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: June 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 June 30, 1997, there were 14,087,480  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                                  4
               June 30, 1997 and December 31,1996

               Consolidated Statement of Operations -                      5
               Three Months Ended June 30, 1997 and 1996
               and Six Months Ended June 30, 1997 and 1996
               and Cumulative During Development Stage

               Consolidated Statement of Cash Flows -                      6
               Three Months Ended June 30, 1997 and 1996
               and Six Months Ended June 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                                9

               Item 2.    Change in Securities                             9

               Item 3.    Defaults Upon Senior Securities                  9
     
               Item 4.    Submission to Matters to a Vote of 
                          Security Holders                                 9

               Item 5.    Other Information                                9

               Item 6.    Exhibits and Reports on Form 8-K                 9

                                     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 June 30, 1997 and the results of its operations and changes in its
financial  position  from  inception  through June 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)
                                           June 30,            December 31,
                                             1997                  1996
                                          -----------          ----------
<S>                                       <C>                   <C>
ASSETS
                                                           
CURRENT ASSETS:
      Cash                                $        12         $    9,805

      TOTAL CURRENT ASSETS                         12              9,805

FIXED ASSETS:

      Equipment                                63,705             60,118
      Less accumulated depreciation            35,695             30,395
                                          ------------        -----------     
                                                                  
                                               28,010             29,723
                                          ------------        -----------   
                                          $    28,022         $   39,528
                                          ============        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
      Notes payable                       $   435,000         $  435,000
      Accounts payable                        659,216            630,733
      Accrued interest payable                490,364            446,300
      Advances from stockholders               23,059                 --
      Deferred royalty income                 125,000            125,000
                                          ------------        -----------

      TOTAL CURRENT LIABILITIES             1,732,639          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
 14,087,480 and 13,427,480 shares              14,087             13,427
 Additional paid-in capital                 8,686,506          8,363,766
 Deficit accumulated during
   development stage                      (10,405,210)       (10,224,698)
                                          ------------       ------------

                                          ( 1,704,617)       ( 1,847,505)
                                          ------------       ------------

                                          $    28,022        $    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       Six Months         Three Months
                           Development   Ended June 30,     Ended June 30,
                             Stage       1997       1996    1997      1996
                          -----------------------------------------------------
<S>                       <C>            <C>         <C>       <C>     <C>     
OPERATING EXPENSES:
Research and development  $ 4,551,152
   Interest expense       $ 4,215,083     $ 44,064  $ 40,060  $ 22,032  $ 20,030
   Officer's salary           500,097       17,108    11,529               5,764
   Rent                       327,895       14,442    10,479     6,356     3,974
   Other administrative 
   expense                    810,983      104,898    93,872    29,887    18,529
                          ------------------------------------------------------

NET LOSS                 $(10,405,210) $(180,512) $(155,940) $(58,275) $(48,297)
                          ======================================================

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

WEIGHTED AVERAGE
  SHARES OUTSTANDING             14,065,480  13,427,480  14,087,480  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       Six Months         Three Months
                           Development   Ended June 30,     Ended June 30,
                             Stage       1997       1996    1997      1996
                          -----------------------------------------------------
<S>                       <C>            <C>         <C>       <C>     <C>     

CASH USED IN OPERATIONS:
 Net loss                $(10,405,210) $(180,512) $(155,940) $(58,275) $(48,297)
 Adjustments to reconcile 
 net loss to cash used 
 in operations:
 Depreciation                  35,695      5,300      3,462     2,650     1,731
 Increase in accounts 
  payable                     659,216     28,483     11,529    10,528     5,764
 Increase in accrued 
  interest                    490,364     44,064     40,060    22,032    20,030
 Deferred royalty income      125,000         --         --        --        --
                          -----------------------------------------------------
                          ( 9,094,935)  (102,665)  (100,889)  (23,065)  (20,772)
                          -----------------------------------------------------

CASH USED IN INVESTING ACTIVITIES:
 Additions to fixed 
  assets                  (    63,705)  (  3,587)  ( 24,991) 
                          -----------------------------------------------------

CASH PROVIDED BY (USED IN) FINANCING
 ACTIVITIES:
 Contributed capital        7,543,938         --
 Sale of stock                999,475    323,400
 Notes payable                435,000         --
 Stockholder advances          23,059   (226,941)              23,059
 Collection of stock 
  subscriptions receivable    157,180         --    101,250
                          -----------------------------------------------------
                            9,158,652     96,459    101,250    23,059
                          -----------------------------------------------------

NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS       12     (9,783)   (24,630)      (6)   (20,772)

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR                 --      9,805     97,997       18     94,139
                           ----------------------------------------------------

CASH AND CASH EQUIVALENTS,
 END OF YEAR               $       12   $     12  $  73,367   $   12   $ 73,367
                           ====================================================

</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 June 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>

                 GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                             (A Development Company)

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                  June 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.  Reference is made to that document with regard to
these matters.

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


                                     Page 8
<PAGE>

                           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 9

<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: August 13, 1997                        /S/ Lawrence A. Guinness
                                             ----------------------------------
                                             By:  Lawrence A. Guinness
                                             Its: President



Date: August 13, 1997                        /S/ Arthur Korn 
                                             ---------------------------------- 
                                             By:  Arthur Korn
                                             Its: Chief Financial Officer


       
                                     Page 10