaged in developing an interactive
networking system, the Telli*Phone, which will allow access to
electronic information. The Company determined that effective
December 31, 1994 all significant research and development regarding
the Telli*Phone had been completed. The cost of ongoing modifications
to the Telli*Phone continue to be expensed as the ability of this
product to generate future revenues is uncertain.

Depreciation

Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets, ranging from 5 to 12 years. Depreciation
expense of $10,600 in 1998 and 1997 and $7,732 in 1996, and $51,995
cumulative during development stage has been charged to operations.

Cash and Cash Equivalents

The Company considers investments purchased with an original maturity
of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

Loss Per Share

 As of December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, Earnings Per Share
(SFAS 128). SFAS 128 provides for the calculation of basic and diluted
earnings per share. Basic earnings per share includes no dilution and
is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of
securities, including stock option and warrants, that could share in
the earnings of an entity. Because the Company has a net loss, dilutive
earnings per share are the same as basic earnings per share. As
required by SFAS 128, all prior earnings have been restated to reflect
the retroactive application of this accounting pronouncement. Adoption
of SFAS 128 had no effect on previously reported earnings per share.

Income Taxes

 Income taxes are calculated using the liability method specified by
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes.


                         F-6

<PAGE>54

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, requires that the Company disclose
the estimated fair value for its financial instruments for which it is
practicable to estimate their values. The Company's financial
instruments include cash, due from stockholders, notes payable and
accounts payable. The carrying value of cash approximates fair value
due to the short maturities of these instruments. The fair value of
other financial instruments is not practical to estimate because of the
current financial condition of the Company.

Reclassification

Certain reclassifications have been made in the prior year to conform
to the current-year presentation.


                      F-7

<PAGE>55

Guinness Telli*Phone Corporation and Subsidiary
(A Development Stage Company)

Notes to Financial Statements


1.   Financial Statement Presentation

The financial statements have been prepared assuming the Company will
continue as a going concern. Although the Company is still in the
development stage, management is currently negotiating to raise
adequate financing to produce and place Telli*Phone units into a test
market. The Company is continuing to pursue additional debt and equity
financing while continuing to modify and improve the Telli* Phone. The
Company's ability to continue as a going concern is dependent on
management's success in obtaining financing, its ability to repay past
due debt obligations and the acceptance of the Telli*Phone by the test
market. To improve its financial condition, the Company has
significantly curtailed expenditures with only necessary costs being
paid from the sale of stock (see Note 6). Once the system is in place,
the Company anticipates being able to attract financial support from
those having an interest in reaching subscribers.

 The Company's recurring losses, negative working capital, default on
loan agreements and stockholders' deficit raise substantial doubt about
the ability of the Company to continue as a going concern. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

2.   Debt Conversion

During 1996, the Company was advanced various non-interest bearing
funds from a minority shareholder to fund operating expenses. As of
December 31, 1996, total funds advanced were $250,000. Approximately
$122,000 of the funds were received directly by the Company's primary
shareholder. Although the primary shareholder anticipates repaying such
advances in the future, there is currently no agreement requiring
repayment. Accordingly, the amount has been treated as officer's salary
for the year ended December 31, 1996. In January 1997, the minority
shareholder advanced additional funds. In February 1997, the Company
and the minority shareholder converted the advances to common stock.
The Company issued 675,680 shares of stock under Regulation S of the
Securities Act of 1933 as repayment in full for advances totaling
$323,400.

3.   Notes Payable

The Company, through its wholly-owned subsidiary, CoNetCo, entered into
approximately 20 different royalty agreements prior to 1990. The terms
of the agreements required a fixed payment of cash for the future
rights to a percentage of the future Telli*Phone sales proceeds. The
agreements also provided the holders of the royalty agreements the
option to convert its royalty interest into common stock of CoNetCo on
the basis of eight times the royalty payment divided by the greater of
$3 per share or three times the average bid price on the day the
Company's stock is traded after its initial public offering. During
1990, approximately 17 of the notes-holders modified their royalty
agreements to a conventional note payable. The aggregate principal
balance on these notes was $435,000 at December 31, 1998 and 1997, and
accrued interest was $631,372 and $534,428 at December 31, 1998 and
1997. These notes bear interest at 10%, are in default at December 31,
1998, and require future royalty payments but do not contain any
features allowing the conversion to common stock. The Company is
currently negotiating with the note holders to convert their debt and
accrued interest into common stock.

 As of December 31, 1998 and 1997, the Company had received $125,000 of
advance royalty payments, which had not been converted to notes
payable. This amount will begin to be amortized into income once sales
of the Telli*Phone commence. The amortization period of deferred
revenue has not yet been determined.

                          F-8

<PAGE>56

4.   Commitments

Royalty Agreements - As part of CoNetCo's acquisition of the Guinness
Companies, CoNetCo granted royalty rights of 5% of all future revenues
generated by the sale or lease of the Community News Network and the
Telli*Phone instrument to the shareholder of the Guinness Companies. In
addition, royalty and note holders received royalty rights. Under these
agreements, the Company will pay royalties aggregating 2.26% of the
manufacturer's actual net price for which each Telli*Phone is sold.

Stock Options - In order to provide interim funds for the development
of the Telli*Phone instrument, CoNetCo's major stockholder agreed in
September 1989 that he would sell some of his stock in CoNetCo to
"qualified investors" and remit the proceeds as donated capital to
CoNetCo. In exchange for the donated capital, he received an option to
purchase a like number of shares sold by him at the same price he
received from their sale and contributed to CoNetCo. This option
expired in September 1999.

 In 1998, the Board of Directors approved a stock option plan under
which options to purchase up to four million shares may be granted. As
of December 31, 1998, no options had been granted.

Shareholder and Predecessor Company Obligations - A creditor of the
Guinness Companies, and now a creditor of the Guinness Companies'
former shareholder, has filed a lien against the shareholder and has
also named CoNetCo as an additional judgment debtor. The creditor is
seeking to recover approximately $650,000 related to $500,000 of loans
and related accrued interest borrowed by the Guinness Companies. The
Company does not believe that it has any legal obligation to repay the
debt of the Guinness Companies and that all such liabilities were
assumed by the shareholder of the Guinness Companies. The shareholder
of the Guinness Companies is currently the majority shareholder of the
Company. At December 31, 1998, the ultimate outcome of this matter is
unknown and no liability has been recorded relating to the matter.

 Leases - In February 1999, the Company entered into an operating lease
for its corporate office that expires in March 2002. The minimum
aggregate lease payments due under the operating lease are as follows:

 Year ending December 31,            Amount
------------------------------------------------
1999                                 $18,730
2000                                  22,476
2001                                  22,476
2002                                   3,746
------------------------------------------------
                                     $67,428
==================================================

5.   Income Tax

 Since the Company is in the development stage and management cannot
determine that it is more likely than not the asset will be recovered,
it has provided a 100% valuation allowance against the deferred tax
asset resulting from its net operating loss carryforwards. Accordingly,
no deferred tax asset is reflected in the accompanying financial
statements. There are no deferred tax liabilities.

 The deferred tax assets and valuation allowances are as follows:

 December 31,                            1998                1997
---------------------------------------------------------------------
Product costs capitalized for tax     $900,000           $900,000
 Net operating loss carryforward       900,000            530,000
 Valuation allowances               (1,800,000)        (1,430,000)
---------------------------------------------------------------------
                                    $         -         $        -
 ====================================================================

The Company has approximately $2 million of federal net operating loss
carryforwards expiring between 2004 and 2013. The losses accumulated by
the Company for tax purposes is significantly lower than the
accumulated losses in these financial statements because the
accumulated losses for financial statement purposes includes
approximately $7.2 million of losses incurred by predecessor companies.

                    F-9

<PAGE>57

6.   Equity Transactions

Business Combinations - In 1989, CoNetCo was formed and acquired the
theoretical rights to the Telli*Phone from a predecessor company in
exchange for 2,350,000 shares of CoNetCo stock, which were valued at
par value.

Effective February 18, 1990 (as amended by the March 15, 1994
agreement), CoNetCo, currently the Company's wholly-owned subsidiary,
acquired from CoNetCo's major stockholder the assets of the businesses
known as Guinness Productions, Inc. and Guinness Computer Television
Corp. (together, the Guinness Companies) in exchange for 8,000,000
shares of CoNetCo stock and royalty rights. The assets acquired from
the Guinness Companies consisted primarily of product development
efforts performed by the Guinness Companies to further develop the
Telli*Phone. For accounting purposes, all costs incurred by the
Guinness Companies to develop the Telli*Phone have been expensed in
accordance with Financial Accounting Standards Board Statements No. 2,
Accounting for Research and Development Costs. The assets acquired from
the Guinness Companies have been valued at their historical cost basis
and not current fair market value, if any, because all entities are
under common control.

 The liabilities incurred and assumed by the Guinness Companies, during
their development of the Telli*Phone, have been assumed by the
shareholder of the Guinness Companies (see Note 4). The primary
shareholder of Guinness Telli*Phone is also the primary shareholder of
the Guinness Companies. The liabilities assumed by the Guinness
Companies' shareholder total approximately $7.2 million, which include
approximately $2.3 million of investor notes payable and related
delinquent compounded interest of $3.6 million. Such liabilities were
incurred by the Guinness Companies primarily during the years 1982 to
1989 and have been treated as a capital contribution and increased
paid-in capital. CoNetCo and the Guinness Companies are predecessors of
the Company and their activities are included in the cumulative
financial data. Included in deficit accumulated during development
stage is approximately $7.2 million relating to the Guinness Companies.

 Effective August 4, 1993, Guinness Telli*Phone Corporation, through an
inactive predecessor company, U.S. Telli*Phone, acquired all of the
outstanding shares of Innstar Corporation, an inactive company having
no assets, in exchange for 1,551,480 shares of the Company's stock.
Innstar Corporation was then merged into the Company. U.S. Telli*Phone
did not receive any consideration beyond the exchange of shares. The
merger was accounted for as a recapitalization and Innstar had no
assets, liabilities or operations to include in the accompanying
financial statements. The purpose of the merger was to acquire a
company whose shares were registered with the Securities and Exchange
Commission and to change its domicile to Nevada which is where U.S.
Telli*Phone was incorporated.

 Effective March 15, 1994, Guinness Telli*Phone Corporation acquired
all of the outstanding shares of CoNetCo in exchange for 11,041,000
shares of the Company's stock. The issuance of shares is accounted for
as the issuance of shares by CoNetCo, who is considered the acquirer
for accounting purposes, in exchange for monetary assets rather than a
business combination since U.S. Telli*Phone, now Guinness Telli*Phone,
was an inactive corporation. The assets acquired, principally the
product development efforts, which for accounting purposes have zero
book value, of the Telli*Phone network, were recorded at the historical
cost basis of CoNetCo because of common control amongst current and
predecessor entities.

Other Transactions - In August 1998, the Company sold 24,750 shares of
its common stock for $4,950. In December 1998, the Company entered into
an agreement to sell 666,666 shares of common stock for $120,000. As
the Company received the cash, but had not issued the shares in 1998,
this obligation has been recorded as a liability.

 During 1998, the Company issued 2,550,000 shares of common stock with
an aggregate fair value of $366,300 in exchange for professional and
consulting services to be rendered during 1999 and 1998. $100,000
related to services to be rendered in 1999 is included in prepaid
expenses as of December 31, 1998.

                    F-10


<PAGE>58

 The Company is also obligated to issue 3,265,000 shares of common
stock to compensate employees for work performed during 1998.
Accordingly, a liability of $540,500 has been recorded for this
obligation.

In January 1997, the Company converted $323,400 of advances from one of
its stockholders to 675,680 shares of its common stock (see Note 2). In
September 1997, the Company sold 207,000 of its common stock for
$178,500. In December 1997, the Company issued 550,000 shares of its
common stock for engineering services. Such shares have been valued at
$27,500 and recorded as a 1997 expense.

 On October 19, 1995, the Company sold 700,000 shares of its common
stock for $301,000 which was all received in 1995. On December 15,
1995, the Company sold 135,000 shares of its common stock for $101,250
which was not received until January 1996. Both of these transactions
were executed in accordance with Regulation S under the Securities Act
of 1933.

 In fiscal 1994 and 1993, the principal shareholder paid operating
expenses on behalf of the Company totaling $52,330 and $47,250. These
amounts were accounted for as contributed capital and increased
additional paid-in capital.

7.   Research and Development

Research and development costs represent costs the Company (including
the predecessor companies) believes are directly related to the
development of the Telli*Phone. Included in cumulative research and
development costs is approximately $1,077,000 of officer compensation
and approximately $800,000 of rent expense. During the period of
product development, the Company estimated that, excluding interest,
approximately 80% of all expenses incurred have related directly to the
development of the Telli*Phone.

8.   Cash Flow Statement There were no cash payments for interest or
taxes during the periods presented. In 1993, the Company acquired the
stock of Innstar Corporation for 1,551,480 shares of the Company's
common stock, valued at $.001 per share. Because the cumulative
statement of operations includes the predecessor companies' operations,
accumulated loss includes approximately $7.2 million from the
predecessor companies. Additionally, contributed capital includes
approximately $7.2 million of liabilities assumed personally by the
predecessor company shareholder, who is also the primary shareholder of
the Company.

 In 1997, the Company issued 675,680 shares of common stock as
repayment in full for stockholders' advances totaling $323,400.

9.   Related Party Transactions

Advances of $55,177 were received by the Company from its primary
stockholder during 1998. The Company also received an advance of
$15,000 from a relative of the Company's primary stockholder during
1998. No repayments were made on these advances during 1998.

 In 1998 and 1997, the Company recorded consulting expense of $15,990
and $91,010 for services rendered by a minority stockholder. At
December 31, 1998 and 1997, $107,000 and $91,010 was due to this
stockholder.

10.   Subsequent Events

In 1999, the Company sold 2,873,667 shares of common stock for $449,500
in cash.

                        F-11


<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.




<PAGE>60

                           PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The executive officers and directors of the Company, and their
ages and positions as of September 30, 1999, are as follows:

Name                      Age             Position

Lawrence A. Guinness       56    President, Chief Executive
                                   Officer and Director

Dixie K. Tanner            57    Vice President,Publishing and
                                            Director

Arthur Korn                61    Chief Financia Officer
                                         and Director

Richard A. Morse           50    Vice President,Engineering and
                                         Technology

There are no arrangements or understanding between any of the
directors or executive officers of the Company and any other
person or persons pursuant to which they were selected as
directors or officers. All officers plan to devote full time to
the Company. No other person has been nominated or chosen to
become an officer at the present time.

There is no family relationship between any director or executive
officer of the Company. No other person has been nominated or
chosen to become an officer at the present time.


Background of Directors and Executive Officers

Lawrence A. Guinness, a founder of the Company, has served as the
Company's President, Chief Executive Officer, and a member of the
Company's Board of Directors since its founding. He has devoted
most of his adult life to various ventures in the publishing
business.

In 1967, Mr. Guinness, with $300,000 in private funding, founded
Guinness Publishing Ltd., Toronto, Canada, a company that
published educational textbooks for the elementary school
curriculum. The company's publications became an instant success
with the schools in Canada and sales were made to United States
and other foreign countries. Mr. Guinness was a publisher in
the true sense in that his company (1) thoroughly researched the
marketplace to target product before development of a
publication, (2) authored all its publications in-house, and (3)
marketed, shipped, and maintained an inventory from its own
offices and warehouses. The company became a recognized leader
in the field of Canadian educational textbook publishing and,
because of its successful record of sales, the company was
awarded Canadian distribution rights to publications published by
companies in Great Britain and the United States to expand its
line of products.

In 1969, with $500,000 obtained from a New York venture capital
firm, Mr. Guinness founded Guinness Publishing Ltd., New York, to
publish educational textbooks for the entire North American
marketplace. In addition to producing and marketing its own
successful publications, it authored material, under contract,
for American Book Company, a division of Lytton Industries.

In 1979, Mr. Guinness sold his foreign publications to finance
the development of computer programmed materials and educational
programs.

From 1980 to 1988, using $1,000,000 of his own funds and an
additional $5,000,000 raised from various private sources, he
founded Guinness Productions, Inc., to develop various computer
software programs and authoring systems, and Guinness Computer
Television Corporation to develop software for a computer


<PAGE>61

networking and navigational system to distribute the programs
that he had created. In 1989 he founded CoNetCo, now a
subsidiary of Guinness Telli*Phone Corporation, to develop an
easy-to-use, inexpensive screen telephone (the Telli Phone) to
access these and other programs and to receive information from
COMPUTER network information servers. The materials, products,
and computer software programs developed since 1980 have been
incorporated and integrated into Guinness Telli*Phone
Corporation.

From 1980 until 1987, while operating Guinness Productions, Inc.,
and Guinness Computer Television Corporation, Mr. Guinness
borrowed funds from time to time from certain qualified private
individuals for the development of some of the software being
utilized by Guinness Telli*Phone Corporation. Some of these
investors of Guinness Productions, Inc., and Guinness Computer
Television Corporation hold notes payable by Mr. Guinness that
are in default. Even though the Statute of Limitations has run
regarding the right of the holders of these securities to
rescind, Mr. Guinness intends to offer to all investors, who have
invested in the development of the software utilized by Guinness
Telli*Phone Corporation an opportunity to have all their cash,
plus interest, returned or, as an alternative, to receive shares
of his Common Stock in Guinness Telli*Phone Corporation, at their
option.

Dixie K. Tanner serves as Secretary, Vice President and Director
of the Company. She has worked with Mr. Guinness on various
publishing projects since 1977. Since graduating from the
University of British Columbia in 1964 with a BA in Anthropology
and Psychology, she has been a tutor for handicapped children and
a buyer, manager, and proprietor for retail businesses. From
1977 to 1979 she served as an author and editor of Guinness
Publishing Limited in Canada. After Guinness Publishing Limited
was sold, until 1986, Ms. Tanner returned to community work as a
volunteer and successful fund raiser.

In 1986 Ms. Tanner joined Guinness Computer Television
Corporation as the Editor-in-Chief of programming and
development. In 1989 she joined CoNetCo, a subsidiary of the
Company, as Vice President and Editor-in-Chief of the Telli Pages
Directory.

Arthur Korn joined the Company as Chief Financial Officer and
Director in August 1996. From 1962 to 1979 Mr. Korn held various
positions with J.H. Cohn & Company, a large regional CPA firm in
New Jersey, including the partner in charge of the quality
control department and from 1976 to 1979 was the Managing Partner
of the firm's Nevada offices. In 1979, Mr. Korn joined the San
Francisco office of Mann Judd Landau, Certified Public
Accountants, a small national firm, and was the Managing Partner
from 1981 to 1984. In 1984, Mr. Korn merged his office into the
San Francisco office of Moss Adams, a large regional West Coast
CPA firm, and was the partner in charge of that office's audit
and accounting department. In 1988 he opened his own practice
serving a wide variety of industries with clients from closely
held corporations to publicly owned corporations registered with
the Securities and Exchange Commission.

Mr. Korn is currently licensed as a CPA in California. He is a
member of the American Institute of CPAs, the California Society
of CPAs, the New York State Society of CPAs, the New Jersey State
Society of CPAs and the American Arbitration Society. He has
been a member of the California State Board of Accountancy Report
Quality Monitoring Committee since January, 1994. He was a
member of the State Accounting Principles and Auditing Standards
Committee (AP & AS) for the California Society of CPAs for seven
years and Chairman of the San Francisco Chapter AP & AS for three
years. He is a member of the East Bay Chapter AP & AS, Managing
an Accounting Practice Committee and the Litigation Support
Committee. Mr. Korn holds a BS degree in Accounting from
Fairleigh Dickinson University.



<PAGE>62

Richard Alden Morse serves as Vice President of Engineering and
Technology for the Company. Since 1986 Mr. Morse has served as
a consultant on various computer related development projects.
Since 1989 he has consulted with CoNetCo, a subsidiary of the
Company, and has been instrumental in the designing, development,
and building of the hardware and software operating systems for
the Telli Phone.

From 1985 to 1986 Mr. Morse worked for NEC as the Technical
Manager for the Single Chip Microcomputer Product Group. He
supported three families of microcomputers and helped the
Japanese design a new set of single chip microcomputers for
American managed groups of engineers. From 1979 to 1984 he was
employed with Fairchild Semiconductor and in 1983 and 1984 he
served as Product Planning Manager for the Microprocessor
Division where he managed a group of engineers who designed
advanced telcom chips (x.25 and MPCC). Mr. Morse holds a BS
degree in Physics from the University of New Hampshire.

Directorships

No Director of the Company holds any other directorship in any
company with a class of securities registered pursuant to section
12 of the Securities Exchange Act or subject to the requirements
of section 15(d) of such Act or any company registered as an
investment company under the Investment Company Act of 1940, 15
U.S.C. 80a-1, et seq., as amended.


Involvement in Certain Legal Proceedings

None of the directors of the Company or persons nominated are
involved in any legal proceedings as outlined in Item 401 (f)
that are material to the evaluation of their ability or
integrity.

From 1980 until 1987 Lawrence A. Guinness borrowed funds from
time to time from certain qualified private individuals for the
development of some of the software being utilized by Guinness
Telli*Phone Corporation. In 1987 the Commissioner of
Corporations of the State of California issued a "Cease and
Desist" order preventing Mr. Guinness from borrowing any further
monies and claiming these loans involved the sale of securities.
The matter was referred by the Commissioner to the District
Attorney in Marin County, California, who met with Mr. Guinness
and after informing him that the County had investigated the
loans thoroughly, dismissed the matter with taking any formal
action. The District Attorney also advised Mr. Guinness to
consult a securities attorney before making any future financial
transactions. To this day Mr. Guinness has complied.

Promoters and Control Persons

See "Involvement in Certain Legal Proceedings" above.


ITEM 11. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
                                                                      Long-term
Name and                                  Annual Compensation        Compensation
Principal Position              Year   Salary(1)  Bonus    Awards                   Other
<S>                              <C>    <C>        <C>      <C>                       <C>
Lawrence Guinness              1998  $410,000(2)    --       --                        --
President and CEO              1997   $21,951       --       --                        --
                               1996  $185,682       --       --                        --
</TABLE>

(1) The Company does not have a formal employment contract.
Compensation has been based upon annual discretionary
factors such as technical advancements of the Telli
Phone products and the generation of capital. During
1996, approximately $120,000 of funds advanced were
treated as compensation because there is no formal
agreement requiring repayment and there is no collateral
securing the funds.


<PAGE>63

(2) Includes $378,000 accrued at December 31,1998 and paid
in 1999 with the issuance of 2,265,000 shares of the Company's Common
Stock.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Controlling Interest

Lawrence A. Guinness is the only person who has beneficial
ownership of over Five percent (5%) of the Common Stock in the
Company:
<TABLE>
<CAPTION>
Title of     Name and Address of        Amount and Nature of       Percent
Class          Beneficial Owner         Beneficial Ownership      of Class
<S>                <C>                        <C>                   <C>
Common       Lawrence A. Guinness        10,615,166 shares          42.8%
             655 Redwood Highway., #111
             Mill Valley, CA 94941
</TABLE>
Security Ownership of Management

The following table sets forth certain information with respect to
the beneficial ownership of the Company's Common Stock as of
November 30, 1998, (i) each person or entity who is known by the
Company to beneficially own five percent or more of the
outstanding Common Stock of the Company, (ii) each of the
Company's directors, (iii) each of the named officers, and (iv)
all directors and executive officers of the company as a group.
Except as noted below, the address for each such person is c/o
Guinness Telli*Phone Corporation, 655 Redwood Highway, Suite 111,
Mill Valley, CA 94941.
<TABLE>
<CAPTION>
Title of     Name and Address of        Amount and Nature of       Percent
Class          Beneficial Owner         Beneficial Ownership      of Class
<S>                <C>                        <C>                   <C>
Common       Lawrence A. Guinness         10,615,166 shares        42.82%
             Pres., CEO, Director
             655 Redwood Hwy.,#111
             Mill Valley, CA 94941

Common       Dixie K. Tanner                 735,000 shares         2.96%
             Secretary, Director
             655 Redwood Hwy., #111
             Mill Valley, CA 94941

Common       Arthur Korn                     250,000 shares         1.00%
             CFO, Director
             655 Redwood Hwy., #111
             Mill Valley, CA 94941

Common       Richard A. Morse              1,250,000 shares         5.05%
             V.P. Engineering
             and Product Development
             3030 Bridgeway, Suite 405
             Sausalito, CA 94965

Total                                     12,850,166 shares        51.83%
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Notes Due By Lawrence A. Guinness; Dilution of Guinness'
Ownership in the Company

All of the investors who loaned funds to Guinness to invest in
the Guinness Companies hold notes payable by him that are in
default. Even though the Statute of Limitations has run
regarding the right of the holders of these securities to
rescind, Guinness intends to offer his note holders an
opportunity to have all their notes payable, plus interest
(totaling approximately $1.1 million) repaid, or, as an
alternative, to receive Common Stock in the Company, at their
option. Guinness plans to offer his personal stock in Guinness
Telli*Phone Corporation to those investors who wish to receive
Common Stock in the Company, thus there will be no dilution to

<PAGE>64

the issued and outstanding shares of the Company. However, this
will dilute Guinness' present ownership in the Company and have
an impact on his control of the Company's operations. The
outcome from this event and its effect on the future of the
Company cannot be determined at this time. For those investors
who wish to receive cash, it is the intention of Guinness to
arrange financing through an investment banker. This financing
may take the form of debt financing, securities financing, or a
public sale of enough of Guinness' Guinness Telli*Phone
Corporation shares of Common Stock to satisfy the debt to the
note holders remaining.



<PAGE>64

                           PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K

(a) Documents filed as part of this report:

(1) Financial Statements of the Registrant set forth under
ITEM 8 are filed as part of this report.

(2) The Financial Statement Schedule other than those listed
above have been omitted since they are either not
required, not applicable, or the information is
otherwise included.

(b) Information filed as part of this report from Form 8-K:

(1) No Current Reports on Form 8-K have been filed for the
period covered by this report.

Pursuant to the requirements of section 12 of the securities act
of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

GUINNESS TELLI*PHONE CORPORATION
(Registrant)

Date: December 15, 1999           /S/Lawrence A. Guinness
                                  ---------------------------
                                  By: Lawrence A. Guinness
                                  Its: President

Date: December 15, 1999           /S/Arthur Korn
                                  ----------------------------
                                  By: Arthur Korn
                                  Its: Chief Financial Officer

Date: December 15, 1999           /S/Dixie K. Tanner
                                  ----------------------------
                                  By: Dixie K. Tanner
                                  Its: Secretary