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, 2000.

         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 11, 2000, 11,389,191 shares of registrant's Common Stock, par value
$.001 per share, 29,521 shares of the registrant's Series B Preferred Stock, par
value  $.001 per  share,  and  13,353,806  shares of the  registrant's  Series C
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  of
Convergence Communications, Inc. 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 our annual report on Form
10-KSB for the year ended December 31, 1999,  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 our results of
operations,  financial  position and changes  therein for the periods  presented
have been included.  The results of operations for the six months ended June 30,
2000 may not be  indicative  of the results  that may be  expected  for the year
ending December 31, 2000.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]



<PAGE>
<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 2000 AND DECEMBER 31, 1999

-------------------------------------------------------------------------------------------------------------------
                                                                               June 30,           December 31,
                                                                                 2000                 1999
                                                                          -----------------     ---------------
<S>                                                                       <C>                   <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                   $ 6,097,310        $ 26,303,296
    Accounts receivable - net                                                     5,783,536           3,180,748
    Inventory - net                                                                 484,562             262,177
    Other current assets                                                          4,341,594           1,225,490
                                                                           -----------------     ---------------
                  Total current assets                                           16,707,002          30,971,711
PROPERTY AND EQUIPMENT - net                                                     33,066,174          28,446,776
INTANGIBLE ASSETS - net                                                          45,310,616          36,660,025
OTHER ASSETS                                                                      5,661,610           1,126,011
                                                                           -----------------     ---------------
TOTAL ASSETS                                                                  $ 100,745,402        $ 97,204,523
                                                                           =================     ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Notes payable - current portion                                            $ 16,256,117        $ 11,190,987
    Accounts payable and accrued liabilities                                     13,970,480           6,851,249
    Due to affiliates                                                                     -             122,356
                                                                           -----------------     ---------------
                  Total current liabilities                                      30,226,597          18,164,592
LONG-TERM LIABILITIES:
    Notes payable - long-term portion                                            17,946,873          11,389,937
    Long-term debt (payable to related parties)                                   2,654,098           2,595,634
    Other long-term liabilities                                                     229,227             185,686
                                                                           -----------------     ---------------
                  Total long-term liabilities                                    20,830,198          14,171,257
MINORITY INTEREST IN SUBSIDIARIES                                                 3,965,939           5,493,394
                                                                           -----------------     ---------------
                  Total liabilities                                              55,022,734          37,829,243
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:

       101,374 shares issued and outstanding in 2000 and 1999.                          101                 101
    Series "C" Preferred stock; $0.001 par value; 14,250,000 shares authorized:
       9,728,909 shares issued and outstanding in 2000 and 1999.                      9,729               9,729
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       11,717,701 and 11,585,489 outstanding in 2000 and 1999, respectively          11,717              11,585
    Additional paid-in capital                                                   96,676,447          95,147,893
    Accumulated deficit                                                         (50,338,503)        (35,764,016)
    Accumulated other comprehensive loss                                           (636,823)            (30,012)
                                                                           -----------------     ---------------
                  Total stockholders' equity                                     45,722,668          59,375,280
                                                                           -----------------     ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $ 100,745,402        $ 97,204,523
                                                                           =================     ===============


See notes to consolidated financial statements.
</TABLE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000, 1999 AND 1998

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

                                                                 Six Months         Six Months        Six Months
                                                                    Ended              Ended             Ended
                                                                   June 30            June 30           June 30
                                                                    2000               1999              1998
                                                               ----------------   ----------------   --------------
<S>                                                            <C>                <C>                <C>
NET REVENUES FROM SERVICES                                        $ 15,851,933        $ 4,144,575         $ 44,911
                                                               ----------------   ----------------   --------------
COSTS AND EXPENSES:
    Variable cost of services                                        8,997,860          1,439,805          197,553
    Salaries, wages and benefits                                     6,793,648          2,353,694          173,536
    Selling, general and administrative                              7,525,053          3,417,683        1,854,250
    Depreciation and amortization                                    6,885,851          2,420,985          865,555
    Stock option compensation expense                                  510,367            634,009                -
                                                               ----------------   ----------------   --------------
                  Total costs and expenses                          30,712,779         10,266,176        3,090,894
                                                               ----------------   ----------------   --------------
OPERATING LOSS                                                     (14,860,846)        (6,121,601)      (3,045,983)
OTHER INCOME AND (EXPENSES):
    Interest expense, net                                           (1,236,669)        (1,441,706)         137,026
    Net gain (loss) on foreign exchange and other                       89,720            (20,186)               -
                                                               ----------------   ----------------   --------------
                  Total other expense                               (1,146,949)        (1,461,892)         137,026
                                                               ----------------   ----------------   --------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                     (16,007,795)        (7,583,493)      (2,908,957)
PROVISION FOR INCOME TAXES                                             (94,147)           (34,773)               -
                                                               ----------------   ----------------   --------------
LOSS BEFORE MINORITY INTEREST                                      (16,101,942)        (7,618,266)      (2,908,957)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES                            1,527,455            753,956            8,076
                                                               ----------------   ----------------   --------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                     $ (14,574,487)      $ (6,864,310)    $ (2,900,881)
                                                               ================   ================   ==============
Net loss per basic and diluted common share                            $ (0.68)           $ (0.57)         $ (0.25)
                                                               ================   ================   ==============
Weighted-average number of common shares:

    Basic and diluted                                               21,480,240         12,022,728       11,469,119
                                                               ================   ================   ==============


See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2000, 1999 AND 1998

---------------------------------------------------------------------------------------------------------------------------
                                                                   Three Months        Three Months       Three Months
                                                                       Ended              Ended              Ended
                                                                      June 30            June 30            June 30
                                                                       2000                1999               1998
                                                                  ----------------   -----------------   ---------------
<S>                                                               <C>                <C>                 <C>
NET REVENUES FROM SERVICES                                            $ 8,635,510         $ 2,102,087          $ 16,575
                                                                  ----------------   -----------------   ---------------
COSTS AND EXPENSES:
    Variable cost of services                                           4,897,700             459,453           105,753
    Salaries, wages and benefits                                        3,638,927           1,768,709            87,768
    Selling, general and administrative                                 3,844,845           1,486,996           998,100
    Depreciation and amortization                                       3,977,136           1,215,114           436,658
    Stock option compensation expense                                     246,144             317,004                 -
                                                                  ----------------   -----------------   ---------------
                  Total costs and expenses                             16,604,752           5,247,276         1,628,279
                                                                  ----------------   -----------------   ---------------
OPERATING LOSS                                                         (7,969,242)         (3,145,189)       (1,611,704)
OTHER INCOME AND (EXPENSES):                                                    -                   -                 -
    Interest expense, net                                                (791,730)           (856,633)           82,977
    Net gain (loss) on foreign exchange and other                          51,439             (20,186)                -
                                                                  ----------------   -----------------   ---------------
                  Total other expense                                    (740,291)           (876,819)           82,977
                                                                  ----------------   -----------------   ---------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                         (8,709,533)         (4,022,008)       (1,528,727)
PROVISION FOR INCOME TAXES                                                (40,388)                  -                -
                                                                  ----------------   -----------------   ---------------
LOSS BEFORE MINORITY INTEREST                                          (8,749,921)         (4,022,008)       (1,528,727)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES                                 869,714             398,696             3,980
                                                                  ----------------   -----------------   ---------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                         $ (7,880,207)       $ (3,623,312)     $ (1,524,747)
                                                                  ================   =================   ===============
Net loss per basic and diluted common share                               $ (0.37)            $ (0.30)          $ (0.13)
                                                                  ================   =================   ===============
Weighted-average number of common shares:

    Basic and diluted                                                  21,541,324          12,022,728        11,937,014
                                                                  ================   =================   ===============


See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                                  Preferred Stock
                                                             Series "A"         Series "B"        Series "C"         Common Stock
                                                          --------------- ------------------  -----------------   ------------------
                                                Total      Shares  Amount  Shares    Amount   Shares    Amount   Shares      Amount
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------  -------
<S>                                        <C>            <C>     <C>     <C>       <C>      <C>        <C>     <C>         <C>

BALANCE, DECEMBER 31, 1996                  $  (661,018)                                                           428,571    $ 429
Reverse acquisition of TIC:
   Exchange of TIC common shares for CCI
   Series "A" Preferred shares                   14,571   685,063   $ 685                                         (428,571)    (429)
   Addition of CCI common stock                  86,990                                                          1,041,494    1,041
Exchange of CVV common stock for CCI common
   shares and Series "B" Preferred shares     7,096,500                    101,374    $ 101                        450,563      451
Issuance of CCI common stock and Series
   "A" Preferred shares for cash             10,000,000   150,380     150                                          228,658      229
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                                          24,284       24
Issuance of options for common shares and
   Series "A" Preferred shares below
      fair value                    1,        1,479,074
Net loss for the year ended December         (4,594,294)
                                              ----------  ------- ------- --------  -------  ---------  ------- ----------  -------
BALANCE, DECEMBER 31, 1997                   14,378,966   839,526     839  101,374      101          -        -  1,744,999    1,745
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                                          600,504      600
Conversion of Series "A" Preferred shares into
   common shares                                      -   930,706)   (930)                                       9,307,060    9,307
Exchange of Telecom common stock for CCI
   common shares                                600,000                                                             85,714       86
Issuance of options for common shares
   below fair value                           1,000,245
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------  -------

BALANCE, DECEMBER 31, 1998                   10,684,526         -       -  101,374      101          -        - 11,738,277   11,738
Comprehensive loss:
   Net loss for the year ended
      December 31, 1999                     (20,277,479)
   Other comprehensive loss consisting of
     foreign currency translation adjustment     (9,497)
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------  -------
     Total comprehensive loss               (20,286,976)        -       -        -        -          -        -          -        -

Issuance of Series "C" Preferred Stock, net  67,794,198                                      9,728,909   $9,729
Issuance of warrants                            750,677
Repurchases and retirements of common stock  (1,215,860)                                                          (152,788)    (153)
Forgiveness of related party liability          235,175
Issuance of warrants on debt                    162,191
Issuance of options for common shares
   below fair value                           1,251,349
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------  -------
BALANCE, DECEMBER 31, 1999                   59,375,280         -       -  101,374      101  9,728,909    9,729 11,585,489   11,585
Comprehensive loss:
   Net loss for six months ended
      June 30, 2000                         (14,574,487)
   Other comprehensive loss consisting of
     foreign currency translation adjustment   (606,811)
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------   ------
     Total comprehensive loss               (15,181,298)        -       -        -        -          -        -          -

Exchange of Metrotelecom stock for
   CCI common shares                          1,000,000                                                            121,212      121
Exercise of stock options                           241                                                             11,000       11
Issuance of options for common shares
   below fair value                             528,445
                                             ----------   ------- ------- --------  -------  ---------  ------- ----------  -------
BALANCE, JUNE 30, 2000                     $ 45,722,668         -       -  101,374    $ 101  9,728,909   $9,729 11,717,701 $ 11,717
                                             ==========   ======= ======= ========  =======  =========  ======= ==========  =======

</TABLE>
                                             (CONTINUED)

<PAGE>
<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
                                             (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------



                                                                                   Accumulated
                                                        Additional                 Other Compre-
                                                          Paid-In    Accumulated  hensive Income
                                                          Capital      Deficit        (Loss)
                                                        ----------   -----------   ------------
<S>                                                     <C>          <C>           <C>

BALANCE, DECEMBER 31, 1996                                            $ (661,447)
Reverse acquisition of TIC:
   Exchange of TIC common shares for CCI
   Series "A" Preferred shares                            $ 14,315
   Addition of CCI common stock                             85,949
Exchange of CVV common stock for CCI common
   shares and Series "B" Preferred shares                7,095,948
Issuance of CCI common stock and Series
   "A" Preferred shares for cash                         9,999,621
Issuance of warrants below fair value                      657,143
Issuance of CCI common stock and Series
   "A" Preferred shares for cash                           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                              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                         4,955,935
Conversion of Series "A" Preferred shares into
   common shares                            -               (8,377)
Exchange of Telecom common stock for CCI
   common shares                                           599,914
Issuance of options for common shares
   below fair value                                      1,000,245
                                                        ----------   -----------   ------------
BALANCE, DECEMBER 31, 1998                              26,179,739   (15,486,537)       (20,515)
Comprehensive loss:
   Net loss for the year ended December 31, 1999                     (20,277,479)
   Other comprehensive loss consisting of
     foreign currency translation adjustment                                            $ (9,497)
                                                        ----------   -----------   ------------
     Total comprehensive loss                                    -   (20,277,479)       (30,012)

Issuance of Series "C" Preferred Stock, net             67,784,469
Issuance of warrants                                       750,677
Repurchases and retirements of common stock             (1,215,707)
Forgiveness of related party liability                     235,175
Issuance of warrants on debt                               162,191
Issuance of options for common shares
   below fair value                                      1,251,349
                                                        ----------   -----------   ------------
BALANCE, DECEMBER 31, 1999                              95,147,893   (35,764,016)       (30,012)
Comprehensive loss:
   Net loss for six months ended June 30, 2000                       (14,574,487)
   Other comprehensive loss consisting of
     foreign currency translation adjustment                                         $ (606,811)
                                                        ----------   -----------   ------------
     Total comprehensive loss                                    -   (14,574,487)      (636,823)

Exchange of Metrotelecom stock for
   CCI common shares                                       999,879
Exercise of stock options                                      230
Issuance of options for common shares
   below fair value                                        528,445
                                                        ----------   -----------   ------------

BALANCE, JUNE 30, 2000                                 $96,676,447  $(50,338,503)    $ (636,823)
                                                        ==========   ===========   ============


See notes to consolidated financial statements

</TABLE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000, 1999 AND 1998

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

                                                                       Six Months        Six Months         Six Months
                                                                         Ended             Ended              Ended
                                                                        June 30           June 30            June 30
                                                                          2000              1999               1998
                                                                     ---------------   ---------------   -----------------
<S>                                                                  <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                           $(14,574,487)     $ (6,864,310)       $ (2,900,881)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
          Depreciation and amortization                                   6,885,851         2,420,985             865,555
          Provision for bad debts                                           439,057           114,676                   -
          Minority interest in loss of subsidiaries                      (1,527,455)         (553,956)             (8,076)
          Issuance of options for common shares below fair value            528,445           634,009                   -
          Amortization of discount on notes payable                       1,091,473           392,350                   -
          Issuance of warrants below fair value                                   -           104,110                   -
          Change in assets and liabilities, net of effects
            of acquisitions:
             Accounts receivable                                         (2,316,193)         (272,064)              9,275
             Due from affiliates                                                  -         5,000,000              (2,121)
             Inventory                                                     (222,385)         (222,649)              7,679
             Other current assets                                        (2,415,284)         (256,356)             (5,932)
             Other assets                                                (1,656,593)         (374,093)           (139,625)
             Accounts payable and accrued liabilities                     3,362,037           588,149             435,476
             Due to affiliates                                             (102,699)         (266,798)            100,666
             Other long-term liabilities                                     43,541             9,078                   -
                                                                     ---------------   ---------------   -----------------
                  Net cash used in operating activities                 (10,464,692)          453,131          (1,637,984)
                                                                     ---------------   ---------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash paid in Metrotelecom acquisition, net                           (3,417,851)                -                   -
    Purchases of property and equipment                                  (5,879,732)       (9,271,736)           (765,748)
                                                                     ---------------   ---------------   -----------------
                  Net cash used in investing activities                  (9,297,583)       (9,271,736)           (765,748)
                                                                     ---------------   ---------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of common stock                                    -                 -           3,161,661
    Net proceeds from exercise of stock options                                 241                 -                   -
    Increase in minority interest from issuance of subsidiary common stock        -           200,000                   -
    Net proceeds from issuance of Series "A" Preferred Stock                      -                 -           1,794,965
    Proceeds from related party note                                              -         9,966,115
    Payments on related party notes                                        (126,000)          (52,500)
    Proceeds from related party borrowings                                        -                 -              45,603
    Proceeds from promissory notes                                                -         4,335,000
    Payments on promissory notes                                           (322,917)       (8,349,642)                  -
                                                                     ---------------   ---------------   -----------------
                  Net cash (used by) provided by financing activities      (448,676)        6,098,973           5,002,229
                                                                     ---------------   ---------------   -----------------

EFFECT OF EXCHANGE RATES ON CASH                                              4,965                 -                   -
                                                                     ---------------   ---------------   -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    (20,205,986)       (2,719,632)          2,598,497
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                         26,303,296         4,315,281           6,171,515
                                                                     ---------------   ---------------   -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $ 6,097,310       $ 1,595,649         $ 8,770,012
                                                                     ===============   ===============   =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for interest                              $ 218,325           $ 7,100                 $ -
                                                                     ===============   ===============   =================
    Cash paid during the period  for income taxes (including prepaid)      $ 69,366          $ 58,805                 $ -
                                                                     ===============   ===============   =================


See notes to consolidated financial statements.
</TABLE>
<PAGE>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2000

(Unaudited)

1.       Basis of Presentation

         Convergence  Communications,  Inc.  and  subsidiaries  is a provider of
integrated  broadband  communications  and  Internet  services  through  its own
metropolitan area networks.  We operate in recently  deregulated and high growth
markets,  principally  Mexico,  Central  America and the Andean  region of South
America.  We offer  business  entities,  governmental  agencies and  residential
customers high-speed broadband data connections, high-speed and dial-up Internet
access,  voice and video  services.  Our  networks use  technology  based on the
Internet  Protocol,   or  "IP",  and  asynchronous   transfer  mode,  or  "ATM",
technology.

         From our  inception,  we have focused on  providing  telecommunications
services  using  high speed  transmission  networks  within and across  national
borders.   We  intend  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.

         Our consolidated  financial  statements include the accounts of our all
wholly- and majority-owned subsidiaries, as well as Chispa Dos, Inc. ("Chispa"),
the holding  entity of  Cablevisa,  S.A.,  Multicable  S.A.  and  Cybernet de El
Salvador S.A. We own 32.6% of the capital stock of Chispa, but we have operating
control  and 50% of the Board of  Directors  seats of  Chispa.  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
our annual report on Form 10-KSB for the year ended December 31, 1999.

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 and Series C
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

         Alcatel  Notes - In June 2000,  we closed a vendor  financing  facility
with Alcatel giving us the ability to borrow up to $175,000,000 for the purchase
of  telecommunications  equipment  and  design,  engineering,  installation  and
testing  services  from  Alcatel for the  deployment  of our  pan-regional  high
bandwidth  metropolitan  area  network.  As of June 30, 2000,  we had drawn down
$2,788,833  of  that  facility.   The  amounts  drawn  under  the  facility  are
represented by promissory  notes which are secured by a  comprehensive  security
package  including a pledge of the stock of our  subsidiaries  and other  equity
interests in our  subsidiaries  and  equipment,  supplies,  inventory,  accounts
receivable  and  other  personal  property.  We will be  required  to repay  the
principal  amounts in  quarterly  installments,  commencing  30 months  from the
closing date. The final maturity date for the facility is in January, 2007.

         MetroTelecom  Notes - In April 2000,  we  financed  amounts not paid at
closing in the MetroTelecom  Acquisition through the delivery of four promissory
notes totaling  $8,750,000.  The  promissory  notes are due on the first through
fourth  anniversaries of the closing.  The promissory notes bear interest at the
rate  of 7% per  annum.  The  notes  were  recorded  at  the  present  value  of
approximately  $8,200,000,  which reflects the estimated market rate of interest
of 10.75%.  Our obligation to pay the deferred portions of the purchase price is
secured  by a pledge of the  shares of  MetroTelecom,  as well as its  operating
subsidiaries. A portion of those pledged shares will be released to us as we pay
down the promissory notes.  MetroTelecom will be entitled to retain at least 51%
of the pledged shares until we pay all amounts due under the promissory notes.

5.       Operating Segment Information

         We make key financial  decisions based on certain  operating results of
our  subsidiaries  and revenue types.  Our operating  segment  information is as
follows for the six months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>

         NET REVENUES FROM SERVICES BY SUBSIDIARY:

         DIAL UP INTERNET ACCESS                        June 30, 2000         June 30, 1999
                                                      ------------------     -----------------
         <S>                                       <C>                    <C>
         Intervan (in Mexico)                      $            236,093   $                 -
         GBnet (in Central America)                             239,724                     -
         Inter@net (in Venezuela)                               512,598               572,308
         Chispa Dos (in El Salvador)                             30,243                24,801
         MetroTelecom (in Guatemala)                            317,901                     -
         Parent Company, elim. and others                         2,434                     -
                                                      ------------------     -----------------
              Consolidated total                   $          1,338,993   $           597,109
                                                      ==================     =================

         HIGH SPEED DATA                                June 30, 2000         June 30, 1999
         INTERNET ACCESS
                                                      ------------------     -----------------
         Intervan (in Mexico)                      $          5,222,755   $                 -
         GBnet (in Central America)                           1,721,960                     -
         Inter@net (in Venezuela)                                57,504                     -
         Chispa Dos (in El Salvador)                            420,896                     -
         MetroTelecom (in Guatemala)                            225,409                     -
         Parent Company, elim. and others                      (24,065)                     -
                                                      ------------------     -----------------
              Consolidated total                   $          7,624,459   $                 -
                                                      ==================     =================

         CABLE TELEVISION                               June 30, 2000         June 30, 1999
                                                      ------------------     -----------------
         Intervan (in Mexico)                      $                  -   $                 -
         GBnet (in Central America)                                   -                     -
         Inter@net (in Venezuela)                                     -                     -
         Chispa Dos (in El Salvador)                          3,197,209             3,128,558
         MetroTelecom (in Guatemala)                            329,656                     -
         Parent Company, elim. and others                             -                     -
                                                      ------------------     -----------------
              Consolidated total                   $          3,526,865   $         3,128,558
                                                      ==================     =================

         OTHER (primarily equipment financing,
         installation and advertising)                  June 30, 2000         June 30, 1999
                                                      ------------------     -----------------
         Intervan (in Mexico)                      $          2,145,258   $                 -
         GBnet (in Central America)                             231,811                     -
         Inter@net (in Venezuela)                                30,371                17,668
         Chispa Dos (in El Salvador)                            563,879               397,775
         MetroTelecom (in Guatemala)                            281,120                     -
         Parent Company, elim. and others                       109,178                 3,465
                                                      ------------------     -----------------
              Consolidated total                   $          3,361,616   $           418,908
                                                      ==================     =================

         TOTAL REVENUES                                 June 30, 2000           June 30, 1999
                                                      ------------------     -----------------
         Intervan (in Mexico)                      $          7,604,106   $                 -
         GBnet (in Central America)                           2,193,494                     -
         Inter@net (in Venezuela)                               600,472               589,976
         Chispa Dos (in El Salvador)                          4,212,228             3,551,134
         MetroTelecom (in Guatemala)                          1,154,086                     -
         Parent Company, elim. and others                        87,547                 3,465
                                                      ------------------     -----------------
              Consolidated total                   $         15,851,933   $         4,144,575
                                                      ==================     =================

         OPERATING                                      June 30, 2000         June 30, 1999
         INCOME (LOSS)
                                                      ------------------     -----------------
         Intervan (in Mexico)                      $        (3,997,897)   $                 -
         GBnet (in Central America)                         (1,526,007)                     -
         Inter@net (in Venezuela)                             (857,364)             (341,266)
         Chispa Dos (in El Salvador)                        (1,548,951)             (659,960)
         MetroTelecom (in Guatemala)                          (506,977)                     -
         Parent Company, elim. and other                    (6,423,650)           (5,120,375)
                                                      ------------------     -----------------
              Consolidated total                   $       (14,860,846)   $       (6,121,601)

                                                      ==================     =================
</TABLE>

6.       Acquisition

         MetroTelecom   Acquisition  -  On  April  5,  2000,  we  completed  the
acquisition  of all of the  outstanding  stock  of a  group  of  companies  that
conduct, through directly or indirectly held operating subsidiaries,  high speed
data,  dial-up Internet,  high speed Internet,  telephony and subscription cable
television  services in Guatemala.  The purchase price for the  acquisition  was
$13.5  million.  For a more detailed  description  of the  transaction,  see our
report on Form 8-K dated April 5, 2000.

7.       Recently Issued Accounting Standards

         In December 1999, the Securities and Exchange  Commission  issued Staff
Accounting  Bulletin ("SAB") 101, Revenue  Recognition in Financial  Statements.
SAB 101  establishes  accounting and reporting  standards for the recognition of
revenue.  It states that revenue  generally is realized or realizable and earned
when all of the  following  criteria  are met:  (1)  persuasive  evidence  of an
arrangement  exists;  (2) delivery has occurred or services have been  rendered;
(3) the seller's price to the buyer is fixed or determinable;  (4) collection is
reasonably  assured.  SAB 101 is effective for our financial  statements for the
year ending  December 31, 2000.  Effective  January 1, 2000, we adopted SAB 101.
The  adoption  of SAB  101 did  not  have a  material  impact  on our  financial
statements.

8.       Subsequent Event

         Option Exercise - In July 2000, we received approximately $27.2 million
of cash from the  exercise of options  granted  pursuant to an option  agreement
dated October 1999, as amended,  to a group of shareholders  who invested $109.5
million of equity and debt  financing in October 1999 (see the section  entitled
"Subsequent  Financings and Other Transactions" in our report on Form 10-KSB for
the year ended  December 31, 1999 for a more  detailed  description)  and issued
3,624,897  shares of our Series C preferred stock. We also have been notified by
this group of  shareholders  that the  remaining $2 million of options under the
October 1999 financing will be exercised by mid-August.

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS

         The  following   discussion  and  analysis  relates  to  our  financial
condition and results of  operations  for the six months ended June 30, 2000 and
1999.  This  information  should be read in  conjunction  with our  consolidated
financial  statements and the notes related thereto  appearing  elsewhere in the
document.

A.       OVERVIEW

         We are a  provider  of  telecommunications  services  to  business  and
residential  customers over MANs in Latin America.  From our inception,  we have
focused on providing  telecommunications services in emerging markets, primarily
in Latin  America,  using a high speed  transmission  network  within and across
national  borders.  We intend 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 our  business  strategy,  we  expect to  continue  to expand
through additional significant  acquisitions and strategic alliances. We believe
that additional attractive  acquisition  opportunities  currently exist in Latin
America and we are continually evaluating these opportunities.  Certain of these
transactions,  if  consummated,  may be material to our operations and financial
condition.  Those  acquisitions  may not be  successfully  integrated  into  our
business operations or result in projected benefits.

B.       MATERIAL CHANGES IN RESULTS OF OPERATIONS

Six months ended June 30, 2000 compared to the six months ended June 30, 1999:

         Revenues.  Our  Revenues for the six months ended June 30, 2000 totaled
$15.85  million,  compared  to  $4.15  million  for the  same  period  in  1999,
representing a $11.7 million increase. The following table shows our revenues by
operating subsidiary for the first quarters in 2000 and 1999:

   TOTAL REVENUES                     JUNE 30, 2000          JUNE 30, 1999
   (in thousands)
   Intervan (1)                            $ 7,604                       -
   GBNet (1)                                 2,193                       -
   Inter@net                                   601                  $  590
   Chispa                                    4,212                   3,551
   MetroTelecom (2)                          1,154                       -
   Parent Company, elim. & others               88                       4
                                      ------------             ------------
     Consolidated total                   $ 15,852                 $ 4,145
                                      ============             ===========
-----------------

(1)      Intervan and GBNet subsidiaries were acquired in December 1999.
(2)      MetroTelecom subsidiary was acquired in April 2000.

         The increase in revenues was primarily attributable to ownership of the
Intervan, GBNet and MetroTelecom entities during the respective six months ended
June 30, 2000. Chispa's customer base grew from 27,325 customers as of June 1999
to 29,047 customers as of June 2000, an increase of 1,722  customers,  or 6%. In
addition to the growth of the customer base during 1999,  Chispa began  offering
dial-up  internet  services  and high speed data  services  to  residential  and
corporate customers during the latter half of 1999.

           Variable  Cost  of  Services.  Variable  cost  of  services  consists
primarily of bandwidth and cable programming charges. The cost of these services
totaled $9.0 million for the six months ended June 30, 2000, an increase of $7.6
million over June 1999.  Of total  variable  cost of services for the six months
ended June 30, 2000, $5.6 million related to our Intervan  operations in Mexico,
$1.3 million related to our GBnet  operations in Central  America,  $0.4 million
related to our Inter@net  operations in Venezuela,  $1.4 million  related to our
Chispa  operations  in El  Salvador  and $0.4  million  related to  MetroTelecom
operations in Guatemala.

         Salaries,  Wages and Benefits. Our salaries, wages and benefits totaled
$6.8 million for the six months ended June 30, 2000, an increase of $4.4 million
over the six months  ended June 30,  1999.  We  maintained a total of almost 700
employees  at June 30,  2000,  compared to less than 300  employees  at June 30,
1999. The increase in headcount  reflects both the normal  increases  associated
with our growing  operations  and the employees we acquired  during the month of
December  1999 with our  purchases of Intervan  and GBnet,  which had 153 and 46
employees,  respectively,  at June 30,  2000.  The  increase  also  reflects the
employees  we hired in April 2000 with our purchase of  MetroTelecom,  which had
170 employees at June 30, 2000.

         Selling, General and Administrative Expenses. We incurred SG&A expenses
of $7.5 million  during the six months ended June 30, 2000,  an increase of $4.1
million  compared to the six months  ended June 30,  1999.  The increase in SG&A
expenses  reflects growth in our operations,  including  completing  significant
acquisitions  in  December  1999  and  April  2000,  as  well  as the  increased
development of our networks. The increase in SG&A reflects:

     o    Consulting  and legal fees,  which  totaled  $2.1  million for the six
          months  ended June 30,  2000,  compared  with $1.1 million for the six
          months ended June 30, 1999.

     o    Travel,  advertising  and  promotion  costs  increased  189%,  to $1.7
          million  for the six months  ended  June 30,  2000,  compared  to $0.6
          million for the six months ended June 30, 1999.  These expenses relate
          primarily to the  expansion of our  operations  into Central  America,
          Mexico and Venezuela.

     o    Other  operating  expenses  such  as  contract  labor,  rents,  office
          expenses,  utilities,  etc.  combined to increase  approximately  $1.7
          million as a result of acquisitions and increased operations.

     o    On a consolidated basis, we recorded a provision for doubtful accounts
          of $0.4 million for the six months  ended June 30,  2000,  compared to
          $0.1  for  the  six  months  ended  June  30,  1999  as  a  result  of
          acquisitions, increased operations and payment in arrears.

         Stock  Compensation  Expense.  We incurred non-cash stock  compensation
expense in the six months ended June 30, 2000 of $0.5 million  which is slightly
lower that that recorded in the six months ended June 30, 1999.

         Depreciation  and  Amortization.   Our  depreciation  and  amortization
expense totaled $6.9 million in the six months ended June 30, 2000, representing
an  increase  of $4.5  million  over the six  months  ended June 30,  1999.  The
significant  increase reflects the amortization of intangible assets relating to
our three  acquisitions  in  December  1999 and April  2000.  Additionally,  the
increase reflects the depreciation  expense from network assets obtained through
acquisitions and foreign subsidiary network asset purchases.

          Interest  Expense,  Net. Our net interest expense totaled $1.2 million
during the six months ended June 30,  2000,  consisting  of interest  expense of
$1.6 million and interest  income of $0.4 million.  Net interest  expense during
the six months  ended June 30, 2000  decreased  $0.2 million over the six months
ended June 30,  1999.  The June 30, 2000  decrease in net  interest  expense was
primarily  attributable to the recording of imputed interest for warrants issued
in conjunction  with the December 1998 Notes. The average interest rate recorded
on our  indebtedness  outstanding  during the six months ended June 30, 2000 was
approximately  10.75%,  compared to  approximately  10% for the six months ended
June 30, 1999.

         Provision for Income Taxes. We recorded a provision for income taxes of
$0.1  million  during the six  months  ended June 30,  2000,  compared  to $0.03
million for the six months  ended June 30,  1999.  Intervan,  which  operates in
Mexico, recognized the majority of this income tax expense.

         Net Loss.  We  incurred a net loss of $14.6  million for the six months
ended June 30, 2000, an increase of $7.7 million  compared to the same period in
1999. The principal reasons for the increased loss were:

     o    the $4.5 million increase in depreciation and amortization  expense as
          a result of acquisitions and build-out of network.

     o    the $4.4 million increase in salary and benefits expense  attributable
          to acquisitions and as a result of growth in operations

     o    the $4.1  million  increase in SG&A  expenses due to the growth in our
          operations and as a result of acquisitions

     o    the above  increases  were  offset by a $4.1  million  increase in net
          revenues over variable cost of services.  Minority interest in loss of
          subsidiaries also offset the increase by $0.8 million.

Six months ended June 30, 1999 compared to the six months ended June 30, 1998:

         During  the six  months  ended  June 30,  1999,  we had  only  recently
completed our development activities and commenced planned principal operations.
We were still in the  development  stage  during  the six months  ended June 30,
1998.

         Revenues.  Our  revenues for the six months ended June 30, 1999 totaled
$4.1 million,  compared to $0.05 million for 1998,  representing  a $4.1 million
increase.  The following  table shows our revenues by operating  subsidiary  for
1999 and 1998:

    TOTAL REVENUES                       JUNE 30, 1999          JUNE 30, 1998
    (in thousands)
    Inter@net(1)                               $ 590                  $   -
    Chispa (1)                                 3,551                      -
    Parent Company, elim. & others                 4                     45
                                         -----------        -    ----------
         Consolidated total                   $4,145                  $  45
                                         ==========               =========
----------------

     (1)  Inter@net and Chispa were both  acquired in the
          third fiscal quarter of 1998.

         The  increase  in revenues  for the six months  ended June 30, 1999 was
primarily attributable to our ownership interests in Inter@net and Chispa during
the six months ended June 30, 1999.

         Variable Cost of Services.  Our variable cost of services  totaled $1.4
million in the six months ended June 30, 1999,  an increase of $1.2 million over
the same period in 1998.

         Salaries,  Wages and Benefits. Our salaries, wages and benefits totaled
$2.4 million for the six months ended June 30, 1999, an increase of $2.2 million
from the same period in 1998.  We  maintained a total of almost 300 employees at
June 30,  1999,  compared  to fewer  than 25  employees  at June 30,  1998.  The
increase in headcount  reflects  normal  increases in our employee  count as our
operations matured and the employees we acquired through our acquisitions during
the months of July and August of 1998 of Chispa and Inter@net, which had 241 and
37 employees, respectively, at June 30, 1999.

         Selling, General and Administrative Expenses. We incurred SG&A expenses
of $3.4  million in the six months  ended June 30,  1999,  an  increase  of $1.6
million  (or 84%)  compared  to the same  period in 1998.  The  increase in SG&A
expenses  reflects growth in our operations,  including  completing  significant
acquisitions in 1998 and increased development of our networks.  The increase in
SG&A reflects:

     o    Consulting  and legal fees,  which  totaled  $1.1  million for the six
          months ended June 30, 1999,  compared  with less than $0.6 million for
          the same period in 1998 for an increase of $0.5 million.

     o    Travel,  advertising  and promotion  costs  increased to $0.6 million,
          compared to less than $0.2 million for the same period in 1998, for an
          increase  of  $0.4  million.   The  increase  in  travel  was  due  to
          researching potential business acquisitions in Central America.

     o    Other  operating  expenses,  such as  contract  labor,  rents,  office
          expenses,  utilities, etc., all increased as result of acquisitions in
          El Salvador and Venezuela in the third fiscal quarter of 1998.

          Stock  Compensation  Expense.  We incurred non-cash stock compensation
expense in the six months ended June 30, 1999 totaling $0.6 million  compared to
none in the same period of 1998.

         Depreciation  and  Amortization.   Our  depreciation  and  amortization
expense   totaled  $2.4  million  for  the  six  months  ended  June  30,  1999,
representing  an increase of $1.6  million  compared to the same period in 1998.
The significant  increase  relates  primarily to the  amortization of intangible
assets relating to acquisitions.

         Interest Expense, Net. Our net interest expense totaled $1.4 million in
the six months  ended June 30,  1999,  consisting  of  interest  expense of $1.5
million and interest  income of $0.1 million.  Net interest income was less than
$0.2  million  for the same  period in 1998.  The  significant  increase  in net
interest expense relates  primarily to the interest from debt issued to complete
acquisitions in the third fiscal quarter of 1998.

         Net Loss.  We  incurred  a net loss of $6.9  million  in the six months
ended June 30,  1999,  an increase of $4.0 million over the same period in 1998.
The principal reasons for the increased loss were:

     o    the $2.2 million increase in salary, wages and benefit expenses due to
          the growth in our operations and as a result of acquisitions in 1998

     o    the $1.6  million  increase in SG&A  expenses due to the growth in our
          operations and as a result of
                  acquisitions in 1998

     o    the $0.6  million  increase  in  stock-based  compensation  expense to
          attract key management

     o    the $1.6 million increase in our depreciation and amortization expense
          on intangible assets as a result
                  of acquisitions in 1998

     o    the $1.2 million  increase in net interest expense as a result of debt
          related to acquisitions and financing of operational growth.

     o    the above  increases  wereh offset by a $2.9  million  increase in net
          revenues over variable cost of services.  Minority interest in loss of
          subsidiaries also offset the increase by $0.7 million

C.       LIQUIDITY AND CAPITAL RESOURCES

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

         We will continue to make significant  capital  expenditures in the next
several years in connection with building our networks,  the further development
of our  operations in Mexico,  Venezuela and Central  America,  and new customer
accounts (for which we install our equipment on customer premises). We intend to
meet our capital requirements during 2000 from a combination of the following:

     o    unused  proceeds  from our October 1999  Financing  including  the $26
          million  credit  facility for use in Venezuela  provided by one of the
          investors in that financing which has not been drawn upon.

     o    borrowings  under the $175  million  vendor  financing  facility  with
          Alcatel (see Note 4).

     o    $27.2  million of proceeds  from the  exercise of options in July 2000
          issued to the six accredited  investors in connection with our October
          1999 financing transactions.

     o    additional  private  equity  transactions  relating to the exercise of
          outstanding options and warrants.

         We anticipate that we will require  approximately  $46.5 million during
2000  for  capital  expenditures  related  to  the  expansion  of  our  existing
telecommunications  business,  and  that we  will  require  significant  amounts
thereafter.

         During the six months ended June 30,  2000,  our  operating  activities
used $10.5  million,  compared with providing $0.5 million during the six months
ended June 30, 1999. Our investing activities,  consisting of the cash component
of the  MetroTelecom  acquisition  in  Guatemala  and capital  expenditures  for
network  equipment  used $9.3 million during the six months ended June 30, 2000,
compared with $9.3 million for capital  expenditures  for network  equipment and
fiber  capacity  during  the six  months  ended  June 30,  1999.  Our  financing
activities  in the six  months  ended June 30,  2000 used $0.5  million to repay
amounts  owed  to  third-party  bank  and  pre-paid  amounts  owed  on  the  IAN
acquisition  debt  compared to $6.1 million that was provided from proceeds from
related party note and borrowing  activity (net of payments)  during the quarter
ended June 30, 1999.

         As of June 30, 2000, we had current assets of $16.7  million,  compared
to $31.0 million as of December 31, 1999, for a decrease of $14.3  million.  The
decrease  in  current  assets  was  due to  decreases  in cash  relating  to the
MetroTelecom  acquisition  in  April  2000,  capital  expenditures  for  network
equipment and disbursements for consolidated operational expenses. In July 2000,
we received $27.2 million of proceeds from the exercise of options issued to the
six accredited investors from the October 1999 financing transactions.

         We have the ability to  moderate  our  capital  spending  and losses by
varying  the  number  and  extent of our  market  build out  activities  and the
services  we offer in our  various  markets.  If we elect to slow the speed,  or
narrow the focus,  of our business  plan,  we will be able to reduce our capital
requirements  and losses.  The actual  costs of building out and  launching  our
markets would depend on a number of factors,  however,  including our ability to
negotiate  favorable  prices for purchases of network  equipment,  the number of
customers and the services for which they  subscribe,  the nature and success of
the services that we may offer, regulatory changes and changes in technology. In
addition,  actual  costs and  revenues  could vary from the amounts we expect or
budget,  possibly materially,  and such variations are likely to affect how much
additional financing we will need for our operations.  Accordingly, there can be
no assurance  that our actual  financial  needs will not exceed the  anticipated
amounts available to us, including from new, third parties, described above.

         To the extent we acquire the  amounts  necessary  to fund our  business
plan through the issuance of equity securities,  our shareholders 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
our cash flow from  operations  being  dedicated to the payment of principal and
interest  on  that  indebtedness,   and  could  render  us  more  vulnerable  to
competitive and economic  downturns.  Our  subsidiaries or affiliates could also
obtain  financing  from  third  parties,  but  there  can  be no  assurance  our
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 us.

D.       SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

         Certain statements contained in "Management's  Discussion and Analysis"
constitute  forward-looking  statements  concerning  our  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 our  results  of  operations  are the  potential  risk of  delay  in
implementing our business plan; the political, economic and legal aspects of the
markets  in  which  we  operate;   competition;  and  our  need  for  additional
substantial financing. We have no control over some of these factors.

         The factors  described in this report could cause our actual  operating
results  to  differ  materially  from  those  expressed  in any  forward-looking
statements made by or on behalf of us. 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 we  undertake  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 our  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

         Effective July 5, 2000, we settled our arbitration  proceeding  against
Donald Williams.  Under the terms of the settlement,  we canceled 328,510 common
shares and 71,853 Series B preferred  shares  formally owned by Mr. Williams and
affiliates. See our report on Form 8-K filed on July 7, 2000 for a more detailed
description.

         Also see the section entitled "Legal Proceedings" in our report on Form
10-KSB for the year ended December 31, 1999.

ITEM 2.       CHANGES IN SECURITIES

         In April  2000,  we issued  121,212  shares of our common  stock to one
investor in connection with the closing of the Metrotelecom Acquisition. In July
2000,  we  issued a total  of  3,624,897  shares  of our  Series  C  Convertible
Preferred  Stock to five  investors for  approximately  $27.2 million upon their
exercise of certain options we granted them in October 1999 in connection with a
$109 million equity and debt financing round.

         In each case, we believe (and received  representations  and warranties
to the effect) that (i) the investor was an "accredited investor",  as that term
is defined  under the  Securties  Act of 1933,  as  amended  (the  "Act"),  (ii)
acquired the securites for investment purposes,  and without a view to resale or
distribution in violation of the federal  securities  laws, (ii) understood that
the  securities  were  subject  to severe  restrictions  on  resale  or  further
disposition,  and that any such  disposition  would be subject to the dispostion
qualifying for an exemption from registration or the securities being registered
under  the Act,  and (iv)  understood  that the  certificates  representing  the
securities  would bear  restrictive  legends  typically  placed on  unregistered
securities.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

                                      None.

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

         In May 2000,  we  received  the  written  consent  from the  holders of
approximately  84.3% or the voting power of our outstanding capital stock to the
transfer  by  our  parent  corporation,  Convergence  Communications,  Inc.,  of
substantially  all of its  assets to a newly  formed,  wholly-owned  subsidiary,
Latin American  Broadband,  Inc. The transferred  assets consisted  primarily of
Convergence Communications,  Inc.'s stock interests in its various subsidiaries.
The transfer was effected at the request of Alcatel and in  connection  with the
closing of our vendor financing package with Alcatel.  On May 21, 2000, we filed
an Information Statement on Schedule 14C with the Commission which described the
transaction,  the  reasons  for it,  the  number  of  shares  consenting  to the
transaction,  the percentage of the voting power of our securites represented by
those shares,  and that the number of shares  consenting to the  transaction was
sufficient to authorize the transaction at any duly called and convened  meeting
of our  shareholders.  On June 21, 2000, we effected the transactions and closed
the Alcatel vendor financing transaction.

ITEM 5.       OTHER INFORMATION

                                      None.

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

     A.   EXHIBITS.

                                      None.

     B.   REPORTS ON FORM 8-K

         We filed two reports on Form 8-K for transactions  occurring during the
quarter ended June 30, 2000.

     1.   On July 7,  2000,  we  filed a  report  on  Form  8-K  describing  the
          execution  of  documents  with  Alcatel  relating  to a  $175  million
          financing facility.

     2.   On May 1,  2000,  we  filed  a  report  on  Form  8-K  describing  the
          MetroTelecom Acquisition.



<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:  August 14, 2000                   BY       /s/ JERRY SLOVINSKI
                                                  -------------------
                                                  Jerry Slovinski
                                                  Chief Financial Officer