U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


[X]      QUARTERLY  REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.


                          Commission file number 21143


                        CONVERGENCE COMMUNICATIONS, INC.

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


          Nevada                                                   87-0545056
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

      102 West 500 South, Suite 320
        Salt Lake City, Utah                                       84101
(Address of Principal Executive Offices)                         (Zip Code)

                                 (801) 328-5618
                           (Issuer's telephone number)

                                 Not Applicable

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


Check  whether  the  Registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 [ ]


As of November 15, 1998,  11,738,277  shares of Registrant's  Common Stock,  par
value $.001 per share and 101,374 shares of the Registrant's  Series B Preferred
Stock, par value $.001 per share, were outstanding.


<PAGE>

PART I : FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB

         The accompanying  unaudited consolidated financial statements have been
prepared by Convergence  Communications,  Inc. (the  "Company")  pursuant to the
rules and  regulations of the Securities  and Exchange  Commission.  They do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements.   These  financial
statements should be read in conjunction with Note 1 herein and the consolidated
financial  statements and notes thereto  included in the Company's annual report
on Form 10-KSB for the year ended  December  31,  1997,  as  amended,  which are
incorporated herein by reference. The accompanying financial statements have not
been examined by independent  accountants in accordance with generally  accepted
auditing  standards,   but  in  the  opinion  of  management,   all  adjustments
(consisting of normal recurring  entries) necessary for the fair presentation of
the Company's results of operations,  financial position and changes therein for
the periods  presented  have been  included.  The results of operations  for the
three and nine months  ended  September  30, 1998 may not be  indicative  of the
results that may be expected for the year ending December 31, 1998.








                      [THIS SPACE INTENTIONALLY LEFT BLANK]




<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
-----------------------------------------------------------------------------------------------------
<S>                                                                                               <C>                 <C>
                                                                                                  September 30,        December 31,
                                                                                                      1998                 1997
                                                                                                  ------------         ------------
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents ............................................................        $  3,288,650         $  6,171,515
    Accounts receivable - net ............................................................             862,883                9,754
    Due from affiliates ..................................................................               2,656               36,950
    Inventory ............................................................................             131,018               32,074
    Prepaid license fees .................................................................             228,741              186,982
    Other current assets .................................................................               6,557               18,007
                                                                                                  ------------         ------------
                   Total current assets ..................................................           4,520,505            6,455,282
INVESTMENT IN CENTURION ..................................................................             845,955              845,955
EQUIPMENT - net ..........................................................................           3,636,688              421,944
LICENSE RIGHTS - net .....................................................................             720,167              807,167
SUBSCRIBER RIGHTS - net ..................................................................          24,678,715            8,916,587
OTHER ASSETS .............................................................................             486,090               42,171
                                                                                                  ------------         ------------
TOTAL ASSETS .............................................................................        $ 34,888,120         $ 17,489,106
                                                                                                  ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable and accrued liabilities .............................................        $  2,752,956         $    640,164
    Notes payable ........................................................................           8,860,226              350,000
    Accrued license lease fees ...........................................................             142,594              121,621
    Accrued consulting fees (payable to related party) ...................................              92,593              100,000
    Due to affiliates ....................................................................             876,137              709,558
    Customer deposits ....................................................................              33,791               40,070
                                                                                                  ------------         ------------
                   Total current liabilities .............................................          12,758,297            1,961,413
LONG-TERM LIABILITIES:
    Long-term debt (owed to related party) ...............................................           1,791,171            1,130,660
    Notes payable ........................................................................           3,341,068                 --
                                                                                                  ------------         ------------
                   Total long-term liabilities ...........................................           5,132,239            1,130,660
MINORITY INTEREST IN SUBSIDIARIES ........................................................           2,385,752               18,067
                                                                                                  ------------         ------------
                   Total liabilities .....................................................          20,276,288            3,110,140
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY*:
    Series "A" Preferred stock; $0.001 par value; 0 shares authorized
       issued and outstanding in 1998, 4,250,000 authorized: 839,526 shares
       issued and outstanding in 1997 ....................................................                --                    839
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:
       101,374 shares issued and outstanding in 1998 and 1997  ...........................                 101                  101
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       11,738,277 and 1,744,999 shares issued and outstanding in
       1998 and 1997, respectively .......................................................              11,738                1,745
    Additional paid-in capital ...........................................................          25,179,494           19,632,022
    Currency translation adjustment ......................................................             (21,018)                --
    Deficit accumulated during the development stage .....................................         (10,558,483)          (5,255,741)
                                                                                                  ------------         ------------
                   Total stockholders' equity ............................................          14,611,832           14,378,966
                                                                                                  ------------         ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............................................        $ 34,888,120         $ 17,489,106
                                                                                                  ============         ============

* = Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

See notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997, AND
FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                    <C>                   <C>
                                                                             Three                Three               September 27,
                                                                             Months               Months              1994 (Date of
                                                                             Ended                Ended               Inception) To
                                                                         September 30,          September 30,          September 30,
                                                                             1998                   1997                   1998
                                                                         ------------           ------------           ------------

NET REVENUES ..................................................          $  1,204,535           $     38,648           $  1,289,632
COST OF SERVICE ...............................................               876,309                 24,106              1,238,910
                                                                         ------------           ------------           ------------
GROSS MARGIN ..................................................               328,226                 14,542                 50,722
OPERATING EXPENSES:
     Professional fees ........................................               669,912                138,919              2,477,382
     Depreciation and amortization ............................               807,906                187,353              2,292,643
     Leased license expense ...................................                40,410                 28,884                239,608
     General and administrative ...............................             1,243,215                306,826              4,100,324
     Stock option compensation expense ........................                  --                     --                  962,738
                                                                         ------------           ------------           ------------
                      Total ...................................             2,761,443                661,982             10,072,695
                                                                         ------------           ------------           ------------
OPERATING LOSS ................................................            (2,433,217)              (647,440)           (10,021,973)
OTHER INCOME AND EXPENSES:
     Interest income ..........................................                57,166                 34,839                367,688
     Interest expense .........................................              (276,797)               (47,348)            (1,176,272)
                                                                         ------------           ------------           ------------
                      Total ...................................              (219,631)               (12,509)              (808,584)
                                                                         ------------           ------------           ------------
NET LOSS BEFORE MINORITY INTEREST .............................            (2,652,848)              (659,949)           (10,830,557)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES .....................               250,987                  3,237                272,074
                                                                         ------------           ------------           ------------
NET LOSS ......................................................          $ (2,401,861)          $   (656,712)          $(10,558,483)
                                                                         ============           ============           ============

Net loss per basic common share* ..............................          $      (0.21)          $      (0.08)
                                                                         ============           ============
Net loss per diluted common share* ............................          $      (0.21)          $      (0.08)
                                                                         ============           ============

Weighted-average common shares*
     Basic ....................................................            11,693,557              8,691,374
                                                                         ============           ============
     Diluted ..................................................            12,528,527              8,691,924
                                                                         ============           ============


* Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders
     on August 17, 1998 and the adoption of Statements of Financial Accounting Standards (SFAS)
     No. 128, "Earnings Per Share," effective December 31, 1997.

See notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997, AND
FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                    <C>                    <C>
                                                                             Nine                  Nine                September 27,
                                                                            Months                Months               1994 (Date of
                                                                             Ended                 Ended               Inception) To
                                                                          September 30,         September 30,          September 30,
                                                                             1998                   1997                   1998
                                                                         ------------           ------------           ------------

NET REVENUES ..................................................          $  1,249,446           $     38,648           $  1,289,632
COST OF SERVICE ...............................................             1,073,862                 24,106              1,238,910
                                                                         ------------           ------------           ------------
GROSS MARGIN ..................................................               175,584                 14,542                 50,722
OPERATING EXPENSES:
     Professional fees ........................................             1,380,187                229,571              2,477,382
     Depreciation and amortization ............................             1,673,461                235,903              2,292,643
     Leased license expense ...................................               123,447                 61,370                239,608
     General and administrative ...............................             2,477,689                490,145              4,100,324
     Stock option compensation expense ........................                  --                     --                  962,738
                                                                         ------------           ------------           ------------
                      Total ...................................             5,654,784              1,016,989             10,072,695
                                                                         ------------           ------------           ------------
OPERATING LOSS ................................................            (5,479,200)            (1,002,447)           (10,021,973)
OTHER INCOME AND EXPENSES:
     Interest income ..........................................               251,321                 34,839                367,688
     Interest expense .........................................              (333,926)              (116,861)            (1,176,272)
                                                                         ------------           ------------           ------------
                      Total ...................................               (82,605)               (82,022)              (808,584)
                                                                         ------------           ------------           ------------
NET LOSS BEFORE MINORITY INTEREST .............................            (5,561,805)            (1,084,469)           (10,830,557)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES .....................               259,063                  8,665                272,074
                                                                                                ------------           ------------
                                                                         ============           ============           ============
NET LOSS ......................................................          $ (5,302,742)          $ (1,075,804)          $(10,558,483)
                                                                         ============           ============           ============

Net loss per basic common share* ..............................          $      (0.47)          $      (0.15)
                                                                         ============           ============
Net loss per diluted common share* ............................          $      (0.47)          $      (0.15)
                                                                         ============           ============

Weighted-average common shares*
     Basic ....................................................            11,356,162              7,204,602
                                                                         ============           ============
     Diluted ..................................................            12,191,132             10,589,750
                                                                         ============           ============


* Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders
     on August 17, 1998 and the adoption of Statements of Financial Accounting Standards (SFAS)
     No. 128, "Earnings Per Share," effective December 31, 1997.

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998,
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
-----------------------------------------------------------------------------------
<S>                                                     <C>                     <C>
                                                        Series "A" Preferred    Series "B" Preferred
                                                               Stock                   Stock
                                                          Shares *    Amount      Shares *  Amount
                                                        ---------------------   --------------------- 
Issuance of TIC stock to TIC shareholders
    on September 27, 1994

Net loss for the period from September 27, 1994
    (date of inception) to December 31, 1994
                                                        --------    --------    --------   --------

BALANCE, DECEMBER 31, 1994

Net loss for the year ended December 31, 1995
                                                        --------    --------    --------   --------

BALANCE, DECEMBER 31, 1995

Net loss for the year ended December 31, 1996
                                                        --------    --------    --------   --------

BALANCE, DECEMBER 31, 1996

Reverse acquisition of TIC:
    Exchange of TIC common shares for CCI
    Series "A" Preferred shares .....................    685,063    $    685

    Addition of CCI common stock

Exchange of CVV common stock for CCI common
    shares and Series "B" Preferred shares ..........                           101,374    $    101

Issuance of CCI common stock and Series
    "A" Preferred shares for cash ...................    150,380         150

Issuance of warrants below fair value

Issuance of CCI common stock and Series
    "A" Preferred shares for cash ...................      4,083           4

Issuance of options for common shares and
    Series "A" Preferred shares below fair value

Net loss for the year ended December 31, 1997
                                                        --------    --------    --------   --------

BALANCE, DECEMBER 31, 1997 ..........................    839,526         839     101,374        101

Issuance of CCI common stock and Series
    "A" Preferred shares for cash ...................     91,180          91

Conversion of Series "A" Preferred shares into
    common shares ...................................   (930,706)       (930)

Exchange of Telecom common stock for CCI
    common shares

Net loss for the nine months ended September 30, 1998
                                                        --------    --------    --------   --------

BALANCE, SEPTEMBER 30, 1998 .........................       --      $   --       101,374   $    101
                                                        ========    ========    ========   ========


* = Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998,
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
-----------------------------------------------------------------------------------
<S>                                                     <C>             <C>              <C>          <C>          <C>

                                                                                                                        Deficit
                                                                 Common Stock             Additional  Currency        Accumulated
                                                           ------------------------       Paid-in     Translation     During the
                                                            Shares *         Amount       Capital     Adjustment   Development Stage
                                                        -------------------------------  -----------  -----------  ----------------
Issuance of TIC stock to TIC shareholders
         on September 27, 1994 ......................        428,571    $        429

Net loss for the period from September 27, 1994
         (date of inception) to December 31, 1994 ...   $                                                                   (59,108)
                                                        ------------    ------------    ------------    ------------    ------------

BALANCE, DECEMBER 31, 1994 ..........................        428,571             429                                        (59,108)

Net loss for the year ended December 31, 1995 .......                                                                      (179,771)
                                                        ------------    ------------    ------------    ------------    ------------

BALANCE, DECEMBER 31, 1995 ..........................        428,571             429                                       (238,879)

Net loss for the year ended December 31, 1996 .......                                                                      (422,568)
                                                        ------------    ------------    ------------    ------------    ------------

BALANCE, DECEMBER 31, 1996 ..........................        428,571             429                                       (661,447)

Reverse acquisition of TIC:
         Exchange of TIC common shares for CCI
         Series "A" Preferred shares ................       (428,571)           (429)   $     14,315

         Addition of CCI common stock ...............      1,041,494           1,041          85,949

Exchange of CVV common stock for CCI common
         shares and Series "B" Preferred shares .....        450,563             451       7,095,948

Issuance of CCI common stock and Series
         "A" Preferred shares for cash ..............        228,658             229       9,999,621

Issuance of warrants below fair value ...............                                        657,143

Issuance of CCI common stock and Series
         "A" Preferred shares for cash ..............         24,284              24         299,972

Issuance of options for common shares and
         Series "A" Preferred shares below fair value                                      1,479,074

Net loss for the year ended December 31, 1997 .......                                                                    (4,594,294)
                                                        ------------    ------------    ------------    ------------    ------------

BALANCE, DECEMBER 31, 1997 ..........................      1,744,999           1,745      19,632,022                     (5,255,741)

Issuance of CCI common stock and Series
         "A" Preferred shares for cash ..............        600,504             600       4,955,935

Conversion of Series "A" Preferred shares into
         common shares ..............................      9,307,060           9,307          (8,377)

Exchange of Telecom common stock for CCI
         common shares ..............................         85,714              86         599,914

Net loss for the nine months ended September 30, 1998   $                                                   (21,018)     (5,302,742)
                                                        ------------    ------------    ------------    ------------    ------------
BALANCE, SEPTEMBER 30, 1998 .........................     11,738,277    $     11,738      25,179,495    $    (21,018)   (10,558,483)
                                                        ============    ============    ============    ============    ============






* = Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

See notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997,
AND FROM SEPTEMBER 27, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
---------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>             <C>
                                                                                Nine           Nine          September 27,
                                                                                Months         Months        1994 (Date of
                                                                                Ended          Ended         Inception) To
                                                                             September 30,   September 30,   September 30,
                                                                                 1998            1997            1998
                                                                             -------------   -------------   -------------

CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
    Net loss .............................................................   $ (5,302,742)   $ (1,075,804)   $(10,558,483)
    Adjustments to reconcile net loss to net cash used in
       development activities:
          Depreciation and amortization ..................................      1,673,461         235,903       2,292,643
          Amortization of note discount on notes payable .................        244,508            --           244,508
          Minority interest in loss of subsidiaries ......................       (259,063)         (8,665)       (272,074)
          Issuance of stock options below fair value .....................           --              --         1,479,074
          Issuance of warrants below fair value ..........................           --              --           657,143
          Change in assets and liabilities, net of effects
            of acquisitions of IAN and interest in Chispa Dos:
             Accounts receivable .........................................         27,435            --            28,394
             Due from affiliates .........................................         76,523         (40,127)        304,169
             Inventory ...................................................         18,064            --            51,289
             Prepaid license fees ........................................        (41,759)        (44,567)        (53,528)
             Other current assets ........................................         11,688            --            52,132
             Other assets ................................................       (289,420)        585,396        (298,264)
             Accounts payable and accrued liabilities ....................        696,766        (459,807)        692,721
             Accrued license lease fees ..................................         20,973         121,621          33,196
             Accrued consulting fees .....................................         (7,407)           --            (7,407)
             Due to affiliates ...........................................        146,913         100,000         (51,229)
             Customer deposits ...........................................         (6,917)           --            (6,600)
                                                                             ------------    ------------    ------------
                  Net cash used in development activities ................     (2,990,977)       (586,050)     (5,412,316)
                                                                             ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investment in Centurion ..............................................           --        (1,648,455)       (805,955)
    Reverse acquisition of WCCI ..........................................           --            56,582          56,582
    Acquisition of CVV (net of cash acquired) ............................           --          (200,000)       (387,318)
    Purchase of minority interest in CVV .................................           --              --          (800,000)
    Acquisition of interest in Chispa Dos (net of cash acquired(2,341,074)           --        (2,341,074)
    Acquisition of IAN (net of cash acquired) ............................       (961,412)           --          (961,412)
    Purchases of equipment ...............................................     (1,605,959)           --        (1,734,738)
                                                                             ------------    ------------    ------------
                  Net cash used in investing activities ..................     (4,908,445)     (1,791,873)     (6,973,915)
                                                                             ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock ...............................      3,161,661       1,800,686       5,144,606
    Proceeds from issuance of Series A preferred stock ...................      1,794,965       8,199,314      10,127,020
    Proceeds from related party borrowings ...............................         60,510          58,960       1,366,127
    Payments on related parties borrowings ...............................           --          (175,319)       (962,293)
    Proceeds from promissory notes .......................................           --         2,985,600       2,300,000
    Payments on promissory notes .........................................           --        (2,253,217)     (2,300,000)
                                                                             ------------    ------------    ------------
                  Net cash provided by financing activities ..............      5,017,136      10,616,024      15,675,460
                                                                             ------------    ------------    ------------

EFFECT OF EXCHANGE RATES ON CASH .........................................           (579)           --              (579)
                                                                             ------------    ------------    ------------
NET INCREASE (DECREASE) IN CASH ..........................................     (2,882,865)      8,238,101       3,288,650
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .........................      6,171,515           8,902            --
                                                                             ------------    ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...............................   $  3,288,650    $  8,247,003    $  3,288,650
                                                                             ============    ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the year for interest ...............................   $       --      $       --      $     30,996
                                                                             ============    ============    ============


See notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>




CONVERGENCE COMMUNICATINOS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED  STATEMENTS  OF CASH  FLOWS  (Continued)  (UNAUDITED)  FOR THE NINE
MONTHS ENDED  SEPTEMBER  30, 1998 AND 1997 AND FROM  SEPTEMBER 27, 1994 (DATE OF
INCEPTION) TO SEPTEMBER 30, 1998
--------------------------------------------------------------------------------


<S>                                                                                                                  <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:

     Acquisition  by  Chispa  Dos of the El  Salvador  multi-channel  television systems (July 17,  1998):
           Fair value of assets  acquired,  including subscriber  rights and 
           equipment  (net of cash acquired).........................................................................$  17,290,853
           Fair  value  of   liabilities   assumed...................................................................     (956,513)
           Notes   payable...........................................................................................  (11,366,518) 
           Minority interest.........................................................................................   (2,626,748)
                                                                                                                     -------------
               Net cash paid.........................................................................................$   2,341,074
                                                                                                                     =============


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
     Acquisition of IAN (August 17, 1998):
           Fair value of assets acquired, including subscriber rights and 
           equipment(net of cash acquired)...........................................................................$   2,881,495
           Fair value of liabilities assumed.........................................................................     (520,083)
           CCI common stock issued...................................................................................     (600,000)
           Notes payable.............................................................................................     (800,000)
                                                                                                                     -------------
                     Net cash paid                                                                                   $     961,412
                                                                                                                     =============
</TABLE>

The  determination  of  the  fair  value  of  the  assets  described  above  are
preliminary. The actual amounts recorded will vary based upon the final purchase
price   allocation   resulting  from  settlement  of  any  financial   statement
adjustments  under the  acquisition  agreements  and the completion of asset and
technology  valuations which will occur prior to reporting the audited financial
results for the year ended December 31, 1998.


<PAGE>



CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

SEPTEMBER 30, 1998

 1.       Presentation

     The  interim  unaudited   consolidated  financial  statements  include  the
accounts  of  the  Company's  subsidiaries,  including  (i) a 100%  interest  in
Interamerican   Telecom,   Inc.,  ("Telecom")  which,  through  a  wholly  owned
subsidiary,  holds 100% of the stock of  Interamerican  Net de Venezuela,  S.A.,
("IAN"), a Venezuelan internet service provider; (ii) a 49.5% interest in Chispa
Dos,  Inc.,  ("Chispa  Dos")  which  holds  100% of the  stock  of two  separate
companies providing multi-channel  television services in El Salvador. Under the
terms of the parties  agreements  the Company has operating  control and holds a
majority of the board of directors seats for Chispa Dos; (iii) a 78.14% interest
in Caracas  Viva  Vision TV,  S.A.  ("CVV"),  a local  multi-point  distribution
service wireless  communications  system in Venezuela;  (iv) a 94.9% interest in
Auckland Independent  Television  Services,  Ltd., which holds license and lease
rights for a  multi-point  video  distribution  service and four  multi-channel,
multi-point  distribution service ("MMDS") channels in three new Zealand cities;
(v) a 100% interest in Wireless Communications Holding - Guatemala, S.A. ("WCH -
Guatemala")  and Wireless  Communications  License  Holdings - Guatemala,  S.A.,
corporations  which have been formed to acquire  and operate  telecommunications
rights in Guatemala;  (vi) a 100% interest in Sociedad  Television  Interactiva,
S.A., a  corporation  that has the right to manage and operate an LMDS system in
Costa Rica; (vii) a 90% interest in Wireless  Communications Panama, S.A., which
will act as the  operating  company for an LMDS system in Panama;  (viii) an 80%
interest  in WCI de  Argentina,  which  holds a value  added  license to provide
telecommunications services in Argentina; and (ix) a 100% interest in Transworld
Wireless  Television,  Inc., a corporation that holds four MMDS channels in Park
City, Utah. The Company also has a 45% interest in LatinCom, Inc., which has not
engaged in any  business  activities  and an 8.46%  interest  in  Comunicaciones
Centurion,  S.A.,  which holds the  licenses  for the  multi-point  distribution
services provided by CVV. All significant intercompany accounts and transactions
have been eliminated in consolidation.

 2.       Net loss per common share

                  Net  loss  per  common  share is  computed  by both the  basic
method, which uses the weighted average number of common shares, and the diluted
method, which assumes the exercise of stock options and warrants,  as calculated
using the treasury  stock  method.  All share  amounts  have been  retroactively
restated for the 1 for 3.5 reverse  stock split and  conversion of each Series A
preferred  share into 10 shares of common  stock,  as approved by the  Company's
shareholders on August 17, 1998. See Part II, Item 4.



<PAGE>



 4.       Use of Estimates in Preparing Financial Statements

         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.

 5.       New Accounting Standard

         In June 1997, the Financial  Accounting Standards Board ("FASB") issued
SFAS  No.  130,  "Reporting  Comprehensive  Income."  SFAS No.  130  establishes
standards for reporting and display of  comprehensive  income and its components
(revenues,  expenses,  gains  and  losses)  in a  full  set  of  general-purpose
financial  statements.  SFAS No. 130 requires  that an  enterprise  (a) classify
items of other comprehensive income by their nature in a financial statement and
(b) display the accumulated  balance of other  comprehensive  income  separately
from retained earnings and additional paid-in-capital in the equity section of a
statement of financial position.

         Effective  January 1, 1998, the Company  adopted the provisions of SFAS
No. 130. Accordingly,  the Company determined that no other Company transactions
were considered to be an additional component of comprehensive income except for
the  currency  translation  adjustment  of $21,018  for the three  months  ended
September   30,   1998.   Except  for  the  currency   translation   adjustment,
comprehensive  loss  equaled  net  loss for the  three  and  nine  months  ended
September 30, 1998 and 1997.

 6.       Year 2000

         The "year 2000 issue"  relates to the potential  problems with computer
systems or any equipment  with computer  chips that use dates where the data has
been  stored as just two digits  (e.g.,  97 for 1997).  On January 1, 2000,  any
clock or date recording mechanism, including data sensitive software, which uses
only two digits to represent  the year may recognize a date using 00 as the year
1900  rather  than the year  2000.  This  could  result in a system  failure  or
miscalculations, causing disruption of operations, including among other things,
a temporary  inability  to process  transactions,  send  invoices,  or engage in
similar activities.

         The Company  recently  adopted a policy of  purchasing  only  equipment
which is year  2000  compliant  and is  converting  its  current  financial  and
operating  systems  to  year  2000  compliant  systems.  The  Company  does  not
anticipate a significant cost to modify its systems to accommodate the impact of
the upcoming change in the century.

         The Company also has  third-party  customers,  financial  institutions,
vendors and others with which its conducts business.  While the Company believes
that these third-party vendors and customers will successfully address year 2000
issues in a timely  manner,  it is  possible  that a series of failures by third
parties  could  have a  material  adverse  effect on the  Company's  results  of
operations in future years.




<PAGE>



ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS

         A.     MATERIAL CHANGES IN FINANCIAL CONDITION

         At September 30, 1998,  the Company had current  assets of  $4,520,505,
compared to $6,455,282 at December 31, 1997, for a decrease of $1,934,777.  Cash
decreased by $2,882,865  from  $6,171,515  to  $3,288,650  during the nine month
period,  primarily as a result of the Company's investment in Chispa Dos and the
acquisition by Chispa Dos of two multi-channel  television  service companies in
El Salvador ("El Salvador  Acquisitions"),  the Company's  acquisition of IAN, a
Venezuelan  internet  service  provider ("IAN  Acquisition"),  and the Company's
purchase of equipment to develop the network  infrastructure  for the  Company's
start-up markets. The El Salvador  Acquisitions are more particularly  described
in the Company's report on Form 8-K filed August 3, 1998,  which  description is
incorporated  herein by  reference.  The IAN  Acquisition  is more  particularly
described in the  Company's  report on Form 8-K filed  September 1, 1998,  which
description is incorporated  herein by reference.  The determination of the fair
value of the assets recorded for these acquisitions are preliminary.  The actual
amounts  recorded  will vary  based  upon the final  purchase  price  allocation
resulting  from  settlement of any  financial  statement  adjustments  under the
acquisition  agreements and the  completion of asset and  technology  valuations
which will occur prior to reporting the audited  financial  results for the year
ended  December  31, 1998.  Current  liabilities  as of September  30, 1998 were
$12,758,297,  compared to $1,961,413 as of December 31, 1997, for an increase of
$10,796,884.  The increase was primarily due to an increase in accounts  payable
and accrued expenses which were assumed in the El Salvador  Acquisitions and the
IAN Acquisition (collectively, the "Acquisitions"), an increase in notes payable
related to future  amounts  due under the  Acquisitions,  an increase in accrued
license  lease fees and an  increase  in amounts  due to  affiliates  related to
amounts due under a service contract.

         At September  30,  1998,  total  assets were  $34,888,120,  compared to
$17,489,106  as of  December  31,  1997,  for an increase  of  $17,399,014.  The
increase  in total  assets  was  primarily  due to the  assets  acquired  in the
Acquisitions   and  purchases  of   equipment.   Total   liabilities   increased
$17,166,148,  from  $3,110,140  as of  December  31, 1997 to  $20,276,288  as of
September 30, 1998.  The increase in total  liabilities is primarily a result of
the increase in current liabilities, an increase in related party long-term debt
related to additional accrued interest,  an increase in notes payable related to
future amounts due under the Acquisitions  and an increase in minority  interest
in subsidiaries  associated with the recording of the net interest in Chispa Dos
for the other  shareholder in Chispa Dos. Total  stockholders'  equity increased
during the period by  $232,866,  from  $14,378,966  at  December  31,  1997,  to
$14,611,832 at September 30, 1998.

          B.     MATERIAL CHANGES IN RESULTS OF OPERATIONS

         For the nine months ended  September 30, 1998, the Company had revenues
of $1,249,446,  which includes  revenues from the El Salvador  Acquisitions from
July 17, 1998 and the IAN  Acquisition  from August 17, 1998.  This  compares to
revenues of $38,648 for the nine  months  ended  September  30,  1997.  The 1997
revenues were generated from the  multi-channel  television  service provided in
Caracas,  Venezuela  by CVV,  for the  period  from  August  17,  1997  (date of
acquisition)  to  September  30,  1997.  The cost of service for the nine months

<PAGE>

ended September 30, 1998 was $1,073,862, compared to $24,106 for the nine months
ended September 30, 1997.

         Operating  expenses for the nine months ended  September  30, 1998 were
$5,654,784  compared to $1,016,989  for the same period in 1997, for an increase
of  $4,637,795.  This  increase  was  primarily  due to  costs  associated  with
negotiating and completing the Acquisitions,  start-up expenses  associated with
the  Company's  current   telecommunications   projects  and  the  depreciation,
amortization and lease expense from the Company's  telecommunications assets and
subscriber  rights.  The Company's  operating  loss was  $5,479,200 for the nine
months ended  September 30, 1998,  compared to $1,002,447 for the same period in
1997.

         Interest  income  for the nine  months  ended  September  30,  1998 was
$251,321,  compared to $34,839  for the same period in 1997,  for an increase of
$216,482. The increase was primarily due to higher cash balances related to cash
received  for equity  investments  in August 1997 and  February  1998.  Interest
expense increased $217,065 from $116,861 for the nine months ended September 30,
1997, to $333,926 for the same period in 1998. The increase was due primarily to
interest associated with the notes payable related to the Acquisitions.

         Minority  interest in loss of  subsidiaries  was  $259,063 for the nine
months ended September 30, 1998, compared to $8,665 for the same period in 1997,
for an  increase  of  $250,398.  The  increase  primarily  relates  to the  loss
attributable to the minority shareholder's interest in Chispa Dos.

     As a result of the  foregoing,  the  Company's net loss for the nine months
ended  September 30, 1998 was  $5,302,742,  compared to $1,075,804  for the nine
months ended September 30, 1997, for an increase in net loss of $4,226,938.

         LIQUIDITY AND CAPITAL RESOURCES

         Since  inception,  the Company has funded its cash  requirements at the
parent  company  level through debt and equity  transactions.  The proceeds from
these transactions were primarily used to fund the Company's acquisitions,  fund
investments in start-up  network  operations,  provide  working  capital and for
general  corporate  purposes,  including  the  expenses  incurred in seeking and
evaluating  new  business   opportunities.   The  Company's  foreign  subsidiary
interests  have been  financed by the Company  through a  combination  of equity
investments and shareholder loans.

         The Company's  principal sources of funds are its available reserves of
cash and cash equivalents.  At September 30, 1998, the Company had cash and cash
equivalents of $3.29 million.  The cash flow generated by the Company's  current
operations  and  projected   telecommunications  and  multi-channel   television
services  will not be  sufficient  to cover the  Company's  projected  operating
expenses,  general and administrative expenses and start-up costs.  Accordingly,
the  Company's  cash and cash  equivalents  are  being  depleted  under  current
operating conditions.  Nevertheless, the Company believes that its cash and cash
equivalents,  together with the anticipated cash flow from its operations,  will
be sufficient to cover the Company's operating expenses through the end of 1998.

<PAGE>

         The  Company  has  entered  into  negotiations  with two of its current
shareholders  who have previously  provided equity capital to the Company for an
additional  round of equity  financing.  The Company  anticipates  that any such
financing  would be  available to the Company in two  installments,  one in late
1998 and the other in early 1999.  There can be no  assurance  the Company  will
acquire  additional  financing from the shareholders  with which it is currently
negotiating, or on what terms any such financing would be available, if at all.

         The Company's  current business plan anticipates  further growth in the
acquired  companies,  launching of new  markets,  and  launching  of  additional
telecommunications  services as the Company's  target  markets  deregulate.  The
Company's  current  sources  of funds  are  insufficient  to fund  the  complete
buildout and launch of those  markets and service  capabilities.  The ability of
the Company to launch all markets and provide  these  services will be dependent
upon the Company obtaining  substantial  additional  sources of funds to finance
these projects.  The Company is also in negotiations  with third party financing
sources and vendor  relationships  for equity and debt  financing  transactions.
While the Company  believes that it may be able to obtain  additional  financing
through one or more of these  sources,  no assurances can be given that any such
financing  will be  available,  or that the Company  would be able to obtain any
such financing on favorable terms.

PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     See the section  entitled "Legal  Proceedings"  in the Company's  report on
Form 10-KSB for the year ended  December 31, 1997,  as amended and the Company's
report on Form 8-K filed on October 23, 1998.

ITEM 2.  CHANGES IN SECURITIES

         See Item 4 below.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  MATTERS SUBMITTED TO A VOTE OF THE COMPANY'S SHAREHOLDERS

         The Company held its annual meeting of stockholders on August 17, 1998.
At that meeting, the Company's  shareholders  approved the Company's Amended and
Restated  Articles  of  Incorporation,  which  were  previously  adopted  by the
Company's board of directors. The shareholders also approved a 1 for 3.5 reverse
stock split of the Company's  outstanding  capital stock and an agreement  under
which each  share of the  Company's  outstanding  Series A  Preferred  Stock was
converted into ten shares of Common Stock.

ITEM 5.

     In June 1996,  the  licensing  authority  for the Republic of Panama issued
Administracion  E  Inversiones  Radiales,  S.A.  ("ADIRA")  licenses for 24 5MHz
channels in the 27.6 to 28.08 GHz  frequency  band and 1 channel in the 6086 MHz
frequency band for Panama City,  Panama (the "Original  Frequencies").  In March
1997, the Company acquired 90% of Wireless Communications Panama S.A. ("Wireless
Panama"), a Panamanian joint venture corporation that was formed for the purpose
of  commercializing  those rights.  The other 10% of Wireless Panama is owned by
ADIRA on a non-dilutive basis.

     In September 1998,  ADIRA made  application  with the Panamanian  licensing
authority  for the  frequencies  between the 5MHZ  channels in the 27.6 to 26.08
band  for  Panama  City,  Panama,  and  Wireless  Panama  made  application  for
frequencies  consisting  of a 1.4GHz  block of  frequencies  in the  28.1GHz  to
29.5GHz band for Panama City, Panama (the "New Frequencies"). Those applications
were prompted, in part, by the Company's  determination that the New Frequencies
would allow the Company to carry out its proposed local multi-point distribution
service  business  operations in Panama.  The application by Wireless Panama was
also  prompted by the  Panamanian  licensing  authority's  claim in a regulatory
proceeding  that  ADIRA was not  using the  Original  Frequencies.  The  Company
believes  those  claims are without  merit and filed an appeal.  On November 16,
1998, the Panamanian licensing authority notified ADIRA that it had rejected the
appeal,  with the  result  that the right to use the  Original  Frequencies  was
revoked.  ADIRA may  appeal  the  decision  of the  licensing  authority  to the
Panamanian Supreme Court. ADIRA is currently evaluating whether it will do so.

     On October 2, 1998, the Company  received  notice that the  applications of
ADIRA and Wireless Panama for the New Frequencies had been approved and would be
subjected to the  alternative  application  process  consisting  of (i) a 30-day
notice period (the "Initial  Period")  during which third parties could offer to
match the annual rent  offered by ADIRA or Wireless  Panama for all or a portion
of the New  Frequencies  ("Alternative  Applications")  and  (ii) an  additional
fourteen day period (the "Review Period") during which the Panamanian  licensing
authority will evaluate any Alternative  Applications which it may receive.  The
Initial  Period ended on November 16, 1998 and the Review  Period will expire on
November  30,  1998.  If  the  Panamanian   licensing   authority  receives  any
Alternative Applications for any of the New Frequencies, the portions of the New
Frequencies  that are the subject of those requests  would be awarded first,  on
the basis of the  priority  level  accorded  to each of the  proposed  uses and,
second,  in the event of  multiple  applications  with  equal  priority  levels,
through a lottery process  expected to be conducted by the Panamanian  licensing
authority on Decenber 6, 1998. It is anticipated  that  frequencies for which no
Alternative  Applications  are  filed  will  be  awarded  within  14 days of the
conclusion of the Review Period.


ITEM 6.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

         A.       EXHIBITS.

         None

         B.       REPORTS ON FORM 8-K

         On October 23, 1998,  the Company filed a report on Form 8-K describing
the resignation of two of the Company's board members, the termination of one of
the Company's executive employees and two arbitration proceedings.  On September
1, 1998,  the Company  filed a report on Form 8-K  describing  its  acquisition,
through wholly-owned subsidiaries, of an internet service business in Maracaibo,
Venezuela and the results from the Company's annual meeting of stockholders held
on  August  17,  1998.  As  permitted  by  Securities  and  Exchange  Commission
regulations,  on  September  30, 1998,  the Company  filed a report on Form 8-KA
which contained the financial  statements required under the Securities Exchange
Act of 1934 for the El Salvador Acquisition,  as described in the report on Form
8-K filed on August 13, 1998.


<PAGE>



                                   SIGNATURES


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



                                                CONVERGENCE COMMUNICATIONS, INC.


Date: November 20, 1998                           BY  /s/ JERRY SLOVINSKI
                                                  ------------------------------
                                                  Jerry Slovinski
                                                  Chief Financial Officer