SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
                            Annual Report Pursuant to
                       The Securities Exchange Act of 1934

                     For the fiscal year ended June 30, 1999
                         Commission file number 0-13313
                               GS TELECOM LIMITED
             (Exact name of registrant as specified in its charter)


Colorado                 0-13313                             36-3296861
--------                 -------                             ----------
(State or other          (Commission                         (IRS Employer
Jurisdiction of          File Number)                        Identification No.)
Incorporation)


         First Floor Southbank House, Black Prince Road, London SE1 7SJ
         --------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code 44-1481 252 701

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 the  filing
requirements for at least the past 90 days.
Yes X     No
   -----    -----

As of June 30, 1999,  there were  60,056,414  shares of common stock,  of no par
value, outstanding.

Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None

Name of each exchange on which registered: N/A

Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Common Stock

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will 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-KSB or any  amendment to
this Form 10-KSB. Yes __X____ No ____

State   issuer's   revenues  for  its  most  recent   fiscal  year,  $0  (before
extraordinary items). Transitional Small Business Disclosure Format:
Yes       No  X
   -----    -----

<PAGE>



Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant as of June 30, 1999 was $24,510,567,  based upon the closing price of
$1.437 of the common stock on June 30, 1999.

Number of outstanding  shares of the  registrant's no par value common stock, as
of June 30, 1999: 60,056,414.

DOCUMENTS INCORPORATED BY REFERENCE

         List hereunder the following documents if incorporated by reference and
the Part of this Form 10-K into  which the  document  is  incorporated:  (1) Any
annual report to security holders None; (2) Any proxy or information statement -
None;  (3) Any  prospectus  filed  pursuant  to Rule  424(b)  or (c)  under  the
Securities Act of 1933. - None.


<PAGE>



                                TABLE OF CONTENTS

                                     PART I

                                                                           Page

Item 1.   Business ..................................                          1

Item 2.   Properties ................................                         13

Item 3.   Legal Proceedings..........................                         13

Item 4.   Submission of Matters to a Vote of
          Security Holders..........................                          14

                                     PART II

Item 5.   Market for Registrant's Common Stock and
          Security Holder Matters ..................                          14

Item 6.   Management's Discussion and Analysis of
          Financial Condition and Results of
          Operations ...............................                          15

Item 7.   Financial Statements.......................                         16

Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure.....                         17

                                    PART III

Item 9.   Directors and Executive Officers of the
          Registrant.................................                         17

Item 10.  Executive Compensation......................                        21

Item 11.  Security Ownership of Certain Beneficial
          Owners and Management......................                         23

Item 12.  Certain Relationships and Related
          Transactions...............................                         23

                                     PART IV

Item 13.  Exhibits, Financial Statement Schedule
          and Reports on Form 8-K....................                         25


<PAGE>



                                     PART 1

ITEM 1.           DESCRIPTION OF BUSINESS
-----------------------------------------

(a)      General Business Plan

         GS Telecom  Limited (the  "Company")  was  incorporated  in Colorado on
December 19, 1983 as Teleconferencing Systems International,  Inc. Activities of
the  Company  from  June  30,  1995  until  November  15,  1997  were  primarily
liquidation of operating assets and settlement of obligations owed creditors and
employees as previously reported.

         On November 15, 1997, the Company acquired an Isle of Man Company, also
named GS Telecom Limited,  (later changed to GST Limited - "GST") by issuance of
a $150,000  convertible  note  payable.  GST, the acquired  subsidiary,  had net
liabilities  of  $544,268.  The note  payable was  subsequently  converted  into
14,500,000   shares  of  common  stock  and  issued  to  the  acquired   company
stockholders.

     The Company at June 30,  1999,  through  GST Limited  (Isle of Man) had two
wholly owned  subsidiaries,  Guardian  Smart Systems  Limited  ("GSS") and Total
Energy Controls (Commercial) Limited ("TECC") and a 50% holding in an associated
company,  Associated  Power  Industries  Limited  ("API").  GST had an option to
acquire the remaining 50% ownership interest for three years beginning September
1, 1998.  The  investment in API has been accounted for using the equity method,
since  the  Company  had  insufficient  board  representation  or other  control
attributes  involving API. During fiscal 1998,  Management  elected to write-off
its  investment  in API,  $242,447,  as a result  of API's  continued  operating
losses.  GSS'business is the design and marketing of domestic energy savings and
home management  systems and TECC's business is to market and install commercial
energy  saving  devices.  Mainly due to a lack of working  capital,  neither GST
Limited,  GSS nor TECC was  successful,  and  Management  elected to discontinue
operations effective June 30, 1998. Accordingly, the Company has taken steps and
adopted a plan to pay obligations  owned  employees and others,  resulting in an
estimated  loss from  discontinued  operations  in fiscal 1998 of $140,099,  and
expensed un-amortized goodwill totaling $475,367.  The assets and liabilities of
two subsidiaries were sold subsequent to June 30, 1999.

     In  September  1998,  the Company  entered into an Agreement to acquire the
shares of  Masstech,  Inc.,  a Delaware  Corporation,  which  purportedly  owned
certain  intellectual  property  rights,  and which had  minority  interests  in
certain companies which were purportedly  engaged in developing the intellectual
property.  Subsequently,  in December 1998, the Agreement was modified, by which
Masstech  was not to be acquired,  but the assets  consisting  of  "Intellectual
Property Rights" and the minority  interests in the companies  represented to be
developing the intellectual property were to be acquired for issuance of a total
of  43,000,000  shares of common  stock  issued:  19,360,000  shares each to Dr.
Steven Gillam and Andrew Castle,  and 4,280,000 shares to Masstech,  Inc. (which
is beneficially controlled by Dr. Steven Gillam and Andrew Castle).



                                        1

<PAGE>



         On April 1, 1999,  the  Company  acquired  all the assets of  Masstech,
Inc., a Delaware Corporation,  consisting of Intellectual Property Rights (IPR).
This IPR was to be commercialized and developed by Universal Syntropy,  a wholly
owned  subsidiary  company or through  third  party  licensing  agreements.  The
consideration  for this  acquisition and transfer of these assets to the Company
is 4,280,000 shares of common stock (subject to Rule 144) which have been issued
to Masstech, Inc.

         On April 1, 1999 the Company  purchased  from Dr. Steven Charles Gillam
and David Andrew Castle an interest of 15% in each of the  following  companies:
Manex Studios,  LLC,,Manex Visual Effects,  LLC, Manex Entertainment,  Ltd., and
Mass  Illusions,  LLC. The  consideration  for this  acquisition and transfer of
these  assets to the  Company is a total of  38,720,000  shares of common  stock
(subject to Rule 144) which have been issued in two equal parts of 19,360,000 to
Dr. Gillam and Mr. Castle.  The Company agreed with Dr. Gillam and Mr. Castle to
place 50% of their  shares in escrow (a total of  19,360,000  shares)  until the
independent  and  non-interested  Board  members agree by majority vote that the
shares should be released. A portion of the purchase  consideration of the above
assets was deferred  until the gross revenues for the  commercialization  of the
IPR and/or  the share of profits  received  from the above  companies  attain or
surpass  $14,000,000  cumulatively by the year ended June 30, 2001. In the event
that this gross revenue target is met then additional  shares shall be issued as
follows:  Masstech, Inc. - 2,320,000,  Dr. Steven C. Gillam - 4,840,000,  and D.
Andrew Castle - 4,840,000. In the event that these cumulative gross revenues are
exceeded  before June 30, 2001 or the business of Universal  Syntropy is sold or
disposed of prior to that date at a value  providing a profit  acceptable to the
Board of GST then the above shares shall be immediately  issuable.  In the event
that these  cumulative  revenue  projections are not met at the due date for any
other reason then the Board (voting by disinterested members only) shall, in its
absolute  discretion,  determine such compensation,  if any, in shares of common
stock of GST as may be considered  appropriate and payable by the Company to all
or any of Masstech, Inc., Dr. Steven Gillam and/or Mr. D. Andrew Castle.

         There is  currently  a  lawsuit  between  third  parties  and the major
shareholder  of  Manex  Studios,   LLC,   Manex  Visual   Effects,   LLC,  Manex
Entertainment,  Ltd., and Mass Illusions, LLC. In any determination of any right
or entitlement of either Masstech,  Inc., Dr. Steven Gillam and/or Mr. D. Andrew
Castle as specified  above,  neither Dr.  Steven Gillam nor Mr. D. Andrew Castle
will  participate in any such  determination  and such  remaining  disinterested
Directors of the Company as there may be at the appropriate  time shall make the
said  determination  after taking third party advice on what would be considered
appropriate and such decision shall be final and binding on all parties.

         Manex  Interests  - The  IPR  and the  15%  limited  liability  company
interests in four specialty  production  companies ("Manex  Companies")  require
substantial  development  funding and time to realize any potential.  On October
21, 1999 the Board  resolved that they were not  satisfied  with the progress on
the commercialization of the software and intangible property rights ("IPR") and
in receiving information on the financial results of the four companies that use
the  technology.  Accordingly  in the  interests of all  shareholders  the Board
resolved that the number of shares exchanged for the assets should be reduced by
21.5 million shares and the Board  authorized the return from escrow of the 21.5
million shares and their cancellation.



                                        2

<PAGE>



         In Spring 1999 the Company entered into Letters of Intent or Agreements
as follows:

         Network UK - The Company acquired the total share capital of Network UK
Limited,  an Internet  Service  Provider  based in Manchester  England,  for the
consideration of (pound)100,000 (UK) and 150,000 shares of 144 restricted stock.
This acquisition was to provide critical  infrastructure  and an Internet portal
through  which the  Company  could  build part of its  integrated  platform  for
e-commerce  and  develop  its  planned  innovations  in  facilitating  financial
transactions across the Internet. This Agreement was cancelled.

         The Company  entered into a memorandum of  understanding  to acquire NC
International  Limited of the UK,  which  owns and  operates  Authority  on line
Credit  Card  Authorization  System.   Authority  provided  secure  credit  card
authorization,  in real time, over the Internet,  using any currently  available
browser.  The  consideration was to be $100,000 (US) in cash and $4 million (US)
in common shares. This Agreement was cancelled.

         The Company  entered  into an  Agreement  to acquire  certain ATTM card
technology from World  Innovation  Netcom Services  ("WINS") in Spring 1999, and
attempted to fund  development to WINS.  The Company could not  completely  fund
development and has,  subsequent to year end, entered into a modification of the
Agreement  with WINS to  provide  that the  Company  has a license  for the ATTM
technology  to exploit in Europe.  The planned  operations  for a  non-operating
subsidiary, Universal Syntropy, have been cancelled concurrent with the modified
Agreement.

         On October  15,  1999,  the Company  acquired  exclusive  European  and
non-exclusive  World  wide  licensing  rights  to an Asset  Transfer  Teleminute
Manager,  Universal  Prepaid card (ATTM card) to be used in electronic  commerce
and other commercial transactions.  The term of the agreement is for five years,
with renewal options annually thereafter.

         During  fiscal  2000,  the  Company  plans to  develop  the  E-Commerce
businesses  of the  Company to include  the  commercialization  of the ATTM card
coupled  with the fast,  low cost,  easy to use  secure  credit  and debit  card
authorization/payment  system.  These provide a unique  foundation  that will be
able to handle a large  customer  E-Commerce  base and can  easily be  expanded.
After limited initial  development  capital  funding,  these component parts are
planned to be self-financing with profits and positive cash flows.

         In February 1999, the Company engaged Union Trading Financial, Ltd., of
Geneva,  Switzerland,  to conduct a "best efforts" underwriting to raise the sum
of $25 million, to finance the acquisition of selected  technologies,  including
the ATTM Card, Universal Syntropy, and to incubate the development and marketing
of these technologies. The Agreement was cancelled in May 1999.

         In March 1999, a "report" was made by Barrington Financial  Securities,
believed by the Company at the time to be an  "independent  analyst" and a press
release and research  report was issued.  On April 8, 1999, the Company  learned
that  Barrington  is an affiliate of Union  Trading.  The Company  rescinded any
projections of income and issued a press release about the  non-independence  of
Barrington.

         From  February  1999 the  operations  of the  Company  were  focused on
acquiring and developing  businesses and technologies in E-Commerce.  The policy
of the Board is that the Company  should be a low overhead  Company whose aim is
to  acquire  and  integrate  established   profitable  and  positive  cash  flow
businesses which have proven technologies addressed at and able

                                        3

<PAGE>



to exploit the world wide and growing E-Commerce and Internet markets. It is not
the policy of the Company to be a Research and Development  Company. The Company
has no business operations as of the date of this report or at June 30, 1999.

Disclosure Items:

         (a)      Investigation by Securities & Exchange Commission

         On April 19, 1999, the United States Securities and Exchange Commission
commenced a Formal  Investigation as to whether the Company issued securities in
violation of  registration  requirements  and issued press  releases  containing
materially false information. Presently, it is uncertain whether any action will
be filed, the grounds for said action, or the potential consequences thereof. In
the event of a  successfully  prosecuted  SEC action,  the Company  could suffer
civil and criminal  sanctions and  substantial  fines as well as other  remedies
including injunction against further violation of securities laws and rules.

         (b)      Unauthorized Issue of Shares

         The  Company  learned  in May 1999 that  certificates  were  issued for
common shares of GS Telecom,  Ltd. which were in the 6000 number series and were
neither  countersigned  by American  Share  Transfer and Trust,  Inc. (the prior
transfer  agent) nor by Colonial Stock Transfer Co., Inc. (the current  transfer
agent).  The Company has determined that all such  certificates  are invalid and
has  so  notified  the  Securities  &  Exchange  Commission,   Depository  Trust
Corporation,  and its current  transfer agent,  Colonial Stock Transfer Co, Inc.
From the current information  available,  it appears that invalid  certificates,
totaling approximately 800,000 shares have been submitted for transfer. From its
investigation,  it appears to the Company that Union Trading  Financial  Limited
and one Werner Wassler were involved in the unauthorized issuance.

         The Company has severed all relationships with Union Trading Financial,
Ltd./Werner  Wassler  and/or any of their  associates or  affiliates  which have
become known to GST.

         The  Company  is  considering  appropriate  legal  action  to be  taken
specifically against Union Trading Financial, Ltd. and its associates/affiliates
in relation to misrepresentations and the unauthorized distribution of stock.

DEBT OF THE COMPANY

Notes Payable

The notes payable at June 30, 1999 are summarized as:

Unsecured 9% notes payable to an
individual dated February 19, 1998
and March 31, 1998, payable on
demand.                                                        $212,400

8% convertible notes payable issued
November 20, 1997, due September 30, 2000.                     $376,500
                                                                -------
                                                      Total    $588,900
                                                               ========

                                        4

<PAGE>



         All the notes are classified as a current liability because the Company
has an outstanding dispute with the note holders.

         During  fiscal  1999,  the  Company  and  holders of  $588,900 in notes
payable became involved in a dispute.  The Company charged the note holders with
non-performance in providing promised funding.  The note holders have threatened
legal  proceedings  for recovery of amounts due, but the parties are  continuing
settlement discussions.

         The Holders of the Notes have the option to convert one hundred percent
(100%) of the original  principal amount of the Note issued to the Holder at any
time  after the  120th  day  following  the date of  issue,  into  shares of the
Company's  Common Stock at a conversion price equal to the lower of $2 per share
or at twenty five percent  (25%) less than the average  closing bid price of the
Company's  Common Stock for the five (5) consecutive  trading days ending on the
trading  day  immediately  preceding  the  date  thereof.   Notwithstanding  the
foregoing,  if, after the  effectiveness of the Registration  Statement or if an
exemption is available from registration, the closing bid price of the Company's
Common  Stock  reaches four  dollars for the five (5)  consecutive  trading days
ending on the trading day  immediately  preceding the date thereof,  the Company
shall have the option of forcing  conversion  up to Fifty  Percent  (50%) of the
original  principal amount of the Notes originally issued to the Holder, and if,
after such  effectiveness,  the closing bid price of the Company's  Common Stock
reaches eight dollars,  the Company shall  thereafter have the option of forcing
conversion up to One Hundred Percent (100%) of the original  principal amount of
the Notes  issued to the  Holder.  Up to the date of this Report the Company has
received no request for conversion.

         During fiscal 1999,  three  stockholders  loaned the Company a total of
$161,776  with  interest  accrued at 9% per annum (an unpaid  total of $1,866 at
June 30, 1999). The loans are unsecured and payable on demand.

     During fiscal 1998,  three former  directors and/or officers loaned the GST
Limited,  Isle of Man  subsidiary  a total  of  $288,048  of which  $281,416  is
outstanding at June 30, 1999. These unsecured  advances are non-interest bearing
and due on demand.

Plan of Seeking Other Business Opportunities

         The  Company's  purpose  will  be to  seek,  investigate  and,  if such
investigation warrants,  acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the  perceived  advantages
of a corporation  which is registered under the Securities  Exchange Act of 1934
(the "Exchange  Act").  The Company will not restrict its search to any specific
business, industry or geographical location and the Company may participate in a
business  venture  of  virtually  any kind or  nature.  This  discussion  of the
proposed business is purposefully  general and is not meant to be restrictive of
the  Company's  virtually  unlimited  discretion  to search  for and enter  into
potential business opportunities.  Management anticipates that it may be able to
participate  in only one  potential  business  venture  because  the Company has
nominal assets and limited financial resources. See "Financial Statements." This
lack of diversification  should be considered a substantial risk to shareholders
of the Company because it will not permit the Company to offset potential losses
from one venture against gains from another.

         The Company may seek a business  opportunity  with entities  which have
recently commenced  operations,  or which wish to utilize the public marketplace
in order to raise  additional  capital in order to expand  into new  products or
markets,  to develop a new product or service or for other  corporate  purposes.
The  Company may  acquire  assets and  establish  wholly-owned  subsidiaries  in
various businesses or acquire existing businesses as subsidiaries.


                                        5

<PAGE>



         The Company anticipates that the selection of a business opportunity in
which to  participate  will be  complex  and  extremely  risky.  Due to  general
economic conditions,  rapid technological advances being made in some industries
and shortages of available capital,  management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation.  Such
perceived  benefits may include  facilitating  or  improving  the terms on which
additional  equity  financing may be sought,  providing  liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable  statutes) for all shareholders and other factors.
Potentially,  available  business  opportunities  may  occur  in many  different
industries and at various stages of development, all of which will make the task
of  comparative  investigation  and  analysis  of  such  business  opportunities
extremely difficult and complex.

         The Company  has, and will  continue to have,  no capital with which to
provide the owners of business  opportunities with any significant cash or other
assets.  However,  management  believes  that the Company  will be able to offer
owners of  acquisition  candidates  the  opportunity  to  acquire a  controlling
ownership  interest in a publicly  registered company without incurring the cost
and time  required  to  conduct an initial  public  offering.  The owners of the
business  opportunities  will,  however,  incur significant legal and accounting
costs in connection  with the acquisition of a business  opportunity,  including
the costs of  preparing  Form 8-Ks,  10-Qs or  10-KSBs,  agreements  and related
reports and documents. The Exchange Act specifically requires that any merger or
acquisition candidate comply with all applicable reporting  requirements,  which
include  providing  audited  financial  statements  to be  included  within  the
numerous filings relevant to complying with the Exchange Act. Nevertheless,  the
officers and directors of the Company have not conducted market research and are
not aware of  statistical  data which would support the perceived  benefits of a
merger or acquisition transaction for the owners of a business opportunity.

         The analysis of new business  opportunities  will be undertaken  by, or
under the  supervision  of, the officers and  directors of the Company,  none of
whom is a professional  business analyst.  Management  intends to concentrate on
identifying  preliminary prospective business opportunities which may be brought
to its attention  through  present  associations  of the Company's  officers and
directors, or by the Company's  shareholders.  In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial  and  managerial  resources;   working  capital  and  other  financial
requirements; history of operations, if any; prospects for the future; nature of
present and  expected  competition;  the quality and  experience  of  management
services which may be available and the depth of that management;  the potential
for further research, development or exploration;  specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed  activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition or acceptance of products,  services or trades;
name identification;  and other relevant factors.  Officers and directors of the
Company will meet  personally  with management and key personnel of the business
opportunity as part of their investigation.  To the extent possible, the Company
intends to utilize  written reports and personal  investigation  to evaluate the
above factors.  The Company will not acquire or merge with any company for which
audited  financial  statements  cannot be obtained within a reasonable period of
time after closing of the proposed transaction.

         Management of the Company,  while not especially experienced in matters
relating to the new business of the  Company,  shall rely upon their own efforts
and, to a much lesser  extent,  the efforts of the  Company's  shareholders,  in
accomplishing the business  purposes of the Company.  It is not anticipated that
any outside consultants or advisors,  other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business purposes
described herein. However, if the Company does retain such an outside consultant
or advisor, any cash fee

                                        6

<PAGE>



earned by such party will need to be paid by the prospective  merger/acquisition
candidate,  as the Company has no cash assets with which to pay such obligation.

         The Company will not restrict its search to any specific kind of firms,
but may acquire a venture  which is in its  preliminary  or  development  stage,
which is  already  in  operation  or which is in  essentially  any  stage of its
corporate  life.  It is  impossible  to  predict  at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded or may
seek other perceived advantages which the Company may offer.

         It  is  anticipated  that  the  Company  will  incur  expenses  in  the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses,  present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company. However, the only opportunity which management has to have these
loans  repaid  will be  from a  prospective  merger  or  acquisition  candidate.
Management has agreed among  themselves  that the repayment of any loans made on
behalf of the Company will not impede,  or be made conditional in any manner, on
consummation of a proposed transaction.

         The Colorado  Revised  Statutes of the Company provide that the Company
may indemnify  officers and/or directors of the Company for  liabilities,  which
can include liabilities arising under the securities laws. Therefore,  assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification.

Acquisition of Opportunities

         In implementing a structure for a particular business acquisition,  the
Company  may become a party to a merger,  consolidation,  reorganization,  joint
venture or licensing  agreement with another  corporation or entity. It may also
acquire  stock or assets  of an  existing  business.  On the  consummation  of a
transaction,  it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition,  the Company's
directors may, as part of the terms of the acquisition  transaction,  resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell  their  stock in the  Company.  Any and all such sales will only be made in
compliance  with the  securities  laws of the United  States and any  applicable
state.

         It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from  registration  under  applicable
federal  and  state  securities  laws.  In  some  circumstances,  however,  as a
negotiated element of its transaction,  the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter.  If such registration  occurs, of which there can be
no assurance,  it will be  undertaken by the surviving  entity after the Company
has  successfully  consummated  a merger or  acquisition  and the  Company is no
longer considered a "shell" company. Until such time as this occurs, the Company
will not  attempt  to  register  any  additional  securities.  The  issuance  of
substantial  additional  securities  and their  potential  sale into any trading
market  which may  develop in the  Company's  securities  may have a  depressive
effect on the value of the Company's  securities in the future, if such a market
develops, of which there is no assurance.



                                        7

<PAGE>



         While the actual terms of a  transaction  to which the Company may be a
party cannot be  predicted,  it may be expected that the parties to the business
transaction  will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free  treatment under the Code, it may be necessary for the owners of
the acquired  business to own 80% or more of the voting  stock of the  surviving
entity.  In such event,  the  shareholders of the Company would retain less than
20% of the issued and outstanding  shares of the surviving  entity,  which would
result in significant dilution in the equity of such shareholders.

         As part of the Company's  investigation,  officers and directors of the
Company will meet personally  with  management and key personnel,  may visit and
inspect  material  facilities,  obtain  independent  analysis or verification of
certain information  provided,  check references of management and key personnel
and take other reasonable investigative measures, to the extent of the Company's
limited financial  resources and management  expertise.  The manner in which the
Company  participates  in an  opportunity  will  depend  on  the  nature  of the
opportunity,  the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative  negotiation  strength of the
Company and such other management.

         With  respect to any merger or  acquisition,  negotiations  with target
company  management are expected to focus on the percentage of the Company which
target  company  shareholders  would  acquire  in  exchange  for  all  of  their
shareholdings  in the target company.  Depending upon,  among other things,  the
target company's assets and liabilities,  the Company's shareholders will in all
likelihood  hold a substantially  lesser  percentage  ownership  interest in the
Company  following any merger or  acquisition.  The percentage  ownership may be
subject to  significant  reduction  in the event the  Company  acquires a target
company  with  substantial  assets.  Any merger or  acquisition  effected by the
Company can be expected to have a significant  dilutive effect on the percentage
of shares held by the  Company's  then-shareholders.  If required to so do under
relevant  law,  management  of the Company will seek  shareholder  approval of a
proposed merger or acquisition via a Proxy Statement.

         The Company will  participate in a business  opportunity only after the
negotiation and execution of appropriate written agreements.  Although the terms
of such agreements  cannot be predicted,  generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify  certain  events of  default,  will  detail the terms of closing and the
conditions  which must be  satisfied  by each of the parties  prior to and after
such  closing,  will  outline  the  manner of  bearing  costs,  including  costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.

         The  Company  will not  acquire or merge with any entity  which  cannot
provide independent  audited financial  statements within a reasonable period of
time after closing of the proposed transaction. The Company is subject to all of
the  reporting  requirements  included in the  Exchange  Act.  Included in these
requirements is the affirmative duty of the Company to file independent  audited
financial statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as well as the
Company's  audited  financial  statements  included in its annual report on Form
10-KSB (or 10-K, as applicable).  If such audited  financial  statements are not
available  at  closing,  or within  time  parameters  necessary  to  insure  the
Company's  compliance  with the  requirements  of the  Exchange  Act,  or if the
audited financial statements provided do not conform to the representations made
by the candidate to be acquired in the closing documents,  the closing documents
will provide that the proposed  transaction will be voidable,  at the discretion
of the present management of the Company. If such

                                        8

<PAGE>



transaction is voided, the agreement will also contain a provision providing for
the  acquisition  entity to reimburse the Company for all costs  associated with
the proposed transaction.

Competition

         The Company will remain an  insignificant  participant  among the firms
which  engage  in the  acquisition  of  business  opportunities.  There are many
established  venture  capital and financial  concerns  which have  significantly
greater  financial and personnel  resources  and  technical  expertise  than the
Company. In view of the Company's combined extremely limited financial resources
and  limited  management  availability,  the  Company  will  continue to be at a
significant competitive disadvantage compared to the Company's competitors.

Certain Risks

         The Company's  business is subject to numerous risk factors,  including
the following:

     History of Operating Losses and Minimal Assets and Revenue. The Company has
had a history of operating  losses and has not had any earnings from operations.
The Company has no significant assets or financial resources.  The Company will,
in all likelihood, sustain operating expenses without corresponding revenues, at
least  until the  consummation  of a  business  combination  or  development  of
business.  This may result in the Company  incurring a net operating  loss which
will  increase   continuously  until  the  Company  can  consummate  a  business
combination with a business opportunity.  There is no assurance that the Company
can  identify  such a  business  opportunity  and  consummate  such  a  business
combination.

         Speculative Nature of Company's Proposed Operations. The success of the
Company's  proposed  plan of  operation  will  depend  to a great  extent on the
operations,  financial  condition  and  management  of any  identified  business
opportunity.  While  management  intends to seek  business  combination(s)  with
entities having established operating histories,  there can be no assurance that
the Company will be successful in locating candidates meeting such criteria.  In
the event the Company completes a business combination, of which there can be no
assurance,  the  success  of the  Company's  operations  may be  dependent  upon
management  of the  successor  firm or venture  partner firm and numerous  other
factors beyond the Company's control.

         Scarcity   of  and   Competition   for   Business   Opportunities   and
Combinations.   The  Company  is  and  will  continue  to  be  an  insignificant
participant  in the business of seeking  mergers with,  joint  ventures with and
acquisitions of small private and public entities. A large number of established
and  well-financed  entities,  including  venture  capital firms,  are active in
mergers and acquisitions of companies which may be desirable  target  candidates
for the Company.  Nearly all such entities have significantly  greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently,  the Company will be at a competitive  disadvantage in identifying
possible  business   opportunities   and  successfully   completing  a  business
combination.  Moreover,  the  Company  will also  compete in  seeking  merger or
acquisition candidates with numerous other small public companies.



                                        9

<PAGE>



         No  Agreement  for  Business  Combination  or  Other  Transaction;   No
Standards for Business Combination. The Company has no arrangement, agreement or
understanding  with respect to engaging in a merger with,  joint venture with or
acquisition of, a private or public entity except as described in the "Business"
section  preceding  this.  There can be no  assurance  that the Company  will be
successful in identifying and evaluating  suitable business  opportunities or in
concluding a business combination.  Management has not identified any particular
industry or specific  business within an industry for evaluation by the Company.
There is no  assurance  that the  Company  will be able to  negotiate a business
combination on terms favorable to the Company. The Company has not established a
specific length of operating  history or a specified level of earnings,  assets,
net worth or other criteria which it will require a target business  opportunity
to have  achieved,  and without  which the Company would not consider a business
combination in any form with such business opportunity. Accordingly, the Company
may enter into a business  combination  with a  business  opportunity  having no
significant  operating  history,  losses,  limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.

         Continued Management Control; Limited Time Availability.  While seeking
a business  combination,  management  anticipates devoting only part-time to the
business of the Company. None of the Company's current officers has entered into
a written employment agreement with the Company and none is expected to do so in
the foreseeable  future.  The Company has not obtained key man life insurance on
any  of  its  officers  or  directors.   Notwithstanding  the  combined  limited
experience  and time  commitment of  management,  loss of the services of any of
these individuals would adversely affect  development of the Company's  business
and its likelihood of continuing operations.

         Conflicts of Interest - General.  Certain of the officers and directors
of the Company are directors and/or principal  shareholders of other blank check
companies  and,  therefore,  could face  conflicts  of interest  with respect to
potential acquisitions.  In addition,  officers and directors of the Company may
in the future  participate in business ventures which could be deemed to compete
directly with the Company.  Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors  are  involved  in the  management  of any firm with which the Company
transacts  business.  The Company's Board of Directors has adopted a policy that
the Company will not seek a merger with, or acquisition  of, any entity in which
management  serve as officers  or  directors,  or in which they or their  family
members own or hold a controlling ownership interest.

         Reporting  Requirements May Delay or Preclude Acquisition.  Sections 13
and 15(d) of the  Exchange  Act  require  companies  subject  thereto to provide
certain   information  about  significant   acquisitions,   including  certified
financial statements for the company acquired, covering one, two or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target  entities  to prepare  such  statements  may
significantly  delay  or  essentially  preclude  consummation  of  an  otherwise
desirable acquisition by the Company.  Acquisition prospects that do not have or
are unable to obtain the required audited  statements may not be appropriate for
acquisition  so long  as the  reporting  requirements  of the  Exchange  Act are
applicable.



                                       10

<PAGE>



         Lack of Market  Research  or  Marketing  Organization.  The Company has
neither  conducted,  nor have others  made  available  to it,  results of market
research indicating that market demand exists for the transactions  contemplated
by the  Company.  Moreover,  the  Company  does not  have,  and does not plan to
establish, a marketing organization.  Even in the event demand is identified for
a merger or acquisition  contemplated by the Company,  there is no assurance the
Company will be successful in completing any such business combination.

         Lack of  Diversification.  The Company's proposed  operations,  even if
successful,  will in all likelihood result in the Company engaging in a business
combination with a business opportunity.  Consequently, the Company's activities
may be limited to those engaged in by the business  opportunity or opportunities
which the Company merges with or acquires.  The Company's inability to diversify
its  activities  into a number of areas may  subject  the  Company  to  economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.

         Regulation.  Although the Company will be subject to  regulation  under
the  Exchange  Act,  management  believes  the  Company  will not be  subject to
regulation under the Investment Company Act of 1940, insofar as the Company will
not be engaged in the  business of investing  or trading in  securities.  In the
event the Company engages in business  combinations  which result in the Company
holding passive investment interests in a number of entities,  the Company could
be subject to  regulation  under the  Investment  Company  Act of 1940.  In such
event,  the Company would be required to register as an  investment  company and
could be expected to incur  significant  registration and compliance  costs. The
Company has obtained no formal  determination  from the  Securities and Exchange
Commission as to the status of the Company under the  Investment  Company Act of
1940 and,  consequently,  any violation of such Act would subject the Company to
material adverse consequences.

         Probable  Change in Control  and  Management.  A  business  combination
involving  the issuance of the Company's  Common Stock will, in all  likelihood,
result in shareholders of a private company obtaining a controlling  interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's Common Stock held by them,
or resign as members of the Board of  Directors of the  Company.  The  resulting
change in control of the Company  could result in removal of one or more present
officers  and  directors  of the Company  and a  corresponding  reduction  in or
elimination of their participation in the future affairs of the Company.

         Reduction of Percentage Share Ownership Following Business Combination.
The  Company's  primary plan of  operation is based upon a business  combination
with other private companies which may, in all likelihood, result in the Company
issuing securities to shareholders of any such private company.  The issuance of
previously  authorized and unissued  shares of Common Stock of the Company would
result  in a  reduction  in the  percentage  of  shares  owned  by  present  and
prospective shareholders of the Company and may result in a change in control or
management of the Company.

         Taxation.  Federal and state tax consequences  will, in all likelihood,
be major  considerations in any business  combination the Company may undertake.
Currently,  such  transactions  may be  structured  so as to result in  tax-free
treatment  to  both  companies,  pursuant  to  various  federal  and  state  tax
provisions.  The Company intends to structure any business  combination so as to
minimize  the  federal  and state tax  consequences  to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the

                                       11

<PAGE>



statutory  requirements  of a tax-free  reorganization  or that the parties will
obtain the intended  tax-free  treatment  upon a transfer of stock or assets.  A
non-qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to the transaction.

         Requirement of Audited  Financial  Statements  May Disqualify  Business
Opportunities.  Management of the Company  believes that any potential  business
opportunity  must  provide  audited  financial  statements  for review,  for the
protection of all parties to the business  combination.  One or more  attractive
business  opportunities  may  choose to forego  the  possibility  of a  business
combination  with the Company,  rather than incur the expenses  associated  with
preparing audited financial statements.

Board of Director Changes

     Dr. Steven Gillam and Andrew Castle were  appointed as Directors in October
1998. In July 1998, Mr. Gary Botha was appointed as Director.

         Ms. Joslin Bennett, appointed as  a Director  in January 1998, resigned
         in April 1999.
         Gary Botha resigned as Director after June 30, 1999.
         David Innes resigned as Director in October, 1998.
         In July 1999 Dr. Steven Gillam resigned as Chairman and Director.
         In November  1999 Andrew  Castle  offered  his  resignation  and it was
         accepted by the Board.  In July 1999 the following  Board  appointments
         were made:

                           Mr. Francis Guy Lewis Askham as Chairman
                           Mr. Gervaise-Brazier as Chief Executive and
                           Mr. Sam Lupton as Director

         (See Management Experience for detailed management experience)

Governmental Regulations

         The Company has not been involved in any  bankruptcy,  receivership  or
similar proceeding during its existence.

Research and Development

         The Company spent $0 on research and development  activities during the
fiscal year ended June 30, 1999 and 1998.

Environmental Regulations

         Compliance  with federal,  state and local  provisions  regulating  the
discharge of materials into the environment does not have any material effect on
the on the  capital  expenditures,  earnings  and  competitive  position  of the
Company.

                                       12

<PAGE>



Employees

         As of June 30, 1999, the Company was employing only its three directors
and one other staff member, on a part-time basis.

Status of Products:                                  None

Competition:                                         None

Raw Materials:                                       None

Customer Dependence:                                 None

Patents, Trademarks, and Licenses:                   None at June 30, 1999.

Government Approval:                                 None pending.


ITEM 2.           DESCRIPTION OF PROPERTY
-----------------------------------------

(a) Properties:            None

         The Company  currently  maintains  administrative  offices and receives
mail at:

                  First Floor Southbank House, Black Prince Road, London SE1 7SJ
                  Telephone No: (44) 1481 252 701 Fax: (44) 1481  251103

(b) Investment Policies

         The Company does not invest in, have investments in real estate or real
estate  mortgages,  nor does the Company  have  securities  of or  interests  in
persons engaged in real estate activities.

(c) The Company does not own real estate.


ITEM 3.           LEGAL PROCEEDINGS
-----------------------------------

         (a)  The   Company  is  a   defendant   in  a  lawsuit   entitled   GST
Telecommunications,  Inc.  and GST Telecom,  Inc. vs. GS Telecom,  LTD, in which
plaintiffs  sought an  Injunction  and Damages for trademark  infringement.  The
Company consented to judgment and agreed to use a disclaimer: "GS Telecom LTD is
not  affiliated  in any way with GST  Telecommunications,  Inc. or GST  Telecom,
Inc." in press  releases,  advertising  or  promotional  materials.  The Company
agreed to change its name within four months after  judgment.  The Court entered
Judgment April 22, 1999. The  Plaintiffs  have since sought a Contempt  Citation
against the Company,  set for December 17, 1999,  for failing to comply with the
Court Order.  The Company  intends to attempt to change its name as soon as this
10K is filed and a Section 14c Proxy  Statement is filed,  cleared and mailed to
shareholders of the Company.



                                       13

<PAGE>



         (b) The  Company has been  notified  that it is the subject of a Formal
Investigation  by the  Securities  &  Exchange  Commission  relating  to matters
occurring  from January 1999 to date. No prediction can be made of any result or
outcome. An adverse decision or result of the investigation could be material to
the Company,  and could result in civil and criminal  penalties,  sanctions  and
fines.

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

         No matter was submitted to a vote of the Company's  shareholders during
the year ended June 30, 1999.

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------------------------

(a) Market Information

         The following  table shows the range of high and low bid  quotations of
the shares of the  Company's  common stock for the eight fiscal  quarters  ended
June 30, 1999.

         Period
Year Ended June 30, 1998                   High Bid                   Low Bid
------------------------------------------------------------------------------

First quarter                               0.00                       0.00
Second quarter                              0.00                       0.00
Third quarter                               2.00                       0.00
Fourth quarter                              2.87                       2.00

Year Ended June 30, 1999                   High Bid                   Low Bid
------------------------------------------------------------------------------

First quarter                               2.60                       1.87
Second quarter                              1.00                       0.05
Third quarter                               6.94                       0.38
Fourth quarter                              7.94                       1.25

         The  shares  are  traded  in the  over-the-counter  market.  The  above
quotations were furnished by the National  Quotation Bureau  Incorporated.  Such
quotations  represent prices between dealers and do not include retail mark-ups,
markdowns, or commissions and may not represent actual transactions.

(b) Holders

         As of June 30, 1999, the Company had  approximately 490 shareholders of
record.

(c) Dividends

         The Company has not declared  cash  dividends on its common stock since
its inception and the Company does not  anticipate  paying any cash dividends in
the foreseeable future.

                                       14

<PAGE>



ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------------------------

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

         The  following  is  management's  discussion  and  analysis  of certain
significant  factors that affected the Company's financial condition and results
of  operation  during the  periods in the  accompanying  consolidated  financial
statements.

         During the fiscal year the  business  of the Company was  significantly
altered.  At June 30, 1998 the Company had no business and no active operations.
At June 30,  1999 it is  engaged  in seeking  Internet/E-Commerce  business  and
acquiring the necessary  services and skills of  management.  In addition it has
entered into agreements to acquire IPR and software  licenses,  which were at an
incomplete stage.

Liquidity

         The  Company  had a net cash  balance of $51 at June 30,  1999,  and no
other liquid assets. Receivables amount to $3,833.

         The Company has actively  sought  operations in E-Commerce as described
above. It anticipates seeking acquisition or merger candidates in the future.

         During fiscal 1999,  three  stockholders  loaned the Company a total of
$163,642,  with  interest  accrued at 9% per annum (an unpaid total of $1,866 at
June 30, 1999).  The loans are  unsecured and payable on demand.  Since June 30,
1999 shareholders have increased their loans to the Company to $401,930.

         The Company's outstanding debt level, including for both years the Loan
Notes of $588,900 and the accrued interest thereon, increased to $2,074,823 from
$1,597,557 in the fiscal year ended June 30, 1998.

     Working capital increased from a deficit of ($ 1,577,310) at June 30, 1998,
to a deficit of ($2,050,910) at June 30, 1999.

         An offer,  was made in November  1999,  to purchase GST Limited (of the
Isle of Man) and its  subsidiaries.  Since the terms of the offer had the effect
of relieving the Company of all the UK liabilities and with the GST assets being
minimal,  the offer was accepted.  The result is that the assets and liabilities
of the UK  operations,  effective  for the 2000 fiscal  year,  will no longer be
consolidated  with those of the Company,  with the attendant  improvement in the
debt and equity  position of the Company.  The financial  effect of this sale is
that net liabilities will be reduced by  approximately  $800,000 and accumulated
deficit by the same amount.

Capital Resources

         The Company has no capital resources as of June 30, 1999 or the date of
this report.

         The  Company  has no  other  known  material  commitments  for  capital
expenditures.  Other than the need to raise  significant  funds to  develop  any
business  the  Company  has no  additional  plans,  agreements,  or  commitments
concerning any transaction, which would require the Company to use a significant
amount of capital. The Company has no sources of capital at year-end.

                                       15

<PAGE>



Results of Operations

COMPARISON OF FISCAL YEAR ENDED JUNE 30, 1999 TO YEAR ENDED JUNE 30, 1998.

         Revenues collected in the year ended June 30, 1999 was in the amount of
$0, which compared to revenues for the year ended June 30, 1998, of $65,431. The
Company had a cost of sales of $0 for year ended June 30, 1999, compared to cost
of sales of $134,645  in year ended June 30,  1998.  General and  administrative
expense for the years  ended June 30, 1999 and 1998 were $ 618,584 and  $826,397
respectively.  Total losses before  discontinued  operations  were ($670,457) in
1999 and  ($895,611) in 1998.  The net loss for the year ended June 30, 1999 was
($  670,457).  For the year  ended June 30,  1998 the net loss was  ($1,753,524)
after ($857,913) of losses from discontinued operations.

         Loss per share for year ended June 30, 1999 was ($0.01) and ($0.01) per
share,  before and after  discontinued  operations,  respectively,  compared  to
($.11) and ($0.22) per share for year ended June 30, 1998.

         The  management of the Company does not believe that  inflation has had
any  material  effect on the  Company  during the years  ended June 30, 1999 and
1998.

Year 2000 Issues

         Year 2000 problems result primarily from the inability of some computer
software to properly  store,  recall or use data after December 31, 1999.  These
problems  may affect may  computers  and other  devices  that  contain  embedded
computer chips. The Company's  operations,  however,  do not rely extensively on
information  technology ("IT") systems. The IT software and hardware systems the
Company  operates  are all  publicly  available,  pre-packaged  systems that are
readily replaceable with other functionally  similar systems.  Accordingly,  the
Company  does not  believe  that it will be  materially  affected  by Year  2000
problems in its IT software and hardware systems.

         The  Company  relies on non-IT  systems  that may suffer from Year 2000
problems  including  telephone  systems and facsimile and other office machines.
Moreover,  the Company  relies on  third-parties  that may suffer from Year 2000
problems that could affect the Company's operations, including banks, government
offices  and  utilities.   In  light  of  the  Company's  substantially  reduced
operations, the Company does not believe that such non-IT systems or third-party
Year 2000 problems will affect the Company in a manner that is different or more
substantial  than such problems  affect other  similarly  situated  companies or
industry  generally.  Consequently,  the Company  does not  currently  intend to
conduct a readiness  assessment  of Year 2000  problems or to develop a detailed
contingency  plan  with  respect  to Year  2000  problems  that may  affect  the
Company's IT and non-IT systems or third-parties.

ITEM 7.           FINANCIAL STATEMENTS
--------------------------------------

         The  response to this Item is  included  as a separate  Exhibit to this
report. Please see pages F-1 through F-13.

                                       16

<PAGE>



ITEM 8.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
--------------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

         In  connection  with  audits of two most  recent  fiscal  years and any
interim period preceding  resignation,  no  disagreements  exist with any former
accountant  on any  matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former  accountant would have caused them to
make  reference in connection  with their  reports to the subject  matter of the
disagreement(s).

         The audit  report by Oatley  Bystrom & Hansen for the years  ended June
30, 1999 and 1998,  contained an opinion which  included a paragraph  discussing
uncertainties related to continuation of the Registrant as a going concern.

         The principal  accountants' reports on the financial statements for any
of the past two years  contained no adverse  opinion or a disclaimer  of opinion
nor was  qualified as to  uncertainty,  audit scope,  or  accounting  principles
except for the "going concern" qualification specified above.

                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
-------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
--------------------------------------------------

(a)      Identification of Directors.

         The  present  term of office of each  director  will expire at the next
Annual Meeting of Shareholders. The name, position with the Company, age of each
director and the period during which each director has served are as follows:

Name and Position in the Company                      Age   Director Since

Mr. Francis Guy Lewis Askham, Chairman                68    July 29, 1999

Mr. Colin P Gervaise-Brazier, Chief Executive         56    July 29, 1999

Mr. Sam Lupton, Director                              46    July 29, 1999

Mr. Andrew Castle, Director                           47    October 1998
                                                            Resigned in November
                                                            1999

Mr. Gary Botha, Director and Secretary                58    July 1998
                                                            Resigned in October
                                                            1999

Ms Joslin Bennett                                     49    January 1998,
                                                            Resigned in April
                                                            1999

Dr Steven Gillam, Former Chairman                     46    October 1998
President and CEO                                           Resigned in July
                                                            1999

         There was no arrangement or understanding  between any director and any
other person pursuant to which any director was selected as such.

                                       17

<PAGE>



Identification of Executive Officers.

         Each  executive  officer will hold office  until his  successor is duly
elected and qualified or until his  resignation  or until he shall be removed in
the manner provided by the Company's bylaws. The Company's  executive  officers,
their ages,  position with the Company and periods during which they have served
are as follows:

Name and Position in the Company                Age    Officers Since
---------------------------------------------------------------------
Mr. Colin P Gervaise-Brazier,
Chief Executive and President                   56     July 29, 1999

Dr. Steven Gillam                               46     October 1998
(Chairman of the Board and President                   Resigned in July 1999
at June 30, 1999 but since resigned)

Andrew Castle                                   46     October 1998
(CEO at June 30, 1999 but since resigned)              Resigned in November 1999

Business Experience

         The  following  is a brief  account of the business  experience  for at
least the last five years of each director and executive  officer of the Company
at June 30, 1999:

         Mr. Francis Guy L Askham,  age 68, has been Chairman and Director of GS
Telecom since August 1999. Mr. Askham attended Hurst Pierpoint College from 1944
through 1948.  He became a Chartered  Accountant in 1954. He has been a Business
Consultant from 1982 to date. He is currently a Director and Chairman of Wilshaw
Plc and Deputy Chairman of Southampton  Leisure  Holdings Plc and  non-executive
Director of International Energy Group Ltd.

         Mr. Colin  Gervaise-Brazier,  age 56, is CEO and Director of GS Telecom
since July 1999. He attended  Elizabeth  College,  Guersey  Channel  Islands and
obtained a GCSE in 1961 in English Literature and Language and attended Vauxhall
College in Business  Management  studies.  From 1995 to 1997 he has been General
Manager  and  Sales  Manager  of Vale  Garage,  Ltd.  From 1989 to 1994 he was a
Director of OCS Bureau, Ltd. He was appointed as a Director of GS Telecom,  Ltd.
in August 1999. He is CEO of Torbay Holdings, Inc., appointed in 1999.

         Sam Lupton,  age 46, is the Secretary and Director of GS Telecom,  Ltd.
since  July  1999.  He was  educated  at  Downing  College,  Cambridge,  UK, and
graduated with an M.A. (Hous) in Natural Services. He was recruited into AT&T in
1994 from Cable & Wireless (UK). He was responsible for service  development and
profit  responsibility for all voice systems. He launched VPN (SDN) services and
brought long distance & freephone (800) services to market. Mr. Lupton left AT&T
in 1997 to become an Independent  Consultant.  As an  Independent  Consultant he
covered a number of assignments during 1997 to 1999 including: IPO and flotation
of Telecom Plus Plc on OFEX in UK;  Private  placement for Eurocall  Limited,  a
large UK  telecom  reseller;  Development  of  Speedial  in  Ireland  to provide
telecoms and added value services to residential customers.

     Dr. Steven Gillam,  age 46, became Chairman,  President,  and a Director of
the Company in October  1998.  He has been  Chairman of Jectabor  Limited  since
1987. He is founding director of North Derbyshire Doctors Limited. He has been a
practicing physician since 1979. He received

                                       18

<PAGE>



his education  with a Doctorate  from St.  George's  Hospital  Medical School in
London in 1975. He is Chairman of Manex Entertainment, Manex Visual Effects, and
Manex Studios  businesses which he co-founded since 1997. Dr. Gillam resigned as
a Director, President and Chairman in July 1999.

         D. Andrew  Castle,  age 46, became a CEO and Director of the Company in
October  1998.  He received his education at Kings College with an LLB degree in
1975.  He has been  Chief  Executive  of Manex  Group  since  1998.  He acted as
Acquisitions  Director for Grand  Heritage  Hotels Group in 1998.  He has been a
corporate  consultant to Fox Brooks  Marshall,  a Manchester U.K. law firm since
1993.  Prior to 1993,  he was a  practicing  solicitor in the U.K. He has been a
Director of Manchester  Exchange  Trust LTD since 1998, a Director of Manchester
Exchange  Investment Company since 1998, a Director of Manex Brokers,  Ltd., and
Manex  Investments and Manex  Corporate  Services since 1998. Mr. Castle offered
his resignation in November 1999, and the Board accepted it.

         Gary Botha, age 57, was appointed as a Director in July 1998. Mr. Botha
received  his  education  at Glenwood  High School and Natal  University  with a
degree in Accountancy in 1963. He became a chartered  accountant  (South Africa)
in 1965. He wass a partner with Whinney Murray & Co., Chartered Accountants (now
Ernst & Young) from 1973 to 1977.  From 1977 to 1982 he was Finance  Director of
AW Galadari (Holdings) Limited of Dubai and Singapore.  From 1983 to 1986 he was
Chief Executive Officer of Asian Real Estate Development, Inc. Since 1987 he has
been a private  business  consultant in the U.K. Mr. Botha  resigned as Director
and Secretary in October 1999.

Family  Relationships.  There are no family relationships  between the executive
officers and directors of the Company.

Involvement in Legal Proceedings.  See Item 3 - Legal Proceedings.

Compliance with Section 16(a) of the Exchange Act

         Section  16(a) of the  Securities  Exchange Act of 1934 (the  "Exchange
Act") requires that the Company's  officers and  directors,  and persons who own
more than ten percent of a registered class of the Company's equity  securities,
file  reports of  ownership  and changes in ownership  with the  Securities  and
Exchange   Commission.   Officers,   directors  and  greater  than  ten  percent
stockholders  are required by regulation to furnish to the Company copies of all
Section 16(a) forms they file.

         1. The following people did not file any reports under Section 16(a)
            during the most recent fiscal year:

                  a.  David Innes        Former President and Director (at June
                                         30, 1998)
                  b.  Gordon Bliss       Former Director resigned during year
                  c.  Joslin Bennett     Former Director resigned during year
                  d.  Marshall Kaye      Former Director resigned during year
                  e.  Andrew Castle      Director, CEO (resigned after year end)
                  f.  Gary Botha         Secretary and  Director (resigned after
                                         year end)
                  g.  Steven Gillam      President and Director (resigned after
                                         year end)

                                       19

<PAGE>



         2. For each person, listed by subparagraph letter above:

Number of late           Number of                       Known failures
reports                  transactions not reported       to file forms
                         on a timely basis

a.       3               January 1998 - 1                Forms 3, 4, and 5
b.       2               unknown                         Forms 3 and 5
c.       2               unknown                         Forms 3 and 5
d.       2               unknown                         Forms 3 and 5
e.       2               April 1, 1999, Oct. 1998        Forms 3, 4 and 5
f.       2               April 1, 1999, Oct. 1998        Forms 3 and 5
g.       2               April 1, 1999, Oct. 1998        Forms 3, 4 and 5


Conflicts of Interest

         Members of the Company's  management  are  associated  with other firms
involved in a range of business  activities.  Consequently,  there are potential
inherent  conflicts of interest in their acting as officers and directors of the
Company.  Insofar as the officers and  directors  are engaged in other  business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.

         Certain of the officers and  directors of the Company are directors and
principal  shareholders  in  other  blank  check  companies,  and  officers  and
directors  of the Company  may in the future  become  shareholders,  officers or
directors of other  companies which may be formed for the purpose of engaging in
business  activities  similar to those  conducted by the  Company.  Accordingly,
direct  conflicts  of  interest  may arise in the  future  with  respect to such
individuals  acting on behalf of the  Company or other  entities.  Conflicts  of
interest may arise with respect to opportunities  which come to the attention of
such  individuals in the  performance of their duties or otherwise.  The Company
does not  currently  have a right of first refusal  pertaining to  opportunities
that come to management's  attention insofar as such opportunities may relate to
the Company's proposed business operations.

         The  officers  and  directors  are,  so long as they  are  officers  or
directors  of the Company,  subject to the  restriction  that all  opportunities
contemplated by the Company's plan of operation  which come to their  attention,
either  in the  performance  of their  duties or in any  other  manner,  will be
considered  opportunities  of,  and be made  available  to the  Company  and the
companies  that they are  affiliated  with on an equal  basis.  A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company and the  companies  with which the  officers  and  directors  are
affiliated  both desire to take advantage of an  opportunity,  then the Board of
Directors  has agreed that said  opportunity  should be  available  to each such
company in the order in which such  companies  were formed.  All  directors  may
still individually take advantage of opportunities if the Company should decline
to do so.  Except as set forth  above,  the  Company  has not  adopted any other
conflict of interest policy with respect to such transactions.

         The Company's  Board of Directors has adopted a policy that the Company
will not seek a merger with, or acquisition  of, any entity in which any officer
or director  serves as an officer or  director or in which they or their  family
members own or hold a controlling ownership interest.

                                       20

<PAGE>



Although the Board of Directors could elect to change this policy,  the Board of
Directors has no present intention to do so.

         There can be no assurance that management will resolve all conflicts of
interest in favor of the Company.

ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

         The  Company  accrued  a  total  of  $198,232  in  compensation  to the
executive  officers  as a group for  services  rendered  to the  Company  in all
capacities  during the fiscal year ended June 30, 1999.  No cash bonuses were or
are to be paid to such persons.

         The following table sets forth for the Company's fiscal year ended June
30, 1999,  the  compensation  paid by the Company for  services  rendered in all
capacities  to the  Company  to the  persons  who at June  30,  1999,  were  the
President and the Chief  Executive  Officer of the Company.  No other  executive
officers of the Company  received salary and bonus from the Company in excess of
$100,000 during such fiscal year.

<TABLE>
<CAPTION>

                                       SUMMARY COMPENSATION TABLE OF EXECUTIVES

                                                     Annual Compensation                                  Awards


Name & Principal                Fiscal            Salary            Bonus           Other            Restricted         Securities
Position                        Year              ($)               ($)             Annual           Stock              Under-
                                                                                    Comp-            Award(s)           lying
                                                                                    ensation         ($)                Options/
                                                                                    ($)                                 SARs (#)
<S>                             <C>               <C>               <C>             <C>              <C>                <C>
Steve Gillam,                   1998              $65,135           0               0                **                 0
President                       1997              0                 0               0                0                  0
                                1996              0                 0               0                0                  0

Gary Botha,                     1998              $81,030           0               0                0                  0
Secretary                       1997              0                 0               0                0                  0
                                1996              0                 0               0                0                  0

Andrew Castle,                  1998              $52,067           0               0                **                 0
CEO                             1997              0                 0               0                0                  0
                                1996              0                 0               0                0                  0

</TABLE>

     **Restricted  common stock shares  totaling  19,360,000 each were issued on
April 1, 1999.
(See "Certain  Relationship  and Related  Transactions").  4,280,000 shares were
issued to Masstech, Inc. which is beneficially owned by Steven Gillam.

                                       21

<PAGE>



         Option/SAR Grants Table (None).

         Aggregated   Option/SAR  Exercises  in  Last  Fiscal  Year  and  FY-End
         Option/SAR value (None).

         Long Term Incentive Plans - Awards in Last Fiscal Year (None)

Stock Options

         No stock options were granted or exercised  Company's  last fiscal year
ended June 30, 1999,  and the Company has no stock options  outstanding  at June
30, 1999.

<TABLE>
<CAPTION>

            DIRECTOR COMPENSATION FOR FISCAL YEAR ENDED JUNE 30, 1999

(Except for  compensation of Officers who are also Directors which  Compensation
is listed in Summary Compensation Table of Executives).

                                                     Cash Compensation                           Security Grants


Name                                      Annual           Meeting           Consulting          Number           Number of
                                          Retainer         Fees ($)          Fees/Other          of               Securities
                                          Fees ($)                           Fees ($)            Shares           Underlying
                                                                                                 (#)              Options/
                                                                                                                  SARs (#)
<S>                                       <C>              <C>               <C>                 <C>              <C>
a. Director, David Innes                  0                0                 0                   0                0
b. Director, Gordon Bliss                 0                0                 0                   0                0
c. Director, Joslin Bennett               0                0                 0                   0                0
d. Director, Marshall Kaye                0                0                 0                   0                0
e. Director, Gary Botha                   0                0                 0                   0                0
f. Director, Andrew Castle                0                0                 0                   0                0
g. Director, Steven Gillam                0                0                 0                   0                0

</TABLE>


                                       22

<PAGE>



ITEM 11.         SECURITY, OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------

         (a) and  (b)  Security  Ownership  of  Certain  Beneficial  Owners  and
Management.  The following  table sets forth as of June 30, 1999,  the number of
shares of the Company's no par value common stock owned by each person who owned
of  record,  or was known to own  beneficially,  more  than 5% of the  number of
shares of the  Company's  outstanding  common  stock,  sets  forth the number of
shares of the Company's  outstanding  common stock beneficially owned by each of
the  Company's  current  directors  and  officers,  and sets forth the number of
shares of the Company's common stock  beneficially owned by all of the Company's
current directors and officers as a group:

<TABLE>
<CAPTION>

                                                                       Amount and Nature
Name of Beneficial                          Position                   of Beneficial             Percent of
Owner of Common Stock                       with Company               Ownership                 Class
---------------------------------------------------------------------------------------------------------------
<S>                                         <C>                        <C>                       <C>
Dr. Steve Gillam                            Former Chairman            23,640,000                39.1%
(Appointed Oct. 1998)                       President & Director
Resigned July 1999)

Mr. Andrew Castle                           Former CEO                 19,360,000                32.2%
(Appointed Oct. 1998)                       and Director
(Resigned late 1999)

Mr. Gary Botha                              Secretary                  0                         0%
(Appointed July 1998)                       and Director
(Resigned October 1999)

Total Owned by Officers
and Directors                                                          43,000,000                71.3%

</TABLE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------------------------

         (a) and  (b)  Transactions  with  Management  and  others  and  Certain
Business Relationships.

         Certain assets  consisting of  "Intellectual  Property  Rights" and the
minority  interests in the Manex  companies  represented  to be  developing  the
intellectual  property were acquired on April 1, 1999 for issuance of a total of
43,000,000  shares of common stock issued:  19,360,000 shares each to Dr. Steven
Gillam and Andrew  Castle,  and  4,280,000  shares to Masstech,  Inc.  (which is
beneficially controlled by Dr. Steven Gillam).  Certain Escrow restrictions were
placed upon the shares conditioned.

         The  Company  paid  no  management  fees  to  any  entity  owned  by  a
stockholder/director/ officer in 1999 or 1998.

         (c) Indebtedness of Management. No director or executive officer of the
Company and no associate of any such director or executive  officer was indebted
to the Company at any time since the beginning of the Company's last fiscal year
in an amount in excess of $60,000.

                                       24

<PAGE>



         (d)  Transactions  with Promoters.  Werner  Wassler/Union  Trading were
promoters,  who issued or caused to be issued unauthorized,  unregistered shares
of stock estimated at 800,000 shares, purportedly from the Company.

         (e) A 50% interest in Associated  Power  Industries (API) was purchased
by the  wholly  owned  subsidiary  GST  Limited  of the Isle of Man.  Under  the
purchase   agreement  signed  in  June  1997,  50%  of  API  was  purchased  for
(pound)100,000  (UK)  cash and  222,626  common  shares  issued to the two other
Directors of API,  Michael  Beddingham and Robert Curley.  In the acquisition by
the Company of GST Limited in 1997,  David Innes,  then  President and Director,
was issued the following shares:
                  David Innes                                 1,057,018 shares
                  Raehill Investments                         1,286,280 shares
     Mr. Innes in 1997/8 advanced to the Company a total of  (pound)65,000  (UK)
through his own Trust, Raehill Investments.  He also sold Raehill 300,000 shares
at a price of (pound) .01 per share which reduced the advance by $3,000.

                  The  Company  agreed to issue  common  stock to the  following
consultant  companies  who arranged the  Masstech/Castle/Gillam  acquisition  as
follows:
                  Brent Trust                                 235,400 shares
                  Panacon Anstalt                             2,129,600 shares
     These   may   be   issued   as   soon   as,   and   if,   the   shares   of
Masstech/Gillam/Castle are released from Escrow.

                                       24

<PAGE>



ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------

         (a)      Lists of Exhibits Required by Item 601 of Regulation S-B

         (3.1)  Articles  of  Incorporation,   as  amended,   which  are  hereby
incorporated herein by reference to Exhibit (3.1) to the Company's Annual Report
on Form 10-K for the fiscal year June 30, 1993.

         (3.2)  Bylaws as amended  through  October 14,  1987,  which are hereby
incorporated herein by reference to Exhibit (3.2) to the Company's Annual Report
on form 10-K for the fiscal year, ended June 30, 1993.

         (b) Reports on Form 8-K. The  following  reports on Form 8-K were filed
during the fiscal year ended June 30, 1999.

                           September 30, 1998*
                           January 21, 1999*
                           May 26, 1999*
                           June 1, 1999*
                           June 11, 1999*

*Previously filed and incorporated by reference as filed with the Securities and
Exchange Commission.

         (c) Financial statements of GS Telecom Limited:

                                                                     Page
                  Reports of Independent Accountants                 F-1 and F-2
                  Balance Sheets                                     F-3
                  Statement of Operations                            F-4
                  Statements of Cash Flow                            F-5
                  Statements of Shareholders' Equity                 F-6
                  Notes to Financial Statements                      F-7



                                       25

<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

Dated:  December 3, 1999


                                           GS Telecom Limited
                                           a Colorado corporation


                                           By:/s/Gervaise Brazier
                                              ------------------------
                                              CP Gervaise-Brazier,
                                              President and CEO



                                           By:/s/S. Lupton
                                              ------------------------
                                               S Lupton - Secretary



                                           DIRECTORS:


                                           By:/s/FG Askham
                                              -------------------------
                                               Printed Name:  FG Askham


                                           By:/s/Gervaise Brazier
                                              -------------------------
                                               Printed Name: CP Gervaise-Brazier


                                           By:/s/S. Lupton
                                              -------------------------
                                               Printed Name: S Lupton







                                       26



<PAGE>

OATLEY BYSTROM & HANSEN
Greenwood Village, Colorado


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

November 15, 1999
To the Board of Directors
GS Telecom Limited
London, England

We have  audited  the  accompanying  consolidated  balance  sheet of GS  Telecom
Limited  as of  June  30,  1999,  and the  related  consolidated  statements  of
operations,  cash flows and changes in  stockholders'  equity  (deficit) for the
years then ended.  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 did not  audit  the  financial
statements  of GST  Limited,  a  wholly  owned  Isle  of Man  subsidiary,  which
financial  statements  reflect  all of the  revenues  of the  1998  consolidated
totals.  Those financial  statements were audited by other auditors whose report
has been  furnished  to us,  and in our  opinion,  insofar  as it relates to the
amounts  included  for GST  Limited  for the year ended  June 30,  1998 is based
solely on the report of the other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 accompanying  consolidated  financial statements referred to
above present fairly,  in all material  respects,  the financial  position of GS
Telecom Limited at June 30, 1999, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.

The accompanying  consolidated financial statements have been presented assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business. As discussed in Note A to the financial statements, the Company has
incurred  significant  recurring losses and has substantial  working capital and
stockholders' deficits as of June 30, 1999. At June 30, 1999, the Company had no
substantial product,  services or properties and requires significant additional
financing to satisfy its outstanding obligations and commence operations. Unless
the Company successfully obtains suitable significant additional financing there
is substantial doubt about the Company's ability to continue as a going concern.
Management's  plans in regard to these matters are also discussed in Note A. The
financial  statements  do not include any  adjustments  to reflect the  possible
future effect on the  recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may result  from the  outcome of this
uncertainty.


/s/ Oatley Bystrom & Hansen

                                      F-1

<PAGE>

STEIN RICHARDS
Chartered Accountants
London, England

REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS

15th November 1999

To the Board of Directors
GS Telecom Limited
London, England


We have  audited  the  consolidated  statements  of  operations,  cash flows and
changes in  stockholders'  equity  (deficit) of GST Limited  (Isle of Man) as of
June  30,  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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the accompanying  consolidated  financial statements referred to
above present fairly,  in all material  respects,  the results of operations and
cash flows of GST  Limited  (Isle of Man) for the year ended June 30,  1998,  in
conformity with generally accepted accounting principles.

The accompanying  consolidated financial statements have been presented assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business. As disclosed in the financial statements,  the Company discontinued
operations  as of  June  30,  1998.  At  June  30,  1998,  the  Company  had  no
substantial product, services or properties and requires significant additional
financing to satisfy its outstanding obligations and commence operations. Unless
the Company successfully obtains suitable significant additional financing there
is substantial doubt about the Company's ability to continue as a going concern.
Other  than  specific  provisions  included  in  the  accounts,   the  financial
statements do not include any  adjustments to reflect the possible future effect
on  the   recoverability   and  classification  of  assets or  the  amounts  and
classification  of  liabilities  that  may  result  from  the  outcome  of  this
uncertainty.


STEIN RICHARDS
Chartered Accountants
Registered Auditors

/s/ Stein Richards


                                      F-2

<PAGE>


GS TELECOM LIMITED
CONSOLIDATED BALANCE SHEET
June 30, 1999

ASSETS

CURRENT ASSETS

     Cash                                                             $     51
     Accounts receivable                                                 3,833
     Prepaid and other current assets                                   20,029
                                                                        ------
        Total current assets                                            23,913

PROPERTY AND EQUIPMENT, net of accumulated depreciation
     of $1,191                                                           1,191
                                                                         -----

DEPOSITS                                                                60,000

        Total assets                                                  $ 85,104
                                                                      ========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
     Convertible and demand notes payable                            $ 588,900
     Loans from shareholders                                           163,642
     Accounts payable                                                  581,227
     Payable to affiliates and related parties                         281,416
     Accrued expenses                                                  254,507
     Accrued salaries and wages                                        130,797
     Accrued interest payable                                           72,947
     Bank overdraft                                                      1,387
                                                                     ---------
        Total current liabilities                                    2,074,823
                                                                     ---------

STOCKHOLDERS' EQUITY (DEFICIT)
     Common stock, no par value; 100 million shares authorized:
        60,056,414 shares issued and outstanding, respectively       1,380,357
     Accumulated deficit                                            (3,390,634)
     Foreign currency translation adjustments                           20,558
                                                                     ---------
        Total stockholders' (deficit)                               (1,989,719)

        Total liabilities and stockholders' equity (deficit)          $ 85,104
                                                                      ========

                            See accompanying notes.

                                      F-3

<PAGE>

<TABLE>
<CAPTION>


GS TELECOM LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                               Year Ended June 30,
                                                                                        -----------------------------------

                                                                                                   1999               1998
                                                                                        ----------------   ----------------
<S>                                                                                          <C>               <C>

NET SALES                                                                                           $ -           $ 65,431

COST OF SALES                                                                                         -           (134,645)
                                                                                                -------           ---------

     Gross income (loss)                                                                              -            (69,214)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE                                                     618,584            826,397
INTEREST EXPENSE                                                                                 51,873                 -
                                                                                                -------            -------

        Loss from continuing operations                                                        (670,457)          (895,611)
                                                                                               ---------          ---------

DISCONTINUED OPERATIONS:
     Discontinued operations                                                                          -           (140,099)
     Write-off investment in unconsolidated subsidiary                                                -           (242,447)
     Write-off goodwill of consolidated subsidiaries                                                  -           (475,367)
                                                                                               --------           ---------

        Loss from discontinued operations                                                             -           (857,913)
                                                                                               --------           ---------

NET INCOME (LOSS)                                                                            $ (670,457)       $(1,753,524)
                                                                                             ===========       ============




BASIC AND DILUTIVE NET INCOME (LOSS) PER SHARE:

     (LOSS) FROM CONTINUING OPERATIONS                                                          $ (0.01)           $ (0.11)

     (LOSS) FROM DISCONTINUED OPERATIONS                                                             -               (0.11)
                                                                                                -------              ------

     NET INCOME (LOSS) PER SHARE                                                                $ (0.01)           $ (0.22)
                                                                                                ========           ========


     WEIGHTED AVERAGE SHARES OUTSTANDING                                                     50,733,983          8,124,053
                                                                                             ===========         =========
</TABLE>


                            See accompanying notes.
                                      F-4

<PAGE>

<TABLE>
<CAPTION>


GS TELECOM LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                               Year Ended June 30,
                                                                                        -----------------------------------

                                                                                                   1999               1998
                                                                                       ----------------   ----------------
<S>                                                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                                       $ (670,457)       $(1,753,524)
     Adjustments to reeconcile net income (loss) to net cash
     provided by operating activities
            Write-off investment in unconsolidated subsidiary                                         -            242,447
            Write-off goodwill of consolidated subsidiaries                                           -            475,367
            Common stock issued for services                                                          -             20,500
            Depreciation and amortization                                                         1,191             52,380
            Changes in operating assets and liabilities:
               Receivables                                                                          105             (3,938)
               Prepaid and other current assets                                                  (3,720)           (16,309)
               Accounts payable                                                                (114,292)           695,519
               Accrued liabilities                                                              434,539             23,712
               Bank overdraft                                                                         9              1,378
                                                                                               --------           ---------
        Net cash flows from (used for) operating activities                                    (352,625)          (262,468)
                                                                                               ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of equipment                                                                       (2,382)           (44,947)
     Deposit to acquire software license                                                        (60,000)                 -
     Investment in unconsolidated subsidiary                                                          -           (242,447)
     Investment in consolidated subsidiaries                                                          -           (332,800)
                                                                                                -------           ---------
        Net cash flows (used for) investing activities                                          (62,382)          (620,194)
                                                                                                --------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Shareholder loans                                                                          163,642                  -
     Issuance of common stock                                                                   243,000                  -
     Advances from (repaid to) affiliates and related parties                                    (6,632)           288,048
     Issuance of convertible and other notes payable                                                  -            588,900
                                                                                                -------            -------
        Net cash flows (used for) from financing activities                                     400,010            876,948
                                                                                                --------           -------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                          15,048              5,510
                                                                                                -------             ------

NET INCREASE (DECREASE) IN CASH                                                                      51               (204)

CASH AT BEGINNING OF YEAR                                                                            -                204
                                                                                                -------              -----

CASH AT PERIOD END OF YEAR                                                                         $ 51                $ -
                                                                                                  =====               ===


SUPPLEMENTAL DISCLOSURES:
     Net interest paid                                                                              $ -           $ 24,119
     Non-cash investing and financing activities:
        Note payable issued stockholders of acquired subsidiary                                       -            150,000

</TABLE>


                            See accompanying notes.

                                      F-5

<PAGE>

<TABLE>
<CAPTION>


GS TELECOM LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)


                                                                              Common Stock                     Accumulated
                                                                 -------------------------------------  ----------------------
                                                                      Shares             Amount                    Deficit
                                                                 ------------------ ------------------  -------------------
<S>                                                                    <C>               <C>                    <C>
Balances at June 30, 1997                                                  278,220           $966,857            $(966,653)

     Conversion of note payable issued to
          stockholders of acquired subsidiary                           14,500,000            150,000                    -

     Issuance of fractional shares from fiscal
          1997 reverse stock split                                             194                  -                    -

     Stock issued for services                                           2,050,000             20,500                    -

     Net (loss)                                                                 -                  -            (1,753,524)
                                                                        ----------            -------           -----------

Balances at June 30, 1998                                               16,828,414          1,137,357           (2,720,177)

     Stock issued to acquire intellectual property
          and related software rights                                   43,000,000                  -                    -

     Stock issued for cash                                                 228,000            243,000                    -

     Net (loss)                                                                 -                  -              (670,457)
                                                                                --                 --             ---------

Balances at June 30, 1999                                              60,056,414        $ 1,380,357          $ (3,390,634)

                                                                       ===========       ============         =============
</TABLE>


                             See accompanying notes

                                      F-6

<PAGE>

         GS Telecom Limited
         Notes to Consolidated Financial Statements


         Note A - Organization and Business
         Organization and Nature of Business
         -----------------------------------
         GS Telecom  Limited (the  "Company")  was  incorporated  in Colorado on
         December    19,    1983.    The   Company   is   engaged   in   seeking
         internet/electronic  commerce  business  and  acquiring  the  necessary
         services and skills of  management  (see Going  Concern  Considerations
         below).

         September  16, 1998,  the Company  entered into an agreement to acquire
         Masstech, Inc., a Delaware corporation.  Subsequently the agreement was
         modified  to  provide for the  purchase of Masstech's purportedly owned
         software  and  intangible  property  rights  ("IPR")  and the  minority
         interests of two of Masstech's principals in four special  effects film
         studios  that  purporedly  develop the  technology  for a  total of  43
         million shares. In addition, if gross revenues from the IPR and/or  the
         share of profits received attain or surpass $14,000,000 cumulatively by
         June 30, 2001, then 12 million additional shares shall be issued to the
         sellers.   It is management's  assessment that  substantial development
         funding and  time  is  required in  order to  develop commercially  the
         acquired technology  and rights.  Also, there  are  certain significant
         outstanding legal  issues  with respect  to access and title to the IPR
         and software. Accordingly, the cost of the assets acquired has not been
         recorded in  the accompanying financial statements.

         Discontinued Operations
         -----------------------
         November 15, 1997,  the Company  acquired an Isle of Man company;  also
         named GS Telecom  Limited  (later changed to GST Limited - "GST" - also
         see Note E). GST has two U.K. wholly owned subsidiaries: Guardian Smart
         Systems Limited ("GSS") and Total Energy Controls  (Commercial) Limited
         ("TECC").  GSS' business is the design and marketing of domestic energy
         savings and home  management  systems and TECC's  business is to market
         and install  commercial energy saving devices.  Mainly due to a lack of
         working  capital,  neither GSS nor TECC was successful,  and Management
         elected,   effective   June  30,  1998,  to   discontinue   operations.
         Accordingly,  in  fiscal  1998,  the  Company  adopted  a  plan  to pay
         obligations  owed employees and others,  resulting in an estimated loss
         from  discontinued  operations of $140,099,  and expensed  un-amortized
         goodwill totaling  $475,367.  During fiscal 1999 these  subsidiaries as
         well as GST had no operations and the Company is presently  undertaking
         efforts to divest the entities.

         The assets of the GST subsidiary  previously  included Associated Power
         Industries  Limited ("API"), a U.K. designer and manufacturer of energy
         savings systems.  During fiscal 1998,  Management  elected to write-off
         its  investment  in API,  $242,447,  as a  result  of  API's  continued
         operating losses.

         Going Concern Considerations
         ----------------------------
         The accompanying financial  statements have been prepared assuming  the
         Company  will  continue  as a going  concern,  which  contemplates  the
         realization  of assets and  satisfaction  of  liabilities in the normal
         course of  business.  The Company has  incurred  significant  recurring
         losses and has substantial  working capital and stockholders'  deficits
         as of June 30, 1999.


                                      F-7

<PAGE>

         GS Telecom Limited
         Notes to Consolidated Financial Statements

         At June 30, 1999, the Company had no substantial  product,  services or
         properties  and requires  significant  additional  financing to satisfy
         outstanding obligations and to commence operations.  Management's plans
         to address these matters include private placements of stock, obtaining
         short-term  loans, and seeking suitable joint venture  relationships in
         technology and e-commerce fields of business.

         Unless the Company successfully obtains suitable significant additional
         financing  there is  substantial  doubt about the Company's  ability to
         continue as a going  concern.  The financial  statements do not include
         any   adjustments  to  reflect  the  possible   future  effect  on  the
         recoverability   and  classification  of  assets  or  the  amounts  and
         classification  of liabilities that may result from the outcome of this
         uncertainty.

         Note B - Summary of Significant Accounting Policies

         Principles of Consolidation
         ---------------------------
         The financial  statements  include the accounts of GS  Telecom Limited,
         GST Limited, Guardian Smart Systems Limited and Total  Energy  Controls
         (Commercial)  Limited. All significant  inter-company  transactions and
         balances have been eliminated.

         Use of Estimates
         ----------------
         Preparation of  financial  statements  in  conformity  with   generally
         accepted accounting principles requires management  to  make  estimates
         and assumptions  that affect the  amounts  reported  in  the  financial
         statements and accompanying notes.  Significant areas requiring the use
         of  management   estimates   are  accrual  of  costs  of   discontinued
         operations,  assessment  of  realization  of goodwill and  investments,
         useful asset lives for depreciation and amortization,  and valuation of
         stock issued for services and  deferred tax  benefits.  Actual  results
         inevitably will differ from those  estimates,  and such differences may
         be material to the financial statements.

         Foreign Currency
         ----------------
         The financial  statements of the Company's  non-U.S.  subsidiaries  are
         translated  into U.S.  dollars using  current  rates of exchange,  with
         gains or  losses  included  in the  cumulative  translation  adjustment
         account in the stockholders' equity section of the consolidated balance
         sheet.  Revenues,  costs and expenses denominated in foreign functional
         currencies are translated at the weighted average exchange rate for the
         period.  Gains and  losses on  currency  transactions  (denominated  in
         currencies  other  than  the  local  currency)  are  reflected  in  the
         statement of consolidated operations.

         Revenue Recognition
         -------------------
         Sales are recognized when products are shipped or services rendered.


                                      F-8

<PAGE>


         GS Telecom Limited
         Notes to Consolidated Financial Statements

         Property and Equipment
         ----------------------
         Property and  equipment  are recorded at cost.  Maintenance  and repair
         costs are charged to expense as incurred, and renewals and improvements
         that extend the useful life of assets are capitalized.  Depreciation is
         computed  using the  straight-line  method over the  assets'  estimated
         useful lives as follows:
                                    Equipment                 4  years
                                    Office equipment          4  years

         Depreciation  expense  recorded  in fiscal 1999 and 1998 was $1,191 and
         none, respectively.

         Goodwill
         --------
         Goodwill  arose  from  the  acquisition  of  GST  in  fiscal  1998  for
         assumption  of net  liabilities  totaling  $332,800  and  issuance of a
         $150,000  convertible  note payable to  stockholders of the subsidiary.
         Prior to June 30, 1998, goodwill was being amortized over 40 years on a
         straight-line  basis.  As of  June  30,  1998,  Management  elected  to
         discontinue  the  operations  of GST, and  accordingly,  write-off  the
         $475,367 unamortized cost of the goodwill.

         Income Taxes
         ------------
         The Company  has  adopted the  provisions  of  Statement  of  Financial
         Accounting  Standards  No. 109,  "Accounting  for Income  Taxes," which
         incorporates the use of the asset and liability  approach of accounting
         for  income  taxes.  The  asset and  liability  approach  requires  the
         recognition  of deferred  tax assets and  liabilities  for the expected
         future  consequences  of temporary  differences  between the  financial
         reporting basis and tax basis of assets and liabilities (see Note D).

         Statement of Cash Flows Information and Supplemental Non-Cash Financing
         Activities  Cash  and cash  equivalents  include  cash  and  short-term
         investments with original maturities of three months or less.

         Basic Earnings (Loss) Per Share
         -------------------------------
         Basic earnings (loss) per share of common stock are  computed using the
         weighted  average  number of shares  outstanding  during  each  period.
         Diluted  earnings  per share are  computed  on the basis of the average
         number  of  common  shares  outstanding  plus the  dilutive  effect  of
         convertible notes payable.

         The basic and the  dilutive  earnings  per share are the same in fiscal
         1999 and 1998 since the Company had net losses and the inclusion of the
         effect of the convertible notes would be anti-dilutive.


                                      F-9

<PAGE>

         GS Telecom Limited
         Notes to Consolidated Financial Statements


         Concentrations
         --------------
         Substantially all activities of  the Company were conducted in the U.K.
         in fiscal 1999 and 1998.

         Note C - Notes Payable and Loans from Stockholders and Former Directors

         Unsecured   9%   notes   payable   to  an
         individual  dated  February  19, 1998 and
         March  31,   1998,   payable  on  demand.
         (See Note F.)                                                  $212,400

         8% convertible  notes payable  issued
         November 20, 1997, due September 30, 2000.
         These notes are classified as a current liability
         because the Company has an outstanding
         dispute with the note holders (see Note F).                     376,500
                                                                        --------
                                                                        $588,900
                                                                        ========

         The  convertible  note  holders have the option to convert the original
         principal  amount of the notes (a total of $376,500)  into common stock
         at the lower of $2 per share or 75% of the average closing bid price of
         the stock for trading  five days prior  exercise.  Notwithstanding  the
         foregoing,  if, after the effectiveness of a registration  statement or
         if an exemption is available from  registration,  the closing bid price
         of the common stock reaches $4 per share for five  consecutive  trading
         days, the Company has the option to require  conversion of up to 50% of
         the  original  principal,  and if the closing bid price  reaches $8 per
         share, the Company has the option of requiring conversion of all of the
         original principal.

         During fiscal 1999,  three  stockholders  loaned the Company a total of
         $161,776,  with  interest  accrued at 9% per annum (an unpaid  total of
         $1,866 at June 30,  1999).  The  loans are  unsecured  and  payable  on
         demand.  During fiscal 1998,  three former  directors  and/or  officers
         loaned the GST  Limited,  Isle of Man  subsidiary  a total of $288,048.
         These  unsecured  advances are  non-interest  bearing and due on demand
         ($1,968 repaid in fiscal 1999).

         Note D - Income Taxes

         As of June 30, 1999 the  accumulated  net operating  loss  carryforward
         that may be  offset  against  future  taxable  income,  if any,  totals
         approximately  $814,000.  The  loss  carryforward  expires  in  varying
         amounts from 2003 through 2019.

         A tax  benefit  has not been  reported  in the  accompanying  financial
         statements for the operating loss  carryforward  because the Company is
         uncertain  as  to  the  likelihood  of  utilization.  Accordingly,  the
         approximate tax benefit of $122,000 of the loss  carryforward  has been
         offset by a  valuation  allowance  of the same  amount,  an increase of
         $99,500 in fiscal 1999.

                                      F-10


<PAGE>

         GS Telecom Limited
         Notes to Consolidated Financial Statements


         Note E - Stockholders' Equity

         Conversion of Note Payable
         --------------------------
         On  November  15,  1997,  the  Company  acquired  GST by  issuance of a
         $150,000  convertible note payable to GST  stockholders.  On January 6,
         1998, the $150,000 note payable was converted into 14,500,000 shares of
         common stock (approximately $.01 per share).

         Stock Issued for Services
         -------------------------
         On February 10, 1998,  the Company  issued  2,050,000  shares of common
         stock to three  individuals  (two of whom are holders of notes  payable
         from the  Company) for services  related to the  reorganization  of the
         Company.  The value of the services were estimated at $20,500 ($.01 per
         share).

         Convertible Notes Payable
         -------------------------
         (See Note C.)

         Stock Issued for Software and Property Rights
         ---------------------------------------------
         In 1999, the Company purchased software and intangible  property rights
         ("IPR") and the interests in four special effects film studios that use
         the technology for a total of 43 million  shares.  As there are certain
         significant  outstanding issues with respect to access and title to the
         IPR and software,  the Company is unable to estimate  their  associated
         value,  if any.  Accordingly,  the cost of the assets  acquired has not
         been recorded in the accompanying financial statements.

         Stock Issued for Cash
         ---------------------
         During  fiscal  1999,  a total of 228,000  shares of common  stock were
         issued to  investors  in  private  placements  for a total of  $243,000
         (prices per ranged from $.50 to $1.10).

         Note F - Commitments and Contingencies

         Commitments
         -----------
         The Company leases its present office on a month-to month basis at $850
         per month.  Rental expense for offices and related facilities in fiscal
         1999 and 1998 was $11,963 and $25,171, respectively.

         Contingencies
         -------------
         On April 19, 1999, the United States Securities and Exchange Commission
         issued a formal private  investigation as to whether the Company issued
         securities in violation of registration  requirements  and issued press
         releases  containing  materially false  information.  Presently,  it is
         uncertain  whether  any  action  will be filed,  the  grounds  for said
         action,  or the  potential  consequences  thereof.  In the  event  of a
         successfully prosecuted SEC action,  the Company could suffer civil and
         criminal  sanctions  and substantial fines  as well  as  other remedies
         including  injunctive  action against further  violation of  securities
         laws and rules.

         During  fiscal  1999,  the  Company  and  holders of  $588,900 in notes
         payable became involved in a dispute.  The Company has charged the note


                                      F-11

<PAGE>

         GS Telecom Limited
         Notes to Consolidated Financial Statements


         holders with  non-performance in providing  promised funding.  The note
         holders have threatened legal  proceedings for recovery of amounts due,
         but the parties are continuing settlement discussions.  At present, the
         outcome of the dispute cannot be predicted,  but the Company intends to
         defend its rights  vigorously.  These notes are classified as a current
         liability because of the outstanding dispute.

         During fiscal 1999, prior to the installation of the Company's  present
         management,  certain certificates  purported to represent approximately
         800,000 shares of the Company's  stock  were invalidly  distributed  by
         third  parties.  The Company  is  presently  considering  legal  action
         against the individuals responsible for the unauthorized distribution.

         The   Company   is   a   defendant   in   a   lawsuit    entitled   GST
         Telecommunications,  Inc. and GST Telecom,  Inc. vs. GS Telecom LTD, in
         which  plaintiffs  are seeking an injunction  and damages for trademark
         infringement  and name  infringement.  On April 22,  1999,  the Company
         consented to a judgment in Federal  District Court in San Francisco and
         agreed to use a  disclaimer:  "GS Telecom LTD is not  affiliated in any
         way with GST  Telecommunications,  Inc. or GST Telecom,  Inc." in press
         releases, advertising or promotional materials. The Company also agreed
         to change its name within four months after  judgment.  The  plaintiffs
         have since  sought a contempt  citation  against the  Company,  set for
         hearing on  December  17,  1999,  for  failing to comply with the court
         order.  The  Company  intends  to change its name as soon as its Annual
         Report  on Form  10-KSB  and a  Proxy  Statement  are  filed  with  the
         Securities and Exchange  Commission and mailed to  shareholders  of the
         Company.

         Note G - Fair Value of Financial Instruments

         The carrying  amounts for  accounts  receivable,  accounts  payable and
         accrued  expenses  approximates  fair value  because of the  short-term
         maturities  of  these  instruments.  The fair  value  of notes  payable
         approximates  fair value  because of the market rate of interest on the
         debt.

         The  determinations  of fair value  discussed  above are  subjective in
         nature and involve  uncertainties and significant  matters of judgement
         and do not include income tax  considerations.  Therefore,  the results
         cannot be  determined  with  precision and cannot be  substantiated  by
         comparison  to  independent  market  values and may not be  realized in
         actual sale or settlement of the instruments.

         Note H - Events Subsequent to June 30, 1999 (Unaudited)

         On October  15,  1999,  the Company  acquired  exclusive  European  and
         non-exclusive   World  wide  licensing  rights  to  an  Asset  Transfer
         Teleminute  Manager,  Universal  Prepaid card (ATTM card) to be used in
         electronic commerce and other commercial transactions.  The term of the
         agreement is for five years, with renewal options annually  thereafter.


                                      F-12

<PAGE>


         During fiscal 1999, the Company paid a deposit of $60,000 to secure the
         license.  In  addition,  the  agreement  calls for the  issuance of 3.5
         million  shares of common stock to the  licensor,  and that the Company
         guarantees it a minimum monthly royalty of $80,000.

         On August 23,  1999,  the Board of Directors  approved a resolution  to
         issue a total of 2.25 million  shares to two  directors  and one former
         director for services.

         On August 30, 1999, the Board of Directors passed a resolution to issue
         2.365 million shares to a firm of financial advisors for services.

         In August and October 1999,  the Company sold a total of 293,000 shares
         for $57,677.

         From June 30,  1999  through  September  30,  1999,  shareholder  loans
         increased from $163,642 to $401,930.


                                      F-13