<Page>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                  FORM 10-QSB

(MARK ONE)

<Table>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

<Table>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER 0-13313

                            ------------------------

                               GS TELECOM LIMITED

       (Exact name of small business issuer as specified in its charter)

<Table>
<S>                                          <C>
            COLORADO                                    36-3296861
 (State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                     Identification No.)
</Table>

             14-16 Regent Street, London, SWIY 4PH, United Kingdom
                    (Address of principal executive offices)

                              +44-(0) 870-710-6390
                          (Issuer's telephone number)

   (Former name, former address and former fiscal year, if changed since last
                                    report)

                            ------------------------

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

    Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.

Yes / /  No /X/

                      APPLICABLE ONLY TO CORPORATE ISSUERS

    State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of July 23, 2001:
42,683,036 shares of Common Stock, no par value.

    Transitional Small Business Disclosure Format (check
one):  Yes / /  No /X/

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<Page>
                                     PART I
                             FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

    The financial statements for the Company's fiscal quarter ended March 31,
2001 are attached to this Report, commencing at page F-1.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
  OPERATIONS

    Except for historical information, the material contained in this
Management's Discussion and Analysis or Plan of Operation is forward-looking.
For the purposes of the safe harbor protection for forward-looking statements
provided by the Private Securities Litigation Reform Act of 1995, readers are
urged to review the list of certain important factors set forth in "Cautionary
Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995" contained in the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2000 ("Fiscal 2000"), which may
cause actual results to differ materially from those described. These risks and
uncertainties include the limited revenues and significant operating losses
generated to date and the possibility of significant ongoing capital
requirements. For the purposes of the safe harbor protection for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995,
readers are urged to review the list of certain important factors set forth in
"Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995".

    For purposes of the discussion contained herein, all information is reported
on a consolidated basis for the Company and its wholly-owned subsidiaries.

    The report of the Company's independent accountants, BDO Stoy Hayward, on
the Company's financial statements for the fiscal year ended June 30, 2000,
includes a statement that the Company has incurred significant recurring losses
and has a substantial accumulated deficit as of the end of its fiscal year. The
auditors have stated that there is a substantial doubt about the ability of the
Company to continue as a going concern. There can be no assurances that the
Company will be able to generate any revenues or will be able to continue as a
going concern.

    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. Between 1998 and 1999, the Company engaged in
a series of transactions to acquire certain intellectual property rights and
E-commerce businesses. These strategic relationships and acquisitions have
provided the Company with a technology in secure Internet payment systems. While
the Company will seek to acquire additional businesses in E-commerce, there can
be no assurance that the Company will be successful in locating such
opportunities, or having sufficient financing to complete such acquisitions, and
even if the Company completes any such acquisition of an additional E-commerce
business, there can be no assurance that such business will be profitable.

    Since February 1999, the operations of the Company have been focused on
acquiring and developing businesses and technologies in E-commerce. These
businesses and technologies are inherently risky, and there can be no assurance
that any of these businesses will be commercialized successfully, or if so
commercialized, will be profitable.

                                       2
<Page>
RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 2001

    REVENUES.  In the fiscal quarter ended March 31, 2001 (the "Current
Quarter"), the Company had $4,718 in revenues from operations. The Company had
no revenues from operations in the fiscal quarter ended March 31, 2000 (the
"Comparable Quarter").

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  For the Current Quarter, the
Company incurred an aggregate of $1,140,066 (including $1,113,133 of non cash
items) in selling, general and administrative expenses, versus $275,416 for the
Comparable Quarter, as the Company incurred salaries, professional fees and
other expenses in effecting an internal restructuring and in seeking
acquisitions in the E-commerce field.

    NET LOSS AND LOSS PER SHARE.  Net loss was ($1,483,211) for the Current
Quarter, versus ($309,492) for the Comparable Quarter. Loss per share for the
Current Quarter was ($0.04) based on weighted average shares outstanding of
39,965,032, as compared to a loss per share of $0.01 based on weighted average
shares outstanding of 45,376,535 for the Comparable Quarter.

NINE MONTHS ENDED MARCH 31, 2001

    REVENUES.  In the nine months ended March 31, 2001 (the "Current Period"),
the Company had $4,718 in revenues from operations. The Company had no revenues
in the nine months ended March 31, 2000 (the "Comparable Period").

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  For the Current Period, the
Company incurred an aggregate of $3,796,825 in selling, general and
administrative expenses (including $3,529,175 of non cash items), versus
$639,828 for the Comparable Period, as the Company incurred salaries,
professional expenses and other expenses in effecting an internal restructuring
and in seeking acquisitions in the E-commerce field.

    NET LOSS AND LOSS PER SHARE.  Net loss was ($4,823,259) for the Current
Period, versus earnings of $178,719 for the Comparable Period (including income
from discontinued operations). Loss per share for the Current Period was ($0.12)
based on weighted average shares outstanding of 39,059,033, as compared to an
earnings per share of $0.00 based on weighted average shares outstanding of
47,444,871 for the Comparable Period.

LIQUIDITY AND CAPITAL RESOURCES

    WORKING CAPITAL.  At March 31, 2001, the Company had $428,828 in current
assets versus $3,023,856 in current assets at June 30, 2000. The decrease in
current assets was attributable to the expenses incurred by the Company for
salaries, professional fees and other expenses in effecting an internal
restructuring and in seeking acquisitions in the E-commerce field. In the
current quarter the Company issued 4,077,000 shares of common stock to generate
additional working capital. At March 31, 2001, cash and cash equivalents
amounted to $400,000 held in escrow; at June 30, 2000, the Company had cash and
cash equivalents of $444,700, with $400,000 held in escrow. The cash held in
escrow will be released when the Company's shares become free-trading.

    STOCKHOLDERS' EQUITY.  The Company's stockholders' equity at March 31, 2001
was $847,832, including an accumulated deficit of ($12,109,763). At June 30,
2000, the Company's stockholders' equity was $5,490,057, including an
accumulated deficit of ($7,286,504).

    The Company will require additional working capital in the next twelve
months and thereafter to implement its business strategies, including cash for
(i) payment of increased operating expenses such as salaries for additional
employees; and (ii) further implementation of business strategies. Such

                                       3
<Page>
additional capital may be raised through additional public or private financing,
as well as borrowings and other resources. To the extent that additional capital
is raised through the sale of equity or equity-related securities, the issuance
of such securities could result in dilution to the Company's stockholders. No
assurance can be given, however, that the Company will have access to the
capital markets in the future, or that financing will be available on acceptable
terms to satisfy the Company's cash requirements to implement its business
strategies. If the Company is unable to access the capital markets or obtain
acceptable financing, its results of operations and financial conditions could
be materially and adversely affected. The Company may be required to raise
substantial additional funds through other means. If adequate funds are not
available to the Company, it may be required to curtail operations significantly
or to obtain funds through entering into arrangements with collaborative
partners or others that may require us to relinquish rights to certain of its
technologies or product candidates that the Company would not otherwise
relinquish.

    SUBSEQUENT EVENTS.  In June 2001, the Company made the decision to cease
providing funds to its wholly owned subsidiary, Snowstorm Developments Ltd.
Snowstorm has been unable to generate sufficient revenue to warrant continued
operations, since its two major distribution contracts have been non-performing.
The creditors of Snowstorm voted to liquidate Snowstorm at a meeting held on
July 6, 2001. There is no formal plan for the liquidation. This will lead to a
write-off of the intercompany account amounting to $478,658 and a significant
impairment charge being recorded against acquired technology.

                                       4
<Page>
                                    PART II

ITEM 1. LEGAL PROCEEDINGS

    (a) The Company is a defendant in a lawsuit entitled GST
       TELECOMMUNICATIONS, INC. AND GST TELECOM, INC. VS. GS TELECOM, LTD. The
       plaintiffs filed suit in the United States District Court, Northern
       District of California seeking injunctive relief 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. While the Company has identified an alternative name, the
       Company has not yet taken any corporate action to effect the name change.

    (b) 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. While the Company
       believes that it has meritorious defenses to any such claims, it is
       cooperating fully with the investigation. Currently, it is uncertain
       whether any action will be filed, or if such action is filed, what the
       basis for such action will be. 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. Such consequence would
       have a material adverse effect on the business and financial condition of
       the Company.

    (c) The Company learned in May 1999 that certificates allegedly representing
       shares of its common stock were issued improperly, having not been
       authorized by the Company's transfer agent nor approved properly by the
       Company's Board of Directors. The Company has determined that all such
       certificates are invalid and has so notified the Securities and Exchange
       Commission, Depository Trust Corporation, and the Company's 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. The
       Company has placed a stop transfer on such shares and is pursuing its
       remedies against the perpetrators of this scheme. The Company is actively
       pursuing appropriate legal action against such perpetrators in relation
       to misrepresentations and the unauthorized distribution of stock.

    (d) In April 2001 the Company and one of the Company's directors, John
       Mitchell, were named as parties to a lawsuit brought by Payment Resources
       International ("PRI"). PRI is seeking to recover payments made by Global
       Payment Systems, Ltd., to the Company on the basis of PRI's claims
       against Global Payment Systems, Ltd. The Company and Mr. Mitchell believe
       such claims are without merit, and are pursuing such defenses vigorously.

ITEM 2. CHANGES IN SECURITIES

    (a) None.

    (b) None.

    (c) In March 2001, the Company issued and sold to a limited number of
       investors an aggregate of 4,077,000 shares of Common Stock for a purchase
       price of $0.05 per share. The shares were sold without registration under
       the Securities Act of 1933, as amended (the "Securities Act") pursuant to
       an exemption from registration under Section 4(2) of the Securities Act.

    (d) None.

                                       5
<Page>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

    None.

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

    None.

ITEM 5. OTHER INFORMATIONS

    None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits

    (b) Reports on Form 8-K

    None.

                                       6
<Page>
                      GS TELECOM LIMITED AND SUBSIDIARIES
             INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                 AS OF AND FOR THE QUARTER ENDED MARCH 31, 2001

<Table>
<S>                                                           <C>
Consolidated Balance Sheets as of March 31, 2001 (Unaudited)
  and June 30, 2000 (Audited)...............................    F-2

Consolidated Statements of Operations for the three months
  ended March 31, 2001 and 2000 (Unaudited) and for the nine
  months ended March 31, 2001 and 2000 (Unaudited)..........    F-3

Consolidated Statements of Comprehensive Income for the nine
  months ended March 31, 2001 and 2000 (Unaudited)..........    F-4

Consolidated Statements of Cash Flows for the nine months
  ended March 31, 2001 and 2000 (Unaudited).................    F-5

Notes to Consolidated Financial Statements..................    F-6
</Table>

                                      F-1
<Page>
                     GS TELECOM LIMITED [AND SUBSIDIARIES]

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              MARCH 31, 2001   JUNE 30, 2000
                                                              --------------   -------------
                                                               (UNAUDITED)       (AUDITED)
<S>                                                           <C>              <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................   $        --      $    44,700
Cash held in escrow.........................................       400,000          400,000
Accounts receivable, net of allowance for doubtful accounts
  of $Nil and $Nil, respectively............................         4,718            5,005
Other current assets........................................        14,400               --
Prepaid expenses............................................         9,710        2,574,151
                                                               -----------      -----------
TOTAL CURRENT ASSETS........................................   $   428,828      $ 3,023,856
NON CURRENT ASSETS:
Acquired technology, net of accumulated amortization of
  $1,104,854 and $297,647, respectively.....................   $ 2,123,961      $ 2,931,168
License rights, net of accumulated amortization of $285,984
  and $138,911, respectively................................       694,516          841,589
Property and equipment, net of accumulated depreciation of
  $14,058 and $3,604, respectively..........................        29,602           24,680
                                                               -----------      -----------
TOTAL NON CURRENT ASSETS....................................   $ 2,848,079      $ 3,797,437
                                                               -----------      -----------
TOTAL ASSETS................................................   $ 3,276,907      $ 6,821,293
                                                               ===========      ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdrafts.............................................   $     9,576      $        --
Convertible notes payable...................................       208,500          208,500
Demand notes payable........................................       212,400          212,400
Loan from shareholders......................................       216,030          227,266
Accounts payable............................................       529,546          155,554
Amounts due to shareholder..................................       716,359               --
Accrued expenses............................................       185,104          228,219
Accrued salaries and wages..................................       162,461          171,460
Accrued interest payable....................................       189,099          127,837
                                                               -----------      -----------
TOTAL CURRENT LIABILITIES...................................   $ 2,429,075      $ 1,331,236
                                                               -----------      -----------
STOCKHOLDERS' EQUITY:
Common stock (no par value) 42,683,036 and 38,606,036 shares
  issued and outstanding, respectively......................   $        --      $        --
Additional paid-in capital..................................    12,974,903       12,771,053
Stock subscriptions receivable..............................       (42,785)              --
Cumulative foreign currency translation adjustment..........        25,477            5,508
Accumulated deficit.........................................   (12,109,763)      (7,286,504)
                                                               -----------      -----------
TOTAL STOCKHOLDERS' EQUITY..................................   $   847,832      $ 5,490,057
                                                               -----------      -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................   $ 3,276,907      $ 6,821,293
                                                               ===========      ===========
</Table>

          See accompanying notes to consolidated financial statements

                                      F-2
<Page>
                      GS TELECOM LIMITED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                 THREE MONTHS ENDED           NINE MONTHS ENDED
                                              -------------------------   -------------------------
                                               MARCH 31,     MARCH 31,     MARCH 31,     MARCH 31,
                                                 2001          2000          2001          2000
                                              -----------   -----------   -----------   -----------
                                              (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
<S>                                           <C>           <C>           <C>           <C>
Sales, net..................................  $     4,718   $       --    $     4,718   $       --
Cost of sales...............................           --           --             --           --
                                              -----------   ----------    -----------   ----------
GROSS PROFIT................................        4,718           --          4,718           --
Selling, general and administrative
  expenses..................................  $(1,140,066)  $ (275,416)    (3,796,825)    (639,828)
Depreciation and amortization...............     (327,198)     (12,255)      (964,734)     (22,641)
                                              -----------   ----------    -----------   ----------
      TOTAL OPERATING EXPENSES..............   (1,467,264)    (287,671)    (4,761,559)    (662,469)
                                              -----------   ----------    -----------   ----------
Loss from operations........................   (1,462,546)    (287,671)    (4,756,841)    (662,469)
Net interest expense........................      (20,665)     (21,821)       (66,418)     (66,928)
Net (loss) from continuing operations.......   (1,483,211)    (309,492)    (4,823,259)    (729,397)
                                              -----------   ----------    -----------   ----------
Income from discontinued operations.........           --           --             --      908,116
      NET (LOSS) INCOME.....................  $(1,483,211)  $ (309,492)   $(4,823,259)  $  178,719
                                              ===========   ==========    ===========   ==========
Net loss per common share: basic and diluted
  From continuing operations................  $     (0.04)  $    (0.01)   $     (0.12)  $    (0.02)
  From discontinued operations..............  $     (0.00)  $    (0.00)   $     (0.00)  $    (0.02)
                                              -----------   ----------    -----------   ----------
                                              $     (0.04)  $    (0.01)   $     (0.12)  $    (0.00)
                                              ===========   ==========    ===========   ==========
Weighted average shares outstanding, basic
  and diluted...............................   39,965,032   45,376,535*    39,059,033   47,444,871*
                                              ===========   ==========    ===========   ==========
</Table>

------------------------

*   21,500,000 and 16,500,000 shares were rescinded on October 21, 1999 and
    April 27, 2000 respectively.

          See accompanying notes to consolidated financial statements

                                      F-3
<Page>
                      GS TELECOM LIMITED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<Table>
<Caption>
                                                                  NINE MONTHS ENDED
                                                              -------------------------
                                                               MARCH 31,     MARCH 31,
                                                                 2001          2000
                                                              -----------   -----------
                                                              (UNAUDITED)   (UNAUDITED)
<S>                                                           <C>           <C>
Net (loss)/income...........................................  $(4,823,259)   $ 178,719

OTHER COMPREHENSIVE INCOME

Currency translation adjustment.............................       19,969           --
                                                              -----------    ---------

Comprehensive (loss)/income for the period..................  $(4,803,290)   $ 178,719
                                                              ===========    =========
</Table>

          See accompanying notes to consolidated financial statements

                                      F-4
<Page>
                      GS TELECOM LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW

<Table>
<Caption>
                                                                  NINE MONTHS ENDED
                                                              -------------------------
                                                               MARCH 31,     MARCH 31,
                                                                 2001          2000
                                                              -----------   -----------
                                                              (UNAUDITED)   (UNAUDITED)
<S>                                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income...........................................  $(4,823,259)   $ 178,719
Adjustments to reconcile net (loss)/income to net cash used
  in operating activities:
Depreciation and amortization...............................      964,734       22,641
Common stock issued for services............................           --      179,018

CHANGES IN OPERATING ASSETS AND LIABILITIES:

Increase in cash held in escrow.............................           --     (422,349)
Decrease in accounts receivable.............................          287        3,833
Increase in other current assets............................      (14,400)          --
Decrease/(increase) in prepaid expenses.....................    2,564,441      (15,529)
Increase/(decrease) in accounts payable.....................      373,992     (541,292)
Decrease in accrued expenses................................      (43,115)    (149,259)
Decrease in accrued salaries................................       (8,999)     (48,577)
Increase in accrued interest................................       61,262       46,995

Increase/(decrease) in bank overdraft.......................        9,576       (1,387)
                                                              -----------    ---------

NET CASH USED IN OPERATING ACTIVITIES.......................     (915,481)    (747,187)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets....................................      (15,377)      (5,002)
                                                              -----------    ---------

NET CASH USED IN INVESTING ACTIVITIES.......................      (15,377)      (5,002)
                                                              -----------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of common stock....................................      161,065      829,780
Advance from shareholder....................................      716,359           --
Repayment of shareholder loans..............................      (11,236)     (34,086)
                                                              -----------    ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES...................      866,188      795,694
                                                              -----------    ---------

Effect of changes in exchange rates on cash.................       19,970      (20,558)
Decrease in cash and cash equivalents.......................      (44,700)      22,947
                                                              -----------    ---------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..............       44,700           51
                                                              -----------    ---------

CASH AND CASH EQUIVALENT, END OF PERIOD.....................  $        --    $  22,998
                                                              ===========    =========
</Table>

          See accompanying notes to consolidated financial statements

                                      F-5
<Page>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.  BASIS OF PRESENTATION

    NATURE OF REPORT.  The consolidated balance sheet at the end of the
preceding fiscal year has been derived from the audited consolidated balance
sheet contained in the Company's Annual Report on Form 10-KSB, on file with the
Securities and Exchange Commission, and is presented for comparative purposes.
All other financial statements are unaudited. In the opinion of management, all
adjustments, which include only normal recurring adjustments necessary to
present fairly the financial position, results of operations and changes in cash
flows, for all periods presented, have been made. The results of operations for
interim periods are not necessarily indicative of the operating results for the
full year.

    FOOTNOTES.  Certain footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with the published rules and regulations of the
Securities and Exchange Commission. These consolidated financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB, on file with the
Securities and Exchange Commission.

    ESTIMATES AND UNCERTAINTIES.  The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates. Estimates relate primarily to recoverability
of the Company's tangible and intangible assets.

    PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

    ACQUIRED TECHNOLOGY.  Acquired technology is the difference between the
value of the consideration paid and the value of the assets and liabilities
acquired. It is amortized through the statement of operations over a period of
three years, which is management's best estimate of its beneficial economic
life.

2.  CONTINGENCIES

    On April 19, 1999, the United States Securities and Exchange Commission
commenced a formal private investigation as to whether the Company issued
securities in violation of registration requirements and issued press releases
containing materially false information. While the Company believes it has
meritorious defenses to any such claims, it is co-operating fully with the
investigation. 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. Such consequences
would have a material adverse effect on the Company.

    During fiscal 1999, the Company and holders of $420,900 in notes payable
became involved in a dispute. The Company has 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. At present, the outcome of the dispute cannot be

                                      F-6
<Page>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (Unaudited) (Continued)

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 purporting to represent approximately 800,000
shares of the Company's common stock were invalidly distributed by third
parties. The Company has placed a stop transfer on such shares and is pursuing
remedies against the perpetrators of the scheme.

    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 judgement 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 judgement. The
court entered judgement on April 22, 1999. While the Company has identified an
alternative name, it has not yet taken any corporate action to effect such name
change.

    In April 2001 the Company and one of the Company's directors, John Mitchell,
were named as parties to a lawsuit brought by Payment Resources International
("PRI"). PRI is seeking to recover payments made by Global Payment
Systems, Ltd., to the Company on the basis of PRI's claims against Global
Payment Systems, Ltd. The Company and Mr. Mitchell believe such claims are
without merit, and are pursuing such defenses vigorously.

3.  SUBSEQUENT EVENTS.

    In June 2001, the Company made the decision to cease providing funds to its
wholly owned subsidiary, Snowstorm Developments Ltd. Snowstorm has been unable
to generate sufficient revenue to warrant continued operations, since its two
major distribution contracts have been non-performing.   The creditors of
Snowstorm voted to liquidate Snowstorm at a meeting held on July 6, 2001. There
is no formal plan for the liquidation. This will lead to a write-off of the
inter-company account amounting to $478,658 and a significant impairment charge
being recorded against acquired technology.

                                      F-7
<Page>
                                   SIGNATURE

    In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

<Table>
<S>                                                    <C>  <C>
                                                       GS TELECOM LIMITED.

                                                       By:  /s/ JOHN MITCHELL
                                                            -----------------------------------------
                                                            John Mitchell
                                                            Chief Executive Officer

                                                       By:  /s/ F.G.L. ASKHAM
                                                            -----------------------------------------
                                                            F.G.L. Askham
                                                            Chief Financial Officer
</Table>

Date: August 2, 2001