<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
X         EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1999.

          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 of             (IRS Employer Identification Number)
 incorporation or organization)

                  4001 Main Street, Vancouver, Washington 98663

               (Address of Principal Executive Offices) (Zip Code)

       Registrant's telephone number, including area code: (360) 356-7100

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

  THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(A)

      AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE
                 REDUCED DISCLOSURE FORMAT CONTEMPLATED THEREBY.

<PAGE>

         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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  X
                             ---

         Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: At March 27, 2000,
there were outstanding 100 shares of the Registrant's common stock, $.01 par
value per share.

<PAGE>

                            TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                               <C>
PART I   Item 1.   Business.........................................................  2
         Item 2.   Properties.......................................................  2
         Item 3.   Legal Proceedings................................................  2
PART II  Item 5.   Market for Registrant's Common Equity and
                   Related Stockholder Matters......................................  2
         Item 7.   Management's Discussion and Analysis
                   of Financial Condition and Results of Operations.................  3
         Item 7A.  Quantitative and Qualitative Disclosures about
                   Market Risk......................................................  3
         Item 8.   Financial Statements and Supplementary Data......................  4
         Item 9.   Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure..............................  4
PART IV  Item 14.  Exhibits, Financial Statement Schedules, and
                   Reports on Form 8-K..............................................  4

SIGNATURES..........................................................................  6

INDEX TO FINANCIAL STATEMENTS.......................................................  F-1

</TABLE>


<PAGE>

ITEM 1.   BUSINESS.

OVERVIEW

         GST Equipment Funding, Inc. ("GST Funding") is a special purpose
finance subsidiary of GST Telecommunications, Inc ("GST"). GST Funding was
formed to issue its 13 1/4% Senior Secured Notes due 2007 (the "Secured
Notes") that were sold in a private placement in May 1997 (the "Secured Notes
Offering") and to purchase equipment with the proceeds of the Secured Notes
Offering. GST Funding acts as a purchasing agent for GST USA, Inc. ("GST
USA"), a wholly owned subsidiary of GST and the parent of GST Funding, and
sells to GST USA the equipment it purchases. Ultimately, such equipment is
leased to the operating subsidiaries of GST by GST USA. Of the $255.8 million
of net proceeds from the issuance of the Secured Notes, as of December 31,
1999 approximately $93.8 million had been used to purchase securities pledged
to fund the first six interest payments on the Secured Notes ($86.6 million
of which was used to make the first five interest payments in November 1997,
May and November 1998 and May and November 1999) and approximately $194.2
million had been used to purchase telecommunications equipment ($41.5 million
of which was used to refinance intercompany indebtedness).

         GST is a facilities-based integrated communications provider, or ICP,
offering voice, data and Internet services throughout the western United States.
By providing service over its own network facilities, it is able to lower and
control its costs while also developing flexible products to meet the needs of
both small and large business customers. Its current products include data
transport, high-speed Internet access, voice services, including a bundled
offering of local and long distance services, and wholesale services, including
dark fiber and conduit rights.

ITEM 2.  PROPERTIES.

         GST Funding neither owns nor leases material properties.

ITEM 3.  LEGAL PROCEEDINGS.

         There are no material legal proceedings to which GST Funding is a
         party. GST Funding knows of no threatened or pending material legal
         action against it.

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY
         AND RELATED STOCKHOLDER MATTERS.

         There is no established public trading market for GST Funding's common
         equity. All of the issued

                                      -2-

<PAGE>

         and outstanding shares of such common equity are owned by GST USA.

ITEM 7.  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
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 December 31, 1999, GST Funding had purchased approximately $168.4
million of equipment and held restricted investments of approximately $17.2
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 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.

ITEM 7A. 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 short-term. The fair value of each investment approximates amortized cost,
and long-term securities have maturities of less than twelve months.

                                      -3-

<PAGE>

         GST Funding does not use derivative financial instruments to manage
its interest rates. GST Funding's long-term debt had a book value of $265.0
million at both December 31, 1999 and 1998 and a market value of $262.4
million and $273.9 million at December 31, 1999 and 1998, respectively.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE.

         Not applicable.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

         AND REPORTS ON FORM 8-K.

(a)(1)   Financial Statements:  see the Index to Financial Statements.

         Exhibits:
   *3(a) Certificate of Incorporation of GST Funding.
   *3(b) By-Laws of GST Funding.
   *4(a) Indenture dated as of May 13, 1997, by and among GST Funding, GST, GST
         USA and United States Trust Company of New York.
*10(a)   Collateral Pledge and Security Agreement dated as of May 13, 1997, by
         and among GST Funding, United States Trust Company of New York and the
         holders of the Notes as defined therein.
**27     Financial Data Schedule.

                                      -4-

<PAGE>

*        Incorporated by reference to GST Funding's Registration Statement on
         Form S-4 (No. 333-33601).
**       Filed herewith.

(b)      Reports on Form 8-K:  None.

                                      -5-

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Vancouver, State of Washington, on the 30th day of March, 2000.

                                                     GST EQUIPMENT FUNDING, INC.

                                                     By: /s/ Robert A. Ferchat
                                                        ------------------------
                                                         Robert A. Ferchat,
                                                         Chairman of the Board

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert A. Ferchat and Thomas M. Malone
his true and lawful attorney-in-fact, each acting alone, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments to this report, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact or their substitutes, each acting
alone, may lawfully do or cause to be done by virtue thereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been duly signed by the following persons in the
capacities on March 30, 2000.

<TABLE>
<CAPTION>

       SIGNATURE                                                     TITLE
<S>                                                    <C>
/s/ Robert A. Ferchat                                  Chairman of the Board and Director
-----------------------------------------
           (Robert A. Ferchat)

/s/ Thomas M. Malone                                   Acting President and Chief Executive Officer (Principal
-----------------------------------------
           (Thomas M. Malone)                          Executive Officer) and Director

/s/ George B. Cobbe                                    Director
-----------------------------------------
            (George B. Cobbe)

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

</TABLE>


                                     -6-

<PAGE>


                           GST EQUIPMENT FUNDING, INC.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                                   PAGE
<S>                                                                                                                <C>
Independent Auditors' Report.......................................................................................F - 2

Balance Sheets at December 31, 1999 and 1998.......................................................................F - 3

Statements of Operations
     for the years ended December 31, 1999 and 1998, the three-month period
     ended December 31, 1997 and the period from March 5, 1997 (date of
     inception) to September 30, 1997..............................................................................F - 4

Statements of Shareholder's Deficit for the years ended December 31,
     1999 and 1998, the three-month period ended December 31, 1997 and the
     period from March 5, 1997 (date of inception)
     to September 30, 1997.........................................................................................F - 5

Statements of Cash Flows
     for the years ended December 31, 1999 and 1998, the three-month period
     ended December 31, 1997 and the period from March 5, 1997 (date of
     inception) to September 30, 1997..............................................................................F - 6

Notes to Financial Statements......................................................................................F - 7

</TABLE>

                                      F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder
GST Equipment Funding, Inc.:

We have audited the accompanying balance sheets of GST Equipment Funding,
Inc. as of December 31, 1999 and 1998 and the related statements of
operations, shareholder's deficit, and cash flows for each of the years in
the two-year period ended December 31, 1999, the three-month period ended
December 31, 1997 and for the period from March 5, 1997 (date of inception)
to September 30, 1997. 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 conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GST Equipment Funding, Inc.
as of December 31, 1999 and 1998, and the results of its operations and cash
flows for each of the years in the two-year period ended December 31, 1999,
the three-month period ended December 31, 1997 and for the period from March
5, 1997 (date of inception) to September 30, 1997, in conformity with
accounting principles generally accepted in the United States of America.


                                   /s/ KPMG LLP

Portland, Oregon
March 17, 2000

<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                                 Balance Sheets

                      (In thousands, except share amounts)

<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,
                                                                                 -----------------------------------------
                                   Assets                                               1999                  1998
                                                                                 -------------------   -------------------
<S>                                                                              <C>                   <C>
Current assets--
     Restricted investments; current                                              $          17,192     $          32,759

Restricted investments                                                                         --                  17,244
Notes receivable from parent                                                                223,806               194,228
Interest receivable from parent                                                               5,715                 4,812
Deferred financing costs, net                                                                 7,210                 8,187
                                                                                 -------------------   -------------------
                 Total assets                                                     $         253,923     $         257,230
                                                                                 ===================   ===================
                    LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
     Accrued interest payable                                                     $           5,852     $           5,852
     Other payable to parent                                                                   --                   1,037
                                                                                 -------------------   -------------------
                                                                                              5,852                 6,889
                                                                                 -------------------   -------------------
Long-term debt
Shareholder's deficit:                                                                      265,000               265,000
     Common shares:
        1,000 shares authorized, 100 shares issued and outstanding,
           $.01 par common shares                                                             --                     --
        Additional paid-in capital                                                           17,713                36,000
        Note receivable from parent                                                         (16,713)              (35,000)
        Accumulated deficit                                                                 (17,929)              (15,659)
                                                                                 -------------------   -------------------
                                                                                            (16,929)              (14,659)
                                                                                 -------------------   -------------------
                 Total liabilities and shareholder's deficit                      $         253,923     $         257,230
                                                                                 ===================   ===================

</TABLE>

See accompanying notes to financial statements.

                                      F-3

<PAGE>
                           GST EQUIPMENT FUNDING, INC.

                            Statements of Operations

                                 (In thousands)

<TABLE>
<CAPTION>


                                                                                                                   PERIOD FROM
                                                                                                                  MARCH 5, 1997
                                                                                            THREE-MONTH             (DATE OF
                                                     YEARS ENDED DECEMBER 31,               PERIOD ENDED          INCEPTION) TO
                                             -----------------------------------------      DECEMBER 31,          SEPTEMBER 30,
                                                    1999                  1998                  1997                  1997
                                             -------------------   -------------------   -------------------   --------------------
<S>                                          <C>                   <C>                   <C>                   <C>
Revenues:
     Interest income                         $           33,821    $           28,979    $            6,059    $             8,248
                                             -------------------   -------------------   -------------------   --------------------
                 Total revenues                          33,821                28,979                 6,059                  8,248
                                             -------------------   -------------------   -------------------   --------------------
Operating costs and expenses:
     Interest expense                                    36,091                36,102                 9,019                 13,824
                                             -------------------   -------------------   -------------------   --------------------
                 Loss before income taxes                (2,270)               (7,123)               (2,960)                (5,576)
                                             -------------------   -------------------   -------------------   --------------------
Income tax expense (benefit):
     Current                                             --                     --                   (2,680)                 2,680
     Deferred                                            --                     --                     --                      --
                                             -------------------   -------------------   -------------------   --------------------
                                                         --                    --                    (2,680)                 2,680
                                             -------------------   -------------------   -------------------   --------------------
                 Net loss                    $           (2,270)   $           (7,123)   $             (280)   $            (8,256)
                                             ===================   ===================   ===================   ====================

</TABLE>

See accompanying notes to financial statements.

                                      F-4

<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                       Statements of Shareholder's Deficit

                      (In thousands, except share amounts)

<TABLE>
<CAPTION>

                                                                                NOTE
                                       COMMON SHARES          ADDITIONAL      RECEIVABLE                         TOTAL
                                 -------------------------      PAID-IN         FROM          ACCUMULATED    SHAREHOLDER'S
                                    SHARES        AMOUNT        CAPITAL        PARENT           DEFICIT         DEFICIT
                                 -----------   -----------   -------------  -------------    --------------  -------------
<S>                              <C>           <C>           <C>            <C>              <C>             <C>
Balances, at date of inception         100        $  --         $      1     $       --         $    --       $       1
Capital investment by parent            --           --           35,999        (35,000)             --             999
Net loss                                --           --             --               --            (8,256)       (8,256)
                                 -----------   -----------   -------------  -------------    --------------  -------------
Balances, September 30, 1997           100           --           36,000        (35,000)           (8,256)       (7,256)
Net loss                                --           --             --               --              (280)         (280)
                                 -----------   -----------   -------------  -------------    --------------  -------------
Balances, December 31, 1997            100           --           36,000        (35,000)           (8,536)       (7,536)
Net loss                                --           --             --               --            (7,123)       (7,123)
                                 -----------   -----------   -------------  -------------    --------------  -------------
Balances, December 31, 1998            100           --           36,000        (35,000)          (15,659)      (14,659)
Forgiveness of note
  receivable from parent                --           --          (18,287)        18,287                --            --
Net loss                                --           --             --               --            (2,270)       (2,270)
                                 -----------   -----------   -------------  -------------    --------------  -------------
Balances, December 31, 1999            100        $  --         $ 17,713     $  (16,713)        $ (17,929)    $  (16,929)
                                 ===========   ===========   =============  =============    ==============  =============

</TABLE>

See accompanying notes to financial statements.

                                      F-5

<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                            Statements of Cash Flows

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                                       PERIOD FROM
                                                                                                                      MARCH 5, 1997
                                                                                                     THREE-MONTH        (DATE OF
                                                                                                     PERIOD ENDED    INCEPTION) TO
                                                                         YEARS ENDED DECEMBER 31,    DECEMBER 31,    SEPTEMBER 30,
                                                                 ----------------------------------
                                                                        1999              1998           1997            1997
                                                                 ----------------   --------------- ------------- -----------------
<S>                                                              <C>                <C>             <C>           <C>
Operations:
     Net loss                                                       $     (2,270)      $   (7,123)   $     (280)      $     (8,256)
     Adjustments to reconcile net loss to net cash (used
        in) provided by operations:
           Amortization of deferred financing costs                          977              989           241                364
           Changes in non-cash operating working capital:
              Interest receivable from parent                               (903)          (2,142)          985             (3,655)
              Accrued interest payable                                     --                --          (7,608)            13,460
              Accrued income taxes payable to parent                       --                --          (2,680)             2,680
              Other payable to parent                                     (1,037)            (223)         (645)             1,905
                                                                 ----------------   --------------- -------------- -----------------
                    Cash (used in) provided by operations                 (3,233)          (8,499)       (9,987)            6,498
                                                                 ----------------   --------------- -------------- -----------------
Investments:
     Change in investments restricted for the
        purchase of property and equipment                                 --              62,484        12,217           (74,701)
     Notes receivable from parent                                        (29,578)         (85,064)      (17,890)          (91,274)
                                                                 ----------------   --------------- -------------- -----------------
                    Cash used in investing activities                    (29,578)         (22,580)       (5,673)         (165,975)
                                                                 ----------------   --------------- -------------- -----------------
Financing:
     Proceeds from long-term debt                                          --                --            --            265,000
     Change in investments restricted to finance interest
        payments                                                          32,811           30,888        15,083          (95,974)
     Deferred debt financing costs                                         --                (182)          (53)          (9,546)
     Proceeds from investment by parent                                    --                --            --              1,000
                                                                 ----------------   --------------- -------------- -----------------
                    Cash provided by financing activities                 32,811           30,706         15,030         160,480
                                                                 ----------------   --------------- -------------- -----------------
                    Increase (decrease) in cash and cash
                        equivalents                                        --               (373)           (630)          1,003

Cash and cash equivalents, beginning of period                             --                373           1,003            --
                                                                 ----------------   --------------- -------------- -----------------
Cash and cash equivalents, end of period                            $      --     $          --      $       373   $       1,003
                                                                 ================   =============== ============== =================
Supplemental disclosure of cash flow information:
     Cash paid for interest                                         $     35,113     $       35,113  $    16,386   $        --

</TABLE>

See accompanying notes to financial statements.

                                      F-6

<PAGE>

                           GST EQUIPMENT FUNDING, INC.

                          Notes to Financial Statements

                             December 31, 1999, 1998

                                 (In thousands)

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         DESCRIPTION OF THE COMPANY

         GST Equipment Funding, Inc. (the Company) was formed on March 5, 1997.
         The Company is a wholly-owned subsidiary of GST USA, Inc. (GST USA),
         which is a wholly-owned subsidiary of GST Telecommunications, Inc.
         (GST).

         The Company's operations are limited to (i) purchasing equipment, (ii)
         selling equipment to GST USA, (iii) receiving payments under
         intercompany notes, and (iv) making payments of interest and principal
         on senior secured notes.

         RESTRICTED INVESTMENTS

         The Company follows the provisions of Statement of Financial Accounting
         Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT
         AND EQUITY SECURITIES.

         The Company classifies its restricted investments, consisting at
         December 31, 1999 of $17,192 in U.S. Treasury securities as
         held-to-maturity. Held-to-maturity investments, recorded at
         amortized cost, totaled $17,192 and $50,003 at December 31, 1999 and
         1998, respectively, and maturing in four months, are restricted for
         interest payments.

         DEFERRED FINANCING COSTS

         Deferred financing costs, consisting of legal, accounting and
         underwriting fees related to the May 13, 1997 debt offering, and are
         being amortized to interest expense over the life of the related notes.
         Amounts amortized totaled $977, $989, $241 and $364 for the years ended
         December 31, 1999 and 1998, the three-month period ended December 31,
         1997 and for the period from March 5, 1997 (date of inception) to
         September 30, 1997, respectively.


                                      F-7
<PAGE>


         INCOME TAXES

         The Company accounts for income taxes under the asset and liability
         method. Under the asset and liability method, deferred income taxes
         reflect the future tax consequences of differences between the tax
         bases of assets and liabilities and their financial reporting
         amounts at each year-end. Deferred tax assets and liabilities are
         measured using enacted tax rates expected to apply to taxable income
         in the years in which those temporary differences are expected to be
         recovered or settled. The effect on deferred tax assets and
         liabilities of a change in the tax rates is recognized in income in
         the period that includes the enactment date. Valuation allowances
         are established when necessary to reduce deferred tax assets to the
         amounts expected to be realized.

         FINANCIAL INSTRUMENTS

         The carrying amounts reported in the balance sheet for cash, short-term
         borrowings, accounts payable and accrued liabilities approximate fair
         values due to the short maturity of those instruments.

         The carrying amount of the Company's long-term debt approximates its
         fair value. The fair value of the Company's long-term debt was
         determined based on quoted market prices for similar issues or on
         current rates available to the Company for debt of the same remaining
         maturities and similar terms.

         Fair value estimates are made at a specific point in time, based on
         relevant market information about the financial instrument. These
         estimates are subjective in nature and involve uncertainties and
         matters of significant judgment and therefore cannot be determined with
         precision. Changes in assumptions could significantly affect the
         estimates. The long-term debt has a book value of $265,000 at both
         December 31, 1999 and 1998 and a fair value of $262,350 and $273,933
         at December 31, 1999 and 1998, respectively.

         USE OF ESTIMATES

         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 could differ
         from those estimates.

         RECLASSIFICATIONS

         Certain reclassifications have been made in the accompanying financial
         statements for prior periods to conform with the December 31, 1999
         presentation.


                                      F-8

<PAGE>

(2)      FINANCING ARRANGEMENTS

         LONG-TERM DEBT

The Company's long-term debt consists of the following at December 31, 1999,
1998, and 1997 and September 30, 1997:

<TABLE>

<S>                                                                                      <C>
Senior Secured Notes, interest at 13.25%, due
May 1, 2007                                                                                  $  265,000
                                                                                         ===================

</TABLE>

         ISSUANCE OF SENIOR SECURED NOTES

         The Company completed a private placement (the 1997 Offering) under an
         indenture (the Indenture) dated May 13, 1997, of $265,000 of Senior
         Secured Notes (the Secured Notes). The Secured Notes bear interest at
         13.25% payable in semiannual installments commencing November 1, 1997.
         Net proceeds from the 1997 Offering totaled approximately $255,800,
         $93,790 of which were set aside to fund the first six scheduled
         interest payments. The remainder of the net proceeds is restricted to
         the purchase and installation of telecommunications equipment. Pursuant
         to the Indenture, all purchased equipment will be sold to GST USA for
         use in its telecommunications operations (see note 3). The Secured
         Notes are secured by a first priority security interest in the
         equipment and the restricted investment securities held for the payment
         of interest. The Secured Notes are subject to certain debt covenants.

         The Indenture provides that GST USA will assume and become a direct
         obligor on the Secured Notes and GST will guarantee the Secured Notes
         on May 13, 2000, or earlier if permitted by the terms of their existing
         debt. Once assumed the Secured Notes will be secured senior
         indebtedness of GST USA. The note guarantee will be senior unsecured
         indebtedness of GST.

         The Secured Notes are redeemable at the option of GST USA, in whole or
         in part, at any time, on or after May 1, 2002, initially at 106.625% of
         their principal amount, plus accrued and unpaid interest, declining
         ratably to 100% on or after May 1, 2004. If on May 13, 2000, GST USA is
         prohibited from assuming all of the Secured Notes, the Company will
         redeem the portion of the Secured Notes that cannot be assumed at 101%
         of their principal amount plus accrued interest at the date of
         redemption.


                                      F-9

<PAGE>

(3)      RELATED PARTY TRANSACTIONS

         The Company acts as a purchasing agent for GST USA and sells to GST
         USA the equipment it purchases with the proceeds from the 1997
         Offering. The note receivable from parent of $223,806 and $194,228,
         at December 31, 1999 and 1998 respectively, represents equipment
         purchases for GST USA and compounded interest. The note receivable
         is guaranteed by GST and bears interest at 15.25%, compounded
         semiannually on May and November 1, and is payable in full on May 13,
         2000. Interest income earned on the note receivable from parent
         totaled $31,518, $23,271, $3,838 and $3,543 for the years ended
         December 31, 1999 and 1998, the three-month period ended December
         31, 1997 and the year ended September 30, 1997, respectively.

         The payable to parent of $0 and $1,037 at December 31, 1999 and
         1998, respectively, consists of cash advances from GST USA for the
         purchase of equipment and the payment of expenses.

(4)      INCOME TAXES

         The provision for income taxes differs from the "expected" amount
         computed by applying the U.S. federal corporate rate as follows:

<TABLE>
<CAPTION>

                                                                                                       PERIOD FROM
                                                                                                      MARCH 5, 1997
                                                                                 THREE-MONTH            (DATE OF
                                             YEARS ENDED DECEMBER 31,            PERIOD ENDED         INCEPTION) TO
                                      -------------------------------------       DECEMBER 31,        SEPTEMBER 30,
                                              1999               1998                1997                  1997
                                      ------------------------------------------------------------------------------
<S>                                      <C>                <C>                <C>                   <C>
Computed "expected"
    income tax benefit..........           $     (772)        $     (2,421)      $  (1,007)           $  (1,896)
Effect of change in
    valuation allowance.........                  772                2,421          (1,673)               4,576
                                         ---------------    ---------------    -----------------    -------------------
Actual tax expense (benefit)........       $     ----         $     ----         $  (2,680)           $   2,680
                                         ===============    ===============    =================    ===================

</TABLE>

         The tax effects of temporary differences that give rise to deferred
         tax assets and deferred tax liabilities at December 31, 1999 and
         1998 are derived primarily from interest expense not currently
         deductible for tax purposes. Gross deferred tax assets and
         liabilities amount to $6,096 and $-0-, respectively, at December 31,
         1999 and $5,324 and $-0-, respectively at December 31, 1998.


                                      F-10
<PAGE>


       The valuation allowance for deferred tax assets as of December 31, 1999,
       1998 and 1997 and September 30, 1997 was $6,096, $5,324, $2,903 and
       $4,576, respectively. The net change in the total valuation allowance for
       the years ended December 31, 1999 and 1998, the three-month period ended
       December 31, 1997 and the period from March 5, 1997 (date of inception)
       to September 30, 1997 was an increase of $772, an increase of $2,421, a
       decrease of $1,673 and an increase of $4,576, respectively.

       The Company files consolidated income tax returns with its parent
       corporation. However, income tax expense (benefit) is computed as if the
       Company filed on a single entity basis. The tax related balance due to
       the parent corporation as of December 31, 1999, 1998 and 1997 and
       September 30, 1997 was $-0-, $-0-, $-0- and $2,680, respectively.


                                      F-11