SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(Mark one)

[X]           Annual report under section 13 or 15(d) of the Securities Exchange
              Act of 1934 for the fiscal year ended December 31, 2001.

[ ]           Transition  report  under  section  13 or 15(d) of the  Securities
              Exchange Act of 1934 for the transition  period from  ____________
              to _____________.

Commission file number                                                  00-21143

                        CONVERGENCE COMMUNICATIONS, INC.
                 (Name of small business issuer 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 office)                  (Zip Code)

       (Registrant's telephone number, including area code) (801) 328-5618

Securities to be registered under
    Section 12(b) of the Act:
     Title of each class               Name of each exchange on which registered
 Common Stock, Par Value $.001                                       None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ___.

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  of the  registrant.  The aggregate  market value
shall be computed by reference to the price at which the common equity was sold,
or the average bid and asked  prices of such  common  equity,  as of a specified
date within 60 days prior to the date of filing. (See definition of affiliate in
Rule 405, 17 CFR 230.405) $3,269,128

         Note.If a determination as to whether a particular person or entity is
an affiliate cannot be made without involving  unreasonable  effort and expense,
the  aggregate  market value of the common stock held by  non-affiliates  may be
calculated  on the basis of  assumptions  reasonable  under  the  circumstances,
provided that the assumptions are set forth in this Form

Applicable  only to registrants  involved in bankruptcy  proceedings  during the
preceding  five years:  Indicate by check mark whether the  registrant has filed
all documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities  Exchange Act of 1934  subsequent to the  distribution  of securities
under a plan confirmed by a court. Yes ___ No ___.

(Applicable  only to  corporate  registrants)  Indicate  the  number  of  shares
outstanding  of each of the  registrant's  classes  of common  stock,  as of the
latest practicable date.

As of April 8, 2002,  60,592,086 shares of registrant's  common stock, par value
$.001 per share, were outstanding.

Documents  incorporated by reference.  List hereunder the following documents if
incorporated by reference and the Part of the Form 10-K (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) Any annual report to security
holders;  (2) Any proxy or information  statement;  and (3) Any prospectus filed
pursuant  to Rule  424(b) or (e) under the  Securities  Act of 1933.  The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1980). NONE

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K (ss.  229.405 of this chapter) is not contained  herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |_|


<PAGE>


PART 1.

                           OUR BUSINESS AND PROPERTIES

Overview of Our Operations

We are a leading  facilities-based  provider of broadband  services operating in
recently  deregulated   high-growth   markets,   principally  Mexico.  We  offer
enterprise  customers  end-to-end  communications  solutions,  including managed
corporate data network  services,  high-speed data  connections,  high-speed and
dial-up Internet access,  voice, video,  e-commerce-enabling  services and other
value-added  communications  services.  We had  $40,170,949 in revenues in 2001,
compared to $35,027,458 in 2000 and $9,099,054 in 1999.

We  believe  many  underdeveloped  countries,  particularly  countries  in Latin
America,  are experiencing  unparalleled demand for expanded  telecommunications
services. The Latin American  telecommunications  market was approximately $33.2
billion in 1996 and is expected to be approximately $74.2 billion in 2002.

We also believe incumbent telecommunication networks in those markets are unable
to meet that demand, in large part because antiquated  circuit-switched networks
are unable to deliver new  integrated  communication  services.  We believe this
problem  will be  solved  as  service  providers  enter  the  market  with  new,
next-generation   networks  that  provide  managed   corporate  data  networking
services,  high-speed  data  connections,   Internet  access,  voice  and  video
services. We are a first-mover service provider in our chosen markets.

We have decided to focus our business  efforts on the Mexican  market,  which is
one of the fastest growing segments of the Latin American market, and we operate
in 146 cities in that country.  We are the leading provider of managed corporate
data networking services there, after the incumbent telephone company, and have,
system-wide,  over 846  corporate  and  institutional  customers.  Our customers
include such household  names as WorldCom,  Samsung,  Marriott  Hotels,  Ernst &
Young, Inter-Continental Hotels and Unicef.

In a report  dated  August 14,  2001,  Booz Allen  Hamilton  estimated  that the
Mexican  market for business data services in the top five Mexican  cities would
increase by a compound  annual  growth  rate of over 30%  between  2001 and 2004
(from $1.0  billion in 2001 to $2.2  billion in 2004).  During the same  period,
they  expect the voice and data  market in the top five cities in Mexico to grow
from $3.1 billion to $4.8 billion. According to ITTA, Mexico is also leading the
way for Internet-related  sales as a percent of company revenue, with an average
of 20% of total sales compared with 17% for the United  States.  Booz Allen also
estimated that as of 2000, there were  approximately  3.1 million large,  medium
and small businesses in Mexico.

We service our customers in a number of our market areas over a next  generation
IP-based  optical  technology  platform  that  uses  packet  switching,  Gigabit
Ethernet standards, and state-of-the-art encryption and authentication protocols
to transmit data,  carrier-grade  voice and video services over the same network
at guaranteed service rates.

Our technology platform is fully scaleable,  redundant and multi-pathed to offer
maximum  flexibility in traffic  management,  quality of service and "on demand"
provisioning.  We ultimately plan to deploy those networks in each of our target
markets. We believe our use of Gigabit Ethernet networks - which cost 25% of the
next lowest cost network - gives us a significant competitive advantage.

We have grown rapidly since we began our  operations in 1995.  Our customer base
has increased from 900 residential cable television  customers in one country in
1997, the year we acquired our first operating  system, to 2,509 high-speed data
customers,   2,948  dial-up  Internet  customers,  and  6,958  cable  television
customers as of December 31, 2001. Our customers include large  corporations and
businesses,   governmental  agencies  and,  to  a  limited  extent,  residential
customers.  Although  we  currently  maintain  operations  and assets in Central
America and Venezuela in addition to our  operations in Mexico,  we have decided
to focus our business efforts on the Mexican market,  and anticipate selling our
non-Mexican  assets in 2002 if acceptable  valuations  can be achieved.  In June
2001,  we  sold  operations  in  El  Salvador,  including  361  high-speed  data
customers,  124  high-speed  and dial-up  Internet  customers  and 26,039  cable
television  customers.  The total remaining  customers related to our non-Mexico
operations are 1,663  high-speed  data customers,  2,948  high-speed and dial-up
Internet customers and 6,958 cable television customers.

Our Corporate Structure

We were  formed  in  1995 to take  advantage  of  opportunities  created  by the
deregulation  of the Latin American  telecommunications  markets.  We have grown
organically and through acquisitions since then. We currently conduct operations
or have  assets in Mexico,  Central  America  and  Venezuela  through a group of
approximately  35 direct and  indirect  subsidiaries.  Our parent  corporation's
assets  primarily  consist  of  its  direct  and  indirect  interests  in  those
subsidiaries.

When we  discuss  our  operations  in this  report,  you  should  assume  we are
describing  our  own  and  our  controlled  subsidiaries'  operations.  We  have
structured our corporate  ownership interests in our subsidiaries to provide our
parent  corporation  with the ability to  consolidate  their  operations  in its
financial   statements  under  United  States  generally   accepted   accounting
principles.

Our principal executive office is located at 102 West 500 South, Suite 320, Salt
Lake  City,  Utah  84101,  where our  telephone  number is (801)  328-5618.  Our
principal operating office is located at 1300 Sawgrass Corporate Parkway,  Suite
110,  Sunrise,  Florida 33323, and our telephone number there is (954) 233-0025.
We also have offices in each of our Latin American country markets.

Our World Wide Web site is located at www.cciglobal.net. The information on that
site is not part of this report.  Our logo and certain  titles and logos for our
services  are our  property.  Each  trademark,  tradename or service mark of any
other company appearing in this report belongs to its holder.

We previously  reported some of the transactions and operations  information set
forth in this report in greater  detail in other  reports we have filed with the
Securities and Exchange Commission,  including in the reports described below in
the section  entitled  "Reports on Form 8-K" and our  quarterly  reports on Form
10-QSB for the periods  covered by this report.  You should read the information
in this report in  connection  with those other  reports and filings,  which are
incorporated herein by this reference.

Some of the matters  described  in this report  occurred or are  anticipated  to
occur after  December 31, 2001,  the close of the period covered by this report.
We have included  descriptions of those matters in this report to provide a more
balanced description of our operations, business and prospects.

Our Market Opportunity

We are  focused  on the  Mexican  market.  We  believe  there  is a  significant
opportunity for telecommunications growth in this market as a result of:

     o    large,  unmet  demand  for  expanded,   broadband   telecommunications
          services,  which is growing at a compound  annual  growth rate of over
          30%

     o    deregulation and  privatization  of historically  government owned and
          operated telecommunications systems

     o    relatively limited competition

     o    current  infrastructure  which is inadequate for delivering  broadband
          applications.

The combined  telecommunications market worldwide is believed to be in excess of
$700 billion and is expected to grow to $1.0  trillion by the year 2002.  Growth
in the industry is driven by a number of factors, including increased demand for
bandwidth  and services such as electronic  commerce.  Internet  access and data
services   are   arguably   one  of  the   fastest   growing   segments  of  the
telecommunications   market,  with  an  estimated  116  million  Internet  users
worldwide.

The Latin American  telecommunications  industry is, in  particular,  undergoing
dramatic change,  including widespread  privatization of existing networks.  The
countries  in Latin  America  that have or are  beginning  to  deregulate  their
telecommunications  industries have done so as their governments have recognized
the need to introduce market competition.

The increased demand for telecommunications  services is expected to result in a
significant   growth  in  the   revenues   generated   in  the  Latin   American
telecommunications  market,  which totaled $63.7 billion in 2000 and is expected
to be $74.2  billion in 2002,  up from $33.2  billion in 1996.  Internet  use in
Latin  America has more than doubled  (from 10.7 million  users in 2000 to 25.33
million users in 2001) in the last two years and that growth rate is expected to
continue for the foreseeable future.

In a report dated August 14, 2001,  Booz Allen estimated that the Mexican market
for business  data services in the top five Mexican  cities would  increase by a
compounded  annual  growth  rate of over 30%  between  2001 and 2004  (from $1.0
billion in 2001 to $2.2 billion in 2004) compared to a compounded growth rate of
approximately 13% in the United States.  During the same period, they expect the
voice and data market in the five top cities in Mexico to grow from $3.1 billion
to $4.8  billion.  Additionally,  Booz Allen  estimate that as of 2000 there are
over 3.1 million large, medium and small businesses in Mexico.

This anticipated growth will be influenced by a number of factors, including:

     o    Increased   Competition.   As  competitors  enter  the  Latin  America
          telecommunications  market, the range of  telecommunications  services
          available to consumers should expand.

     o    The Entry of Globalized Businesses into Latin America. As corporations
          from more developed markets expand their operations into Latin America
          and Latin American  corporations  develop more global operations,  the
          need for private data networks and broadband capacity should grow.

     o    Changes  in  Technology.  Latin  American  markets  have  historically
          depended on legacy  telecommunications  systems and the infrastructure
          of the incumbent operators. These systems have generally been based on
          technology and equipment that has limited  bandwidth  capabilities and
          relatively poor transmission quality. We use state-of-the-art  Gigabit
          Ethernet, IP-based networks.

     o    Increases  in the Use of the  Internet.  The Latin  American  Internet
          market is  generally  thought to be several  years behind the Internet
          market in the United States in terms of overall market  penetration of
          both use and Internet related services.  Actual use varies by country,
          but was estimated to be, on average,  less than 1% (compared to 18% in
          the United States) in 1997, and is projected to increase to 5% by 2002
          (compared to over 40% in the United States).

Our Business Strategies

Our vision is to become the  premier  facilities-based  provider  of  integrated
broadband telecommunications solutions to business and governmental customers in
our markets. Our strategy to reach that goal is based on the following:

     o    We intend  to  capitalize  on the  growth in  managed  corporate  data
          network  services.   We  expect  the  demand  for  high-speed  managed
          corporate  data  network  services to grow at a rapid pace as economic
          expansion  increases and the need for bandwidth  intensive data, voice
          and other connectivity  solutions in the region develops. We intend to
          capitalize on the trend of companies that desire to outsource critical
          business applications and to integrate Web-based services and products
          into their  operations by  aggressively  marketing  value-added  data,
          Internet and e-business enabling services.

     o    We focus on the business  customer.  We focus our marketing efforts on
          large and medium sized corporate customers that tend to be significant
          users of data services and have sophisticated data connectivity needs.

     o    We focus on "first mile"  services.  Unlike  other  telecommunications
          companies that provide long-haul  services,  we focus on the important
          "first-mile"  service segment.  We believe  international  gateway and
          national  long-haul  services are quickly becoming  commoditized,  but
          that  the  "first-mile"  providers  will  not be  subject  to the same
          downward pricing pressure.

     o    We focus on the Mexican market.  The Mexican market for  communication
          services  is one of the largest and most  rapidly  growing  markets in
          Latin  America.  In a report  dated  August 14,  2001,  Booz Allen has
          estimated  the Mexican  market for business  data  services in the top
          five Mexcian cities would increase by a compounded  annual growth rate
          of over 30% between  2001 and 2004 (from $1.0  billion in 2001 to $2.2
          billion in 2004).  During the same  period,  they expect the voice and
          data market in Mexico to grow from $3.1  billion to $4.8  billion.  We
          have deployed  networks in key metropolitan  markets within Mexico and
          are the leading provider of managed corporate data networking services
          there, second only to the incumbent telephone company.

     o    We have established an early market  presence.  We have established an
          early  and  significant  presence  in all of our  target  markets.  We
          believe we are able to secure a significant subscriber base and market
          share with minimal turnover as a result of our early market presence.

     o    We   provide   state-of-the-art   solutions.   We   are   building   a
          state-of-the-art    IP-based    network   to   deliver   our   bundled
          telecommunications services. Our networks incorporate Gigabit Ethernet
          architecture and transmission media, scalable optical systems and IETF
          approved   protocols   for   providing   data   security  for  optimum
          "first-mile" connectivity.

     o    We use our own Metropolitan  Area Network  infrastructure  to increase
          margins.  We provide a significant portion of our services through our
          own next-generation optical-based network.

     o    We enhance our service offerings to increase  margins.  As a result of
          our solutions-oriented  approach and emphasis on high quality customer
          service,  we believe we will be uniquely positioned to sell additional
          services and  applications  to our clients as their data needs evolve.
          We also plan to take advantage of other revenue  opportunities that we
          expect  to  develop  as a result of  deregulation  or  changes  in the
          telecommunications  industry,  including  domestic  long-distance  and
          international  switched  voice   telecommunications  and  data  center
          services for our corporate and carrier customers.

     o    We lease  intercity and  international  backbone  capacity to increase
          margin and capitalize on decreasing prices. We lease backbone capacity
          in  service  areas  where  we  believe   building  a  network  is  not
          economically feasible.  This strategy allows us to increase our margin
          as the prices for leased capacity continue to drop, while reducing our
          capital expense.

Our Network Technology

We employ a next  generation  IP-based  optical  technology  platform  that uses
packet switching and Gigabit Ethernet protocols, to transmit data, carrier-grade
voice and video  services  over the same network at  guaranteed  service  rates.
Gigabit Ethernet  technology costs  approximately  25% of asynchronous  transfer
mode systems, or ATM networks,  the dominant data transmission  technology.  Our
networks  are  fully  scalable,  redundant  and  multi-homed  to  offer  maximum
flexibility  in  traffic   management,   quality  of  service  and  "on  demand"
provisioning.

Gigabit Ethernet  networks  incorporate the most advanced  principles in network
design,  technical  standards and optical  engineering  to provide  "first-mile"
network  services and  capabilities  that are  significantly  greater than those
offered by traditional  circuit-switched  or  non-optical  based  networks.  Our
networks  may also  incorporate  optical  transmission  devices  that use  dense
wavelength division multiplexing, or DWDM, when required.

With DWDM  technology,  a single  fiber optic  strand is able to carry  multiple
signals  at the same time  through  the use of  different  wavelengths  for each
signal.  This  greatly  increases  the  capacity  of each of our fiber  strands,
effectively eliminating the need for additional fiber.

A key feature of our network  design is its  adaptability  to changes in service
offerings,  network standards and new technologies and protocols. We are able to
efficiently  support  a  wide  mix of  telecommunications  traffic  and  provide
high-transmission  speeds to our customers while providing substantial potential
for expansion in a cost-effective  manner. Our network is based on the following
principles:

     o    Cutting-edge design. Our network incorporates an IP-based architecture
          that uses Gigabit  Ethernet  hardware,  IETF approved  encryption  and
          authentication  protocols,  DWDM and all-optical  switching systems to
          maximize  "first-mile"  customer  service and network  efficiency  and
          adaptability.

     o    Scalability.  We are able to expand  both  transmission  capacity  and
          switching capacity rapidly and  cost-effectively as traffic volume and
          capacity demands increase.

     o    Reliability.  Our  networks  allow for  carrier  grade  service  level
          redundancy  if there is a network  failure.  When we  connect to other
          networks,  we also employ multiple routing paths and  interconnections
          for further redundancy.

     o    Revenue-driven  deployment schedule. We design and deploy our networks
          to maximize  potential revenue  generation while minimizing  build-out
          costs.  We use a "smart  build"  strategy  where we only spend capital
          when we have a customer.

     o    Supplementary local access technologies. Although we eventually intend
          to  provide  our  services  using the same  technology  in each of our
          markets,  where we believe it is  cost-effective  or  appropriate  for
          customer service, we employ various technologies, such as fiber, fixed
          wireless  technologies,  and coaxial cable in our networks. We believe
          this advanced  technology  architecture  allows the most cost and time
          efficient  delivery of high-speed last mile connectivity with IP-based
          service offerings.

Network Architecture

Metropolitan  Area Networks  (MANs).  MANs are generally  comprised of single or
several  fiber optic rings that provide our customers  with a direct  connection
within a city or metropolitan area to our network. Our MANs have route diversity
and a self-healing architecture, which allows us to re-route traffic if there is
a  network  outage.  We  generally  deploy  our  networks  in areas  with a high
potential customer density and limited competition.

Although we intend to provide our services over our own fiber optic networks, we
may use  leased  networks,  fixed  wireless  technology  or  coaxial  cable on a
case-by-case  basis to  complete  or  complement  our fiber  rings or to provide
services to customers  who we may not be able to serve on our own network.  This
strategy  gives us rapid  access  to  customers  and  allows  us to gain  market
penetration and take advantage of market opportunities before we have completely
constructed our network. The strategy also allows us to enhance the reach of our
fiber networks.

Points of Presence (POPs). Our POPs provide secured  interconnection points with
other carriers,  typically with a minimum of one POP per market.  We purchase or
lease sites and construct POPs in each market at the location of other carriers,
public Internet peering points and local telehouses.

Network  Operations  Centers (NOCs).  Our NOCs contain central node transmission
and switching  equipment and are located in each of our principal  market areas.
They ensure that our systems are working as efficiently as possible, and monitor
our various  fiber-optic,  fixed  wireless  and coaxial  cable  networks on a 24
hour-a-day  basis and provide our  operating  personnel  with alarm,  status and
performance information.

Interconnection   Gateways.  We  have  entered  into  national   interconnection
agreements with incumbent  public operators in some of our markets and intend to
enter into  additional  agreements in other markets once  regulatory  conditions
permit.  We have also entered into  agreements  with national and  international
carriers,  such  as  WorldCom  and  Sprint,  and  with  international  satellite
connectivity  providers  such  as  Interpacket  Group,  Inc.  We are  developing
additional  physical  interconnections  with incumbent  public operators at both
their tandem switching centers and end offices in a number of our markets.

Our Networks and Markets

We have grown rapidly since we began our  operations in 1995.  Our customer base
has increased  from 900 cable  television  customers in one country in 1997, the
year we acquired our first operating system, to 2,509 high-speed data customers,
2,948 dial-up Internet customers,  and 6,958 cable television  customers in nine
countries as of December 31, 2001. Our customers include large  corporations and
businesses,   governmental  agencies  and,  to  a  limited  extent,  residential
customers.  Although  we  currently  maintain  operations  and assets in Central
America and Venezuela in addition to our  operations in Mexico,  we have decided
to focus our business efforts on the Mexican market,  and anticipate selling our
non-Mexican assets in 2002 if acceptable valuations can be achieved. Pending the
sale of those assets,  we intend to maintain our assets and  operations in those
markets.  In June  2001,  we  sold  operations  in El  Salvador,  including  361
high-speed data  customers,  124 high-speed and dial-up  Internet  customers and
26,039 cable television customers.  The total remaining customers related to our
non-Mexico operations are 1,663 high-speed data customers,  2,948 high-speed and
dial-up Internet customers and 6,958 cable television customers.

Our  Mexican  Network.  We first  entered the  Mexican  market in 1999,  when we
acquired  approximately  17% of the capacity of a fiber optic  network in Mexico
City owned by Metronet,  S.A. de C.V., or Metronet. The network consists of five
main interconnected rings of optic strands. As of December 31, 2001, the network
had  approximately  275 kilometers of fiber in Mexico City and approximately 100
kilometers of fiber in Monterrey.

The network provides us with direct access to several hundred  single-tenant and
multi-tenant  buildings.  As part of the Metronet  transaction,  we also entered
into an agreement with Metronet to jointly  pursue the  development of new fiber
networks  in  five  other  major  Mexican  cities.   We  jointly  completed  the
construction  of a network  in  Monterrey  in 2001 and plan to  construct  fiber
networks in Guadalajara in 2004, Puebla in 2005 and Leon in 2006.

In December 1999, we expanded our presence in Mexico by acquiring  International
Van, S.A. de C.V., or Intervan, the leading independent data networking services
company in Mexico.  Through its national  state-of-the  art leased  network,  we
provide  broadband data connectivity  solutions to over 846 corporate  customers
throughout Mexico.  Intervan has  facilities-based  POPs in seven Mexican cities
(Mexico  City,  Guadalajara,   Monterrey,   Tijuana,   Chihuahua,   Juarez,  and
Villahermosa),  as  well as four  United  States  cities  (Laredo,  El Paso  and
Houston, Texas, and San Diego, California).

Intervan's  operations  are  enhanced  by  several  strategic  relationships  or
commercial  carrier  agreements  with other  local and  international  carriers,
through  which it serves its  clients'  connectivity  needs,  as well as peering
agreements for Internet backbone capacity. Intervan uses a combination ATM/Frame
Relay technology over leased access. We intend to migrate as many as possible of
Intervan's current customers in Mexico to our next-generation IP-based network.

In November  2000,  we received a concession to operate our own data networks in
Mexico. The concession allows us to expand our profit margins by selling our own
products,  rather than reselling  products of other carriers.  See our report on
Form 8-K dated filed on March 7, 2001 for a more detailed description of the new
concession. We have also applied for a telephony concession, which we anticipate
we will receive before the end of 2002.

We intend to concentrate  our network build out and operations in Mexico in five
major metropolitan areas, Mexico City, Monterrey,  Guadalajara, Pueblo and Leon,
where Booz Allen  projects  the  telecommunications  market  will grow from $3.1
billion in 2001 to approximately $8.0 billion by 2007.

Our Central American Network.  Our Central American market region operations are
conducted  in seven  countries - El  Salvador,  Guatemala,  Panama,  Costa Rica,
Nicaragua,  Honduras and the Dominican Republic.  We began our operations in the
region in 1998,  when we acquired a CATV  operation in El Salvador.  In December
1999, we added to our  operations  in the region by acquiring the  operations of
GBNet Corporation,  or GBNet, which provides data networking and Internet access
services.

In connection with the GBNet  acquisition,  we entered into a  commercialization
agreement  under which the parties  agreed to recommend one another as preferred
providers of services and products,  an equipment purchase agreement under which
the  seller of the GBNet  system  (an IBM  affiliate)  agreed to provide us with
preferred  purchasing  terms on any IBM equipment we acquire from the seller for
our operations,  and a network management agreement,  under which we provide the
seller with managed data network services connections.

In April  2000,  we added to our  operational  assets  in the area  through  the
purchase of a Guatemala holding company that conducts  high-speed data,  dial-up
and high-speed  Internet and telephony services in Guatemala,  and the assets of
another  company that  provides  CATV  services  using its own fiber and coaxial
cable network. We provide our services in Guatemala primarily through a six-node
fiber optic/coaxial cable network in Guatemala City.

We  have  also  secured  two  blocks  of  frequency  in   Guatemala's   wireless
telecommunications spectrum. That spectrum allows us to provide services through
broadband  multi-point  wireless  systems.  We have built two wireless  nodes to
support  our  wireless  network  operations.  Our  network in  Guatemala  covers
approximately 70% of the business community of Guatemala City.

In June 2001,  we sold our  interest in one of the  companies  through  which we
conduct operations in El Salvador. That sale included the sale of the network we
need to support our other operations in El Salvador,  and we have been servicing
our remaining customers in El Salvador through a short-term use arrangement with
the buyer of our El Salvadoran network.

Pending the sale of all of our operations in that country,  we intend to service
our customers with a leased third party network. We intend to sell our remaining
Central  American  operations  and assets in 2002 if we can obtain an acceptable
valuation.

Our Venezuela  Network.  We maintain a number of licenses and  authorizations to
provide  telecommunications  services in Venezuela. In addition to those permits
and licenses,  we own a nine-ring  fiber optic network in Maracaibo,  and have a
strategic  relationship  with  Telematica  EDC, C.A., or Telematica,  one of our
largest  shareholders  and an  affiliate  of the  largest  electric  utility  in
Venezuela.  Under that strategic relationship,  Telematica has agreed to provide
us with rights-of-ways to an existing metropolitan area utility duct network the
utility owns in Caracas,  as well as a $26 million credit facility,  under which
we have borrowed $7,000,000 (see the section entitled "Certain Relationships and
Related Party Transactions: Telematica Transactions").

Our Customers

We are the largest  independent  corporate  data  provider in Mexico,  where our
customer base includes 846 multinational corporations, governmental agencies and
other  businesses in 146 cities.  We intend to expand our  marketing  efforts in
Mexico to a broader  customer base and when we are granted a telephone  license,
we  intend  to  initiate  telephony  services.  We  have  also  entered  into an
affiliation  agreement  with  Sumitomo,  a Japanese  firm that has a significant
presence,  along with a number of other Japanese  enterprises,  in Mexico. Under
the terms of the  agreement,  Sumitomo has agreed to assist us in marketing  our
services to other Japanese entities doing business in Mexico.

In our Central American market countries,  we focus on providing our services to
large business  customers  primarily through our GBNet operations and our system
in Guatemala.  As of December 31, 2001 we had 1,663  high-speed  data customers,
2,948 dial-up and high-speed Internet customers and 6,958 CATV customers in that
market. We also provide limited telephony services to our customers in Guatemala
through an interconnect agreement with the incumbent telephone company.

In June 2001, we sold a portion of our operations in El Salvador,  including 361
high-speed data  customers,  124 high-speed and dial-up  Internet  customers and
26,039 cable television customers. Also, until recently, we maintained a dial-up
Internet  operation in Venezuela that provided  services to 2,323 customers.  We
sold that  operation in late 2001 and currently  maintain  only  non-operational
assets in that market.

Competition

The amount,  financial  condition,  services,  service  areas,  reputation,  and
relative  market  strength of the competition in each of our market areas varies
depending  on the  market  in  question,  the state of the  deregulation  of the
telecommunications industry in that market and other factors.

In Mexico, we are the leading pure data services  provider.  Our competitors are
primarily  incumbent  services  providers which use circuit-based  networks that
focus on voice are not well  suited for data and other  broadband  applications.
Our primary  competitors include Telmex and its principal  competitors,  Avantel
and Alestra, which each provide nationwide telecommunications services.

Telmex  provides  fixed and  mobile  telephone,  Internet,  VPN,  long  distance
connectivity  and web hosting  services,  while Avantel and Alestra provide long
distance  services  to large  business  segments.  Alestra  also  provides  some
residential  long  distance  services.  We also compete with Bestel,  which is a
carrier's  carrier  that  provides  leased  intercity  long  distance  and  data
transmission  to other service  providers.  Other  competitors in Mexico include
Infosel, which was recently acquired by Telmex and which is Mexico's largest ISP
service provider,  and Telefonica,  which provides data transmission services in
major cities throughout Mexico.

The  telecommunications  industry  in our  Central  American  markets  is not as
competitive  as our other  markets.  Our primary  competitor in those  countries
generally is the incumbent telephony provider, such as Telefonica in El Salvador
and Telgua in Guatemala. In some instances,  such as Costa Rica, the competition
has   been   restricted   because   of   the   uncertainties   related   to  the
telecommunications laws.

Competition  in  Venezuela  is  primarily  provided by the  incumbent  telephony
provider, CANTV. Other competitors include Telcel, VeinfoTel and Genesis.

Our Services

We offer a wide  variety of  broadband  telecommunications  services,  including
managed corporate network services, high-speed data connections,  high-speed and
dial-up  Internet  access,   video,   e-commerce-enabling   services  and  other
value-added communications services. We also offer voice services in some of our
markets and plan to offer these  services in  additional  markets as  regulatory
conditions   permit.   We  allow   subscribers  to  combine  our  services  into
individually designed packages rather than offering standard  telecommunications
service packages designed for a typical customer. We believe this flexible sales
strategy reduces switching  barriers for potential and existing  subscribers who
may be  reluctant  to switch all of their  telecommunications  services  and for
subscribers that have existing contracts with their service providers.

We have the capacity to establish deep and interdependent relationships with our
customers by: (i)  developing  tailored  solutions for them,  (ii)  provisioning
their network needs and (iii) managing and maintaining their network operations.
We believe our outsourced  solution is more capital  efficient for customers and
provides them with advanced services without the expense of a full IT staff.

As a  result  of our  solutions-oriented  approach  and  high  quality  customer
service,  we believe we are uniquely  positioned to sell additional services and
products to customers as their  telecommunications needs evolve. In addition, we
believe we are well positioned to retain customer  relationships  because of the
mission  critical  nature of our  services,  our  commitment  to a high level of
customer  service  and the value  proposition  we provide  through  our  bundled
service offerings.

We believe  that, by being the first  provider of integrated  telecommunications
services  in our  markets  we secure  access  to a broad  base of  business  and
government  customers.  We  also  believe  that,  if  we  develop  our  business
operations  in  accordance  with our  business  plan we will create  significant
barriers  for our  competitors  to overcome and that our lowest  operating  cost
strategy and highly  differentiated  service  offerings will give us competitive
advantages over the other telecommunications providers in our markets.

Our  telecommunications  solutions  typically consist of one or a combination of
the following service categories:

          o    Managed   Corporate   Data  Network   Services.   We  offer  data
               communication links over a shared network environment. Because we
               operate,  manage and monitor our network end-to-end,  we are able
               to provide  our  customers  with higher  performance  and greater
               reliability  than  networks  that use the  public  Internet.  The
               services  we offer range from simple  connections  to  customized
               private network solutions, including high-speed data transmission
               and Virtual  Private  Networks.  As of December 31, 2001,  we had
               2,509 network service  customers,  which, in some cases,  include
               high-speed Internet access customers.

          o    Full Suite of Internet Access Services. Our services include both
               high-speed and dial-up Internet access.  We offer Internet access
               services  primarily to corporate and  governmental  users.  As of
               December 31, 2001, we had 2,948  high-speed and dial-up  Internet
               access customers.

          o    Telephony Services. We offer private carrier-grade voice services
               in  some  of  our  markets.  We  intend  to  offer  national  and
               international  carrier-grade  IP voice in all of our  markets  as
               they  deregulate  and  we  obtain   approvals  to  provide  those
               services.

          o    Other   Services.   We  offer  other   telecommunications-related
               services    which   we    believe    enhance    our    customers'
               telecommunications  and data  services  operations.  These  other
               services include web and application  hosting and managed network
               security.

Our Business and Operating Issues

To operate successfully,  we will need to deal with a number of governmental and
operational issues. These issues include the following:

Governmental  Regulation.  Our services  are subject to  extensive  governmental
regulation.  The amount,  type and extent of that regulation varies from country
to country.  The regulatory  structure for any  particular  market is subject to
change from time to time, and any such  regulatory  change could have a material
and adverse  effect on the  particular  market in which that change takes place,
and/or upon our business as a whole.

The  regulatory  environment  in each of our major  markets can be summarized as
follows:

Mexico.  The  1995  Ley  Federal  de  Telecomunicaciones,  the  1940 Ley de Vias
Generales de Comunicacion,  the 1990 Reglamento de  Telecomunicaciones,  and the
rules  promulgated  by  Cofetel  (such  as rules  for  local  and long  distance
interconnection),    define   the    regulatory    structure    applicable    to
telecommunications  services  in  Mexico.  The  objectives  of those laws are to
promote  the  efficient  development  of  the  telecommunications  industry,  to
encourage fair competition in the provision of quality,  low-price services, and
to  ensure  satisfactory  coverage  of the  population  based  on  socioeconomic
factors.

Telecommunications  services in Mexico and service  providers  are regulated and
supervised by the Secretary of Communications  and  Transportation,  or SCT, and
Cofetel.  The  SCT  is  the  governmental  agency  principally  responsible  for
regulating telecommunications services in Mexico.

Under Mexican law,  generally no more than 49% of the capital stock of a Mexican
corporation  holding a  concession  to provide  local  telephone,  domestic  and
international long distance services may be held by non-Mexican  investors.  Our
principal operating company in Mexico,  Intervan,  restructured its ownership in
2000  to  comply  with  these  foreign  ownership  requirements  as  part of its
application for a Mexican telephony  license.  See our report on Form 10-QSB for
the quarter  ended  September 30, 2000 for a more  detailed  description  of the
recapitalization.

Starting  in 1997,  Telmex was  required to permit any other  concessionaire  to
connect to its network.  The SCT issued technical rules for the  interconnection
of  competing  long-distance  carriers  with the  Telmex  network  in June 1994,
specifying there would be an unlimited  number of long-distance  concessions and
that Telmex must provide over 200  interconnection  points by the year 2000.  In
1996, SCT released new rules governing long-distance  services,  which generally
established the framework for competitive long-distance services.

Each  of the  countries  in our  Central  American  markets  has  enacted  major
legislation for the deregulation of telecommunications  services within the last
few years. Nicaragua and Honduras approved new regulatory structures in 1994 and
1995,  respectively.  In 1996,  El Salvador,  Guatemala  and Panama  adopted new
regulatory schemes, followed by the Dominican Republic in 1998 and Costa Rica in
early  2000.  In  general,  each of these  new  laws  establishes  a  regulatory
environment  that calls for the breakup and  privatization  of  government-owned
monopolies on  telecommunications  services.  In some  countries,  such as Costa
Rica, it is still unclear as to whether new legislation will allow us to provide
the services that we provide in other market areas,  and the timing of our entry
into those market segments.

Central  America  and  Venezuela.  The  Venezuelan  telecommunications  laws are
regulated and  supervised by CONATEL,  a  governmental  agency.  CONATEL is also
charged   with   the    responsibility   of   creating    competition   in   the
telecommunications industry. Currently, the markets for data services, dedicated
network  services,  dial-up  Internet  services,  value added  services,  mobile
satellite services, trunking and rural telephony have been privatized.

Risks of Foreign  Investment.  Governments of many countries in which we operate
have  exercised and will continue to exercise  substantial  influence  over many
aspects  of  private  business  enterprise.  Local  governments  own or  control
companies  that are or may become our  competitors  or companies  upon which the
operating  companies  and network right holders in which we have an interest may
depend for required  services or materials.  Governmental  actions in the future
could have a significant effect on our business operations,  financial condition
and  operations.  Our interests in some or all of our market  countries could be
adversely  affected by expropriation,  confiscatory  taxation,  nationalization,
political, economic or social instability, changes in laws or other developments
over which we have little or no control.

Network  Issues.  We rely on the existence of, and continuing  ability to use or
exploit,  telecommunications licenses, concessions or leases which are typically
granted by  governmental  agencies  on an  exclusive  or  limited  basis and for
limited terms.  There can be no assurance these  governmental  agencies will not
attempt  to  limit,  revoke or  otherwise  adversely  modify  the terms of those
rights.  Those rights may be subject to significant  operating  restrictions  or
conditions,   including   restrictions   relating  to  the   implementation   or
construction of network  improvements,  commercialization,  subscriber  rates or
royalties or other  specified  deadlines or conditions  which, if not satisfied,
could result in the network rights being revoked or modified.

Our Properties and Facilities

Our  Equipment.  We have the  ability to source key  network  components  from a
number of equipment vendors. Fiber-optic and coaxial cable systems can generally
be  constructed   using   equipment  from  different   manufacturers.   This  is
particularly  true with equipment such as switches,  routers and servers,  where
there are many  manufacturers that distribute their products through a number of
resellers. Fixed local wireless networks can also be constructed using equipment
from different  manufacturers,  and can use different  technologies.  We believe
that, by employing standardized  equipment,  we will be able to make appropriate
decisions  based on the  price  of the  equipment,  with  less  emphasis  on the
manufacturer.

Our Office Space.  As of December 31, 2001, we leased approximately:

          o    2,500 square feet of office space in Salt Lake City, Utah under a
               lease agreement expiring in September 2003.

          o    8,100  square feet of office  space in Sunrise,  Florida  under a
               lease expiring in May 2005.

          o    3,600  square  feet of office  space in Pembroke  Pines,  Florida
               under a lease expiring in April 2003.

We have  subleased  our lease space in  Pembroke  Pines to a third  party.  That
sublease  expires in April 2003. We believe our office space in Utah and Florida
is  adequate  for  our  current  needs.  We  believe  all of our  leases  are on
commercially   reasonable   terms.   We  also  maintain,   through  our  various
subsidiaries and affiliates,  office space in a number of the countries in which
we operate.

Our  Network  and Other  Rights.  We hold  license  rights,  either  directly or
derivatively,   for   fiber-optic  and  coaxial  cable  networks  and  microwave
point-to-multipoint  telecommunications  networks in our  markets.  We generally
have acquired those rights through:

          o    the acquisition of direct ownership rights or rights of use

          o    long-term contracts with third parties

          o    arrangements  where  we are the  majority  or sole  owner  of the
               entity that owns those assets, or

          o    contractual   arrangements  which  we  believe  provide  us  with
               substantial managerial and operational control of such assets

The rights for wireless point-to-multipoint microwave communications networks in
a number of the markets  that meet our market  selection  criteria  have already
been granted to, or been applied for by, third parties.  Therefore, to build and
operate any  wireless  portions of our  networks in new markets  where we do not
already  control network  rights,  we will have to purchase,  lease or otherwise
acquire  sufficient network capacity from or with those third parties or rely on
other transmission facilities, such as fiber-optic or coaxial networks.

                                    EMPLOYEES

As of December 31, 2001, we had 393 full-time employees. Approximately 20 of our
employees  work  in our  United  States  offices,  and the  balance  work in our
subsidiary  operation  offices in our various  markets.  Our  employees  are not
represented by any unions or collective bargaining entities.

                                   LITIGATION

In March  2000,  we were named as a  defendant  in an action  brought in federal
court in  California.  The suit  claimed  we had  defrauded  the  plaintiffs  in
connection  with a merger we concluded in 1997 and that we had further  breached
contractual obligations to offer the plaintiffs preemptive rights for securities
we later  sold.  After  preliminary  motions  in the case,  we filed a number of
motions for summary  judgment on the issues raised by the  plaintiff.  The court
granted our motions for summary  judgment and  disposed of the last  substantive
issue in the case in October 2001. We subsequently  made a motion to recover our
costs and expenses in the matter,  and, in February 2002, the parties negotiated
a settlement, which included a cash payment to us and the return of the stock we
issued to the plaintiff in 1997.

In April 2001,  FondElec  Group,  Inc.,  an  affiliate  of one of our  principal
shareholders  ("FondElec Group"),  filed an arbitration action against us in New
York alleging  breach of a Services  Agreement  dated August 1998.  The FondElec
Group  claimed,  among other  things,  that we failed to pay the FondElec  Group
certain commissions and fees in connection with the sale of our securities,  and
that we further owed the FondElec  Group  amounts for other  transaction-related
services.  We asserted a number of defenses and counterclaims in the proceeding,
including  breach of fiduciary  duty,  duress and violation of federal and state
securities  laws.  In April 2002,  we settled  the  FondElec  Group  arbitration
proceeding and each party dismissed its claims with prejudice  against the other
party ("FondElec Settlement Agreement").  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.

In July 2001, we were named in an arbitration proceeding initiated in Florida by
two of the  parties  who  sold us  some of our  Guatemala  assets  and we  filed
counterclaims,  all relating to contractual obligations and representations made
in the asset purchase.  In October 2001, we settled the arbitration with the two
original  claimants,   and  the  arbitration  proceedings  were  dismissed  with
prejudice. We believe the arbitration proceeding was settled on favorable terms.
In January 2002, we filed an arbitration proceeding against the sellers who were
not parties to the settlement. In the demand for arbitration, we allege that the
representations  and  warranties  they  made  about the  assets  we bought  were
inaccurate, that they fraudulently induced us into buying the assets and that we
are entitled to indemnification for those misrepresentations.

In November 2001, we were named in a lawsuit brought in the Third District Court
for the State of Utah  (which was  subsequently  removed  to the  United  States
Bankruptcy Court). The suit relates to a 1995 loan commitment from a third party
which is now in  bankruptcy.  Under the  commitment,  the third party  loaned us
$996,707 and the total amount due, including interest, is now approximately $1.4
million. The commitment documents allowed us to repay the principal and interest
on or before August 1, 2001 or convert the  obligation  into a 10-year,  monthly
amortized  loan at any time before August 1, 2001 under certain  conditions.  In
July 2001,  we notified  the third party that we had elected to convert the loan
and we have made all required  payments  under the loan as converted.  The third
party claims we were not  entitled to convert the loan.  We believe it has valid
defenses to the third party's claims, and intend to vigorously defend the suit.

                     DIVIDENDS DISTRIBUTIONS AND REDEMPTIONS

We have not declared or paid any  dividends to the holders of our common  shares
or preferred shares.

              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following  information  summarizes certain transactions we either engaged in
during  the past two years (or which we  propose  to engage  in)  involving  our
executive officers,  directors,  5% stockholders and immediate family members of
those persons:

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. The amounts advanced under the agreement accrue
interest  at 25% per annum,  are senior to all other debt except for amounts due
on our vendor debt  facility  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  agreed  to  promptly  engage  an  investment  banker or
financial  advisor  reasonably  acceptable  to the  lender  for the  purpose  of
exploring  a  possible  sale of all or  substantially  all of our  business  and
operations.

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 (see the section
entitled  "Litigation" for additional  information  regarding the FondElec Group
settlement).

September  2001  Transactions.  In September  2001,  we entered into a series of
agreements  relating to our sale to two  accredited  investors  of shares of our
common  stock  (the  "September  Financing").  Both of those  parties  (or their
affiliates)  are the holders of more than 5% of our common stock and are parties
to other  agreements  with us, as described  below. In connection with the stock
sale,  we entered into a series of other  agreements  under which (1) all of our
outstanding  preferred  stock  (consisting  of Series C and  Series D  preferred
stock) was  converted  into  shares of our common  stock,  (2) the  holders of a
number of our outstanding  warrants exercised those warrants and acquired shares
of our common stock, and (3) the parties to a shareholders agreement that we and
a number of our  principal  shareholders  executed on October 18, 1999 agreed to
amend and  restate  that  agreement  to provide for  modified  board of director
approval requirements,  an increase in the number of the members of our board of
directors from 10 to 12, and  modifications  to the contractual  restrictions on
those  parties'  ability to transfer  their common stock.  For more  information
regarding these transactions, please see our current report on Form 8-K filed on
October 9, 2001.

February  2001  Transactions.  In  February,  2001,  we entered into a series of
agreements  relating to our sale to six  accredited  investors  of shares of our
newly  designated  series D preferred  stock and warrants to acquire  additional
shares  of our  series  D  preferred  stock  and  common  stock  (the  "February
Financing").  See our  report  on Form 8-K  filed  on  March 7,  2001 for a more
detailed  description  of the February  Financing and the  agreements we entered
into in connection  with its closing.  The investors in the securities  included
certain of our stockholders who, at the time of the transaction,  held more than
5% of our stock on a voting basis and are parties to other  agreements  with us,
as described below.

In connection with our sale of the series D stock, our Board of Directors agreed
to grant to the investors in our series C stock  warrants to acquire  additional
shares of our common stock. The  consideration for those warrants  included,  in
part, a waiver by a number of our  shareholders of certain rights they had under
the terms of the warrants  they acquired in October 1999 to an adjustment in the
purchase price in the shares they could acquire under those  warrants  resulting
from our sale of the warrants  involved in the series D stock sale. In addition,
under the terms of our sale of the series D stock,  we paid an  affiliate of one
of the investors under the terms of the October 1999 series C stock  transaction
a fee of $600,000 as  compensation  for its services in connection with the sale
of the series D stock and warrants.

October  1999  Transactions.  In  October  1999,  we  entered  into a series  of
agreements  relating to our sale to six  accredited  investors  of shares of our
newly designated  series C preferred stock and warrants to acquire shares of our
common stock.  Two of the  accredited  investors,  FondElec  Essential  Services
Growth Fund, L.P.  (together with its affiliates,  FondElec) and Internexus S.A.
(together with its affiliates and successors in interest,  Internexus)  acquired
their securities through the conversion of debt we had issued them, and the four
other  investors  acquired  their  securities  for  cash.  For a  more  detailed
description of this transaction and the agreements we entered into in connection
with it, see our reports of form 8-K dated  October 15,  1999 and  November  16,
1999. In July and September 2000, those shareholder parties (or certain of their
affiliates)  exercised  options that we issued them in October 1999 and acquired
additional shares of our series C preferred stock.

Internexus  Affiliates   Transactions.   We  have  entered  into  the  following
contracts,  agreements and arrangements  with a group of affiliated  persons and
entities,  including  their   successors-in-interest,   which  we  refer  to  as
Internexus.  Those  affiliated  parties  include  Norberto  Priu,  one of our 5%
shareholders, and Pablo Priu, one of our directors (see "Principal Stockholders"
below):

          o    In April 2002, Internexus committed to loan us up to $4.0 million
               under the terms of a revolving  loan  agreement.  See "April 2002
               Transactions", above.

          o    In September 2001, Internexus purchased securities from us in the
               September Financing.

          o    In February 2001,  Internexus purchased securities from us in the
               February Financing.

          o    In  December  2000,  we  entered  into  a loan  transaction  with
               Internexus,  pursuant  to  which  we  borrowed  $3  million  on a
               short-term  basis. For a more detailed  description of this loan,
               see our report on Form 8-K filed on March 7, 2001.

          o    Under  the  terms of  shareholders  agreements  to which we are a
               party,  our  principal  shareholders  have agreed to vote, at any
               election of our board of directors,  for persons nominated by the
               parties  to  those  agreements.   Messrs.   Priu,   Schiller  and
               Fucaraccio   currently   serve  on  our  board  as   nominees  of
               Internexus. See "Our Management," below.

Telematica   Transactions.   We  have  entered  into  the  following  contracts,
agreements  and  arrangements  with  Telematica  EDC,  C.A.,  also one of our 5%
shareholders, and its affiliates:

          o    In October 1999,  our Venezuelan  subsidiary,  entered into a $26
               million  financing  arrangement  with  Telematica.   The  parties
               executed the financing agreement for that arrangement in November
               2000.  Telematica paid us a portion of that financing commitment,
               $7.0 million,  in cash, in late 2000 and early 2001.  The amounts
               under  the  debt   facility   were   convertible   under  certain
               circumstances  into shares of our  subsidiary.  Assuming the full
               funding of the facility,  the conversion of the debt amounts into
               equity  could  have  resulted  in  Telematica  or its  affiliates
               acquiring 50% of the stock of our  subsidiary.  As noted above in
               "Business  and  Properties - Our Networks and  Markets",  we have
               decided to dispose of our Venezuela  operations.  As a result, we
               have  not  drawn  any  additional  amounts  under  our  financing
               agreement  with  Telematica.  In April 2002, in  connection  with
               Internexus' commitment to loan us up to $4.0 million, we replaced
               the  promissory  notes for the $7.0 million that  Telematica  had
               previously  advance to us with a promissory note due in 2015. See
               "April 2002 Transactions", above.

          o    Under  the  terms of  shareholders  agreements  to which we are a
               party,  our  principal  shareholders  have agreed to vote, at any
               election of our board of directors,  for persons nominated by the
               parties to those agreements. Messrs. Safford, Pacanins, Shenefelt
               and  Corredor  currently  serve  on  our  board  as  nominees  of
               Telematica. See "Our Management," below.

          o    Telematica was one of the investors in the February Financing.

          o    An  affiliate  of  Telematica  was  one of the  investors  in the
               September Financing.

FondElec Transactions. We have entered into the following contracts, agreements,
and arrangements  with FondElec  Essential  Services Growth Fund, L.P., which is
one of our shareholders, and its affiliates:

          o    Our  subsidiaries  have entered into a number of agreements  with
               FondElec  and  its  affiliates   with  respect  to  our  business
               operations in El Salvador.  Those agreements include the purchase
               agreements  whereby we acquired  our  interest in our El Salvador
               operating  companies,  the sale by that subsidiary of its capital
               stock  to a  third  party,  and  the  documents  relating  to the
               refinancing  of  the  payment   obligations   for  the  operating
               companies with a commercial lender. When Telematica purchased its
               interest in the subsidiary in October 1999, the subsidiary used a
               portion  of the  proceeds  from that sale ($3.8  million)  to pay
               FondElec  amounts the  subsidiary  owed it. In June 2001, we sold
               our  interest in one of our El Salvador  operating  companies  to
               FondElec  and, in  connection  with that sale,  refinanced  $2.75
               million in loans we previously made that operating entity.

          o    In August 1999,  we entered into an advisory  services  agreement
               with  FondElec  relating  to  our  payment  of  certain  fees  to
               FondElec,  including fees (totaling  $1,654,000)  relating to the
               sale  of our  series  C  stock  in  our  October  1999  financing
               transactions.  In 2001, FondElec filed an arbitration  proceeding
               against us for  additional  fees and  damages  under the  service
               agreement.  That  arbitration  was settled in April 2002. See the
               section entitled "Litigation".

          o    Under  the  terms of  shareholders  agreements  to which we are a
               party,  our  principal  shareholders  have agreed to vote, at any
               election of our board of directors,  for persons nominated by the
               parties to those agreements.  Mr. Acosta-Rua  currently serves on
               our  board as the  nominee  of  FondElec.  See "Our  Management",
               below.

Employment  Agreements.  We have entered into employment agreements with certain
of our senior  management.  Some of those  employees  also act as our directors.
Those employment  agreements contain "change of control" provisions that provide
those employees with severance benefits under certain conditions.

Under agreements we previously had with two of our senior executives, we granted
those  executives  5%  non-dilutible  interests  in  certain  of  our  operating
subsidiaries.  In 2000,  we agreed to acquire  those  interests  in exchange for
shares of our common stock.  We issued a total of 366,666 common shares to those
two  executives  in  connection  with those  purchases  and granted them limited
"piggyback" registration rights for those shares.

In 2000, we  restructured  our operating  subsidiary in Mexico to facilitate our
application for a telephony license.  Under the terms of that restructuring,  we
sold 51% of the voting  stock of Intervan to one of our  Mexican  executives  in
order to comply  with  certain  foreign  ownership  requirements  imposed by the
Mexican government on companies that hold such  telecommunications  licenses. We
retained 80% of Intervan's non-voting shares and 49% of its voting shares in the
transaction,  which gives us approximately 92% of the economic rights associated
with Intervan's operations. For a more detailed description of this transaction,
see our report on Form 10-QSB for the quarter ended September 30, 2000.

                                 OUR MANAGEMENT

Our directors,  executive officers and key employees,  and their respective ages
and the  positions  they  held  with  us,  are  set  forth  below.  Biographical
information  for each of the senior  management  members and  directors  is also
presented below. With the exception of Lance D'Ambrosio and Troy D'Ambrosio, who
are  brothers,  there are no family  relationships  between  or among any of our
directors or executive  officers.  Our Board of Directors is currently comprised
of twelve members. Executive officers are chosen by, and serve at the discretion
of, the Board of Directors:

Name                                     Age     Position
Lance D'Ambrosio............   44      Chairman of the Board of Directors
Douglas Jacobs..............   58      Chief Executive Officer
Brian Reynolds..............   45      President and Chief Operating Officer
Troy D'Ambrosio.............   41      Senior Vice President, Legal
                                       & Administration, Director
Amaury Rivera...............   40      Managing Director CCI Mexico
Anthony Sansone.............   37      Vice President, Treasurer and
                                       Corporate Secretary
Gary Barlow.................   36      Vice President of Accounting and Taxation
Ron Bouganim................   30      Vice President of Business Development
Pablo Priu..................   33      Director
Peter Schiller..............   67      Director
Jorge Fucaraccio............   57      Director
Jeffery Safford.............   43      Director
Christopher Shenefelt.......   43      Director
Gonzalo Pacanins............   38      Director
Norberto Corredor...........   38      Director
Mario L. Baeza..............   51      Director
Carlos Christensen..........   51      Director
Gaston Acosta-Rua...........   36      Director

Our Senior Management Team

Lance  D'Ambrosio,  Chairman of the Board of Directors.  Mr. D'Ambrosio has been
involved in the  telecommunications  business for over ten years and has over 22
years of  entrepreneurial  business  and sales  experience.  Mr.  D'Ambrosio  is
responsible  for  our  acquisitions,  strategic  planning  and  mergers,  and is
responsible  for  all of our  financing  plans.  Mr.  D'Ambrosio  was one of our
founders and was our Chief Executive Officer until August 2000. Between 1992 and
1995, Mr.  D'Ambrosio  served as the President,  Chief  Executive  Officer and a
Director  of  Transworld  Telecommunications,  Inc.,  or TTI, a  wireless  cable
television company in the United States that had operations in six markets.  TTI
was sold to Sprint Corporation in 1999. Prior to entering the telecommunications
industry,  Mr.  D'Ambrosio  was the President of Bridgeport  Financial,  Inc., a
holding company that acquired a full-service  broker/dealer securities operation
and which was primarily  involved in raising  venture capital for investments in
high-tech  companies.  Prior to that,  Mr.  D'Ambrosio  held  various  sales and
management positions with Paine Webber, Savin Corp. and Xerox Corporation.

Douglas  Jacobs,  Chief  Executive  Officer.  Douglas  K.  Jacobs  is our  Chief
Executive  Officer.  Mr. Jacobs joined us in August 2000. Mr. Jacobs brings more
than 30 years of experience in telecommunications  sales and marketing,  as well
as hands-on  knowledge of today's  leading  technology.  Before joining CCI, Mr.
Jacobs worked for Alcatel,  where he served as Senior Vice  President and Area 8
President of Alcatel USA, heading an area with annual sales in excess $4 billion
and over 3,000  employees  covering the US, Canada,  Mexico and Japan.  Prior to
joining  Alcatel,  Mr.  Jacobs was Senior  Vice  President  and Chief  Operating
Officer  of  InterWave  Communications,  a  manufacturer  of GSM  micro-cellular
network  systems.  Before that, Mr. Jacobs served in various sales and executive
positions  with DSC  Communications,  most recently as Senior Vice  President of
Worldwide Sales and Service, and before that as the Executive Vice President and
Chief   Operating   Officer   of   DSC's   Denmark   subsidiary.   Mr.   Jacobs'
telecommunications  career began with Western Electric,  a division of AT&T. Mr.
Jacobs spent 23 years with AT&T, rising to the position of AT&T Network Systems,
Southwestern  Region Vice  President.  Mr.  Jacobs holds a Bachelor and a Master
Degree  in  Industrial   Engineering  from  Texas  Tech  University  and  Purdue
University respectively.

Brian Reynolds, President and Chief Operating Officer. Mr. Reynolds joined us in
July 1998 as our President and Chief Operating Officer. Mr. Reynolds has over 20
years of  telecommunications  experience in the United States and  international
markets,  focusing  on  major  company  start-ups.  Between  late  1997  and the
effective   date  of  his   employment   with  us,  Mr.   Reynolds  acted  as  a
telecommunications  consultant  to a number of entities,  including our company.
Between  1994 and 1997,  Mr.  Reynolds  served  as Chief  Operating  Officer  of
Wireless  Holdings,  Inc.,  or WHI,  where he was  responsible  for start-up and
growth of its  high-speed  data and wireless cable  operations.  During 1993 and
1994, he was Chief Operating Officer for Australia Media LTD., a combined direct
broadcast and wireless video company.  Between 1989 and 1993, Mr. Reynolds was a
founder  of  Sutter  Buttes  Cablevision  and  Pacific  West  Cable in  Northern
California, a wireless cable operation.  Between 1984 and 1989, Mr. Reynolds was
responsible  for the overall  construction  and profit and loss  operations  for
Sacramento  Cable,  taking the operations from  construction  and launch to over
150,000  customers.  Before  working for  Sacramento  Cable,  Mr.  Reynolds held
various management positions with Warner Cable. Mr. Reynolds received a Bachelor
of Arts Degree from Rutgers University with an emphasis in Accounting.

Troy D'Ambrosio,  Senior Vice President Legal &  Administration,  Director.  Mr.
D'Ambrosio  has 21 years of business and government  experience,  including four
years of  telecommunications  experience  prior to  joining  us as an officer in
October 1998.  Before joining us, he served as Vice President of  Administration
and as a  Director  of TTI and  also  served  in  executive  positions  and as a
director  of its  subsidiaries.  TTI was  sold to  Sprint  Corporation  in 1999.
Between September 1996 and October 1998, Mr. D'Ambrosio served as the Manager of
Mutual Fund  Operations  for Wasatch  Advisors,  Inc., a  registered  investment
advisory  firm which  manages  approximately  $1 billion  dollars in  separately
managed  accounts and maintains a family of mutual funds.  Between July 1992 and
November  1993,  Mr.  D'Ambrosio  was a Vice President and a partner in a public
relations firm  specializing  in legal,  economic and  government  relations for
business.  Between  1985 and  1992,  Mr.  D'Ambrosio  was with  American  Stores
Company,  a food and drug retailer with sales in excess of $20 billion annually,
where he served most recently as Vice President of Corporate  Communications and
Government  Relations.  Mr. D'Ambrosio  received a Bachelor of Science Degree in
Political Science from the University of Utah.

Amaury Rivera, Managing Director CCI Mexico. Mr. Rivera joined us in 2000 as our
Vice President of Sales and  Marketing.  Mr. Rivera has in excess of 17 years of
telecommunications industry experience and joined us from Iusacell/Bell Atlantic
in  Mexico,  where he was  responsible  for  company-wide  strategy  in the long
distance,  cellular,  data and paging  services  areas.  While at Iusacell,  Mr.
Rivera was  responsible  for  growing  revenues  by  approximately  200% to $355
million in annual sales.  Prior to joining  Iusacell in 1999, Mr. Rivera was the
regional vice president and general manager at Centennial/Lambda, a Puerto Rican
based   telecommunications   start  up  that   became  the   country's   largest
telecommunications company.

Anthony Sansone, Vice President,  Treasurer and Corporate Secretary. Mr. Sansone
has been with our company  since its  inception  and,  until 1998,  acted as our
controller in addition to his duties as our Corporate  Secretary and  Treasurer.
Mr.  Sansone has 14 years of  financial,  accounting  and  business  experience,
including eight years of telecommunications  experience.  Between 1994 and 1997,
he was the  Treasurer  and  Controller  of TTI and,  during  1996,  served  as a
director of WHI. During 1993 and 1994, Mr. Sansone was the Controller, Secretary
and the Director of Shareholder Relations for Paradigm Medical Industries, Inc.,
a public  manufacturer of ophthalmic  cataract removal devices.  During 1992 and
1993,  he was the  Assistant  Controller  of HGM  Medical  Lasers,  Inc.,  which
manufactures  and sells surgical and dental  lasers.  Between 1988 and 1992, Mr.
Sansone was the  Assistant  to the Vice  President of Public  Relations  and the
Assistant to the Chairman of the Board of Directors for American Stores Company,
a large retail grocery and drugstore  chain.  Mr. Sansone received a Bachelor of
Science degree in Accounting from Utah State University and a Master of Business
Administration degree from the University of Utah.

Gary Barlow, Vice President of Accounting and Taxation.  Mr. Barlow has 14 years
of accounting and financial experience, including eight years of big-five public
accounting  experience  and a combined  four years with IBM and two other public
accounting  firms.  Between  1992 and 1996,  he was a Senior  Auditor with Price
Waterhouse in Northern  California,  serving SEC registrant  clients in the high
technology  industry.  Between  1997  and  1999,  he was an Audit  Manager  with
Deloitte  & Touche in Salt Lake City,  Utah,  where he served  various  clients,
including SEC  registrants.  Mr. Barlow received a Bachelor of Science degree in
Accounting from the University of Utah and is a Certified Public Accountant.

Ron Bouganim, Vice President of Business Development.  Mr. Bouganim joined us in
October  1998 as Director of Mergers and  Acquisitions.  Mr.  Bouganim  has over
seven years of telecommunications  and venture capital experience.  From 1996 to
1998, Mr.  Bouganim  worked in the field of venture  capital,  advising  various
portfolio companies in the telecommunications and media industries. In 1995, Mr.
Bouganim led a bid to acquire a PCS mobile telecommunications license in Canada.
Previously, Mr. Bouganim worked for the Latin American Division of SR Telecom, a
manufacturer  of  wireless  telecommunications   infrastructure.   Mr.  Bouganim
graduated   with  a  Bachelor  of  Commerce  with  a  major  in  accounting  and
international business from McGill University.

Pablo Priu,  Director.  Mr. Priu is the President of Fulcrum Financial Services,
LLC.  Fulcrum  provides asset  management and  consultation  services to private
investment  companies and charitable  organizations.  Between 1995 and 1999, Mr.
Priu was assistant counsel for International Registries, Inc., a service company
providing  corporate and maritime services to the international legal community.
Between 1993 and 1995, Mr. Priu was a legal  consultant with Pan  American/World
Health  Organization.  Mr.  Priu  holds a  Bachelors  of Arts  Degree  from Duke
University and a Juris Doctorate from Georgetown University Law Center.

Peter Schiller,  Director.  Mr. Schiller is currently retained by Internexus SCA
as a  consultant.  Mr.  Schiller  has  been  employed  by  Bolland  S.A  and its
affiliates,  including Petrolera Argentina San Jorge S.A. and OEA Services,  all
of which were  Argentinean  corporations  engaged in oil and gas services,  from
1990 until  mid-2000 as the Director of New Business  Development.  Between 1976
and  1990,  Mr.  Schiller  held  general  management   positions  in  the  heavy
electromechanical  manufacturing,  automotive  components and non-ferrous metals
industries.  Between 1961 and 1975, Mr. Schiller held a number of product design
and quality  control  management  positions in the  electrical,  automotive  and
tractor industries.

Jorge  Fucaraccio,  Director.  Since 1994, Mr. Fucaraccio has been an advisor to
Petrolera Argentina San Jorge S.A. and Bolland S.A.,  Argentinean  corporations,
or  their  affiliates  in  software  engineering  applications  related  to  oil
production and data communications. Between 1989 and 1991, Mr. Fucaraccio worked
as the National  Director of Technology at the National  Institute of Industrial
Technology  in  Argentina,  where he was  responsible  for  managing  all of its
technical  departments  and  research  centers,  including  its  communications,
software  engineering,  energy,  mechanics  and building  technologies  research
departments.  Between 1982 and 1988, he was a member of the Board of Advisors at
the Ministry of Science and  Technology and the Ministry of Energy in Argentina.
During this period,  he was responsible for the creation of a number of research
centers  and  directed  several  technical  governmental  missions  between  the
government of Argentina and countries in Europe and Asia. Between 1978 and 1985,
Mr.  Fucaraccio  was a  director  of an energy  transmission  and  solar  energy
utilization research program sponsored by the Organization of American States.

Jeffery  A.  Safford,  Director.  Mr.  Safford is the Vice  President  and Chief
Financial  Officer  of AES  Americas,  a  wholly  owned  subsidiary  of The  AES
Corporation.  From April 1994 until Mr. Safford's appointment to such offices in
September 1998, he served as the Vice President and Chief Financial  Officer and
Secretary of the AES China  Generating  Co., Ltd., and performed the function of
principal   account   officer.   Mr.   Safford  was   Director  of  Finance  and
Administration  of AES prior to April 1994.  Prior to joining AES,  Mr.  Safford
worked as a Senior  Auditor  for Touche  Ross & Co., an  accounting  firm,  with
responsibility  for several large publicly held clients.  Mr. Safford  graduated
from  Pennsylvania  State  University  with  a  degree  in  accounting  and is a
Certified Public Accountant.

Christopher  Shenefelt,  Director.  Mr.  Shenefelt is Vice  President of Telecom
Initiatives for The AES Corporation and has over 20 years of technical, business
and  management  experience.  Prior  to  joining  AES,  Mr.  Shenefelt  was Vice
President  of  Network  Planning  at  Winstar   Communications,   where  he  was
responsible  for  developing  the  financial-based  network  plans for Winstar's
expansion in existing and new markets. Prior to his employment with Winstar, Mr.
Shenefelt led a  communications  consulting  group at SAIC, where they designed,
evaluated,  and tested state-of-the-art  communications and sensor technologies.
Mr.   Shenefelt   held  various   position  at   Lockheed-Martin   and  Electron
Communications  Incorporated.  Mr. Shenefelt holds a BSEE from Michigan Tech, an
MSEE in Wireless  Communications  from the University of Central  Florida and an
MBA from the George Washington University.

Gonzalo  Pacanins,   Director.  Mr.  Pacanins  is  Senior  Project  Manager/Vice
President of AES Americas.  Before joining AES, Mr. Pacanins was Senior Director
of M&A/Strategic  Alliances for Atento,  Inc., the largest global privately held
CRM/Teleservices  company.  Mr.  Pacanins was  responsible  for  structuring and
developing a corporate venturing program designed to establish an investment and
integration  process for mergers and acquisitions  activities on a global basis,
developing  a  market  entry   strategy  in  the  United   States  market  using
acquisitions, as well as structuring global strategic alliances with leading CRM
entities.  Prior to Atento, Mr. Pacanins was Director of International Corporate
Venturing  of  OneSoft  Corp,   where  he  was  responsible  for  designing  and
structuring an investment  vehicle to incubate and provide seed and  first-round
financing to Internet and  technology  ventures in Latin  America.  From 1997 to
2000, Mr. Pacanins was Vice President at Darby Overseas Investments Ltd., one of
the  leading  private  equity  firms in Latin  America,  where he was  active in
sourcing and evaluating  transactions in the Andean Pact  countries,  as well as
Argentina.  From 1991 to 1994, Mr. Pacanins was Vice President of Capital Market
for  Confimerca,  a  Venezuelan  investment  banking  firm,  where he  worked on
privatization assignments and mergers and acquisitions.  Mr. Pacanins holds a BS
in Civil Engineering from Universidad Metropolitana in Caracas, Venezuela, an MS
in Finance from the  University of Colorado at Boulder,  and an MBA from Harvard
Business School.

Norberto Corredor,  Director.  Mr. Corredor is the Manager of Telecommunications
and Automation Services for C.A. La Electricidad de Caracas,  SACA, a Venezuelan
utility company that is an affiliate of Telematica EDC, one of our shareholders.
In that capacity,  he is responsible for  acquisition,  planning,  operation and
maintenance of the company's  telecommunications network and automation systems.
He has held different management positions during his 16 years with the company,
including  as a manager  assigned to work in Montreal,  Canada,  where he lead a
development team for the electric network control system.  Mr. Corredor has also
been  involved  in  the  development  of  the  telecommunications  networks  and
automation systems of several utilities in El Salvador and Colombia.

Mario L. Baeza,  Director. Mr. Baeza is the Chairman and Chief Executive officer
of TCW/Latin America Partners,  L.L.C., which is the managing general partner of
TCW/Latin  America  Private Equity  Partners,  L.P., a $230 million  partnership
organized  by Baeza &  Company  and  jointly  owned by Baeza &  Company  and TCW
Advisors,  Inc. The fund makes privately  negotiated  equity and  equity-related
investments in companies in Latin America. TCW Advisors, Inc. is an affiliate of
Trust Company of the West, a global asset  management firm with over $85 billion
of assets under  management.  Between 1994 and 1996,  Mr. Baeza was President of
Wasserstein Perella  International  Limited and Chief Executive Officer of Grupo
Wasserstein  Perella,  the Latin America division of the firm. From 1974 to 1994
he was an associate  and then,  at the age of 29,  became a partner,  at the law
firm of Debevoise & Plimpton,  where he specialized in international mergers and
acquisitions, international finance and leveraged buyout transactions. Mr. Baeza
has been a Herman Phleger Visiting Professor of Law at Stanford Law School and a
Lecturer  in Law at Harvard Law  School.  Mr.  Baeza is a member of the board of
directors of Air Products and Chemical Company,  an industrial company listed on
the New York Stock Exchange, the Ariel Mutual Funds Complex,  Tendtudo Holdings,
L.L.C.,  Brazil's leading national do-it-yourself home improvement retail chain,
Dekor  Internacional  S.A. de C.V.,  one of  Mexico's  largest  home  finishings
chains,  Camil  Alimentos,  S.A., one of Brazil's leading branded rice and beans
processors  and  distributors,  Dermet de  Mexico,  Mexico's  leading  specialty
chemical distributor, and Marta Harff, a leading Argentine brand and retailer of
feminine personal care products.

Carlos H.  Christensen,  Director.  Mr.  Christensen  is  Managing  Director  of
TCW/Latin  America  Partners,  LLC (an affiliate of TCW/CCI Holding) where he is
responsible for managing its business operations,  including sourcing, analyzing
and  monitoring  its  private  equity  investments.  Prior to joining  TCW/Latin
America  Partners,  Mr.  Christensen was a Senior Director of Continental  Bank,
where he was responsible for corporate finance and private equity investments in
Brazil and Argentina and, served as a member of the Board of Directors of two of
Continental's portfolio companies in Argentina.  Mr. Christensen's  professional
experience  includes  various credit and risk  management  related  positions at
Banco de la Nacion Argentina in New York and Chicago and five years as a Finance
Manager at Witcel  S.A.,  a  specialty  paper  manufacturer  in  Argentina.  Mr.
Christensen has a Business Administration degree from the Catholic University of
Argentina and a Masters in  Management  from the JL Kellogg  Graduate  School of
Management, Northwestern University.

Gaston  Acosta-Rua,  Director.  Mr. Acosta-Rua has spent the last eight years in
the private equity investment and management sector in Latin America,  primarily
as a Director of FondElec Group,  Inc. Before joining  FondElec,  Mr. Acosta-Rua
worked  for and helped  create the Latin  American  Group for  Chemical  Venture
Partners and was previously an officer with the Chemical Bank Debt/Equity Group,
which was  responsible  for managing the combined  Chemical  Bank  Manufacturers
Hanover  portfolio of Latin  American  equity  investments.  Before  working for
Chemical Bank, Mr. Acosta-Rua worked as a consultant to the Brookings  Institute
in Washington, D.C.

Structure of Our Board of Directors

Our Amended and Restated Certificate of Incorporation  provides for a classified
Board of Directors  consisting  of three  classes.  The  directors in each class
serve staggered  three-year  terms. As of the date of this report,  the Board of
Directors  consists of twelve  members.  The Class 3  directors,  consisting  of
Messrs.  Schiller,  Christensen,  Shenefelt and Pacanins  serve until 2002.  The
Class 2  directors,  consisting  of Messrs.  Troy  D'Ambrosio,  Priu,  Baeza and
Corredor,  serve until 2003. The Class 1 directors,  consisting of Messrs. Lance
D'Ambrosio,  Corredor,  Acosta-Rua  and  Fucaraccio,  serve until 2004.  At each
annual  meeting of our  shareholders,  the  successors to the class of directors
whose term  expires at that  meeting  will be elected to hold  office for a term
expiring at the annual meeting of shareholders  held in the third year following
the  year  of  their   election.   Our  Amended  and  Restated   Certificate  of
Incorporation  provides that directors may be removed only for cause and only by
the affirmative  vote of the holders of two-thirds of the common shares entitled
to vote.

Our Board of Directors Committees

During 2001,  our Board of  Directors  held 10  meetings,  and each  director in
office during the year attended at least 70% of those meetings. During 2001, the
Board of Directors  had three  standing  committees,  the Audit  Committee,  the
Compensation Committee, and the Executive Committee.

Our Audit Committee assists the Board in overseeing and monitoring the integrity
of our financial  reporting  process,  our compliance  with legal and regulatory
requirements and the quality of our internal and external audit processes.  Upon
the  Audit  Committee's  review  of any of those  matters,  it is  charged  with
preparing and submitting periodic reports,  summaries and proposals to our Board
of Directors  regarding those matters,  which may then be acted upon by our full
Board. As of the date of this report,  the Audit  Committee  consists of Messrs.
Christensen,  Priu  and  Pacanins.  Mr.  Christensen  acts  as  chairman  of the
committee. The report of this committee is set forth below.

Our  Compensation  Committee  is charged  with the review of the  levels,  form,
policies and procedures for the  compensation of our executives and agents,  the
review of our pension and other benefit  programs,  and such other  compensation
matters as may be brought to its  attention  or as may be delegated to it by our
Board. Upon the Compensation  Committee's review of any of those matters,  it is
charged with preparing and submitting  periodic reports,  summaries of proposals
to our Board of  Directors  regarding  those  matters  for  action by the entire
Board. As of the date of this report,  the  Compensation  Committee  consists of
Messrs. Christensen, Lance D'Ambrosio,  Fucaraccio, and Pacanins. Mr. Fucaraccio
acts as chairman of the  committee.  The report of this  committee  is set forth
below.

Our  Executive  Committee is charged with the  performance  of the duties of our
Board of Directors  between  regularly  scheduled  meetings of the Board and, in
that capacity, is charged with the functions, and has the authority of, the full
Board of  Directors  with  regard to  matters  addressed  by it.  The  Executive
Committee consisted of Messrs. Baeza, Fucaraccio,  Safford, Acosta-Rua and Lance
D'Ambrosio. In March 2002, the Board of Directors dissolved this committee.

The Board does not have a nominating committee.  The entire Board performs those
duties.

Our Director Compensation

Our directors do not receive cash  compensation for serving on our Board (or any
committee of the Board),  or for any other  services they provide to us in their
capacity as directors. They are, however,  reimbursed for expenses they incur in
connection with attending Board or committee  meetings.  In addition,  directors
who are not employees  are awarded  options under the terms of our 1998 Director
Stock Plan.

The Board of  Directors  adopted the director  stock plan in June 1998,  and our
shareholders  approved  it at our  annual  meeting  in August  1998.  A total of
100,000  common shares are reserved for issuance  under the director stock plan.
The director  stock plan provides each  non-employee  director with an aggregate
annual  compensation  retainer of options to acquire 8,000 common  shares.  Each
option is granted on the first day after the last day of each  calendar year for
services  performed  during the preceding  year.  The first options were granted
under the  director  stock plan in  January  1999 for the  annual  period  which
commenced on July 1, 1998. Each  non-employee  director will continue to receive
annual grants as long as he or she is a non-employee director. If a non-employee
director no longer serves as a director for any reason, he or she is entitled to
all ungranted  portions of his or her option (which will accrue on a daily basis
through the date of termination as a director).

Each option  vests on the first  anniversary  of the date of its grant,  and the
options expire, if unexercised,  five years from the date of grant. The exercise
price of each option is 85% of the fair market value of the common shares on the
date of grant.  The number of common  shares  issuable  in  connection  with the
option  and the  aggregate  number  of common  shares  remaining  available  for
issuance under the director stock plan are  proportionately  adjusted to reflect
any subdivision or combination of the outstanding common shares.

The  director  stock  plan  will  continue  until  May 30,  2008,  unless  it is
terminated prior to that time by the Board of Directors.  The Board of Directors
may  amend,  modify or  suspend  the  director  stock  plan for the  purpose  of
addressing any changes in legal  requirements or for any other purpose permitted
by law,  except that (i) no amendment or alteration  of the director  stock plan
will be effective  prior to its approval by the  shareholders to the extent that
approval  is then  required  by  applicable  legal  requirements,  and  (ii) the
director  stock plan can not be  amended  more than once every six months to the
extent  the  amendment  is  limited by Rule  16b-3(c)(2)(ii)  (or any  successor
provision) under the Securities Exchange Act of 1934, as then in effect.

Our Executive Compensation

The  following  information  summarizes  the  compensation  we  paid  our  Chief
Executive Officer and our four other most highly compensated  executive officers
whose total salary and bonus exceeded  $100,000,  (our "named  officers") during
the fiscal  years ended  December 31, 2001,  2000 and 1999.  We awarded  options
during 2000 to Douglas Jacobs, our Chief Executive  Officer,  and Amaury Rivera,
our Senior Vice President and Mexico General Director, both of whom joined us as
employees during 2000.



<PAGE>
<TABLE>
<CAPTION>



                                                                            Long Term
                                              Annual Compensation          Compensation
                                              -------------------         --------------
                                                                            Securities
           Name and                                                         Underlying          Other
       Principal Position         Year       Salary            Bonus       Options (#)(5)    Compensation(6)
       ------------------         ----       ------            -----        ------------     -------------
  <S>                            <C>       <C>              <C>                <C>               <C>



  Douglas Jacobs                 2001      $350,000         $220,833(2)          -0-             $13,753
     Chief Executive Officer     2000      $350,000(1)       $66,667(2)        400,000           $12,136(4)
                                 1999        $-0-              $-0-              -0-               $-0-

  Lance D'Ambrosio               2001      $240,000          $40,000             -0-             $17,647
     Chairman of the Board       2000      $212,500            $-0-              -0-             $16,400
                                 1999      $165,000          $41,250             -0-             $14,950

  Amaury Rivera                  2001      $210,000          $36,745             -0-             $16,422
     Senior Vice President       2000      $210,000(3)         $-0-            125,000           $9,500(4)
     and Mexico General          1999        $-0-              $-0-              -0-               $-0-
     Director

  Brian Reynolds                 2001      $193,725          $28,351             -0-             $14,026
     President and Chief         2000      $169,500            $-0-              -0-             $15,700
     Operating Officer           1999      $135,000          $33,750             -0-             $13,000

  Troy D'Ambrosio                2001      $183,475          $21,480             -0-              $9,839
     Senior Vice President       2000      $157,000            $-0-              -0-              $8,180
     of Legal &                  1999      $105,000          $26,250             -0-              $6,765
     Administration
</TABLE>


-----------------------
(1)      Reflects full year base salary.  Mr. Jacobs became a salaried employee
         on August 3, 2000.
(2)      Includes signing bonus of $133,333 in 2001 and $66,667 in 2000.
(3)      Reflects full year base salary.  Mr. Rivera became a salaried employee
         on August 1, 2000.
(4)      Person named was our employee  during only a part of the year in
         question.  The amount shown  assumes full year premiums on group term
         life insurance and medical, dental and disability insurance.
(5)      See Fiscal Year-End Option Value table below for the values of
         these options.
(6)      Other Compensation includes (i) the dollar value of premiums paid by us
         for health,  life and  disability  insurance  for each named  executive
         officer,  (ii) the  dollar  value of  premiums  paid by us to term life
         insurance for the benefit of each named executive officer, (iii) in the
         case of Lance D'Ambrosio,  an annual car allowance of $7,800,  and (iv)
         in the case of Amaury Rivera,  a car allowance of $5,460 in 2001.  Does
         not include amounts related to rental payments for corporate apartments
         used by CCI executives during travel outside their homebase.

Fiscal Year-End Option Value

         The following information summarizes the number and value of options to
acquire common shares held by the executive officers described above.

<TABLE>
<CAPTION>


                                 Number of Securities                    Value of Unexercised
                                Underlying Unexercised                       In-the-Money
                             Options at Fiscal Year-End (#)             Options at Fiscal Year-End
                             -----------------------------          ------------------------------
       Name                  Exercisable       Unexercisable        Exercisable         Unexercisable
---------------------        -----------       -------------        -----------         -------------
   <S>                         <C>                <C>                <C>                  <C>
   Douglas Jacobs              300,000            100,000               $-0-                 $-0-
   Amaury Rivera                87,500             37,500               $-0-                 $-0-
   Brian Reynolds              183,333            166,667            $137,500             $125,000
</TABLE>


For  purposes  of  determining  the  values  of the  options  held by the  named
executive  officers,  we assumed that the common  shares  underlying  the option
granted had a value of $1.75 per share, which is the estimated fair market value
attributed to that stock on November 30, 2001 in connection with the sale of our
common stock to an unrelated  party. The option value is based on the difference
between the fair market value of those shares and the option  exercise price per
share, multiplied by the number of shares subject to the options.

Our Employment Agreements

We  typically  enter  into an  employment  agreement  with  each  of our  senior
management and key personnel.  The employment  agreements generally have initial
terms of between one and three  years.  Under the  agreements,  the  employee is
entitled to a base salary plus incentive bonuses,  as determined by the Board of
Directors, standard benefits such as health and life insurance and reimbursement
of  reasonable  business  expenses.  The  agreements  also  provide  for  moving
allowances in some  instances.  The  employment  agreements  for a number of our
senior  executives also provide for the grant of options.  The option grants are
generally  subject to vesting  schedules  and  require  the  employee to forfeit
portions of their vested options if he terminates the relationship.

We can terminate  the  employment  contracts for cause,  which is defined in the
agreements,  or without  cause.  In addition,  the employee  can  terminate  the
contract  on  notice  to us  ranging  from 90 to 180 days.  If the  contract  is
terminated  without cause or as a result of a "change of control," as defined in
the  agreements,  the employee is entitled to receive  severance pay of up to 12
months  salary,  depending on the  particular  agreement.  The  agreements  also
contain   non-competition,   non-solicitation   and   assignment  of  inventions
provisions which we believe are consistent with industry practice.

Our  employment  contract  with our Chief  Executive  Officer,  who joined us in
August,  2000,  is  similar  to our  employment  contracts  with our  other  key
employees,  but differs in several significant  respects,  primarily relating to
the compensation he will receive in the event of the termination of his contract
under certain  conditions  constituting a "change of control" (as defined in the
agreement) during the first 18 months of the contract.  The provisions  relating
to the payment of compensation for a "change of control"  terminated in February
2002. The contract provides for the grant of two grants of options, the first of
which vested upon the execution of the agreement. The second grant vested 50% on
the first anniversary of the agreement and the other 50% will vest on the second
anniversary  of the  agreement.  If the  agreement is  terminated  under certain
conditions  during the first year,  the first grant of options also  terminates.
Each year after the  initial  year of the  agreement,  he is entitled to receive
additional options based on a formula equal to 100% of his cash compensation for
the preceding year, divided by the market price of our common shares on the date
of the grant as  determined by the board of  directors.  The per share  exercise
price for those  options is the market  value of our common stock on the date of
grant,  and the option  vests over a  two-year  period  after the date of grant,
one-half  on the first  anniversary  of the date of the grant and the balance on
the second  anniversary  after the date of the grant.  In  general,  the options
granted  under the  agreement  are  exercisable  until the  earlier of the fifth
anniversary of the date of the grant or the  termination  of the agreement.  Any
non-vested  portions  of  any  options  terminate  on  the  termination  of  the
agreement.  Our Chief  Executive  Officer is also  entitled  to  receive  annual
bonuses under his agreement.  These bonuses are  discretionary and determined by
our board of directors, with the exception of the bonus for the year 2000, which
was set at an amount equal to 25% of the Chief Executive Officer's base salary.



<PAGE>


           REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

Overview

The  Compensation  Committee  of the Board of  Directors  is  composed  of three
outside  directors  and  Lance  D'Ambrosio,   our  Chairman.   The  Compensation
Committee,  which consists of Mr. Carlos Christensen,  Mr. Lance D'Ambrosio, Mr.
Jorge Fucaraccio and Mr. Gonzalo  Pacanins,  is responsible for establishing and
administering  our executive  compensation  policies.  This report addresses the
compensation  policies for fiscal year 2001 as they affected Mr. Douglas Jacobs,
in his capacity as Chief Executive Officer, and our other executive officers.

General Compensation Policy

The objectives of the Company's executive compensation program are to:

          o    Provide a competitive  compensation package that will attract and
               retain superior talent and reward performance.

          o    Support the achievement of desired performance.

          o    Align the interests of executives with the long-term interests of
               stockholders  through  award  opportunities  that can  result  in
               ownership of common stock, thereby encouraging the achievement of
               superior results over an extended period.

Executive Officer Compensation Program

Our  executive  officer  compensation  program is comprised of: (i) base salary,
which is set on an  annual  basis;  (ii)  annual  incentive  bonuses,  which are
subjective but primarily based on the achievement of  predetermined  objectives;
and (iii) long-term incentive  compensation in the form of periodic stock option
grants,  with the  objective  of  aligning  the  executive  officers'  long-term
interests with those of the  stockholders  and  encouraging  the  achievement of
superior results over an extended period.

The Compensation Committee performs reviews of executive compensation to confirm
the competitiveness of the overall executive  compensation  packages as compared
with companies who compete with us to attract and retain employees.

In  considering  compensation  of  our  executives,   one  of  the  factors  the
Compensation Committee takes into account is the anticipated tax treatment to us
of various  components of compensation.  We do not believe Section 162(m) of the
Internal  Revenue  Code of 1986,  as amended,  which  generally  disallows a tax
deduction  for  certain  compensation  in  excess  of $1  million  to any of the
executive officers appearing in the Summary  Compensation Table above, will have
an effect on us. The  Compensation  Committee has considered the requirements of
Section 162(m) of the Code and its related  regulations.  It is the Compensation
Committee's  present  policy to take  reasonable  measures to preserve  the full
deductibility  of  substantially  all  executive  compensation,  to  the  extent
consistent with its other compensation objectives.

Base Salary

The  Compensation  Committee  reviews  base  salary  levels  for  our  executive
officers.  Base  salaries  are set  competitively  relative to  companies in the
telecommunications  industry  and other  comparable  companies.  In  determining
salaries the  Compensation  Committee also takes into  consideration  individual
experience and  performance.  The  Compensation  Committee  seeks to compare the
salaries paid by companies of similar size and stage of development. Within this
comparison  group,  we seek to make  comparisons  to  executives at a comparable
level of experience,  who have a comparable level of responsibility and expected
level  of  contribution  to our  performance.  In  setting  base  salaries,  the
Compensation  Committee also takes into account the intense level of competition
among telecommunications companies to attract talented personnel.

Annual Incentive Bonuses

Along with each executive  officer,  we establish goals related  specifically to
that officer's areas of responsibility.  The Compensation  Committee  determines
the  amount  of each  executive  officer's  bonus  based  on  their  contractual
agreement,  as well as a subjective assessment by the Compensation  Committee of
the executive officer's progress toward achieving the established goals. Bonuses
are awarded on an annual basis.

Long-term Incentive Compensation

Long-term  incentive  compensation,  in the form of stock  options,  allows  the
executive  officers  to share in any  appreciation  in the  value of our  common
stock.  The  Compensation  Committee  believes  that stock option  participation
aligns executive officers' interests with those of the stockholders. The amounts
of the awards are designed to reward past  performance and create  incentives to
meet  long-term  objectives.  Awards  are  made  at a  level  calculated  to  be
competitive within the telecommunications industry as well as a broader group of
companies of comparable size and  complexity.  In determining the amount of each
grant, the  Compensation  Committee takes into account the number of shares held
by the executive prior to the grant.

Chief Executive Officer Compensation

Mr. Douglas Jacobs was appointed to the position of Chief  Executive  Officer in
August 2000. Under the terms of the Employment Agreement, Mr. Jacobs receives an
annual  base salary of  $350,000.  This is  consistent  with the range of salary
levels  received by his  counterparts  in  companies  in the  telecommunications
industry and other comparable companies. The Compensation Committee believes Mr.
Jacobs has managed us well in a challenging  business  climate and has continued
to move us towards our long-term objectives.

In fiscal  2000,  we granted  stock  options to Mr.  Jacobs to purchase  200,000
shares of common stock at an exercise  price of $10.00 and 200,000 common shares
at an exercise price of $12.50 per share.  These option awards  contain  certain
vesting  provisions,  along  with  certain  forfeit  provisions  if  Mr.  Jacobs
voluntarily terminates his employment.  This option package is designed to align
the  interests  of Mr.  Jacobs with those of our  stockholders  with  respect to
short-term  operating results and long-term increases in the price of our stock.
The grant of these  options  is  consistent  with the goals of our stock  option
program as a whole.

                                            THE COMPENSATION COMMITTEE

                                            Jorge Fucaraccio, Chairman
                                            Lance D'Ambrosio
                                            Carlos Christensen
                                            Gonzalo Pacanins


             REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The Audit Committee of the Board of Directors (the "Audit  Committee") has three
members,  Carlos Christensen,  Pablo Priu, and Gonzalo Pacanins.  Each member of
the Audit Committee is an independent director, in that they are not employed by
the Company.

The Audit Committee assists the Board in overseeing and monitoring the integrity
of our financial  reporting  process,  our compliance  with legal and regulatory
requirements and the quality of our internal and external audit  processes.  The
role and  responsibilities  of the Audit  Committee are determined by the Board.
The Audit Committee  reviews and reassesses their duties annually and recommends
any changes to the Board for approval.  The Audit  Committee is responsible  for
overseeing  our  overall  financial   reporting   process.   In  fulfilling  its
responsibilities  for the  financial  statements  for  Fiscal  2001,  the  Audit
Committee took the following actions:

          o    Reviewed and discussed the audited  financial  statements for the
               fiscal year ended December 31, 2001 with  management and Deloitte
               & Touche, LLP, our independent auditors.

          o    Discussed with Deloitte & Touche,  LLP the matters required to be
               discussed by Statement on Auditing  Standards  No. 61 relating to
               the conduct of the audit; and

          o    Received  written  disclosures  and the  letter  from  Deloitte &
               Touche,   LLP   regarding   its   independence   as  required  by
               Independence  Standards Board Standard No. 1. The Audit Committee
               further discussed with Deloitte & Touche, LLP their independence.
               The  Audit  Committee  also  considered  the  status  of  pending
               litigation,   taxation  matters  and  other  areas  of  oversight
               relating to the  financial  reporting  and audit process that the
               Audit Committee determined appropriate.

The  following  is a summary of the fees  charged by Deloitte & Touche LLP,  the
member  firms of  Deloitte  Touche  Tohmatsu,  and their  respective  affiliates
(collectively,  "Deloitte & Touche"),  which includes Deloitte  Consulting,  for
services rendered to us:

Audit Fees

The aggregate fees for  professional  services  rendered by Deloitte & Touche in
connection with their audit of our consolidated financial statements and reviews
of the consolidated  financial  statements  included in our Quarterly Reports on
Form 10-Q for the year ended December 31, 2001 was $220,941.

Financial Information Systems Design and Implementation Fees

There were no  professional  services  rendered by Deloitte & Touche  during the
year ended  December 31, 2001 relating to financial  information  systems design
and implementation.

All Other Fees

The  aggregate  fees  for  tax  planning  and  compliance  and  consultation  on
accounting  transactions  billed by  Deloitte  & Touche  during  the year  ended
December 31, 2001 was $116,960.

The Audit Committee has considered  whether the provision of non-audit  services
noted above is compatible with maintaining the independence of Deloitte & Touche
LLP.

Based on the Audit  Committee's  review of the  audited  consolidated  financial
statements and discussions  with management and Deloitte & Touche LLP, the Audit
Committee  recommended  to the Board that the audited  financial  statements  be
included in our Annual  Report on Form 10-K for the fiscal  year ended  December
31, 2001 for filing with the Securities and Exchange Commission.

                                              THE AUDIT COMMITTEE

                                              Carlos Christensen, Chairman
                                              Pablo Priu
                                              Gonzalo Pacanins

Limitations of Liability and Indemnification

Our  Amended and  Restated  Certificate  of  Incorporation  limits the  personal
liability of our  directors  and  officers  for monetary  damages to the maximum
extent  permitted by Nevada law.  Under  Nevada law,  such  limitations  include
monetary  damages  for any  action  taken or failed to be taken as an officer or
director except for an act or omission that involves intentional misconduct or a
knowing violation of the law, or payment of improper  distributions.  Nevada law
also permits a corporation to indemnify any current or former director, officer,
employee or agent if the person  acted in good faith and in a manner in which he
reasonably  believed  to be in or  not  opposed  to  the  best  interest  of the
corporation.  In the case of a criminal proceeding,  the indemnified person must
also have had no reasonable cause to believe that his conduct was unlawful.

Our Bylaws  provide  that,  to the full  extent  permitted  by our  Amended  and
Restated  Certificate of Incorporation and the Nevada Business  Corporation Act,
we will  indemnify,  and advance  expenses to, the our  officers,  directors and
employees in connection with any action, suit or proceeding,  civil or criminal,
to which  those  persons  are made  party by reason of their  being a  director,
officer or employee.  That  indemnification is in addition to the advancement of
expenses.

At present, we are not involved in any litigation or proceeding involving any of
our directors,  officers,  employees or agents where indemnification by us would
be required or permitted.

Our Employee Benefit Plans

In June 1998,  our Board adopted the 1998 Stock  Incentive  Plan.  The Incentive
Plan was approved by our  shareholders  in August 1998.  The Board  believes the
availability  of stock  options  and the other  incentive  compensation  that is
permitted to be awarded under the Incentive  Plan is an important  factor in our
ability to attract and retain qualified  employees and to provide incentives for
them to exert their best efforts on our behalf.

All employees, consultants, advisors, officers and directors of our subsidiaries
and our company are eligible to participate in the Incentive Plan. The Incentive
Plan is administered by the Board, which may designate the price and other terms
and  conditions  of any such award.  The Board may also  delegate  authority for
administration of the Incentive Plan to a committee of the Board. Subject to the
provisions of the Incentive Plan, the Board,  or a committee,  if any, may adopt
and amend rules and regulations  relating to the administration of the Incentive
Plan. Only the Board may amend, modify or terminate the Incentive Plan.

A total of 1,250,000  common shares were originally  reserved for issuance under
the Incentive  Plan.  Our Board  increased the number of common shares  reserved
under the Incentive Plan to 1,820,229 common shares in December 1998. All of the
shares  reserved  under the plan have  been  approved  for grant by the Board of
Directors,  subject to the grant of such options pursuant to an option agreement
in form  approved  by the  Board of  Directors,  of which no  options  have been
exercised as of December 31, 2001.

The Incentive Plan permits the grant of incentive  stock  options,  nonstatutory
stock  options,  stock awards,  stock  appreciation  rights,  cash bonus rights,
dividend  equivalent  rights,  performance-based  awards and  foreign  qualified
grants.  Common shares  awarded under the Incentive  Plan may be authorized  and
unissued  common  shares or common shares  acquired in the market.  If any award
granted under the  Incentive  Plan  expires,  terminates or is cancelled,  or if
common  shares sold or awarded  under the  Incentive  Plan are  forfeited  to or
repurchased  by us, the common shares again become  available for issuance under
the Incentive Plan.

Our Board determines the persons to whom options are granted,  the option price,
the number of common  shares to be covered  by each  option,  the period of each
option, the times at which options may be exercised and whether the option is an
incentive  stock option,  which we refer to as an ISO, as defined in Section 422
of the  Internal  Revenue Code of 1986,  as amended,  or a  non-statutory  stock
option, or NSO.

All options  granted under the Incentive Plan are exercisable in accordance with
the terms of an option agreement entered into at the time of, and as a condition
to, the grant.  If the option is an ISO, the terms must be  consistent  with the
requirements  of  the  tax  code  and  applicable  regulations,   including,  if
applicable,  the  requirements  that the option  price not be less than the fair
market value of the common shares on the date of the grant.  If the option is an
NSO, the option price is as  determined  by our Board,  and may be less than the
fair market value of the common shares on the date of the grant.

Our Board may award common  shares under the  Incentive  Plan as stock  bonuses,
restricted  stock awards,  or  otherwise.  Our Board  determines  the persons to
receive those awards, the number of common shares to be awarded, the time of the
award and the  terms,  conditions  and  restrictions  of the stock  awards.  The
aggregate  number of common  shares that may be awarded to any one person  using
stock awards  under the  Incentive  Plan is  determined  by our Board.  No stock
awards have yet been granted under the Incentive Plan.

We may also grant stock  appreciation  rights under the  Incentive  Plan.  Stock
appreciation  rights may, but need not, be granted in connection  with an option
grant or an outstanding  option  previously  granted under the Incentive Plan. A
stock appreciation right is exercisable only at the time or times established by
our  Board.  If a stock  appreciation  right is granted  in  connection  with an
option,  it is exercisable  only to the extent and on the same conditions as the
related  option is  exercisable.  Our Board may withdraw any stock  appreciation
rights granted under the Incentive Plan at any time and may impose any condition
upon the exercise of a stock  appreciation  right or adopt rules and regulations
from time to time affecting the rights of holders of stock appreciation  rights.
No stock appreciation rights have yet been granted under the Incentive Plan.

Our  Board  may also  grant  cash  bonus  rights  under  the  Incentive  Plan in
connection with options granted or previously granted, stock appreciation rights
granted or previously  granted,  stock awarded or previously  awarded and shares
sold or previously  sold under the Incentive  Plan.  Bonus rights may be used to
provide cash to  employees  for the payment of taxes in  connection  with awards
under the  Incentive  Plan. No cash bonus rights have yet been granted under the
Incentive Plan.

Our Board  may also  grant  awards  intended  to  qualify  as  performance-based
compensation  under Section 162(m) of the Code and the  regulations  thereunder.
Performance-based awards may be denominated either in common shares or in dollar
amounts.  All or  part  of the  awards  will  be  earned  if  performance  goals
established  by our Board for the  period  covered by the awards are met and the
employee  satisfies  any  other  restrictions  established  by  our  Board.  The
performance  goals are expressed as one or more targeted  levels of  performance
for our company or any of our subsidiaries,  divisions or other units, including
performance  levels  relating  to  earnings,  earnings  per share,  stock  price
increase,  total  stockholder  return,  which is  measured  by the  stock  price
increase plus dividends,  return on equity, return on assets, return on capital,
economic  value  added,  revenues,  operating  income,  cash flows or any of the
foregoing.  No  performance-based  awards have been granted  under the Incentive
Plan.

Awards under the Incentive Plan may be granted to eligible  persons  residing in
foreign  jurisdictions.  The Board may adopt  supplements  to the Incentive Plan
necessary to comply with the  applicable  laws of foreign  jurisdictions  and to
afford  participants  favorable  treatment under those laws, but no award may be
granted  under  any  supplement  with  terms  that  are more  beneficial  to the
participants  than  the  terms  permitted  by the  Incentive  Plan.  No  foreign
qualified grants have been awarded under the Incentive Plan.

The  Incentive  Plan will  continue in effect for ten years from the date it was
adopted by the Board, subject to earlier termination by the Board. The Board may
suspend or terminate the Incentive Plan at any time.

              MATTERS SUBMITTED TO THE VOTE OF THE SECURITY HOLDERS

During 2001,  our security  holders  approved two  proposals  through the use of
written  consents,  which is authorized under our  organizational  documents and
Nevada  corporate  law. The first matter related to an increase in the number of
our authorized  preferred  shares from 25 million  shares to 75 million  shares.
That  action was  approved by written  consent in June 2001 and we affected  the
change  in  our  corporate  structure  in  November  2001.  The  second  consent
resolution  matter related to an amendment of our Amended and Restated  Articles
of  Incorporation  to increase the maximum  number of persons who can sit on our
board of  directors  from 10 persons to 12  persons,  and to amend our  Restated
Articles  to  provide  that  certain  types of  equity  financings  require  the
affirmative  vote of at least 75% of our  board.  That  action  was taken by our
shareholders in September 2001, and the amendment was effected in November 2001.
The approval  procedures,  number of shares of our stock voting in favor of each
of those actions  pursuant to the written  consents and a description of each of
the  transactions  so approved are  described in more detail in our  information
statements   on  Schedule  14C  dated  July  16,  2001  and  November  1,  2001,
respectively.

                           OUR PRINCIPAL STOCKHOLDERS

The following  table sets forth  certain  information  regarding the  beneficial
ownership of our  outstanding  securities  as of April 8, 2002 by the  following
parties:

          o    all those persons or entities known by us to be beneficial owners
               of 5% or more of each class of our outstanding securities, or "5%
               Shareholders"

          o    each director, and our executive officers

          o    all directors and our executive officers as a group.

The data  presented  are  based on  information  provided  to us by the  parties
specified above.



<PAGE>


<TABLE>
<CAPTION>


                     Name of                                              Number of         Percentage of
                Beneficial Owner                    Class                  Shares               Class(1)
                ----------------                    -----                  ------               ------
<S>                                                 <C>                      <C>                <C>
Norberto Priu                                       Common                   15,005,523         25.0%
    (5% Shareholder)(2)

AES Telecom Americas, Inc.                          Common                   11,764,705         19.6%
    (5% Shareholder)(3)

Telematica EDC, C.A.                                Common                    8,599,901         14.3%
    (5% Shareholder)(4)

TCW/CCI Holding LLC and TCW/CCI Holding II LLC      Common                    7,950,657         13.2%
    (5% Shareholder)(5)

Lance D'Ambrosio                                    Common                    3,652,939          6.1%
    (5% Shareholder/ Chairman)(6)

Douglas Jacobs(7)                                   Common                      300,000          (*)
    (CEO)

Brian Reynolds(8)                                   Common                      183,333          (*)
    (Pres. and COO)

Amaury Rivera                                       Common                       50,000          (*)
    (SVP/Mexico General Director)(9)

Troy D'Ambrosio                                     Common                      687,292          1.1%
    (Sr. V.P./Director)(10)

Anthony Sansone                                     Common                      120,555          (*)
    (V.P., Treasurer and Secretary)(11)

Gary Barlow(12)                                     Common                       50,000          (*)
    (V.P., Acct. and Tax)

Ron Bouganim(13)                                    Common                      100,000          (*)
    (V.P., Bus. Development)

Pablo Priu(14)                                      Common                          -0-          (*)
    (Director)

Peter Schiller(15)                                  Common                          -0-          (*)
    (Director)

Jorge Fucaraccio(16)                                Common                          -0-          (*)
    (Director)

Jeffery Safford(17)                                 Common                          -0-          (*)
    (Director)

Christopher Shenefelt(18)                           Common                          -0-          (*)
    (Director)

Gonzalo Pacanins(19)                                Common                          -0-          (*)
    (Director)

Norberto Corredor(20)                               Common                        9,621          (*)
    (Director)

Mario L. Baeza(21)                                  Common                        9,621          (*)
    (Director)

Carlos Christensen(22)                              Common                          -0-          (*)
    (Director)

Gaston Acosta-Rua(23)                               Common                       20,000          (*)
    (Director)

All directors and officers as a group (19           Common                    5,183,361          8.5%
persons)(24)
----------------------
*Less than 1%
</TABLE>


(1)      Based on 60,019,618  outstanding shares of common stock, which does not
         include  572,468  shares  of  common  stock  held by our  wholly  owned
         indirect  subsidiary,  WCI Cayman Inc.  The  inclusion of any shares as
         "beneficially  owned" does not  constitute  an admission of  beneficial
         ownership  (which has a broad  definition under the securities laws) of
         those shares.  Unless otherwise indicated,  each person listed has sole
         investment  and voting power with respect to the shares  listed.  Also,
         each  person is deemed  to  beneficially  own any  shares  issuable  on
         exercise  of stock  options or  warrants  held by that  person that are
         currently  exercisable or that become  exercisable within 60 days after
         April 8, 2002.

(2)      Does not include  276,581  shares of common  stock that may be acquired
         under a one-year  option we granted the named  shareholder on September
         11, 2001.  Includes  options to acquire 38,093 common shares which were
         granted to the named stockholder's  designees to our Board of Directors
         under our  Director  Stock Plan,  but which were  assigned to the named
         stockholder  under the terms of the  designees'  arrangements  with the
         named stockholder.  We have been informed that in March 2002, the named
         shareholder  intends  to  transfer  his  shares  to  Internexus  S.C.A.
         ("Internexus").

(3)      AES Telecom  Americas,  Inc. is an affiliate of  Telematica  EDC,  C.A.
         These shares are subject to a pledge in favor of  Internexus  until the
         repayment of any amounts advanced under the April 2002 revolving credit
         agreement between us and Internexus.  See "Related Party  Transactions:
         April 2002 Transactions."

(4)      Telematica EDC, C.A is an affiliate of AES Telecom Americas, Inc. These
         shares  are  subject  to a  pledge  in favor of  Internexus  until  the
         repayment of any amounts advanced under the April 2002 revolving credit
         agreement between us and Internexus.  See "Related Party Transactions."
         Does not include  1,626,953 shares of common stock that may be acquired
         under a one-year  option we granted the named  shareholder on September
         11, 2001.

(5)      Includes  5,228,452 shares of the total 7,950,657 shares noted that are
         held by TCW/CCI Holding LLC and 2,722,205 shares of the total 7,950,657
         shares noted that are held by TCW/CCI  Holding II LLC.  TCW/CCI Holding
         LLC and TCW/CCI Holding II LLC are holding companies whose sole members
         are TCW/Latin America Private Equity Partners, LP and TCW/Latin America
         Off-Shore  Pool I, LP,  respectively.  These  shares  are  subject to a
         pledge  in favor of  Internexus  until  the  repayment  of any  amounts
         advanced under the April 2002 revolving credit agreement between us and
         Internexus.   See  "Related  Party   Transactions."  Does  not  include
         1,626,953  shares of common stock that may be acquired under a one-year
         option granted TCW/Latin  America  Partners,  LLC, an affiliated of the
         named shareholders, on September 11, 2001.

(6)      3,626,689  of  these  shares  are  subject  to a  pledge  in  favor  of
         Internexus  until the repayment of any amounts advanced under the April
         2002 revolving credit agreement between us and Internexus. See "Related
         Party Transactions." Includes shares formerly reported as being held by
         an entity controlled by the named shareholder and Troy D'Ambrosio.  The
         jointly  controlled  entity was  dissolved  in April 2002 and the named
         shareholder now has direct control of those shares.

(7)      Includes options to acquire 300,000 common shares.

(8)      Includes options to acquire 183,333 common shares.

(9)      Includes options to acquire 50,000 common shares.

(10)     These shares are subject to a pledge in favor of  Internexus  until the
         repayment of any amounts advanced under the April 2002 revolving credit
         agreement between us and Internexus.  See "Related Party Transactions."
         Does  includes  shares  held by Mr.  D'Ambrosio's  wife  for  which  he
         disclaims  beneficial  ownership.  Included shares formerly reported as
         being held by an entity jointly controlled by the named shareholder and
         Lance D'Ambrosio.  The jointly controlled entity was dissolved in April
         2002 and the named shareholder now has direct control of those shares.

(11)     119,170 shares shown are held by a limited  liability company for which
         the  named   stockholder  acts  as  the  managing  member.   The  named
         stockholder does not disclaim beneficial ownership of such shares.

(12)     Includes options to acquire 50,000 common shares.

(13)     Includes options to acquire 100,000 common shares.

(14)     Mr. Priu is the grandson of Norberto Priu.

(15)     Mr.  Schiller is an officer of one or more  affiliates of Norberto Priu
         and Raquel Emilse Oddone de Ostry.  Mr. Schiller  disclaims  beneficial
         interest  in the  shares  held by  messrs.  Priu and  Ostry  and  their
         affiliates.

(16)     Mr. Fucaraccio is an officer of one or more affiliates of Norberto Priu
         and Raquel Emilse Oddone de Ostry. Mr. Fucaraccio  disclaims beneficial
         interest  in the  shares  held by  messrs.  Priu and  Ostry  and  their
         affiliates.

(17)     Mr.  Safford  is an officer of one or more  affiliates  of AES  Telecom
         Americas,  Inc. Mr. Safford disclaims beneficial interest in the shares
         held by AES Telecom Americas, Inc.

(18)     Mr.  Shenefelt is an officer of one or more  affiliates  of AES Telecom
         Americas,  Inc.  Mr.  Shenefelt  disclaims  beneficial  interest in the
         shares held by AES Telecom Americas, Inc.

(19)     Mr.  Pacanins  is an officer of one or more  affiliates  of AES Telecom
         Americas, Inc. Mr. Pacanins disclaims beneficial interest in the shares
         held by AES Telecom Americas, Inc.

(20)     Mr.  Corredor  is an  officer  of  Telematica  or its  affiliates.  Mr.
         Corredor disclaims beneficial interest in the shares held by Telematica
         except to the extent  shown.  Includes  options to acquire 9,621 common
         shares.

(21)     Mr. Baeza is a principal of TCW/CCI Holding or its  affiliates,  and is
         an officer and sole  member of a company  that is a member of an entity
         that controls TCW/CCI Holding.  Mr. Baeza disclaims beneficial interest
         in the shares  held by  TCW/CCI  Holding  or its  affiliates.  Includes
         options to acquire 9,621 common shares.

(22)     Mr. Christensen is a principal of an affiliate of TCW/CCI Holding.  Mr.
         Christensen disclaims beneficial interest in the shares held by TCW/CCI
         Holding or its affiliates.

(23)     Mr.   Acosta-Rua  is  a  principal  of  FondElec  and  certain  of  its
         affiliates.  Mr. Acosta-Rua disclaims beneficial interest in the shares
         held by FondElec and its affiliates.  Also includes  options to acquire
         20,000 common shares.

(24)     Assumes the matters set forth in notes 1 through 23.  Includes  options
         to acquire  722,575  common  shares.  Includes the shares held by Lance
         D'Ambrosio  as a "5%  Shareholder,"  Mr.  D'Ambrosio  also  serves as a
         director.

PART 2.

                MARKET FOR EQUITY AND RELATED SHAREHOLDER MATTERS

There is no established public market for our common shares or preferred shares.
We cannot  predict the effect,  if any,  that future  sales of common  shares or
preferred  shares, or the availability of such shares for sale, will have on any
market price prevailing from time to time on our equity securities. Future sales
of  substantial  amounts  of our  stock,  whether  common  or  preferred,  could
adversely  affect  any  prevailing  market  prices  of  our  outstanding  equity
securities.

In 1995 we issued 1.0 million of our common shares to the former shareholders of
TTI   in   connection    with   our   business    separation   from   Transworld
Telecommunications, Inc., or TTI. In connection with that transaction, we placed
all of those shares in escrow (where they remain today) and filed a registration
statement on Form 10-SB under the  Securities  Exchange Act of 1934, as amended.
We  issued  all of our  currently  issued  and  outstanding  common  shares  and
preferred  shares since the initial issuance of the 1 million common shares that
are held in escrow in transactions which we believe did not involve unregistered
public  offerings.  The common  shares and  preferred  shares we issued in those
transactions  are  "restricted  securities."  All or a portion of the restricted
shares may in the future become (or, as in the case of common  shares  currently
held in escrow, are) eligible for sale in the public market place in reliance on
Rule 144,  subject  to  volume,  affiliate,  timing  and manner of sale or other
restrictions contained therein.

We have previously issued warrants and options,  which were not registered under
the  federal  or  state   securities  laws  in  reliance  upon  exemptions  from
registration  contained  in those laws.  The  warrants  and  options  constitute
"restricted  securities"  and may not be  resold  unless  registered  under  the
Securities  Act of 1933,  as  amended,  or  disposed  of in  connection  with an
exemption therefrom.

As of the date of this  report,  there  are  approximately  390  holders  of our
outstanding common shares.


                      SELECTED CONSOLIDATED FINANCIAL DATA

The following  table sets forth our  consolidated  financial  data as of and for
each of the years ended  December  31,  2001,  2000,  1999,  1998 and 1997.  The
selected  consolidated  financial  data as of and for  each of the  years  ended
December  31,  2001,  2000,  1999,  1998 and 1997  have  been  derived  from our
consolidated financial statements. The consolidated financial statements and the
report thereon for the years ended December 31, 2001, 2000 and 1999 are included
elsewhere  in this  Annual  Report  of Form  10-K.  The  consolidated  financial
statements and the report thereon for the years ended December 31, 1998 and 1997
are included in our Annual Report on Form 10-KSB for the year ended December 31,
1998 ("1998 Form 10-KSB").  The information  below should be read in conjunction
with the consolidated financial statements (and notes thereon) and "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations,"
included below and in the 1998 Form 10-KSB.













                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

<TABLE>
<CAPTION>


     CONSOLIDATED STATEMENTS OF OPERATIONS DATA:                                            Years Ended December 31,
                                                -----------------------------------------------------------------------------------
                                                     2001             2000             1999             1998              1997
                                                ---------------  ---------------  ---------------   --------------   --------------
<S>                                               <C>              <C>               <C>              <C>                  <C>



NET REVENUES FROM SERVICES                        $ 40,170,949     $ 35,027,458      $ 9,099,054      $ 3,113,482          $ 40,186
                                                ---------------  ---------------  ---------------   --------------   ---------------
COSTS AND EXPENSES:
  Variable cost of services                         27,376,072       21,400,503        3,202,017        1,876,133           165,048
  Salaries, wages and benefits                      19,077,085       17,872,673        5,768,580        2,756,212           343,072
  Selling, general and administrative                9,306,606       14,938,511        7,114,111        5,485,204         1,866,615
  Depreciation and amortization                     14,063,613       14,160,812        5,308,489        2,864,789           619,182
  Stock option compensation expense                     54,505          248,293        1,251,349          753,046           962,738

  Business restructuring charges and asset
  impairments                                       21,869,264                -        5,680,101                -                 -
                                                ---------------  ---------------  ---------------   --------------   ---------------
              Total costs and expenses              91,747,145       68,620,792       28,324,647       13,735,384         3,956,655
GAIN ON ASSET SALE                                  (8,001,337)               -                -                -                 -
                                                ---------------  ---------------  ---------------   --------------   ---------------

OPERATING LOSS                                     (43,574,859)     (33,593,334)     (19,225,593)     (10,621,902)       (3,916,469)
OTHER INCOME (EXPENSE):
  Interest income                                      445,293          966,170          427,953          268,996           116,367
  Interest expense                                  (6,401,587)      (3,693,887)      (3,702,770)        (677,188)         (807,203)
  Arbitration settlement                            (1,505,882)               -                -                -                 -
  Other                                               (195,429)               -                -                -                 -
  Net gain (loss) on foreign exchange                 (789,286)        (102,013)          27,491                -                 -
                                                ---------------  ---------------  ---------------   --------------   ---------------
              Total other expense                   (8,446,891)      (2,829,730)      (3,247,326)        (408,192)         (690,836)
                                                ---------------  ---------------  ---------------   --------------   ---------------
LOSS BEFORE INCOME TAXES, MINORITY INTEREST        (52,021,750)     (36,423,064)     (22,472,919)     (11,030,094)       (4,607,305)
PROVISION FOR INCOME TAXES                             (40,843)         (30,786)         (50,183)               -                 -
                                                ---------------  ---------------  ---------------   --------------   ---------------
LOSS BEFORE MINORITY INTEREST AND
EXTRAORDINARY ITEM                                 (52,062,593)     (36,453,850)     (22,523,102)     (11,030,094)       (4,607,305)
MINORITY INTEREST IN LOSS (GAIN) OF
SUBSIDIARIES                                        (3,536,304)       3,480,790        2,245,623          799,298            13,011
                                                ---------------  ---------------  ---------------   --------------   ---------------
NET LOSS                                           (55,598,897)     (32,973,060)     (20,277,479)     (10,230,796)       (4,594,294)
NON-CASH REMEASUREMENT OF WARRANTS / OPTIONS       (10,386,464)        (352,000)               -                -                 -
                                                ---------------  ---------------  ---------------   --------------   ---------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS     $ (65,985,361)   $ (33,325,060)   $ (20,277,479)   $ (10,230,796)     $ (4,594,294)
                                                ===============  ===============  ===============   ==============   ===============
NET INCOME PER SHARE OF COMMON STOCK:

   Net loss per basic and diluted common share         $ (1.79)         $ (1.44)         $ (1.48)         $ (0.87)          $ (0.57)
                                                ===============  ===============  ===============   ==============   ===============
Weighted-average number of common shares:
    Basic and diluted                               36,834,387       23,149,752       13,660,881       11,736,927         8,044,827
                                                ===============  ===============  ===============   ==============   ===============


                                                                                        As of December 31,
                                                ------------------------------------------------------------------------------------
                                                     2001             2000             1999             1998              1997
                                                ---------------  ---------------  ---------------   --------------   ---------------
CONSOLIDATED BALANCE SHEET DATA:

Cash and cash equivalents                          $ 4,238,166      $ 4,193,170     $ 26,303,296      $ 4,315,281       $ 6,171,515
Working capital                                    (18,076,902)     (32,548,814)      12,807,119       (3,969,421)        4,493,869
Total assets                                       103,160,625      126,717,902       97,204,523       42,473,044        17,489,106
Notes payable less current portion                  11,528,701       12,274,717       11,389,937        3,987,268                 -
Long-term debt (payable to related parties)          8,288,118        4,769,497        2,595,634       11,224,504         1,130,660
Stockholders' equity                                48,701,970       58,589,045       59,375,280       10,684,526        14,378,966

</TABLE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The  following   information  should  be  read  in  conjunction  with  "Selected
Consolidated Financial Data" and our Consolidated Financial Statements and notes
thereto provided  elsewhere in this report.  The following  discussion and other
parts of this report may contain  forward-looking  statements that involve risks
and uncertainties.  Our actual results may differ significantly from the results
discussed  in those  forward-looking  statements.  Factors that might cause such
differences  include, but are not limited to, our history of unprofitability and
the  continuing  uncertainty  of our  profitability,  our ability to develop and
introduce  new services,  the  uncertainty  of market  acceptance of our new and
existing services, our reliance on collaborative partners, our limited sales and
marketing experience, risks associated with obtaining governmental approvals for
our services,  the highly competitive industry in which we operate and the rapid
pace of technological change within that industry,  changes in or our failure to
comply with  governmental  regulations,  our  dependence  on key  employees  and
general economic and business conditions, some or all of which may be beyond our
control.

Overview

We are a leading  facilities-based  provider of broadband  services operating in
recently  deregulated   high-growth   markets,   principally  Mexico.  We  offer
enterprise  customers  end-to-end  communications  solutions,  including managed
corporate data network  services,  high-speed data  connections,  high-speed and
dial-up Internet access,  voice, video,  e-commerce-enabling  services and other
value-added communications services.

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,  our operating network is based on an IP, Gigabit
Ethernet  architecture that incorporates a variety of state-of-the-art  delivery
platforms,  including  fiber-optic,  fixed  wireless  technologies  and  two-way
coaxial cable.  Gigabit Ethernet  technologies  have been commercially used on a
limited basis.

We selected this technology because we believe it allows us to deliver broadband
connectivity  to  our  customers  at  high,  committed  information  rates  more
efficiently  than  other  older  technologies   current  used  by  some  of  our
competitors. However, if this 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.

Results of Our Operations

2001 Compared to 2000

Revenues. Our revenues for 2001 totaled $40.2 million, compared to $35.0 million
for 2000,  representing a $5.2 million increase in revenues. The following table
shows our revenues by region for 2001 and 2000:

   TOTAL REVENUES                         2001                        2000
   (in thousands)
   Mexico (Intervan)                    $ 21,519                   $  16,529
   Venezuela (Inter@net)                     923                       1,132
   Central America                        17,729                      17,366
                                        --------                    --------
        Consolidated total             $ 40,171                    $  35,027
                                       =========                   =========

The increase in our 2001  revenues was primarily  attributable  to growth of our
operations in Mexico  (Intervan),  combined with the acquisition of Metrotelecom
(Central  America) in April 2000, but was offset by the sale of a portion of our
El  Salvadoran  operations  (Chispa)  in June 2001.  Intervan  contributed  $5.0
million of the revenue  increase,  consisting  of an increase of $3.9 million in
high-speed  data  revenue,  with the  remainder  consisting  of  other  revenue,
including telephony.

Our total revenues in 2002 will be affected by the sale of the Chispa operations
in 2001,  which  contributed $3.4 and $8.5 million in revenue for 2001 and 2000,
respectively,  and our decision to cease  operations  in Venezuela  during 2001,
which  contributed  $0.9  and  $1.1  million  in  revenue  for  2001  and  2000,
respectively.  The revenue  losses from the Chispa and Venezuela  operations are
projected  to be offset by revenue  growth in 2002 from our Mexican  operations,
which grew by 30.2% between 2000 and 2001. Additionally,  if we sell our Central
American assets as discussed above, our revenues would be affected further.  Our
revenues in Central  America,  as  adjusted  for the sale of a portion of our El
Salvador   operations,   were  $14.3  and  $8.9   million  for  2001  and  2000,
respectively.

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 $27.4 million in 2001, an increase of $6.0 million over
2000.  The  increase  relates  primarily  to an increase in our  customer  base,
primarily in Mexico.  Of total variable cost of services for 2001, $16.6 million
related to our Intervan operations in Mexico.

Salaries,  Wages and Benefits.  Our salaries,  wages and benefits  totaled $19.1
million in 2001,  an increase  of $1.2  million,  from 2000,  due  primarily  to
employee  hirings  subsequent  to June  2000  and  the  inclusion  of  Guatemala
employees  for a full  twelve  months  in  2001.  We  maintained  a total of 393
employees at December 31, 2001,  which  compares  with 648 employees at December
31,  2000,  adjusted  for the 123  employees  associated  with  the El  Salvador
operations sold in June 2001. This  significant  decrease in employee  headcount
reflects  the 255  employees  we  terminated  in  connection  with our  business
restructuring discussed below.

Selling,  General and Administrative Expenses. We incurred SG&A expenses of $9.3
million in 2001, a significant  decrease of $5.6 million  compared to 2000.  The
decrease in SG&A expenses  reflects the impact of  management's  cost  reduction
program implemented during 2001. The decrease in SG&A reflects:

          o    Travel, advertising and promotion costs decreased $1.9 million to
               a total of $2.5  million  in 2001,  compared  to $4.4  million in
               2000.

          o    Consulting  and legal fees  decreased  $2.3 million to a total of
               $1.6 million in 2001, compared to $3.9 million in 2000.

          o    Other  operating  expenses  decreased  $1.4  million in 2001 to a
               total of $5.2 million, compared to $6.6 million in 2000.

Stock Compensation  Expense. We incurred non-cash stock compensation  expense in
2001 of $54,505 compared to
$248,293 in 2000.

Depreciation and Amortization. Our depreciation and amortization expense totaled
$14.1 million in 2001 and 2000.

Business  Restructuring  Charges and Asset  Impairments.  In  connection  with a
restructuring  plan  to  exit  certain   non-strategic  market  regions  and  to
streamline  our cost  structure in both  foreign and  corporate  operations,  we
recorded a pre-tax charge of $21.9 million for the year ended December 31, 2001,
which  includes  restructuring  costs of $5.8 million and asset  write-downs  of
$16.1 million. These costs include $14.4 million of restructuring costs recorded
for the year ended December 31, 2001 to reflect our approval to cease operations
in Venezuela.

For the year ended December 31, 2001,  restructuring  costs primarily  relate to
involuntary employee separations of $3.7 million for approximately 255 employees
and facility  reduction  costs of $2.1 million.  The employee  separation  costs
primarily impacted our corporate operations and Venezuela, but also impacted all
of  our  geographic  locations,  with  the  majority  pertaining  to  management
employees.  As of December 31, 2001, almost all of the 255 employee  separations
were completed.

For the year-ended  December 31, 2001, asset write-downs  reflect the write-down
of certain  long-lived  intangible assets, VAT tax receivable and tangible fixed
assets  that became  impaired as a result of our  decision to limit or reduce or
exit certain operations in non-strategic market regions and reduce operations in
Venezuela.  Impairment  losses were determined  based on the write-down of fixed
assets,  goodwill and other acquired  intangibles to their fair value, which was
estimated by the expected future cash flows.

Interest  Income and Interest  Expense.  Our interest income was $0.5 million in
2001 versus $1.0 million in 2000.  The 2000 interest  income was higher due to a
higher average cash investment balance during 2000. Interest expense for 2001 of
$6.4  million  increased  $2.7 million over 2000.  The  significant  increase in
interest  expense is primarily  associated  with the $3.0 million in accelerated
interest  amortization  for the  Venezuela  and the  non-Mexico  debt issue cost
components  directly  associated  with  their  note  components  of the  Alcatel
equipment  financing  facility.  Also  contributing  to this increase,  were the
Guatemala  acquisition debt and Alcatel debt being outstanding during all twelve
months of 2001. The significant  increase in 2001 interest expense was offset by
$2.1  million in interest  capitalization  that was  recorded to our networks in
Mexico. The average interest rate recorded on our indebtedness outstanding as of
2001 and 2000 was approximately  11%. 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%.

Provision  for Income  Taxes.  We recorded a provision for income taxes of $0.04
million in 2001, compared to $0.03 million for 2000.

Net Loss.  We incurred a net loss  attributable  to common  shareholders  of $66
million in 2001, an increase of $32.7  million,  compared to 2000. The principal
reasons for the increase were:

          o    $21.9  million  in  business   restructuring  charges  and  asset
               impairments.

          o    $10.4 million in non-cash  remeasurement  of options and warrants
               charge as a result of the induced  conversion of preferred  stock
               on September 11, 2001 and the subsequent  modifications of common
               stock awards to two accredited investors.

          o    $1.2 million increase in salary and benefits expense attributable
               to the growth in employee  headcount  subsequent  to June 2000 to
               support  our  operations  and  the  inclusion  of  the  Guatemala
               employees  for the full  twelve  months in 2001.  Since March 31,
               2001,  salary and benefit costs have  significantly  decreased in
               connection with the restructuring plan implemented during 2001.

          o    $1.5 million in  arbitration  settlement  from the FondElec Group
               arbitration settlement.

          o    $2.7 million  increase in interest expense due to the accelerated
               interest  amortization  on  certain  components  of  the  Alcatel
               equipment  financing facility combined with a higher average debt
               balance during 2001.

          o    $7  million  increase  in  minority  interest  income of which $5
               million directly relates to the sale of our interest in Chispa.

          o    The above increases were offset by the $8 million pre-tax gain on
               the Chispa asset sale, a $5.6 million  decrease in SG&A  expenses
               due  to  the  concerted  effort  by  management  to  reduce  such
               expenses,   and  a  $0.2  million   decrease  in  non-cash  stock
               compensation expense.

 2000 Compared to 1999

Revenues.  Our revenues  for 2000 totaled $35 million,  compared to $9.1 million
for 1999, representing a $25.9 million increase in revenues. The following table
shows our revenues by region for 2000 and 1999:

         TOTAL REVENUES                            2000                  1999
         (in thousands)
         Mexico (Intervan)                       $ 16,529              $    172
         Venezuela (Inter@net)                      1,132                 1,156
         Central America                           17,366                 7,772
                                                 --------              --------
              Consolidated total                 $ 35,027              $  9,100
                                                 ========              ========

The increase in our 2000 revenues was primarily attributable to ownership of the
operating  entities of Intervan  (Mexico)  and GBNet  (Central  America) for all
twelve  months  of 2000.  GBNet  operations  contributed  $4.3  million  in 2000
revenues.  The Company also  acquired  Metrotelecom  (Central  America) in April
2000, which contributed $4.3 million in revenues in 2000.

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 $21.4 million in 2000, an increase of $18.2 million over
1999. Of total variable cost of services for 2000,  $12.8 million related to our
Intervan  operations  in Mexico.  The  significant  increase in variable cost of
services  reflects  growth in our  revenues,  including  completing  significant
acquisitions in December 1999 and April 2000.

Salaries,  Wages and Benefits.  Our salaries,  wages and benefits  totaled $17.9
million,  an increase of $12.1  million (or 210%),  from 1999.  We  maintained a
total of 471 employees at December 31, 1999,  of which 165 employees  related to
companies we acquired in December 1999. The adjusted  headcount of 306 employees
for December 31, 1999,  compared to 773  employees at December 31, 2000 reflects
an  employee  headcount  increase  of almost  153%.  The  increase  in  employee
headcount reflects significant employee hiring in primarily the sales, marketing
and  technical   departments  to  support  our  planned  significant  growth  in
operations.  The increase in employee  headcount also reflects normal  increases
associated with our growing operations,  combined with the employees we acquired
during the month of April 2000 with our purchase of Metrotelecom,  which had 154
employees at December 31, 2000. We increased the salaries, wages and benefits of
our personnel to match market rates and increases in cost of living.

Selling, General and Administrative Expenses. We incurred SG&A expenses of $14.9
million in 2000,  an increase of $7.9  million (or 110%)  compared to 1999.  The
increase  in  SG&A  expenses  reflects  growth  in  our  operations,   including
completing  three  significant  acquisitions in April 2000 and December 1999, as
well  as the  increased  development  of our  networks.  The  increase  in  SG&A
reflects:

          o    Travel, advertising and promotion costs increased $3.4 million to
               a total of $4.4 million in 2000, compared to only $1.0 million in
               1999. This significant  increase in expenses is the result of the
               rapid   development  of  our  operations  into  Central  America,
               Venezuela and Mexico.

          o    Consulting and legal fees,  which totaled $3.9 million,  compared
               with $2.7 million for 1999.

          o    Other  operating  expenses  such as rent and lease  expenses  for
               office  space and  equipment  increased  to $2  million  in 2000,
               compared to $0.4 million for 1999.

          o    On a  consolidated  basis,  we recorded a provision  for doubtful
               accounts of $1.4  million in 2000,  compared  to $0.4  million in
               1999 as a result of three significant  acquisitions and increased
               operations.

Stock Compensation  Expense. We incurred non-cash stock compensation  expense in
2000 of $0.2 million compared to $1.3 million in 1999.

Depreciation and Amortization. Our depreciation and amortization expense totaled
$14.1 million in 2000,  representing  an increase of $8.8 million over 1999. The
significant  increase reflects the amortization of intangible assets relating to
our  three   significant   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 Income and Interest Expense. Our interest income increased $0.6 million
for a total  of  almost  $1.0  million,  in 2000 due to a  higher  average  cash
investment  balance  during  2000.  Interest  expense  for 2000 of $3.7  million
remained  constant  compared to interest  expense in 1999. The average  interest
rate recorded on our indebtedness  outstanding as of 2000 was approximately 11%,
compared to approximately 10.75% for 1999.

Provision  for Income  Taxes.  We recorded a provision for income taxes of $0.03
million in 2000, compared to $0.05 million for 1999.

Net Loss. We incurred a net loss  attributable  to common  shareholders of $33.3
million in 2000, an increase of $13.0  million,  compared to 1999. The principal
reasons for the increase were:

          o    a  $12.1  million   increase  in  salary  and  benefits   expense
               attributable  to  acquisitions  and as a  result  of  significant
               growth in employee headcount to support planned operations.

          o    an $8.9 million increase in depreciation and amortization expense
               on  intangible  assets  as  a  result  of  acquisitions  and  the
               build-out of our networks.

          o    a $7.8 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 $7.7 million increase in net
               revenues over variable cost of services,  a $1.2 million increase
               in minority  interest loss and a $1 million  decrease in non-cash
               stock  compensation  expense.  Additionally,  in 1999 there was a
               one-time  significant  asset impairment of $5.7 million which was
               not required in 2000.

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.

As of December 31, 2001, we had the following cash  obligations  and commitments
to make future payments under contracts and contingent commitments as follows:

<TABLE>
<CAPTION>


                                                                Less than       1 -3       4 -5    After 5
      Contractual Obligations                          Total       1 Year      Years      Years      Years
      -----------------------                          -----       ------      -----      -----      -----
      <S>                                              <C>          <C>         <C>        <C>        <C>
      Long-Term Debt                                   $33.6        $13.8       $4.9       $6.1       $8.8
      Operating Leases                                  $4.9         $2.0       $2.7       $0.2       $0.0
      Unconditional Purchase Obligations                $0.7         $0.7       $0.0       $0.0       $0.0
                                                        ----         ----       ----       ----       ----
      Total Contractual Cash Obligations               $39.2        $16.5       $7.6       $6.3       $8.8
                                                       =====        =====       ====       ====       ====
</TABLE>

As of the date of this report,  we are not in compliance  with the operating and
payment  covenants  of  the  equipment   purchasing  provision  of  the  Alcatel
agreements.  We are  negotiating  a waiver  of  those  payment  provisions  with
Alcatel,  but we have not yet received  (and there can be no  assurance  that we
will obtain)  Alcatel's  agreement to the waiver,  or that Alcatel will agree to
modify the payment  provisions in a manner which we believe is acceptable.  As a
result,  Alcatel has the right to accelerate the maturity of the amounts we have
drawn under the facility and pursue its remedies for default.

In March 2002, we requested and Alcatel  agreed to reduce the amounts  available
under the Alcatel  facility from $175.0 million to $9.1 million.  This reduction
will decrease the amount of quarterly commitment fees we pay to Alcatel.

As of the date of this report, we have not paid a $3.7 million principal payment
on a note payable due on April 5, 2001 relating to our Guatemala acquisition due
to purchase price adjustment and  indemnification  claims we made in 2001 and in
our January  2002 demand for  arbitration  against the holders of that note.  We
allege in our arbitration filing that the representations and warranties made by
certain  sellers  about the assets we bought were  inaccurate,  that the sellers
fraudulently  induced us into  buying the  assets  and that we are  entitled  to
indemnification for the sellers'  misrepresentations.  We believe our claims are
greater than the amount due on April 5, 2001. However, we may be required to pay
some or all of this amount and future amounts due if we are  unsuccessful in the
arbitration proceeding.

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.

During 2001, our operating  activities  used $32.3 million,  compared with $15.7
million  during the same period in 2000.  The increase was primarily  related to
expenses and asset impairments related to our 2001 restructuring and payments on
our accounts payable and accrued liabilities. Our investing activities used $0.3
million in 2001  compared  with using  $36.3  million  during the same period in
2000. The decrease was primarily  attributable  to the proceeds from the sale of
our cable television and residential data assets in El Salvador and the decrease
in purchases of property and equipment.  Financing  activities,  principally the
issuance of Series D Preferred  Stock in  February  2001 and  issuance of common
stock in September 2001 offset by the payments on notes payable,  provided $32.6
million in 2001.

As of December 31, 2001,  we had current  assets of $14.9  million,  compared to
$32.9 million of current liabilities.

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 and  continue as a going  concern will depend on our
ability to obtain  additional  sources of funds to finance  our  business  plan.
There  can be no  assurance  that we will be able to  obtain  funding  on  terms
acceptable to us, or at all.

We intend to make 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    The draw down of amounts  available  from the April 2002 facility
               with Internexus.

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

          o    Extending or modifying repayment terms on seller notes

          o    Senior secured lending

          o    Reductions in capital expenditures

          o    Control of operating expense growth

Management  believes the April 2002 revolving loan  commitment  from  Internexus
will provide us with  sufficient  operating  capital to fund our operations only
through  June  2002,  at which  point  we will  either  be  required  to  obtain
additional  debt and/or  equity  financing  from third  parties,  sell  selected
assets,  significantly  reduce  the  scope  of  our  business  plan  or  take  a
combination of those actions. Under the terms of the April 2002 loan commitment,
we agreed to retain an  investment  advisor to assist us in the sale of all or a
portion of our assets or business or obtain additional financing to continue our
operations.

We spent $20 million,  $32.6  million and $13.1  million  during 2001,  2000 and
1999, respectively, for capital expenditures. We anticipate that we will require
a minimum of $5.0 million  during 2002 for capital  expenditures  related to the
expansion of our existing telecommunications  business, and that we will require
additional amounts in periods after 2002.

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 which
are economically acceptable to us.

Critical Accounting Policies

Our critical  accounting policies are those which we believe require significant
judgments,  often as a result of the need to make estimates  about the effect of
matters that are inherently  uncertain.  A discussion of our critical accounting
policies, the underlying judgments and uncertainties affecting their application
and the likelihood  that  materially  different  amounts would be reported under
different conditions or using different assumptions, is as follows:

Property and Equipment

Our telecommunications  equipment and network represent 52% of our total assets.
We have several  accounting  policies  dealing with our plant and equipment that
significantly impact our operations.  Recording depreciation expense requires us
to estimate  the average  useful  lives of each of our  systems  components.  We
account for network  improvement costs,  including salary of employees dedicated
to the network  construction and improvement,  by capitalizing those costs which
we believe will add value to our networks and depreciate those improvements over
their estimated useful lives.

We determine  the average  useful lives of our  telecommunication  equipment and
network  based  primarily on our  estimates  of the average  useful lives of the
major  components,  such as  transmission  and  switching  equipment,  operating
systems, cables and underground  construction.  In addition, we consider,  among
other things, the impact of anticipated technological changes.

Given the complex nature of our  telecommunications  equipment and network,  the
above  described  accounting  estimates  require  considerable  judgment and are
inherently  uncertain.  If we materially changed our assumptions of useful lives
and  salvage  values,  our  depreciation  expense,  and net  book  value  of our
telecommunications equipment and network could be materially different.

We believe  that the  estimates  we made for  network  accounting  purposes  are
reasonable,  our methods are consistently applied and the resulting depreciation
expense is based on a rational and systematic  method to equitably  allocate the
costs of our  networks to the periods  during which  services are obtained  from
their use.

Asset Impairment

Our review of our long-lived assets, principally goodwill and other intangibles,
which  accounts for 27% of our total assets,  requires us to initially  estimate
the undiscounted  future cash flow of our business segments,  whenever events or
changes in  circumstances  indicate that the carrying amount of these assets may
not be fully recoverable.  If such analysis indicates that a possible impairment
may exist, we are required to then estimate the fair value of the asset.  During
the years ended December 31, 2001 and December 31, 1999, we recorded  impairment
charges of $16,058,681 and $5,380,101, respectively.

The  determination of fair value includes  numerous  uncertainties.  Significant
judgments are made concerning future operating cash flows by segment. We believe
that we have made reasonable  estimates and judgments in determining whether our
long-lived assets have been impaired;  however, if there is a material change in
the  assumptions  used in our  determination  of fair  values  or if  there is a
material change in the conditions or  circumstances  influencing  fair value, we
could be required to recognize a material impairment charge.

Revenue

We recognize  revenue when the services are provided to customers in  accordance
with contract  terms,  which range from six months to five years.  We also lease
equipment to customers, which is recognized ratably over the lease term. We also
need to estimate the amount of revenues that will not be collected and record an
appropriate  allowance for  uncollectible  accounts.  Recording  this  allowance
requires us to make assumptions using historical  results,  current trends,  and
the credit risk of customers, among other factors.

Recently Issued Financial Accounting Standards

In June 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standard No. 141, "Business  Combinations" and SFAS No.
142, "Goodwill and Other Intangible Assets". SFAS No. 141 establishes accounting
and reporting standards for business combinations. SFAS No. 141 is effective for
business  combinations  initiated  after June 30, 2001. SFAS No. 142 establishes
accounting and reporting standards for goodwill and intangible assets, requiring
annual  impairment   testing  for  goodwill  and  intangible   assets,  and  the
elimination of periodic  amortization  of goodwill and certain  intangibles.  We
adopted the provisions of SFAS No. 142 effective January 1, 2002.  Goodwill that
is no longer subject to  amortization is $11,128,342 as of December 31, 2001. We
recorded  $1,000,626  of  goodwill  amortization  expense  during the year ended
December 31, 2001. We have not completed an analysis of the impact upon adoption
of the impairment test of goodwill. The impairment analysis will be completed by
June 30, 2002 as required by SFAS No. 142.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations",  which requires asset retirement obligations to be recognized when
they are incurred and  displayed as  liabilities.  SFAS No. 143 is effective for
the year ending December 31, 2003. Management is currently evaluating the impact
of this pronouncement on the consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of Long-Lived Assets".  SFAS No. 144 addresses accounting and reporting
for the impairment or disposal of long-lived assets, including the disposal of a
segment of business.  SFAS No. 144 is effective for the year ending December 31,
2002. Management is currently evaluating the impact of this pronouncement on the
consolidated financial statements.

           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.

                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Paragraph  16(a) of the Securities  Exchange Act of 1934, or the "Exchange Act",
requires our executive  officers and directors,  and persons who own 10% or more
of a registered class of our equity  securities,  which we refer to collectively
as  "Reporting  Persons",  to file reports of ownership and changes in ownership
with the Securities and Exchange Commission if we and our equity securities meet
certain requirements.  We received copies of two late-filed Form 3s, dated March
9, 2001,  and two  timely-filed  Form 4s, also dated March 9, 2001,  for TCW/CCI
Holding  II LLC  and  its  affiliates  (including  Mario  L.  Baeza,  one of our
directors)  relating  to the  closing of the  purchase  and sale of our Series D
Convertible  Preferred  Stock in February  2001. We have not received  copies of
filings  on Forms 3, 4 or 5 from any other  Reporting  Person for the year ended
December 31, 2001.

                               REPORTS ON FORM 8-K

We have filed the  following  reports  on Form 8-K during the period  covered by
this report:

          o    An 8-K,  filed  March  8,  2001,  relating  to (i)  the  February
               Financing,  (ii) two recently acquired concessions (in Mexico and
               Venezuela)  and (iii) a debt financing that we closed in December
               2000.

          o    An 8-K, filed July 3, 2001,  relating to the sale of our interest
               in a portion of our El Salvador operations and the refinancing of
               a loan we previously made to our El Salvadoran operation, as well
               as the appointment of two new directors.

          o    An 8-K, filed August 7, 2001,  relating to a $1.75 million bridge
               loan and our conversion (into a 10-year,  monthly amortized loan)
               of certain  amounts we incurred  in 1995 under a loan  commitment
               agreement with a third party.

          o    An  8-K,  filed  October  9,  2001,  relating  to  the  September
               Financing and the sale of a portion of our non-Mexican operations
               in conjunction  with our effort to focus our continuing  business
               operations on Mexico.

PART F/S

The  following  financial   information  is  provided  in  accordance  with  the
requirements of Item 310 of Regulation S-B.

INDEX TO FINANCIAL STATEMENTS

          Item                                                             Page
          ----                                                             ----
          Independent Auditors' Report                                      50
          Consolidated Balance Sheets                                       51
          Consolidated Statements of Operations                             52
          Consolidated Statements of Cash Flows                             53
          Consolidated Statements of Stockholders' Equity                   54
          Notes to Consolidated Financial Statements                        55



<PAGE>







INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Convergence Communications, Inc.
Salt Lake City, Utah

We have audited the  accompanying  consolidated  balance  sheets of  Convergence
Communications,  Inc. and subsidiaries,  (the "Company") as of December 31, 2001
and 2000, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the three years ended in the period December
31, 2001. Our audits also included the financial  statement  schedule  listed in
the Index at Exhibit 99. These consolidated  financial  statements and financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  financial  position  of the  Company  at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years ended in the period December 31, 2001, in conformity
with accounting  principles  generally accepted in the United States of America.
Also, in our opinion,  such financial  statement  schedule,  when  considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly, in all material respects, the information set forth therein.

The accompanying  consolidated  financial statements for the year ended December
31, 2001 have been  prepared  assuming that the Company will continue as a going
concern. As discussed in Note 2 to the consolidated  financial  statements,  the
Company's  negative  working capital and recurring  losses from operations raise
substantial doubt about its ability to continue as a going concern. Management's
plans  concerning  these matters are also described in Note 2. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



DELOITTE & TOUCHE LLP

Salt Lake City, Utah
April 15, 2002


<PAGE>

<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
------------------------------------------------------------------------------------------------------------------

                                                                                December 31,         December 31,
                                                                                    2001                2000
                                                                               ----------------    ---------------
<S>                                                                              <C>                <C>

ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                      $ 4,238,166        $ 4,193,170
    Accounts receivable - net                                                        7,585,725          5,244,893
    Inventory - net                                                                     41,111            910,204
    Value added tax receivable                                                       1,176,461          4,048,900
    Prepaid expenses and other                                                       1,861,570          1,733,820
                                                                               ----------------    ---------------
                 Total current assets                                               14,903,033         16,130,987
PROPERTY AND EQUIPMENT - net                                                        54,939,546         56,652,546
INTANGIBLE ASSETS - net                                                             28,700,844         46,513,030
OTHER ASSETS
    Debt issue costs                                                                 1,737,733          5,550,687
    Equipment lease receivables                                                      1,508,586            395,618
    Other                                                                            1,370,883          1,475,034
                                                                               ----------------    ---------------
                 Total other assets                                                  4,617,202          7,421,339
                                                                               ----------------    ---------------
TOTAL ASSETS                                                                     $ 103,160,625      $ 126,717,902
                                                                               ================    ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short-term debt (payable to related party)                                             $ -        $ 3,000,000
    Notes payable - current portion                                                 13,707,928         22,298,447
    Current portion of long-term debt (payable to related party)                        99,029          1,436,519
    Accounts payable and accrued liabilities                                        19,172,978         21,944,835
                                                                               ----------------    ---------------
                 Total current liabilities                                          32,979,935         48,679,801
LONG-TERM LIABILITIES:
    Notes payable - long-term portion                                               11,528,701         12,274,717
    Long-term debt (payable to related parties)                                      8,288,118          4,769,497
    Accrued restructuring costs                                                        748,504                  -
    Accrued long-term interest                                                         210,000                  -
    Other long-term liabilities                                                        703,397            392,239
                                                                               ----------------    ---------------
                 Total long-term liabilities                                        21,478,720         17,436,453
MINORITY INTEREST IN SUBSIDIARIES                                                            -          2,012,603
                                                                               ----------------    ---------------
                 Total liabilities                                                  54,458,655         68,128,857
COMMITMENTS AND CONTINGENCIES (Notes 14 and 15)
STOCKHOLDERS' EQUITY:
    Series "C" Preferred stock; $0.001 par value; 14,250,000 shares authorized:
       0 and 13,620,472 shares outstanding in 2001 and 2000, respectively.                   -             13,620
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       60,061,284 and 11,921,094 shares outstanding in 2001 and 2000,
       respectively                                                                     60,634             11,921
    Additional paid-in capital                                                     184,136,712        127,897,441
    Accumulated deficit                                                           (135,074,437)       (69,089,076)
    Accumulated other comprehensive income (loss)                                      897,130           (244,861)
    Treasury stock, 572,468 common shares in 2001 at cost                           (1,318,069)                 -
                                                                               ----------------    ---------------
                 Total stockholders' equity                                         48,701,970         58,589,045
                                                                               ----------------    ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $ 103,160,625      $ 126,717,902
                                                                               ================    ===============
</TABLE>


See notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>


CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS  ENDED DECEMBER 31, 2001, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------

                                                                  Year Ended        Year Ended       Year Ended
                                                                 December 31,      December 31,     December 31,
                                                                     2001              2000             1999
                                                                ---------------   ---------------  ---------------
<S>                                                               <C>               <C>               <C>

NET REVENUES FROM SERVICES                                        $ 40,170,949      $ 35,027,458      $ 9,099,054
                                                                ---------------   ---------------  ---------------
COSTS AND EXPENSES:
    Variable cost of services                                       27,376,072        21,400,503        3,202,017
    Salaries, wages and benefits                                    19,077,085        17,872,673        5,768,580
    Selling, general and administrative                              9,306,606        14,938,511        7,114,111
    Depreciation and amortization                                   14,063,613        14,160,812        5,308,489
    Stock option compensation expense                                   54,505           248,293        1,251,349
    Business restructuring charges and asset impairments            21,869,264                 -        5,680,101
                                                                ---------------   ---------------  ---------------
                Total costs and expenses                            91,747,145        68,620,792       28,324,647
GAIN ON ASSET SALE                                                  (8,001,337)                -                -
                                                                ---------------   ---------------  ---------------

OPERATING LOSS                                                     (43,574,859)      (33,593,334)     (19,225,593)
OTHER INCOME (EXPENSE):
    Interest income                                                    445,293           966,170          427,953
    Interest expense                                                (6,401,587)       (3,693,887)      (3,702,770)
    Arbitration settlement                                          (1,505,882)                -                -
    Other                                                             (195,429)                -                -
    Net gain (loss) on foreign exchange                               (789,286)         (102,013)          27,491
                                                                ---------------   ---------------  ---------------
                Total other income (expense)                        (8,446,891)       (2,829,730)      (3,247,326)
                                                                ---------------   ---------------  ---------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                     (52,021,750)      (36,423,064)     (22,472,919)
PROVISION FOR INCOME TAXES                                             (40,843)          (30,786)         (50,183)
                                                                ---------------   ---------------  ---------------
LOSS BEFORE MINORITY INTEREST                                      (52,062,593)      (36,453,850)     (22,523,102)
MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES                  (3,536,304)        3,480,790        2,245,623
                                                                ---------------   ---------------  ---------------
NET LOSS                                                           (55,598,897)      (32,973,060)     (20,277,479)
NON-CASH REMEASUREMENT OF WARRANTS / OPTIONS                       (10,386,464)         (352,000)               -
                                                                                                   ---------------
                                                                ---------------   ---------------  ---------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                     $ (65,985,361)    $ (33,325,060)   $ (20,277,479)
                                                                ===============   ===============  ===============
NET INCOME PER SHARE OF COMMON STOCK:
       Net loss per basic and diluted common share                     $ (1.79)          $ (1.44)         $ (1.48)
                                                                ===============   ===============  ===============
Weighted-average number of common shares:
    Basic and diluted                                               36,834,387        23,149,752       13,660,881
                                                                ===============   ===============  ===============


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

<TABLE>
<CAPTION>


CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
-----------------------------------------------------------------------------------------------------------

                                                                 Year Ended      Year Ended    Year Ended
                                                                December 31,    December 31,  December 31,
                                                                   2001           2000            1999
                                                               -------------   ------------   -------------
<S>                                                            <C>             <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                   $(55,598,897)  $(32,973,060)    $(20,277,479)
    Adjustments to reconcile net loss to net cash used in
      operating activities:
         Depreciation and amortization                           14,063,613     14,160,812       5,308,489
         Asset impairment                                        16,058,681              -       5,680,101
         Gain on asset sale                                      (8,001,337)             -               -
         Provision for bad debts                                  1,074,024      1,387,255         363,005
         Minority interest in income (loss) of subsidiaries       3,536,304     (3,480,790)     (2,245,623)
         Stock-based compensation expense                            54,505        248,293       1,251,349
         Amortization of discount on notes payable                1,062,726      2,136,826         682,440
         Issuance of warrants on debt                                12,929         13,251         162,191
         Change in assets and liabilities, net of effects
           of acquisitions:
           Accounts receivable                                   (3,814,850)    (3,000,749)       (573,033)
           Due from affiliates                                            -              -       5,000,000
           Inventory                                                (47,743)      (648,027)        (81,376)
           Prepaid expenses and other                               679,804     (4,906,316)       (687,897)
           Equipment lease receivables                           (1,112,968)      (395,618)
           Other assets                                           1,944,939       (449,342)       (561,485)
           Accounts payable and accrued liabilities              (3,801,828)    12,044,039       1,111,373
           Accrued restructuring costs                              748,504              -               -
           Accrued long-term interest                               210,000
           Other long-term liabilities                              594,019        206,553          50,595
                                                               -------------   ------------   -------------
                Net cash used in operating activities           (32,337,575)   (15,656,873)     (4,817,350)
                                                               -------------   ------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash paid in Metrotelecom acquisition, net                            -     (3,417,851)              -
    Cash paid in GBNet acquisition, net                                   -              -      (4,000,000)
    Cash paid in Intervan acquisition, net                                -              -     (13,979,747)
    Purchases of wireless licenses and related expenses                   -       (275,000)       (512,944)
    Purchases of property and equipment                         (20,059,594)   (32,580,126)    (13,087,570)
    Proceeds from asset sale                                     19,750,000              -               -
                                                               -------------   ------------   -------------
                Net cash used in investing activities              (309,594)   (36,272,977)    (31,580,261)
                                                               -------------   ------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of Series "C" Preferred Stock              -     27,374,162      53,578,039
    Net proceeds from issuance of Series "D" Preferred Stock     22,869,461              -               -
    Net proceeds from issuance of common stock                   18,178,410              -               -
    Net proceeds from exercise of employee stock options              2,257            241               -
    Net proceeds from exercise of shareholder warrants               71,700              -               -
    Proceeds from related party borrowings                        5,980,000              -               -
    Proceeds from short-term debt                                         -      6,500,000      11,935,422
    Payments on related party borrowings                         (5,038,485)    (4,007,547)    (15,581,076)
    Payments for debt issuance costs                                      -     (5,550,687)              -
    Proceeds from notes payable                                     565,489      7,587,664       4,335,000
    Payments on notes payable                                   (10,037,250)    (1,849,263)       (383,334)
    Purchase of minority interest                                         -       (175,000)              -
    Increase in minority interest from issuance of subsidiary common stock-              -       5,725,000
    Repurchases of treasury stock prior to retirement                     -              -      (1,215,860)
                                                               -------------   ------------   -------------
                Net cash provided by financing activities        32,591,582     29,879,570      58,393,191
                                                               -------------   ------------   -------------

EFFECT OF EXCHANGE RATES ON CASH                                    100,583        (59,846)         (7,565)
                                                               -------------   ------------   -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 44,996    (22,110,126)     21,988,015
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                    4,193,170     26,303,296       4,315,281
                                                               -------------   ------------   -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                        $ 4,238,166    $ 4,193,170    $ 26,303,296
                                                               =============   ============   =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the year for interest                      $ 1,650,729      $ 896,476     $ 1,621,896
                                                               =============   ============   =============
    Cash paid during the year for income taxes (including prepaid) $ 63,528      $ 126,732       $ 113,418
                                                               =============   ============   =============

See Note 17 to the consolidated financial statements for other non-cash financing and investing activities.

See notes to consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------------------


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

BALANCE, JANAURY 1, 1999         $ 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 S
Stock, net                         67,794,198                  9,728,909 $ 9,729
Issuance of warrants                  750,677
Repurchases and retirements of com
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 year ended
    December 31, 2000             (32,973,060)
   Other comprehensive loss
     consisting of foreign
      currency translation
      adjustment                     (214,849)
                                    ---------  ------- ------  --------- -------     -------  -------    ---------   ---------

     Total comprehensive loss     (33,187,909)       -      -          -       -           -        -            -           -
Acquisition of Metrotelecom stock
   for CCI common shares            1,000,000                                                              121,212         121
Acquisition and retirement of
  stock from former officer                 -  (71,853)   (72)                                            (328,510)       (328)
Conversion of Series B to common shares     -  (29,521)   (29)                                             125,237         125
Non-cash remeasurement of options           -
Exercise of shareholder stock
 options                           27,374,162                  3,891,563   3,891
Exercise of employee stock
 options                                  241                                                               11,000          11
Issuance of common shares for
minority interest                   3,765,727                                                              406,666         407
Issuance of warrants on debt           13,251
Issuance of options for common
   shares below fair value            248,293
                                    ---------- ------- ------  ---------  ---------   ------ --------      -------   ---------
BALANCE, DECEMBER 31, 2000         58,589,045        -      - 13,620,472  13,620           -        -   11,921,094      11,921
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)                                                            (572,468)
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                                                              103,177         103
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                                                              745,650         746
Issuance of common stock for
  equipment                         2,880,556                                                            1,646,032       1,646
Conversion of Series C stock
 into common stock                          -                (17,594,230 (17,594)                       17,594,230      17,594
Conversion of Series D stock
 into common stock                          -                                     (5,094,159)  (5,094)   5,094,159       5,094
Conversion of promissory note to
  common stock                      1,818,082                                                            2,138,920       2,139
Issuance of common stock           18,178,410                                                           21,390,490      21,391
                                    ---------  ------- ------  --------- -------    --------  -------    ---------   ---------
BALANCE, DECEMBER 31, 2001       $ 48,701,970        -    $ -          -     $ -           -      $ -   60,061,284    $ 60,634
                                    =========  ======= ======  ========= =======    ========  =======    =========   =========
</TABLE>

See notes to consolidated financial statements.

                            (CONTINUED ON NEXT PAGE)



<PAGE>

<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Continued From Previous Page)

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



BALANCE, JANAURY 1, 1999                         $ 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)        (9,497)

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 year ended
    December 31, 2000                                           (32,973,060)
   Other comprehensive loss
     consisting of foreign
      currency translation
      adjustment                                                                  (214,849)
                                                   ----------    ----------       ---------      ------  ---------

     Total comprehensive loss                               -   (32,973,060)      (214,849)
Acquisition of Metrotelecom stock
   for CCI common shares                              999,879
Acquisition and retirement of
  stock from former officer                               400
Conversion of Series B to common shares                   (96)
Non-cash remeasurement of options                     352,000      (352,000)
Exercise of shareholder stock
 options                                           27,370,271
Exercise of employee stock
 options                                                  230
Issuance of common shares for
minority interest                                   3,765,320
Issuance of warrants on debt                           13,251
Issuance of options for common
   shares below fair value                            248,293
                                                    ---------                    ----------      ------      -------
BALANCE, DECEMBER 31, 2000                        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  $ (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                      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                       6,711
Issuance of common stock for
  equipment                                         2,878,910
Conversion of Series C stock
 into common stock
Conversion of Series D stock
 into common stock
Conversion of promissory note to
  common stock                                      1,815,943
Issuance of common stock                           18,157,019
                                                   ----------    ----------       ---------      ------   -----------
BALANCE, DECEMBER 31, 2001                       $184,136,712$  (135,074,437)      $897,130     572,468  $ (1,318,069)
                                                   ==========    ==========       =========      ======   ===========
See notes to consolidated financial statements.
</TABLE>

CONVERGENCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       GENERAL

         Business   Description   -   Convergence   Communications,   Inc.   and
         subsidiaries (the "Company"), is a leading facilities-based provider of
         broadband  services  operating  in  recently  deregulated   high-growth
         markets,  principally  Mexico. The Company offers enterprise  customers
         end-to-end communications  solutions,  including managed corporate data
         network services,  high-speed data connections,  high-speed and dial-up
         Internet access, voice, video,  e-commerce-enabling  services and other
         value-added communications services.

         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.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation - 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.

         The  Company has built high  capacity  networks  and leased  additional
         capacity  from  third  party  providers  in the  countries  in which it
         operates  and is  primarily  focused  on  data-internet  services,  the
         fastest growing segments of the  communications  market.  This strategy
         initially  increased the Company's  level of capital  expenditures  and
         operating  losses and required it to make a substantial  portion of the
         Company's capital  investments  before the Company realized any revenue
         from those expenditures.

         These  capital  expenditures,  together  with  the  associated  initial
         operating  expenses,  have  resulting  and will  continue  to result in
         negative  cash flows until the Company is able to establish an adequate
         customer  base,  even  if  individual  markets  of the  Company  become
         profitable.  Now that the Company  has  completed  the initial  planned
         build-out of its networks,  the  Company's  capital  expenditures  will
         become  more  elastic  with  respect to  revenue  growth.  The  Company
         believes  that this  long-term  strategy  will  enhance  its  financial
         performance  by increasing  the capacity of, and traffic flow over, its
         networks.

         As  described  in more detail in Note 3 below,  the Company  recorded a
         pre-tax charge of  $21,869,264  for the year ended December 31, 2001 in
         connection with a restructuring plan.

         At December  31,  2001,  the  Company's  current  liabilities  exceeded
         current assets by  $18,076,902.  In addition,  as of December 31, 2001,
         the Company was out of compliance  with the operating  covenants of the
         Alcatel equipment  financing  facility and has not received a waiver of
         such noncompliance from the lender. As a result,  Alcatel has the right
         to accelerate the maturity of the  outstanding  debt and the Company is
         unable to draw upon its  facility  until such  covenants  are met.  The
         outstanding  balance under the Alcatel  facility of $7,591,555 has been
         classified as a current liability.

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

o        Draw downs on amounts available from the April 2002 Facility (Note 18)
o        Additional private equity transactions
o        Negotiate extensions of repayment terms on seller notes
o        Proceeds from its September 2001 equity financing of $20,000,000
        (Note 13)
o        Reductions in capital expenditures
o        Optimize and control operating expense growth
o        Sales of selected businesses

         In April 2002,  the Company  agreed to retain an investment  advisor to
         assist it in obtaining  additional  debt and/or equity  financing  from
         third parties and sell selected assets (see Note 18).

         Management  intends to work with Alcatel to  renegotiate  the operating
         covenants under the Alcatel financing  facility,  which, if successful,
         might allow the Company to extend  repayment  terms. The Company has no
         assurance  that it will be able to obtain  additional  equity  and debt
         financing,  to renegotiate operating covenants or draw upon the Alcatel
         facility,  or to  optimize,  control or reduce  operating  and  capital
         expenditures  in amounts  sufficient  for the  Company to continue as a
         going concern.

         Principles of  Consolidation - The  consolidated  financial  statements
         include the accounts of  Convergence  Communications,  Inc., all wholly
         and  majority-owned   subsidiaries  and  its  49%  voting  interest  in
         International   Van,  S.  A.  de  C.V.   ("Intervan")  (Note  13).  All
         significant   inter-company   accounts  and   transactions   have  been
         eliminated in consolidation.

         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.

         Cash and Cash Equivalents - Cash and cash equivalents are highly liquid
         investments,  including  short-term  investments and time deposits with
         original maturities of three months or less at the time of purchase.

         Accounts   Receivable  -  The  allowance  for  doubtful   accounts  was
         $1,879,316 and $1,225,627 at December 31, 2001 and 2000, respectively.

         Inventory  -  Inventory  of  subscriber   installation   materials  and
         subscriber  converter  boxes are stated at the lower of average cost or
         market. The inventory balance reflects an approximate inventory reserve
         of $3,000 and $215,000 for excess and obsolescence at December 31, 2001
         and 2000, respectively.

         Property and  Equipment - Property and  equipment  are recorded at cost
         and  depreciated  using the  straight-line  method  over the  following
         expected useful lives:

                                                                   Life in years
                    Buildings and improvements                     10 - 20 years
                    Telecommunications equipment                    2 - 10 years
                    Furniture,  fixtures  and  office equipment     2 - 10 years
                    Telecommunications  network                    12 - 15 years

         Long-Lived  Assets - The carrying  amount of all  long-lived  assets is
         evaluated  periodically to determine if adjustment to the  depreciation
         and  amortization  period  or  to  the  unamortized  asset  balance  is
         warranted.  The  Company's  policy  is  to  measure  long  lived  asset
         impairment  by  considering  a number of factors  including (i) current
         operating  results of the applicable  business;  (ii) projected  future
         operating results of the applicable  business;  (iii) the occurrence of
         any  significant  regulatory  changes  which  may have an impact on the
         continuity of the business;  and (iv) any other  material  factors that
         affect the continuity of the applicable business (see Note 3).

         Revenue Recognition - The Company provides  telecommunication  services
         to its  customers  pursuant to contracts  that range from six months to
         five years.  The customer  generally pays an installation  charge and a
         monthly  fee based on the  quantity  and type of  equipment  installed.
         Installation  revenue  is  recognized  once the  installation  has been
         completed.  Service  fee revenue is  recorded  monthly as services  are
         provided.

         Stock Based Compensation - The Company accounts for stock option grants
         to employees  and directors in accordance  with  Accounting  Principles
         Board  Opinion  ("APB")  No.  25,   "Accounting  for  Stock  Issued  to
         Employees."

         Income  Taxes - The  Company  uses the  asset and  liability  method to
         account  for income  taxes.  Deferred  tax assets and  liabilities  are
         recognized for the future tax consequences  attributable to differences
         between the financial statement carrying amounts of existing assets and
         liabilities  and their existing tax bases.  Provision is made for taxes
         on  undistributed  earnings of foreign  subsidiaries to the extent that
         such earnings are not considered to be permanently invested.

         Foreign  Currency  Translation  - All  of the  Company's  subsidiaries,
         except  for  GBNet  Corporation  ("GBNet"),  operate  using  the  local
         currency as the functional currency.  GBNet uses the U.S. dollar as the
         functional currency.  Accordingly,  all assets and liabilities of these
         subsidiaries, except for GBNet are translated at current exchange rates
         at the end of the period  and  revenues  and costs at average  exchange
         rates in effect during the period. The resulting cumulative translation
         adjustment  has been  recorded  as a component  of other  comprehensive
         income (loss), a separate component of stockholders' equity.

         Net Loss Per  Basic and  Diluted  Common  Shares - 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
         Series D preferred  stock  (which  were  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 December 31, 2001, 2000 and 1999 all options
         and warrants were anti-dilutive due to the losses of the Company.

         Fair  Value  of  Financial   Instruments  -  The  Company's   financial
         instruments  include cash and cash equivalents,  receivables,  payables
         and  short  and  long-term  debt.  The  fair  value  of such  financial
         instruments has been determined using available market  information and
         interest  rates as of December 31, 2001 and 2000. The recorded value of
         each financial  instrument  approximates  its fair value as receivables
         and  payables  are near  term  and the  interest  rates  on  short  and
         long-term debt approximate current market rates.

         Recently  Issued  Financial  Accounting  Standards - In June 2001,  the
         Financial   Accounting  Standards  Board  (FASB)  issued  Statement  of
         Financial Accounting Standard No. 141, "Business Combinations" and SFAS
         No.  142,  "Goodwill  and  Other  Intangible  Assets".   SFAS  No.  141
         establishes   accounting   and   reporting   standards   for   business
         combinations.  SFAS No.  141 is  effective  for  business  combinations
         initiated after June 30, 2001. SFAS No. 142 establishes  accounting and
         reporting  standards  for goodwill  and  intangible  assets,  requiring
         annual impairment  testing for goodwill and intangible  assets, and the
         elimination   of  periodic   amortization   of  goodwill   and  certain
         intangibles.  The  Company  adopted  the  provisions  of SFAS  No.  142
         effective  January  1,  2002.  Goodwill  that is no longer  subject  to
         amortization  is  $11,128,342  as of  December  31,  2001.  The Company
         recorded  $1,000,626 of goodwill  amortization  expense during the year
         ended  December 31, 2001.  The Company has not completed an analysis of
         the impact  upon  adoption  of the  impairment  test of  goodwill.  The
         impairment  analysis  will be completed by June 30, 2002 as required by
         SFAS No. 142.

         In June 2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
         Retirement Obligations", which requires asset retirement obligations to
         be recognized when they are incurred and displayed as liabilities. SFAS
         No. 143 is effective for the year ending December 31, 2003.  Management
         is  currently  evaluating  the  impact  of  this  pronouncement  on the
         consolidated financial statements.

         In August  2001,  the FASB  issued SFAS No.  144,  "Accounting  for the
         Impairment  or Disposal of Long-Lived  Assets".  SFAS No. 144 addresses
         accounting  and reporting for the  impairment or disposal of long-lived
         assets,  including the disposal of a segment of business.  SFAS No. 144
         is  effective  for the year ending  December 31,  2002.  Management  is
         currently   evaluating  the  impact  of  this   pronouncement   on  the
         consolidated financial statements.

         Reclassifications  - Certain  reclassifications  of previously reported
         2000  and  1999   amounts  have  been  made  to  conform  to  the  2001
         classifications.

3.       BUSINESS RESTRUCTURING CHARGES AND ASSET IMPAIRMENTS

         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 includes
         restructuring costs of $5,810,583 and asset write-downs of $16,058,681.
         These costs include $14,400,982 of restructuring costs recorded for the
         year ended December 31, 2001 to reflect the Company's approval to cease
         operations in Venezuela.

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

         For the year-ended  December 31, 2001,  asset  write-downs  reflect the
         write-down of certain long-lived  intangible assets, VAT tax receivable
         and  tangible  fixed  assets  that  became  impaired  as  a  result  of
         management's  decision to limit or reduce or exit certain operations in
         non-strategic  market  regions  and  reduce  operations  in  Venezuela.
         Impairment  losses were  determined  based on the  write-down  of fixed
         assets, goodwill and other acquired intangibles to their fair value.

         The following table displays the status of the restructuring reserve at
         December 31, 2001:

<TABLE>
<CAPTION>



                                         Initial               Cash              Non-cash        12-31-01
        Type of Cost                     charge              charges             charges         Reserve
        ------------                     ------                                  -------         -------
        <S>                              <C>                 <C>               <C>                <C>
        Restructuring costs:
        Employee separations             $3,660,653         $2,697,241                            $ 963,412
        Facility reductions               2,149,930            320,989                            1,828,941
                                     ---------------    ---------------                       --------------
        Total                             5,810,583          3,018,230                            2,792,353

        Asset impairments:
        Goodwill and other                3,823,508                            $3,823,508
            intangibles
        Fixed assets                     10,134,272                            10,134,272
        VAT receivable                    1,557,175                             1,557,175
        Other assets                        543,726                               543,726
                                     ---------------    ---------------    ---------------    --------------
        Total                           $21,869,264         $3,018,230        $16,058,681        $2,792,353
                                     ===============    ===============    ===============    ==============
</TABLE>


         Consolidated  revenues of the Venezuelan operations for the years ended
         December 31, 2001,  2000 and 1999 were $0.9  million,  $1.1 million and
         $1.2 million, respectively.

         The  Company  formerly  owned  78.14%  of  the  stock  of a  Venezuelan
         corporation,  which  acted  as the  operating  company  for  the  local
         multi-point  distribution  service  license held by another  Venezuelan
         corporation ("Former Venezuelan  Entities").  During the fourth quarter
         of fiscal  1999,  the  Company  determined  that the  recorded  assets,
         intangible  assets and  investments in the Former  Venezuelan  Entities
         totaling $5,680,000 as of December 31, 1999 were impaired. As a result,
         a  recoverability  and fair value  assessment of the related  assets in
         accordance with generally accepted accounting  principles was completed
         by management,  which concluded that the assets would not be recovered.
         Accordingly,  management  recorded an impairment of $5,680,000  for the
         year ended December 31, 1999.

         Effective July 5, 2000,  the Company  canceled  certain  Company common
         shares,  previously  issued as part of the purchase price of the Former
         Venezuelan  Entities,  in exchange for returning all outstanding shares
         of one of the Former  Venezuelan  Entities as  settlement of litigation
         with one of the original sellers of the acquisition (See Note 15). This
         exchange of non-monetary assets was recorded through additional paid-in
         capital as an acquisition of treasury stock.

4.       ACQUISITIONS

         Metrotelecom  Acquisition  - On April 5, 2000,  the  Company  purchased
         Grupo Metrotelecom,  S.A. and its subsidiaries,  Cybernet de Guatemala,
         S.A.   and   Cybercable   de    Centroamerica,    S.A.    (collectively
         "Metrotelecom").  The purchase price for  Metrotelecom  was $13,500,000
         ($12,909,610  effective  purchase  price  including the discount on the
         notes of $590,390).  The Company paid  $3,750,000 of the purchase price
         in cash at the closing  and issued  121,212  common  shares with a fair
         value of  $1,000,000.  The Company  also issued four  promissory  notes
         totaling  $8,750,000.  The notes are due on the  first  through  fourth
         anniversaries  of the closing,  and bear interest at the rate of 7% per
         annum.  The notes were  recorded  at the present  value of  $8,159,610,
         which reflects a 10.75% estimated market rate of interest. The note due
         on the first  anniversary is for $4,750,000,  and each of the remaining
         three notes is for $1,333,333.  The amount of the first note is subject
         to adjustment,  depending on the cash balance and intercompany  debt of
         the  Metrotelecom  companies as of the closing date.  The payment terms
         and  amounts  due on a portion  of these  notes  were  restructured  in
         October 2001 (see Note 10).

         The purchase price was allocated as follows:

            Current assets                                     $        979,331
            Property and equipment                                    1,302,475
            Other assets                                                 38,006
            Intangible assets (primarily subscriber rights)          12,749,333
            Liabilities assumed                                      (2,159,535)
                                                                  --------------
                                                                     12,909,610
                                                                  ==============

         Intervan   Acquisition   -   On   December   24,   1999,    Convergence
         Communications,  S.A. de C.V. ("CCI Mexico"), a wholly owned subsidiary
         of the Company,  acquired all of the outstanding stock of Intervan. The
         total  purchase  price  for  Intervan  was  approximately   $21,000,000
         ($20,338,705  effective  purchase  price  including the discount on the
         notes of $661,295), of which CCI Mexico paid $15,000,000 in cash at the
         closing.  The  balance  of the  purchase  price  was paid  through  CCI
         Mexico's delivery of two promissory  notes,  which are due on the first
         and second  anniversaries of the closing. The first promissory note due
         of $4,500,000 was non-interest bearing and was repaid in February 2001.
         The  promissory  note due on December 24, 2001 was in the original face
         amount of $1,500,000  and bore  interest  during the second year at the
         rate of 8% per annum.  The notes were  recorded at the present value of
         $5,265,563,  which reflects a 10.75% estimated market rate of interest.
         The payment terms of the $1,500,000  note was  restructured in December
         2001 (see Note 10).

         The purchase price was allocated as follows:

          Current assets                                      $      3,749,864
          Property and equipment                                     5,136,584
          Other assets                                                 851,128
          Intangible assets (primarily subscriber rights)           13,344,581
          Liabilities assumed                                       (2,743,452)
                                                                 --------------
                                                              $     20,338,705
                                                                 ==============

         GBNet  Acquisition  - On December 15, 1999,  the Company  completed the
         acquisition  of all of the  outstanding  capital  stock of  GBNet  from
         General  Business  Machines  ("GBM")  for a  total  purchase  price  of
         $13,000,000,  of  which  the  Company  paid  $4,000,000  in cash at the
         closing.  The  balance of the  purchase  price,  or  $9,000,000  (after
         discount of  promissory  notes at 10.75%,  the  imputed  and  estimated
         market interest rate), was paid through the delivery of four promissory
         notes,  which are due on the first through fourth  anniversaries of the
         closing. The first note, in the amount of $2,468,000 including interest
         was due on  December  14,  2000.  Fifty  percent  of the first note was
         repaid on December  14, 2000 and the  remainder  was repaid in February
         2001 (Note 13). The Company's  obligations to pay the deferred portions
         of the  purchase  price are secured by a pledge of the shares of GBNet,
         as well as its  operating  subsidiaries.  A  portion  of those  pledged
         shares will be  released to the Company as it pays down the  promissory
         notes.  GBM will be  entitled  to retain  at least  51% of the  pledged
         shares  until the Company  pays all  amounts  due under the  promissory
         notes.  The payment  terms of the  December 14, 2001 through 2003 notes
         were restructured during the first quarter of 2002 (see Note 10).

         In connection with the acquisition, GBM and GBNet entered into a number
         of ancillary agreements,  including (1) a commercialization  agreement,
         pursuant to which each of GBNet and GBM agreed to recommend one another
         as  preferred  providers  of services  and  products,  (2) an equipment
         purchase agreement,  pursuant to which GBM agreed to provide GBNet with
         preferred  purchasing  terms for any IBM equipment it acquires from GBM
         for its operations,  and (3) a network management agreement pursuant to
         which GBNet will provide GBM with managed data network  services  frame
         relay-based connections.

         The purchase price was allocated as follows:

         Current assets                                       $        268,161
         Property and equipment                                      2,872,908
         Intangible assets (primarily subscriber rights)             9,858,931
                                                                 --------------
                                                              $     13,000,000
                                                                 ==============

         Pro Forma Effect of Acquisitions - The following pro forma  information
         reflects   the  results  of  the   Company's   operations   as  if  the
         Metrotelecom,  Intervan  and  GBNet  acquisitions  had  occurred  as of
         January 1, 1999.



<PAGE>
<TABLE>
<CAPTION>


                                                      Years Ended December 31,
                                                     2000                 1999
                                               -----------------    -----------------
  <S>                                              <C>                  <C>
  Revenues                                  $        36,473,505  $        33,470,276
  Net loss attributable to common
      shareholders                          $       (34,176,943) $       (26,215,870)
  Net loss per common share and common
      share equivalent (basic and diluted)
                                            $             (1.47) $             (1.90)
</TABLE>


         These pro forma  results have been  prepared for  comparative  purposes
         only and do not  purport to be  indicative  of what  operating  results
         would  have  been  had the  acquisitions  actually  taken  place at the
         beginning  of the periods  presented,  nor do they purport to represent
         results of future operations of the combined companies.

5.       PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following as of December 31:
<TABLE>
<CAPTION>


                                                                               2001                 2000
                                                                          ----------------     ---------------
                 <S>                                                          <C>                <C>
                 Land                                                  $                -   $         586,400
                 Buildings and improvements                                     1,543,695             751,081
                 Telecommunications equipment and network                      38,508,158          35,932,359
                 Furniture, fixtures and office equipment                       4,514,320           5,084,015
                                                                          ----------------     ---------------
                                Total                                          44,566,173         42,353,855
                 Less - accumulated depreciation                               (9,343,580)         (7,949,614)
                                                                          ----------------     ---------------
                                Total                                          35,222,593          34,404,241
                 Telecom network construction in progress                      19,716,953          22,248,305
                                                                          ----------------     ---------------
                 Property and equipment, net                           $       54,939,546   $      56,652,546
                                                                          ================     ===============

         Interest  capitalized  as of  December  31,  2001,  2000  and  1999 was
         $2,248,894, $498,038, and none, respectively.
</TABLE>


6.       INTANGIBLE ASSETS

<TABLE>
<CAPTION>


         Intangible assets and respective  amortization periods consisted of the
following as of December 31:





                                                             2001                 2000              Amortization
                                                                                                       Period
                                                       -----------------    -----------------    -------------------
              <S>                                          <C>                  <C>                    <C>
              License rights                       $            846,263  $         1,273,970           5 - 15
              Subscriber rights                              25,007,626           33,761,646             6
              Franchise rights                                2,300,000            6,411,528             11
              Goodwill                                       11,128,342           15,772,877             11
                                                       -----------------    -----------------
                                                             39,282,231           57,220,021
              Accumulated amortization                     (10,581,387)         (10,706,991)
                                                       -----------------    -----------------
                                                   $         28,700,844  $        46,513,030
                                                       =================    =================
</TABLE>


7.


ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

         Accounts payable and accrued liabilities  consisted of the following as
of December 31:

                                                  2001                2000
                                           ---------------     ---------------
      Accounts payable                  $      12,352,565   $      11,165,503
      Accrued liabilities                       2,501,972           8,607,087
      Accrued interest                          1,409,196           1,148,497
      Accrued restructuring cost                2,043,849                   -
      Deferred revenue                            865,396           1,023,748
                                           ---------------     ---------------
          Total                         $      19,172,978   $      21,944,835
                                           ===============     ===============

8.       RELATED PARTY TRANSACTIONS

         Chispa  Dos Inc.  Disposition  - Until  June 2001,  the  Company  owned
         approximately  33%  of  Chispa  Dos  Inc.  ("Chispa").   The  remaining
         interests were owned 28% by FondElec  Essential  Services  Growth Fund,
         L.P. ("FondElec"), 33% by Telematica EDC, C.A. ("Telematica") and 6% by
         unrelated parties. Telematica and FondElec are also shareholders of the
         Company.

         On June 11, 2001, the Company sold the cable television and residential
         high-speed  data  operations  operated  by its  subsidiary  Chispa  for
         $19,750,000 in cash and  $2,000,000 in notes (the "El Salvador  Sale").
         The sale of these assets resulted in a gain of $8,001,327. The proceeds
         from the sale (net of costs)  were  used to repay  Chispa  bank debt of
         $3,050,528,   repay  an  outstanding   debt  and  accrued  interest  of
         $1,902,488 and $378,866 to FondElec and Telematica,  respectively,  and
         to repay $8,471,693 of the total  $11,221,693  intercompany debt due to
         the  Company.   The  remaining  $2,750,000  in  intercompany  debt  was
         refinanced  (together  with  interest  at 10% per annum) and was due on
         June 11,  2006.  The  Company  repaid  $6,000,000  to Alcatel  from the
         proceeds received.

         The $2,750,000  refinanced  amount was secured by FondElec's  pledge of
         591,398 shares of the Company's  common stock and Chispa's  pledge of a
         promissory  note of  $1,500,000  received in the El Salvador  Sale.  In
         April  2002,  the Company  cancelled  this note in  conjunction  with a
         settlement agreement between the Company and FondElec (see Note 15).

         On June 21,  2001,  the  Company  closed  an  Exchange  Agreement  with
         FondElec,  which  transferred  the  Company's 33% interest in Chispa in
         exchange for 572,468  shares of the Company's  common stock.  The stock
         received from FondElec was accounted for as an  acquisition of treasury
         sock.  Simultaneously,  Telematica  and  FondElec  closed  an  Exchange
         Agreement,  which  transferred  Telematica's  33% interest in Chispa to
         FondElec in exchange for 572,468 shares of the Company's  common stock.
         As a part of the  Exchange  Agreements,  FondElec has agreed to certain
         amendments  to the  shareholders  agreement  that the  Company  and its
         principal shareholders executed in October 1999.

         Consolidated  revenues of Chispa for the years ended December 31, 2001,
         2000 and 1999 were $3,447,063, $8,505,539 and $7,561,207, respectively.

         FondElec  Agreement  - In August  1999,  the  Company  entered  into an
         advisory services  agreement with FondElec Group, Inc., an affiliate of
         FondElec   Essential   Services   Growth   Fund,   LP,  a   shareholder
         ("FondElec").  During 2000, the Company accrued $1,054,118  relating to
         certain  consulting  services  provided to the Company,  including fees
         related to the  exercise of options for Series "C"  Preferred  Stock in
         July  2000 and the  cash  portions  of the  long-term  credit  facility
         provided  by  Telematica.  The  Company  recorded  $644,118  as  equity
         transaction costs and $210,000 as debt issue costs.

         FondElec  was also  entitled  to receive  $50,000  per  quarter for the
         services it provides  the Company  under the  advisory  agreement.  The
         Company  disputed the amounts due under this  agreement,  and, in April
         2002, settled its disputes (see Note 15).

         Interest  Expense  Payable  - The  Company  recorded  interest  expense
         payable to related  parties of $0, $ 557,911 and $660,335 for the years
         ended December 31, 2001, 2000 and 1999, respectively.

9.       INCOME TAXES

         The following  table presents the principal  reasons for the difference
         between the effective  tax rate and the United State federal  statutory
         income tax rate:

<TABLE>
<CAPTION>

                                                           2001                 2000               1999
                                                      ---------------    -----------------    --------------
        <S>                                              <C>                  <C>                <C>
        Federal  income tax benefit at statutory
             rate of 34%                          $      (18,903,624)  $      (11,330,521)  $    (6,877,280)
        State and local income taxes                      (2,779,945)          (1,666,253)       (1,011,365)
        Foreign rate differential                          3,013,059            1,573,916           769,464
        Change in valuation allowance                     18,189,457           10,273,732         4,644,076
        Losses in certain  foreign  subsidiaries
             with
             no tax benefit                                  353,089              550,347         2,312,935
        Other                                                168,807              629,565           212,353
                                                      ----------------    -----------------    --------------
        Total                                     $           40,843  $            30,786  $         50,183
                                                      ================    =================    ==============
</TABLE>

<TABLE>
<CAPTION>

         The following table presents the U.S. and foreign components of the provision for income taxes:

                                                            2001                2000               1999
                                                    -----------------    ---------------     --------------
        <S>                                               <C>                 <C>                <C>
        Current:
             Federal                               $              --    $            --     $           --
             State                                                --                 --                 --
             Foreign                                          40,843             30,786             50,183
                                                              ------             ------             ------
                                                              40,843             30,786             50,183
        Deferred:
             Federal                                      (4,109,920)        (3,743,943)        (3,128,188)
             State                                          (604,400)          (549,370)          (460,027)
             Foreign                                     (18,120,774)        (1,219,268)        (1,055,861)
        Valuation Allowance                               22,835,094          5,512,581          4,644,076
                                                    -----------------    ---------------     --------------
        Total Provision                            $          40,843  $          30,786   $         50,183
                                                    =================    ===============     ==============
</TABLE>


         As  of  December  31,  2001,   the  Company  has  net  operating   loss
         carryforwards  of  approximately  $31,814,563.  The net operating  loss
         carryforwards  will  begin to  expire  in 2010.  The  Company  also has
         foreign net operating loss carryforwards of approximately  $45,986,222.
         The Company has recorded a valuation allowance to reflect the estimated
         amount of deferred tax assets which,  more likely than not, will not be
         realized.

         The long-term net deferred tax assets at December 31, 2001 and 2000 are
         fully  reserved with a valuation  allowance due to the  uncertainty  of
         realization and are comprised of the following:

<TABLE>
<CAPTION>



                                                                      2001                    2000
                                                                 ------------------    -----------------
             <S>                                                     <C>                    <C>

             Deferred Tax Assets:
             Net operating loss carryforwards
                   Federal                                   $         10,816,951    $         7,931,589
                   State                                                1,590,781              1,166,710
                   Foreign                                             15,177,907              7,882,181
             Basis in intangibles                                         239,985                498,524
             Related party accruals                                             -                144,118
             Stock options deferred                                     1,979,201              1,946,882
             Loss impairment deferred                                   7,485,043                      -
             Impairment of license rights                                       -                185,319
             Inventory reserve                                                  -                 21,134
             Provision for bad debts                                      476,242                333,464
             Accrued severance pay                                              -                 38,312
             Other                                                        836,456                322,687
                                                                ------------------      -----------------
                      Total deferred tax asset                         38,602,566             20,470,920
             Deferred Tax Liabilities:
              Basis in fixed assets                                       (43,009)              (100,820)
             Valuation allowance                                      (38,559,557)           (20,370,100)
                                                                ------------------      -----------------
             Total net deferred tax asset                    $                 --    $                --
                                                                ==================      =================
</TABLE>


10.      NOTES PAYABLE AND LONG-TERM DEBT

<TABLE>
<CAPTION>


         The  Company  has  the  following  notes  payable  and  long-term  debt
outstanding as of December 31:

                                                                                             2001                2000
                                                                                       -----------------    ----------------
         <S>                                                                        <C>                  <C>
         Notes payable  to  Alcatel  for  equipment  and  professional  services
             represented by three promissory  notes,  interest payable quarterly
             at LIBOR plus 4.5%, quarterly principal payments begin in September
             2002, and maturing in January 2007.                                    $         7,591,555  $        7,591,555

         Notes payable  to  Telematica  EDC with a face value of  $7,000,000  at
             December 31, 2001. The notes bear interest at 3% per annum payable
             at the maturity date of March 15, 2015 (see Note 18).                            7,000,000           3,500,000

         Notes payable  for the  MetroTelecom  acquisition  represented  by four
             promissory  notes with a combined face value of $6,316,619 and bear
             interest  at  7%  per  annum.  These  four  promissory  notes  were
             discounted at 10.75%,  which reflects the estimated  market rate of
             interest.  The four notes mature  annually on April 5, 2001 through
             2004. The  amortization of the discount on these notes was $127,376
             and $165,194 as of December 31, 2001 and 2000, respectively.                     6,201,564           6,055,403

         Notes  payable  for  the   MetroTelecom   acquisition   represented  by
             promissory notes with an original combined face value of $2,433,381
             and bear interest at 7% per annum. These four promissory notes were
             discounted at 10.75%,  which reflects the estimated  market rate of
             interest.  The four notes mature  annually on April 5, 2001 through
             2004. The  amortization  of the discount on these notes was $46,638
             and $63,343 as of December  31,  2001 and 2000,  respectively.  The
             notes were  restructured in October 2001 into new promissory  notes
             with a combined  face value of  $1,843,520  and bear interest at 8%
             per  annum.  The new  notes  require  42  equal  monthly  principal
             payments plus accrued interest.                                                  1,755,732           2,332,744

         Notes  payable   for  the  GBNet   acquisition   represented   by  four
             non-interest  bearing  promissory  notes with an original  combined
             face  value  of  $11,795,000.  These  four  promissory  notes  were
             discounted at 10.75%,  which reflects the estimated  market rate of
             interest.  The four notes  mature  annually  on  December  14, 2000
             through 2003. The  amortization  of the discount on these notes was
             $775,798  and   $1,093,443  as  of  December  31,  2001  and  2000,
             respectively (see Note  4).                                                      8,352,048           8,860,250

         Notes  payable  for  the  Intervan   acquisition   represented  by  two
             promissory  notes with a combined  face  value of  $6,000,000.  The
             first promissory note of $4,500,000 is non-interest bearing matured
             December 24, 2000. The second note of $1,500,000  bears interest at
             8% in the  second  year  only  maturing  December  24,  2001.  Both
             promissory  notes were  discounted  at 10.75%,  which  reflects the
             estimated market rate of interest. The amortization of the discount
             on these notes was  $141,795  and  $603,955 as of December 31, 2001
             and  2000,   respectively.   In  December  2001,  $700,000  of  the
             $1,500,000 note was paid and the remaining balance was restructured
             into a new  promissory  note with a face  value of  $800,000,  with
             interest  at 12% per annum.  The new note  requires  equal  monthly
             principal  payments and accrued  interest from January 2002 through
             August 2002.                                                                       800,000           5,869,518

         Notes  payable to a third-party  with  interest at LIBOR plus 4.75%.  The
             balance was paid in June 2001.                                                           -           3,336,403

         Note payable  to  an   affiliate  of  a   shareholder   of  the  Company
             represented  by a  promissory  note which bore  interest at 15% per
             annum payable on the  maturity  date of February 28, 2001,  which
             was  converted  into Series D preferred stock (see Note 13).                             -           3,000,000


         Notes payable to FondElec with  original face values of $4,769,497  and
             with interest at 12%. The balance was paid in June 2001 (see Note
             8).                                                                                      -           1,269,497

         Other notes payable (interest rates ranging from 8.0% to 11.5%)                      1,922,877           1,963,810
                                                                                       -----------------    ----------------
         Total notes payable                                                                 33,623,776          43,779,180
         Less current portion                                                               (13,806,957)        (26,734,966)
                                                                                       -----------------    ----------------
         Long-term portion                                                          $        19,816,819  $       17,044,214
                                                                                       =================    ================
</TABLE>


         The  scheduled  maturities  of  notes  payable  and  long-term  debt at
December 31, 2001 are as follows:

         Year ending December 31:
             2002                                       $       13,806,957
             2003                                                1,751,741
             2004                                                1,709,202
             2005                                                1,419,530
             2006 and thereafter                                14,936,346
                                                           ----------------
             Total                                      $       33,623,776
                                                           ================

         Vendor  Equipment  Financing - In June 2000, the Company entered into a
         series of  agreements  with Alcatel for  financing  up to  $175,000,000
         under which  Alcatel  agreed to provide the  Company  with  system-wide
         network  design  and  build-out  services  for  the  telecommunications
         network,  provide  the  equipment  necessary  for that  build-out,  and
         finance the amounts payable for the services and equipment.

         At the closing of the facility, the Company paid Alcatel an arrangement
         fee in the  amount  of  $4,375,000  by  paying  $2,187,500  in cash and
         financing  the  remainder  with  Alcatel.  As part of the closing,  the
         Company  also issued a warrant to acquire  60,764  shares of its common
         stock.  The value of these  warrants  are being  expensed  as  interest
         expense  over the loan term and was  $12,929  and $13,251 for the years
         ended December 31, 2001 and 2000, respectively.

         During the fourth quarter of 2000, the Company was not able to meet one
         of its quarterly  operational  covenants.  As a result, the Company was
         not able to draw down on the Alcatel facility in the fourth quarter. In
         January 2001, the Company  amended the Alcatel  facility to include new
         operational and financial milestone  covenants.  Under the terms of the
         January 2001 amendment to the agreements  with Alcatel,  the Company is
         required  to  obtain  additional  equity  financing  (as  well  as meet
         operational  milestones)  in order to make  further  draw  downs on the
         Alcatel  facility  and  obtain  reimbursement  of certain  amounts  the
         Company has paid or will pay prior to the reimbursement.

         In March  2001,  the  Company  was not in  compliance  with the payment
         covenants  of  the  equipment  purchasing  provisions  of  the  Alcatel
         agreements.  The  Company  is  negotiating  with  Alcatel  a waiver  or
         modification  of  those  payment  requirements,  but  there  can  be no
         assurance  Alcatel will agree to the waiver,  or that it will otherwise
         modify the payment  terms.  Until the Company  meets all of the amended
         operating  covenants,  it will not be able to draw down on the  Alcatel
         facility.

         As a  result  of the  above  noncompliance,  Alcatel  has the  right to
         accelerate  the  maturity  of the  outstanding  debt and the Company is
         unable  to draw  upon  its  facility  until  such  covenants  are  met.
         Consequently,  the  outstanding  balance under the Alcatel  facility of
         $7,591,555  as of December 31, 2001 and 2000 has been  classified  as a
         current liability in the accompanying consolidated balance sheets.

         In connection  with the closing of the facility,  the Company created a
         wholly-owned  subsidiary,  Latin American Broadband,  Inc. ("LAB"). The
         Company  transferred  essentially  all of its  operations and assets to
         LAB, and then the Company  pledged its shares in LAB to Alcatel as part
         of a security package for the Alcatel credit  facility.  The loans from
         Alcatel  are also  secured by a  comprehensive  security  package  that
         includes a pledge of all equity  interests in Company  subsidiaries;  a
         first and perfected security interest,  to the extent permitted by law,
         in licenses and permits for the operation of all networks or systems; a
         security interest in equipment,  supplies, inventory and other personal
         property;  an  assignment,  for  security  purposes,  of  all  material
         contracts; and a security interest in all accounts receivable.

         Additionally,  due to the Company's  restructuring  described in Note 3
         above, the Company has written off Alcatel deferred debt issue costs of
         $2,976,013  relating to portions of the facility  that the Company will
         not use.  The  expense has been  recorded  in  interest  expense in the
         accompanying  consolidated  statement of operations  for the year ended
         December 31, 2001.

         In March 2002, the Company and Alcatel agreed to reduce the outstanding
         commitment to  $9,109,895.  The Company pays a commitment  fee of .005%
         per year on the amount of undrawn  commitment,  which was $5,000,000 on
         the date of the commitment fee reduction agreement.

         2001  Shareholder  Loan - On July 30, 2001, the Company  borrowed $1.75
         million on an unsecured  basis from a shareholder  of the Company.  The
         loan was due on August 15, 2001. The unpaid principal amount out of the
         loan  bore  interest  at 15% per  annum  through  that  date,  and bore
         interest  at a default  rate  equal to 15% per annum  plus 2% per month
         after that date.  In  connection  with the loan,  the Company  paid the
         lender a commitment fee of $52,500. The Company's repayment obligations
         under the loan were  subordinated to its payment  obligations under its
         vendor  financing  relationship  with Alcatel.  The unsecured  loan was
         converted  into common  stock in  connection  with the  September  2001
         private placement (see Note 13).

         TTI Loan - In connection  with a reverse  acquisition  that occurred in
         1997,   the   Company    assumed   a   note   payable   to   Transworld
         Telecommunications,  Inc. ("TTI").  Interest on the outstanding balance
         accrued at 8% per annum  until the  earlier  of August 31,  2001 or the
         conversion of the loan into a ten-year  obligation under the terms of a
         loan  commitment  agreement  between the  Company and TTI  ("Commitment
         Agreement").  Under the terms of the Commitment Agreement,  the Company
         had the option to convert the  amounts it  borrowed to a ten-year  term
         loan (payable in monthly  payments of principal and interest) if it met
         certain  conditions.  On July 31, 2001, the Company  converted the loan
         and accrued interest  through July 31, 2001 totaling  $1,407,636 into a
         ten-year obligation bearing interest at 8% per annum under the terms of
         the Conversion  Agreement.  As a result of the conversion,  the Company
         will be obligated to pay TTI $17,078 per month,  from September 1, 2001
         through  August 30,  2011.  As of December  31,  2001,  $1,368,648  was
         outstanding  on the loan,  and is included as other notes  payable (see
         Note 15).

         GBNet and  Intervan  December  2000  Payments - In December  2000,  the
         Company was required to make payments under  promissory notes delivered
         in connection  with two  acquisitions.  The first GBNet note was due on
         December 14, 2000.  The Intervan  promissory  note was due December 24,
         2000.  On the due dates of the notes,  the  Company  notified  the note
         holders  of the  Company's  intent to pay those  notes  (together  with
         interest  at 18% per  annum  from the  original  due date  through  the
         payment date) upon the closing of the Series D Private Placement.  Each
         of the notes was paid in full on the  closing  of the  Series D Private
         Placement in February 2001.

11.      PREFERRED STOCK

         At December 31, 2001, the authorized  number of shares of the Company's
         preferred stock was 75,000,000,  $0.001 par value with no shares issued
         or outstanding.

         Series D  Preferred  Stock - Effective  February  1, 2001,  the Company
         authorized a  newly-designated  series of Series D preferred stock. The
         Series D preferred  stock  consisted of 10,000,000  shares of preferred
         stock, par value $.001 per share, and had the following  general rights
         and  preferences:  (1) it voted with the  outstanding  shares of common
         stock and  Series C  convertible  preferred  stock and had one vote per
         share;  (2) each Series D share was convertible  into common stock; (3)
         each  Series D share had a  liquidation  preference;  and (4)  Series D
         holders had a preemptive  right to purchase their pro rata share of any
         new securities  issued.  Effective  September 11, 2001, all outstanding
         Series D  Preferred  shares  totaling  2,643,636  were  converted  into
         2,643,636 common shares.

         Series C Preferred Stock - In conjunction  with the equity financing on
         October 18, 1999, the Company authorized a  newly-designated  series of
         Series C  preferred  stock.  The  non-redeemable  convertible  Series C
         Preferred Stock consisted of 14,250,000  shares of preferred stock, par
         value  $0.001  per  share,  and had the  following  general  rights and
         preferences:  (1)  they  voted  with  the  outstanding  shares  of  the
         Company's  common  stock  and had one vote  per  share;  (2) they  were
         convertible  into shares of the Company's  common  stock;  and (3) they
         carried a liquidation  preference.  Effective  September 11, 2001,  all
         outstanding   Series  C  Preferred  shares  totaling   13,620,472  were
         converted into 13,620,472 common shares.

         Series B  Preferred  Stock - At  December  31,  1999,  the  Company had
         designated  750,000 shares of its preferred stock as Series B Preferred
         Stock.  The rights and privileges of the Series B Preferred  Stock were
         as follows: (1) they carried a liquidation preference; (2) they carried
         voting  rights that entitle the holder to one vote per share;  (3) they
         were  non-redeemable;  and (4) they were convertible into shares of the
         Company's common stock. In August 2000, the outstanding 29,521 Series B
         shares were converted to 125,237 common shares.

12.      STOCK PLANS, OPTIONS AND WARRANTS

         Stock   Incentive   Plan  -  The  Company's   board  of  directors  and
         shareholders  approved the 1998 Stock  Incentive  Plan (the  "Incentive
         Plan).  The Company is authorized to issue a total of 1,820,229  common
         shares for issuance under the plan, all of which have been granted. The
         Company's  Board of Directors  administers  the plan and determines the
         amount of awards and other terms and  conditions  of the awards.  Stock
         appreciation  rights  may be  granted  under the  Incentive  Plan.  The
         Company also has issued  outstanding  option  grants for an  additional
         568,308  common  shares  with  similar  terms  and  conditions  as  the
         Incentive Plan.

         Stock Option Plan for Non-Employee Directors - The Company has reserved
         100,000  common shares in a  non-employee  director  stock option plan.
         Options  for these  shares  are  awarded at 85% of the  estimated  fair
         market value of the stock on the date of award. Compensation expense is
         then  recognized  ratably  over  the one  year  vesting  period.  As of
         December 31, 2001 and 2000,  the Company had issued  option  grants for
         the purchase of 100,000 and 28,002 common  shares,  respectively  under
         the non-employee director stock plan.

         Stock Option  Awards - The total stock  options  granted by the Company
         under the Incentive  Plan and options  granted  outside of the plan are
         summarized in the table below:

<TABLE>
<CAPTION>


                                                                                                       Weighted
                                                             Number                                    Average
          2001:                                          of Options            Price Range          Exercise Price
                                                         ---------------    -------------------    -----------------
               <S>                                            <C>           <C>                              <C>
               Outstanding at beginning of year               3,159,853     $0.02 - $12.00                   $ 7.24
               Granted                                           84,724     $7.01 - $10.00                   $ 8.47
               Exercised                                        103,177     $0.02                            $ 0.02
               Canceled / Expired                               652,863     $0.88 - $10.00                   $ 5.90
                                                         ---------------
               Outstanding at end of year                     2,488,537     $1.00 - $12.00                   $ 7.93
                                                         ===============
</TABLE>



<TABLE>
<CAPTION>
                                                                                                       Weighted
                                                             Number                                    Average
          2000:                                          of Options            Price Range          Exercise Price
                                                         ---------------    -------------------    -----------------
               <S>                                            <C>           <C>                              <C>
               Outstanding at beginning of year               2,106,664     $0.02 -  $7.50                    $4.20
               Granted                                        1,157,280     $10.00 - $12.00                  $10.39
               Exercised                                         11,000     $0.35                             $0.35
               Canceled / Expired                                93,091     $7.00 - $10.00                    $7.53
                                                         ---------------
               Outstanding at end of year                     3,159,853     $0.02 - $12.00                    $7.24
                                                         ===============
</TABLE>

<TABLE>
<CAPTION>


                                                                                                       Weighted
                                                                                                       Average
          1999:                                             Options            Price Range           Exercise Price
                                                         ---------------    -------------------    -----------------
               <S>                                            <C>           <C>                               <C>
               Outstanding at beginning of year               1,492,842     $0.02 - $7.50                     $3.31
               Granted                                          613,822     $0.88 - $7.50                     $6.34
               Canceled                                               0
                                                         ---------------
               Outstanding at end of year                     2,106,664     $0.02 - $7.50                     $4.20
                                                         ===============
</TABLE>


<TABLE>
<CAPTION>

                                                                                   Weighted            Weighted
                                                                 Options           Average           Average Fair
                                                                 Granted        Exercise Price     Value of Options
                                                               -------------    ---------------    -----------------
               <S>                                                   <C>            <C>                 <C>
            2001:
               Grants with  exercise  price greater than fair
                   market value                                      41,500         $10.00               None
               Grants  with  exercise  price  less  than fair
                   market value                                      43,224         $7.01               $1.45
                                                               -------------
                                                                     84,724         $8.01               $0.74
                                                               =============
</TABLE>

<TABLE>
<CAPTION>

                                                                                   Weighted            Weighted
                                                                 Options          Average           Average Fair
                                                                 Granted        Exercise Price     Value of Options
            2000:                                              -------------    ---------------    -----------------
               <S>                                                <C>               <C>                 <C>

               Grants with  exercise  price greater than fair
                   market value                                   1,129,278         $10.49               None
               Grants  with  exercise  price  less  than fair
                   market value                                      28,002          $6.50               $1.71
                                                               -------------
                                                                  1,157,280         $10.39              $0.04
                                                               =============
</TABLE>

<TABLE>

<CAPTION>


                                                                                   Weighted            Weighted
                                                                  Options          Average           Average Fair
                                                                  Granted       Exercise Price     Value of Options
            1999:                                              -------------    ---------------    -----------------
               <S>                                                  <C>              <C>                <C>
               Grants with exercise price equal to fair
               market value                                         200,000          $7.50              $1.10
               Grants with exercise price less than fair
               market value                                         413,822          $4.39              $2.16
                                                               -------------
                                                                    613,822          $6.40              $1.89
                                                               =============

</TABLE>


         In  general,  the option  grants  vest over a  three-year  period  with
         forfeiture provisions if the employee leaves the Company.

<TABLE>
<CAPTION>


         Options Outstanding and Exercisable

                                           Options Outstanding                       Options Exercisable
                               --------------------------------------------------    -------------------
                                                     Weighted
                                                      Average                                         Weighted
                                                     Remaining      Weighted                          Average
                  Exercise            Options       Contractual      Average             Options      Exercise
                   Prices           Outstanding        Life       Exercise Price       Exercisable     Price
                   ------           -----------        ----       --------------       -----------     -----
                <S>                 <C>                 <C>             <C>            <C>             <C>


                $.35 - $1.00          375,000           1.47            $0.73             208,333      $ 1.00
                 3.50 - 4.61          390,000           0.32            $4.56             390,000      $ 4.56
                 6.38 - 7.50          774,500           1.38            $6.59             583,166      $ 7.36
             ---------------          949,037           1.63            $9.40             724,703      $10.28
                10.00- 12.00    ------------------                                    ---------------
                                    2,488,537                                          1,906,202
                                ==================                                   ===============
</TABLE>


         The Company  accounts for stock options  granted to employees using APB
         No. 25.  Accordingly,  compensation  cost has been  recognized  for all
         stock option grants, which were issued with an exercise price below the
         estimated  fair  value at the date of  grant.  The  total  compensation
         expense  for  stock  options  recognized  in  2001,  2000  and 1999 was
         $54,505, $248,293 and $1,251,349,  respectively.  Had compensation cost
         for the Company's stock options been determined  based on the estimated
         fair value at the grant dates for awards  consistent  with SFAS No. 123
         (based on the Black-Scholes  option valuation model), the Company's net
         loss and net loss per basic and diluted common share would have changed
         to the pro forma amounts indicated below:

<TABLE>
<CAPTION>


                                                              Years Ended December 31,
                                                              ------------------------
                                                    2001                  2000                 1999
                                              ------------------    -----------------    ------------------
         <S>                                       <C>                  <C>                   <C>

         Net loss attributable
         to common shareholders:
                 As reported               $       (65,985,361)  $      (33,325,060)  $       (20,277,479)
                 Pro forma                 $       (66,304,139)  $      (33,811,413)  $       (20,532,818)
         Net loss per the weighted
         average common share
          (basic and diluted):
                 As reported               $             (1.79)  $            (1.44)  $             (1.48)
                 Pro forma                 $             (1.80)  $            (1.46)  $             (1.50)

</TABLE>

         The  Black-Scholes  option  valuation  model was  developed  for use in
         estimating  the fair  value of traded  options,  which  have no vesting
         restrictions and are fully transferable.  In addition, option valuation
         models require the input of highly  subjective  assumptions,  including
         the expected stock price volatility.  Because changes in the subjective
         input  assumptions can materially  affect the fair value  estimate,  in
         management's  opinion, the existing models do not necessarily provide a
         reliable  single  measure  of the  fair  value  of its  employee  stock
         options.

         The fair value of each option  grant is  estimated on the date of grant
         using the Black Scholes  valuation model method  prescribed by SFAS No.
         123 with the following assumptions:  no volatility;  no dividend yield,
         risk-free  interest  rates  ranging from 4% to 6%, and  expected  lives
         ranging from one to four years.

         Warrant  Awards - The total  warrants  outstanding  for the purchase of
         common stock at December 31, 2001 are summarized in the table below:

<TABLE>
<CAPTION>


                                                   Outstanding
                                                    Shares in         Exercise
Description                                         Warrants           Prices         Expiration
-----------                                     ----------------    ------------    --------------
<S>                                                      <C>               <C>          <C>
Financial Advisor Warrants (Note 13)                     303,333           $7.50        11/17/2004
Financial Advisor Warrants (Note 13)                     130,259           $6.00         6/18/2006
Alcatel Warrants granted in conjunction with
notes (Note 10)                                           60,764           $7.50         6/29/2005
1997 Warrants granted in conjunction with
promissory notes                                         155,763           $2.63         1/31/2002
                                                 ----------------
                                                         650,119
                                                 ================

</TABLE>
         None of the 1997 warrants were exercised by the expiration date.

13.

<PAGE>


STOCK PURCHASE AGREEMENTS

         November  2001 Private  Placement - On November  30, 2001,  the Company
         closed a private placement with an accredited  investor who is also one
         of the Company's equipment vendors. At the closing,  the Company issued
         that investor  1,646,032  shares of its common stock for  $2,880,000 in
         cash. In conjunction  with the private  placement,  the Company ordered
         $2,880,000 of network equipment from the vendor.

         September  2001 Private  Placement - On September 11, 2001, the Company
         closed  a  $20,000,000  private  placement  with  two of the  Company's
         shareholders.  At the closing,  the Company  issued those  shareholders
         23,529,410  shares of its common stock for  $18,178,410 in cash and the
         conversion  of  $1,818,082  due under the  promissory  note the Company
         issued one of the investors in July 2001.

         In connection with the private  placement,  the Company issued one-year
         options to a group of six accredited investors who purchased securities
         in  February  2001.  The  options  provide  the right to  acquire up to
         4,000,000  shares of the Company's common stock at a per share purchase
         price equal to 147% of the September  2001 private  placement  purchase
         price.  If the options are exercised in full,  the Company will receive
         $5,000,000 from their exercise.

         In connection with the closing of the September 2001 private  placement
         the Company entered into a series of transactions that were intended to
         simplify its capital structure. Under these agreements, (i) the holders
         of the Company's  16,264,108 shares of outstanding Series C Convertible
         Preferred Stock and Series D Convertible Preferred Stock (collectively,
         the "Preferred  Stock")  converted  their Preferred Stock into an equal
         number of shares of the Company's common stock (the "Conversion"), (ii)
         the holders of warrants the Company  issued in connection  with certain
         of the Company's prior financings exercised those warrants and acquired
         7,169,931  shares of its common stock ("Warrant  Exercise"),  and (iii)
         the  parties to the October 18,  1999 CCI  Shareholders  Agreement,  as
         amended,  and  the  February  7,  2001  Shareholder  Joinder  Agreement
         (collectively,  the "Prior  Shareholders  Agreements")  entered into an
         amended shareholders agreement (the "Amended Shareholders Agreement").

         As a result of the  September  2001  financing  induced  conversion  of
         preferred stock and modifications of common stock warrants, the Company
         recorded  $5,396,396  and  $626,346,  respectively,  during  2001  as a
         non-cash  remeasurement  charge  to net  earnings  available  to common
         stockholders for preferred stock warrants and options.

         The  Company  also  issued  60-day  options  to  two  other  accredited
         investors to acquire up to 5,095,658 shares of its common stock.  Under
         the  first of these  60-day  options,  the  optionee  had the  right to
         purchase up to 900,000 shares of the Company's common stock at the same
         price as the September 2001 private placement purchase price. Under the
         second of the 60-day options, the optionee had the right to purchase up
         to 4,195,658  shares of the Company's  common stock,  but at a purchase
         price  that  increases  by 2.5% per month  over the  private  placement
         purchase  price. If either 60-day  optionee  exercised its option,  the
         Company  had the right to  acquire an equal  number of shares  from the
         private placement  investors at a purchase price equal to the per share
         purchase price under the 60-day options.  As a result,  the exercise of
         the 60-day  options will not have resulted in any further  dilution for
         the Company's current shareholders, but the Company would also not have
         received any net proceeds from their exercise.

         In November 2001,  these options were extended to December 15 under the
         same terms. In December 2001,  these options were extended to March 15,
         2002 under the same terms, except the option price was set at $.903 per
         share. As a result of the modification of the options  expiration date,
         the Company recorded  $4,363,722 during 2001 as non-cash  remeasurement
         charges to net earnings available to common  stockholders for preferred
         stock warrants and options. None of these options were exercised by the
         expiration date.

         The holders of the  Preferred  Stock had a preemptive  right to join in
         certain  issuances  of  the  Company's  stock,  including  the  private
         placement.  In  connection  with the closing of the private  placement,
         they  waived  that  preemptive  right.  The  holders  of the  Series  D
         Convertible  Preferred  Stock  also  waived,  as  part  of the  private
         placement,  any right to require us to adjust the purchase  terms under
         which they acquired  their Series D Convertible  Stock in February 2001
         to match the economic terms of the private placement.

         In connection  with the Warrant  Exercise,  the parties to the exercise
         agreed  to amend the terms of any  warrants  that were not  immediately
         exercisable  to  provide  for  their  immediate   exercise,   and  then
         immediately  exercised  the  warrants at an exercise  price of $.01 per
         share.  The Company  received  $71,700 in proceeds from the exercise of
         the warrants under the Warrant Exercise,  of which $64,243 was recorded
         as an exercise of preferred  stock  warrants and $7,457 was recorded as
         an exercise of common stock warrants.

         Under the terms of an Amended  Shareholders  Agreement executed as part
         of the September  2001  financing,  the  shareholder  parties agreed to
         allow for  transfers  of their  shares  of the  Company's  stock  under
         certain conditions,  including a right of first refusal for the benefit
         of the other  parties to the  agreement to purchase such shares under a
         right of co-sale.

         Series D Private  Placement - On February 7, 2001, the Company closed a
         private  placement of securities with five of its  shareholders and one
         additional  accredited  investor.  The Company received  $22,869,461 in
         cash,  net of fees and expenses,  from the sale of 2,643,636  shares of
         Series D  convertible  preferred  stock and issued  warrants to acquire
         1,657,435  additional  shares of Series D and common  stock.  Effective
         September  11,  2001,  all  remaining  Series D  Preferred  shares  and
         warrants were converted into common shares (see Note 11).

         Minority  Interest  Purchases - In October 2000, the Company  purchased
         minority interests from three parties relating to operations in Mexico,
         Venezuela and Panama.  The Company acquired the stock from the minority
         parties in exchange for a $175,000  cash payment and the issuance of an
         aggregate of 406,666 shares of common stock.

         Intervan  Restructuring - In October 2000, the Company restructured the
         Mexican  operating  subsidiaries in connection with its application for
         certain  Mexican  telecommunications  licenses.  Under  those  types of
         licenses,  the voting  control of the licensee  must be held by Mexican
         citizens or entities. Mexican law provides,  however, that licenses may
         be organized with both voting and non-voting shares.  Therefore,  under
         the terms of the  restructuring,  the  Company  sold 51% of the  voting
         control  (representing  approximately  10% of  Intervan's  stock  on an
         economic interest basis) of Intervan to one of the Company's executives
         who is a Mexican citizen. The Company retained the remaining 49% voting
         control (and  approximately 90% of the economic  interest) in Intervan,
         along with the right to veto  certain  types of  fundamental  corporate
         business  transactions.  The  executive's  purchase  of the 51%  voting
         control  interest  was financed  through a loan from the Company  which
         bears interest on a deferred basis at a rate of 12% per annum and which
         is due in one payment in 2010. In October 2001,  the Company  converted
         $20,376,879 of intercompany  debt into an equivalent amount of variable
         capital in Intervan.  This conversion also increased the original price
         per share paid by the Company and its executive for the Intervan  stock
         as  described  above  in  conformance  with  Intervan's  organizational
         documents  and  increased  the  loan  amount  due  from  the  Company's
         executive.  The  Company  will  continue  to  account  for the  Mexican
         operations using the consolidation method.

         Series C Option  Exercise - In July and  September  2000,  the  Company
         received net proceeds of $27,374,162, after fees and expenses, from the
         exercise of options to acquire  3,891,563  shares of Series C Preferred
         Stock that were  granted in the October  1999  Financing.  The original
         July  exercise  date was  extended to  September  2000 for a portion of
         those options.  The  modification  of the original option term required
         the  Company  to  remeasure   the  fair  value  of  the  options,   and
         accordingly,  the Company recognized $352,000 of non-cash remeasurement
         as an increase in the net loss attributable to common  shareholders for
         the year ended December 31, 2000.

         October  1999  Financing - In October and  November  1999,  the Company
         closed certain  components of a total  $109,500,000  private equity and
         credit facility  financing  package with six accredited  investors.  As
         part of the  transaction,  the investors  acquired  options to purchase
         3,891,563 additional shares of Series C Preferred Stock and warrants to
         purchase   2,432,226   shares  of  common   stock,   and  two  existing
         shareholders  (Internexus and FondElec) acquired additional warrants to
         purchase  520,000 shares of common stock.  The preferred  stock options
         had an exercise  price of $7.50 per share and were exercised in 2000 as
         discussed  above. The warrants were exercised and converted into common
         stock in September  2001 as described  above.  In connection  with this
         financing,  the  Company  also  granted  its  financial  advisor in the
         transaction  warrants  to acquire  433,592  common  shares at $7.50 per
         share (see Note 12).

         Under  the  terms  of  the  financing  agreement,  Telematica  invested
         $5,525,000 in Chispa. Additionally, Telematica entered into a long-term
         $26,000,000 credit facility with Inter@net and, in connection with that
         transaction,  agreed to enter into a  fiber-optic  lease,  pursuant  to
         which  Inter@net  will  lease  a  portion  of   Telematica's   existing
         fiber-optic  network in Caracas,  Venezuela,  and a commercial services
         agreement,  under which  Telematica's  affiliate will provide  billing,
         collection and other commercial services to Inter@net.

         In  December  2000 and  January  2001,  $7,000,000  of the  $26,000,000
         facility was paid to Inter@net in cash. Given the Company's decision to
         cease  operations  in Venezuela as described in Note 3, the Company has
         not drawn any of the remaining $19,000,000 in the facility.

         The  outstanding  principal  and  unpaid  interest  amounts  under  the
         facility  are  convertible  to  shares  of  Inter@net  at  Telematica's
         election at any time after the third  anniversary of the facility,  but
         Telematica  can convert the amounts due under the facility prior to the
         third  anniversary if Inter@net  defaults under the facility.  Upon any
         such  conversion,   the  Company  would  retain  operating  control  of
         Inter@net.  The  credit  facility  also  provides  for a  corresponding
         subscription  right  in  Telematica's  favor,  pursuant  to which it is
         allowed to  purchase  50% of the  outstanding  stock of  Inter@net  for
         $26,000,000  through October 31, 2015. As Inter@net draws on the credit
         facility, the subscription  obligation is proportionately  reduced. Any
         election by  Telematica  to convert the amounts due under the  facility
         into shares of Inter@net must be exercised with the subscription right.
         In April 2002,  the Company  replaced these notes with a new $7,000,000
         note  accruing  interest at 3% per annum with a balloon  payment due at
         March 15, 2015.

14.      LEASES

         Metronet   Capital  Lease  -  In  June  1999,   the  Company   acquired
         approximately  17% of the capacity of a  fiber-optic  network in Mexico
         City. The Company paid  $4,717,908 for the capacity.  This  transaction
         was  recorded  as a  prepaid  capital  lease  as  there  are no  future
         obligations.

         The Company financed the purchase through two loans from  shareholders.
         The loans bore interest at 10% per annum along with a premium  interest
         payment at a 55% effective  annual interest rate and were due (together
         with unpaid  interest)  on the earlier of January 3, 2000 or receipt of
         proceeds  from any  equity or debt  financing.  The  shareholders  also
         received warrants to acquire 96,870 shares of common stock,  which were
         exercised in September 2001 (see Note 13). One of the promissory  notes
         along with accrued interest was paid in the October 1999 Financing. The
         other  promissory note and accrued interest was converted into Series C
         Preferred Stock in connection with the October 1999 Financing (see Note
         13).

         The Company leases corporate office space and equipment under operating
         leases with terms that range between one and five years. Future minimum
         annual  lease  payments  under the  Company's  operating  leases are as
         follows:

           Year ending December 31:
              2002                               $            1,959,104
              2003                                            1,134,533
              2004                                              725,977
              2005                                              616,454
              2006 and thereafter                               414,934
                                                ------------------------
           Total future lease payments           $            4,851,002
                                                ========================

         Total rent expense  under the operating  leases in 2001,  2000 and 1999
         was $1,981,219, $2,020,893 and $908,538, respectively.

15.      COMMITMENTS AND CONTINGENCIES

         Litigation - In March 2000,  the Company was named as a defendant in an
         action  brought in federal  court in  California.  The suit claimed the
         Company had  defrauded the  plaintiffs in connection  with a merger the
         Company  concluded  in 1997 and that the Company  had further  breached
         contractual  obligations to offer the plaintiffs  preemptive rights for
         securities later sold by the Company.  After preliminary motions in the
         case, the Company filed a number of motions for summary judgment on the
         issues raised by the plaintiff.  The court granted all of the Company's
         motions  and  disposed  of the  last  substantive  issue in the case in
         October  2001.  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 a cash payment to the Company
         and the  return of the stock the  Company  issued to the  plaintiff  in
         1997.

         In  April  2001,  FondElec  Group,  Inc.,  an  affiliate  of one of the
         Company's  principal   shareholders   ("FondElec   Group"),   filed  an
         arbitration action against the Company in New York alleging breach of a
         Services Agreement dated August 1998. The FondElec Group claimed, among
         other things, that the Company failed to pay the FondElec Group certain
         commissions  and  fees in  connection  with the  Company's  sale of its
         securities,  and that the  Company  further  owes  the  FondElec  Group
         amounts for other transaction-related  services. The Company asserted a
         number of  defenses  and  counterclaims  in the  proceeding,  including
         breach of  fiduciary  duty,  duress and  violation of federal and state
         securities  laws. In April 2002, the Company settled the FondElec Group
         arbitration  proceeding  and  each  party  dismissed  its  claims  with
         prejudice against the other party ("FondElec Settlement Agreement"). 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.  As a result of the
         above  settlement,   the  Company  recorded  a  $1,505,882  arbitration
         settlement expense during the year ended December 31, 2001.

         In July  2001,  the  Company  was  named in an  arbitration  proceeding
         initiated  in Florida by two of the  parties  who sold the  Company the
         Metrotelecom  assets and operations in April 2000. In the  arbitration,
         the claimants  alleged that the Company had defaulted in the payment of
         a portion of the deferred purchase price due them in April 2001, in the
         aggregate approximate amount of $2,400,000.  The Company counterclaimed
         in the action for breach of the sellers' representations and warranties
         in the sale of the assets and operations, and cross-claimed against the
         other  sellers of the  assets and  operations.  In  October  2001,  the
         Company  and the two  claimants  settled  the  arbitration,  which  was
         dismissed  with  prejudice.   The  Company   believes  the  arbitration
         proceeding was settled on terms  favorable to the Company.  As a result
         of the settlement,  the claimants accepted a reduction in the principal
         and interest,  which was recorded as a reduction of the purchase  price
         for Metrotelecom.

         In November 2001, the Company was named in a lawsuit  brought by TTI in
         the Third District Court for the State of Utah (which was  subsequently
         removed to the United States Bankruptcy  Court).  The suit relates to a
         1995 loan  commitment  between  the  Company  and TTI,  which is now in
         bankruptcy.  Under the commitment, TTI agreed to loan the Company up to
         $1 million in working  capital,  and the Company was  required to repay
         that amount,  together with  interest,  on August 1, 2001. TTI advanced
         $996,707 to the Company under the  commitment  and the total amount due
         under  the  commitment,   including  interest,  is  approximately  $1.4
         million.  The commitment  documents  allowed the Company to convert the
         obligation  into a 10-year,  monthly  amortized loan at any time before
         August 1, 2001 under certain  conditions.  The Company  notified TTI of
         its conversion of the loan prior to that date and has made all required
         payments  under the loan as  converted.  TTI claims the Company was not
         entitled  to  convert  the  loan.  The  Company  believes  it has valid
         defenses to TTI's claims, and intends to vigorously defend the suit.

16.      OPERATING SEGMENT INFORMATION

         The Company makes key financial  decisions  based on certain  operating
         results of its  operational  regions and primary  revenue types.  Other
         revenue as disclosed  below  consists  primarily  of  equipment  rents,
         installation and value added services.  The Company's operating segment
         information is as follows for the years ended  December 31, 2001,  2000
         and 1999:

<TABLE>
<CAPTION>


2001                                                                          Central
                                         Mexico           Venezuela           America           Corporate           Totals
--------------------------------     ---------------    ---------------   --------------     --------------    ---------------
<S>                                    <C>              <C>                  <C>               <C>                <C>

Revenue:
-        Data                    $       15,762,512  $         880,947  $      8,899,272   $              -  $      25,542,731
-        CATV                                     -                  -         3,473,947                  -          3,473,947
-        Telephony/other                  5,756,133             41,903         5,356,235                  -         11,154,271
Depreciation expense                      3,367,847            259,894         3,150,093          1,140,671          7,918,505
Amortization expense                      2,270,939             99,916         3,574,231            200,022          6,145,108
Segment restructuring costs             (1,652,926)        (14,400,982)       (2,766,013)        (3,049,343)       (21,869,264)
Segment operating loss                 (14,489,979)        (16,922,711)       (1,828,669)       (10,333,500)       (43,574,859)
Segment total assets                     57,735,317          1,542,955        34,893,132          8,989,221        103,160,625
Segment long-lived assets                47,761,418          1,154,098        28,016,555          6,708,319         83,640,390
Capital expenditures                     14,335,417          3,226,450         1,847,860            649,867         20,059,594


                                                                              Central
2000                                     Mexico           Venezuela           America           Corporate           Totals
--------------------------------     ---------------    ---------------    -------------      --------------    ---------------

Revenue:
-        Data                    $       11,978,291  $       1,066,225  $      6,417,167   $              -  $      19,461,683
-        CATV                                     -                  -         8,100,265                  -          8,100,265
-        Other                            4,551,541             66,638         2,847,331                  -          7,465,510
Depreciation expense                      1,780,003            206,047         3,825,299            393,569          6,204,918
Amortization expense                      2,641,820             41,091         5,232,294             40,689          7,955,894
Segment operating loss                  (8,959,484)        (2,561,654)      (10,523,323)       (11,548,873)       (33,593,334)
Segment total assets                     45,570,764         12,643,197        56,266,131         12,237,810        126,717,902
Segment long-lived assets                36,178,876          8,664,728        49,708,184          8,613,788        103,165,576
Capital expenditures                     15,927,905          5,798,647         8,716,986          2,136,588         32,580,126


                                                                              Central
1999                                     Mexico           Venezuela           America           Corporate           Totals
--------------------------------     ---------------    ---------------    --------------     --------------    ---------------
Revenue:
-        Data                    $          172,355  $       1,120,123  $        432,385   $              -  $       1,724,863
-        CATV                                     -                  -         7,175,042                  -          7,175,042
-        Other                                    -             35,537           163,612                  -            199,149
Depreciation expense                         18,856            136,313         1,287,613            246,464          1,689,246
Amortization expense                         29,983            225,006         3,364,254                  -          3,619,243
Segment operating loss                     (76,576)          (880,496)      (10,798,760)        (7,469,761)       (19,225,593)
Segment total assets                     22,998,357          5,468,357        42,668,044         26,069,765         97,204,523
Segment long-lived assets                19,068,279          3,040,167        40,071,220          2,927,135         65,106,801
Capital expenditures                      4,987,838            357,697         5,795,142          1,946,893         13,087,570

</TABLE>

17.

<PAGE>

<TABLE>
<CAPTION>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

         The  Company  had  the  following   non-cash  investing  and  financing
activities in 2001:
         <S>                                                                                   <C>

                    Acquisition of treasury  stock in exchange for minority  interest
                        in subsidiary                                                   $        1,318,069
                    Issuance of notes receivable in debt restructuring                  $        2,750,000
                    Conversion of promissory note to common stock                       $        1,818,082
                    Issuance of notes receivable in asset sale                          $        2,000,000

         In addition, the Company had the following non-cash activities relating
         to its acquisitions during 2000 and 1999:

         Acquisition of Metrotelecom (April 5, 2000):
                    Fair value of assets acquired,  including  intangible  assets and
                      equipment (net of cash acquired)                                 $        14,736,996
                    Fair value of liabilities assumed                                          (2,159,535)
                    Notes payable                                                              (8,159,610)
                    Common stock issued                                                        (1,000,000)
                                                                                          -----------------
                         Cash paid (net of cash acquired)                              $         3,417,851
                                                                                          =================

         Acquisition of Intervan (December 24, 1999):
                    Estimated fair value of assets acquired, including intangible
                      assets and equipment (net of cash acquired)                      $        21,980,304
                    Fair value of liabilities assumed                                           (2,743,452)
                    Notes payable                                                               (5,257,105)
                                                                                          -----------------
                         Cash paid (net of cash acquired)                              $        13,979,747
                                                                                          =================

         Acquisition of GBNet (December 15, 1999):
                    Estimated  fair value of assets  acquired,  including  intangible
                      assets and equipment (no cash was acquired)                       $       13,000,000
                    Fair value of liabilities assumed                                                 None
                    Notes payable                                                               (9,000,000)
                                                                                           ----------------
                         Cash paid                                                      $        4,000,000
                                                                                           ================
</TABLE>


18.      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.  The amounts  advanced  under the  agreement
         accrue  interest at 25% per annum,  are senior to all other debt except
         for  amounts  due  on  the  Company's  vendor  debt  facility  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
         agreed to promptly  engage an  investment  banker or financial  advisor
         reasonably  acceptable  to the lender for the  purpose of  exploring  a
         possible sale of all or substantially all of the Company's business and
         operations.

         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 million  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  million,  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 the FondElec Settlement Agreement (see Note 16).


<PAGE>


PART 3.

<TABLE>
<CAPTION>


INDEX TO EXHIBITS

Exhibit
No.
---
                                                         Exhibit                                                 Page
<S>            <C>                                                                                                <C>

3.1            Articles of Incorporation                                                                          *
3.2            Bylaws                                                                                             *
3.3            Amended and Restated Articles of Incorporation                                                     *
4.1            Statement of Rights and Preferences for the Series A Preferred Stock                               *
4.2            Statement of Rights and Preferences for the Series B Preferred Stock                               *
4.3            Statement of Right and Preferences for the Series C Preferred Stock                                *
4.4            Amendment to Series C Certificate                                                                  *
4.5            Amendment to Amended and Restated Articles of Incorporation                                        *
4.6            Statement of Rights & Preference for the Series D Preferred Stock                                  *
4.7            Amendment to Statement of Rights & Preference for the Series D Preferred Stock                     *
10.1           Agreement and Plan of Reorganization                                                               *
10.2           Escrow Agreement between Fidelity Transfer Company, TTI and the Company                            *
10.3           Commitment Agreement between the Company and TTI                                                   *
10.4           Letter of Understanding with Decathlon                                                             *
10.5           Merger Agreement between the Company and Telecom Investment Corporation                            *
10.6           Services Agreement between Bridgeport Financial, Inc. and the Company                              *
10.7           Option and Stock Purchase Agreement between the Company, Caracas Viva Vision, S.A. and its         *
                     Shareholders
10.8           July 24, 1997 Amendment to Option and Stock Purchase Agreement                                     *
10.9           August 13, 1997 Amendment to Option and Stock Purchase Agreement                                   *
10.10          Shareholders Agreement between Petrolera Argentina San Jorge, S.A. and the Company                 *
10.11          Stock Purchase Agreement between FondElec Essential Services Growth Fund, L.P., Pegasus            *
                     Fund, L.P. and the Company
10.12          Securities Purchase Agreement dated December 23, 1998 among the Company, Internexus, S.A.          *
                     and FondElec Essential Services Growth Fund, L.P.
10.13          Form of Promissory Note issued in connection with the Securities Purchase Agreement dated          *
                     December 23, 1998
10.14          Participation Agreement, dated October 15, 1999, among Telematica EDC, C.A., TCW/CCI               *
                     Holding LLC, Glacier Latin-America Ltd., the International Finance Corporation,
                     FondElec Essential Services Growth Fund, L.P., Internexus S.A. (collectively, the
                     "Investors"), the Company and other parties
10.15          Option Agreement, dated October 18, 1999, among the Company and the Investors                      *
10.16          Form of Series C Warrant, dated October 18, 1999, as issued in favor of each Investor              *
10.17          CCI Shareholder's Agreement, dated October 18, 1999, among the Company, the Investors, and         *
                     other parties
10.18          Amended and Restated Registration Rights Agreement, dated October 19, 1999 among the               *
                     investors and other parties
10.19          Stock Purchase Agreement between General Business Machines Corporation and the Company,            *
                     dated December 15, 1999
10.20          Stock Purchase Agreement for the purchase of International Van, S.A. de C.V., dated                *
                     December 24, 1999
10.21          Umbrella Stock Purchase Agreement among Convergence Communications, Inc., TCW/CCI Holding          *
                     II, LLC, Telematica EDC, C.A., Norberto Priu, Raquel Emilse Oddone de Ostry, Glacier
                     Latin-America Ltd. and Morley Capital Management III, LLC (the "Series D Investors"),
                     dated as of February 7, 2001
10.22          Representative Stock Purchase Agreement by and among Convergence Communications, Inc. and          *
                     TCW/CCI Holding II, LLC, dated as of February 7, 2001
10.23          Representative Internal Rate of Return Warrant for the purchase of shares of common stock          *
                     of Convergence Communications, Inc., dated as of February 7, 2001
10.24          Representative Performance Warrant for the purchase of shares of Series D Preferred Stock          *
                     of Convergence Communications, Inc., dated as of February 7, 2001
10.25          Financing Warrant for the purchase of shares of common stock of Convergence Communications,        *
                     Inc., dated as of February 7, 2001
10.26          Preemptive Rights and Warrant Adjustment Waiver, dated as of February 7, 2001                      *
10.27          Shareholder Joinder Agreement by and among Convergence Communications, Inc. and the Series         *
                     D Investors, dated as of February 7, 2001
10.28          Registration Rights Agreement by and among Convergence Communications, Inc. and the Series         *
                     D investors, dated as of February 7, 2001
10.29          Stock Purchase Agreement by and among Convergence Communications, Inc., Norberto Priu, and         85
                     AES Telecom, Inc. dated as of September 11, 2001
10.30          Revolving Credit Agreement among Convergence Communications, Inc., Latin American                 106
                     Broadband, Inc. and Internexus S.C.A. dated as of April 8, 2002
21.1           Subsidiaries of the Registrant                                                                    119
99             Valuation and Qualifying Accounts                                                                 120

* This document was previously  filed with the Commission and is incorporated in
this report by reference.
</TABLE>



<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
and Exchange  Act of 1934,  the Company has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

                                       CONVERGENCE COMMUNICATIONS, INC.

4-18-2002                              /s/ Douglas Jacobs
----------------------                 -----------------------------------------
Date                                   Douglas Jacobs
                                       Chief Executive Officer
                                       (Principal Executive Officer)


                                       CONVERGENCE COMMUNICATIONS, INC.

4-18-2002                              /s/  Gary Barlow
----------------------                 -----------------------------------------
Date                                   Gary Barlow
                                       Vice President of Accounting and Taxation
                                       (Principal Accounting Officer)

DIRECTORS

4-18-2002                              /s/  Lance D'Ambrosio
----------------------                 -----------------------------------------
Date                                   Lance D'Ambrosio, Chairman


4-18-2002                              /s/  Troy D'Ambrosio
----------------------                 -----------------------------------------
Date                                   Troy D'Ambrosio


4-18-2002                              /s/  Pablo Priu
----------------------                 -----------------------------------------
Date                                   Pablo Priu


4-18-2002                              /s/  Peter Schiller
----------------------                 -----------------------------------------
Date                                   Peter Schiller


4-18-2002                              /s/  Jorge Fucaraccio
----------------------                 -----------------------------------------
Date                                   Jorge Fucaraccio


4-18-2002                              /s/  Jeffery Safford
----------------------                 -----------------------------------------
Date                                   Jeffery Safford


4-18-2002                              /s/  Christopher Shenefelt
----------------------                 -----------------------------------------
Date                                   Christopher Shenefelt


4-18-2002                              /s/  Gonzalo Pacanins
----------------------                 -----------------------------------------
Date                                   Gonzalo Pacanins


4-18-2002                              /s/  Norberto Corredor
----------------------                 -----------------------------------------
Date                                   Norberto Corredor


4-18-2002                              /s/  Mario L. Baeza
----------------------                 -----------------------------------------
Date                                   Mario L. Baeza


4-18-2002                              /s/  Carlos Christensen
----------------------                 -----------------------------------------
Date                                   Carlos Christensen


4-18-2002                              /s/  Gaston Acosta-Rua
----------------------                 -----------------------------------------
Date                                   Gaston Acosta-Rua