SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

     (Mark One)

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

     For Quarter Ended: September 30, 1997; or

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

     For the transition period _________ to __________

     Commission File Number: 0-25632


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


    Nevada                                                   68-0310550
------------------------------                          -----------------------
State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification No.)

655 Redwood Highway, #273, Mill Valley, California             94941
----------------------------------------------------    ------------------------
(Address of principal executive offices)                      Zip Code)


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


     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 a
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

     On September 30, 1997,  there were  14,244,480  shares of the  registrant's
Common Stock, $.001 par value, outstanding.

<PAGE>

                        GUINNESS TELLI*PHONE CORPORATION

                                      INDEX

PART I.             Financial Information                            Page No.
                    -----------------------------------------------------------

          Item 1.   Financial Statements                                3

                    Consolidated Balance Sheet
                    September 30, 1997 and December 31,1996             4

                    Consolidated Statement of Operations -              5
                    Three Months Ended September 30, 1997 and 1996
                    and Nine Months Ended September 30, 1997 and 1996
                    and  cumulative During Development Stage

                    Consolidated Statement of Cash Flows -              6  
                    Three Months Ended September 30, 1997 and 1996
                    and Nine Months Ended September 30, 1997 and 1996
                    and Cumulative During Development Stage

                    Note to Consolidated Financial Statements           7
        
          Item 2.   Management's Discussion and Analysis of
                    Financial Condition and Results of Operations       8

PART II.            Other Information

          Item 1.   Legal Proceedings                                   8

          Item 2.   Change in Securities                                8

          Item 3.   Defaults Upon Senior Securities                     8

          Item 4.   Submission to Matters to a Vote of Security Holders 8

          Item 5.   Other Information                                   8

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


                                     Page 2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

     The condensed  financial  statements  included herein have been prepared by
the  Company,  without  audit  pursuant  to the  rules  and  regulations  of the
Securities and Exchange Commission.  Certain information and footnote disclosure
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and  regulations,  although the Company  believes that the disclosures are
adequate to make the information presented not misleading.

     In the opinion of the Company,  all adjustments,  consisting of only normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of September 30, 1997 and the results of its  operations  and changes
in its financial  position from inception  through  September 30, 1997 have been
made. The results of its  operations for such interim period is not  necessarily
indicative of the results to be expected for the entire year.


                                     Page 3
<PAGE>

                 GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>

                                       (Unaudited)
                                        Sept. 30,           December 31,
                                           1997                1996
                                        ---------------------------------------
<S>                                     <C>                 <C>
ASSETS                

CURRENT ASSETS:
      Cash                              $   41,030          $     9,805
                                        ---------------------------------------

     TOTAL CURRENT ASSETS               $   41,030                9,805
                                        ---------------------------------------

FIXED ASSETS:

      Equipment                             66,833               60,118
      Less accumulated depreciation         38,345               30,395
                                        ---------------------------------------

                                            28,488               29,723
                                        ---------------------------------------

                                        $   69,518          $    39,528
                                        =======================================

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Notes payable                      $  435,000          $   435,000
     Accounts payable                      659,216              630,733
     Accrued interest payable              512,396              446,300
     Deferred royalty income               125,000              125,000
                                        ---------------------------------------

     TOTAL CURRENT LIABILITIES           1,731,612            1,637,033
                                        ---------------------------------------

ADVANCES FROM STOCKHOLDERS                    --                250,000
                                        ---------------------------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Common stock, $.001 par value; 
     authorized 25,000,000 shares, 
     issued and outstanding
     14,244,480 and 13,427,480 shares       14,244              13,427
     Additional paid-in capital          8,864,849           8,363,766
     Deficit accumulated during
          development stage            (10,541,187)        (10,224,698)
                                       ----------------------------------------

                                       ( 1,622,094)        (  1,847,505)
                                       ----------------------------------------

                                        $   69,518          $    39,528
                                       ========================================


</TABLE>

See accompanying notes.

                                     Page 4

<PAGE>

                 GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                      Consolidated Statement Of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                           Cumulative
                              During       Nine Months         Three Months
                           Development   Ended Sept. 30,     Ended Sept. 30,
                             Stage       1997       1996    1997      1996
                          -----------------------------------------------------
<S>                       <C>            <C>         <C>       <C>     <C>     
                         
OPERATING EXPENSES:
     
Research and development $ 4,551,152
Interest expense         $ 4,237,115   $  66,096   $ 60,090   22,032   $ 20,030
Officer's salary             517,006      34,017     17,293   16,909      5,764
Rent                         338,605      25,152     17,540   10,710      7,061
Other administrative
     expense                 897,309     191,224    161,581   86,326     67,709
                          -----------------------------------------------------
 
NET LOSS                 $(10,541,187) $(316,489) $(256,504)$(135,977)$(100,564)
                         =======================================================

LOSS PER SHARE                         $    (.02) $    (.02) $   (.01) $   (.01) 
                                       =========================================

WEIGHTED AVERAGE
     SHARES OUTSTANDING           14,092,165  13,427,480  14,144,426  13,427,480
                                  ==============================================

</TABLE>

See accompanying notes.

                                     Page 5

<PAGE>
                 GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                      Consolidated Statement Of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>

                           Cumulative
                              During       Nine Months        Three Months
                           Development   Ended Sept. 30,     Ended Sept. 30,
                             Stage       1997       1996    1997      1996
                          -----------------------------------------------------
<S>                       <C>            <C>         <C>       <C>     <C>     

CASH USED IN OPERATIONS:
 Net loss               $(10,541,187) $(316,489) $(256,504) $(135,977)$(100,564)
 Adjustments to 
 reconcile net 
 loss to cash used 
 in operations:
 Depreciation                 38,345      7,950      5,597     2,650     2,135
 Increase (decrease) in
   accounts payable          659,216     28,483        --         --   (11,529)
 Increase in accrued 
  interest                   512,396     66,096     60,090     22,032   20,030
 Deferred royalty income     125,000        --         --         --       --
                         ------------------------------------------------------
                          (9,206,230)  (213,960)  (190,817)  (111,295) (89,928)

CASH USED IN INVESTING ACTIVITIES:

Additions to fixed 
assets                    (   66,833)  (  6,715)  ( 33,070)  (  3,128) ( 8,079)
                         ------------------------------------------------------

CASH PROVIDED BY (USED IN) FINANCING
 ACTIVITIES:
 Contributed capital       7,543,938        --         --        --       --
 Sale of stock             1,177,975    501,900        --        --    178,500
 Notes payable               435,000        --         --        --       --
 Stockholder advances            --    (250,000)    27,195   ( 23,059)  27,195
 Collection of stock 
  subscriptions receivable   157,180        --     101,250
                         ------------------------------------------------------
                           9,314,093    251,900    128,445    155,441   27,195
                         ------------------------------------------------------

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS     41,030     31,225   ( 95,442)    41,018  (70,812)

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR               --       9,805      97,997        12   73,367
                         ------------------------------------------------------

CASH AND CASH EQUIVALENTS,
 END OF YEAR             $    41,030   $ 41,030   $   2,555  $ 41,030  $  2,555
                         ======================================================

</TABLE>

See accompanying notes.

                                     Page 6

<PAGE>
                 GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                             (A Development Company)
                    Note To Consolidated Financial Statements


Note 1. In the opinion of the management of Guinness Telli*Phone Corporation and
Subsidiary,   the  unaudited  financial   statements  of  Guinness   Telli*Phone
Corporation   and  Subsidiary   for  the  interim   periods  shown  include  all
adjustments,  consisting only of normal recurring accruals, necessary for a fair
presentation of the financial position at September 30, 1997, and the results of
operations and cash flows for the periods then ended.  The results of operations
for the interim  periods  shown may not be indicative of the results that may be
expected for the fiscal year.  These  statements  should be read in  conjunction
with the financial  statements and notes thereto  included in the Company's Form
10-K for the year December 31, 1996.

                                     Page 7
<PAGE>


Item 2.   Management's  Discussion  and Analysis of Financial  Condition and
          Results of Operations September 30, 1997

      Liquidity and Capital Resources:

     There have been no  significant  changes  in the  Company's  liquidity  and
capital resources since the Company filed its annual report on Form 10-K for the
year ended December 31, 1996, except for the private placements reflected in the
accompanying  financial  statements.  Reference  is made to that  document  with
regard to these matters.

     The  Company  has begun  negotiations  to raise the  necessary  capital  to
commence operations.

                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.

     At the present time there are no legal proceedings  against the Company and
the Company is unaware of any unasserted  claim or assessment  which will have a
material effect on the financial position or future operations of the Company.

Item 2.   Changes in Securities.

     Not required.

Item 3.   Defaults Upon Senior Securities.

     Not required.

Item 4.   Submission of Matters to a Vote of Security Holders.

     Not required.

Item 5.   Other Information.

     Not required.

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

     (a) No exhibits have been filed with this Form 10-Q.

     (b) No other  reports on Form 8-K were filed during the last quarter of the
period covered.

                                     Page 8


<PAGE>

                                   SIGNATURES

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

                                             GUINNESS TELLI*PHONE CORPORATION
                                               (Registrant)


Date: September 12, 1997                     /S/ Lawrence A. Guinness
                                             ----------------------------------
                                             By:  Lawrence A. Guinness
                                             Its: President



Date:  September 12, 1997                    /S/ Arthur Korn
                                             ----------------------------------
                                             By:  Arthur Korn
                                             Its: Chief Financial Officer


                                     Page 9