SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                 QUARTERLY REPORT UNDER SECTION 13 OR (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934




                                   FORM 10-Q




  FOR THE QUARTER ENDED SEPTEMBER 30, 1998, 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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO

     On November 19, 1998,  there were 16,934,910  shares of the issuer's common
stock, $.001 par value, outstanding.


                                   - 1 -

<PAGE>


                        GUINNESS TELLI*PHONE CORPORATION

                                      INDEX


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

         Item 1.  Financial Statements

                  Consolidated Balance Sheet
                  September 30, 1998 and December 31, 1997                 3

                  Consolidated Statement of Operations 
                  Three Months Ended September 30, 1998 and
                  1997 and Nine Months Ended September 30, 
                  1998 and 1997 and Cumulative During
                  Development Stage                                        4

                  Consolidated Statement of Cash Flows Three 
                  Months Ended September 30, 1998 and 1997 
                  and Nine Months Ended September 30, 1998 
                  and 1997 and Cumulative During Development
                  Stage                                                    5

                  Note to Consolidated Financial Statements                6

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations            7

PART II. - Other Information
 
         Item 1.  Legal Proceedings                                        8

         Item 2.  Changes in Securities and Use of Proceeds                8

         Item 3.  Defaults Upon Senior Securities                          8

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

         Item 5.  Other Information                                        8

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


SIGNATURES                                                                10

                                   - 2 -


<PAGE>


                  GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                            (A DEVELOPMENT STAGE COMPANY)
                              CONSOLIDATED BALANCE SHEET

                                           September 30,
                                               1998                 December 31,
                                            (Unaudited)                 1997
                                            -----------             -----------
            ASSETS

CURRENT ASSETS:
      Cash                                  $     5,942             $        87
      Prepaid expenses                               --                  14,587
                                            -----------             -----------

           TOTAL CURRENT ASSETS                   5,942                  14,674
                                            -----------             -----------

FIXED ASSETS:
      Equipment                                  71,431                  66,832
      Less accumulated depreciation              48,945                  40,995
                                            -----------             -----------

                                                 22,486                  25,837
                                            -----------             -----------

                                            $    28,428             $    40,511
                                            ===========             ===========

           LIABILITIES AND
         STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
      Notes payable                         $   450,000             $   435,000
      Accounts payable                          738,837                 634,597
      Accrued interest payable                  607,136                 534,428
      Stockholder advances                       36,515                      --
      Deferred royalty income                   125,000                 125,000
                                            -----------             -----------

           TOTAL CURRENT LIABILITIES          1,957,488               1,729,025
                                            -----------             -----------



<PAGE>



COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
      Common stock, $.001 par value;
           authorized 25,000,000 shares;
           issued and outstanding
           16,634,910 and 14,860,160 shares      16,635                  14,860
      Additional paid-in capital              9,030,158               8,891,733
      Deficit accumulated during
            development stage               (10,975,853)            (10,595,107)
                                            -----------             -----------
                                             (1,929,060)             (1,688,514)
                                            -----------             -----------

                                            $    28,428             $    40,511
                                            ===========             ===========

















See accompanying notes.

                                  - 3 -


<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 September 30,       Ended September 30,
                                                            ------------------------   -----------------------
                                                Stage           1998         1997         1998         1997
                                            ------------        ----         ----         ----         ----
<S>                                         <C>             <C>           <C>          <C>          <C>    

OPERATING EXPENSES:
      Research and development              $   4,551,152
      Interest expense                          4,331,855   $   72,708    $   66,096   $   24,236   $   20,030
      Officer's salary                            528,940       24,000        34,017        8,000        5,764
      Rent  365,834                                20,266       25,152         7,462        7,061
      Other administrative
         expenses                               1,198,072      263,772       191,224      163,521       67,709
                                            -------------   ----------    ----------   ----------   ----------

NET LOSS                                    $(10,975,853)   $(380,746)    $(316,489)   $(203,219)   $(100,564)
                                            =============   ==========    ==========   ==========   ==========

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

WEIGHTED AVERAGE
      SHARES OUTSTANDING                                    15,527,508    14,092,165   15,735,008   13,427,480
                                                            ==========    ==========   ==========   ==========
</TABLE>
















See accompanying notes.

                                   - 4 -


<PAGE>


                  GUINNESS TELLI*PHONE CORPORATION AND SUBSIDIARY
                           (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                           Cumulative
                                             During               Nine Months Ended                Three Months Ended
                                           Development              September 30,                     September 30,
                                                             --------------------------      ---------------------------
                                              Stage              1998           1997             1998             1997
                                          -------------          ----           ----             ----             ----
<S>                                       <C>                <C>             <C>             <C>              <C>

CASH USED IN OPERATIONS:
   Net loss                               $(10,975,853)      $(380,746)      $(316,489)      $(203,219)       $(135,977)
   Adjustments to reconcile net loss
      to cash used in operations:
      Depreciation                               48,945           7,950           7,950           2,650            2,650
      Decrease in prepaid expenses                               14,587              --              --
      Increase in accounts payable              738,837         104,240          24,483          68,878
      Increase in accrued interest              607,136          72,708          66,096          24,236           22,032
   Stock issues for consulting services         162,750         135,250                          90,000
   Deferred royalty income                      125,000              --              --              --               --
                                          -------------       ---------      ----------      ----------       ----------

                                            (9,293,185)        (46,011)       (213,960)        (17,455)        (111,295)
                                          -------------       ---------      ----------      ----------       ----------


CASH USED IN INVESTING ACTIVITIES:
      Additions to fixed assets                (71,431)         (4,599)         (6,715)         (2,568)          (3,128)
                                          -------------       ---------      ----------      ----------       ----------



CASH PROVIDED BY (USED IN) FINANCING
   ACTIVITIES:
   Contributed capital                        7,543,938
   Sale of stock                                859,525           4,950        501,900           4,950          178,500
   Notes payable                                450,000          15,000                         15,000
   Stockholder advances                         359,915          36,515      (250,000)           (255)         (23,059)
   Collection of stock subscriptions
      receivable                                157,180
                                           ------------       ---------      ---------       ---------        ---------
                                              9,370,558          56,465        251,900          19,695          155,441
                                           ------------       ---------      ---------       ---------       ----------



<PAGE>



NET INCREASE (DECREASE)
   IN CASH AND CASH EQUIVALENTS                   5,942           5,855         31,225           (328)           41,018

CASH AND CASH EQUIVALENTS,
   BEGINNING OF YEAR                                 --              87          9,805           6,270               12
                                           ------------       ---------      ---------      ----------       ----------

CASH AND CASH EQUIVALENTS,
   END OF YEAR                             $      5,942       $   5,942      $  41,030      $    5,942       $   41,030
                                           ============       =========      =========      ==========       ==========
</TABLE>











See accompanying notes.

                                     - 5 -

<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, 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.








                                   - 6 -


<PAGE>


                        GUINNESS TELLI*PHONE CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               SEPTEMBER 30, 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.

Results of Operations.

         The Company has finalized long  term  financial  arrangements  for  the
production of Telli  Screens,  and has also finalized  arrangements  with a U.S.
manufacturer  of consumer  products  for the  production  and  assembly of Telli
Screens  during  the  Company's  early  run  start up  stage.  The  Company  has
negotiated  an  agreement  with  Global  Tele  Services,   LLC  ("Global"),   to
manufacture a minimum of 10,000 telli screens , Model GT100, which when produced
will be leased  to the  Company  for  installation  in  Southern  Marin  County,
California.  Under the  terms of the  agreement,  the  Company  will pay  Global
$237,500 per quarter for a total of  $4,750,000,  commencing  180 days after the
Company  receives the telli screens from Global.  Definitive  documents  will be
filed with the SEC under Form 8-K upon receipt.

         The  Company's  engineer  has  completed  the  first  stage  production
prototype of the Telli Screen and it has been delivered to the  manufacturer.  A
small run of Telli Screens is being produced  initially for a small market test.
By  March  1999  the  Company  plans to have  approximately  1,000 Telli Screens
delivered into the  marketplace  and plans to have at least 10,000 Telli Screens
operating in households in Southern Marin County by July 1999.

         This report contains "forward-looking statements" within the meaning of
Section  27A of the  1933  Securities  Act  and  Section  21E of the  Securities
Exchange Act of 1934. Actual results could differ  materially,  as the result of
such  factors as  competition  in the markets  for  telephone  directories,  the
availability of financing at favorable  terms, and other factors detailed in the
Company's public filings with the SEC.












                                 - 7 -


<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 and Use of Proceeds.

                  None.

Item 3.  Defaults Upon Senior Securities.

                  None.

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

                  None.

Item 5.  Other Information.

                  On  September  30,  1998,  the  Company  filed a  Registration
Statement on Form S-8 (Registration No. 333-65163) to register  4,000,000 shares
of its common stock for  issuance  under the  Guinness  Telli*Phone  Corporation
Stock Option Plan.

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

         (a)  Exhibits

              Exhibit No.   Description

              2.1           Agreement and Plan of Reorganization between CoNetCo
                            and the Company dated March 15, 1994.  (Incorporated
                            by reference to  Exhibit 1 to the Company's Form 10,
                            filed  with  the  SEC  on  March  8,  1996, File No.
                            0-25632.)

              2.2           Purchase of Assets, Assumption  of  Liabilities  and
                            Royalty   Agreement   between    CoNetCo,   Guinness
                            Productions,  Guinness   Computer   Television   and
                            Lawrence  A.  Guinness  and  assumed  by the Company
                            dated  March 15, 1994. (Incorporated by reference to
                            Exhibit 5 to the Company's Form 10,  filed  with the
                            SEC  on  March  8,  1996,  File  No. 0-25632.)

              2.3           Purchase  of  Assets, Assumption of Liabilities  and
                            Royalty   Agreement   between   CoNetCo,    Guinness
                            Productions,  Guinness   Computer   Television   and
                            Lawrence  A.  Guinness  dated  February  18,  1990 -
                            Superceded by Exhibit 5.  (Incorporated by reference
                            to  Exhibit  6  to the Company's Form 10, filed with
                            the SEC on March 8, 1996, File No. 0-25632.)


                                   - 8 -

<PAGE>


              2.4           Agreement  and   Plan   of   Reorganization  between
                            Guinness  Telli*Phone Corporation and CoNetCo  dated
                            October  4,  1993  -  Superceded  by   Exhibit    1.
                            (Incorporated  by  reference  to  Exhibit  7 to  the
                            Company's Form 10,  filed  with the SEC on March  8,
                            1996,  File  No.  0-25632.)

              3.1           Articles of Incorporation,  as amended and currently
                            in effect. (Incorporated  by reference to  Exhibit 2
                            to  the  Company's  Form  10,  filed with the SEC on
                            March 8, 1996, File No. 0-25632.)

              3.2           Bylaws.  (Incorporated  by reference to Exhibit 2 to
                            the  Company's  Form 10, filed with the SEC on March
                            8, 1996, File No. 0-25632.)

             10.1           Guinness  Telli*Phone Corporation  Stock Option Plan
                            adopted  by the Company  on   September   30,  1998.
                            (Incorporated  by  reference  to Exhibit 10.1 to the
                            Company's  Registration   Statement   on  Form  S-8,
                            Registration  No.  333-65163, filed on September 30,
                            1998.)

               27           Financial Data Schedule.  (Filed herewith.)

         (b)      Reports on Form 8-K.

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



                                   - 9 -

<PAGE>


                                   SIGNATURES


         Pursuant to the  requirements  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:  November 19, 1998                    /s/ Lawrence A. Guinness            
                                            ------------------------------------
                                            By:      Lawrence A. Guinness
                                            Its:     President


Date:  November 19, 1998                    /s/ Arthur Korn                    
                                            -----------------------------------
                                            By:      Arthur Korn
                                            Its:     Chief Financial Officer







                                   - 10 -

<PAGE>


                                  EXHIBIT INDEX


    Exhibit No.       Description

       2.1            Agreement and  Plan  of Reorganization between CoNetCo and
                      the  Company  dated  March  15,  1994.  (Incorporated   by
                      reference  to  Exhibit 1 to the  Company's  Form 10, filed
                      with the SEC on March 8, 1996, File No. 0-25632.)

       2.2            Purchase of Assets, Assumption of Liabilities and  Royalty
                      Agreement between CoNetCo, Guinness Productions,  Guinness
                      Computer Television  and Lawrence A. Guinness and  assumed
                      by the  Company  dated March 15,  1994.  (Incorporated  by
                      reference to  Exhibit 5  to  the Company's Form 10,  filed
                      with the SEC  on  March  8,  1996,  File  No.  0-25632.)

       2.3            Purchase of Assets, Assumption of liabilities  and Royalty
                      Agreement between CoNetCo, Guinness Productions,  Guinness
                      Computer   Television   and  Lawrence  A.  Guinness  dated
                      dated  February  18,  1990  -  Superceded  by  Exhibit  5.
                      (Incorporated  by reference to Exhibit 6 to  the Company's
                      Company's  Form 10,  filed  with the SEC on March 8, 1996,
                      File  No. 0-25632.)

       2.4            Agreement  and  Plan  of Reorganization  between  Guinness
                      Telli*Phone Corporation  and CoNetCo dated October 4, 1993
                      - Superceded  by Exhibit 1. (Incorporated  by reference to
                      Exhibit  7  to  the   Company's  Form 10,  filed  with the
                      SEC  on  March  8,  1996,  File  No. 0-25632.)

       3.1            Articles  of  Incorporation,  as  amended and currently in
                      effect.  (Incorporated  by reference  to  Exhibit 2 to the
                      Company's  Form 10,  filed  with the SEC on March 8, 1996,
                      File No. 0-25632.)

       3.2            Bylaws.  (Incorporated  by  reference  to Exhibit 2 to the
                      Company's  Form  10,  filed with the SEC on March 8, 1996,
                      File No. 0-25632.)

       10.1           Guinness Telli*Phone Corporation Stock Option Plan adopted
                      by the  Company  on  September 30, 1998.  (Incorporated by
                      reference to Exhibit 10.1 to  the  Company's  Registration
                      Statement on Form S-8,  Registration  No. 333-65163, filed
                      on September 30, 1998.)

        27            Financial Data Schedule.  (Filed herewith.)