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 JUNE 30, 1999.

 [   ]   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 issuer (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 August 20, 1999, 11,738,277 shares of registrant's Common Stock, par value
$.001 per share and 101,379 shares of the registrant's Series B Preferred Stock,
par value $.001 per share, were outstanding.


PART I:  FINANCIAL INFORMATION
------------------------------
ITEM 1.   FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB

         The  accompanying   unaudited   consolidated  financial  statements  of
Convergence   Communications,   Inc.  (the  "Company")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
reporting  and  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, 1998,
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 six  months  ended  June  30,  1999  may not be
indicative of the results that may be expected for the year ending  December 31,
1999.

<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
--------------------------------------------------------------------------------------------------------------

                                                                              June 30,          December 31,
                                                                                1999                1998
                                                                           ---------------      --------------
ASSETS
<S>                                                                        <C>                  <C>
CURRENT ASSETS:
    Cash and cash equivalents                                              $    1,593,984       $   4,315,281
    Accounts receivable - net                                                     588,881             432,868
    Note proceeds due from affiliate                                                    -           5,000,000
    Inventory                                                                     427,203             205,408
    Prepaid license fees                                                           12,592              57,359
    Other current assets                                                          416,924             115,801
                                                                           ---------------      --------------
                   Total current assets                                         3,039,584          10,126,717
INVESTMENT IN CENTURION                                                           845,955             845,955
PROPERTY AND EQUIPMENT - net                                                   17,028,542           8,524,521
INTANGIBLE ASSETS - net                                                        20,412,424          22,650,040
OTHER ASSETS                                                                      699,904             325,811
                                                                           ---------------      --------------
TOTAL ASSETS                                                               $   42,026,409       $  42,473,044
                                                                           ===============      ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable and accrued liabilities                               $    4,104,728       $   3,603,165
    Notes payable                                                                 863,439           8,676,722
    Notes payable (payable to related parties)                                  5,165,925                   -
    Foreign bank lines of credit outstanding                                            -              27,281
    Accrued consulting fees (payable to related parties)                          461,703             340,629
    Due to affiliates                                                             809,214           1,074,855
    Unearned revenue                                                              342,494             373,486
                                                                           ---------------      --------------
                   Total current liabilities                                   11,747,503          14,096,138
LONG-TERM LIABILITIES:
    Long-term debt (payable to related parties)                                 9,650,523           1,224,504
    Subordinated exchangeable promissory notes (payable to related parties)    10,000,000          10,000,000
    Notes payable                                                               4,142,865           3,987,268
    Accrued foreign severance                                                     144,169             135,091
                                                                           ---------------      --------------
                   Total long-term liabilities                                 23,937,557          15,346,863
MINORITY INTEREST IN SUBSIDIARIES                                               1,791,561           2,345,517
                                                                           ---------------      --------------
                   Total liabilities                                           37,476,621          31,788,518
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY  *:
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:
       101,374 shares issued and outstanding in 1999 and 1998.                        101                 101
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       11,738,277 shares issued and outstanding in 1999 and 1998.                  11,738              11,738
    Additional paid-in capital                                                 26,917,858          26,179,739
    Accumulated deficit                                                       (22,350,847)        (15,486,537)
    Accumulated other comprehensive loss                                          (29,062)            (20,515)
                                                                           ---------------      --------------
                   Total stockholders' equity                                   4,549,788          10,684,526
                                                                           ---------------      --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $   42,026,409       $  42,473,044
                                                                           ===============      ==============

*  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

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
----------------------------------------------------------------------------------------------------------------------
                                                                     Six Months       Six Months         Six Months
                                                                       Ended             Ended             Ended
                                                                      June 30,         June 30,           June 30,
                                                                        1999             1998               1997
                                                                   ---------------   --------------    ---------------
<S>                                                                <C>               <C>               <C>
NET REVENUES                                                       $    4,144,575    $      44,911     $            -
COST OF SERVICE                                                         1,439,805          197,553                  -
                                                                   ---------------   --------------    ---------------
GROSS MARGIN                                                            2,704,770         (152,642)                 -
OPERATING EXPENSES:
     Professional fees                                                  1,312,603          710,275            137,050
     Depreciation and amortization                                      2,420,985          865,555             48,550
     Leased license expense                                                44,829           83,037             32,486
     General and administrative                                         4,434,130        1,234,474            136,921
     Stock-based compensation expense                                     634,009                -                  -
                                                                   ---------------   --------------    ---------------
                     Total                                              8,846,556        2,893,341            355,007
                                                                   ---------------   --------------    ---------------
OPERATING LOSS                                                         (6,141,786)      (3,045,983)          (355,007)
OTHER INCOME AND (EXPENSES):
     Interest income                                                       79,129          194,155                  -
     Interest expense                                                  (1,520,835)         (57,129)           (69,513)
                                                                   ---------------   --------------    ---------------
                     Total                                             (1,441,706)         137,026            (69,513)
                                                                   ---------------   --------------    ---------------
NET LOSS BEFORE INCOME TAX AND MINORITY INTEREST                       (7,583,492)      (2,908,957)          (424,520)
INCOME TAX                                                                 34,774                -                  -
                                                                   ---------------   --------------    ---------------
NET LOSS BEFORE MINORITY INTEREST                                      (7,618,266)      (2,908,957)          (424,520)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES                                 753,956            8,076              5,428
                                                                   ---------------   --------------    ---------------
NET LOSS                                                           $   (6,864,310)   $  (2,900,881)    $     (419,092)
                                                                   ===============   ==============    ===============

Net loss per basic common share*                                   $        (0.57)   $       (0.25)    $        (0.06)
                                                                   ===============   ==============    ===============
Net loss per diluted common share*                                 $        (0.57)   $       (0.25)    $        (0.06)
                                                                   ===============   ==============    ===============

Weighted-average common shares*
     Basic                                                             12,022,728       11,469,119          6,449,061
                                                                   ===============   ==============    ===============
     Diluted                                                           14,102,389       12,404,978          6,775,459
                                                                   ===============   ==============    ===============

* 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

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
----------------------------------------------------------------------------------------------------------------------

                                                                    Three Months       Three Months     Three Months
                                                                       Ended             Ended             Ended
                                                                      June 30,          June 30,          June 30,
                                                                        1999             1998               1997
                                                                   ---------------   --------------    ---------------
<S>                                                                <C>               <C>               <C>
NET REVENUES                                                       $    2,102,087    $      16,575     $            -
COST OF SERVICE                                                           783,057          105,753                  -
                                                                   ---------------   --------------    ---------------
GROSS MARGIN                                                            1,319,030          (89,178)                 -
OPERATING EXPENSES:
     Professional fees                                                    712,129          383,205             47,694
     Depreciation and amortization                                      1,215,114          436,658             29,000
     Leased license expense                                                20,635           41,340             24,544
     General and administrative                                         2,219,522          661,323             81,178
     Stock-based compensation expense                                     317,004                -                  -
                                                                   ---------------   --------------    ---------------
                     Total                                              4,484,404        1,522,526            182,416
                                                                   ---------------   --------------    ---------------
OPERATING LOSS                                                         (3,165,374)      (1,611,704)          (182,416)
OTHER INCOME AND (EXPENSES):
     Interest income                                                       18,869          107,834                  -
     Interest expense                                                    (875,503)         (24,857)           (43,841)
                                                                   ---------------   --------------    ---------------
                     Total                                               (856,634)          82,977            (43,841)
                                                                   ---------------   --------------    ---------------
NET LOSS BEFORE INCOME TAX AND MINORITY INTEREST                       (4,022,008)      (1,528,727)          (226,257)
INCOME TAX                                                                      -                -                  -
                                                                   ---------------   --------------    ---------------
NET LOSS BEFORE MINORITY INTEREST                                      (4,022,008)      (1,528,727)          (226,257)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES                                 398,696            3,980              3,157
                                                                   ---------------   --------------    ---------------
NET LOSS                                                           $   (3,623,312)   $  (1,524,747)    $     (223,100)
                                                                   ===============   ==============    ===============

Net loss per basic common share*                                   $        (0.30)   $       (0.13)    $        (0.03)
                                                                   ===============   ==============    ===============
Net loss per diluted common share*                                 $        (0.30)   $       (0.13)    $        (0.03)
                                                                   ===============   ==============    ===============

Weighted-average common shares*
     Basic                                                             12,022,728       11,937,014          7,892,329
                                                                   ===============   ==============    ===============
     Diluted                                                           14,120,621       12,979,170          8,293,267
                                                                   ===============   ==============    ===============

* 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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
---------------------------------------------------------------------------------------------

                                                                   Series "A" Preferred Stock    Series "B" Preferred Stock
                                                                   --------------------------    --------------------------
                                                       Total          Shares *       Amount        Shares *        Amount
                                                    -------------  -------------  -------------  -------------  -------------
<S>                                                 <C>            <C>            <C>            <C>            <C>
BALANCE, DECEMBER 31, 1996                          $   (661,018)

Reverse acquisition of TIC:
   Exchange of TIC common shares for CCI
   Series "A" Preferred shares                            14,571        685,063   $        685

   Addition of CCI common stock                           86,990

Exchange of CVV common stock for CCI common
   shares and Series "B" Preferred shares              7,096,500                                      101,374   $        101

Issuance of CCI common stock and Series
   "A" Preferred shares for cash                      10,000,000        150,380            150

Issuance of warrants below fair value                    657,143

Issuance of CCI common stock and Series
   "A" Preferred shares for cash                         300,000          4,083              4

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                            14,378,966        839,526            839        101,374            101

Comprehensive loss:
   Net loss for the year ended December 31, 1998     (10,230,796)
   Other comprehensive loss consisting of
      foreign currency translation adjustment            (20,515)
                                                    -------------  -------------  -------------  -------------  -------------

      Total comprehensive loss                       (10,251,311)            -               -             -               -

Issuance of CCI common stock and Series
   "A" Preferred shares for cash                       4,956,626         91,180             91

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

Exchange of Telecom common stock for CCI
   common shares                                         600,000

Issuance of options for common shares
   below fair value                                    1,000,245
                                                    -------------  -------------  -------------  -------------  -------------

BALANCE, DECEMBER 31, 1998                            10,684,526             -               -        101,374            101

Comprehensive loss:
   Net loss for the six months ended June 30, 1999    (6,864,310)
   Other comprehensive loss consisting of
      foreign currency translation adjustment             (8,547)
                                                    -------------  -------------  -------------  -------------  -------------

      Total comprehensive loss                        (6,872,857)             -              -           -                 -

Stock-based compensation expense activity                634,009

Interest expense from issuance of warrants               104,110
                                                    -------------  -------------  -------------  -------------  -------------

BALANCE, JUNE 30, 1999                              $  4,549,788              -   $          -        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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

-CONTINUED-
----------------------------------------------------------------------------------------------------------------------

                                                           Common Stock             Additional                    Accumulated
                                                    ---------------------------     Paid-in       Accumulated    Other Compre-
                                                       Shares *       Amount        Capital        Deficit      hensive Loss
                                                    -------------  -------------  -------------  -------------  -------------
<S>                                                 <C>            <C>            <C>            <C>            <C>
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)

Comprehensive loss:
   Net loss for the year ended December 31, 1998                                                  (10,230,796)
   Other comprehensive loss consisting of
      foreign currency translation adjustment                                                                   $    (20,515)
                                                    -------------  -------------  -------------  -------------  -------------
      Total comprehensive loss                                 -             -               -    (10,230,796)       (20,515)

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

Issuance of options for common shares
   below fair value                                                                  1,000,245
                                                    -------------  -------------  -------------  -------------  -------------
BALANCE, DECEMBER 31, 1998                            11,738,277         11,738     26,179,739    (15,486,537)       (20,515)

Comprehensive loss:
   Net loss for the six months ended June 30, 1999                                                 (6,864,310)
   Other comprehensive loss consisting of
      foreign currency translation adjustment                                                                         (8,547)
                                                    -------------  -------------  -------------  -------------  -------------
      Total comprehensive loss                                 -             -               -     (6,864,310)        (8,547)

Stock-based compensation expense activity                                              634,009

Interest expense from issuance of warrants                                             104,110
                                                    -------------  -------------  -------------  -------------  -------------

BALANCE, JUNE 30, 1999                                11,738,277   $    11,738    $ 26,917,858   $(22,350,847)  $    (29,062)
                                                    =============  ============   =============  =============  =============

*  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

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
--------------------------------------------------------------------------------------------------------------------

                                                                     Six Months       Six Months       Six Months
                                                                        Ended           Ended             Ended
                                                                      June 30,         June 30,         June 30,
                                                                        1999             1998             1997
                                                                    --------------   -------------    --------------
<S>                                                                  <C>             <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                         $ (6,864,310)   $ (2,900,881)     $   (419,092)
    Adjustments to reconcile net loss to net cash used in
        development activities:
           Depreciation and amortization                                2,420,985         865,555            48,550
           Minority interest in loss of subsidiaries                     (553,956)         (8,076)           (5,428)
           Stock-based compensation expense                               634,009               -                 -
           Amortization of discount on notes payable                      392,350               -                 -
           Imputed interest expense for warrants                          104,110               -                 -
           Change in assets and liabilities:
              Accounts receivable - net                                  (157,388)          9,275                 -
              Due from affiliates                                       5,000,000          (2,121)                -
              Inventory                                                  (222,649)          7,679                 -
              Prepaid license fees                                         44,767         (14,769)           16,940
              Other current assets                                       (301,123)          8,837                 -
              Other assets                                               (374,093)       (139,625)          577,377
              Accounts payable and accrued liabilities                    498,067         435,476          (136,915)
              Accrued consulting fees                                     121,074               -                 -
              Due to affiliates                                          (266,798)        100,666           100,000
              Unearned revenue                                            (30,992)              -                 -
              Accrued foreign severance                                     9,078               -                 -
                                                                     -------------   -------------     -------------
                 Net cash provided by (used in) operating activities      453,131      (1,637,984)          181,432
                                                                     -------------   -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investment in Centurion                                                     -               -          (788,424)
    Reverse acquisition of WCCI                                                 -               -            56,582
    Purchases of property and equipment                                (9,271,736)       (765,748)                -
                                                                     -------------   -------------     -------------
                 Net cash used in investing activities                 (9,271,736)       (765,748)         (731,842)
                                                                     -------------   -------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                                      -       3,161,661                 -
    Proceeds from issuance of Series A preferred stock                          -       1,794,965                 -
    Increase in minority interest from issuance of
                 subsidiary common stock                                  200,000               -                 -
    Proceeds from related party note                                    9,966,115               -                 -
    Payments on related parties borrowings                                (52,500)         45,603            49,141
    Payments on foreign bank line of credit                               (27,281)              -          (175,319)
    Proceeds from promissory notes                                      4,335,000               -           746,095
    Payments on promissory notes                                       (8,322,361)              -                 -
                                                                     -------------   -------------     -------------
                 Net cash provided by financing activities              6,098,973       5,002,229           619,917
                                                                     -------------   -------------     -------------

EFFECT OF EXCHANGE RATES ON CASH                                           (1,665)              -                 -
                                                                     -------------   -------------     -------------
NET INCREASE (DECREASE) IN CASH                                        (2,721,297)      2,598,497            69,507
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                        4,315,281       6,171,515             8,902
                                                                     -------------   -------------     -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                           $  1,593,984    $  8,770,012      $     78,409
                                                                     =============   =============     =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for interest                         $      7,100    $          -      $          -
                                                                     =============   =============     =============
    Cash paid during the period for income tax                       $     58,805    $          -      $          -
                                                                     =============   =============     =============

See notes to consolidated financial statements.
</TABLE>

<PAGE>


CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1999
(Unaudited)


1.       Basis of Presentation
         ---------------------
         Convergence Communications, Inc. (the "Company") is a provider of data,
video and voice telecommunications service to business and residential customers
over metropolitan area networks ("MAN") in Latin American.

         The  consolidated  financial  statements  of the  Company  include  the
accounts  of the  Company's  subsidiaries,  including  (i) a 44.03%  interest in
Chispa Dos, Inc.  ("Chispa")  which is a holding company for three  subsidiaries
that provide multi-channel  television and Internet services in El Salvador (the
"El Salvador Entities");  (ii) a 100% interest in Interamerican  Telecom,  Inc.,
the parent company of Interamerican Net de Venezuela, S.A. ("Inter@net"),  which
is providing Internet services in Venezuela;  (iii) a 78.14% interest in Caracas
Viva Vision TV, S.A. ("CVV"), a local multi-point  distribution service ("LMDS")
wireless  communications system in Venezuela,  (iv) a 94.9% interest in Auckland
Independent  Television Services,  Ltd. ("AITS"),  which holds license and lease
rights  in  four  multi-channel,   multi-point   distribution  service  ("MMDS")
channels,  (v) a 100% interest in Wireless  Communications  Holding  -Guatemala,
S.A.  ("WCH -  Guatemala"),  a  corporation  which holds LMDS license  rights in
Guatemala,  (vi)  a 100%  interest  in  Sociedad  Television  Interactiva,  S.A.
("TISA"),  a corporation  that intends to operate a wireless  telecommunications
system in Costa Rica,  (vii) a 90% interest in Wireless  Communications  Panama,
S.A.  ("WC -  Panama"),  which is acting as the  operating  company  for an LMDS
system in Panama, (viii) a 95% interest in Convergence Communications de Mexico,
S.A.  ("CCI   Mexico"),   which  will  act  as  the  operating   company  for  a
telecommunications  system in Mexico and which owns fiber optic network capacity
in Mexico City, (ix) an 80% interest in WCI de Argentina ("WCIA"), which holds a
value added license to provide telecommunications services in Argentina, and (x)
a 100% interest in Transworld Wireless Television,  Inc. ("TWTV"), a corporation
that holds four MMDS channels and a leased  transmitter in Park City,  Utah. All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  All  capitalized  terms  not  defined  in this  report  have the
meanings  given them in the Company's  annual report on Form 10-KSB for the year
ended December 31, 1998.

2.       Net loss per common share and common share equivalent
         -----------------------------------------------------
         Net loss per common share and common share  equivalents  is computed by
both the basic method,  which uses the weighted  average number of common shares
and the common stock  equivalents on a voting basis for the Series "B" preferred
stock  outstanding,  and the diluted method,  which includes the dilutive common
shares from stock options and warrants,  as calculated  using the treasury stock
method.

3.       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.

4.       Debt Obligations
         ----------------
         El Salvador Acquisition Note Refinancing - In May 1999, Chispa obtained
a  long-term  loan from a third party  lender  totaling  $4,335,000,  of which a
portion was used to pay the second  note  payable  payment  from the El Salvador
Entities acquisition of $3,607,134.  The loan is due in May 2004, bears interest
at LIBOR plus 4.75% quarterly and has mandatory annual payments.  In conjunction
with the loan, a FondElec Essential Services Growth Fund LP ("FondElec") loan in
the amount of $4,769,497 was refinanced  under the same terms of the third party
loan, except that the FondElec loan was subordinated to the third party lender's
position and the due date for the FondElec  loan was changed to January 1, 2000,
with an annual renewal until the third party lender is repaid.

         Under the terms of the loans,  the Company is required to refrain  from
engaging in certain types of business activities (including sales of its assets,
mergers or other fundamental corporate  transactions) without the consent of the
lenders.  The loans are  secured by the assets and capital  stock of  Cablevisa,
S.A.  de C.V.  and  Multicable,  S.A.  de C.  V.,  which  are the two  companies
providing multi-channel television service to subscribers in El Salvador.

         FondElec is a shareholder of the Company,  and,  pursuant to agreements
among the Company and certain of its shareholders,  two of FondElec's  designees
currently sit on the Company's Board of Directors.

         MetroNet  Transaction  Loan - The Company  financed the purchase of the
MetroNet  acquired  network  capacity  agreement  (see  Item 5 below)  through a
$2,615,925  loan from  FondElec  and a  $2,550,000  loan from  Internexus,  S.A.
("Internexus").  The loans are evidenced by senior  promissory  notes which bear
interest at 10% per annum,  and are due (together  with unpaid  interest) on the
earlier of January 3, 2000 or the receipt by the  Company of  proceeds  from any
equity or debt financing.  FondElec and Internexus will also receive warrants to
acquire shares of the Company's common stock while the notes are outstanding and
a premium based on the actual  repayment date of the notes.  The premium will be
an  amount  equal to 3.08% of the  original  principal  amount  if the loans are
repaid on or before August 1, 1999,  9.18% of the original  principal  amount if
they are repaid  between  August 2, 1999 and September  20, 1999,  15.35% of the
original  principal  amount if they are repaid  between  September  21, 1999 and
November 9, 1999, and 20.46% of the original principal amount if they are repaid
between November 10, 1999 and January 3, 2000.

         Under the terms of the loans,  the Company is required to refrain  from
engaging in certain types of business activities (including sales of its assets,
mergers or other fundamental corporate transactions) without the consent of both
lenders,  and, as an  accommodation  to the  lenders,  certain of the  Company's
shareholders  (who, in the aggregate,  beneficially own approximately 44% of the
Company's  outstanding  shares)  delivered  share  proxies to the  lenders.  The
proxies are not exercisable  unless the Company  defaults on the loans,  and, in
the event of any such default, the proxies will be voted jointly by the lenders,
in accordance with an agreement to be reached by them.

         Internexus is a shareholder of the Company, and, pursuant to agreements
among the Company and certain of its shareholders,  two of Internexus' designees
currently sit on the Company's Board of Directors.

         FondElec Loan  Transaction - On August 6, 1999, the Company borrowed $1
million  from  FondElec.  The  loan  is  subject  to  the  following  terms  and
conditions:  (i) all unpaid  amounts bear interest at the rate of 13% per annum,
(ii) the note is due in full on November 6, 1999,  (iii) if the Company closes a
equity or debt financing prior to the maturity date, the Company must prepay the
note to the extent the  proceeds of the  financing  are in excess of the amounts
necessary to discharge the  Company's  obligations  to FondElec and  Internexus,
S.A.  under  the  terms  of their  June 15,  1999 and  December  23,  1998  loan
agreements  with the Company (the "Prior  Obligations"),  and (iv) the Company's
repayment of the loan is subordinated to the discharge of the Prior Obligations.
The Company's  performance  under the loan is guaranteed by Lance D'Ambrosio and
Troy D'Ambrosio,  officers and directors of the Company.  In connection with the
loan, FondElec also acquired five year warrants to purchase the Company's common
shares at an exercise price,  subject to adjustment based on the price for which
the Company issues its securities in the future,  of $8.70 per share.  Under the
warrant,  FondElec will receive,  on a monthly basis,  the right to purchase the
number of common shares equal to 3.5% of the  principal  amount of the note then
outstanding,  divided  by $8.70.  The  warrants  are  accompanied  by demand and
"piggy-back" registration rights.

5.       CVV Financial Results
         ---------------------
         The Company  owns  approximately  78% of the stock of CVV, a Venezuelan
corporation  that acts as the operating  company for a multi-channel  television
system in Caracas,  Venezuela.  The Company reports the operating results of CVV
on a consolidated  basis under  appropriate  accounting  rules.  During the four
months   immediately   proceeding  April  1999,  CVV  has  generated  losses  of
approximately  $25,000 per month. On July 28, 1999 (after  repeated  requests by
the  Company  for CVV's  financial  information  for the period  covered by this
report),  Donald Williams, the president of CVV, notified the Company that CVV's
monthly financial  information was current only through April 1999, and declined
to release that operating  information to the Company.  The Company is currently
pursuing two arbitration  proceedings  against Mr.  Williams.  See the Company's
annual  report on Form  10-KSB for the period  ended  December  31,  1998.  As a
result,  the  financial  information  set forth in this  report does not include
actual operating result information for CVV. The Company has, however,  included
estimates for CVV's operating results during the period, based on its historical
operating results. The Company believes CVV's operations are not material to its
consolidated financial operations.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

         The  following   discussion  and  analysis  relates  to  the  financial
condition and results of operations of the Company for the six months ended June
30,  1999 and 1998.  This  information  should be read in  conjunction  with the
Company's  consolidated  financial  statements  and the  notes  related  thereto
appearing elsewhere in the document.

A.       OVERVIEW
         --------
         The  Company  is  a  leading   provider   of  data,   video  and  voice
telecommunications  services to business and residential  customers over MANs in
Latin  America.  From its  inception,  the  Company  has  focused  on  providing
telecommunications  services in emerging  markets,  primarily in Latin  America,
using a high speed transmission  network within and across national borders. The
Company   intends   to   capitalize   on  the   rapidly   growing   demand   for
telecommunications   services  in  countries   emerging  from   developing   and
state-controlled   economies  and  where  there  is  growing  liberalization  of
regulations governing the provision of telecommunications services.

         As part of the Company's business  strategy,  it expects to continue to
expand through additional significant  acquisitions and strategic alliances. The
Company believes that additional attractive acquisition  opportunities currently
exist in Latin America and it is  continually  evaluating  these  opportunities.
Certain of these transactions,  if consummated, may be material to the Company's
operations and financial  condition.  Those acquisitions may not be successfully
integrated  into the  Company's  business  operations  or  result  in  projected
benefits.

B.       MATERIAL CHANGES IN RESULTS OF OPERATIONS
         -----------------------------------------
Six months ended June 30, 1999 compared to the six months ended June 30, 1998:

         For the six months  ended June 30,  1999,  the Company had  revenues of
$4,144,575  as compared to $44,911 for the same period in 1998,  for an increase
of  $4,099,664.  The increase is primarily  related to the revenues  from the El
Salvador  Entities and  Inter@net  operations  which were  acquired in the third
quarter of 1998.

         The cost of service  increased  $1,242,252,  from  $197,553 for the six
months ended June 30, 1998,  to  $1,439,805  in 1999.  The increase is primarily
related to the additional  revenues  earned in 1999. The Company's  gross margin
was  $2,704,770  for the six months ended June 30, 1999,  compared to ($152,642)
for the same period in 1998.

         Operating  expenses  for  the six  months  ended  June  30,  1999  were
$8,846,556 compared to $2,893,341 for 1998, for an increase of $5,953,215.  This
increase  was  primarily  due to an increase in general and  administrative  and
professional  fees  related to the  Company's  acquisitions, the addition of new
employees,  the  additional  depreciation  and  amortization  from the Company's
acquired operations and the recognition of stock-based  compensation expense for
anticipated  options with exercise prices below fair market value. The Company's
operating loss was  $6,141,786 for the six months ended June 30, 1999,  compared
to $3,045,983 for the six months ended June 30, 1998.

         Interest  income for the six months  ended June 30,  1999 was  $79,129,
compared to $194,155 in 1998. The $115,026  decrease is primarily related to the
lower cash balances in 1999. Interest expense increased  $1,463,706 from $57,129
for the six months  ended June 30, 1998 to  $1,520,835  for the six months ended
June 30, 1999.  The increase was due primarily to the interest  expense from the
debt used to acquire the El Salvador  Entities ("Chispa  Acquisition  Debt") and
the fiber optic  network  capacity in Mexico City acquired in June 1999 (see the
Company's  report  on  Form  8-K  dated  June  23,  1999  for  a  more  detailed
description) ("MetroNet  Transaction"),  the accrual of interest expense for the
subordinated  exchangeable  promissory notes the Company issued in December 1998
(the  "December 1998 Notes") and the recording of imputed  interest  expense for
warrants issued in conjunction with the December 1998 Notes.

         Income tax expense  was $34,773 for the six months  ended June 30, 1999
which was related to the El Salvador  Entities.  There was no income tax expense
in 1998.  Minority  interest in loss of  subsidiaries  was  $753,956 for the six
months ended June 30, 1999, compared to $8,076 for the six months ended June 30,
1998  for an  increase  of  $745,880.  The  increase  was  primarily  due to the
recording of the minority interest for the El Salvador Entities.

         As a result of the foregoing, the Company's net loss for the six months
ended June 30, 1999 was  $6,864,310,  compared to  $2,900,881  for 1998,  for an
increase of $3,963,429.

Six months ended June 30, 1998 compared to the six months ended June 30, 1997:

         For the six months  ended June 30,  1998,  the Company had  revenues of
$44,911 from the multi-channel video services provided in Caracas,  Venezuela by
CVV, which manages the Venezuelan network. Prior to August 17, 1997, the Company
did not have  revenues.  The cost of service for CVV's revenues was $197,553 for
the six months ended June 30, 1998.

         Operating  expenses  for  the six  months  ended  June  30,  1998  were
$2,893,341  compared to $355,007 for 1997, for an increase of  $2,538,334.  This
increase  was  primarily  due to an increase in general and  administrative  and
professional fees related to the development of the Company's Venezuelan network
rights and search for potential  acquisition  candidates,  and the depreciation,
amortization  and lease  expense  from the  Company's  New  Zealand  assets  and
Venezuelan  assets.  The Company's  operating  loss was  $3,045,983  for the six
months ended June 30,  1998,  compared to $355,007 for the six months ended June
30, 1997.

         Interest  income for the six months  ended June 30, 1998 was  $194,155.
The Company had no interest  income  during  1997.  Interest  expense  decreased
$12,384,  from $69,513 for the six months ended June 30, 1997 to $57,129 for the
six months ended June 30, 1998.  The decrease in interest  expense was primarily
attributable  to a decrease in notes  payable from  promissory  notes which were
paid in early 1998.

         Minority interest in loss of subsidiaries was $8,076 for the six months
ended June 30, 1998  compared to $5,428 for 1997.  This loss  related to the New
Zealand subsidiary, AITS.

         As a result of the foregoing, the Company's net loss for the six months
ended June 30,  1998 was  $2,900,881,  compared  to  $419,092  for 1997,  for an
increase of $2,481,789.

C.       LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------
         The telecommunications  industry is capital intensive. In order for the
Company to successfully compete, it will require substantial capital to continue
to develop its  networks  and meet the funding  requirements  of its  operations
(including  losses  from  operations),  as well as to  provide  capital  for its
acquisitions and business development  initiatives.  The Company expects that it
will  spend  over  $100  million  over the next  two  years to meet its  capital
requirements as it implements its business plan.

         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 investments in, and
acquisition of, start-up network operations, to 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 from the Company.

         As of June 30,  1999,  the Company had  current  assets of  $3,039,584,
compared to  $10,126,717  as of December 31, 1998, for a decrease of $7,087,133.
The decrease in current  assets was primarily due to a decrease in note proceeds
due from  affiliate and a decrease in cash. The note proceeds due from affiliate
was received in the form of cash in the first week of January 1999 and then cash
totaling $7,721,297 was used to purchase capital expenditures and inventory, pay
accounts payable and pay corporate  expenses  associated with the development of
the Company's telecommunications operations during the six months ended June 30,
1999.

         The Company had current liabilities of $11,747,503 as of June 30, 1999,
compared to  $14,096,138  as of December 31, 1998, for a decrease of $2,348,635.
The decrease in current  liabilities  was due to the  refinancing  of all of the
short-term  acquisition  debt from the  acquisition of the El Salvador  Entities
(see Item 5), the payment of the  outstanding  foreign  bank lines of credit and
the payment of amounts due to affiliates.  The decrease was partially  offset by
an increase in accounts payable for equipment  purchases and operating expenses,
an increase in accrued  liabilities  for accrued  interest on the December  1998
Notes,  an  increase  in related  party  accrued  consulting  and an increase in
related party notes payable in conjunction  with the MetroNet  Transaction  (see
Item 5). Long term debt increased  $8,590,694,  from $15,346,863 at December 31,
1998 to  $23,937,557  at June 30, 1999.  The  increase was due  primarily to the
refinancing of the Chispa  Acquisition Debt through FondElec  Essential Services
Growth Fund,  L.P., a shareholder in the Company and Chispa  ("FondElec")  and a
third party commercial lender.

         The Company's principal sources of funds are its available resources of
cash and cash  equivalents.  At June 30,  1999,  the  Company  had cash and cash
equivalents of $1,593,984.  The cash flow generated by the Company's  operations
and  projected  network  launches  will not be sufficient to cover the Company's
projected  operating expenses,  general and administrative  expenses and capital
expenditures. The Company also expects acquisitions will constitute a major part
of its  business  strategy,  so it is likely the  Company  will seek  additional
financing in the future for these purposes.

         The  Company's  ability to provide  the  services  contemplated  by its
business  plan  will  be  dependent  upon  the  Company  obtaining   substantial
additional  sources of funds.  While the Company believes that it may be able to
obtain financing through  additional  equity or debt financing or otherwise,  no
assurances can be given that any such  financing will be available,  or that the
Company will be able to obtain any such financing on favorable terms.  Also, the
actual amount and timing of the Company's future capital requirements may differ
materially  from its  current  estimates.  In  particular,  the  accuracy of the
Company's  estimates  is subject to changes and  fluctuations  in the  Company's
revenues, operating costs and development expenses, which can be affected by its
ability to (1) effectively  and efficiently  manage the build-out of the MANs in
each  of  its  markets,  (2)  obtain  infrastructure  contracts,  rights-of-way,
licenses, interconnection agreements and other regulatory approvals necessary to
complete and operate the MANs, (3) negotiate favorable contracts with suppliers,
including  large volume  discounts on  purchases  of capital  equipment  and (4)
access markets,  attract sufficient numbers of customers and provide and develop
services for which customers will subscribe. The Company's revenue and costs are
also dependent upon a number of factors that are not within its control, such as
political,  economic and regulatory  changes,  changes in technology,  increased
competition  and various  factors such as strikes,  weather,  and performance by
third parties in connection with our operations. Due to the uncertainty of these
factors, the Company's actual revenues and costs may vary from expected amounts,
possibly to a material  degree,  and those  variations  are likely to affect the
Company's future capital  requirements.  In addition, if the Company expands its
operations at an accelerated rate or consummates acquisitions, its funding needs
will likely increase, possibly to a significant degree, and it would, therefore,
expend its capital  resources sooner than currently  expected.  If the Company's
capital  resources prove to be  insufficient,  it will need to raise  additional
capital to execute  its current  business  plan and to fund  expected  operating
losses, as well as to consummate future  acquisitions and exploit  opportunities
to expand and develop its businesses.

         To the extent the Company  acquires  the amounts  necessary to fund its
business  plan  through the  issuance  of equity  securities,  the  then-current
shareholders  of the Company may  experience  dilution in the value per share of
their equity securities. The acquisition of funding through the issuance of debt
could result in a substantial portion of the Company's cash flow from operations
being  dedicated to the payment of principal and interest on that  indebtedness,
and could  render the  Company  more  vulnerable  to  competitive  and  economic
downturns.  Financing  could also be obtained by the Company's  subsidiaries  or
affiliates from third parties,  although there can be no assurance the Company's
subsidiaries or affiliates will be able to obtain the financing required to make
planned capital  expenditures,  provide working capital or meet other cash needs
on terms which are economically acceptable to the Company.

         The Company has taken  several  actions  which it believes will improve
its short-term and ongoing liquidity and cash flow:

         - The Company  has  entered  into an  agreement  with a New  York-based
investment  bank for the purpose of securing third party equity and debt for its
activities,  and  management  believes  that this funding can be obtained  under
satisfactory terms. While there can be no assurance that the Company will secure
such financing,  management  believes that this is achievable prior to September
30, 1999.

         - The Company is currently conducting a formal bid and proposal process
for the selection of a technology  partner that would provide a vendor financing
package for the Company's capital equipment,  professional  engineering services
and systems integration expenditures.

         - The Company closed a $1,000,000  short-term  bridge loan with a major
shareholder  in early August,  1999 to provide the Company with working  capital
while it secures the additional financing described above.

         -  Management  is  undertaking  actions  intended to conserve  cash and
control costs as it pursues additional financing and capital resources.

D.       THE YEAR 2000 ISSUE
         -------------------
         The  Company  has  completed  a  review  of its  computer  systems  and
operations  to determine  the extent to which its systems will be  vulnerable to
potential  errors and failures as a result of the "year 2000" problem.  The year
2000  problem  results  from the use of  computer  programs  which were  written
employing only two digits (rather than four digits) to define  applicable years.
On  January  1,  2000,  any  clock  or  date  recording   mechanism,   including
date-sensitive  software which uses only two digits to represent the year, could
recognize a date using "00" as the year  "1900",  rather the year  "2000".  This
could  result in system  failures or  miscalculations,  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions,  send invoices,  provide services or engage in similar activities.
These failures,  miscalculations,  and disruptions could have a material adverse
effect on the Company's business, operations and financial condition.

         The Company has  concluded,  based on its review of its  operations and
computer systems, that its significant computer programs and operations will not
be materially  affected by the year 2000 problem and that the programs that will
be  affected  can be  properly  modified  or  replaced  by the end of 1999 at an
estimated cost of approximately  $100,000.  Under a reasonably likely worst-case
scenario,  the Company's  computer  systems and  operations  could be materially
affected  by the year  2000  problem.  In  addition  to its own  operations  and
computer  systems,  the Company  relies on  operations  and computer  systems of
third-party customers,  financial  institutions,  vendors and other parties with
and through which it conducts business (such as national telephone systems under
the  Company's  interconnect  agreements,   and  the  owners  of  communications
backbones utilized by the Company).

         The Company intends to prioritize its year 2000 efforts to protect,  to
the extent possible,  its business and operations.  The Company's first priority
will be to protect its  mission-critical  operations--such  as those systems and
applications that are vital to the provision by the Company of voice,  video and
data switching,  processing and transport services to customers--from  incurring
material service  interruptions  that could occur as the result of the year 2000
transition.  To this end,  the Company  has  attempted  to identify  any element
within its  business  operations  (including  elements  relating  to third party
relationships)  that could be  impacted  by the year 2000 date  change,  and has
attempted to determine  the risks to its  continuing  business  operations  as a
result of an adverse effect resulting from that date change.

         The Company  generally  requires  that its key  vendors  and  suppliers
warrant in writing that they are year 2000 ready.  The Company has  purchased or
acquired most of its  mission-critical  systems from such  third-party  vendors.
Unfortunately,  like other  telecommunications  providers  (and, in  particular,
telecommunications  providers  operating  outside  of the  United  States),  the
Company's  products and services are dependent  upon third parties which may not
be fully year 2000 compliant.  The Company has attempted to identify the vendors
and third-parties  with which it has contractual  relationships  that may not be
year 2000 compliant by the end of 1999, and has adopted  contingency plans which
it  believes  will  mitigate  any  adverse  impact  to its  business  operations
resulting  from  those  vendors'  or  third-parties'  inability  to  perform  in
accordance with their contractual  obligations.  These contingency plans include
the  preparation  and use of backup  copies  of  financial  records,  installing
portable  diesel  generators,  determining the  availability  and reliability of
alternate networks,  and scheduling  additional phone center,  network operating
center, and repair personnel.

         Although the Company's  efforts to be Year 2000  compliant are intended
to  minimize  the  adverse  effects of the Year 2000 issue on its  business  and
operations,  the  actual  effects  of the issue  will not be known  until  2000.
Difficulties in implementing the remediation or prevention  phases or failure by
the Company's major vendors,  third party network service  providers,  and other
material service providers and customers to adequately  address their respective
Year 2000 issues in a timely manner could have a material  adverse effect on the
Company's business, results of operations, and financial conditions.

E.       SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
         -------------------------------------------------
         Certain statements contained in "Management's  Discussion and Analysis"
constitute  forward-looking  statements  concerning  the  Company's  operations,
economic performance and financial  condition.  Because those statements involve
risks and  uncertainties,  actual  results  may  differ  materially  from  those
expressed or implied by those forward-looking statements.

         In addition,  any statements that express or involve  discussions as to
expectations,  beliefs,  plans,  objectives,  assumptions  or  future  events or
performance  are  not  historical   facts  and  may  be   forward-looking   and,
accordingly,  those statements involve estimates,  assumptions and uncertainties
which could cause actual results to differ  materially  from those  expressed in
the  forward-looking  statements.  Accordingly,  those types of  statements  are
qualified in their entirety by reference to, and are accompanied by, the factors
discussed  throughout  this  report.  Among the key  factors  that have a direct
bearing on the Company's  results of operations  are the potential risk of delay
in implementing the Company's  business plan; the political,  economic and legal
aspects  of the  markets in which the  Company  operates;  competition;  and the
Company's need for additional substantial financing.  The Company has no control
over some of these factors.

         The factors  described in this report could cause the Company's  actual
operating   results  to  differ   materially   from  those   expressed   in  any
forward-looking  statements  of the Company made by or on behalf of the Company.
Persons  reviewing  this report,  therefore,  should not place undue reliance on
those  forward-looking  statements.  Further, to the extent this report contains
forward-looking  statements,  they speak only as of the date of this report, and
the Company undertakes no obligation to update any forward-looking  statement or
statements to reflect the occurrence of  unanticipated  events.  New factors may
emerge from time to time,  and it is not possible for  management to predict all
of such  factors.  Further,  management  cannot  assess  the impact of each such
factor  on the  Company's  business  or the  extent  to  which  any  factor,  or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS


         On August 9,  1999,  the  plaintiffs  in the suit  styled as  Clearview
Cable,  Inc., et al. v.  Convergence  Communications,  Inc.,  et al.,  agreed to
dismiss  that action  without  prejudice  pursuant to the terms of a  settlement
agreement with the Company. See the Company's report on Form 8-K filed on August
12,  1999 for a more  detailed  description  of the  suit  and the  terms of the
settlement.  See also the section entitled "Legal  Proceedings" in the Company's
report on Form  10-QSB for the  quarter  ended  March 31,  1999 and for the year
ended December 31, 1998.

ITEM 2.  CHANGES IN SECURITIES

                                      None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


                                      None.

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

                                      None.

ITEM 5.  OTHER INFORMATION

         FondElec  Loan  Transaction - On August 6, 1999,  the Company  borrowed
$1,000,000 from FondElec Essential Services Growth Fund, L.P. ("FondElec").  See
the  Company's  report on Form 8-K filed on  August  12,  1999 and note 4 to the
financial  statements included in this report for more detailed  descriptions of
this transaction.

         MetroNet  Agreement - On June 15,  1999,  the Company  consummated  the
acquisition of fiber optic network capacity in Mexico City,  Mexico and financed
the  acquisition  through a loan from  FondElec  and  Internexus,  S.A.  See the
Company's  report on Form 8-K filed on June 23, 1999 and note 4 to the financial
statements  included  in this  report for more  detailed  descriptions  of those
transactions.

         El Salvador Acquisition Note Refinancing - In May 1999, Chispa obtained
a long-term loan from a third party lender of  approximately  $4.3 million and a
FondElec loan was  refinanced.  See the Company's  report on Form 10-QSB for the
three  months  ended  March  31,  1999  and note 4 to the  financial  statements
included in this report for more detailed descriptions of the refinancing.

         Venezuelan  Point-to-Multipoint  Concession  - In  January,  1999,  the
Venezuelan telecommunications licensing authority granted Inter@net an extension
to  its  telecommunications  concession.  The  extension  provisionally  granted
Inter@net the right to conduct  point-to-multipoint  data transmission  services
through  both fiber optic cable and using a portion of the  Venezuelan  wireless
frequency  spectrum.  The  concession was  conditioned on a technical  review of
Inter@net  system and the licensing  authority's  frequency use plan.  After the
date of the provisional  grant, the Company  repeatedly  requested the licensing
authority to inspect the Company's  facilities,  and believes its system met the
technical  requirements necessary for the extension to be granted on a permanent
basis.  Nevertheless,  on August 9, 1999, the Company  received  notice from the
Venezuelan  licensing  authority that,  based on its review of its frequency use
plan, it had rescinded the extension. The authority's frequency use plan has not
been made public.

         The Company intends to vigorously  defend its expectancy  rights in the
extension.  On August 20, 1999,  Inter@net  filed a petition with the Venezuelan
licensing  authority  in  response  to its August 9, 1999  action.  Among  other
things,  the petition requests the authority to reconsider its rescission of the
concession's  extension or,  alternatively,  to grant Inter@net spectrum in some
portion of the Venezuelan  wireless  frequency band that is consistent  with the
authority's  frequency  use plan.  The petition  also  requests the authority to
immediately  reinstate the portion of the extension relating to the provision of
point-to-multipoint  data transmission using fiber optic cable. Under applicable
law, the licensing authority has four months to act on the petition.

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

         A.    EXHIBITS.

                                      None

         B.    REPORTS ON FORM 8-K

         The  Company  filed two  reports  on Form 8-K  since the  filing of the
Company's report on Form 10-QSB for the quarter ended March 31, 1999:

         1. On June 23, 1999,  the Company filed a report on Form 8-K describing
its  acquisition of a portion of the capacity of a fiberoptic  network in Mexico
City, Mexico, and the financing transaction relating to that acquisition.

         2. On  August  12,  1999,  the  Company  filed  a  report  on Form  8-K
describing  the  terms  of a  $1,000,000  million  loan  from  FondElec  and the
dismissal, without prejudice, of a lawsuit involving the Company pursuant to the
terms of a settlement agreement with the plaintiffs in that action.



                                   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:  August 23, 1999                      BY    /s/ JERRY SLOVINSKI
                                               ---------------------------------
                                                 Jerry Slovinski
                                                 Chief Financial Officer