<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


(Mark One)

/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1999
                               ----------------

                                       OR

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from          to
                                ------       ------

                          Commission file number 0-9728
                                                 -------

                           GST EQUIPMENT FUNDING, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as Specified in its Charter)

          Delaware                                                    91-1785734
---------------------------------                   ----------------------------
(State or Other Jurisdiction                        (IRS Employer Identification
of Incorporation or Organization)                    Number)


    4001 Main Street, Vancouver, WA                                       98663
----------------------------------------                              ---------
(Address of Principal Executive Offices)                              (Zip Code)

Registrant's Telephone Number, Including Area Code: (360) 356-7100

                                       N/A
--------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last 
Report)

                  THE REGISTRANT MEETS THE CONDITIONS SET FORTH
               IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q
                 AND IS THEREFORE FILING THIS FORM 10-Q WITH THE
                 REDUCED DISCLOSURE FORMAT CONTEMPLATED THEREBY

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

<PAGE>

     Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date: At May 12, 1999, 
there were outstanding 100 shares of common stock, $.01 par value per share, 
of the Registrant.


<PAGE>

                           GST EQUIPMENT FUNDING, INC.


                                      INDEX

<TABLE>
<CAPTION>
                                                                               PAGE(S)
                                                                               -------
<S>                                                                            <C>

                           PART I: FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS:

         Balance Sheets - March 31, 1999 and December 31, 1998                       2

         Statements of Operations
         - Three Months Ended March 31, 1999 and 1998                                3

         Statements of Cash Flows
         - Three Months Ended March 31, 1999 and 1998                                4

         Notes to Financial Statements                                               5

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS (REDUCED DISCLOSURE
         NARRATIVE)                                                                  5-6

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  6


                           PART II: OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                            6


SIGNATURES                                                                           7

</TABLE>

                                      -1-
<PAGE>

                              GST EQUIPMENT FUNDING, INC.

                                    BALANCE SHEETS

                         (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                     MARCH 31,        DECEMBER 31,
                    ASSETS                             1999               1998
                                                  ----------------   ----------------
<S>                                               <C>                <C>
Current assets:
   Cash...................................        $         306      $          --
   Restricted investments.................               33,272             32,759
                                                  ----------------   ----------------

                                                         33,578             32,759
                                                  ----------------   ----------------

Restricted investments....................               17,516             17,244
Notes receivable from parent..............              194,228            194,228
Interest receivable from parent...........               12,217              4,812
Deferred financing costs, net.............                7,942              8,187
                                                  ----------------   ----------------

                                                        231,903            224,471
                                                  ----------------   ----------------

                                                  $     265,481      $     257,230
                                                  ----------------   ----------------
                                                  ----------------   ----------------

     LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
   Accrued interest payable                              14,630              5,852
   Other payable to parent                                1,344              1,037
                                                  ----------------   ----------------

                                                         15,974              6,889
                                                  ----------------   ----------------

Long-term debt............................              265,000            265,000

Shareholder's deficit:
   Common stock:
     Authorized - 1,000 of $.01 par
       common shares; issued and
       outstanding - 100 shares...........                   --                 --
   Additional paid-in capital.............                1,000              1,000
   Accumulated deficit....................              (16,493)           (15,659)
                                                  ----------------   ----------------

                                                        (15,493)           (14,659)
                                                  ----------------   ----------------

                                                  $     265,481      $     257,230
                                                  ----------------   ----------------
                                                  ----------------   ----------------
</TABLE>

(1)  The information in this column was derived from audited financial 
     statements as of December 31, 1998.


See accompanying notes to financial statements.

                                      -2-
<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                            Statements of Operations

                                 (In thousands)

<TABLE>
<CAPTION>
                                                             THREE MONTHS
                                                            ENDED MARCH 31,
                                                   ----------------------------------
                                                       1999               1998
                                                  ----------------   ----------------
<S>                                               <C>                <C>
Revenues:
   Interest income........................        $       8,189      $       6,413
                                                  ----------------   ----------------

           Total revenues.................                8,189              6,413

Operating costs and expenses:
   Interest expense.......................                9,023              9,034
                                                  ----------------   ----------------

           Loss before income taxes.......                 (834)            (2,621)
                                                  ----------------   ----------------

Income tax expense (benefit):
   Current................................                   --                 --
   Deferred...............................                   --                 --
                                                  ----------------   ----------------

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

           Net loss.......................        $        (834)     $      (2,621)
                                                  ----------------   ----------------
                                                  ----------------   ----------------
</TABLE>


See accompanying notes to financial statements.

                                      -3-
<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                            Statements of Cash Flows

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                  ENDED MARCH 31,
                                                       -----------------------------------
                                                            1999               1998
                                                       ----------------   ----------------
<S>                                                    <C>                <C>
Operations:
   Net loss..........................................  $        (834)     $      (2,621)
   Items not involving cash:
     Amortization of deferred financing costs........            245                256
   Changes in non-cash operating working capital:
     Interest receivable from parent.................         (7,405)            (4,372)
     Accrued interest payable........................          8,778              8,778
     Other payable to parent.........................            307                708
                                                       ----------------   ----------------

         Cash provided by operations.................          1,091              2,749
                                                       ----------------   ----------------

Investing:
   Change in investments restricted for
     fixed asset purchases...........................             --              8,011
   Notes receivable from parent......................             --            (11,279)
                                                       ----------------   ----------------

         Cash (used in) investing activities.........             --             (3,268)
                                                       ----------------   ----------------

Financing:
   Change in investments restricted for interest
     payments........................................           (785)             1,242
   Deferred debt financing costs.....................             --               (180)
                                                       ----------------   ----------------

           Cash (used in) provided by 
              financing activities...................           (785)             1,062
                                                       ----------------   ----------------

           Increase in cash..........................            306                543

Cash, beginning of period............................             --                373
                                                       ----------------   ----------------

Cash, end of period..................................  $         306      $         916
                                                       ----------------   ----------------
                                                       ----------------   ----------------

</TABLE>


See accompanying notes to financial statements.

                                      -4-
<PAGE>


                           GST EQUIPMENT FUNDING, INC.

                          Notes to Financial Statements

                                   (Unaudited)



1.  BASIS OF PRESENTATION

     The accompanying financial statements of GST Equipment Funding, Inc. 
     ("GST Funding") have been prepared in conformity with generally accepted 
     accounting principles. However, certain information or footnote 
     disclosures normally included in financial statements prepared in 
     accordance with generally accepted accounting principles have been 
     condensed, or omitted, pursuant to the rules and regulations of the 
     Securities and Exchange Commission. In the opinion of management, the 
     statements include all adjustments necessary (which are of a normal and 
     recurring nature) for the fair presentation of the results of the 
     interim periods presented. The results of operations for the periods 
     presented are not necessarily indicative of the results to be expected 
     for the full fiscal year or for subsequent periods. These financial 
     statements should be read in conjunction with the GST Funding's audited 
     financial statements for the year ended December 31, 1998, as included 
     in GST Funding's Report on Form 10-K for the year ended December 31, 
     1998.

2.  NET INCOME (LOSS) PER SHARE AND SHAREHOLDER'S EQUITY

     GST Funding does not have equity instruments that are considered common 
     stock equivalents, and, as weighted average common shares total only 100 
     for the periods presented, all of which are owned by GST USA, Inc. ("GST 
     USA"), income (loss) per share data is meaningless and is not presented 
     in the accompanying condensed financial statements.

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     GST Funding was formed on March 5, 1997 for the purpose of issuing 
$265.0 million in 13.25% Senior Secured Notes (the "Secured Notes") and 
financing the purchase of telecommunications equipment. GST Funding acts as 
purchasing agent for GST USA and sells to GST USA the equipment it purchases 
with the proceeds from the Secured Notes Offering. GST Funding has only a 
limited operating history.

     As of March 31, 1999, GST Funding had purchased approximately $194.2 
million of equipment and held restricted investments of approximately $50.8 
million restricted for the payment of interest. All of such equipment has 
been sold to GST USA in exchange for intercompany notes. Ultimately, such 
equipment is leased by GST USA to the various operating subsidiaries of GST.

OPERATIONS

     The operations of GST Funding are limited to (i) purchasing equipment, 
(ii) selling equipment, (iii) receiving payments under intercompany notes, 
(iv) making payments of interest and principal on the Secured Notes, and (v) 
fulfilling its obligations under the indenture relating to the 


                                      -5-
<PAGE>

Secured Notes, the pledge agreement relating to the security interest in the 
Secured Notes and the registration rights agreement relating to the Secured 
Notes. GST Funding satisfied its obligations under such registration rights 
agreement in November 1997, upon the consummation of an exchange offer for 
the Secured Notes.

LIQUIDITY AND CAPITAL RESOURCES

     GST, GST USA, GST Network Funding, Inc. and GST Funding (collectively, 
the "GST Companies") are parties to certain indentures and have issued or 
guaranteed notes governed by those indentures. In November 1998, the GST 
Companies notified United States Trust Company of New York, as trustee under 
the indentures, that certain actions by GST and its subsidiaries may not have 
been in compliance with the technical requirements of certain restrictive 
covenants contained in the indentures. In particular, the GST Companies 
disclosed that a series of transactions involving Global may have resulted in 
technical non-compliances with the indentures. The GST Companies are 
currently conducting a review of the relevant transactions and intends to 
vigorously pursue any necessary action to cure the potential non-compliances. 
GST has initiated litigation against Global and others in an effort to cure 
any technical covenant violations that may have resulted from the 
transactions involving Global.

     In February 1999, the trustee informed the note holders of the potential 
violations. Pursuant to the definitions contained within the indentures of 
each of the notes described above, no default has been declared and no event 
of default has occurred. GST Funding has not classified the related debt 
obligations as current in its consolidated financial statements because 
management believes it is probable that, in the event that the holders 
declared a default, GST Funding would be able to take corrective actions to 
cure any objectively determinable violations within the prescribed grace 
period.

     While GST Funding believes that any non-compliances can be cured, GST 
Funding cannot offer any assurance that the litigation will be successful or 
that any other potential cures will be effected in a timely manner or be 
sufficient. In the event that the GST Companies have violated its indentures 
and does not cure the violations, the holders of the notes issued under the 
indentures could demand repayment of the notes, discontinue disbursements of 
cash proceeds of the most recent notes and assert other remedies against the 
GST Companies. If any of these events occurred, the GST Companies would not 
have sufficient liquid assets to repay the notes.

     Other discussion of Liquidity and Capital Resources is omitted pursuant 
to "General Instruction H(1)(a) and (b) of Form 10-Q."

ITEM 3:  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE MARKET RISK

      GST Funding has fixed income investments consisting of cash equivalents 
and short-term investments in U.S. government debt instruments.

      Interest income earned on GST Funding's investment portfolio is 
affected by changes in the general level of U.S. interest rates. GST Funding 
believes that it is not exposed to significant changes in fair value because 
such investments are composed of Government debt instruments and the 
maturities are predominantly short term. The fair value of each investment 
approximates amortized cost, and long term securities have maturities of 
fifteen months or less.

      GST Funding does not use derivative financial instruments to manage its 
interest rates. GST Funding's long-term debt had a book value of $265,000 and a 
market value of $276,263 at March 31, 1999.

                       PART II: OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)  Exhibits

                  Exhibit 27    Financial Data Schedule

           (b)  Reports on Form 8-K

                  None.

                                      -6-
<PAGE>

                               SIGNATURES


    Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf of the 
undersigned thereunto duly authorized.



Date: MAY 17, 1999             GST EQUIPMENT FUNDING, INC.
      ------------                 (Registrant)





                               /s/ Daniel L. Trampush
                               ------------------------------------------------
                               Daniel L. Trampush,
                               (Senior Vice President and Chief Financial 
                               Officer)


                                      -7-