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

                                    FORM 10-Q


[X]      QUARTERLY  REPORT UNDER SECTION 12 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002.

[ ]       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 April 30, 2001,  60,592,086 shares of registrant's Common Stock, par value
$.001 per share were outstanding.


<PAGE>
PART I:  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q

         The  accompanying   unaudited   consolidated  financial  statements  of
Convergence   Communications,   Inc.  have  been  prepared  in  accordance  with
accounting  principles  generally  accepted in the United  States of America 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 accounting  principles generally accepted 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-K for the year ended December 31, 2001,
which  are  incorporated  herein  by  reference.   The  accompanying   financial
statements have not been examined by our  independent  accountants in accordance
with auditing standards generally accepted in the United States of America,  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 three months ended March 31, 2002
may not be  indicative  of the results  that may be expected for the year ending
December 31, 2002.










                      [THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>

<TABLE>
<CAPTION>


CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2002 AND DECEMBER 31, 2001
------------------------------------------------------------------------------------------------------------------

                                                                                  March 31,        December 31,
                                                                                    2002               2001
                                                                               ----------------   ----------------
<S>                                                                                <C>                <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                      $ 1,610,854        $ 4,238,166
    Accounts receivable - net                                                        7,796,700          7,585,725
    Inventory - net                                                                     41,437             41,111
    Value added tax receivable                                                       1,052,873          1,176,461
    Prepaid expenses and other                                                       2,897,369          1,861,570
                                                                               ----------------   ----------------
                 Total current assets                                               13,399,233         14,903,033

PROPERTY AND EQUIPMENT - net                                                        53,846,305         54,939,546

INTANGIBLE ASSETS - net                                                             27,679,995         28,700,844
OTHER ASSETS
    Debt issue costs                                                                 1,616,856          1,737,733
    Equipment lease receivables                                                      1,675,113          1,508,586
    Other                                                                            1,633,783          1,370,883
                                                                               ----------------   ----------------
                 Total other assets                                                  4,925,752          4,617,202
                                                                               ----------------   ----------------
TOTAL ASSETS                                                                      $ 99,851,285      $ 103,160,625
                                                                               ================   ================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Notes payable - current portion                                               $ 13,524,072       $ 13,707,928
    Current portion of long-term debt (payable to related party)                        99,029             99,029
    Accounts payable and accrued liabilities                                        22,294,797         19,172,978
                                                                               ----------------   ----------------
                 Total current liabilities                                          35,917,898         32,979,935

LONG-TERM LIABILITIES:
    Notes payable - long-term portion                                               11,372,019         11,528,701
    Long-term debt (payable to related parties)                                      8,288,118          8,288,118
    Accrued restructuring costs                                                        736,504            748,504
    Accrued long-term interest                                                         210,000            210,000
    Other long-term liabilities                                                        558,083            703,397
                                                                               ----------------   ----------------
                 Total long-term liabilities                                        21,164,724         21,478,720

MINORITY INTEREST IN SUBSIDIARIES                                                            -                  -
                                                                               ----------------   ----------------
                 Total liabilities                                                  57,082,622         54,458,655

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       60,019,618 and 60,061,284 shares outstanding in 2002 and 2001, respectively      60,592             60,634
    Additional paid-in capital                                                     184,136,754        184,136,712
    Accumulated deficit                                                           (141,499,535)      (135,074,437)
    Accumulated other comprehensive loss                                             1,388,921            897,130
    Treasury stock, 572,468 common shares in 2002 and 2001 at cost                  (1,318,069)        (1,318,069)
                                                                               ----------------   ----------------
                 Total stockholders' equity                                         42,768,663         48,701,970
                                                                               ----------------   ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $ 99,851,285      $ 103,160,625
                                                                               ================   ================
</TABLE>


See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
-------------------------------------------------------------------------------------------------------------

                                                                        Three Months         Three Months
                                                                           Ended                 Ended
                                                                          March 31             March 31
                                                                            2002                 2001
                                                                      -----------------    ------------------
<S>                                                                       <C>                   <C>

NET REVENUES FROM SERVICES                                                $ 10,445,263          $ 10,509,328
                                                                      -----------------    ------------------
COSTS AND EXPENSES:
     Variable cost of services                                               6,570,566             6,950,200
     Salaries, wages and benefits                                            3,767,908             6,091,755
     Selling, general and administrative                                     1,517,105             2,856,309
     Depreciation and amortization                                           4,030,393             3,906,505
     Stock option compensation expense                                               -                32,703
                                                                      -----------------    ------------------
                   Total costs and expenses                                 15,885,972            19,837,472
                                                                      -----------------    ------------------
OPERATING LOSS                                                              (5,440,709)           (9,328,144)

OTHER INCOME (EXPENSE):
     Interest income                                                           112,770               139,707
     Interest expense                                                       (1,082,744)           (1,231,403)
     Other                                                                     (96,332)               70,972
     Net gain on foreign exchange                                               94,980                44,165
                                                                      -----------------    ------------------
                   Total other expense                                        (971,326)             (976,559)
                                                                      -----------------    ------------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                              (6,412,035)          (10,304,703)

PROVISION FOR INCOME TAXES                                                     (13,063)              (31,427)
                                                                      -----------------    ------------------
LOSS BEFORE MINORITY INTEREST                                               (6,425,098)          (10,336,130)

MINORITY INTEREST IN LOSS OF SUBSIDIARIES                                            -             1,101,049
                                                                      -----------------    ------------------
NET LOSS                                                                  $ (6,425,098)         $ (9,235,081)
                                                                      =================    ==================
Net loss per basic and diluted common share                                    $ (0.11)              $ (0.34)
                                                                      =================    ==================
Weighted-average number of common shares:
     Basic and diluted                                                      60,046,932            27,069,000
                                                                      =================    ==================

</TABLE>

See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>


CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND YEAR ENDED DECEMBER 31, 2001
------------------------------------------------------------------------------------------------------------------------------------

                                                                                Preferred Stock
                                                         ------------------------------------------------------------
                                                              Series "B"          Series "C"          Series "D"
                                                         -----------------  --------------------  -------------------
                                             Total        Shares    Amount    Shares     Amount    Shares     Amount
                                           -----------   --------  -------  ----------  --------  ---------  --------
<S>                                       <C>            <C>       <C>     <C>           <C>     <C>          <C>

BALANCE, DECEMBER 31, 2000                 58,589,045          -        -   13,620,472    13,620          -         -
Comprehensive income (loss):
    Net loss for year ended
     December 31, 2001                    (55,598,897)
    Other comprehensive income (loss)
     consisting of foreign currency
      translation adjustment                1,141,991
                                           -----------   --------  -------   ---------  --------  ---------  --------

      Total comprehensive income (loss)   (54,456,906)         -        -            -         -           -         -
Issuance of Series D shares                22,869,461                                             2,643,636   $ 2,644
Acquisition of treasury stock              (1,318,069)
Issuance of warrants on debt                   12,929
Stock-based compensation expense               54,505
Non-cash remeasurement of preferred
  stock warrants                                    -
Exercise of employee stock options              2,257
Exercise of warrants to preferred stock        64,243                        3,973,758     3,974  2,450,523     2,450
Modification of common stock warrants               -
Modification of common stock warrants               -
Exercise of common stock warrants               7,457
Issuance of common stock for equipment      2,880,556
Conversion of Series C stock into
  common stock                                      -                      (17,594,230)  (17,594)
Conversion of Series D stock into
  common stock                                      -                                            (5,094,159)   (5,094)
Conversion of promissory note to
  common stock                              1,818,082
Issuance of common stock                   18,178,410
                                           -----------   --------  -------   ---------  --------  ---------  --------
BALANCE, DECEMBER 31, 2001               $ 48,701,970          -   $    -            -    $    -          -   $     -
Comprehensive income (loss):
    Net loss for the three months
     ended March 31, 2002                  (6,425,098)
    Other comprehensive income (loss)
      consisting of foreign currency
       translation adjustment                 491,791
                                           -----------   --------  -------   ---------  --------  ---------  --------
      Total comprehensive income (loss)    (5,933,307)         -        -            -         -          -         -
Retirement of shares in connection with
  litigation settlement                             -

                                           -----------   --------  -------   ---------  --------  ---------  --------
BALANCE, MARCH 31, 2002                  $ 42,768,663          -   $    -            -    $    -          -   $     -
                                           ===========   ========  =======   =========  ========  =========  ========
</TABLE>


See notes to consolidated financial statements.

                               (Continued On the Next Page)
<PAGE>


<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND YEAR ENDED DECEMBER 31, 2001
                             (Continued From the Previous Page)
------------------------------------------------------------------------------------------------------------------------------------



                                                                                                 Accumulated
                                                Common Stock       Additional                      Other        Treasury Stock
                                           ---------------------     Paid-in      Accumulated  Comprehensive  ---------------------
                                             Shares       Amount     Capital        Deficit     Income (Loss)  Shares     Amount
                                           -----------  ----------  -----------    -----------  ------------- -------  ------------
<S>                                        <C>           <C>      <C>            <C>            <C>           <C>      <C>

BALANCE, DECEMBER 31, 2000                 11,921,094      11,921  127,897,441     (69,089,076)   (244,861)
Comprehensive income (loss):
    Net loss for year ended
     December 31, 2001                                                             (55,598,897)
    Other comprehensive income (loss)
     consisting of foreign currency
      translation adjustment                                                                     1,141,991
                                           -----------  ----------  -----------    -----------  -----------  --------   -----------
      Total comprehensive income (loss)             -           -            -     (55,598,897)  1,141,991
Issuance of Series D shares                                         22,866,817
Acquisition of treasury stock                (572,468)                                                        572,468  $ (1,318,069)
Issuance of warrants on debt                                            12,929
Stock-based compensation expense                                        54,505
Non-cash remeasurement of preferred
  stock warrants                                                     5,396,396      (5,396,396)
Exercise of employee stock options            103,177         103        2,154
Exercise of warrants to preferred stock                                 57,819
Modification of common stock warrants                                  626,346        (626,346)
Modification of common stock warrants                                4,363,722      (4,363,722)
Exercise of common stock warrants             745,650         746        6,711
Issuance of common stock for equipment      1,646,032       1,646    2,878,910
Conversion of Series C stock into
  common stock                             17,594,230      17,594
Conversion of Series D stock into
  common stock                              5,094,159       5,094
Conversion of promissory note to
  common stock                              2,138,920       2,139    1,815,943
Issuance of common stock                   21,390,490      21,391   18,157,019
                                           -----------  ----------  -----------    -----------  -----------  --------   -----------
BALANCE, DECEMBER 31, 2001                 60,061,284    $ 60,634 $184,136,712   $(135,074,437) $  897,130    572,468  $ (1,318,069)
Comprehensive income (loss):
    Net loss for the three months
     ended March 31, 2002                                                           (6,425,098)
    Other comprehensive income (loss)
      consisting of foreign currency
       translation adjustment                                                                      491,791
                                           -----------  ----------  -----------    -----------  -----------  --------   -----------
      Total comprehensive income (loss)             -           -            -      (6,425,098)    491,791
Retirement of shares in connection with
  litigation settlement                       (41,666)        (42)          42
                                           -----------  ----------  -----------    -----------  -----------  --------   -----------
BALANCE, MARCH 31, 2002                    60,019,618    $ 60,592 $184,136,754   $(141,499,535) $1,388,921    572,468  $ (1,318,069)
                                           ===========  ==========  ===========    ===========  ===========  ========   ===========

</TABLE>


See notes to consolidated financial statements

<PAGE>

<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
------------------------------------------------------------------------------------------------------------

                                                                          Three Months       Three Months
                                                                             Ended               Ended
                                                                            March 31           March 31
                                                                              2002               2001
                                                                        -----------------   ----------------
<S>                                                                         <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                               $ (6,425,098)      $ (9,235,081)
     Adjustments to reconcile net loss to net cash used in
        operating activities:
           Depreciation and amortization                                       4,030,393          3,906,505
           Provision for bad debts                                               117,191            332,915
           Minority interest in loss of subsidiaries                                   -         (1,101,049)
           Stock-based compensation expense                                            -             51,000
           Amortization of discount on notes payable                              13,210            211,900
           Issuance of options on Alcatel debt                                         -              6,625
           Change in assets and liabilities:
              Accounts receivable                                               (328,166)        (1,799,459)
              Inventory                                                             (326)            20,888
              Prepaid expenses and other                                        (912,210)           978,491
              Equipment lease receivables                                       (166,527)           (78,245)
              Other assets                                                      (142,023)           (69,630)
              Accounts payable and accrued liabilities                         3,506,411          2,715,625
              Accrued restructuring costs                                        (12,000)                 -
              Other long-term liabilities                                       (145,313)           410,886
                                                                        -----------------   ----------------
                   Net cash used in operating activities                        (464,458)        (3,648,629)
                                                                        -----------------   ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                      (1,902,383)       (10,633,287)
                                                                        -----------------   ----------------
                   Net cash used in investing activities                      (1,902,383)       (10,633,287)
                                                                        -----------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from issuance of Series "D" Preferred Stock                          -         22,937,349
     Proceeds from related party borrowings                                            -          4,230,000
     Payments on related party borrowings                                        (15,961)        (3,000,000)
     Payments on notes payable                                                  (287,787)        (5,964,000)
                                                                        -----------------   ----------------
                   Net cash provided by (used in) financing activities          (303,748)        18,203,349
                                                                        -----------------   ----------------

EFFECT OF EXCHANGE RATES ON CASH                                                  43,277            (16,689)
                                                                        -----------------   ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          (2,627,312)         3,904,744

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               4,238,166          4,193,170
                                                                        -----------------   ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   $ 1,610,854        $ 8,097,914
                                                                        =================   ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the quarter for interest                                 $ 221,028          $ 507,910
                                                                        =================   ================
     Cash paid during the quarter for income taxes (including prepaid)          $ 18,027           $ 35,466
                                                                        =================   ================
</TABLE>

See notes to consolidated financial statements.

<PAGE>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2002
(Unaudited)


1.       Basis of Presentation

         Convergence Communications, Inc. and subsidiaries (the "Company"), is a
Latin  American  facilities-based  telecommunications  company  which  owns  and
operates IP-based,  broadband  metropolitan area networks.  The Company offers a
menu  of  broadband  connectivity,  IP-telephony,  high-speed  Internet  access,
web-site  hosting,  virtual  private  networks,  e-commerce  and pay  television
services to businesses and consumers in Latin America, primarily in Mexico.

         From  its   inception,   the   Company   has   focused   on   providing
telecommunications  services using high-speed  transmission  networks 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.

         The Company's consolidated financial statements have been prepared on a
going  concern  basis,   which   contemplates  the  realization  of  assets  and
satisfaction of liabilities in the normal course of business.  The  consolidated
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability and  classifications of recorded amounts of assets or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going  concern.  The Company's  continuation  as a going
concern  depends upon its ability to generate  sufficient cash flows to meet its
obligations on a timely basis and to obtain additional  financing or refinancing
as may be required.

         At March 31, 2002, the Company's current  liabilities  exceeded current
assets by $22.5  million.  Since its  inception,  the Company has  sustained net
losses and negative  cash flow,  due  primarily to  amortization  of  intangible
assets  relating  to   acquisitions,   interest  expense  on  debt  relating  to
acquisitions,  start-up costs, legal and professional  expenses, and charges for
depreciation  and other costs relating to acquisition and the development of its
business.  The  Company  expects to continue to  experience  negative  cash flow
through 2002, and may continue to do so thereafter while it develops and expands
its business,  even if individual markets of the Company become  profitable.  As
described in more detail below,  in April and May 2002,  the Company  received a
total of $4 million  from a drawdown  on a $4 million  related  party  revolving
credit facility.

         As of March 31, 2002,  the Company  continues  to be out of  compliance
with the operating covenants of the Alcatel equipment financing facility and had
not received a waiver of such  noncompliance  from the lender. As a result,  the
company is unable to draw upon its facility until it meets those covenants,  and
Alcatel has the right to accelerate  the maturity of the  outstanding  debt. The
outstanding balance under the Alcatel facility of $7,591,555 has been classified
as a current liability in the accompanying consolidated balance sheets.

         The Company  intends to meet its  operational  and capital  expenditure
requirements during 2002 from a combination of:

     o    Additional draw downs on the related party  revolving  credit facility
          described in Note 7 below

     o    Extending or modifying repayment terms on seller notes

     o    Reductions in capital expenditures

     o    Control of operating expense growth

     o    The sale of its  equity  securities  and of  selected  operations  and
          assets

2.       Recently Adopted Accounting Standards

         On  January  1,  2002,  the  Company  adopted  Statement  of  Financial
Accounting Standard ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS
No.  142  changes  the  accounting  for  goodwill  and  intangible  assets  with
indefinite  lives from an amortization  method to an  impairment-only  approach.
Upon  adoption of SFAS No. 142,  the Company is required to reassess  the useful
lives of all  acquired  intangible  assets  and  perform an  impairment  test on
goodwill.  In the first quarter of 2002, the Company  completed an assessment of
useful lives and concluded that no adjustments  to the  amortization  periods of
intangible assets were necessary.

         SFAS No.  142  provides  for a  six-month  transitional  period for the
Company to perform an initial  assessment of whether there is an indication that
goodwill is impaired.  The Company expects to complete that analysis by June 30,
2002,  as  required.  SFAS No.  142 also  requires  goodwill  to be  tested  for
impairment annually and if certain events occur.

         The  initial  adoption  of SFAS No. 142 had no impact on the  Company's
financial  statements  for the three months  ended March 31, 2002.  The carrying
amount of goodwill for the three months ended March 31, 2002 was $10.1  million.
If SFAS No. 142 had been adopted at the beginning of the quarter ended March 31,
2001, the pro-forma net loss without  goodwill  amortization  would have been $9
million.

         The amortization expense on intangible assets, other than goodwill will
total  approximately  $1 million for each of the next five  years.  At March 31,
2002, the Company had the following  intangible assets,  other than goodwill and
related accumulated amortization recorded:

                                   Subscriber         Franchise        License
                                   Rights            Rights            Rights
                               ---------------     ------------      -----------
Gross intangible            $      25,007,000   $    2,300,000    $     857,000
Accumulated amortization         (10,296,000)        (241,000)         (75,000)
                               ---------------     ------------      -----------
Net intangible              $      14,711,000   $    2,059,000    $     782,000
                               ===============     ============      ===========

3.       Principles of Consolidation

         The  consolidated   financial   statements   include  the  accounts  of
Convergence  Communications,  Inc., all wholly owned and controlled subsidiaries
including  its  49%  voting  interest  in  International  Van,  S.  A.  de  C.V.
("Intervan").  All significant  intercompany accounts and transactions have been
eliminated in consolidation.

4.       Net Loss per Common Share and Common Share Equivalent

         Net loss per  common  share and common  share  equivalent  amounts  are
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 (which  was  converted  to  common  stock in August  2000) and  Series C and D
preferred  stock  outstanding  (which was converted to common stock in September
2001),  and the diluted  method,  which includes the dilutive common shares from
stock options and warrants,  as calculated  using the treasury stock method.  At
March 31, 2002 and 2001, all outstanding options and warrants were anti-dilutive
due to the losses of the Company.

5.       Use of Estimates in Preparing Financial Statements

         The  preparation of financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  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.

6.       Operating Segment Information

         The Company makes key financial  decisions  based on certain  operating
results of our subsidiaries and revenue types. The Company's  operating  segment
information is as follows for the three months ended March 31, 2002 and 2001:

<TABLE>
<CAPTION>


                                                                 Central
2002                          Mexico         Venezuela           America          Corporate          Totals
----------------------     -------------    -------------     --------------    --------------    -------------
<S>                    <C>               <C>               <C>               <C>               <C>

Revenue:
-        Data          $      4,677,064  $             -   $      2,302,784  $              -  $     6,979,848
-        CATV                         -                -            208,965                 -          208,965
-        Other                1,569,160                -          1,687,290                 -        3,256,450
Operating loss               (2,376,099)        (458,823)        (1,010,297)       (1,595,490)      (5,440,709)

                                                                 Central
2001                          Mexico         Venezuela           America          Corporate          Totals
----------------------     -------------    -------------     --------------    --------------    -------------
Revenue:
-        Data          $      3,513,812  $       330,668   $      1,115,862  $              -  $     4,960,342
-        CATV                         -                -          1,836,354                 -        1,836,354
-        Other                1,351,247           18,617          2,342,768                 -        3,712,632
Operating loss               (3,272,123)      (1,022,827)        (2,533,688)       (2,499,506)      (9,328,144)
</TABLE>


7.       Subsequent Events

         April 2002  Revolving  Credit  Facility - In April  2002,  the  Company
entered  into a series of  agreements  relating to a  commitment  by  Internexus
S.C.A.  to  provide  the  Company's  wholly  owned  subsidiary,  Latin  American
Broadband,  Inc.,  with up to  $4,000,000  under a revolving  credit  agreement.
Internexus  S.C.A.  is an affiliate and successor in interest to Norberto  Priu,
one of the Company's principal shareholders.  The Company received an advance of
$2,000,000 under the credit agreement at the closing and the other $2,000,000 in
May 2002. The amounts  advanced under the agreement  accrue  interest at 25% per
annum and are collateralized by a pledge of the Company's common shares owned by
four of its largest  shareholders.  If the Company  defaults on its  obligations
under the Internexus credit agreement,  and Internexus enforces its rights under
the  stock  pledges,  Internexus  would  obtain  control  of a  majority  of the
outstanding voting shares of the Company and would have the ability, among other
things,  to elect  the  board of  directors  and  effect  fundamental  corporate
transactions.

         The maturity date for the facility is the earliest to occur of (i) July
9, 2002, (ii) a change of control (iii) a liquidation, winding up or dissolution
or the sale of all or  substantially  all of the Company's  assets,  or (iv) the
issuance of equity  securities to a third party.  Additionally,  at the maturity
date,  the Company shall pay to the lender an amount equal to the greater of (A)
the amounts then outstanding  hereunder,  together with interest thereon, or (B)
an amount  equal to two hundred  percent  (200%) of the  committed  amount under
certain circumstances,  including if the amounts advanced under the facility are
repaid as a result of a change of control,  liquidation event or equity invested
from a third  party that  occurs  after  September  30,  2002 for a  transaction
entered into on or before July 9, 2002.  The Company also engaged an  investment
banker in May 2002 for the  purpose  of  identifying  strategic  and/or  funding
alternatives for the Company.

         In  connection  with the  execution  of the April  2002  facility,  the
Company entered into two additional transactions. The first transaction involved
the replacement of two notes totaling $7,000,000  previously delivered by one of
the  Company's  Venezuelan  subsidiaries  in favor of  Telematica  EDC, C.A. The
replacement  note, which was delivered by the Company,  is also in the principal
amount of $7,000,000,  accrues  interest at 3% per annum, and is due, along with
accrued interest, in a balloon payment on March 15, 2015.

         The second transaction involved the execution of a settlement agreement
with the FondElec Group, Inc., an affiliate of one of the Company's shareholders
("FondElec Group"). In connection with the settlement, the Company (i) cancelled
a  $2,750,000  promissory  note  payable to the Company by an  affiliate  of the
FondElec Group;  (ii) wrote off $420,000 in related  FondElec Group assets;  and
(iii) was released of a $1,864,118  recorded  obligation payable to the FondElec
Group.  Additionally,  the Company  agreed to pay the FondElec Group $200,000 on
the 60th day  following  repayment  in full of amounts due under the  Internexus
revolving  credit  agreement and each party executed mutual releases for any and
all claims.




<PAGE>


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS

         The  following   discussion  and  analysis  relates  to  our  financial
condition and results of operations for the three-month  periods ended March 31,
2002  and  2001.  This  information  should  be read  in  conjunction  with  our
consolidated  financial  statements  and the  notes  related  thereto  appearing
elsewhere in this report.

A.       OVERVIEW

         We provide high quality,  low-cost integrated  communications  services
using our own  metropolitan  area networks and local networks of incumbent local
exchange providers. We operate primarily in recently deregulated and high-growth
markets,   principally  in  Mexico  and  Central  America.  We  offer  customers
broadband, high-speed data connections,  high-speed and dial-up Internet access,
voice and video services in a number of our markets using an IP-based technology
platform and networks that employ  fiber-optic  fixed wireless  technologies and
hybrid fiber coaxial cable.

         From our inception in 1995 until 1998, our main activities consisted of
acquiring licenses and authorizations in our various market countries, acquiring
building access rights,  hiring  management and other key personnel,  developing
operating  systems and activities  directly  associated with the acquisition and
deployment of our various networks.  During fiscal 1998, we acquired the ability
to provide, or introduced,  significant bundled  telecommunications  services in
our markets.

         Since our  inception,  we have  sustained  significant  net  losses and
negative  cash flow.  We expect the losses and  negative  cash flow to  continue
until we develop a customer base that will generate  sufficient revenues to fund
our operating  expenses.  We also  anticipate that the execution of our business
plan  will  result in a rapid  expansion  of our  operations,  which may place a
significant strain on our management,  financial  situation and other resources.
Our ability to manage the problems  associated  with our expansion  will depend,
among other things,  on our  capability to monitor  operations,  control  costs,
maintain effective quality control, secure necessary interconnect and regulatory
approvals,  expand  internal  management,  technical  information and accounting
systems and attract, assimilate and retain qualified management and professional
personnel.  Our  inability or failure to  effectively  manage these issues could
result in significant  subscriber  turnover,  stagnant or decreasing  subscriber
growth, our inability to meet our contractual  obligations for continued funding
under  our  various  vendor  financing   relationships  such  as  with  Alcatel,
managerial  inefficiencies,  missed  corporate  opportunities  and continuing or
increased losses.

         The  difficulties  in managing  these various  business  issues will be
compounded by a number of the unique  attributes of our business  operations and
our strategy for becoming a premier facilities-based telecommunications provider
in our various markets.  For example,  we use, as part of our operating network,
wireless technology.  This technology has been used by other  telecommunications
providers  for  a  significant  period  of  time,  but  our  point-to-multipoint
technology has only been  commercially used on a limited basis. We selected this
technology  because we believe  it  complements  the  wireline  technologies  we
otherwise  employ in our networks,  but if that  technology  does not perform as
expected or provide  the  advantages  that we expect,  our  business,  financial
condition  and the results of our  operations  may be  materially  and adversely
affected.  Further,  we employ an IP-based  technology platform that uses packet
switching to transmit voice,  video and data elements over the same network.  We
believe that  IP-based  packet-switched  networks have less overhead and greater
capacity than  traditionally  used technology  platforms but, in the past, there
have been issues  regarding the quality of service  provided by those platforms.
We believe that the quality of services  provided by other transport systems has
been  incorporated  into the newer  generations  of IP  switches  and  bandwidth
managers, but if our technology platform does not perform as expected or provide
the advantages we expect, our business,  financial  condition and the results of
our operations could also be materially and adversely affected. Also, as part of
our operations in some of our markets, we rely on network capacity that we lease
from third parties,  some of which may be our  competitors in the market.  Those
parties  may not have the same  incentive  as  other,  non-competitive,  network
owners to maintain those existing  relationships  with us on terms which promote
our competitive advantage.

B.       MATERIAL CHANGES IN RESULTS OF OPERATIONS

Three months  ended March 31, 2002  compared to the three months ended March 31,
2001:

         Revenues.  Our  revenues  for the three  months  ended  March 31,  2002
totaled $10.4 million,  or about the same compared with the same period in 2001.
The  following  table shows our revenues (in  thousands) by region for the first
three months of 2002 and 2001:

      TOTAL REVENUES
      (in thousands)                            2002             2001
                                              ----------       ----------
      Mexico (Intervan)                    $      6,246     $      4,865
      Central America                             4,199            5,295
      Venezuela                                       -              349
                                              ----------       ----------
           Consolidated total              $     10,445     $     10,509
                                              ==========       ==========

         Our 2002 first quarter  revenue  compared to 2001 first quarter revenue
was impacted significantly by the reduction of $2.0 million in quarterly revenue
from the June 2001 sale of a portion of our El Salvadoran  operations.  The $2.0
million  decrease was offset by  significant  growth of our operations in Mexico
(Intervan)  and our remaining  Central  America  operations.  Intervan  directly
contributed $1.4 million to offset the El Salvador revenue decrease,  consisting
of an increase of $1.2 million in  high-speed  data  revenue with the  remainder
consisting of other revenue.

         Variable Cost of Services. Variable cost of services consists primarily
of high-speed data bandwidth,  telephony and cable programming charges. The cost
of these  services  totaled  $6.6  million for the three  months ended March 31,
2002,  a decrease of $0.4  million  over the same period in 2001.  The June 2001
sale of our El Salvadoran operations  contributed $0.8 million of this decrease.
This activity  demonstrates  the increase in our  operational  profitability  as
revenues  continue  to  increase  at a higher  rate  than our  variable  cost of
services.

         Salaries,  Wages and Benefits. Our salaries, wages and benefits totaled
$3.8  million  for the three  months  ended March 31,  2002,  a decrease of $2.3
million over the same period in 2001.  We maintained a total of 395 employees at
March 31, 2002,  which  compares  with 795  employees  at March 31,  2001.  This
significant  decrease  in  salaries,  wages and  benefits,  along with  employee
headcount,  is  primarily  a  result  of the  255  employees  we  terminated  in
connection  with our business  restructuring  discussed  below in Liquidity  and
Capital  Resources  and  the  123  employees  associated  with  the El  Salvador
operations sold in June 2001.

         Selling, General and Administrative Expenses. We incurred SG&A expenses
of $1.5 million during the three months ended March 31, 2002, a decrease of $1.3
million  compared to the same  period in 2001.  The  decrease  in SG&A  expenses
reflects  the  impact  of  management's  cost  reduction  program  and  business
restructuring.

         Depreciation  and  Amortization.   Our  depreciation  and  amortization
expense totaled $4.0 million during the three months ended March 31, 2002 versus
$3.9 million during the same period in 2001. The minimal  increase  reflects the
sale of fixed assets in El Salvador and asset  impairment  reserves  recorded on
Venezuela intangibles and fixed assets as of June 30, 2001.

         Interest Income and Interest  Expense.  Our interest  income  decreased
$26,937 for a total of $112,770 during the three months ended March 31, 2002 due
to a lower average cash investment  balance during the period.  Interest expense
over the same period decreased  $148,659 due primarily to lower average interest
rate recorded on our indebtedness  during the three months ended March 31, 2002,
which was  approximately  8%, compared to  approximately  10.75% as of March 31,
2001.

         Net Loss. We incurred a net loss attributable to common shareholders of
$6.4  million in the three  months  ended  March 31,  2002,  a decrease  of $2.8
million  compared  to the same  period in 2001.  The  principal  reasons for the
decrease were:

     o    $2.3  million  decrease in salary and  benefits  expense  attributable
          primarily to the employee headcount reduction.

     o    $1.3 million decrease in selling,  general and administrative  expense
          due to cost reductions and restructuring charges.

     o    $0.4 million  decrease in variable cost of services  related to the El
          Salvador operations sale and increase in operational profitability.

     o    The  above  decreases  were  offset  by a  $0.1  million  increase  in
          depreciation and amortization and a $1.1 million increase  relating to
          the 2001 minority  interest in loss of subsidiary  generated  from our
          former interests in El Salvador, which were sold in June 2001.

Liquidity and Capital Resources

         Since  inception,  we have 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  acquisitions
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 interests have been financed
by a combination of equity investments 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 and Central America,  and new customer accounts (for
which we install  our  equipment  on customer  premises).  We intend to meet our
capital requirements during 2002 from a combination of the following:

     o    Additional draw downs on the related party  revolving  credit facility
          described in Note 7 above

     o    Extending or modifying repayment terms on seller notes

     o    Reductions in capital expenditures

     o    Control of operating expense growth

     o    The sale of its  equity  securities  and of  selected  operations  and
          assets

         We anticipate that we will require a minimum of $3.6 million during the
remainder  of 2002 for  capital  expenditures  related to the  expansion  of our
existing  telecommunications  business,  and  that we will  require  significant
amounts thereafter.

         The  telecommunications  market dropped dramatically beginning in 2000,
which has significantly affected the market value of companies in that industry.
The values of telecommunications  companies have also been adversely affected by
the credit experience of the established  telecommunications vendors, which have
recently had increasing problems in collecting payments for their equipment.  As
a result of these  factors,  investors  and  lenders  are  carefully  evaluating
prospective   investment   opportunities  in,  and  the  investment  values  of,
telecommunications  companies that are seeking investments.  If we are unable to
obtain  additional equity capital as a result of the factors noted above in this
paragraph,  or  otherwise,  our  ability to comply with the terms of the Alcatel
financing   facility  and  make  draw  downs  on  the   facility   (and  receive
reimbursement of certain amounts we have paid or will pay thereunder) also could
be adversely affected.

         In connection with a restructuring  plan to exit certain  non-strategic
market  regions and to streamline  the Company's  cost structure in both foreign
and corporate  operations,  the Company recorded a pre-tax charge of $21,869,264
for the year ended  December 31, 2001,  which  included  restructuring  costs of
$5,810,583 and asset write-downs of $16,058,681.

         For the year ended  December 31, 2001,  restructuring  costs related to
involuntary  employee  separations of $3,660,653 for approximately 255 employees
and  facility  reduction  costs of  $2,149,930.  The employee  separation  costs
impacted  the  Company's   management  employees  in  corporate  operations  and
Venezuela,  and also  impacted all  geographic  locations of the Company.  As of
March 31, 2002, all of the 255 employee separations were completed.

         The following table displays the status of the restructuring reserve at
March 31, 2002:

                              12-31-01          Cash Charges          3-31-02
 Type of Cost                 Reserve                                 Reserve
 -----------------------    -------------       -------------      -------------
 Restructuring costs:
 Employee separations    $       963,412     $       232,462    $        730,950
 Facility reductions           1,828,941             665,055           1,163,886
                            -------------       -------------      -------------
 Total                   $     2,792,353     $       897,517    $      1,894,836
                            =============       =============      =============

         During the three months ended March 31, 2002, our operating  activities
used $0.5 million,  compared  with $3.6 million  during the same period in 2001.
Our investing  activities  used $1.9 million in the three months ended March 31,
2002,  compared  with  using  $10.6  million  during  the same  period  in 2001.
Financing  activities,  principally  the issuance of Series D Preferred Stock in
February  2001,  provided $18.2 million in net cash flow during the three months
ended March 31, 2001.

         As of March 31, 2002, we had current assets of $13.4 million,  compared
to $14.9 million as of December 31, 2001,  for a decrease of $1.5  million.  The
decrease in current assets was primarily due to a $2.6 million  decrease in cash
offset by a $1.0 increase in prepaid expenses and other current assets.

         The  cash  flow  generated  by  our  foreign  operations  will  not  be
sufficient to cover our planned  operational growth in the next fiscal year. Our
ability to execute our business  plan will be dependent on our efforts to obtain
additional sources of funds to finance our business plan (see Item 5 below).

         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  pressures 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 that 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.

E.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our  operations are exposed to market risks  principally  from  fluctuations  in
foreign currency exchange rates. Our market risks arise from our operations, not
from any trading  activities  in  derivatives.  We seek to minimize  these risks
through our regular operating and financing activities.

Exposure  to Foreign  Currency  Exchange  Rates.  Our primary  foreign  currency
exchange  risk  relates to our  operations  in Latin  America,  where we conduct
business  with more  than one  currency.  We do not  expect  that the  impact of
fluctuations  in the foreign  currency  exchange  rate on our  foreign  currency
denominated revenues and expenses to materially affect our results of operations
due  primarily  to the natural  hedges,  which are  expected to exist within our
operations.  Management  continues to monitor foreign currency risk to determine
if any actions would be warranted to reduce such risk.  Management considers its
operations  in foreign  subsidiaries  and  affiliates to be long-term in nature.
Accordingly,  we do not hedge  foreign  currency  exchange  rate risk related to
translation risk.

Exposure to Interest  Rates.  All of our debt, with the exception of the Alcatel
debt is based on fixed  interest  rates.  Our Alcatel  debt  requires  quarterly
interest payments at LIBOR plus 4.5% with quarterly principal payments beginning
in September 2002 with the final payment maturing in January 2007.


PART II: OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS


         See the section entitled "Legal Proceedings" in our report on Form 10-K
for the year ended December 31, 2001.

ITEM 2.       CHANGES IN SECURITIES


         In October 2001,  the Company was granted all of the Company's  motions
and disposed of the last substantive issue in a case brought in federal court in
California in March 2000. The Company  subsequently made a motion to recover its
costs and expenses in the matter,  and, in February 2002, the parties negotiated
a settlement,  which  included the return of the common stock the Company issued
to the plaintiff in 1997 totaling 41,666 shares.  These shares were subsequently
cancelled.  See the section  entitled "Legal  Proceedings" in our report on Form
10-K for the year ended December 31, 2001 for a more detailed description of the
settlement.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES


         See the section entitled "Item 5 - Other  Information" in our report on
Form  10-QSB for the  quarter  ended  March 31,  2001 and the  section  entitled
"Management's  Discussion and Analysis - Liquidity and Capital Resources" in our
report on Form 10-K for the year ended December 31, 2001.

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


                                      None.

ITEM 5.       OTHER INFORMATION


         April 2002  Transactions.  In April 2002,  we entered  into a series of
agreements  relating to a  commitment  by  Internexus  S.C.A  ("Internexus")  to
provide our wholly owned subsidiary,  Latin American Broadband, Inc., with up to
$4 million under a revolving  credit  agreement.  Internexus is an affiliate of,
and  successor  to,  in  interest  to  Norberto   Priu,  one  of  our  principal
shareholders. See "Our Principal Stockholders," below. We received an advance of
$2 million under the credit agreement at the closing and the other $2,000,000 in
May 2002. The amounts  advanced under the agreement  accrue  interest at 25% per
annum and are  collateralized  by a pledge of our common shares owned by four of
our largest shareholders.  If we default on our obligations under the Internexus
credit  agreement,  and Internexus  enforces its rights under the stock pledges,
Internexus  would obtain control of a majority of our  outstanding  voting power
and would have the ability,  among other things, to elect our board of directors
and effect fundamental corporate transactions.

         The maturity date for the facility is the earliest to occur of (i) July
9, 2002, (ii) a change of control (iii) a liquidation, winding up or dissolution
or the sale of all or substantially  all of our assets,  or (iv) the issuance of
equity  securities  to a third party.  Additionally,  at the maturity  date,  we
agreed to pay the lender an amount  equal to the greater of (A) the amounts then
outstanding hereunder, together with interest thereon, or (B) an amount equal to
two hundred percent (200%) of the committed amount under certain  circumstances,
including if the amounts advanced under the facility are repaid as a result of a
change of control,  liquidation  event or equity  investment  from a third party
that occurs after September 30, 2002 for a transaction entered into on or before
July 9, 2002. We also engaged an  investment  banker in May 2002 for the purpose
of identifying strategic and/or funding alternatives for us.

        In connection with the execution of the April 2002 facility,  we entered
into two additional transactions. The first transaction involved the replacement
of two notes totaling $7 million  previously  delivered by one of our Venezuelan
subsidiaries in favor of Telematica EDC, C.A. The  replacement  note,  which was
delivered by our parent entity Convergence Communications,  Inc., is also in the
principal  amount of $7 million,  accrues  interest at 3% per annum, and is due,
along  with  accrued  interest,  in a balloon  payment  on March  15,  2015 (see
"Telematica Transactions" below).

        The second transaction  involved the execution of a settlement agreement
between us and the FondElec Group, Inc., an affiliate of one of our shareholders
("FondElec Group"), where each party dismissed its claims with prejudice against
the  other  party.  In  connection  with  the  settlement,  we (i)  cancelled  a
$2,750,000  promissory note payable to us by an affiliate of the FondElec Group;
(ii) wrote off 420,000 in related FondElec Group assets; and (iii) were released
of a $1,864,118 recorded obligation payable to the FondElec Group. Additionally,
we agreed to pay the FondElec Group $200,000 on the 60th day following repayment
in full of amounts due under the Internexus  revolving credit agreement and each
party executed mutual releases for any and all claims.  As a result of the above
settlement,  we recorded a $1,505,882  arbitration settlement expense during the
year ended December 31, 2001.

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

A.       EXHIBITS.

                                      None.


         B.       REPORTS ON FORM 8-K

                                      None.



<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:  May 15, 2001                BY       /s/ GARY BARLOW
                                            ------------------------------------
                                            Gary Barlow
                                            Chief Accounting Officer