SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
(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, 2000.

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

Commission file number                                                  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)

                   (Issuer's telephone number) (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

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulations  S-B is not  contained  in  this  form,  and no  disclosure  will 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-KSB
or any amendment to this Form 10-KSB. [ ]

State the registrant's net revenue for its most recent fiscal year: $35,027,458.

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant  computed by reference  to the price at which the stock was sold,  or
the average bid and asked  prices of such stock,  as of a specified  date within
the past 60 days, was $17,435,203.

As of March 28, 2001, 11,921,094 shares of registrant's  common stock, par value
$.001 per share,  13,620,472  shares of the  registrant's  series C  convertible
preferred  stock,  par  value  $.001  per  share,  and  2,643,636  shares of the
registrant's  series D convertible  preferred  stock, par value $.001 per share,
were outstanding.


<PAGE>



                        CONVERGENCE COMMUNICATIONS, INC.
                                 March 28, 2001
                                   Form 10-KSB

PART 1.

                           OUR BUSINESS AND PROPERTIES

Overview of Our Operations

We are a rapidly growing,  facilities-based  provider of managed  corporate data
network services,  high-speed Internet access,  e-commerce-enabling services and
other  value-added  communications  services  in Mexico,  Venezuela  and Central
America.  We  own  and  operate  state-of-the-art  broadband  metropolitan  area
networks which  currently  allow us to provide  service in nine countries and we
are constructing a pan-regional IP-based network. We primarily focus on offering
our tailor-made data networking and Internet solutions to business customers. We
have 8,087 data  customers and 34,537 pay  television  customers  (although,  as
described  below,  we have decided to sell our pay television  assets.  See "Our
Central America Network and Operations").

We have a strategic  network  footprint  linking high growth  telecommunications
markets  in the  `Northern  Corridor'  of  Latin  America.  We are  the  leading
competitive  corporate data solutions provider in Mexico with 709 medium,  large
and  multinational  customers served through points of presence in 22 cities. We
are  also  a  market  leader  in  Central  America,  where  we are  the  leading
alternative  data  provider  to own and  operate a  broadband  network  in seven
Central  American  countries.  In addition to providing  data and other Internet
based  services to  business  customers  in Central  America,  we provide  cable
television services to 34,537 residential customers.  We also recently initiated
the  deployment  of  our  broadband  network  in  Venezuela,  where  we  have  a
partnership  with the largest  electric  utility in Venezuela.  That partnership
provides us with metropolitan  rights of way,  customer  relationships and brand
equity affiliation.  We generated $35,027,458 in 2000 and $9,099,054 in revenues
in 1999.

We  deploy  IP-based  metropolitan  area  and  inter-country  networks  that are
designed around our targeted customer segments and transmit data,  carrier-class
voice and video services  simultaneously over the same network. Our networks are
generally  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  to  deliver   broadband
connectivity to our customers at high,  committed  information rates. We believe
this "technology neutral  architecture  permits the most cost and time efficient
deployment of customer solutions.  We ultimately plan to provide data, Internet,
voice  and  video  services  over the same  IP-based  gigabit  Ethernet  network
architecture in all of our markets.

We were  formed  in 1995 as  "Wireless  Cable &  Communications,  Inc."  to take
advantage of  opportunities  created by the  deregulation  of the Latin American
telecommunications  markets. We have grown organically and through  acquisitions
since then. In August 1998, we changed our name to "Convergence  Communications,
Inc." We  currently  conduct  operations  in nine  countries  through a group of
approximately  40 direct and  indirect  subsidiaries.  Our parent  corporation's
assets  primarily  consist  of  its  ownership  interests,  either  directly  or
indirectly,  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 those  entities  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  offices are located at 102 West 500 South,  Suite 320,
Salt Lake City,  Utah 84101,  and our telephone  number there is (801) 328-5618.
Our principal  operating offices are 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 nine  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 41described 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 scheduled to occur after December 31, 2000, 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 operate in the Mexico,  Venezuela  and  Central  America  markets.  The total
population  of these  markets  exceeds 166 million  people.  We believe there is
significant  opportunity  for  telecommunications  growth in these  markets as a
result of:

     o    large, unmet demand for expanded telecommunications services

     o    deregulation

     o    relatively limited competition

     o    poor  infrastructure  which is  inadequate  for  delivering  broadband
          application.

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 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 is expected to total $63.7 billion in 2000 and
$74.2 billion in 2002, up from $33.2 billion in 1996. Voice and data revenues in
our target  markets  will  increase  from $6.9 billion in 2000 to $13 billion in
2005.  Growth from data  services is  expected  to achieve a  compounded  annual
growth rate of  approximately  40% over the next four years,  growing  from $1.8
billion in 2000 to $6.8 billion in 2004, compared to a compounded growth rate of
approximately  13% in the United States.  This growth will be due to 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 been
          dependent on legacy telecommunications  systems and the infrastructure
          of the incumbent operators. These systems have generally been based on
          technology and equipment  having limited  bandwidth  capabilities  and
          relatively poor transmission quality. We use state-of-the-art IP-based
          gigabit Ethernet 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 4% 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
Mexico,  Venezuela and Central America. The key elements of our strategy include
the following:

     o    We intend  to  capitalize  on the  growth in  managed  corporate  data
          network  services.  We expect that the demand for  high-speed  managed
          corporate data network  services will 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 both long-haul and  "first-mile"  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  will  focus  on  the  Mexican  market.   The  Mexican  market  for
          communication  services  will be one of the largest  and most  rapidly
          growing  markets in our market  regions.  According  to  Booz-Allen  &
          Hamilton, the Mexican market for business data services is expected to
          increase by a compounded  annual  growth rate of over 40% between 2000
          and 2004 (from $1.45 billion in 2000 to $5.8 billion in 2004).  During
          the same  period,  Booz-Allen  & Hamilton  expects  the voice and data
          market in Mexico to grow from $5.2 billion to $10.2  billion.  We have
          deployed  networks in key  metropolitan  markets within Mexico and are
          the leading  provider of managed  corporate data  networking  services
          there, after the incumbent telephone company.

     o    We have established an early market  presence.  We have established an
          early and  significant  presence in all of our 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  pan-regional IP-based network to deliver our bundled
          telecommunications  services.  Our network  will  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  communications  network  infrastructure  to  increase
          margins.  We  believe  that  the use of a  next-generation,  broadband
          infrastructure  will reduce our operating  costs,  improve the quality
          and scope of the  services  we offer and  provide a highly  attractive
          value proposition to our customers.  We provide a significant  portion
          of our services through our own next-generation optical-based network,
          and intend to build or acquire  networks in markets where we currently
          lease network rights from other parties.

     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  that  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.

Our Network Technology

We employ a next generation IP-based optical technology platform in the majority
of our markets  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.  The platform is fully  scalable,  redundant and  multi-pathed to
offer  maximum  flexibility  in traffic  management,  quality of service and "on
demand" provisioning.  We ultimately plan to deploy  next-generation IP networks
in each of our markets.

Our  pan-regional  network will  incorporate the latest  improvements 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.  In
contrast to our next generation networks, traditional circuit-switched networks,
which  many of our  competitors  employ,  use a single  circuit  for each  voice
conversation and route each data  transmission  separately,  occupying an entire
circuit  or  portion  of the  network  for  the  duration  of the  call  or data
transmission.  In  a  packet-switched  network,  there  is  no  single  unbroken
connection  between sender and receiver.  When information is sent, it is broken
into  small  packets  that are mixed with  other  transmissions,  sent over many
different routes simultaneously and then reassembled in the correct order at the
receiving end. Because IP packet switching makes it possible to fill a network's
entire  capacity with packets,  it can move large  amounts of  information  more
efficiently and at a lower cost than traditional circuit-switched networks.

The illustration below highlights the differences between  circuit-switched  and
packet-switched technologies:

------------------------------------- ------------------------------------------
   Circuit Switching Technology               Packet Switching Technology
------------------------------------- ------------------------------------------
          [GRAPHIC OMITTED]                         [GRAPHIC OMITTED]



------------------------------------- ------------------------------------------
Source: Convergence Communications, Inc.
--------------------------------------------------------------------------------

Our networks incorporate gigabit Ethernet hardware architecture and transmission
media,  as well as the latest  standards  for providing  data  security  through
encryption  and  authentication.  "Ethernet"  denotes  the  dominant  local area
network technology that allows multiple end users to communicate within a fairly
small area,  such as a building or campus.  Our networks  will also  incorporate
optical transmission devices that use dense wavelength division  multiplexing or
DWDM.  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 fiber strand.

We believe that, by incorporating the latest advancements in optical, electrical
and quality  service  engineering  into our network,  we will be able to provide
fully scalable, redundant, multi-path services to our customers in a manner that
gives us maximum  flexibility to manage  bandwidth  services.  By  incorporating
these concepts into our network architecture, we also believe we will be able to
avoid  over-provisioning  our networks  based on a  statistical  use models and,
instead,  more  effectively  control  customer  data rates in providing  minimum
committed  information rates with adequate  allowances for bursts at much higher
data rates as applications or server loads demand. This should result in greater
cost  efficiency  and better overall  services to our customers.  Our IP network
architecture  will also allow us to upgrade our bandwidth  requirements  through
logical changes in network edge hardware  configurations  and  technologies.  In
those cases, we believe we will be able to easily upgrade or migrate portions of
our network on a device-by-device or point-of-presence basis.

Alcatel  Agreement.  In July 2000, we entered into a series of  agreements  with
Alcatel, S.A. for the design, construction and financing of our IP-based optical
integrated  networks.  Alcatel has  operations  in over 130 countries and annual
revenues   of  over  $22   billion   and  is  a   world-recognized   builder  of
next-generation  telecommunications  networks.  See our report on form 8-K dated
July 7, 2000 for a more detailed description of our arrangements with Alcatel.

Alcatel is working with us to deploy a state-of-the-art,  multi-service, pure IP
network.  Under the terms of the agreement,  we plan to expand our networks into
17 cities across Mexico,  Venezuela and Central America. Alcatel will design the
network,  construct  the  nodes  and  repeater  sites,  as  well  as  provision,
transport,  integrate and maintain the equipment at these sites. At the customer
premise, Alcatel is responsible for installing concentrator equipment and wiring
the premises.  Alcatel is also responsible for connecting  primary  buildings to
selected nearby buildings  within the network.  Alcatel has agreed to provide us
with up to $175  million  in  vendor  financing  as part of the  agreement.  Our
relationship  with  Alcatel  is not  exclusive,  and we  will be able to use the
services of other network and systems integrators.

     In January  2001,  we amended the terms of our  agreements  with Alcatel to
incorporate new operational  guidelines and financing  requirements.  We will be
required to meet these new  guidelines  and  requirements  before we are able to
make further draw-downs on the Alcatel facility.  We intend to work with Alcatel
to renegotiate  the operating  covenants under the Alcatel  financing  facility,
which, if successful,  might allow us to draw for equipment purchases, but there
can be no assurance  that we will be able to do so.  Further,  as of the date of
this  report,  we are  not in  compliance  with  the  payment  covenants  of the
equipment  purchasing  provisions of the Alcatel agreements.  We are 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 in a manner  which is  acceptable  to us. As a result,
Alcatel is  entitled  to  accelerate  the  payment of all of the amounts we have
drawn under the facility,  and is entitled to pursue its rights for default. See
our  report  on  Form  8K  dated  July  7,  2000,  the  section  below  entitled
"Management's  Discussion  and Analysis of Financial  Conditions  and Results of
Operations,"  and our  report  on form 8-K  filed  on  March 7,  2001 for a more
detailed description of Alcatel's rights upon default, the January amendments to
the Alcatel  facility  and the impact of the  facility on our ability to finance
our network build-out.

Network  Design  Principles.  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 in the event of 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.

     o    A mix of 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
          technology  agnostic  architecture  allows  the  most  cost  and  time
          efficient  delivery of high-speed last mile connectivity with IP-based
          service offerings.

Network Infrastructure

Our network  employs an  optical-based  gigabit  Ethernet  architecture  that is
designed  to  provide  maximum  bandwidth  management  over  a  regional  basis,
including over the critical  "first mile"  connection  between our customers and
the outside  networking world. Our network consists of the following  structural
elements:

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 allow us to re-route traffic in the event
of a network  outage.  We  generally  deploy our  networks  in areas with a high
density of potential customers and limited competition.

Although we intend to provide our services  over our own fiber optic  network in
each of our targeted  markets,  we may use 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 provides us with 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.

Our MANs are designed to form a regional optical Internetworking  infrastructure
consisting of all  non-blocking  gigabit devices.  We believe this  architecture
reduces  latency  times  and  otherwise  allows  us to  provide  better  managed
bandwidth services in accordance with our customers' service requirements.

Points of Presence  (POPs) and  Distribution  Nodes.  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  Operation  Centers.  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 Telgua and Antel and intend to enter into agreements with Telmex
and CANTV once certain regulatory issues are resolved. We have also entered into
agreements  with  national and  international  carriers,  such as MCI  WorldCom,
Sprint and Bestel, 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.

Customer  Premise  Equipment.  We provide our customers  with equipment at their
premises  which  connects our MANs with their  premises  and which  enhances the
efficiency  of their  network  connection.  In  general,  our  customer  premise
equipment  incorporates  gigabit Ethernet technology so as to provide a seamless
"first mile" gigabit connection with our MANs.

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 1,487 high-speed data customers,
6,600 dial-up Internet customers,  and 34,537 cable television customers in nine
countries as of March 1, 2001.  Our  customers  include large  corporations  and
businesses, government agencies and, to a limited extent, residential customers.
The  graphical  materials  below  provide  summary  information   regarding  our
operations area, demographic information regarding those markets and information
regarding our services in our markets.


[GRAPHIC OMITTED]


<TABLE>
<CAPTION>

                                     GDP(1)       GDP Growth(3)      GDP/Capita      Population         CPI(6)
Country                              (US$bn)           (%)             (US$)            (mm)             (%)
--------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>               <C>             <C>             <C>

Costa Rica                            11.3              7.5            3,229             3.5            10.0
Dominican Republic                    17.5              8.3            1,882             9.3             6.5
El Salvador                           12.4           (20.1)            2,067             6.0             0.5
Guatemala                            19.0(2)           7.1(4)          1,759            10.8            4.9(7)
Honduras                               5.4            (2.4)              857             6.3            11.6
Mexico                               484.0              4.6            4,830           100.2             6.9
Nicaragua                             2.1(2)           3.9(4)            488             4.3           10.9(7)
Panama                                9.1(2)           4.3(4)          3,250             2.8            1.3(7)
Venezuela                             95.0            (2.6)            4,060            23.4            23.6
--------------------------------------------------------------------------------------------------------------------
Total                                655.8               nm               nm           166.6              nm
--------------------------------------------------------------------------------------------------------------------
Average                                 nm             3.2(5)          2,491              Nm            6.7(5)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

SOURCE:  International Financial Statistics, June 2000

        NOTES:
1        GDP as of 1999
2        GDP as of 1998
3        GDP growth from 1998-1999
4        GDP growth from 1997-1998
5        Weighted by GDP
6        CPI growth from 1998-1999
7        CPI growth from 1997-1998


--------------------------------------------------------------------------------
       Country/Market                     Operations(1)           Customers(2)
---------------------------- ------------------------------- ------------------
Mexico                            NS, ISP, WH                           709
Central America (3)               NS, ISP, CATV, Tel, WH             39,450(4)
Venezuela                         NS, ISP                             2,465(5)
--------------------------------------------------------------------------------

(1)      "NS" means network services; "ISP" means high-speed or dial-up Internet
         services;   "CATV"  means  cable  television;   "Tel"  means  telephone
         services; and "WH" means web hosting services.
(2)      As of March 1,2001.
(3)      This market  region  includes our operations in El Salvador, Guatemala,
         Panama,  Costa Rica,  Nicaragua,  Honduras and the Dominican Republic
(4)      Represents 34,537 CATV subscribers, 754 network services and high-speed
         Internet access  subscribers and 4,159 dial-up Internet  customers.  We
         have  decided  to sell all or a portion of these  operations.  See "Our
         Central America Network and Operations," below.
(5)      Represents 24 high-speed Internet access and network services customers
         and 2,441 dial-up Internet customers.

Our Mexican  Network.  We entered the Mexican  market in 1999.  In June 1999, we
acquired  approximately  17% of the capacity of a fiber optic  network in Mexico
City that is owned by Metronet,  S.A. de C.V., or Metronet,  and entered into an
option to  purchase  up to 33% of the  capacity  of that  network.  The  network
consists  of five main  interconnected  rings of optic  strands.  As of March 1,
2001, the network had  approximately 340 kilometers of fiber in Mexico City. The
network  will  provide us with  direct  access to several  hundred  multi-tenant
buildings.  In addition, we have up to a 50% capacity right in a fiber system in
Monterrey.  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.

In December,  we acquired  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 709 corporate customers throughout Mexico. The Intervan network 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.  Our existing Intervan network uses a
combination  ATM/Frame  Relay-based  network. We intend to migrate a majority of
Intervan's current customers in Mexico to our  next-generation  IP-based network
and intend to use our IP-based gigabit Ethernet network for all new customers.

In November  2000,  we received a concession to operate our own data networks in
Mexico. The concession will allow 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 2001.

Our  Venezuela  Network.  We provide  Internet  access and  network  services in
Venezuela through a system owned by the incumbent telephone provider and through
a nine-ring,  fiber optic  network we are building in Caracas.  In addition,  we
have entered into a relationship with affiliates of Telematica,  an affiliate of
the largest electric utility in Venezuela,  to provide us with rights-of-ways to
an existing  metropolitan  area  utility  duct  network that the utility owns in
Caracas.  The duct  network  covers  approximately  90% of the central  business
district of Caracas.  We intend to expand the reach of this network  through the
addition of collector rings. We also have a buildout agreement pursuant to which
we can expand  this  network to  additional  locations.  Our  relationship  with
Telematica   also  provides  us  with  customer   relationships,   brand  equity
affiliation  and a  commercial  services  agreement,  pursuant  to which we will
receive  billing  and other  administrative  services,  as well as a $26 million
credit facility, under which we have borrowed seven million dollars.

In January 2001, we received a concession from the Venezuelan  government  which
will allow us to provide local,  domestic long distance and  international  long
distance telephony services. For a more detailed description of this concession,
see our report in form 8-K filed on March 7, 2001.

We have  constructed a fiber network in Maracaibo  which is similar in design to
our Caracas  network.  This network  covers  approximately  95% of the Maracaibo
central  business  district.  We intend to migrate our customers  from the CANTV
network that we currently  use in Maracaibo to this network as soon as possible.
We  also  intend  to  construct  fiber  optic  networks  in  Valencia,  Maracay,
Barquisimeto and Puerto La Cruz and anticipate completing  construction of these
networks between 2002 and 2004.

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 an interest in an operating  CATV system in El
Salvador. That system is the largest CATV system in El Salvador. We also provide
network  services,  high-speed  and  dial-up  Internet  access,  web hosting and
telephony services in El Salvador.

We completed  the  construction  of our El Salvador  network in early 1999.  The
network  consists  of  a  fully  redundant  fiber-optic  ring  in  San  Salvador
interconnected with two-way 750 MHz coaxial cable and 450 MHz coaxial cable. The
all-aerial  network provides last mile connectivity to our subscriber  locations
and covers approximately 85% of the business community of San Salvador. In areas
of new development,  we initially intend to use our wireless  infrastructure  to
provide  services  using  wireless  rights we acquired in 1998,  and then deploy
coaxial cable in areas of higher density. In 1999, we completed the construction
of a central NOC, and, during 2000, we upgraded approximately 45% of our network
to a 750MHz  system  and  initiated  service in El  Salvador's  second and third
largest cities, San Miguel and Santa Ana, respectively.

In December  1999, we added to our  operations in the region by acquiring all of
the operations of GBNet  Corporation,  or GBNet,  which provides data networking
and Internet access services  through seven  subsidiaries to high-speed data and
dial-up Internet customers in Guatemala, Honduras, El Salvador, Nicaragua, Costa
Rica,  Panama  and the  Dominican  Republic.  The  seller of GBNet  was  General
Business Machines Corporation,  or GBM, the exclusive general distributor of IBM
products  and  services  in several  Latin  American  countries,  including  the
countries  in which GBNet  operates.  We provide our services  through  networks
leased  from  the  incumbent  telecommunications  companies  and  a  frame-relay
network.   In   connection   with   that   transaction,   we   entered   into  a
commercialization  agreement  under  which we and GBM  agreed to  recommend  one
another as preferred  providers of services and products,  an equipment purchase
agreement under which GBM agreed to provide us with preferred  purchasing  terms
on any IBM  equipment  we  acquire  from GBM for our  operations,  and a network
management  agreement,  under which we provide  GBM 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 fiber
optic  network in Guatemala  City,  with six nodes  interconnected  with coaxial
cable that provides last mile connectivity to subscriber locations. We have also
secured  two blocks of  frequency  in  Guatemala's  wireless  telecommunications
spectrum, enabling us to provide services through broadband multi-point wireless
systems,  and  built  two  wireless  nodes.  Our  network  in  Guatemala  covers
approximately 70% of the business community of Guatemala City.

In late  2000,  our  board  of  directors  determined  to sell  certain  assets,
including our CATV assets,  in both El Salvador and Guatemala and to concentrate
our  operations  and build-out  activities in those markets on data and Internet
related services.  Based on that decision,  in February 2001, we entered into an
agreement with  Telematica  EDC, C.A. (one of our  shareholders  and the largest
private sector electric utility in Venezuela) to sell our 33% interest in our El
Salvador  operations  (both  data  and  CATV  operations)  to  Telematica.   See
"Litigation" and "Certain  Relationships and Related Party Transactions," below.
We are  actively  seeking  buyers for our  Guatemala  CATV  operations  and also
anticipate completing the sale of those operations in the first half of 2001.

Our Customers

We are the largest  independent  corporate  data  provider in Mexico,  where our
customer base includes 709 multinational corporations, governmental agencies and
other businesses in over 100 cities.  We intend to expand our marketing  efforts
in Mexico to a broader customer base, including residential users and, if, as we
expect,  we are granted a telephone license in the first half of 2001, intend to
initiate telephony services.  We also recently executed 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 Venezuela,  we have been  providing  data services to customers  since August
1998.  Our  customers  are mainly  located in the central  business  district of
Caracas and the business districts of Maracaibo and Valencia. We have over 2,465
customers  (24  of  which  are  high-speed  data  customers)  in the  cities  of
Maracaibo,  Puerto La Cruz, Ciudad Ojeda and Caracas.  We have also entered into
an arrangement  with  Telematica,  an affiliate of Venezuela's  largest utility.
Through that relationship,  we plan to leverage Telematica's and its affiliate's
brand  recognition  in the  Venezuelan  marketplace,  as well  as its  extensive
customer base and administrative expertise.

In our Central American market countries,  we focus on providing our services to
large business customers through our existing networks and our GBNet operations.
We have 39,450  customers in these market areas,  including 754 high-speed  data
customers,  4,159  dial-up and  high-speed  Internet  customers  and 34,537 CATV
customers  (see "Our  Central  America  Network and  Operations").  We also have
interconnect  agreements  with the incumbent  telephone  companies in two of our
Central American markets.

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,  our  competitors  include  Telmex and its  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.

Our primary competitor in Venezuela is the incumbent telephony provider,  CANTV,
which  provides  fixed  and  mobile  telephony,  Internet,  VPN,  long  distance
connectivity,  design and web hosting services on a nationwide  basis. Our other
competitors  include  Telcel,  which  provides  cellular  telephone and Internet
access  and  limited  data  transport   services  in  major  Venezuelan  cities;
VeinfoTel,  which supplies subscription telephony and high speed internet access
in major cities using coaxial cable and fiber and; Genesis, which provides fixed
wireless data transmission,  VPN and high speed Internet access in Caracas using
fixed wireless transmission technology.

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.

Our Services

We offer a wide  variety of  broadband  telecommunications  services,  including
managed  data  transmission,  high-speed  and dial-up  Internet  access,  video,
e-commerce-enabling  services and other value-added  communications services. We
also  offer  voice  services  in many 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 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 will be able to 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 March 1, 2001, we had 1,487 network service  customers which, in
          some cases, include high-speed Internet access.

     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 March 1,
          2001, we had 6,600 dial-up Internet access customers.

     o    Web and Application  Hosting. We offer Web-site and storefront hosting
          services, as well as e-commerce enabling applications. We also connect
          our various hosting centers to our clients' private networks and offer
          outsourced  firewall,   email  and  other  value-added   services.  In
          addition,  we provide design,  installation  and integration  services
          that facilitate our customers' e-commerce and e-business initiatives.

     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    Video  Services.  We offer CATV services in El Salvador,  where we own
          the  largest  CATV  system,  and  Guatemala,  where we own the  second
          largest CATV system.  We service a total of 34,537 CATV subscribers in
          these two markets.  As noted  above,  even though we have a strong and
          growing  presence  in the CATV in a  number  of our  markets,  we have
          determined  to sell  those  assets  and  concentrate  our  efforts  in
          developing  and marketing  our  high-speed  data and Internet  related
          services.

     o    Other  Services.  We offer other  telecommunications-related  services
          which we believe  enhance our customers'  telecommunications  and data
          services operations. For example, in Mexico, we are the fourth largest
          Lotus developer and offer a portfolio of Lotus  Notes-based  solutions
          for our customers' specific processing needs.

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.

Venezuela.  The Venezuelan  telecommunications  laws are generally regulated and
supervised by CONATEL, a governmental  agency.  CONATEL is also charged with the
responsibility of creating competition in the  telecommunications  industry. The
expiration of CANTV's exclusive right to provide basic telephony service in late
2000 created  additional  competition in the Venezuelan  market.  As a result of
that act, we believe that  operators  will be competing for  subscribers  in all
telecommunications   service  areas.  We  also  believe  several  companies  are
positioning  themselves  to enter the local and  long-distance  markets  are the
onset  of   liberalization,   creating  a  highly   competitive   future  market
environment.  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.

Central  America.  The legislatures of each of our Central American markets have
recently enacted major  legislation for the  deregulation of  telecommunications
services.  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.  The new laws generally provide for
the  privatization  of  data  service  providers,  television  and  broadcasting
services  immediately,   with  the  privatization  of  local  and  international
telephone services at later times. 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.

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.  Under our agreements  with Alcatel,  we are not obligated to use
them as the exclusive provider of our network  components.  As a result, we will
have the ability to source key  network  components  from a number of  equipment
vendors.  Fixed local wireless  networks can be constructed using equipment from
different  manufacturers  and can use different  technologies.  Fiber-optic  and
coaxial cable systems can also  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.  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 March 1, 2001, we lease  approximately 2,500 square feet
of office  space in Salt Lake City,  Utah under a lease  agreement  expiring  in
September  2003,  approximately  8,100  square feet of office  space in Sunrise,
Florida under a lease expiring in May 2007, and approximately  3,600 square feet
of office space in Pembroke Pines, Florida under a lease expiring 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, including ownership
          positions  in  the  operating   entities  for  the  asset  and,  where
          permissible under local law, ownership positions in the asset holder

The rights for wireless point-to-multipoint microwave communications networks in
most 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 March 1, 2001, we had 787  full-time  employees.  Approximately  40 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 defendant in an action  brought in federal court
in  California.  The suit claims we  defrauded  the  plaintiffs  in 1997 when we
diluted their position by engaging in our merger with Telecom Investment Company
in 1997 (see our report on form 10-KSB for the period  ending  December 31, 1999
for a  detailed  description  of  that  merger),  that we  breached  contractual
obligations to offer them a portion of the securities we sold other parties, and
that the  promissory  note we  executed  in  favor of a third  party is due now,
rather  than in  August  2001.  The  plaintiff,  which  is the  assignee  of the
promissory  note we  executed  in  favor  of the  third  party  in  1997,  is in
litigation  with that third party,  and both that third party and the  plaintiff
are claiming  rights in the note.  In late 2000,  the United  States  Bankruptcy
court held that the plaintiff  had violated  certain  interest  rate  limitation
rules in the  initial  transaction  between  the  plaintiff  and the other party
claiming  an  interest  in the  promissory  note,  and that the  other  party is
entitled to the note.  The final order with respect to that decision was entered
in January 2001. The action by the plaintiff against us is still pending.

In February 2001, we entered into an agreement with Telematica EDC, C.A., one of
our  principal  shareholders,  for the purchase by Telematica of our interest in
our El Salvador  operations.  Those  operations  include CATV, data services and
telephony   services.   See  "Our  Central  American   Network."  We  originally
anticipated  that the transaction  would close in the first half of 2001.  Since
executing  the  agreement,  disputes  have arisen  between the parties as to the
terms  of the  repayment  of  certain  amounts  that  we  are  due  from  the El
Salvadorian  operating  companies and which are required  under the terms of the
purchase  agreement to be paid on terms we deem reasonably  acceptable.  Neither
party has initiated  litigation  regarding the disputes,  but each party has put
the  other  party on  notice  of its  intent to  enforce  its  rights  under the
agreement.

                     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 that 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:

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. Those  shareholder  parties
hold  all of our  outstanding  series  C  shares  and  approximately  37% of our
outstanding common shares, representing, in the aggregate,  approximately 63% of
the voting rights represented by our outstanding securities. 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.

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.  See our report on form
8-K filed on March 7, 2001, for a more detailed  description of this transaction
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. The investors in
the  series D stock  hold all of the  outstanding  series D stock as of the date
hereof and,  together  with the series C stock and common stock they  previously
acquired from us, hold  approximately  73% in the aggregate of the voting rights
represented by our  outstanding  securities.  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 (as  described in the  preceding  paragraph)  warrants to acquire
additional shares of our common stock at a purchase price of $.01 per share. The
consideration for the warrants  included,  in part, a waiver by the October 1999
purchasers  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 to an affiliate of TCW/CCI  Holding LLC (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.

Internexus   Transactions.   We  have  entered  into  the  following  contracts,
agreements and arrangements with Internexus and its affiliates:

     o    In December  1998,  June 1999,  September  1999 and October  1999,  we
          borrowed a total of $9.05 million from Internexus.  In connection with
          those loans,  we issued  Internexus  warrants to acquire shares of our
          common stock.  Internexus converted the principal and interest amounts
          due  under  all  those  notes  into  shares  of our  series C stock in
          connection  with the October  1999  financing  transactions  described
          above.

     o    In  December,  2000,  we entered  into a loan  transaction  with Jorge
          Ricardo  Priu,  an  affiliate  of  Internexus,  pursuant  to  which we
          borrowed $3 million  from Mr.  Priu 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.

FondElec Transactions. We have entered into the following contracts, agreements,
and arrangements with FondElec 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.  Our El Salvador
          subsidiary  has also  agreed to grant  FondElec  warrants  to  acquire
          shares  of its  capital  stock  in  connection  with any loan by us or
          FondElec to the El Salvador subsidiary.  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.

     o    In December  1998,  June 1999 and August 1999,  we borrowed a total of
          approximately  $8.7 million from  FondElec.  In connection  with those
          transactions,  we also issued  FondElec  warrants to acquire shares of
          our common stock.  FondElec  converted the principal amounts under the
          December  1998 note ($5 million)  into shares of our series C stock in
          connection with our October 1999 financing  transactions and we repaid
          the balance of the amounts due FondElec.

     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.  We paid
          FondElec  the fees due it under the October  financing  when we closed
          the financing. See Note 7 to the Financial Statements attached hereto.

Telematica   Transactions.   We  have  entered  into  the  following  contracts,
agreements and  arrangements  with Telematica EDC, C.A., or Telematica,  and its
affiliates:

     o    As part of our October  1999  financing  transactions,  we agreed with
          Telematica  to negotiate in good faith a joint venture for the purpose
          of acquiring and developing network rights in Colombia.

     o    In connection with our October 1999 financing transactions, Telematica
          acquired  approximately  32.6% of our El Salvador operations for $5.52
          million. In connection with Telematica's acquisition of that interest,
          we  capitalized  approximately  $900,000  of the  amounts  that our El
          Salvador  Subsidiary  owed us, and our El Salvador  subsidiary  used a
          portion of the proceeds from  Telematica's  investment  (approximately
          $3.8 million) to pay a portion of the amounts that the subsidiary owed
          FondElec.

     o    In October 1999, our Venezuelan subsidiary, entered into a $26 million
          financing  arrangement  with  Telematica.  A portion of that financing
          commitment,  $7  million,  was paid by  Telematica  in  cash,  and the
          remaining  amounts will be drawn down by our subsidiary,  from time to
          time,  to cover  its  obligations  under  the  terms of a fiber  optic
          capacity lease and a commercial  services agreement that it will enter
          into with  Telematica  or its  affiliates.  The amounts under the debt
          facility are convertible  under certain  circumstances  into shares of
          our  subsidiary.  Assuming  the  full  funding  of the  facility,  the
          conversion  of the debt amounts into equity would result in Telematica
          or its affiliates acquiring 50% of the stock of our subsidiary.

     o    In  February   2001,   we  entered  into  an  agreement  to  sell  our
          approximately  32.64% interest in our El Salvador operating  companies
          to Telematica. Under the terms of the transaction,  which is yet to be
          completed,  Telematica  has  agreed  to  acquire  our  stock  in those
          operating  companies for a purchase price of $45,000 per share (for an
          aggregate of approximately  $2.6 million).  The purchase price will be
          in addition  to the  amounts due us under the terms of the  promissory
          notes between Chispa and those parties (the "Chispa Debt"). The Chispa
          Debt will be repaid under the terms of the definitive  agreements
          to be negotiated between the parties.

Stock  Purchase.  In 1999, we purchased and  subsequently  retired 35,174 of our
common shares from a  shareholder  for $250,000.  The  shareholder  also forgave
$235,175 we owed him. The shareholder is an affiliate of two of our officers and
directors.

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 had
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 hold with us as of March 31, 2001, 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 nine members. Executive officers are chosen by, and serve
at the discretion of, the Board of Directors:

Name                   Age     Position
Lance D'Ambrosio.....  43      Chairman of the Board of Directors
Douglas Jacobs.......  57      Chief Executive Officer
Brian Reynolds.......  44      President and Chief Operating Officer
Jerry Slovinski......  44      Senior Vice President and Chief Financial Officer
Troy D'Ambrosio......  40      Senior Vice President, Legal & Administration,
                               Director
Thomas Burgos........  49      Senior Vice President of Networks
Tony Read............  47      Vice President of Information Technology and CIO
Amaury Rivera........  39      Vice President of Sales and Marketing
Luis de la Fuente....  54      Vice President of Strategic Alliances
Maritza Escalona.....  47      Chief Executive Officer, Venezuela
Mario Vazquez........  44      Chief Executive Officer, Mexico
Anthony Sansone......  36      Vice President, Treasurer and Corporate Secretary
Gary Barlow..........  35      Vice President of Accounting and Taxation
Ron Bouganim.........  29      Vice President of Business Development
Mario L. Baeza.......  50      Director
Alfonso Bahamonde....  58      Director
Norberto Corredor....  37      Director
Peter Schiller.......  65      Director
Jorge Fucaraccio.....  57      Director
George Sorenson......  45      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 21
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 April 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 Chief Executive
Officer for Convergence Communications, Inc. (CCI), having joined the company 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 19
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.

Jerry  Slovinski,  Senior  Vice  President  and  Chief  Financial  Officer.  Mr.
Slovinski  has  21  years  of  financial  and   accounting   experience  in  the
telecommunications industry. After eight years with Arthur Andersen, in 1986 Mr.
Slovinski  joined Venango River  Corporation,  a railroad  holding  company,  as
controller.  In 1988,  he became  Chief  Financial  Officer and, one year later,
President  and  Chief  Executive  Officer,  of Tel Com  International,  Inc.,  a
telecommunications  company  serving  businesses  throughout  the United States.
Before he joined  us, Mr.  Slovinski  worked for The  Network  Management  Group
providing  financial and management  consulting  services to  telecommunications
companies,  including e.spire Communications,  Ameritech,  AT&T Canada, Citizens
Communications and Teligent. Mr. Slovinski received a Bachelor of Science Degree
in Business  Administration and Accounting from Western Illinois  University and
is a Certified Public Accountant.

Troy D'Ambrosio,  Senior Vice President Legal &  Administration,  Director.  Mr.
D'Ambrosio  has 19 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.

Thomas Burgos,  Senior Vice  President of Networks.  Mr. Burgos joined us in May
2000 as our Senior Vice  President of Networks.  Mr.  Burgos has in excess of 30
years of experience in the telecommunications industry. Between 1993 and when he
joined us, Mr. Burgos was employed by Bell  Atlantic.  From 1998 to 2000, he was
Vice President and CTO of Nuevo Grupo Iusacell, S.A. de C.V., the second largest
wireless communications company in Mexico and a Bell Atlantic subsidiary,  where
he oversaw the corporations network design and construction operations. Prior to
joining Iusacell,  Mr. Burgos was a Director of a Network Operating Center and a
Director of Network  Operations for Bell  Atlantic,  where he was Vice President
and Chief  Technology  Officer between 1993 and 1997. Mr. Burgos received a B.S.
in Electrical Engineering from Trinity College.

Tony Read, Senior Vice President of Information  Technology and CIO. Mr. Read is
our Senior  Vice  President  of  Information  Technology  and Chief  Information
Officer.  Mr.  Read  joined  us in May,  2000 and has in  excess  of 19 years of
experience in the telecommunications  industry.  Before joining us, Mr. Read was
the Vice  President of  Information  Services at Nortel,  where he led the Latin
American IT efforts.  Mr. Read is an expert in OSS Systems and has a  successful
sales  background.  Mr. Read obtained a Bachelor of Science Degree in Electrical
Engineering from Trinity College.

Amaury Rivera,  Vice  President of Sales and Marketing.  Mr. Rivera joined us in
2000 as our Vice President of Sales and  Marketing.  Mr. Rivera has in excess of
16  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.

Luis de la Fuente,  Vice President of Strategic  Alliances.  Mr. de la Fuente is
our Vice  President  of  Strategic  Alliances  and also acts as  Chairman of our
Mexican  operations.  Mr. de la Fuente  has over 31 years of  telecommunications
experience in the Mexican  telecommunications  and financial markets.  Mr. de la
Fuente was responsible for the start-up of Amaritel,  Mexico's largest CLEC, and
until 1998,  served as its Chief  Executive  Officer.  Prior to the  start-up of
Amaritel,  Mr.  de  la  Fuente  served  in  various  financial  and  operational
capacities  for Grupo Radio Centro,  Mexico's  largest radio  operator,  was the
Chief Financial  Officer of Salinas y Rocha, a leading household goods retailer,
and was the Chief Executive  Officer of First Chicago Costa Rica Bank. Mr. de la
Fuente holds a Master of Science  Degree in  Industrial  Management  from Purdue
University.

Maritza Escalona,  Chief Executive Officer Venezuela.  Ms. Escalona joined us as
our Chief Executive  Officer Venezuela in April 2000. Ms. Escalona has extensive
experience in the  telecommunications,  information  technology  and  electrical
industries.  From 1998 to April 2000,  she was the CEO of Tesam de Venezuela,  a
subsidiary of the joint venture  between Alcatel and France Telecom in charge of
operating  the  Globalstar's  Venezuelan  operations.  In less  than 2 years she
formed  the  company,  negotiated  the  legal  authorizations  as  well  as  the
connection rights (the infrastructure is a mix of satellite and earth stations),
recruited and trained a 25 specialists team and built the earth station based in
Venezuela  ($20M).  From 1997 to 1998,  she worked for CANTV,  the GTE telephone
subsidiary,  where she  actively  participated  in the shift  the  company  gave
towards new businesses.  From 1995 to 1997 she was with Bell South's subsidiary,
Telcel,  where her role was to identify new business  opportunities and conceive
and implement  new services to meet market  demand.  From 1993 to 1995,  Maritza
worked  for  an  Israeli  telecom  company,  Corp.  Transdata,   where  she  was
responsible for building the infrastructure  enabling the service (wireless data
transmission).  Ms. Escalona started her career as an Engineer in CANTV and then
in Eripe, a local engineering firm.

Mario Vazquez, Chief Executive Officer Mexico. Mr. Vazquez joined us in December
1999 when we acquired Intervan,  the second largest carrier in Mexico,  where he
was the  President  and Chief  Executive  Officer.  Mr.  Vazquez has a Master of
Science  in  telecommunications  (University  of Essex,  Great  Britain)  and an
engineering  degree  in  electronics  and   communications   (Universidad  Ibero
Americana,  Mexico) and brings 27 years of experience in the telecommunication's
field.  Mr. Vazquez began his  telecommunications  career as design  engineer of
radio systems for Ingenieria de Radio (IRASA) in 1975. Between 1979 and 1987, he
was  responsible  for technology  planning and evaluation at Telefonos de Mexico
(Telmex),  the  incumbent  carrier  in  Mexico.  Between  1993 and 1998,  he was
Director  and  General  Manager for Mexico and  Central  America  for  Newbridge
Networks,  and between 1990 and 1993 he was Director of Cable  Systems for AT&T.
Between 1988 and 1990, he was Vice President of Network  Design and  Engineering
for Sersa-Geocomm.

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 13 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 13 years
of accounting and financial experience, including eight years of big-five public
accounting  experience  and a combined four years with a Fortune 100 company and
another public  accounting firm.  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.

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 $60 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,  GDC Alimentos,  S.A.,  Brazil's leading canned seafood  company,  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.

Alfonso Bahamonde Director.  Mr. Bahamonde is Managing Director and Principal 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 in  September  1996,  Mr.  Bahamonde  was the Senior  Managing
Director and Chief Investment  Officer of Latin America Private Equity Partners,
LLC and, immediately prior to that, was Senior Advisor for Wasserstein Perella &
Co., Inc. Mr.  Bahamonde has also held senior  management and officer  positions
with Continental Bank, N.A., and Chase Manhattan Bank, N.A.,  primarily in their
South American operations.

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 15 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.

Peter Schiller,  Director. Since 1993, 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  are  Argentinean  corporations  engaged  in oil and gas
services, where he currently serves as the Director of New Business Development.
Between 1976 and 1993,  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.

George Sorenson,  Director. Mr. Sorenson is the Chairman of FondElec Group, Inc.
which,  together with its  affiliates,  invests in energy,  communications,  and
other  essential  services in Latin  American  and Eastern  Europe,  and manages
private equity funds that invest in those  services.  Between 1990 and 1992, Mr.
Sorenson was the Associate  Director of Bear,  Sterns & Co., Inc.,  where he was
principally responsible for its international investment banking in the far east
and coordinated product development, marketing and account coverage for Japanese
accounts in New York and Tokyo.  Between 1983 and 1990, Mr.  Sorenson worked for
Drexel  Burnham & Lambert,  Inc.,  most  recently as a Senior Vice  President in
Tokyo, Japan, where he managed the company's high yield bond operations in Asia.

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.

Our Advisory Board

We have formed an advisory  board for the purpose of assisting us in identifying
market and product development opportunities,  reviewing with our management the
progress of our specific projects,  recruiting our top management and evaluating
our  operational  systems and, in general,  assisting us in our  regulatory  and
strategic  planning.  Members of the advisory board are leaders in the fields of
business and  telecommunications  and generally  meet with our  management on an
informal  basis.  Our advisory board has received  options to acquire a total of
150,000 of our common shares as compensation for their services.

Noe Kenig,  Chairman,  CCI Advisory Board. Mr. Kenig is chairman of our Advisory
Board.  Mr.  Kenig is the past  Chairman of Motorola  de Mexico,  S.A.  and Vice
President and Director,  Latin American Operations,  for Motorola, Inc. Prior to
joining Motorola,  Mr. Kenig held several  executive  positions with a number of
large  United  States  corporations  or their  foreign  subsidiaries,  including
National Distillers & Chemical Corporation,  Tennaco Corporation, Philco, Bendix
and  Westinghouse.  Mr.  Kenig  also  serves as a member  of the World  Business
Advisory Council of Thunderbird,  the American  Graduate School of International
Management,  and the  International  Business  Development's  Advisory  Board of
Northwestern University. Mr. Kenig currently acts as a consultant to Fortune 500
Companies such as Motorola and Proctor & Gamble.

Pete Campbell,  Advisory Board.  Mr. Campbell is a 35-year veteran of IBM, where
he  retired  as  Manager  of  Market   Analysis  and   Development  of  the  IBM
Telecommunications  Division. In that capacity, Mr. Campbell was responsible for
industrial  intelligence,  strategic developments and acquisitions,  and market,
product and business planning for IBM's Telecommunications Development Division.

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 nine members. The Class 3 directors, consisting of Messrs.
Schiller and Bahamonde  serve until 2002.  The Class 2 directors,  consisting of
Messrs.  Troy  D'Ambrosio,  Baeza and  Corredor,  serve until 2003.  The Class 1
directors,  consisting of Messrs.  Lance D'Ambrosio,  Acosta-Rua and Fucaraccio,
serve until 2001. 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 2000, our Board of Directors held 9 meetings,  and each director attended
at least 75% of those  meetings.  During 1999,  the Board of Directors had three
standing committees,  the Audit Committee,  the Compensation Committee,  and the
Executive Committee.

Our Audit Committee is charged with the review of the  professional  services we
receive from our independent  auditors,  determining  the  independence of those
auditors,   determining  the  accuracy  of  our  annual  financial   statements,
determining  the  appropriateness,  efficiency  and  accuracy  of our  system of
internal accounting controls and financial  reporting  practices,  and reviewing
such other matters  regarding our financial  procedures as may be brought to its
attention  or as may be  specifically  delegated  to it from time to time by our
Board. 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.  Since February  2000, the Audit  Committee has consisted of Messrs.
Bahamonde,  Sorenson, Troy D'Ambrosio,  Schiller and Corredor. Mr. Corredor acts
as chairman of the committee.

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. Since February 2000, the Compensation  Committee has consisted of Messrs.
Baeza,  Lance  D'Ambrosio,  Fucaraccio,  Acosta-Rua and Magan (who  subsequently
resigned  as a  board  member).  Messrs.  Lance  D'Ambrosio  and  Baeza  act  as
co-chairmen of the committee.

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. Since February 2000,
the Executive Committee has consisted of Messrs. Baeza, Acosta-Rua,  Fucaraccio,
Lance D'Ambrosio and Magan (who subsequently resigned as a director).

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 to 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,  2000,  December 31, 1999 and December 31,
1998. We awarded  options  during 2000 to Douglas  Jacobs,  our Chief  Executive
Office,  Thomas Burgos,  Senior Vice  President of Networks,  and Amaury Rivera,
Vice President of Sales and Marketing, all of whom joined us as employees during
2000.

<TABLE>
<CAPTION>

                                                      Annual Compensation
                                        ------------------------------------------------
                                                                                             Other Annual
        Name and Principal Position        Year        Salary             Bonus              Compensation
 -------------------------------------- ----------  -------------  --------------------      ------------
  <S>                                      <C>        <C>                 <C>                  <C>

  Douglas Jacobs                           2000       $350,000(1)         $66,667(2)           $14,100(7)
   Chief Executive Officer                 1999          $-0-              $-0-                  $-0-
                                           1998          $-0-              $-0-                  $-0-

  Lance D'Ambrosio                         2000       $212,500             $-0-                $16,400(3)
     Chairman of the Board                 1999       $165,000            $41,250              $14,950(3)
                                           1998       $165,000            $12,500              $13,800(3)

  Thomas Burgos                            2000       $210,000(4)         $70,000(2)            $7,300(7)
     Senior Vice President of              1999          $-0-              $-0-                  $-0-
     Networks                              1998          $-0-              $-0-                  $-0-

  Amaury Rivera                            2000       $210,000(5)          $-0-                 $9,500(7)
     Vice President of Sales &             1999          $-0-              $-0-                  $-0-
     Marketing                             1998          $-0-              $-0-                  $-0-

  Brian Reynolds                           2000       $169,500             $-0-                $15,700
     President and Chief Operating         1999       $135,000            $33,750              $13,000
  Officer                                  1998       $135,000(6)         $15,000              $10,800(7)

</TABLE>

-----------------------
(1)      Reflects full year base salary.  Mr. Jacobs became a salaried employee
         in August, 2000.
(2)      Signing Bonus.
(3)      Includes an automobile allowance of $7,800.
(4)      Reflects full year base salary.  Mr. Burgos became a salaried employee
         on May 15, 2000.
(5)      Reflects full year base salary.  Mr. Rivera became a salaried employee
         on August 1, 2000.
(6)      Reflects full year base salary. Mr. Reynolds became a salaried employee
         on July 1, 1998.
(7)      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.

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                           200,000              200,000               $-0-                $-0-
  Thomas Burgos                              -0-                100,000               $-0-                $-0-
  Amaury Rivera                              -0-                125,000               $-0-                $-0-
  Brian Reynolds                           183,333              166,667            $1,521,664          $1,383,336

</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 $9.30 per share, which is the estimated fair market value
our  Board  of  Directors  attributed  to that  stock  on  February  7,  2001 in
connection  with the sale of our series D preferred  stock.  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 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 incentive  compensation  that he will receive in the form of options and the
amounts due him in the event of the  termination  of his contract  under certain
conditions. The option grant provisions of the contract provide for the grant of
two  tranches of options,  the first of which  vested upon the  execution of the
agreement,  with the second tranche vesting 50% on the first  anniversary of the
agreement and 50% on the second  anniversary of the agreement.  If the agreement
is terminated under certain  conditions during the first year, the first tranche
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.  Those  options  will have an  exercise
price per share  equal to the market  value of our  common  stock on the date of
grant and will vest 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.  We have
accrued but not yet paid that bonus.

Our Chief Executive Officer's employment agreement also provides for the payment
of certain  consideration  if the  agreement  is  terminated  or modified  under
certain  circumstances.  If we terminate the agreement  without cause and not in
connection  with a "change of control," as described  below, he will receive his
salary up to the date of the  termination,  and will be able to keep the signing
bonus we paid him when he joined  us, as well as all of his vested  options.  If
the  termination  is in  connection  with a change  of  control,  and any of the
following  events  occurs  within  90 days of that  change,  he will  receive  a
severance payment;

     o    If we terminate his agreement without cause,

     o    If  we  significantly  modify  his  title,  functions  or  duties,  or
          significantly modify his reporting responsibilities,

     o    If we move our principal operations office more than 50 miles from its
          present location,

     o    If we decrease significantly his cash-based compensation, or

     o    If his contract is not assumed by the party then in control  within 90
          days after the date of the change of control.

Upon the occurrence of any of those events,  our Chief Executive Officer will be
entitled to receive a severance payment, calculated as follows:

     o    If the change in control  occurs before the nine month  anniversary of
          the  date of his  agreement,  he  will  receive  a total  compensation
          package  (which  will  take  into   consideration   all  cash  amounts
          previously paid him) in the aggregate amount of $3,500,000.  The total
          compensation  amount will be paid by  adjusting  the  exercise  prices
          and/or vesting schedules of any options we previously granted him and,
          if necessary to make up any  difference,  through our payment of cash,
          and

     o    If the change of  control  occurs  after the first nine  months of the
          agreement,  but before the 18-month  anniversary of the agreement,  he
          will  receive  a total  compensation  package  (which  will  take into
          consideration  all cash amounts  previously paid him) in the aggregate
          amount of $1,750,000.  The total  compensation  package amount will be
          paid in accordance  with the same procedure  described with respect to
          changes of control occurring before the nine-month  anniversary of the
          contract.

As used in the  employment  contract,  the term  "change of  control"  means any
transaction or series of related  transactions  with the same principal  parties
which result in the sale of all or substantially  all of our assets,  our merger
or  consolidation  with  another  unaffiliated  entity and pursuant to which our
shareholders  prior to the merger or  consolidation do not hold (either directly
or indirectly) immediately following that merger or consolidation, a majority of
the  combined  voting  power  of the  outstanding  securities  of the  surviving
corporation in that merger or consolidation, or any acquisition by any person or
entity of more than 50% of our issued and outstanding  stock, or individuals who
(as of the date of the employment  agreement)  constitute the Board of Directors
cease for any reason to constitute at least a majority of our Board of Directors
unless  any  individual  who  becomes  a  director  subsequent  to the  date  of
employment  agreement  whose  election,  or  nomination  for an  election by our
stockholders,  was  approved by a vote of at least a majority  of the  directors
then comprising the incumbent Board.

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 March 1, 2000.

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

On January  14,  2000,  we held our  annual  meeting  for the year 2000.  At the
meeting, our stockholders:

     o    Approved  an  amendment  to  our  Amended  and  Restated  Articles  of
          Incorporation  which increased the maximum number of our board members
          from nine to ten.

     o    Ratified and approved the appointment of Deloitte & Touche, LLP as our
          independent public accountants.

     o    Elected Mario L. Baeza, Norberto Corredor and Troy D'Ambrosio as Class
          2 directors,  and Peter Schiller,  George Sorenson,  Salomon Magan and
          Alfonso Bahamonde as Class 3 directors.

We filed the amendment to our Amended and Restated  Articles of Incorporation to
increase the maximum number of persons  serving on our board of directors to ten
with the  Secretary  of State's  office  for the State of Nevada on January  20,
2000.

During 2000, we also  submitted  two other  matters to our security  holders for
vote  through  the use of  written  consents,  which  is  authorized  under  our
organizational  documents and Nevada  corporate law. The first matter related to
the transfer of  substantially  all of our assets  (consisting  primarily of our
stock interests in our various subsidiaries) to a new, wholly-owned  subsidiary,
Latin American Broadband, Inc., in connection with the completion of the Alcatel
transaction  in July 2000.  That action was  approved by written  consent in May
2000 and we affected the change in our  corporate  structure  in July 2000.  The
second  consent  resolution  matter  related to an  amendment of our Amended and
Restated  Articles of  Incorporation  to increase  our  authorized  capital from
115,000,000  shares to  125,000,000  shares,  comprised of 25,000,000  shares of
preferred stock and 100,000,000 shares of common stock. That action was taken by
our  shareholders  in September 2000, and the amendment was effected in February
2001 in  connection  with our  designation  and sale of our  Series D  preferred
stock. 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  May  22,  2000  and  October  17,  2000,
respectively.

                           OUR PRINCIPAL STOCKHOLDERS

The following  table sets forth  certain  information  regarding the  beneficial
ownership of our outstanding  securities  as of March 28, 2001 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 each of our Chief  Executive  Officer and the next
          four highest paid officers, or "named 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.

<TABLE>
<CAPTION>

               Name of                                                    Number of         Percentage of
           Beneficial Owner                        Class                   Shares               Class(1)
           ----------------                        -----                   ------               ------
<S>                                      <C>                                  <C>               <C>

TCW/CCI Holding LLC(2)                   Common                                     -0-          (*)
    (5% Shareholder)                     Series C Preferred                   4,227,119         31.0%
                                         Series D Preferred                         -0-          (*)

TCW/CCI Holding II LLC                   Common                                     -0-          (*)
    (5% Shareholder)(3)                  Series C Preferred                     537,634          3.9%
                                         Series D Preferred                   1,075,268         40.7%

Telematica EDC, C.A.(4)                    Common                                     -0-          (*)
    (5% Shareholder)                     Series C Preferred                   4,764,753         35.0%
                                         Series D Preferred                   1,075,268         40.7%

FondElec Essential Services(5)           Common                               2,728,597         22.0%
   Growth Fund, L.P.                     Series C Preferred                     666,666          4.9%
    (5% Shareholder)                     Series D Preferred                         -0-           *

Norberto Priu(6)                         Common                               1,235,434         10.2%
    (5% Shareholder)                     Series C Preferred                   1,235,125          9.1%
                                         Series D Preferred                     182,795          6.9%

Raquel Emilse Oddone                     Common                               1,230,617         10.2%
    de Ostry                             Series C Preferred                     664,455          4.9%
    (5% Shareholder)(7)                  Series D Preferred                     139,784          5.3%

Jean D'Ambrosio                          Common                                 793,554          6.7%
    (5% Shareholder)                     Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

International Finance                    Common                                     -0-          (*)
 Corporation(8)                          Series C Preferred                     952,950          7.0%
    (5% Shareholder)                     Series D Preferred                         -0-          (*)

Lance D'Ambrosio(9)                      Common                               3,605,439         30.2%
    (Chairman, Director)                 Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Douglas Jacobs(10)                       Common                                 200,000          1.7%
    (CEO)                                Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Brian Reynolds(11)                       Common                                 183,333          1.5%
    (Pres. and COO)                      Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Jerry Slovinski(12)                      Common                                 175,000          1.4%
    (Sr. VP and CFO)                     Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Troy D'Ambrosio(13)                      Common                                 638,542          5.4%
    (Sr. VP/Director)                    Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Thomas Burgos                            Common                                     -0-          (*)
    (Sr. VP, Network)                    Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Tony Read                                Common                                     -0-          (*)
    (CIO, VP IT)                         Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Amaury Rivera                            Common                                     -0-          (*)
    (VP Sales & Marketing)               Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Luis de la Fuente(14)                    Common                                 300,333          2.5%
    (VP/Strategic Alliances)             Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Maritza Escalona(15)                     Common                                  40,000          (*)
    (CEO/Venezuela)                      Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Mario Vazquez(16)                        Common                                  30,298          (*)
    (CEO/Mexico)                         Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Anthony Sansone(17)                      Common                                 165,555          1.4%
    (Vice President                      Series C Preferred                         -0-          (*)
    Treasurer/Secretary)                 Series D Preferred                         -0-          (*)

Gary Barlow(18)                          Common                                  25,000          (*)
    (VP, Acct. and Tax)                  Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Ron Bouganim(19)                           Common                                  66,666        (*)
    (VP, Bus. Development)               Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Mario L. Baeza(20)                       Common                                   1,634          (*)
    (Director)                           Series C Preferred                      10,000          (*)
                                         Series D Preferred                         -0-          (*)

Alfonso Bahamonde(21)                    Common                                   1,634          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Norberto Corredor(22)                    Common                                   1,634          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Peter Schiller(23)                       Common                                     -0-          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Jorge Fucaraccio(24)                     Common                                     -0-          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

George Sorenson(25)                      Common                                   5,980          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

Gaston Acosta-Rua(26)                    Common                                  12,000          (*)
    (Director)                           Series C Preferred                         -0-          (*)
                                         Series D Preferred                         -0-          (*)

All  directors and officers as a group   Common                               5,452,715         43.3%
(19 persons)(27)                         Series C Preferred                      10,000          (*)
                                         Series D Preferred                         -0-          (*)
</TABLE>

----------------------
*Less than 1%
(1)      Based on  11,921,094  outstanding  shares  of common  stock  (including
         125,237 shares of common stock issued in connection  with the automatic
         conversion  of our existing  series B preferred  stock in August 2000),
         13,620,472 outstanding shares of series C preferred stock and 2,643,636
         outstanding  shares of series D preferred  stock.  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
         March 1, 2000.

(2)      Does not include  776,057  shares of common  stock that may be acquired
         under the terms of a warrant issued to the stockholder in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified corporate events.

(3)      Does not  include  57,276  shares of common  stock that may be acquired
         under the terms of a warrant issued to the stockholder in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified  corporate  events.  Also does not include  322,580 shares of
         common stock and 455,685  shares of series D Stock that may be acquired
         under the terms of a warrant  issued  to the  stockholder  in  February
         2001,  but which may not be exercised  until the  occurrence of certain
         specified corporate events.

(4)      Does not include  833,333  shares of common  stock that may be acquired
         under the terms of a warrant issued to the stockholder in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified  corporate events.  Does not include 322,580 shares of common
         stock and 455,685  shares of series D Stock that may be acquired  under
         the terms of a warrant issued to the  stockholder in February 2001, but
         which may not be exercised  until the  occurrence of certain  specified
         corporate events.

(5)      Includes   508,006  common  shares  under   warrants   granted  to  the
         stockholder  prior to October 1999.  Does not include 426,666 shares of
         common stock that may be acquired under the terms of warrants issued to
         the  stockholder in October 1999, but which may not be exercised  until
         the occurrence of certain specified corporate events.

(6)      Includes   141,322  common  shares  under   warrants   granted  to  the
         stockholder's  predecessor-in-interest  prior  to  October  1999.  Also
         includes  options to acquire  8,817 common shares which were granted to
         Internexus'  designees  to our Board of  Directors  under our  Director
         Stock Plan,  but which were assigned to  Internexus  under the terms of
         the designees'  arrangements with Internexus.  Does not include 296,114
         shares of common stock that may be acquired under the terms of warrants
         issued to the  stockholder's  predecessor-in-interest  in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified  corporate  events.  Also does not include  54,838  shares of
         common  stock and 77,429  shares of series D Stock that may be acquired
         under the terms of a warrant  issued  to the  stockholder  in  February
         2001,  but which may not be exercised  until the  occurrence of certain
         specified corporate events.

(7)      Includes   141,322  common  shares  under   warrants   granted  to  the
         stockholder's  predecessor-in-interest  prior  to  October  1999.  Also
         includes  options to acquire  8,817 common shares which were granted to
         Internexus'  designees  to our Board of  Directors  under our  Director
         Stock Plan,  but which were assigned to  Internexus  under the terms of
         the designees'  arrangements with Internexus.  Does not include 296,114
         shares of common stock that may be acquired under the terms of warrants
         issued to the  stockholder's  predecessor-in-interest  in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified  corporate  events.  Also does not include  41,934  shares of
         common  stock and 59,211  shares of series D Stock that may be acquired
         under the terms of a warrant  issued  to the  stockholder  in  February
         2001,  but which may not be exercised  until the  occurrence of certain
         specified corporate events.

(8)      Does not include  166,666  shares of common  stock that may be acquired
         under the terms of warrants  issued to the stockholder in October 1999,
         but  which  may  not be  exercised  until  the  occurrence  of  certain
         specified corporate events.

(9)      Includes shares held in the name of Mr. D'Ambrosio and held in the name
         of entities  over which Mr.  D'Ambrosio  has voting  and/or  beneficial
         control and for which he does not disclaim beneficial  ownership.  Also
         includes  shares  held by an entity that is jointly  controlled  by Mr.
         D'Ambrosio and Troy D'Ambrosio.

(10)     Includes options to acquire 200,000 common shares.

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

(12)     Includes options to acquire 175,000 common shares.

(13)     Includes shares held by an entity that is jointly controlled by Mr.
         D'Ambrosio and Lance D'Ambrosio.

(14)     Includes options to acquire 67,000 common shares.

(15)     Includes options to acquire 40,000 common shares.

(16)     Includes options to acquire 30,298 common shares.

(17)     Shares  shown are held by a  limited  liability  company  for which Mr.
         Sansone  acts as the  managing  member.  Mr.  Sansone does not disclaim
         beneficial  ownership of such shares.  Also includes options to acquire
         50,000 common shares.

(18)     Includes options to acquire 25,000 common shares.

(19)     Includes options to acquire 66,666 common shares.

(20)     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.  The shares of series C Stock shown for
         Mr. Baeza reflect his indirect  interest in TCW/CCI  Holding's  shares.
         Mr. Baeza disclaims  beneficial  interest in the shares held by TCW/CCI
         Holding  except  to the  extent  of that  indirect  interest.  Includes
         options to acquire 1,634 common shares.

(21)     Mr. Bahamonde is a principal of an affiliate of TCW/CCI Holding.  Mr.
         Bahamonde  disclaims  beneficial interest in the shares held by TCW/CCI
         Holding.  Includes options to acquire 1,634 common shares.

(22)     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 1,634 common
         shares.

(23)     Mr. Schiller  is an officer of one or more  affiliates  of  Internexus.
         Mr. Schiller  disclaims  beneficial  interest  in the shares held by
         Internexus and its affiliates.

(24)     Mr. Fucaraccio is an officer of an affiliate of Internexus.
         Mr. Fucaraccio  disclaims  beneficial interest in the shares held by
         Internexus, or its affiliates.

(25)     Mr. Sorenson  is a  principal  of  FondElec.  Mr. Sorenson  disclaims
         beneficial  interest in the shares held by  FondElec.  Includes options
         to acquire 5,634 common shares.

(26)     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
         12,000 common shares.

(27)     Assumes the matters set forth in notes 1 through 26.  Includes options
         to acquire 676,167 common shares.

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 million of our common shares to the former  shareholders  of
TTI in connection with our business separation from 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, and 11 holders of our outstanding series C preferred
shares and six holders of our series D preferred shares.

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

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

Since our inception,  we have sustained significant net losses and negative cash
flow. We expect the losses and negative cash flow to continue until we develop a
customer  base that will  generate  sufficient  revenues  to fund our  operating
expenses.  We  expect  that our  2001  operating  and net  losses  and  negative
operating  cash flow will be greater than in 2000. 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
and other  resources.  Our ability to manage the  problems  associated  with our
expansion will depend, among other things on, our ability to monitor operations,
control costs, maintain effective quality control, secure necessary interconnect
and regulatory approvals, expand internal management, technical, information and
accounting systems and attract,  assimilate and retain qualified  management and
professional  personnel.  Our inability or failure to  effectively  manage these
issues could result in significant  subscriber turnover,  stagnant or decreasing
subscriber  growth,  our  inability  to meet  our  contractual  obligations  for
continued funding under our various vendor financing  relationships such as with
Alcatel,   managerial   inefficiencies,   missed  corporate   opportunities  and
continuing or increased losses.

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

Results of Our Operations

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.

1999 Compared to 1998

Revenues.  Our Revenues for 1999 totaled $9.1 million,  compared to $3.1 million
for 1998,  representing  a $6.0 million  increase  from  revenues for 1999.  The
following table shows our revenues by operating subsidiary for 1999 and 1998:

         TOTAL REVENUES                      1999                 1998
         (in thousands)
         Mexico (Intervan) (1)            $   172               $    -
         Venezuela (Inter@net) (2)          1,156                  399
         Central America (3)                7,772                2,714
                                          -------               -------
              Consolidated total          $ 9,100               $ 3,113
                                          =======               =======
-------------------
(1)      1999 revenue includes only eight days of ownership.
(2)      1998 revenue represents less than six months of ownership.
(3)      1999 revenue includes only sixteen days of ownership of the GBNet
         entity.

The increase in our 1999 revenues was primarily attributable to ownership of the
Inter@net and Chispa entities for all twelve months of 1999.  Chispa's  customer
base grew from 25,176 customers in 1998 to 29,276 customers in 1999, an increase
of 4,100  customers,  or 16%. In addition  to the growth of the  customer  base,
Chispa began offering dial up Internet  services and high-speed data services to
residential and corporate customers during the latter half of 1999.

Our Inter@net  customer  base consists of both contract and pre-paid  customers.
Inter@net's  contract  customer base grew from 1,771  customers in 1998 to 2,667
customers in 1999,  an increase of 51%. The pre-paid  customer base grew from an
average of 356  customers  in 1998 to an average of 462  customers  in 1999,  an
increase of 106  customers  (or 30%).  Despite  increases in the customer  base,
however,  net revenues for Inter@net reflect the downward pressure on prices due
to competition and economic difficulties in Venezuela.

During  December  1999,  we commenced  both our  operations in Mexico and in the
GBNet affiliated countries of Central America (Guatemala, El Salvador, Honduras,
Nicaragua, Costa Rica, Panama and the Dominican Republic).

Variable  Cost of  Services.  Variable  cost of services  consists  primarily of
bandwidth and cable programming charges. The cost of these services totaled $3.2
million in 1999,  an  increase  of $1.3  million  (or 68%) from  1998.  Of total
variable  cost of  services  for 1999,  $2.2  million  related  to our  Chispa's
operations in El Salvador and $0.6 million related to Inter@net's  operations in
Venezuela.

Salaries,  Wages and  Benefits.  Our salaries,  wages and benefits  totaled $5.8
million,  an increase of $3 million (or 107%),  from 1998. We maintained a total
of 490 employees at December 31, 1999, compared to 242 employees at December 31,
1998. The increase in headcount  reflects both the normal  increases  associated
with our maturing  operation and the  employees we acquired  during the month of
December  1999 in our  purchases  of  Intervan  and GBNet,  which had 126 and 29
employees,  respectively, at December 31, 1999. 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 $7.0
million in 1999, an increase of $2.3 million (or 46%) compared to 1998. The $2.3
million increase in SG&A expenses  reflects growth in our operations,  including
completing  significant  acquisitions in 1999 and 1998, as well as the increased
development of our networks. The increase in SG&A reflects:

     o    Consulting,  legal and tax advisor  fees,  which totaled $2.7 million,
          compared with $2.3 million for 1998

     o    Travel and  promotion  costs  increased by 45%, to $1 million in 1999,
          compared to $0.7 million in 1998.  These expenses relate  primarily to
          the expansion of our operations into Central  America and Mexico,  the
          significant private equity and credit facility we completed in October
          1999 and the expenses  involved  with signing the vendor and equipment
          financing agreement with Alcatel.

     o    On a consolidated basis, we recorded a provision for doubtful accounts
          of $0.4  million,  compared  to $0.04 in 1998 as a result  of  payment
          arrears and increased operations.

Stock Compensation  Expense. We incurred non-cash stock compensation  expense in
1999 of $1.2 million.

Depreciation and Amortization. Our depreciation and amortization expense totaled
$5.3 million in 1999,  representing  an increase of $2.4 million over 1998.  The
increase relates  primarily to amortization of intangible assets relating to our
acquisitions.

Asset  Impairment.  Since 1997, we had owned  approximately  78% of the stock of
Viva  Vision,  which acts as the  operating  company  for the local  multi-point
distribution service license held by Centurion. The total purchase price for our
interest in Viva Vision was approximately  $8,300,000,  of which the majority of
the purchase price was allocated to an intangible  asset. In connection with the
Viva Vision  transaction,  we also  acquired an 8.46%  interest in Centurion for
approximately $845,000.  During the fourth quarter of fiscal 1999, we determined
that our  related  Viva Vision  recorded  assets and  intangible  assets and our
investment in Centurion,  totaling approximately $5.7 million as of December 31,
1999 may be 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,  we recorded an impairment of $5.7 million for the year
ended December 31, 1999.

Interest Expense and Interest Income.  Our interest expense totaled $3.7 million
in 1999,  an  increase  of $3 million  over 1998.  The  significant  increase in
interest expense was primarily  attributable to our increased  indebtedness from
acquisition and financing activities.  The average interest rate recorded on our
indebtedness  outstanding  as of 1999  was  approximately  10.75%,  compared  to
approximately 10% for 1998. Interest income increased $0.2 million due to higher
average cash investments during 1999.

Provision  for Income  Taxes.  We recorded a provision for income taxes of $0.05
million  in 1999,  compared  to none for  1998.  Chispa,  which  operates  in El
Salvador, recognized the majority of this income tax expense.

Net Loss.  We incurred a net loss of $20.3 million in 1999, an increase of $10.1
million, compared to 1998. The principal reasons for the increase were:

     o    the  $5.7  million   impairment  of  our  Viva  Vision  and  Centurion
          intangible assets

     o    the $3  million  increase  in  salary  and  benefits  attributable  to
          acquisitions and our increase in employee headcount to support planned
          growth.

     o    the $3  million  increase  in  interest  expense  attributable  to our
          increased indebtedness as a result of acquisitions

     o    the $2.4 million increase primarily  relating to amortization  expense
          on intangible assets as a result of acquisitions

     o    the $2.3  million  increase in SG&A  expenses due to the growth in our
          operations.

     o    the above  increases  were  offset by a $4.6  million  increase in net
          revenues over variable cost of services and a $1.4 million increase in
          minority interest loss

Liquidity and Capital Resources

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

We will continue to make  significant  capital  expenditures in the next several
years in connection with building our networks,  the further  development of our
operations in Mexico,  Venezuela and Central America,  and new customer accounts
(for which we install our equipment on customer premises). We intend to meet our
capital requirements during 2001 from a combination of the following:

     o    operating revenues

     o    unused proceeds from our February 2001 financing

     o    the sale of all or a portion of our  operations in El Salvador and the
          sale of our CATV operations in Guatemala

     o    additional equity or debt financings.

We  anticipate  that we will  require a minimum of $20  million  during 2001 for
capital expenditures related to the expansion of our existing telecommunications
business,  and that we will require significant amounts thereafter.  If we spend
over $20 million for capital  expenditures,  as noted above, we would anticipate
meeting a portion of our capital  requirements through draw downs on the Alcatel
facility.  Under the  terms of the  January  amendment  to our  agreements  with
Alcatel,  we are 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 we have paid or will pay
prior to the  reimbursement.  As of the date of this report, we have not met one
of the amended operating covenants, and therefore, have been unable to draw down
on the  Alcatel  facility.  We intend to work with  Alcatel to  renegotiate  the
operating covenants to provide us with the ability to make further draw downs on
the  facility.  We can make no  assurances  that  Alcatel will agree to any such
modifications.  Further, as of the date of this report, we are not in compliance
with the 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.



If we are able to obtain a waiver or modification of the payment provisions, but
are  still  unable to make  draw  downs on the  Alcatel  facility  (and  receive
reimbursement  of  certain  amounts  we have paid or will pay  thereunder),  the
amount of our capital expenditures could be reduced significantly. Also as noted
above, we intend to meet a portion of our capital  requirements through the sale
of our equity or debt  securities and through the sale of certain of our assets,
including all or a portion of our Guatemala  and El Salvador  operations.  There
can be no  assurance,  however,  that  we will be  able  to  complete  any  such
financings or sales on terms  acceptable to us, or on any terms, in part because
of the current state of the telecommunications  industry. The telecommunications
market dropped  dramatically during 2000, and from March 2000 through the end of
the  year,   the  market  value  of   telecommunications   companies   decreased
significantly.  The  values  of  telecommunications  companies  have  also  been
adversely  affected  by the  experience  of the  established  telecommunications
vendors,  which have  recently  experienced  increasing  problems in  collecting
payments  for their  equipment.  As a result  of these  factors,  investors  and
lenders are carefully evaluating prospective investment opportunities in and the
investment values of telecommunications  companies that are seeking investments.
If we are unable to obtain  additional equity capital as a result of the factors
noted above in this paragraph,  or otherwise,  our ability to make draw downs on
the Alcatel facility (and receive  reimbursement of certain amounts we have paid
or will pay thereunder) also could be adversely affected.

During 2000, our operating  activities  used $15.6  million,  compared with $4.8
million  during  1999.  Our  investing  activities  used $36.3  million in 2000,
compared   with  $31.6  million   during  1999.   These  changes  are  primarily
attributable  to the increase in working capital  requirements  and purchases of
property and  equipment  totaling  $32.6  million in 2000 related to our rapidly
expanding operations. Financing activities, principally the option exercise from
our October  1999  financing  and draw downs on the Alcatel  facility,  provided
$29.9 million in net cash flow during 2000, compared to $58.4 million in 1999.

As of December 31, 2000,  we had current  assets of $16.5  million,  compared to
$31.0  million as of December 31,  1999,  for a decrease of $14.5  million.  The
decrease in current  assets was  primarily  due to a decrease in cash related to
payments for working capital and capital expenditures.

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

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. If
we are  required to conserve our  operating  cash by slowing the buildout of our
networks,  decreasing  our  marketability  efforts or  otherwise  modifying  our
service  offerings or the manner and timing of the way we implement our business
plan,  our ability to meet the  operational  milestones set forth in the January
2001 amendment to our Alcatel  agreements could be adversely  affected,  perhaps
materially. If we are unable to meet those operations milestones, we will not be
able to make further draw downs on the Alcatel facility or obtain reimbursements
of certain amounts we have paid on or will pay Alcatel under the facility.

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.

                  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 have not received copies of filings on Forms 3, 4 or 5
from any such Reporting Person for the year ended December 31, 2000.

                               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/A filed January 6, 2000,  relating to our  acquisition of GBNet
          and its operations in Central America.

     o    An 8-K  filed  January  13,  2000,  relating  to our  acquisition,  on
          December 24, 1999, of Intervan.

     o    An 8-K filed  January 21, 2000,  relating to a  shareholder's  meeting
          that we held on January 14, 2000, at which our  shareholders  approved
          an increase  in the  maximum  number of board  members,  ratified  and
          approved the appointment of our independent  public  accountants,  and
          elected certain members of our board of directors.

     o    An 8-K/A filed  February 28, 2000,  pursuant to which we filed certain
          financial statements relating to our acquisition of GBNet Corporation.

     o    An 8-K/A filed  March 13,  2000,  pursuant  to which we filed  certain
          financial statements relating to our acquisition of Intervan.

     o    An 8-K filed May 1, 2000, relating to our acquisition of our operating
          companies in Guatemala.

     o    An  8-K  filed  July  11,  2000,  relating  to  our  vendor  financing
          arrangements  with Alcatel and the  restructuring of our operations to
          create Latin American  Broadband,  Inc. and,  thereafter,  to transfer
          essentially  all of the  assets  of our  parent  corporation  to Latin
          American Broadband, Inc.



<PAGE>



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                                47
          Consolidated Balance Sheets                                 48
          Consolidated Statements of Operations                       49
          Consolidated Statements of Cash Flows                       50
          Consolidated Statements of Stockholders' Equity             51
          Notes to Consolidated Financial Statements                  52




<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, 2000
and 1999, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for the years then ended.  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 the Company 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, 2000 and 1999, and the results of its operations and its cash flows
for the years then ended,  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 aspects,
the information set forth therein.

The accompanying  consolidated  financial statements for the year ended December
31, 2000 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
March 28, 2001






<PAGE>


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

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
----------------------------------------------------------------------------------------------------------------

                                                                                    December 31,       December 31,
                                                                                        2000               1999
                                                                                   ---------------    ---------------
<S>                                                                                 <C>                 <C>
ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                                         $ 4,193,170       $ 26,303,296
    Accounts receivable - net                                                           5,244,893          3,180,748
    Inventory - net                                                                       910,204            262,177
    Value added tax receivable                                                          4,048,900                  -
    Prepaid expenses and other                                                          2,129,438          1,225,490
                                                                                   ---------------    ---------------
                 Total current assets                                                  16,526,605         30,971,711

PROPERTY AND EQUIPMENT - net                                                           56,652,546         28,446,776

INTANGIBLE ASSETS - net                                                                46,513,030         36,660,025

OTHER ASSETS
    Debt issue costs                                                                    5,550,687                  -
    Other                                                                               1,475,034          1,126,011
                                                                                   ---------------    ---------------
                 Total other assets                                                     7,025,721          1,126,011
                                                                                   ---------------    ---------------
TOTAL ASSETS                                                                        $ 126,717,902       $ 97,204,523
                                                                                   ===============    ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Short-term debt (payable to related party)                                        $ 3,000,000                  -
    Notes payable - current portion                                                    22,298,447       $ 11,190,987
    Current portion of long-term debt (payable to related party)                        1,436,519                  -
    Accounts payable and accrued liabilities                                           21,944,835          6,973,605
                                                                                   ---------------    ---------------
                 Total current liabilities                                             48,679,801         18,164,592

LONG-TERM LIABILITIES:
    Notes payable - long-term portion                                                  12,274,717         11,389,937
    Long-term debt (payable to related parties)                                         4,769,497          2,595,634
    Other long-term liabilities                                                           392,239            185,686
                                                                                   ---------------    ---------------
                 Total long-term liabilities                                           17,436,453         14,171,257

MINORITY INTEREST IN SUBSIDIARIES                                                       2,012,603          5,493,394
                                                                                   ---------------    ---------------
                 Total liabilities                                                     68,128,857         37,829,243

COMMITMENTS AND CONTINGENCIES (Notes 13 and 14)

STOCKHOLDERS' EQUITY:
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:
       101,374 shares outstanding in 1999.                                                      -                101
    Series "C" Preferred stock; $0.001 par value; 14,250,000 shares authorized:
       13,620,472 and 9,728,909 shares outstanding in 2000 and 1999, respectively.         13,620              9,729
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       11,921,094 and 11,585,489 shares outstanding in 2000 and 1999, respectively         11,921             11,585
    Additional paid-in capital                                                        127,897,441         95,147,893
    Accumulated deficit                                                               (69,089,076)       (35,764,016)
    Accumulated other comprehensive loss                                                 (244,861)           (30,012)
                                                                                   ---------------    ---------------
                 Total stockholders' equity                                            58,589,045         59,375,280
                                                                                   ---------------    ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $ 126,717,902       $ 97,204,523
                                                                                   ===============    ===============

</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, 2000 AND 1999
-------------------------------------------------------------------------------------------------

                                                                Year Ended         Year Ended
                                                               December 31,       December 31,
                                                                   2000               1999
                                                              ----------------   ----------------
<S>                                                             <C>                <C>
NET REVENUES FROM SERVICES                                       $ 35,027,458        $ 9,099,054
                                                              ----------------   ----------------
COSTS AND EXPENSES:
    Variable cost of services                                      21,400,503          3,202,017
    Salaries, wages and benefits                                   17,872,673          5,768,580
    Selling, general and administrative                            14,938,511          7,114,111
    Depreciation and amortization                                  14,160,812          5,308,489
    Asset impairment (Note 2)                                               -          5,680,101
    Stock option compensation expense                                 248,293          1,251,349
                                                              ----------------   ----------------
                 Total costs and expenses                          68,620,792         28,324,647
                                                              ----------------   ----------------
OPERATING LOSS                                                    (33,593,334)       (19,225,593)

OTHER INCOME (EXPENSE):
    Interest income                                                   966,170            427,953
    Interest expense                                               (3,693,887)        (3,702,770)
    Net gain (loss) on foreign exchange                              (102,013)            27,491
                                                              ----------------   ----------------
                 Total other expense                               (2,829,730)        (3,247,326)
                                                              ----------------   ----------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                    (36,423,064)       (22,472,919)

PROVISION FOR INCOME TAXES                                            (30,786)           (50,183)
                                                              ----------------   ----------------
LOSS BEFORE MINORITY INTEREST                                     (36,453,850)       (22,523,102)

MINORITY INTEREST IN LOSS OF SUBSIDIARIES                           3,480,790          2,245,623
                                                              ----------------   ----------------
NET LOSS                                                          (32,973,060)       (20,277,479)

NON-CASH REMEASUREMENT OF OPTIONS (Note 12)                          (352,000)                 -
                                                              ----------------   ----------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                    $ (33,325,060)     $ (20,277,479)
                                                              ================   ================
Net loss per basic and diluted common share                           $ (1.44)           $ (1.48)
                                                              ================   ================
Weighted-average number of common shares:

    Basic and diluted                                              23,149,752         13,660,881
                                                              ================   ================
</TABLE>


See notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

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

                                                                  Year Ended       Year Ended
                                                                   December 31,   December 31,
                                                                     2000             1999
                                                                 --------------   --------------
<S>                                                               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                      $(32,973,060)    $(20,277,479)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
          Depreciation and amortization                             14,160,812        5,308,489
          Provision for bad debts                                    1,387,255          363,005
          Minority interest in loss of subsidiaries                 (3,480,790)      (2,245,623)
          Asset impairment                                                   -        5,680,101
          Stock-based compensation expense                             248,293        1,251,349
          Amortization of discount on notes payable                  2,136,826          682,440
          Issuance of warrants below fair value                         13,251          162,191
          Change in assets and liabilities, net of effects
            of acquisitions:
            Accounts receivable                                     (3,000,749)        (573,033)
            Due from affiliates                                              -        5,000,000
            Inventory                                                 (648,027)         (81,376)
            Other current assets                                    (4,906,316)        (687,897)
            Other assets                                              (844,960)        (561,485)
            Accounts payable and accrued liabilities                12,044,039        1,111,373
            Other long-term liabilities                                206,553           50,595
                                                                 --------------   --------------
                 Net cash used in operating activities             (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                            (32,580,126)     (13,087,570)
                                                                 --------------   --------------
                 Net cash used in investing activities             (36,272,977)     (31,580,261)
                                                                 --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Purchase of minority interest                                     (175,000)               -
    Increase in minority interest from issuance of subsidiary common stock   -        5,725,000
    Net proceeds from issuance of Series "C" Preferred Stock        27,374,162       53,578,039
    Repurchases of treasury stock prior to retirement                        -       (1,215,860)
    Proceeds from short-term debt                                    6,500,000       11,935,422
    Payments on related party borrowings                            (4,007,547)     (15,581,076)
    Payments for debt issuance costs                                (5,550,687)               -
    Proceeds from notes payable                                      7,587,664        4,335,000
    Payments on notes payable                                       (1,849,263)        (383,334)
    Net proceeds from exercise of employee stock options                   241                -
                                                                 --------------   --------------
                 Net cash provided by financing activities          29,879,570       58,393,191
                                                                 --------------   --------------

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

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

See Note 16 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 THE YEARS ENDED DECEMBER 31, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------------------

                                                                                 Preferred Stock
                                                                ----------------------------------------------
                                                                      Series "B"               Series "C"          Common Stock
                                                                --------------------  ----------------------- ----------------------
                                                   Total         Shares     Amount      Shares      Amount      Shares       Amount
                                                -------------   ---------  ---------  -----------  ---------- -----------  ---------
<S>                                             <C>              <C>       <C>        <C>           <C>       <C>          <C>
BALANCE, DECEMBER 31, 1998                      $ 10,684,526     101,374      $ 101            -           -  11,738,277   $ 11,738
Comprehensive loss:
    Net loss for the year ended December 31,     (20,277,479)
    1999 Other comprehensive loss consisting of
      foreign currency translation adjustment         (9,497)
                                                -------------   ---------  ---------  -----------  ---------- -----------  ---------

      Total comprehensive loss                   (20,286,976)          -          -            -           -           -           -

Issuance of Series "C" Preferred Stock, net       67,794,198                           9,728,909     $ 9,729
Issuance of warrants                                 750,677
Repurchases and retirements of common stock       (1,215,860)                                                   (152,788)      (153)
Forgiveness of related party liability               235,175
Issuance of warrants on debt                         162,191
Issuance of options for common shares
    below fair value                               1,251,349
                                                                ---------  ---------  -----------  ---------- -----------  ---------
BALANCE, DECEMBER 31, 1999                        59,375,280     101,374        101    9,728,909       9,729  11,585,489     11,585
Comprehensive loss:
    Net loss for 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 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 Alcatel 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
                                                =============   =========  =========  ===========  ========== ===========  =========
</TABLE>

                                                        (CONTINUED ON NEXT PAGE)

<PAGE>

<TABLE>
<CAPTION>
                                                  (CONTINUED FROM PREVIOUS PAGE)

                                                                                  Accumulated
                                                   Additional                    Other Compre-
                                                     Paid-in       Accumulated      hensive
                                                     Capital         Deficit        (Loss)
                                                  -------------    ------------  ---------------
<S>                                               <C>             <C>           <C>
BALANCE, DECEMBER 31, 1998                        $ 26,179,739    $(15,486,537)      $ (20,515)
Comprehensive loss:
    Net loss for the year ended December 31, 1999                  (20,277,479)
    Other comprehensive loss consisting of
      foreign currency translation adjustment                                           (9,497)
                                                  --------------   ------------  ---------------
      Total comprehensive loss                               -     (20,277,479)         (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 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 Alcatel 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)
                                                 ==============    ============  ===============
</TABLE>


See notes to consolidated financial statements.

<PAGE>

CONVERGENCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       GENERAL

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

         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.

         At December  31,  2000,  the  Company's  current  liabilities  exceeded
         current assets by  $32,153,196.  Since its  inception,  the Company has
         sustained  net  losses  and  negative  cash  flow,   due  primarily  to
         amortization of intangible  assets relating to  acquisitions,  interest
         expense on debt relating to  acquisitions,  start-up  costs,  legal and
         professional  expenses,  and charges for  depreciation  and other costs
         relating  to its  acquisition  and  development  of its  business.  The
         Company  expects to continue to experience net losses and negative cash
         flow  through  2002,  and may  continue  to do so  thereafter  while it
         develops and expands its business,  even if  individual  markets of the
         Company become profitable.

         In addition, as of December 31, 2000, the Company was out of compliance
         with the  operating  covenants of the  $175,000,000  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 faciltiy  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 2001 from a combination of:

     o    Proceeds from its recent equity  financing of $24,585,850  (Note 17)

     o    Additional  private  equity  transactions

     o    Extending repayment terms on seller notes

     o    Reductions in capital expenditures

     o    Optimize and control operating expense growth

     o    Sales of selected businesses (Note 17)



<PAGE>



         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  and  draw for
         equipment purchases.  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, its 32.6% interest in Chispa Dos, Inc.
         ("Chispa"),  the holding entity of Cablevisa, S.A., Multicable S.A. and
         Cybernet  de  El  Salvador   S.A,  and  its  49%  voting   interest  in
         International  Van, S. A. de C.V.  ("Intervan")  (Note 12). The Company
         has  operating  control  and 50% of the  Board  of  Directors  seats of
         Chispa.  All significant  intercompany  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 - No single customer accounted for greater than 10%
         of accounts receivable at December 31, 2000 and 1999. The allowance for
         doubtful  accounts was $1,225,627 and $366,448 at December 31, 2000 and
         1999, respectively.

         Inventories -  Inventories  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 $215,000 and $260,000  for excess and  obsolescence  at December 31,
         2000 and 1999, 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 - 20 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 as of each balance sheet
         date  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.

         Since 1997,  the Company has owned  78.14% of the stock of Caracas Viva
         Vision TV, S.A., a Venezuelan  Corporation  ("Viva Vision") which acted
         as the operating company for the local multi-point distribution service
         ("LMDS") license held by Comunicaciones  Centurion S.A.  ("Centurion").
         During the fourth quarter of fiscal 1999, the Company  determined  that
         the  Visa  Vision  recorded  assets  and  intangible   assets  and  the
         investment in Centurion totaling $5,680,000 as of December 31, 1999 was
         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 shares,
         previously  issued as part of the  purchase  price of Viva  Vision,  in
         exchange for returning all outstanding Viva Vision shares as settlement
         of  litigation  with one of the  original  sellers  of the Viva  Vision
         acquisition  (See Note 14).  This exchange of  non-monetary  assets was
         recorded  through  additional  paid-in  capital  as an  acquisition  of
         treasury stock.

         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.
         Revenue is recorded  monthly as services  are  provided.  Revenues  for
         multi-channel  television  services are recognized in the period during
         which the services are provided. All revenues and expenses are recorded
         on the accrual basis.

         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
         adjustments  have been recorded as an accumulated  other  comprehensive
         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
         preferred stock outstanding, and the diluted method, which includes the
         dilutive  common shares from stock options and warrants,  as calculated
         using the treasury  stock  method.  At December 31, 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, 2000 and 1999. 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 1998, SFAS No.
         133, "Accounting for Derivative Instruments and Hedging Activities" was
         issued. SFAS No. 133 establishes accounting and reporting standards for
         derivative  instruments  and hedging  activities.  It requires  that an
         entity  recognize all  derivative  assets or liabilities in the balance
         sheet and measure  those  instruments  at fair value.  SFAS No. 133 was
         adopted by the Company as of January 1, 2001.  The adoption of SFAS No.
         133  does  not  have  a  material  impact  on the  Company's  financial
         statements.

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

3.       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 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
         (Note 17). The promissory  note due on December 24, 2001 is in the face
         amount of $1,500,000 and bears  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 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 17). 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.

         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.

                                                 Years Ended December 31,
Pro forma results                              2000                   1999
                                       -----------------      -----------------
     Revenues                          $     36,473,505    $        33,470,276
     Net loss                          $    (34,176,943)   $       (26,215,870)
   Net loss per common share and
     common share equivalent
     (basic and diluted)               $          (1.47)   $             (1.90)

         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.

4.       PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following as of December 31:

                                                   2000                 1999
                                            ----------------     ---------------
 Land                                        $      586,400      $      586,400
 Buildings and improvements                         751,081             325,754
 Telecommunications equipment                    35,932,359          26,550,630
 Furniture, fixtures and office equipment         5,084,015           1,637,135
                                            ----------------     ---------------
                Total                            42,353,855          29,099,919
 Less - accumulated depreciation                 (7,949,614)         (4,339,524)
                                            ----------------     ---------------
                Total                            34,404,241          24,760,395
 Telecom network construction in progress        22,248,305           3,686,381
                                            ----------------     ---------------
 Property and equipment, net                 $   56,652,546      $   28,446,776
                                            ================     ===============

5.       INTANGIBLE ASSETS

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


                                     2000                 1999           Years
                              -----------------     ----------------  ----------
  License rights              $      1,273,970      $       512,944     5 - 15
  Subscriber rights                 33,761,646           32,524,143     5 - 7
  Franchise rights                   6,411,528            4,111,528        20
  Goodwill                          15,772,877            2,815,598        20
                              -----------------     ----------------
                                    57,220,021           39,964,213
  Accumulated amortization         (10,706,991)          (3,304,188)
                              -----------------     ----------------
                              $     46,513,030      $    36,660,025
                              =================     ================

6.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

                                           2000               1999
                                     ---------------     --------------
    Accounts payable              $      11,165,503   $      1,987,475
    Accrued liabilities                   9,755,584          4,238,208
    Deferred revenue                      1,023,748            747,922
                                     ---------------     --------------
        Total                     $      21,944,835   $      6,973,605
                                     ===============     ==============

7.       RELATED PARTY TRANSACTIONS

         In December 2000, the Company  entered into a short-term debt agreement
         transaction with an affiliate of a shareholder of the Company, pursuant
         to which the Company borrowed  $3,000,000 with an interest rate of 15%.
         The  short-term  $3,000,000  loan was repaid upon  closing the Series D
         Private Placement (Note 17).

         In  October  1999,  a  shareholder  of the  Company  acquired  a direct
         interest in Chispa for  $5,525,000.  In connection  with that purchase,
         the  Company  acquired  additional  shares in  Chispa  by  capitalizing
         approximately  $900,000 on the amounts owed back to the  Company.  As a
         result of that transaction,  the Company currently holds  approximately
         32.6% of Chispa.  Under the management and  shareholder  agreements for
         Chispa,   the  Company  maintains   day-to-day  control  over  Chispa's
         operations and is entitled to elect 50% of its directors.

         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 and potential payments on certain future investments in the
         Company,  including  fees related to the exercise of options for Series
         "C"  Preferred  Stock in July 2000 and the  long-term  credit  facility
         provided  by  Telematica.  The  Company  recorded  $644,118  as  equity
         transaction  costs and $210,000 as debt issue costs.  During 1999,  the
         Company  paid  $1,654,000  to FondElec  relating to certain  consulting
         services  provided to the Company,  including  services  related to the
         sale of  Series  "C"  Preferred  Stock in the  October  1999  financing
         transactions.  The Company  recorded  $1,281,500 as equity  transaction
         costs and the  balance as  administration  expenses.  FondElec  is also
         entitled to receive  $50,000  per quarter for the  services it provides
         the Company under the advisory  agreement.  A subsidiary of Chispa also
         has  outstanding  debt owed to FondElec  of  $1,269,497,  plus  accrued
         interest of $182,235 using a rate of 12%. This debt is  subordinated to
         another  third-party  bank notes payable with a final  maturity date of
         2004.

         During  1999,  the  Company  borrowed   $8,615,924  from  FondElec  and
         $9,050,000  from  Internexus,  S.A. (a shareholder  which  subsequently
         transferred  ownership of its equity holdings in the Company to the two
         shareholders of Internexus  -"Internexus")  for business  purposes.  In
         conjunction  with the  borrowings,  FondElec  and  Internexus  received
         warrants to purchase a total of 569,696 shares of common stock at $7.50
         per share.  $3,615,924  of these loans were repaid in October  1999 and
         the remaining  $14,050,000  was converted into Series C Preferred Stock
         (Note 12). In conjunction  with the issuance to Internexus and FondElec
         of the warrants, additional interest expense of $162,191 was recognized
         in 1999 for the difference  between the interest rate at which the debt
         was issued  and the  estimated  interest  rate for which the debt would
         have been issued in the absence of the warrants.

         During 1999, the Company also purchased and subsequently retired 35,714
         shares  of its  common  stock  from a  shareholder  for  $250,000.  The
         shareholder  also  forgave  $235,175  of a  note  payable  and  accrued
         interest of the Company.  As the amounts were due from a related party,
         the amounts of debt forgiveness were recorded as contributed capital.

         In 1998,  the Company  granted  FondElec  an option to purchase  45,000
         common shares at $0.875 per share for advisory  services.  In 1997, the
         Company  sold a series of  secured  promissory  notes and  warrants  in
         private placement transactions. The Company issued warrants to purchase
         a total of  331,717  shares of common  stock in this  transaction.  The
         warrants  have a  five-year  exercise  period  and allow the  holder to
         purchase common shares of the Company at $2.626 per share. An affiliate
         of FondElec,  who was an investor in the notes,  received a warrant for
         175,954 shares of common stock.  The remaining  warrants were issued to
         non-affiliated investors.

         In connection  with a reverse  acquisition  that occurred in 1997,  the
         Company assumed a note payable to Transworld  Telecommunications,  Inc.
         ("TTI").  Interest on any  outstanding  balance accrues at 8% per annum
         with the  principal  and  interest  becoming due and payable in full on
         August 1,  2001.  As of  December  31,  2000,  $996,707  (plus  accrued
         interest of $439,811) was outstanding on the loan.

8.       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>

                                                                                    2000                1999
                                                                              -----------------    ---------------
               <S>                                                         <C>                   <C>

               Federal income tax benefit at statutory rate of 34%         $       (11,330,521)  $     (6,877,280)
               State and local income taxes                                         (1,666,253)        (1,011,365)
               Foreign rate differential                                             1,573,916            769,464
               Change in valuation allowance:
               Losses in certain foreign subsidiaries with no                        5,512,581          4,644,076
                    tax benefit
               Other                                                                 5,311,498          2,312,935
                                                                                       629,565            212,353

                                                                              -----------------    ---------------
               Total                                                       $            30,786  $          50,183
                                                                              =================    ===============
</TABLE>


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

                                                 2000                1999
                                            ---------------    ---------------
          Current:
               Federal                   $              --  $               --
               State                                    --                  --
               Foreign                              30,786              50,183
                                                    ------      -------------
                                                    30,786              50,183
          Deferred:
               Federal                          (3,743,943)         (3,128,188)
               State                              (549,370)           (460,027)
               Foreign                          (1,219,268)         (1,055,861)
          Valuation Allowance                    5,512,581           4,644,076
                                            ---------------     ---------------
          Total Provision                $          30,786  $           50,183
                                              ===============   ===============

         As  of  December  31,  2000,   the  Company  has  net  operating   loss
         carryforwards  of  approximately  $23,328,000.  The net operating  loss
         carryforwards  will  begin to  expire  in 2010.  The  Company  also has
         foreign net operating loss  carryforwards of approximately  $7,132,000.
         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, 2000 and 1999 are
         fully  reserved with a valuation  allowance due to the  uncertainty  of
         realization and are comprised of the following:
<TABLE>
<CAPTION>


                                                                      2000                    1999
                                                                ------------------      -----------------
             <S>                                             <C>                     <C>
             Deferred Tax Assets:
             Net operating loss carryforwards
                   Federal                                   $          7,931,589    $         4,072,489
                   State                                                1,166,710                600,105
                   Foreign                                              3,121,030              2,069,156
             Basis in intangibles                                         498,524              1,180,804
             Related party accruals                                       144,118                161,323
             Stock options deferred                                     1,946,882              1,711,246
             Impairment of license rights                                 185,319                185,319
             Inventory reserve                                             21,134                 43,616
             Provision for bad debts                                      333,464                 96,246
             Accrued severance pay                                         38,312                 47,980
             Other                                                        322,687                  8,768
                                                                ------------------      -----------------
                      Total deferred tax asset                         15,709,769             10,177,052
             Deferred Tax Liabilities:
              Basis in fixed assets                                      (100,820)               (80,684)
             Valuation allowance                                      (15,608,949)           (10,096,368)
                                                                ------------------      -----------------
             Total net deferred tax asset                    $                 --    $                --
                                                                ==================      =================
</TABLE>


9.       NOTES PAYABLE AND LONG-TERM DEBT

         The Company has the notes payable and long-term debt  outstanding as of
December 31:
<TABLE>
<CAPTION>

                                                                                             2000                1999
                                                                                       -----------------    ----------------
       <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  $                -
       Note payable to Telematica EDC represented by a promissory note bearing
           interest at 12% per annum payable on maturity date and matures
           October 31, 2015.                                                                  3,500,000                   -
       Note payable to an affiliate of a shareholder of the Company represented
           by a promissory note bearing interest at 15% per annum payable on
           maturity date and matures February 28, 2001. (Note 7)                              3,000,000                   -
       Notes payable for the MetroTelecom acquisition represented by four
           promissory  notes with a combined face value of  $8,750,000  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 $228,537
           as of December 31, 2000.                                                           8,388,147                   -
       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
           (Note 17). 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
           $603,955 as of December 31, 2000.                                                  5,869,518           5,267,035
       Notes payable for the GBNet acquisition represented by four non-interest
           bearing  promissory  notes with a 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 (Note 17). The  amortization of the
           discount on these notes was $1,093,443 as of
           December 31, 2000.                                                                 8,860,250           9,051,038
       Notes payable from a third-party bank.  This note bears interest at LIBOR
           plus 4.75%, which reflects the estimated market rate of interest. The
           note has mandatory quarterly payments maturing in 2004.                            3,336,403           3,951,669
       Notes payable for the Inter@net acquisition represented by two promissory
           notes with a combined face value of $800,000 at a stated rate of
           5.72% which was paid in full in 2000.                                                      -             524,036
       Notes payable to FondElec for the Chispa acquisition with a face value of
           $4,769,497, bears interest at 12%, and is subordinated to the
           third-party bank note.  $3,500,000 was paid in November 1999.                      1,269,497           1,269,497
       Notes payable for the Chispa acquisition payable to Star on July 17, 2000
           which was paid in full in 2000.                                                            -           3,787,146
       Other notes payable                                                                    1,963,810           1,326,137
                                                                                       -----------------    ----------------
       Total notes payable                                                                   43,779,180          25,176,558
       Less current portion                                                                 (26,734,966)        (11,190,987)
                                                                                       -----------------    ----------------
       Long-term portion                                                           $         17,044,214          13,985,571
                                                                                       =================    ================
</TABLE>


         The  scheduled  maturities  of  notes  payable  and  long-term  debt at
December 31, 2000 are as follows:

             Year ending December 31:
                 2001                                 $       26,734,966
                 2002                                          4,738,720
                 2003                                          5,410,520
                 2004                                          3,082,474
                 2005 and thereafter                           3,812,500
                                                         ----------------
                 Total                                $       43,779,180
                                                         ================

         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. The Alcatel
         facility is the Company's principal vendor financing arrangement.

         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  is being  expensed  as  interest
         expense over the loan term and was $13,251 for the year ended  December
         31, 2000.

         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 and  Alcatel  amended  the 2001  operating
         covenants (Note 17). As of the date of this report, the Company has not
         met one of the amended operating covenants. Until the Company meets all
         of the amended operating covenants, it will not be able to draw down on
         the Alcatel facility.

         In addition,  as of December 31, 2000 and  subsequent  to year end, the
         Company was out of compliance with the operating and payment  covenants
         of the $175,000,000  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.  Consequently,  the  oustanding  balance  under the
         Alcatel  facility  of  $7,591,555  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  (See
         update at Note 17).

10.      PREFERRED STOCK

         At December 31, 2000, the authorized  number of shares of the Company's
         preferred  stock was  15,000,000,  $0.001  par value,  with  14,250,000
         shares and 750,000  shares  designated as Series C Preferred  Stock and
         Series B Preferred Stock, respectively. None of the Company's preferred
         stock is redeemable.

         In conjunction with the equity financing on October 18, 1999, the Board
         of Directors designated the Series C Preferred Stock as a new series of
         preferred  stock.  The  non-redeemable  convertible  Series C Preferred
         Stock  consists of  14,250,000  shares of  preferred  stock,  par value
         $0.001 per share, and has the following general rights and preferences:
         (1) they vote with the outstanding shares of the Company's common stock
         (unless  otherwise  required by law), and have one vote per share;  (2)
         they  are  convertible  into  shares  of the  Company's  common  stock,
         initially on a one-for-one  basis.  The conversion  ratio is subject to
         adjustment  for  fundamental  corporate  transactions.   Conversion  is
         generally  optional,   but  is  mandatory  upon  the  occurrence  of  a
         disposition  event (sale of Company or initial  public  offering);  (3)
         they have a liquidation preference of $7.50.

         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  are as  follows:  (1) they  carry a
         liquidation  preference  of $35 per  share  and the  Series B  receives
         liquidation  proceeds  prior to any  liquidation  distributions  to the
         common  shareholders;  (2) they carry  voting  rights that  entitle the
         holder to one vote per share and the  holders  vote  together  with the
         common  shareholders  as  one  class  on  all  matters;  (3)  they  are
         non-redeemable;  (4) they pay  non-cumulative  dividends  in the annual
         amount of 6.75% per share payable  semiannually on January 1 and July 1
         of each year (payable in cash or additional  Series B Preferred  Stock,
         at Company's  option);  and (5) they are  convertible  only into common
         shares of the Company on the earlier of the third  anniversary of their
         initial  issuance.  In August 2000,  the remaining  29,521  outstanding
         shares were converted to 125,237 common shares.

11.      STOCK PLANS, OPTIONS AND WARRANTS

         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, 2000 and 1999,  the Company has granted 28,002 and 28,774,
         respectively of non-employee director stock options.

         Stock  Incentive Plan - In 1998,  the Company's  board of directors and
         shareholders  approved the 1998 Stock  Incentive  Plan (the  "Incentive
         Plan).  The Incentive Plan reserved a total of 1,250,000  common shares
         for  issuance  under  the  plan.  The  Company's   board  of  directors
         subsequently  increased  this  number in  December  1998 to allow for a
         maximum of  1,820,229  shares to be  awarded.  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. As of December 31, 2000 and 1999,
         the Company  granted  618,229 and  1,202,000,  respectively  of options
         under the Incentive  Plan. The Company also has granted  options for an
         additional  483,0470 common shares with similar terms and conditions as
         the  Incentive  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           Price Range            Average
          2000:                                             of Options                              Exercise Price
                                                            --------------    -----------------    -----------------
               <S>                                          <C>               <C>                   <C>

               Outstanding at beginning of year                 2,106,664     $0.35 -  7.50         $  4.20
               Granted                                          1,157,280     $10.00 - 12.00        $ 11.52
               Exercised                                           11,000         $0.35             $  0.35
               Canceled                                            93,091     $7.00-10.00           $  7.53
                                                            --------------
               Outstanding at end of year                       3,159,853     $0.35 - 12.00         $  7.24
                                                            ==============
</TABLE>



<TABLE>
<CAPTION>
                                                                                                      Average
                                                                                Price Range           Exercise
          1999:                                                Options                                 Price
                                                            --------------    -----------------    -----------------
               <S>                                          <C>               <C>                  <C>
               Outstanding at beginning of year                 1,492,842     $0.35 - 7.50         $3.31
               Granted                                            613,822     $0.88 - 7.50         $6.34
               Canceled                                                 0
                                                            --------------
               Outstanding at end of year                       2,106,664     $0.35 - 7.50         $4.20
                                                            ==============
</TABLE>

<TABLE>
<CAPTION>


                                                                                    Weighted           Weighted
                                                                                    Average            Average
                                                                Options             Exercise          Fair Value
          2000:                                                 Granted              Price            of Options
                                                                ------------      -------------    -----------------
               <S>                                              <C>               <C>              <C>
               Grants with exercise price less than FMV              28,002            $6.50            $1.71
                                                                ============
</TABLE>


<TABLE>
<CAPTION>
                                                                                     Weighted           Weighted
                                                                                     Average            Average
                                                                  Options            Exercise          Fair Value
          1999:                                                   Granted             Price            of Options
                                                                ------------      -------------    -----------------
               <S>                                              <C>                    <C>              <C>
               Grants with exercise price equal to FMV              200,000            $7.50            $1.10
               Grants with exercise price less than FMV              95,048            $0.98            $4.16
                                                                ------------
                                                                    295,048            $5.40            $2.08
                                                                ============
</TABLE>

<TABLE>
<CAPTION>


         Options Outstanding and Exercisable

                                               Options Outstanding                     Options Exercisable
                                   ----------------------------------------------   ---------------------------

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

                $.35 - $1.00           835,605         $1.66            $0.93             660,604      $0.91
                 3.50 - 4.61           404,285          2.90             4.52             330,951       4.50
                 6.38 - 7.50           807,109          2.76             6.73             405,331       7.31
                10.00- 12.00         1,112,854          3.09            10.64             353,335      10.00
                                ----------------                                     ---------------
                                     3,159,853                                          1,750,221
                                ================                                     ===============
</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  stock  option
         expense  recognized  in 2000  and  1999 was  $248,293  and  $1,251,349,
         respectively, of which $248,293 and $1,251,349,  respectively,  related
         to   compensation   expense  and  the  remaining   amounts  related  to
         professional  fees  expense.  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:

                                                    Years Ended December 31
                                              ----------------------------------
                                                   2000               1999
                                              ----------------   ---------------
      Net loss:
           As reported                   $    (33,325,060)  $    (20,277,479)
           Pro forma                     $    (33,811,413)  $    (20,532,818)
      Net loss  per the  weighted
        average  common  share
        (basic  and diluted):
          As reported                    $         (1.44)   $         (1.48)
          Pro forma                      $         (1.46)   $         (1.50)


         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 1 to 3 years.

         Warrant  Awards - The total  warrants  outstanding  for the purchase of
         common stock at December 31, 2000 are summarized in the table below:

<TABLE>
<CAPTION>


                                                                 Outstanding
                                                                  Shares in
                 Description                                      Warrants         Exercise Prices       Expiration
                 -----------                                       -------         ---------------       ----------
                 <S>                                           <C>                 <C>                    <C>
                                                                                   Varies based on
                                                                                      future event
                 Series C Warrants (Note 12)                         2,952,226           (Note 12)        10/18/2003
                 Series C Financial  Advisor  Warrants  (Note
                 12)                                                   303,333                $7.50       10/18/2003
                 Alcatel   Warrants  granted  in  conjunction
                 with notes (Note 9)                                    60,764                $7.50        6/29/2005
                 Internexus and FondElec  Warrants granted in
                 conjunction with notes (Note 7)                       569,696                $7.50       10/18/2003
                 1997 Warrants  granted in  conjunction  with
                 notes (Note 7)                                        331,717                $2.63        1/31/2002
                                                               ----------------
                                                                     4,217,736
                                                               ================
</TABLE>



12.               STOCK PURCHASE AGREEMENTS

         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. 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.  The
         Company received  $58,000,000 in cash from the sale of 7,733,332 shares
         of Series C Preferred  Stock to four of the six  accredited  investors'
         and exchanged approximately  $15,000,000 of debt (and accrued interest)
         the  Company  previously  issued  to two of  the  accredited  investors
         (FondElec and Internexus)  into 1,995,577  shares of Series C Preferred
         Stock.  The  investors  also  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 have exercise  prices that are based on
         certain contractual yields contingent upon certain events, as agreed in
         the warrant  agreement.  The warrants have an estimated  value of $0.26
         each. In connection with this  financing,  the Company also granted its
         financial  advisor  in the  transaction  a 4-year  warrant  to  acquire
         303,333 common shares at $7.50 per share.

         The parties to the stock purchase agreement  included:  Telematica EDC,
         C.A., or  Telematica;  TCW/CCI  Holding LLC, or TCW; the  International
         Finance  Corporation,  or IFC; Glacier Latin America,  LTD, or Glacier;
         FondElec; and Internexus.

         Under  the  terms  of  the  financing  agreement,  Telematica  invested
         $5,525,000 in Chispa (Note 7). 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.

         A portion of the $26,000,000  credit facility,  or $7,000,000,  will be
         paid to Inter@net in cash, and the $19,000,000 balance will be advanced
         to Inter@net,  as required,  for the purpose of paying its  obligations
         under the fiber lease agreement and the commercial  services agreement.
         As of December 31, 2000,  the Company had received  $3,500,000  in cash
         from the $7,000,000  cash component of this long-term  credit  facility
         which  is  presented  as a  long-term  liability  in  the  accompanying
         consolidated  balance sheet. The remaining  component of the $7,000,000
         long-term credit facility,  or $3,500,000,  was received on January 28,
         2001. The  outstanding  amounts under the credit facility bear interest
         at 3% per year.  Interest will be deferred  during the first four years
         of the facility and, thereafter, are payable in cash.

         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.  Assuming
         the draw-down of the entire facility and no payment by Inter@net of any
         of the advanced amounts,  the principal and interest advanced under the
         facility  would  be  convertible   into  shares   representing  50%  of
         Inter@net's  equity  ownership.  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.

13.      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, therefore, there are no future
         obligations.  At the closing,  the Company also paid $172,000 for a two
         year option to purchase  additional  capacity  which when combined with
         the  capacity  already  acquired,  will result in the Company  owning a
         total of approximately 33% of the network's capacity.

         The Company  financed the capacity  purchase  through a $2,615,925 loan
         from  FondElec and a $2,550,000  loan from  Internexus.  The loans were
         evidenced by senior  promissory  notes,  which bore interest at 10% per
         annum and were due  (together  with unpaid  interest) on the earlier of
         January  3,  2000 or  receipt  of  proceeds  from  any  equity  or debt
         financing.  FondElec and Internexus  also received  warrants to acquire
         shares of common stock while the notes were  outstanding  and a premium
         based on the  actual  repayment  date of the notes.  A total  number of
         96,870 shares are issuable  under the warrants at an exercise  price of
         $7.50 per share.  The premium amount varied  depending on the repayment
         date of the notes,  but  represented an annual  interest rate of 55% on
         the unpaid amounts.  The FondElec  promissory note and accrued interest
         was  paid  in  full  subsequent  to the  October  1999  Financing.  The
         Internexus  promissory  note and accrued  interest was  converted  into
         Series C Preferred Stock during the October 1999 Financing.

         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:
                  2001                         $   2,751,923
                  2002                             2,186,401
                  2003                             1,517,124
                  2004                             1,141,120
                  2005 and thereafter              1,108,433
                                            -----------------
               Total future lease payments     $   8,705,001
                                            =================

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

14.      COMMITMENTS AND CONTINGENCIES

         Litigation.  In March 2000,  the Company was named as  defendant  in an
         action  brought in federal  court in  California.  The suit  claims the
         Company  defrauded the plaintiffs in 1997 when the Company  diluted the
         plaintiff's  position by engaging in the merger with Telecom Investment
         Corporation,  breached contractual obligations to offer the plaintiff a
         portion of the securities  the Company sold other  parties,  and that a
         promissory note the Company  executed in favor of a third party was due
         in March 2000, rather than in August 2001. The plaintiff,  which is the
         assignee of the  promissory  note the Company  executed in favor of the
         third party in 1997, is in litigation with that third party and both of
         those parties are claiming rights in the note. In late 2000, the United
         States  Bankruptcy  Court held that the plaintiff had violated  certain
         interest rate limitation rules in the initial  transaction  between the
         plaintiff and the party  claiming an interest in the  promissory  note,
         and that the other party is entitled to the note.  The final order with
         respect to that decision was entered in January 2001. The action by the
         plaintiff  against  the  Company is still  pending.  Management  of the
         Company does not believe the  ultimate  resolution  of this  litigation
         will  have a  material  adverse  effect on the  consolidated  financial
         position or results of operations of the Company.

         Arbitration  settlement - Effective July 5, 2000,  the Company  settled
         its arbitration proceeding against a former director and officer of the
         Company.  Under  the  terms of the  settlement,  the  Company  canceled
         328,510  common  shares and 71,853 Series B preferred  shares  formally
         owned by the former director and his affiliates.

         The Company is also  involved in, and pursues,  routine  legal  actions
         relating to its  business  operations,  including  customer  collection
         activities.  Liability,  in the event of final adverse determination in
         any of these  matters,  should not, in the  aggregate,  have a material
         adverse  effect on the  consolidated  financial  position or results of
         operations of the Company.

15.      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, 2000 and
         1999:

<TABLE>
<CAPTION>

                                                                        Central
2000                                 Mexico          Venezuela          America           Corporate           Totals
------------------------------    --------------    -------------     ---------------  ---------------      --------------
<S>                              <C>              <C>                <C>               <C>                 <C>
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>

16.      SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>


         <S>                                                                           <C>
         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>

         Internexus  converted  $9,966,836  in notes and accrued  interest  into
         1,328,911  shares  of  Series C  Preferred  Stock.  FondElec  converted
         $5,000,000 in notes to 666,666 shares of Series C Preferred  Stock (See
         Note 12).

         During 1999, a related party  liability of  approximately  $250,000 was
         forgiven and contributed to equity as part of an overall treasury stock
         repurchase and retirement transaction (Note 7).

17.      SUBSEQUENT EVENTS

         Alcatel Financing  Amendment.  In January 2001, the Company amended the
         Alcatel  facility to include new  operational  and financial  milestone
         covenants.  Under the terms of the January  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.

         Series D Private  Placement.  On February 7, 2001, the Company closed a
         private  placement of securities  with six  accredited  investors.  The
         Company received  $24,585,850 in cash from the sale of 2,643,636 shares
         of recently designated Series D convertible  preferred stock and issued
         warrants to acquire  additional  shares of Series D and common stock as
         described  below.  The  investors  in the  private  placement  included
         Telematica EDC, C.A.,  TCW/CCI Holding II LLC,  Glacier  Latin-American
         LTD,  Morley Capital  Management III LLC, and two individual  investors
         (collectively,  the  "Investors").  The investors also acquired certain
         warrants  consisting  of  "IRR  Warrants,"   "Financing  Warrants"  and
         "Performance Warrants."

         The IRR Warrants provide the Investors with the right to purchase up to
         396,544  shares of our  common  stock at a  purchase  price of $.01 per
         share.  The IRR Warrants are  exercisable  only upon the  occurrence of
         either (i) the  transfer by all of the  shareholder  parties to the CCI
         Shareholders Agreement dated October 18, 1999 of their interests in our
         securities  for cash or  publicly-traded  securities,  or (ii) a public
         offering of our securities  pursuant to a registration  statement filed
         with  the  Securities  and  Exchange   Commission  that  meets  certain
         requirements  (either  such event being  referred to  hereinafter  as a
         "exercise event").  If an exercise event does not occur before February
         7, 2005,  the IRR Warrants are  exercisable on that date for the amount
         of shares of common  stock  determined  by the formula set forth in the
         warrant documents.

         The  Financing  Warrants  give the  Investors  the  right  to  purchase
         additional  shares  of Series D stock at a  purchase  price of $.01 per
         share.  The  number of shares of Series D stock  exercisable  under the
         Financing  Warrants is determined by a formula described in the warrant
         documents.  The Financing  Warrants are exercisable upon the occurrence
         of either of the exercise  events.  If no exercise  event occurs before
         February 7, 2005, the Financing  Warrants are exercisable on that date.
         The Financing  Warrants are exercisable only upon the prior exercise or
         waiver of any exercisable  Performance  Warrants,  as described  below,
         acquired by the Investors.

         The  Performance  Warrants  provide  the  Investors  with the  right to
         purchase  up to  396,544  shares  of the  Company's  common  stock at a
         purchase price of $.01 per share.  The number of shares of common stock
         exercisable  under the Performance  Warrants is determined by a formula
         set  forth in the  warrant  documents.  The  Performance  Warrants  are
         exercisable  at any time during the period from  December  31, 2001 and
         through  February 7, 2005, but only if the Company fails to meet one or
         more of  four  business  milestone  tests  set  forth  in the  warrants
         documents.  The  Performance  warrants  are  exercisable  prior  to the
         exercise  or  waiver  of  any  exercisable  Financing  Warrants  or IRR
         Warrants,  and may not be exercised if, on or before December 31, 2001,
         any exercise event takes place.

         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  consists of  10,000,000  shares of preferred
         stock, par value $.001 per share, and has the following  general rights
         and  preferences:  (1) it votes with the  outstanding  shares of common
         stock  and  Series C  convertible  preferred  stock  (unless  otherwise
         required by law),  and has one vote per share;  (2) each Series D share
         is convertible into common stock,  initially on a 1-for-1 basis and the
         conversion  ratio is subject to adjustment  if a fundamental  corporate
         transaction  occurs.  The  conversion  is  generally  optional,  but is
         mandatory upon the occurrence of an exercise  event;  (3) each Series D
         share has a liquidation  preference  which is superior to common stock,
         but is subordinate to Series C convertible preferred stock. The initial
         liquidation  preference is $9.30 per share; (4) each holder of Series D
         stock is  entitled  to  receive  cash  dividends  or  distributions  or
         property  when, as and if declared by the board of  directors;  and (5)
         Series D holders  have a  preemptive  right to purchase  their pro rata
         share of any new securities  issued. The preemptive rights do not apply
         to  issuances  of stock to  Company  employees,  any  merger or similar
         transaction approved by the board of directors, to securities issued in
         a stock split or dividend,  or certain other  transactions  approved by
         the  board  of  directors.  The  preemptive  right  terminates  on  the
         effective date of a public offering meeting certain size requirements.

         Chispa  Ownership  Sale. In February 2001, we entered into an agreement
         with Telematica EDC, C.A., one of our principal  shareholders,  for the
         purchase by Telematica  of our interest in our El Salvador  operations.
         Those  operations  include CATV, data services and telephony  services.
         See "Our Central American Network." We originally  anticipated that the
         transaction  would close in the first half of 2001. Since executing the
         agreement,  disputes have arisen between the parties as to the terms of
         the  repayment  of  certain  amounts  that  we  are  due  from  the  El
         Salvadorian  operating companies and which are required under the terms
         of the  purchase  agreement  to be paid  on  terms  we deem  reasonably
         acceptable.  Neither  party  has  initiated  litigation  regarding  the
         disputes,  but each  party  has put the  other  party on  notice of its
         intent to enforce its rights under the agreement.

         GBNet and Intervan Payments. In December 2000, the Company was required
         to make payments under  promissory  notes  delivered in connection with
         two  acquisitions.  The first note, which was due on December 14, 2000,
         related to the purchase in December  1999 of GBNet  Corporation,  which
         conducts data services and Internet access  operations in seven Central
         American  countries.  The other promissory note, which was due December
         24, 2000,  related to the acquisition of Intervan,  which also occurred
         in December 1999. On the due date of each of the promissory  notes, the
         Company  notified its holder 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.


<PAGE>




                                                         72
<TABLE>
<CAPTION>

PART 3.

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
21.1           Subsidiaries of the Registrant                                                                   Ex. 21.1
99             Valuation and Qualifying Accounts                                                                Ex. 99

* 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.

3-27-2001               /s/ Douglas Jacobs
----------------------  -------------------------------------------------------
Date                    Douglas Jacobs
                        Chief Executive Officer
                        (Principal Executive Officer)


                        CONVERGENCE COMMUNICATIONS, INC.

3-27-2001               /s/  Jerry Slovinski
----------------------  --------------------------------------------------------
Date                    Jerry Slovinski
                        Senior Vice President and Chief Financial Officer
                        (Principal Financial Officer)

DIRECTORS

3-27-2001               /s/  Lance D'Ambrosio
----------------------  -------------------------------------------------------
Date                    Lance D'Ambrosio, Chairman


3-27-2001               /s/  Troy D'Ambrosio
----------------------  -------------------------------------------------------
Date                    Troy D'Ambrosio


3-27-2001               /s/  Mario L. Baeza
----------------------  -------------------------------------------------------
Date                    Mario L. Baeza


3-27-2001               /s/  Alfonso Bahamonde
----------------------  -------------------------------------------------------
Date                    Alfonso Bahamonde


3-27-2001               /s/  Norberto Corredor
----------------------  -------------------------------------------------------
Date                    Norberto Corredor


3-27-2001               /s/  Peter Schiller
----------------------  -------------------------------------------------------
Date                    Peter Schiller


3-27-2001               /s/  Jorge Fucaraccio
----------------------  -------------------------------------------------------
Date                    Jorge Fucaraccio


3-27-2001               /s/  George Sorenson
----------------------  ------------------------------------------------------
Date                    George Sorenson


3-27-2001               /s/  Gaston Acosta-Rua
----------------------  -------------------------------------------------------
Date                    Gaston Acosta-Rua