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: March 31, 1998; 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 March 31, 1998, there were 14,860,160 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
                    March 31, 1998 and December 31,1997                 4

                    Consolidated Statement of Operations -              5
                    Three Months Ended March 31, 1998 and 1997
                    and Cumulative During Development Stage
                    
                    Consolidated Statement of Cash Flows -              6  
                    Three Months Ended March 31, 1998 and 1997
                    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 March 31,  1998 and the results of its  operations  and changes in
its financial position from inception through March 31, 1998 have been made. The
results of its operations for such interim period are 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)
                                        March 31,            December 31,
                                           1998                1997
                                        ---------------------------------------
<S>                                     <C>                 <C>
ASSETS                

CURRENT ASSETS:
      Cash                              $   --              $        87
      Prepaid expenses                      --                   14,587
                                        ---------------------------------------

     TOTAL CURRENT ASSETS               $   --                   14,674
                                        ---------------------------------------

FIXED ASSETS:

      Equipment                             66,832               66,832
      Less accumulated depreciation         43,645               40,995
                                        ---------------------------------------
                           
                                            23,187               25,837
                                        ---------------------------------------

                                        $   23,187          $    40,511
                                        =======================================

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Notes payable                      $  435,000          $   435,000
     Accounts payable                      666,943              634,597
     Accrued interest payable              558,664              534,428
     Deferred royalty income               125,000              125,000
                                        ---------------------------------------

     TOTAL CURRENT LIABILITIES           1,785,607            1,729,025                                        
                                        ---------------------------------------



COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Common stock, $.001 par value; 
     authorized 25,000,000 shares, 
     issued and outstanding
     14,860,160 shares                      14,860              14,860
     Additional paid-in capital          8,891,733           8,891,733
     Deficit accumulated during
          development stage            (10,669,013)        (10,595,107)
                                       ----------------------------------------

                                       ( 1,762,420)        (  1,688,514)
                                       ----------------------------------------

                                        $   23,187          $    40,511
                                       ========================================


</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       Three Months     
                           Development   Ended March 31,    
                             Stage       1998       1997    
                          ------------------------------
<S>                       <C>            <C>         <C>     
                         
OPERATING EXPENSES:
     
Research and development $ 4,551,152
Interest expense         $ 4,283,383   $  24,236   $ 22,032
Officer's salary             512,940       8,000     17,108
Rent                         351,970       6,402      8,086
Other administrative
     expense                 969,568      35,268     75,011
                          -----------------------------------
 
NET LOSS                 $(10,669,013) $( 73,906) $(122,237)
                         ====================================

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

WEIGHTED AVERAGE
     SHARES OUTSTANDING                14,860,160  14,043,480
                                       ======================

</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         Three Months Ended   
                           Development            March 31,   
                             Stage           1997           1996   
                          ------------------------------------------
<S>                        <C>               <C>            <C>          

CASH USED IN OPERATIONS:
 Net loss                 $(10,669,013)      $(73,906)     $(122,237)
 Adjustments to 
 reconcile net 
 loss to cash used 
 in operations:
 Depreciation                   43,645          2,650          2,650
 Decrease in prepaid expenses       --         14,587             --
 Increase (decrease) in
   accounts payable            666,943         32,346         17,955 
 Increase in accrued 
  interest                     558,664         24,236         22,032 
 Stock Issues for consulting
  services                      27,500             --             --
 Deferred royalty income       125,000             --             --
                         ---------------------------------------------
                            (9,247,261)      (     87)      (  79,600)

CASH USED IN INVESTING ACTIVITIES:
    
Additions to fixed 
assets                      (   66,832)      (     --)      (   3,587)
                         ----------------------------------------------

CASH PROVIDED BY (USED IN) FINANCING
 ACTIVITIES:
 Contributed capital         7,543,938             --              --
 Sale of stock                 854,575             --         323,400  
 Notes payable                 435,000             --              --
 Stockholder advances          323,400             --        (250,000)
 Collection of stock 
  subscriptions receivable     157,180             --              --
                         ---------------------------------------------
                             9,314,093             --          73,400
                         ---------------------------------------------

NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS           --            (87)        ( 9,787)

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR                  --             87           9,805
                         ---------------------------------------------

CASH AND CASH EQUIVALENTS,
 END OF YEAR             $          --       $      --      $       18
                         ==============================================

</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 March 31, 1998,  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, 1997.

                                     Page 7
<PAGE>


Item 2.   Management's  Discussion  and Analysis of Financial  Condition and
          Results of Operations March 31, 1998

      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, 1997.  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: May 20, 1998                           /S/ Lawrence A. Guinness
                                             ----------------------------------
                                             By:  Lawrence A. Guinness
                                             Its: President



Date: May 20, 1998                           /S/ Arthur Korn
                                             ----------------------------------
                                             By:  Arthur Korn
                                             Its: Chief Financial Officer


                                     Page 9