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, 1998. 
 
   ( )   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:  $3,113,482.

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 $11,936,992.

As of March 1, 1999,  11,738,277 shares of registrant's  Common Stock, par value
$.001 per share  and  101,379  shares  of the  registrant's  Series B  Preferred
Shares, par value $.001 per share, were outstanding.


<PAGE>



                        CONVERGENCE COMMUNICATIONS, INC.
                                 April 14, 1999
                                   Form 10-KSB

PART 1.

                                   THE COMPANY

                    Exact corporate name:  Convergence Communications, Inc.
         State and date of incorporation:  Nevada - July 23, 1995
      Street address of principal office:  102 West 500 South, Suite 320
                                           Salt Lake City, Utah 84101
                Company telephone number:  (801) 328-5618
                         Fiscal year end:  December 31

                             BUSINESS AND PROPERTIES

OVERVIEW

         Convergence Communications,  Inc. (the "Company") is a facilities-based
provider of high-quality,  low-cost integrated  communications  services through
its own metropolitan area networks. The Company operates in recently deregulated
and high growth  markets,  principally in Central America and the Andean region,
and intends to expand its  operations to Mexico.  The Company  currently  offers
business, governmental and residential customers high-bandwidth, high-speed data
connections,  high-speed and dial-up Internet access,  voice and video services.
The Company uses  technology  that is based on the Internet  Protocol ("IP") and
employs networks that consist, assuming the consummation of certain transactions
described  herein,  of over 600 route kilometers of fiber-optic and hybrid fiber
coaxial cable,  plus "last mile"  high-bandwidth  fixed  wireless  connectivity.
These networks cover a majority of the central business districts in each of the
Company's current major markets.  The Company currently  provides services to in
excess of 29,000  subscribers  and, upon the completion of certain  transactions
for which it has entered into acquisition  agreements,  it will have over 42,000
subscribers.  See  "Description  of the  Company's  Business  -  Note  Regarding
Acquisitions," below.

         The  Company  believes  many  underdeveloped  countries,   particularly
countries in Latin  America,  are  experiencing  rapid  economic and  population
growth, as well as unparalleled demand for expanded telecommunications services.
In many  instances,  however,  the  operators  of  incumbent  telecommunications
systems in the  Company's  market  areas have  difficulty  responding  to market
demands for efficient service,  new fixed lines and the bandwidth  necessary for
data  transmission  and high-speed  Internet  access.  The Company  believes the
market penetration in those countries by  telecommunications  services providers
has been  limited  in  comparison  to  developed  countries,  such as the United
States.

         The Company's  business goal is to establish itself as one of the first
facilities-based  providers of bundled  telecommunication  services to business,
governmental and residential customers in Central America, the Andean region and
Mexico.  The total  population of these markets exceeds 140 million people.  The
Company's  strategy for achieving  this goal is based on (i) the  development or
acquisition  of  high-bandwidth   metropolitan  area  networks,  (ii)  strategic
acquisitions of existing Internet service providers  ("ISPs"),  cable television
networks  and  telephony   service   providers,   (iii)  maximizing   subscriber
penetration  through  careful  segmentation  of  each  market's  customer  base,
customized  services,  competitive pricing and customer service and support, and
(iv) strategic  alliances with strong local partners.  The Company  believes its
first mover  advantage  will allow it to obtain access to high-end  customers in
both the business and  residential  markets.  The Company  also  believes  rapid
implementation  of its business  strategy will create higher  barriers to entry,
thereby  limiting  competition,  and that its lowest operating cost strategy and
highly  differentiated  service  offerings  will  provide it with a  sustainable
competitive advantage.

         Through strategic acquisitions and partnerships, the Company has gained
access to an existing  customer base,  experienced  local management  teams, and
knowledge  of the  regulatory  and  market  environments  in which it intends to
operate.  Once the Company  establishes an operating  platform in a market,  its
next  step  is  to  focus  on  maximizing   subscriber  growth  through  careful
segmentation  of the customer  base,  customizing  the services  offered to each
identified  segment,  and  competitive  pricing.  The Company intends to develop
brand  awareness  by offering  network  reliability  and high  quality  customer
support.

         The  Company  employs an IP-based  technology  platform  that  utilizes
packet  switching  to  transmit  voice,  video and data  elements  over the same
network.  The Company combines this technology with a delivery network that uses
fiber-optic and coaxial cable networks with wireless  distribution  systems. The
Company believes this approach allows the most efficient  delivery of high-speed
"last mile"  connectivity  with  IP-based  service  offerings,  and  provides an
economical  method of delivering high quality bundled  communications  services.
The Company ultimately plans to provide voice, data, Internet and video services
over the same network architecture in each of its markets.

         The Company was  incorporated  in Nevada in 1995 as  "Wireless  Cable &
Communications,  Inc." On August  24,  1998,  the  Company  changed  its name to
"Convergence Communications,  Inc." All references to the Company in this report
include  the   Company's   direct  and  indirect   partially  and  wholly  owned
subsidiaries.  The Company's principal executive offices are located at 102 West
500 South,  Suite 320, Salt Lake City, Utah 84101,  and its telephone  number is
(801) 328-5618.  The Company's  principal  operating offices are located at 9050
Pembroke Pines Blvd., Pembroke Pines, Florida 33024, and its telephone number is
(954) 430-9393. The Company's web site is located at www.convergence-comm.net.

DESCRIPTION OF THE COMPANY'S BUSINESS

General

         The Company is a  facilities-based  provider of high-quality,  low-cost
integrated  communications  services through its own metropolitan area networks.
The Company intends to operate in recently  deregulated and high growth markets,
principally  in Central  America,  the Andean  region and  Mexico.  The  Company
currently  offers or, upon the  consummation of certain  transactions  described
below,  will have the ability to offer,  business,  governmental and residential
customers bundled  high-bandwidth,  high-speed data connections,  high-speed and
dial-up  Internet  access,  voice and video services in a number of its markets,
including Guatemala, El Salvador, Venezuela, Costa Rica, and Panama. The Company
uses  technology  that is based on the  Internet  Protocol  ("IP")  platform and
employs  networks  that  consist,  upon  the  closing  of  certain  acquisitions
described  herein,  of over 600 route  kilometers of  fiber-optic,  hybrid fiber
coaxial cable,  plus "last mile"  high-bandwidth  fixed  wireless  connectivity.
These networks cover a majority of the central business districts in each of its
major  markets.  See  "Description  of the Company's  Business - Note  Regarding
Acquisitions."

Market Opportunity

         The combined  telecommunications  market worldwide is believed to be in
excess of $600  billion  and is  expected  to grow to $1.0  trillion by the year
2002.  Growth in this industry is driven by the  increased  demand for bandwidth
intensive   applications   such  as  e-commerce,   video-on-demand,   and  video
conferencing.  Internet access and data services are arguably one of the fastest
growing segments of the global telecommunications  market, with an estimated 116
million Internet users worldwide. One of the most notable trends in the industry
as a result of the growth of the  Internet is the adoption of IP as the standard
for wide-area  corporate  communications.  IP allows  computers  with  different
architectures  and operating  systems to  communicate  with one another over the
Internet. Telecommunication companies are expected to shift from the traditional
circuit-switched  networks  to the  operation  of  packet-switched  networks  by
incorporating IP into their backbone.  Several companies (including Level 3) are
working on new products  and  developing  end-to-end  IP-based  networks,  while
others  (such as Qwest  Communications  and IXC  Communications)  already  offer
long-distance  services  over the Internet at rates that are lower than those of
traditional  carriers.  In addition,  as  packet-switched  technology is further
developed and it becomes more cost effective to move voice and data traffic over
the same network, the Company believes there should be a significant increase in
the use of IP-based networks.  According to Ovum, an independent  analyst group,
the  worldwide  market for IP will reach  over $60  billion by 2005.  The global
usage of IP telephony  and  facsimile  services is expected to increase  from 30
million minutes in 1997 to 4.4 billion minutes in 1999.

         The  Latin  American  telecommunications  industry  is also  undergoing
dramatic change,  including widespread  privatization of existing networks (such
as Telebras in Brazil and Telecomunicaciones de Guatemala in Guatemala). In many
instances,   however,   the  Company   believes   the   operators  of  incumbent
telecommunications  systems have  difficulty  responding  to market  demands for
efficient  service,  new  fixed  lines  and the  bandwidth  necessary  for  data
transmission  and  high-speed  Internet  access.  The Company also  believes the
market penetration in those countries by  telecommunications  services providers
has been limited in comparison to developed countries such as the United States.
For example,  telephone penetration in Latin America remains low, averaging less
than 13% (ranging from 23% in Southern  Argentina to 5% in Guatemala),  compared
to more developed markets such as the United States, where telephone penetration
is 64%.

         Recent  developments  in the  Company's  markets  have  focused  on the
improvement  of basic  services  and growth in lines.  The Company  believes the
Internet market can be seen as both a result of market deregulation and a driver
for more pervasive deregulation and infrastructure  improvement.  Internet usage
in Latin  America is estimated to grow from  approximately  10 million  users in
1996 to nearly 34 million users in 2000 and countries with  antiquated  networks
are realizing the need to install higher bandwidth  networks (i.e.,  fiber-optic
networks).  This 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 2001, up from $33.2 billion in
1996.

         The Company  believes  the demand for data  transmission  services  and
high-speed  Internet access will grow at  unprecedented  rates. The Company also
believes  incumbent  telecommunications  networks in Latin America are unable to
meet the  current,  let alone the  expected,  bandwidth  demands  (in large part
because of the  relatively  poor state of their  infrastructures)  and that they
will  also be  unable to evolve  to  support  new,  next-generation,  integrated
communications  services.  Based on the Company's market  research,  it believes
businesses,  governments and households  desire those types of services,  but in
many  instances are unable to obtain them because of inadequate  infrastructure.
The Company  believes its market  opportunities in Latin America will be further
enhanced  by  the  deregulation  of  other  industries,  and  increased  foreign
investment,  which  will  increase  the demand for  private  networks  with more
bandwidth.

The Company's Business Solution

         The Company believes emerging technologies have significantly  enhanced
the value and capacity of networks  that combine  fiber-optic  and coaxial cable
with wireless  communications  systems,  in part because of the  convergence  of
traditional  voice,  data and video  switching  technologies.  The  Internet has
played a key role in this  evolutionary  trend.  The Company employs an IP-based
technology  platform that utilizes packet switching to transmit voice, video and
data  elements  over the same  network.  The Company uses this  technology  with
delivery networks that combine fiber-optic,  coaxial cable networks and wireless
communication  systems.  This  approach  allows  "last mile"  connectivity  with
IP-based  service  offerings,  providing  an  economical  method  of  delivering
high-quality, high-speed bundled communications services.

         The  Company  offers a wide  variety  of  telecommunications  services,
including high-bandwidth,  high-speed data transmission,  high-speed and dial-up
Internet access,  voice, video and value-added  services in many of its markets.
The Company  intends to allow  subscribers  to combine or bundle  services  into
packages, rather than offering only telecommunications service packages designed
for a "typical" customer. The Company believes this flexible sales strategy will
reduce  switching  barriers for  potential  subscribers  who may be reluctant to
switch  all  of  their  telecommunications  services,  or for  subscribers  with
existing  contracts with other service providers.  The Company's  customers will
benefit from having a single provider of telecommunication solutions on a single
bill.

Business Strategies

         The Company's  business  objective is to establish  itself as a premier
facilities-based   provider  of  integrated   high-bandwidth   telecommunication
solutions  to  business,  governmental  and  residential  customers  in  Central
America,  the Andean  region and Mexico.  The Company will employ the  following
strategies to achieve its overall objective:

         Focus on Underserved Markets in Central America,  the Andean Region and
Mexico. The Company provides and intends to expand its integrated  communication
solutions in  under-served  markets in Central  America,  the Andean  region and
Mexico.  The Company believes there is a large and growing demand for high-speed
and dial-up  Internet  access,  high-speed  data  transmission,  voice and video
services in these  markets.  The Company also believes that, as a first provider
of  competitively  priced bundled  telecommunications  services in many of these
rapidly deregulating markets, it will be able to secure a significant subscriber
base and market share of high-end customers with minimal turnover.

         Pursue  Strategic   Acquisitions  of  Subscriber  Bases  and  Ancillary
Services.  In  addition  to  developing  its own  subscriber  base  through  the
promotion of its  telecommunications  services, the Company intends to engage in
selective acquisitions of existing  telecommunications  subscriber bases, or the
acquisition  of  existing  CATV  operations,  ISPs or local  and  long  distance
telephone    companies.    See,    e.g.,    "Description    of   the   Company's
Business-Markets-Guatemala,"   below.   The  Company  believes  these  strategic
acquisitions  will provide it with positive cash flow. In addition,  the Company
believes it can benefit from the vertical  integration of key service  providers
in the  telecommunications  industry  and, in cases where the  acquired  company
relies  primarily on antiquated  networks,  it can provide the acquired  company
with a viable  method of  increasing  its existing  subscriber  base through the
promotion of the Company's high-bandwidth telecommunications networks.

         Initial  Focus on Internet and Data  Services.  The Company is focusing
its initial network  development and acquisition  activities on the provision of
high-speed  and  dial-up  Internet  access,   high-speed  data  connections  and
value-added  services.  The  Company  believes  the  subscriber  base for  these
services  is, in general,  more  affluent and stable.  As a result,  the Company
believes that, by first emphasizing those services, it will be able more quickly
to achieve positive cash flow.

         Use of Lower Cost, High-Bandwidth  Communications Networks. The Company
intends to provide its telecommunications services through the integrated use of
its own  next-generation  transmission  networks that use fiber-optics,  coaxial
cable and wireless  communications  systems.  The Company believes this approach
allows the most efficient  delivery of high-speed "last mile"  connectivity with
IP-based service offerings, providing a lower overall network cost of delivering
bundled  communications  services.  The  Company  also  believes  its lower cost
structure  will  allow it to  economically  access  smaller  buildings  and more
customers than by using only one type of delivery system and, therefore, that it
will enjoy more price  flexibility.  Further,  the  flexibility of the Company's
network  architecture  should  allow it to minimize  the  deployment  of network
equipment not  associated  with  revenues,  since a  significant  portion of its
planned  capital  expenditures  will be for the purchase of subscriber  premises
equipment (which is generally  deployed only when subscribers are acquired).  In
addition,  the Company's  systems will not need to cover an entire market before
the  Company can  initiate  service in that  market.  By  contrast,  competitive
wireline  networks  incur the  majority of their costs  before the first  paying
customer is switched on.

         Customized  Approach to Bundled  Services.  The  Company  offers a wide
variety of telecommunications  services,  including  high-bandwidth,  high-speed
data  transmission,  high-speed and dial-up  Internet access,  voice,  video and
value-added  services.  The  Company  intends to allow  customers  to combine or
bundle  services  into  customized  packages,  rather than offering only bundled
packages designed for a "typical" customer.

         End User Focus. The Company offers its services  directly to end users,
rather than  positioning  itself as a wholesale  network  service  provider.  By
deriving the majority of its revenues from providing telecommunications services
directly to end user customers, the Company believes it will quickly establish a
sustainable and broad customer base. In addition,  the Company believes that, by
offering  last-mile  connectivity,  it will  create  higher  barriers  to entry,
thereby limiting  competition.  The Company believes this strategy will minimize
the risk of  generating  substantial  revenues  from  only a  limited  number of
sources,  and that it will maximize  revenues and profitability by accessing the
higher priced retail market.

         Maximize Subscriber  Penetration.  In order to more rapidly become cash
flow  positive,  the Company plans  initially to offer services in those markets
which it believes  have the most  potential to generate  significant  subscriber
growth.  These markets  include the major  metropolitan  areas in Guatemala,  El
Salvador,   Venezuela,   Costa  Rica,  Panama  and  Mexico,  which  have  denser
populations with higher disposable  income and a potentially  greater demand and
use of telecommunications  services. The Company also intends to rapidly develop
its own  high-bandwidth  metropolitan  area networks for the delivery of bundled
communications  services.  See "Description of the Company's  Business-Markets,"
below.  The Company  believes its first mover  advantage will allow it to obtain
access to high-end customers in both the business and residential markets.  Once
the Company  establishes an operating  platform in a market, its next step is to
focus on  maximizing  subscriber  growth  through  careful  segmentation  of the
customer base,  customizing the services offered to each identified segment, and
competitive  pricing. The Company intends to develop brand awareness by offering
network reliability,  complemented by high quality customer support. The Company
also  believes  rapid  implementation  of its business  strategy will yield more
control over the end user, and create higher barriers to entry.

         Utilize  and Support  Local  Management.  The  Company  relies on local
managers in the countries where it operates. These local managers play an active
role in securing network rights and obtaining  necessary  regulatory  approvals,
assisting  in  arranging,  identifying  and  evaluating  opportunities  for  the
Company's business,  and providing local advocacy for the Company's  operations.
The Company's  local  management,  which typically have managerial and operating
experience  in  the  telecommunications  industry,  will  be  supported  by  the
Company's corporate  operations staff, which is located in Florida.  The Company
believes the use of local managers  allows it to respond rapidly and effectively
to operational  matters,  develop and maintain  effective working  relationships
with local  partners and  capitalize on  telecommunications  opportunities.  The
Company has  recently  acquired  several  companies  and has been able to retain
their local experienced management.

         Strategic  Alliances.  The Company has entered into strategic alliances
with a number of companies  and entities  already  active in the Latin  American
telecommunications  markets.  The  Company  believes  these  partners  are  both
influential and respected within their countries or regions,  and they typically
work closely with the Company's senior management.

Network Technology

         The  Company  employs an  Internet  Protocol  ("IP")  based  technology
platform  that  utilizes  packet  switching  to transmit  voice,  video and data
elements over the same network.  The Company  combines  this  technology  with a
delivery  network that uses  fiber-optic,  coaxial  cable  networks and wireless
telecommunication  networks.  The Company  believes  this  network  architecture
allows the most efficient  delivery of high-speed "last mile"  connectivity with
IP-based service  offerings,  providing an economical  method of delivering high
quality bundled communications services. The Company ultimately plans to provide
voice, data,  Internet and video services over the same network  architecture in
each  of  its  markets.   The  Company  believes   emerging   technologies  have
significantly   enhanced  the  value  and  capacity  of  networks  that  combine
fiber-optic, coaxial and fixed wireless communications systems.

         The strong demand for higher  transmission  speed and bandwidth and the
emergence  of a number  of new  technologies  applicable  to the  communications
industry  have  resulted in a convergence  of data and voice  transmission.  The
Company  believes  this  convergence  is  creating a  fundamental  change in the
telecommunications   industry--a  move  from  the  traditional  circuit-switched
networks   that   were   primarily   designed   for  voice   communications   to
packet-switched networks using IP technology.  This technology makes it possible
to move information at a lower cost,  because IP makes more efficient use of the
network capacity.

         Circuit-switched  networks use a single circuit for each  conversation,
while  conventional  data  networks  route  each data  transmission  separately,
occupying  an entire  circuit or portion of the network for the  duration of the
call  or  data  transmission.   Packet  switching  technology  also  allows  the
transmission  of both  voice  and data  elements  over the  same  network.  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 at the same
time, and then reassembled at the receiving end. In this process,  IP is used as
the basic form of creating and reassembling the packets and ensuring the packets
reach the correct destination.  Because IP packet switching makes it possible to
fill a network's  entire  capacity  with  packets,  it can move large amounts of
information   efficiently  and,  the  Company  believes,   at  lower  cost  than
traditional circuit-switched networks.

         Packet-switched   networks   have  less   overhead   than   traditional
circuit-switched   networks,   which   translates  into  cost  savings.   Sprint
Corporation, for example, estimates it will save 70% over circuit switching with
its  packet-switched  network.  For a provider with both local and long distance
facilities to move a 650-megabit CD ROM worth of information  (the equivalent of
the  contents of eight  encyclopedia  volumes)  from New York to London over the
traditional   public  switched   telephone   network  would  cost  the  provider
approximately $27.00. However, to move the same amount of information over an IP
network would cost the provider only about $2.00.

         The Company  believes  that  another  significant  advantage  of packet
switching technologies over circuit switching is the perceived difference in the
improvement  rate of the technology.  The rate of improvement of technologies is
measured   by  the  time   required   to  double  the   performance/cost   ratio
(switched/second/dollar).  Historically,  circuit  switching  technologies  have
doubled  their  performance  cost  ratio  approximately  every 40 to 80  months,
depending  on  the  specific  nature  of  the  switch,  while  packet  switching
technologies currently double this ratio every 10 to 20 months.

         The Company  also  believes  its IP-based  architecture  facilitates  a
significantly  more  sophisticated   bandwidth  management   capability.   While
competitors can offer limited bandwidth guarantees (e.g. high-level voice, video
and data  management),  the Company can actively manage  bandwidth at a services
layer. This effectively means that the Company can allocate  bandwidth on demand
to a particular data stream,  voice conversation or video stream, as needed. The
Company believes this capability may be a significant service  differentiator in
the market place.

         The Company combines packet-switched technology with a delivery network
that  uses  hybrid   fiber-optic   and  coaxial  cable  networks  with  wireless
telecommunications  systems.  Over  the  last few  years,  high-frequency  radio
transmission   has   proven   to   be  a   reliable,   high-capacity,   scalable
telecommunications  transport network method.  Standardized  point-to-point  and
point-to-multipoint  equipment is now available  from  multiple  vendors such as
Lucent,  Nortel and Bosch. Having garnered market recognition for the ability to
achieve  transport  speeds in excess of OC-48 (2,488  megabits per second),  the
Company  believes   high-bandwidth   wireless   networks  present  an  excellent
alternative and complement to both fiber and hybrid-fiber coaxial networks.

Note Regarding Acquisitions

         As noted in more detail below, the Company has entered into a number of
agreements to acquire assets,  operations or subscribers in its various markets.
These  agreements  include the  Company's  agreements to acquire an ISP and CATV
operation  in  Guatemala  under the terms of the Metro  Transaction,  as defined
below, the Company's  strategic alliance with MetroNet,  S.A. in Mexico, and the
customer base acquisition with GBM Corporation in El Salvador under the terms of
an  agreement  with that entity.  Unless  otherwise  noted in this  report,  the
information  (narrative  and  qualitative)  presented in this report,  including
without   limitation  the  information   set  forth  in  the  section   entitled
"Description  of the Company's  business-Markets,"  assumes the  consummation of
those transactions.  Although the Company has entered into definitive agreements
requiring  the   consummation  of  certain  of  these   transactions   upon  the
satisfaction of certain events,  there can be no assurance that the Company will
actually complete the transactions on the anticipated  terms, or at all, or that
the other  parties to those  arrangements  will not breach their  obligation  to
consummate the acquisitions.

Markets

         The Company has identified  several markets,  including  Guatemala,  El
Salvador,  Venezuela,  Costa Rica, Panama, and Mexico, where it already operates
or intends to operate  and expand its  telecommunications  services  in the next
three years. The total population of these markets exceeds 140 million people.
     
         The table below provides summary information  regarding the operations,
customers  and  ownership  of the  Company and the GDP and  population  of these
countries:
<TABLE>
<S>            <C>                        <C>                 <C>             <C>           <C>          <C>

  -------------------------------------------------------------------------------------------------------------------
    Country           Company               Operation           Customers     Ownership     1998e GDP    Population
  Guatemala    Cybernet Guatemala(2)      ISP(1)/HSD(1)           4,986         60.0%        $18.6bn     11,500,000
                                           /Telephony
               STS(2)                        CATV(1)              7,500         60.0%

  El Salvador  Cablevisa                      CATV               26,000        44.0%(3)      $11.8bn     6,200,000

               Cybernet Salvador             ISP/HSD             330(4)        44.0%(3)

  Venezuela    Inter@net                     ISP/HSD              3,440         100.0%       $86.6bn     22,800,000

  Costa Rica   Television                    ISP/HSD           Market           100.0%       $9.7bn      3,700,000
               Interactiva                                     Trials(5)

  Panama       Wireless Panama               ISP/HSD           Market            90.0%        $8.7bn      2,700,000
                                                               Trials(5)
  -------------------------------------------------------------------------------------------------------------------
(1)      "HSD" means  high-speed data  transmission,  "ISP" means Internet  services  provider and "CATV" means cable
         television.
(2)      Pending acquisition, see "Description of the Company's Business - Markets - Guatemala."
(3)      Under the terms of the  Company's  acquisition  of its  interests in Cablevisa  and Cybernet  Salvador,  the
         Company also obtained the operational  and management  control of those  entities.  See  "Description of the
         Company's Business-Markets-El Salvador."
(4)      Cybernet Salvador began offering ISP and data transmission services in February 1999.
(5)      Television  Interactiva and Wireless Panama recently completed the build out of their infrastructure for ISP
         and data transmission services and are currently conducting market trials.

</TABLE>


Guatemala

         General.  In February  1999,  the Company  entered into an agreement to
acquire 60% of Metrotelecom,  S.A. ("Metro"),  a Guatemalan holding company that
owns Cybernet S.A. ("Cybernet Guatemala"),  an ISP, and has negotiated the right
to acquire the assets of Servicio de Television Via Satelite,  S.A.  ("STS"),  a
CATV  company.  See  "Description  of the  Company's  Business - Note  Regarding
Acquisitions."  Metro also initiated local and long distance  telephony services
in February 1999, through an interconnect  agreement with Telgua. As of March 1,
1999, the combined  subscribership of Cybernet Guatemala and STS exceeded 12,400
customers.  Upon the closing of the Metro acquisition (the "Metro Transaction"),
the  Company  believes  it  will  establish  itself  as a  premier  provider  of
high-bandwidth, high-speed Internet access and data transmission services, voice
and video services to business and residential customers in Guatemala.

         The table below  provides an overview of the  Company's  operations  in
Guatemala assuming the consummation of the Metro Transaction:

--------------------------------------------------------------------------------
Profile
--------------------------------------------------------------------------------
Services offered              Dial-up Internet access, e-mail
                              Video services
                              High-speed dedicated and shared data transmission
                              Telephony services
----------------------------- --------------------------------------------------
Markets served                Guatemala City
----------------------------- --------------------------------------------------
Number of accounts            12,486
----------------------------- --------------------------------------------------
Wireless spectrum             375 MHz in the 25GHz range
                              200 MHz in the 38 GHz range
----------------------------- --------------------------------------------------
Network infrastructure        Fiber-optic infrastructure w/6 nodes/access points
                              60 km of fiber-optic cable
                              200 km of coaxial cable
                              1 video head-end
                              Network Operations Center
                              29 E1 circuits (12 in operation)
                              600 analog lines
                              Network Point of Presence
----------------------------- --------------------------------------------------
Network coverage              80% of the central business district
----------------------------- --------------------------------------------------
Source:  Convergence Communications, Inc.

         Market  Opportunity.  The  Company  believes  that  Guatemala,  Central
America's  largest  economy,   offers  significant   opportunities  for  bundled
telecommunications  services,  as  evidenced  by  (i)  its  rapid  economic  and
population  growth,  (ii) low  penetration  of telephone  and data  transmission
services, and (iii) an open regulatory regime.

         At  present,  Guatemala's  teledensity  is 5.3%,  the lowest in Central
America after Honduras.  However,  the Company believes  Guatemala's  relatively
large population, combined with recently favorable economic conditions, provides
a  significant   telecommunications  services  growth  potential.  According  to
industry  experts,   Guatemala's   telecommunications   sector  will  experience
significant growth following the successful  privatization of Telecomunicaciones
de Guatemala  ("Telgua") in October 1998 and the entry of new service  providers
such as the Company into the market.  Telgua estimates  current demand for phone
lines  totals one million  lines and the  official  waiting  list is for 400,000
lines. Teledensity is expected to double by the end of 2001.

         Guatemala has the largest economy in Central America,  with a total GDP
of $18.6 billion.  It has shown relatively strong,  sustained growth,  averaging
4.1%  over the  past  four  years.  The  Company  believes  that  infrastructure
deficiencies,  particularly in education, electricity,  telecommunications,  and
transportation,  constrain  more  rapid  development;  however,  the  Guatemalan
government  recently  liberalized  several  segments of the  financial  services
industry, deregulated petroleum prices, and revised the commercial code. In 1996
Guatemala's  government passed legislation to liberalize the  telecommunications
and  electricity   sectors,   and  these   industries  are  in  the  process  of
privatization.

         The  population  of  Guatemala is 11.5  million.  Guatemala  City,  the
capital  city of  Guatemala,  has a total  population  of 2.1 million and is the
industrial  and  political  center of the  country.  The  total  number of urban
households in Guatemala is approximately  719,000,  and the average buying power
per  urban  household  totals  $14,138.  The  top  three  (out  of  five)  urban
socioeconomic   segments  ("SES")  in  Guatemala  represent  33%  of  the  total
households.

         Regulatory Environment. Guatemala's telecommunications sector underwent
a major  transformation  with the passage of the  November  1996  General Law of
Telecommunications,  which  established a new  framework  for  telecommunication
services   provision   and   regulation.   As  of   May   1997,   operators   of
telecommunication  services have been  obligated to provide  access to essential
telecommunications  resources to other providers,  opening the market for local,
domestic and international  services.  In March 1998, the then  government-owned
incumbent   local   and   international   exchange   carrier,   Telgua,   signed
interconnection  agreements  with a number of competitive  providers  (including
Metro). These agreements obligated Telgua to provide interconnection services by
July 1998. Telgua initiated performance under these agreements in February 1999.
Telgua was  privatized in October 1998 when a consortium of financial  investors
from Central  America  purchased 95% of the company.  Competitive  providers are
free to set their own tariffs on the services they provide.

         The  table  below  sets  forth  the   regulatory   environment  of  the
telecommunications market in Guatemala:

<TABLE>
<CAPTION>
---------------------------------- -------------------------- --------------------------- --------------------------
     Markets Currently Open        Markets Currently Closed      Markets Open Pending       Regulation Undefined
                                                                   Auctions In 1999
---------------------------------- -------------------------- --------------------------- --------------------------
<S>                                <C>                        <C>                         <C>                       
Wireline voice services (local,    Mobile voice licenses      PCS                         IP telephony
long-distance)                     currently limited          Wireless local loop
Data services                      One AMPS license
Dial-up Internet services          One PCS license (Telgua)
Dedicated data services
Private network services
Value-added services
---------------------------------- -------------------------- --------------------------- --------------------------
Source: Booz, Allen & Hamilton.
</TABLE>

        Operations  Overview.  The Company is scheduled to acquire 60% of Metro
in the second  quarter of 1999. The  acquisition  will combine the operations of
Cybernet  Guatemala,  Guatemala's  leading ISP, with the  operations of STS, the
second largest provider of cable television in the country. The Company has been
providing operational,  financial and management support to these entities since
April 1998. As of March 1, 1999, Metro had 4,986 Internet accounts,  and STS had
over 20,000 homes passed and 7,500 active cable  subscribers in Guatemala  City.
In addition,  Metro recently  implemented an interconnection  agreement with the
incumbent local exchange carrier,  which enables it to offer telephone services.
The  Company is  currently  exchanging  telephone  traffic  with  Telgua.  Metro
currently  processes  approximately 6.5 million minutes a month on local dial-up
Internet calls,  making it the largest  aggregator of local minutes after Telgua
and the nationalized cellular phone company.

         The purchase price for the Company's 60% interest in Metro will be $7.5
million,  consisting of $2.0 in cash and promissory notes due through the second
anniversary  of the closing,  Common Shares of the Company having a value (based
on a per  Common  Share  price of $8.70) of $2.5  million,  and $3.0  million in
"capital  notes" due through the fifth  anniversary of the closing.  Payments by
the Company  under the  capital  notes will be used by the sellers to fund their
continuing 40% share of any additional  equity capital required by Metro to meet
its working capital, expansion and operating requirements. The purchase price is
subject  to  adjustment  under  certain  conditions.  See  "Description  of  the
Company's Business - Note Regarding Acquisitions."

         Employing a total of 83 professionals, upon its acquisition, Metro will
be the Company's  most  developed  data  operation and will be the model for the
Company's  other  operations  in the  region.  The  Company  expects to transfer
Metro's operational and technical skills to its other markets.

         o Internet.  Metro's  Internet  services include dial-up and high-speed
Internet access and other value-added services such as e-mail,  pre-paid dial-up
Internet cards, Internet web-page design, hosting and tutorials.  These services
are offered at various  price  points and usage plans that are  designed to meet
the  differing  needs of its  customers.  These plans,  which  include an e-mail
address,  are for limited or  unlimited  access,  weekend-only  use,  multilogin
access and high-speed access. Each plan requires a monthly set-up fee, a monthly
usage fee, and a per-minute  usage fee above a set hour limit for limited access
accounts.  These  amounts  can be paid  directly to the Company or with a credit
card. Currently,  the standard set-up fee for dial-up Internet-access is $22.00,
the monthly usage fee is $33.00,  and users pay an hourly usage fee of $4.95 for
every  hour  over 30 hours  per  month of use.  Metro's  unlimited  usage fee is
currently  $66.00.  Metro also  offers a prepaid  Internet  access  card,  which
provides a predefined  number of minutes of access.  The Company  believes  that
these rates will  decrease  in the future as  additional  competitors  enter the
market.

         The Company  believes that an important  component for Metro's  dial-up
Internet  services is the starter kit it provides its  subscribers.  The starter
kit includes the  installation  program,  software  and a start-up  manual.  The
market for  individual  Internet  access in Guatemala is heavily  influenced  by
person-to-person  referrals.  Given the  relative  novelty  of the  Internet  in
Guatemala,  Metro has  attempted  to maintain a high degree of contact  with the
community by offering  tutorials,  presentations  to potential  clients and free
trials.  Metro  advertises its services  through local  newspapers,  television,
cable television,  radio, and fliers.  Metro also sells its services,  including
prepaid Internet cards, through an arrangement with retail stores,  universities
and other distribution points.

         o Data Transmission.  Metro offers high-speed data transmission through
a hybrid  fiber-optic  coaxial  metropolitan  area  network  to large  and small
businesses and  governmental  entities,  as well as to residential  customers at
different price points according to their bandwidth requirements. The network is
currently  owned by STS, but will be acquired by the Company in connection  with
its acquisition of its 60% interest in Metro.  Metro's  dedicated  business data
connectivity  services  currently start at a minimum of 256 Kbps. Metro can also
offer  services at 512 Kbps,  and up to E1 speeds.  Metro offers three levels of
high-speed  Internet  service:  residential,  small business and large business.
Residential  users  currently  pay a one-time  set-up fee of $440  (which may be
financed  using  a  credit  card)  and a  monthly  usage  fee of  $88.00.  Small
businesses (up to 4 customers and no more than 256 Kbps of speed)  currently pay
a set-up fee of $550 and a monthly  usage fee  starting  at $150 (for 128 kbps).
Large  businesses  usually pay a one-time set-up fee of $1,850 (which includes a
router on loan) for all dedicated speeds,  plus a monthly usage fee ranging from
$735 for 128 Kbps to $2,320 for E1 speeds.  Additionally,  the Company  plans to
offer virtual private  networks ("VPN") with speeds ranging from 128 Kbps to 100
Mbps to its  high-speed  data  customers.  VPNs provide secure  transmission  of
private  IP traffic  using  shared  network  capacity.  Customers  will have the
ability to connect  multiple  business  locations  with  IP-based  technology at
defined levels of data transmission rates and security.

         o CATV.  STS, which the Company will acquire in connection with its 60%
interest  in Metro,  currently  offers a total of 60  television  channels  with
varied  programming  content,  including  movies,  serials,  sports,  children's
programming,  general interest,  news, music,  locally produced  programming and
channels  from  Europe and the United  States.  Pricing is tiered  according  to
location of the service  delivery area. STS currently offers basic cable service
at a rate of  approximately  $15.70 per month,  with an installation fee of $29.
After the  acquisition  of Metro,  the Company  intends to  reposition  the CATV
operations and alter the pricing structure accordingly.

         o Telephone Services.  Metro recently began offering telephony services
after  successfully  implementing its interconnect  agreement with the incumbent
local exchange carrier,  Telgua.  After activation of its Ericsson ANS switch in
mid-February,  1999, Metro successfully  processed a total of 300,000 minutes of
dial-up traffic in its first two weeks of operation. Metro also intends to offer
a broad range of  telephony  services,  including  toll free  services and voice
mail. The Company's  existing billing  capabilities  will be shared with its new
telephone  services  to measure  the length of the calls and  generate  accurate
billing. The Company intends to charge competitive  telephony  installation fees
and telephone rates to its business, governmental and residential customers. The
installation  charge  for a  minimum  of two lines for a  business  customer  is
currently $200 (plus $5 per line per month),  while a residential  customer will
be installed  for $100 (plus $5 per line per month) for one line.  Customers are
currently  charged $0.023 per minute for a local call and no less than $0.36 per
minute for a call to the United States, based on current rates. The interconnect
agreement  requires  the parties to pay each other 50% of the local  retail rate
for termination  services in Guatemala City and 50% of the intra-urban rates for
termination on a national  basis.  International  rates are not  regulated,  and
incoming  international  minutes  are  levied  with a  termination  rate  by the
terminating  network of 70% of the current  settlement rate (currently $0.38 for
the United States), minus a discount of approximately $0.09 per minute.

         Metro  believes  that  customer  support is a  critical  element to its
success in retaining customers and attracting new users. Metro provides customer
service and technical support at a call center located on its premises,  where a
customized  billing system  integrates  functionality for each stage of customer
interaction  around a single,  unified Oracle customer  database.  This database
acts as a central  repository for all user data  collected  during each stage of
the customer lifecycle, eliminating the need for multiple databases.

         Network  Architecture.  STS recently  completed the construction of its
network  in  Guatemala  City,  which  consists  of  a  60-kilometer  fiber-optic
infrastructure  with six nodes  interconnected  with 200  kilometers  of coaxial
cable.  Its  all-underground  network  utilizes  coaxial  cable for "last  mile"
connectivity  to its subscriber  locations.  See  "Description  of the Company's
Business - Note Regarding  Acquisitions."  The Company (through  presently owned
subsidiaries) also recently received two blocks of spectrum for a high-bandwidth
point-to-multipoint  wireless network, and recently leased a 256 MHz (which will
be increased to 512 MHz) microwave  connection  between the network in Guatemala
and its network in El Salvador,  which provides the Company with a long distance
interconnection  for all  its  services.  In  order  to  provide  its  telephony
services,  Metro  entered  into an  interconnection  agreement  with  Telgua and
currently  operates 12 E1  circuits.  The Company  also built a central  Network
Operation Center ("NOC"),  which monitors the Guatemalan network 24 hours a day,
seven  days  a  week  and  provides  real-time  alarm,  status  and  performance
information. The network covers 80% of the business community of Guatemala City.

         Customers.  As of March 1, 1999, Metro's top business customers were as
follows:

        Operations  Overview.  The Company is scheduled to acquire 60% of Metro
in the second  quarter of 1999. The  acquisition  will combine the operations of
Cybernet  Guatemala,  Guatemala's  leading ISP, with the  operations of STS, the
second largest provider of cable television in the country. The Company has been
providing operational,  financial and management support to these entities since
April 1998. As of March 1, 1999, Metro had 4,986 Internet accounts,  and STS had
over 20,000 homes passed and 7,500 active cable  subscribers in Guatemala  City.
In addition,  Metro recently  implemented an interconnection  agreement with the
incumbent local exchange carrier,  which enables it to offer telephone services.
The  Company is  currently  exchanging  telephone  traffic  with  Telgua.  Metro
currently  processes  approximately 6.5 million minutes a month on local dial-up
Internet calls,  making it the largest  aggregator of local minutes after Telgua
and the nationalized cellular phone company.

         The purchase price for the Company's 60% interest in Metro will be $7.5
million,  consisting of $2.0 in cash and promissory notes due through the second
anniversary  of the closing,  Common Shares of the Company having a value (based
on a per  Common  Share  price of $8.70) of $2.5  million,  and $3.0  million in
"capital  notes" due through the fifth  anniversary of the closing.  Payments by
the Company  under the  capital  notes will be used by the sellers to fund their
continuing 40% share of any additional  equity capital required by Metro to meet
its working capital, expansion and operating requirements. The purchase price is
subject  to  adjustment  under  certain  conditions.  See  "Description  of  the
Company's Business - Note Regarding Acquisitions."

         Employing a total of 83 professionals, upon its acquisition, Metro will
be the Company's  most  developed  data  operation and will be the model for the
Company's  other  operations  in the  region.  The  Company  expects to transfer
Metro's operational and technical skills to its other markets.

         o Internet.  Metro's  Internet  services include dial-up and high-speed
Internet access and other value-added services such as e-mail,  pre-paid dial-up
Internet cards, Internet web-page design, hosting and tutorials.  These services
are offered at various  price  points and usage plans that are  designed to meet
the  differing  needs of its  customers.  These plans,  which  include an e-mail
address,  are for limited or  unlimited  access,  weekend-only  use,  multilogin
access and high-speed access. Each plan requires a monthly set-up fee, a monthly
usage fee, and a per-minute  usage fee above a set hour limit for limited access
accounts.  These  amounts  can be paid  directly to the Company or with a credit
card. Currently,  the standard set-up fee for dial-up Internet-access is $22.00,
the monthly usage fee is $33.00,  and users pay an hourly usage fee of $4.95 for
every  hour  over 30 hours  per  month of use.  Metro's  unlimited  usage fee is
currently  $66.00.  Metro also  offers a prepaid  Internet  access  card,  which
provides a predefined  number of minutes of access.  The Company  believes  that
these rates will  decrease  in the future as  additional  competitors  enter the
market.

         The Company  believes that an important  component for Metro's  dial-up
Internet  services is the starter kit it provides its  subscribers.  The starter
kit includes the  installation  program,  software  and a start-up  manual.  The
market for  individual  Internet  access in Guatemala is heavily  influenced  by
person-to-person  referrals.  Given the  relative  novelty  of the  Internet  in
Guatemala,  Metro has  attempted  to maintain a high degree of contact  with the
community by offering  tutorials,  presentations  to potential  clients and free
trials.  Metro  advertises its services  through local  newspapers,  television,
cable television,  radio, and fliers.  Metro also sells its services,  including
prepaid Internet cards, through an arrangement with retail stores,  universities
and other distribution points.

         o Data Transmission.  Metro offers high-speed data transmission through
a hybrid  fiber-optic  coaxial  metropolitan  area  network  to large  and small
businesses and  governmental  entities,  as well as to residential  customers at
different price points according to their bandwidth requirements. The network is
currently  owned by STS, but will be acquired by the Company in connection  with
its acquisition of its 60% interest in Metro.  Metro's  dedicated  business data
connectivity  services  currently start at a minimum of 256 Kbps. Metro can also
offer  services at 512 Kbps,  and up to E1 speeds.  Metro offers three levels of
high-speed  Internet  service:  residential,  small business and large business.
Residential  users  currently  pay a one-time  set-up fee of $440  (which may be
financed  using  a  credit  card)  and a  monthly  usage  fee of  $88.00.  Small
businesses (up to 4 customers and no more than 256 Kbps of speed)  currently pay
a set-up fee of $550 and a monthly  usage fee  starting  at $150 (for 128 kbps).
Large  businesses  usually pay a one-time set-up fee of $1,850 (which includes a
router on loan) for all dedicated speeds,  plus a monthly usage fee ranging from
$735 for 128 Kbps to $2,320 for E1 speeds.  Additionally,  the Company  plans to
offer virtual private  networks ("VPN") with speeds ranging from 128 Kbps to 100
Mbps to its  high-speed  data  customers.  VPNs provide secure  transmission  of
private  IP traffic  using  shared  network  capacity.  Customers  will have the
ability to connect  multiple  business  locations  with  IP-based  technology at
defined levels of data transmission rates and security.

         o CATV.  STS, which the Company will acquire in connection with its 60%
interest  in Metro,  currently  offers a total of 60  television  channels  with
varied  programming  content,  including  movies,  serials,  sports,  children's
programming,  general interest,  news, music,  locally produced  programming and
channels  from  Europe and the United  States.  Pricing is tiered  according  to
location of the service  delivery area. STS currently offers basic cable service
at a rate of  approximately  $15.70 per month,  with an installation fee of $29.
After the  acquisition  of Metro,  the Company  intends to  reposition  the CATV
operations and alter the pricing structure accordingly.

         o Telephone Services.  Metro recently began offering telephony services
after  successfully  implementing its interconnect  agreement with the incumbent
local exchange carrier,  Telgua.  After activation of its Ericsson ANS switch in
mid-February,  1999, Metro successfully  processed a total of 300,000 minutes of
dial-up traffic in its first two weeks of operation. Metro also intends to offer
a broad range of  telephony  services,  including  toll free  services and voice
mail. The Company's  existing billing  capabilities  will be shared with its new
telephone  services  to measure  the length of the calls and  generate  accurate
billing. The Company intends to charge competitive  telephony  installation fees
and telephone rates to its business, governmental and residential customers. The
installation  charge  for a  minimum  of two lines for a  business  customer  is
currently $200 (plus $5 per line per month),  while a residential  customer will
be installed  for $100 (plus $5 per line per month) for one line.  Customers are
currently  charged $0.023 per minute for a local call and no less than $0.36 per
minute for a call to the United States, based on current rates. The interconnect
agreement  requires  the parties to pay each other 50% of the local  retail rate
for termination  services in Guatemala City and 50% of the intra-urban rates for
termination on a national  basis.  International  rates are not  regulated,  and
incoming  international  minutes  are  levied  with a  termination  rate  by the
terminating  network of 70% of the current  settlement rate (currently $0.38 for
the United States), minus a discount of approximately $0.09 per minute.

         Metro  believes  that  customer  support is a  critical  element to its
success in retaining customers and attracting new users. Metro provides customer
service and technical support at a call center located on its premises,  where a
customized  billing system  integrates  functionality for each stage of customer
interaction  around a single,  unified Oracle customer  database.  This database
acts as a central  repository for all user data  collected  during each stage of
the customer lifecycle, eliminating the need for multiple databases.

         Network  Architecture.  STS recently  completed the construction of its
network  in  Guatemala  City,  which  consists  of  a  60-kilometer  fiber-optic
infrastructure  with six nodes  interconnected  with 200  kilometers  of coaxial
cable.  Its  all-underground  network  utilizes  coaxial  cable for "last  mile"
connectivity  to its subscriber  locations.  See  "Description  of the Company's
Business - Note Regarding  Acquisitions."  The Company (through  presently owned
subsidiaries) also recently received two blocks of spectrum for a high-bandwidth
point-to-multipoint  wireless network, and recently leased a 256 MHz (which will
be increased to 512 MHz) microwave  connection  between the network in Guatemala
and its network in El Salvador,  which provides the Company with a long distance
interconnection  for all  its  services.  In  order  to  provide  its  telephony
services,  Metro  entered  into an  interconnection  agreement  with  Telgua and
currently  operates 12 E1  circuits.  The Company  also built a central  Network
Operation Center ("NOC"),  which monitors the Guatemalan network 24 hours a day,
seven  days  a  week  and  provides  real-time  alarm,  status  and  performance
information. The network covers 80% of the business community of Guatemala City.

<TABLE>
<CAPTION>
         Customers.  As of March 1, 1999, Metro's top business customers were as follows:
<S>                            <C>                          <C>                         <C>
------------------------------ ---------------------------- --------------------------- ----------------------------
Texaco Guatemala               Hyatt                        Gillette                    IGSS
KLM                            Coca Cola                    Avis Rent-a-car             UFM
Xerox                          Bayer                        KPMG                        INGUAT
Shlumberger                    Siemens                      UPS                         Banco de Guatemala
Lloyd's Bank                   Delta Airlines               Ericksson                   UNICEF
Price Waterhouse               Chevron                      Shell                       U.S. Embassy
Avon                           Pepsi Cola                   Mitsubishi                  Austrian Embassy
Glaxo                          McDonalds                    Holiday Inn                 Colombian Embassy
------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>

        Competition.  Internet  services were  introduced in Guatemala in 1995.
There are currently no regulatory  barriers to prevent  companies  from offering
value-added services, private network services or Internet services. The Company
views the market for provision of Internet  access to individuals as competitive
and  somewhat  fragmented,  while it  believes  the market for  high-speed  data
services is concentrated among fewer providers.

         Until   January   1999,   Telgua  was  the  sole  operator  for  local,
long-distance and international telecommunications services in Guatemala. At the
end of  1997,  Telgua  had  430,000  lines  in  service  out of a total  630,000
installed  lines.  All lines in the capital of Guatemala City were digital as of
year-end 1997, with 70%  digitalization in the rest of the country.  In addition
to Telgua's core business of providing local,  long-distance  and  international
telecommunications  services,  it  also  provides  leased  lines,  data  network
services,  and  telegraph  services.  Telgua  has  executed  a number  of access
agreements with operators that are planning to provide domestic or international
voice  services.  These are now being  implemented.  Metro  expects  to  compete
against the recently  privatized Telgua on basic telephony services by providing
a more reliable and cost effective alternative to its services.

         In the cable television  market there are two main providers  operating
in Guatemala City,  including STS, with  approximately  40,000  subscribers on a
combined  basis,  and  hundreds of smaller  providers  operating  in rural areas
throughout the country.  The Company believes that STS, with approximately 7,500
customers, is the second largest cable television provider in the country.

The following  table shows the  composition of the Guatemala  telecommunications
market  in  each  segment,  the  approximate  market  shares  of  the  principal
competitors and a price comparison of the products offered:

<TABLE>
<S>                    <C>               <C>              <C>  
---------------------- ----------------- ---------------- ----------------------------------------------------------
Segment                Competitor        Market Share     Products / Price
Internet access        Metro             35%              Limited (30 hrs) $33.00 + $4.95 / Unlimited $66.00(1)
                       Infovia           23%              Limited $38.00 / Unlimited $135.00(2)
                       Quicknet          13%              N/A
Data transmission      Telgua            73%              N/A
                       Metro             13%              256 Kbps / $212 + $1,575 installation(3)
                       Totalcom          7%               N/A
                       Cablenet          7%               N/A
Cable television       Maya Cable        77%              117 channels / $27.91 + $37.31 installation(3)
                       STS               19%              60 channels / $15.70 + $29.00 installation(3)
Telephony              Telgua            100%             Local     $0.022-0.03    /     l.d.$0.037-0.052     +$224
                       Metro             -                installation(4)
                                                          Local $0.023 / l.d. (U.S.) $0.36 + $100 installation(4)
---------------------- ----------------- ---------------- ----------------------------------------------------------
(1) Subscription fee (monthly charge) plus hourly usage fee (30 hrs free) or unlimited usage fee.
(2) Subscription fee (monthly charge) or unlimited usage fee.
(3) Monthly charge plus installation fee.
(4) Local and long distance rates per minute plus residential installation fee (fees for Telgua are peak and off-peak).
Source: Convergence Communications, Inc.;Booz, Allen & Hamilton.
</TABLE>

El Salvador

         General. The Company owns 44% of Chispa Dos Inc.  ("Chispa"),  which is
the holding company for the Company's El Salvador operations.  Chispa owns three
operating   subsidiaries,   Cablevisa   S.A.  and  Multicable   S.A.   (together
"Cablevisa") and Cybernet S.A. (Cybernet  Salvador').  Chispa also owns a fourth
subsidiary  which it is currently  anticipated  to be used to provide  telephony
services in El Salvador.  Under the terms of the  Company's  acquisition  of its
interest in Chispa,  it also acquired  operating and  management  control of the
entity.  See the Company's current report on Form 8-K dated August 3, 1998 for a
more  detailed  description  of the  Company's  acquisition  of its  interest in
Chispa.

         Cablevisa is the largest CATV provider in El Salvador, with over 26,000
subscribers.  Cybernet  Salvador  recently launched its Internet access and data
transmission  services and signed-up  approximately 330 subscribers in its first
two  weeks  of  operation.   The  Company   intends  to  leverage  the  existing
infrastructure  of  Cablevisa  and  Cybernet  Salvador  to become El  Salvador's
largest provider of bundled  high-bandwidth,  high-speed  Internet access,  data
transmission, voice and video services to high-end businesses,  governmental and
residential  customers.  The  Company's  operations  in El Salvador are its most
developed cable operations.

The table below provides an overview of the Company's  current  operations in El
Salvador:

--------------------------------------------------------------------------------
Profile
----------------------------- --------------------------------------------------
Services offered              Cable television
                              Data transmission
                              Dial-up and high-speed Internet access
                              E-mail, web hosting
----------------------------- --------------------------------------------------
Markets served                San Salvador
----------------------------- --------------------------------------------------
Number of accounts            26,330
----------------------------- --------------------------------------------------
Wireless spectrum             186 MHz in the 2.5 to 2.7 GHz range
----------------------------- --------------------------------------------------
Network infrastructure        4 fiber-optic rings w/22 nodes/access points
                              90 km of 144 strand fiber-optic cable
                              300 km of coaxial cable
                              Wireless MMDS hub
                              3 video head-ends
                              Network Operations Center
                              Network Point of Presence
----------------------------- --------------------------------------------------
Network coverage              85% of the Central Business District
--------------------------------------------------------------------------------
Source:  Convergence Communications, Inc.

         Market   Opportunity.   The  Company  believes  El  Salvador   presents
significant opportunities for providers of bundled telecommunications  services,
as  evidenced by (i)  significant  unmet  demand for basic  telephone  services,
reliable data transmission and Internet access services, (ii) favorable economic
conditions,  (iii) open regulatory  regime,  and (iv) the absence of one company
offering integrated communications services.

         Despite increased investment in the telecommunications sector since the
end of the  civil  war in  1992,  the El  Salvadoran  telecommunications  market
remains significantly underserved by existing operators. As of 1998, El Salvador
had a wireline  penetration of only 8.7%, and the average waiting time for a new
line was over five years.  Unmet demand for  telephone  lines is estimated to be
between  500,000 and 800,000  lines.  This unmet need will  contribute to strong
demand for new telephone  services.  In addition,  the market for  international
long-distance  services benefits from the approximately one million  Salvadorans
living in the United States;  currently  approximately  80% of the international
long-distance  revenues  from calls to El Salvador are generated by traffic from
the United States.

         El Salvador is Central  America's second largest  economy.  In 1998, El
Salvador  had  an  annual  growth  in  real  GDP  of  4.1%,  to  $11.8  billion.
Additionally,  El Salvador is one of only four  investment  grade  countries  in
Latin America, as recognized by a Baa3 rating from Moody's Investor Services. El
Salvador had a relatively low inflation rate of 4.1% per annum in 1998 and has a
historically stable exchange rate.

         The  population  of El Salvador is  approximately  6.2 million.  With a
population  of  approximately  625,000,  the capital city of San Salvador is the
financial,  commercial  and  political  center of El  Salvador  and has  Central
America's highest population density. The total number of urban households in El
Salvador  is  approximately  725,000,  and the  average  buying  power per urban
household  totals  $9,619.  The top  three  (out of five)  urban  SES  represent
approximately 42% of total households.

         Regulatory  Environment.  El  Salvador's  telecommunication  sector  is
considered to be one of the most liberal in Central America.  In September 1996,
the El Salvadoran Assembly enacted the  Telecommunications  Framework Law, which
established a new regulatory  environment  and paved the way for the breakup and
privatization of the government-owned  monopoly on  telecommunication  services.
The Superintendent General for Electricity and Telecommunications is responsible
for the regulation  and oversight of the  telecommunications  sector,  resolving
conflicts  on  interconnection  and  access  issues,  awarding  concessions  and
allocating  frequencies.  Concessions or licenses are required to provide local,
long-distance  services and wireless  services,  although there are no build-out
requirements,  and the 49% limitation on foreign ownership is only applicable to
radio  broadcasting and television.  Rates for the services provided are capped,
while,  below  the cap  operators  are free to set  their  rates.  Data  service
providers, including ISPs, are not required to obtain a concession or license to
offer services.

<TABLE>
<CAPTION>
The table below sets forth the current regulatory environment of the telecommunications market in El Salvador:

------------------------------ --------------------------- --------------------------- ----------------------------
   Markets Currently Open       Markets Currently Closed
                                                                Markets Opening             Undefined Markets
------------------------------ --------------------------- --------------------------- ----------------------------
<S>                            <C>                         <C>                         <C>
Wireline voice services        None                        None                        None
(local and long-distance)
Data services
Internet access
Value-added services
Wireless services
Cable television
------------------------------ --------------------------- --------------------------- ----------------------------
Source: Booz, Allen & Hamilton.
</TABLE>

         Operations  Overview.  In July  1998,  the  Company  acquired  49.5% of
Chispa, the holding company for the El Salvadoran operations. The other 50.5% of
Chispa was acquired by FondElec  Essential  Serviced  Growth Fund,  L.P.  which,
together  with  its  affiliates  (collectively,  "FondElec"),  is a  significant
shareholder in the Company. See "Principal Stockholders." In connection with its
acquisition of its interest in Chispa,  the Company also acquired  operating and
management control of Chispa. In December 1998, Chispa sold additional shares of
its capital stock to a third party, resulting in the Company's present ownership
of 44% of Chispa.

         Cablevisa  is the largest  cable  television  provider in the  country.
Cablevisa has approximately  58,000 homes passed and over 26,000  subscribers in
San Salvador. These subscribers,  most of whom belong to the upper three (out of
five) socioeconomic groups,  represent 47% of the cable market.  Cablevisa plans
to increase its penetration at the third  socioeconomic  tier of the market, and
to expand its  services  to the  cities of San  Miguel  and Santa Ana  utilizing
existing, redeployed equipment and its wireless network rights.

         To  complement  its cable  television  services,  the Company  recently
launched dial-up Internet and high-speed data services to business, governmental
and   residential   customers  in  El  Salvador   through   Cybernet   Salvador.
Additionally,   Cablevisa  is  negotiating  an  interconnection   agreement  for
telephony services.  If Cablevisa obtains that contract,  the Company intends to
offer local and long-distance voice services in the San Salvador area.

         Cablevisa  offers  its  services  through  its own sales  force,  which
targets residential  customers,  corporate accounts and governmental accounts. A
telemarketing  group  offers the complete  selection  of products to  customers,
whose information is sourced through available databases, while an on-the-ground
sales group offers the Company's  services  door-to-door.  The  Company's  sales
efforts are supported by advertising campaigns that use television,  newspapers,
promotions  on the  Company's  own cable network and inserts in its cable guide.
The Company also believes its 22 installation and repair vehicles roaming around
the city of San Salvador  act as  efficient  moving  banners.  To enhance  brand
recognition,  Cablevisa installs free televisions in high-traffic areas, such as
airports.  The Company offers customer  support through a call center located in
its offices,  where its service staff handles all questions regarding subscriber
accounts and dispatch  service calls 24 hours a day,  seven days a week.  With a
total of 8 technicians  on the ground,  Cablevisa can handle up to 1,000 service
calls in any given month.

         o CATV.  Cablevisa  offers a diverse  line-up of high quality basic and
premium  video  programming  of up to 64  channels.  The  Company's  basic video
programming   package  of  62  channels  provides  extensive  channel  selection
featuring diverse cable and broadcast programming.  Cablevisa's premium services
consist of Playboy and Movie City. To achieve  faster  penetration  in the third
socioeconomic  segment,  the Company is offering free installations,  free extra
outlets and either a 50%  discount on the first  month's  installment  or a free
cable  guide for two months.  The  Company  offers  competitive  pricing  tiered
according to target market and product offerings.  The Company currently charges
an installation  fee of $14.27, a monthly charge of $24.59 for the basic package
and an additional monthly charge of $11.87 for premium channels.

         o Data Transmission. The Company initiated high-speed data transmission
and  Internet-access  services  to business  and  governmental  customers  in El
Salvador in February 1999. The Company offers  competitive  pricing according to
the bandwidth requirements of its business clients,  ranging currently from $220
per  month  for 128  Kbps  to  $5,999  for  100  Mbps  of  capacity,  while  the
installation fee is currently $500.  Residential high-speed users will initially
pay approximately $75 a month, plus a set-up fee of $199.

         The  Company  also  has an  arrangement  with GBM  Corporation,  an IBM
Alliance Company,  the exclusive  provider of IBM computer hardware and software
in El  Salvador,  to provide  data  transmission  services to GBM's 120 business
customers.  These  customers  have  over  20,000  separate  connections,   which
represent between 15% and 20% of the market.  The Company expects to migrate the
first  group of 35 clients to its  networks in the second  quarter of 1999.  The
remaining 85 clients will be transferred  over the remainder of 1999.  Under the
terms of the arrangement,  GBM will act as a reseller of the Company's  services
and will be entitled to a fixed percentage of the revenues  generated by each of
its customers.  Also, GBM will have exclusivity to market the Company's services
to a pre-agreed number of potential business clients for a period of six months;
thereafter,  the  Company  will be free to offer its  bundled  services to those
customers.  Since GBM is  considered  to have the most  reliable  network in the
country,  the Company  believes  that the GBM  relationship  will  represent  an
important  step in the  Company's  effort to  establish  itself  as the  premier
provider  of  high-speed  data  transmission  services in El  Salvador.  The GBM
relationship will allow the Company to begin its data transmission operations in
El Salvador with a select customer-base and to market its alliance with GBM to a
wide range of potential  business  customers.  See "Description of the Company's
Business-Note Regarding Acquisitions."

         o Internet  Services.  In February 1999,  the Company  formed  Cybernet
Salvador  to  offer  Internet   access  services  to  business  and  residential
customers. As of March 1, 1999, the Company had approximately 330 ISP customers.
Cybernet  Salvador  provides its customers with dial-up  Internet access through
the public switched  network.  The services allow customers access to electronic
mail,  the  Internet  and file  transfer  services.  Customers  can choose  from
different  plans  starting at current  monthly rates of $15.00 for  weekend-only
usage,  $26.00 per month for  limited  usage (for up to 30 hours) and $35.00 per
month for unlimited usage.  High-speed Internet  connections  currently start at
$75.00 per month. The Company  anticipates that Cybernet  Salvador will make use
of different  promotions  to sign up new  customers,  such as free dial-up time,
upfront  discounts,  credit card discounts and free  installations.  The Company
expects to commence  offering a high-speed  Internet access services in April of
1999.

         Network  Architecture.  As  part of its  strategy  to  provide  bundled
high-speed  Internet access and data connectivity to its customers,  the Company
recently completed the construction of the El Salvadoran network, which consists
of a fully  redundant  90-kilometer  fiber-optic  ring  interconnected  with 300
kilometers of coaxial cable.  The all-aerial  network utilizes coaxial cable for
"last mile"  connectivity  to its subscriber  locations.  The Company's  network
covers  85%  of  the  business  community  of  San  Salvador.  In  areas  of new
development,  the Company  will  initially  use wireless  communications  (using
Cablevisa's  186 MHz in the 2.5 to 2.7 GHz wireless  frequency  band) to deliver
the signal,  and then deploy cable through areas of higher density.  The Company
has also  completed  the  construction  of a central  NOC,  which  monitors  its
networks 24 hours a day, seven days a week and provides real-time alarm,  status
and performance information.

         Customers. Chispa has achieved significant penetration levels among its
targeted  customers,  and is now expanding  its marketing  efforts for its cable
television  services to a broader  residential  customer  base.  For  high-speed
Internet and data  transmission  services,  the Company targets  multinationals,
government  agencies  and other  businesses  in different  industries  including
banking, manufacturing,  tourism and retail. In addition, the Company intends to
market its dial-up Internet services to its existing cable customers.

         The Company's  initial  customers  since starting its  high-speed  data
services in mid-February included Banco Cuscatlan, Banco Agricola and Kismet.

         Competition.  Until its  privatization,  the national telephone company
supplied all public  telecommunications  services in El Salvador.  In July 1998,
France  Telecom   acquired  control  of  the  wireline   company,   Compania  de
Telecomunicaciones  de El  Salvador,  S.A.  ("CTE"),  and  Telefonica  de Espana
acquired   control  of  the  wireless   company,   Compania   Internacional   de
Telecomunicaciones, S.A. ("Intel").

         Today,  Cablevisa has a number of  competitors  in each of its markets.
The Company believes,  however,  that its El Salvadoran operations are currently
the  only   integrated   service   provider   capable  of   delivering   bundled
high-bandwidth,  high-speed Internet access, data transmission,  voice and video
services to businesses, governmental and residential customers.

         The following  table shows the  composition  of the  telecommunications
market in El Salvador in each  segment,  the  approximate  market  shares of the
principal competitors and a price comparison of the products offered:

<TABLE>
<CAPTION>
------------------- -------------------- ------------------- -------------------------------------------------------
Segment             Competitor           Market Share        Products / Price
------------------- -------------------- ------------------- -------------------------------------------------------
<S>                 <C>                  <C>                 <C>
Cable television    Cablevisa            47%                 62 channels / $24.59 + $14.27 installation(1)
                    Cablecolor           34%                 64 channels / $21.00 + $11.41 installation(1)
                    Telsat               16%                 N/A
                    Direct TV            3%                  300 channels / $29.84(2)
------------------- -------------------- ------------------- -------------------------------------------------------
Internet access     Salnet               21%                 Limited  (30 hrs) $22.00 / Unlimited $40.00
                    CTE                  12%                 N/A
                    Vianet               12%                 Limited (15 hrs) $10.00 / Unlimited $30.00
                    Cytec                7%                  Limited (15 hrs) $10.00 / Unlimited $40.00
                    Cybernet Salvador    <1%(3)              Limited  (30 hrs) $26.00 / Unlimited $35.00
------------------- -------------------- ------------------- -------------------------------------------------------
Data transmission   CTE                  N/A                 128 Kbps / $713 + $1,500 installation(1)
                    Intsatelsa           N/A                 N/A
                    GBM                  15-20%              N/A
                    Cybernet Salvador    <1%(3)              256 Kbps / $280 + $500 installation(1)
------------------- -------------------- ------------------- -------------------------------------------------------
(1) Monthly charge, plus installation fee.
(2) Monthly charge; installation fee not available.
(3) Cybernet Salvador initiated Internet and data service operations in February 1999.
Source: Convergence Communications, Inc.; Booz, Allen & Hamilton.
</TABLE>

Venezuela

         General.  The Company  launched its Venezuelan  dial-up Internet access
and data  transmission  and  value-added  services  in August  1998  through the
acquisition of Interamerican  Telecom, Inc.  ("Telecom"),  the parent company of
Interamerican   Net  de   Venezuela,   S.A.   ("Inter@net").   Inter@net   is  a
Venezuelan-based  ISP which  provides  services to over 3,440  customers  in the
cities of Maracaibo,  Puerta La Cruz and Ciudad Ojeda.  See the Company's report
on Form 8-K dated  September  1,  1998 for a more  complete  description  of the
Company's  acquisition of Telecom and  Inter@net.  The Company is also expanding
its services to Caracas, where it has initiated dial-up Internet access services
and constructed the first of five wireless hubs to provide  high-speed  Internet
access and data transmission services.

The table below  provides an overview of the  Company's  current  operations  in
Venezuela:

<TABLE>
<CAPTION>

The table below provides an overview of the Company's current operations in Venezuela:

--------------------------------------------------------------------------------------
Profile
--------------------------------------------------------------------------------------
<S>                           <C>
Services offered              Dial-up Internet access, e-mail
                              Video services
----------------------------- --------------------------------------------------------
Markets served                Maracaibo, Puerto La Cruz, Ciudad Ojeda, Caracas
----------------------------- --------------------------------------------------------
Number of accounts            3,442
----------------------------- --------------------------------------------------------
Wireless spectrum             1GHz in the 27.5 GHz range
                              400 MHz in the 29 GHz range
----------------------------- --------------------------------------------------------
Network infrastructure        Caracas:
                              -    1 Wireless hub
                              -    2 E1 circuits, 2 DSP cards
                              -    Network Operations Center
                              -    Network Point of Presence
                              -    Satellite Earth Station
                              Maracaibo:
                              -    4 E1 circuits, 1 DSP card
                              -    Network Point of Presence
                              -    Satellite Earth Station
                              Ciudad Ojeda:
                              -    Network Point of Presence
                              -    128 Kbps clear channel connectivity to Maracaibo
                              -    1 E1 Circuit
                              Puerto La Cruz:
                              -    Network Point of Presence
                              -    1 E1 Circuit
                              -    Frame relay connectivity to Maracaibo
----------------------------- --------------------------------------------------------
Network coverage              9 square kilometers,  representing approximately 20% of
                              the Caracas Central Business District
----------------------------- --------------------------------------------------------
Source:  Convergence Communications, Inc.
</TABLE>

        Market    Opportunity.    The   Company    believes   the    Venezuelan
telecommunications    market   offers   growth    opportunities    for   bundled
next-generation  telecommunication  services,  given (i) the  significant  unmet
demand for telephone  communications  services,  and (ii) the growing demand for
new services.

         Telecommunications  is one of the fastest  growing sectors in Venezuela
(117% growth between 1991 and 1996). The growth of the telecommunications market
was prompted in part by the privatization of the state-owned  monopoly telephone
services provider,  Compania Anonima Telefonos de Venezuela  ("CANTV"),  and the
liberalization of enhanced  telecommunications  services in 1991. The sector has
benefited during the last several years from annual  investments of more than $1
billion. Despite this recent growth, however the population of Venezuela remains
largely unwired,  as evidenced by a teledensity of only 12.3%.  Demand for basic
telephone  services is expected to reach 4.8  million  subscribers  by 2000,  an
increase of 1.4 million  lines based on the  capacity  installed  as of year-end
1998. Demand for value-added  services is also expected to grow substantially in
the next few years and the  number of users for such  services  is  expected  to
reach 1.2 million by 2000,  up from 16,000 users in 1996.  It is also  estimated
that cellular mobile telephone penetration will grow to 6% by 2000, up from 4.1%
in 1997.

         Venezuela  experienced  an  economic  slowdown  in 1998  due to a sharp
(30-40%) decline in oil prices,  reduced government spending,  and high interest
rates.  Venezuela's economic performance in 1998 was considerably weaker than in
1997; after Venezuela's  strong real GDP growth of 5.1% in 1997, GDP for 1998 is
predicted to decrease by 0.1%, to $86.6 billion.

         Venezuela has a population of 22.8 million, of which 4.9 million are in
Caracas.  In  Venezuela,  the top  three (of five)  urban SES  represent  25% of
households  and the average  buying  power per  household  totals  $10,594.  The
relatively high average buying power per household in the top two SES,  suggests
that,  if made  available,  a significant  number of households  could afford to
purchase an increased range of communications  services,  such as wireline voice
services, mobile voice services, Internet, and video services.

         Regulatory  Environment.  The expiration of CANTV's  exclusive right to
provide  basic  telephone  services  in late 2000 will mark the opening of basic
telephony services to competitors in the Venezuelan market. By 2001, the Company
believes  operators will be competing for subscribers in all service areas.  The
Company also believes several companies are positioning  themselves to enter the
local and  long-distance  markets  at the onset of  liberalization,  creating  a
highly competitive future market environment.

<TABLE>
<CAPTION>
The table below sets forth the regulatory environment of the telecommunications market in Venezuela:

------------------------------ ---------------------------- --------------------------- ----------------------------
   Markets Currently Open       Markets Currently Closed     Markets Opening Pending     Markets Undefined
                                                                  Liberalization
------------------------------ ---------------------------- --------------------------- ----------------------------
<S>                            <C>                          <C>                         <C>
Data services                  Basic local telephone        Basic telephone services    IP telephony
Dedicated network services     services                     in late 2000                Resale of fiber
Dial-up Internet services      Domestic long-distance and   Local, long distance and    Data services via cable
Value-added services           international voice          international voice
Mobile satellite services      services                     services
Trunking                       Market limited to 2          Award of a nationwide PCS
Rural Telephony                national cellular operators  concession expected by
                                                            end of Q2 1999
------------------------------ ---------------------------- --------------------------- ----------------------------
Source: Booz, Allen & Hamilton.
</TABLE>

         Operations Overview.  The Company launched its dial-up Internet access,
data transmission and value-added  services through the acquisition of Inter@net
in August 1998. Inter@net,  which is based in Maracaibo,  holds two governmental
concessions  through  which it is  authorized  to  provide  services  throughout
Venezuela. Inter@net began offering dial-up Internet access services in November
1996 and currently has approximately  3,440 subscribers located primarily in the
cities  of  Maracaibo,  Puerta La Cruz and  Ciudad  Ojeda.  Based on its  market
research,  the Company  believes the  Venezuelan  Internet  market has a current
total market size of  approximately  130,000,  of which the Company has a market
share of approximately  3%. Inter@net intends to launch Internet access and data
transmission  services in Caracas in the second  quarter of 1999, and intends to
expand data  transmission  services to subscribers in Maracaibo  during 1999. In
addition to its metropolitan area networks in those cities,  the Company intends
to interconnect its networks through a leased interconnect network.

         In Caracas,  Inter@net is currently  constructing  five wireless  hubs,
which will be  interconnected  by a  fiber-optic  network,  to provide  Internet
access and high-speed data transmission services to its commercial, governmental
and residential customers. The Company is currently testing one operational hub,
and  expects to launch its  Internet  access  services  in Caracas in the second
quarter of 1999.  The Company also recently  installed a central NOC in Caracas,
which will  monitor its  networks 24 hours a day,  seven days a week and provide
real-time  alarm,  status and  performance  information  on its  operations.  In
addition,  it recently  installed a 7.3M satellite dish on top of its NOC, which
will provide the Company with up/down-link connectivity.

         In  Maracaibo,  which  has  a  population  of  1.7  million,  Inter@net
currently provides dial-up and high-speed Internet access to approximately 3,000
residential  customers and approximately 400 commercial  customers.  The Company
expects to launch high-speed  Internet access and data transmission  services to
its customers on its own network upon  completion  of its first  wireless hub in
Maracaibo  by August  1999.  The  Company  intends  to  install a total of three
wireless hubs in order to cover the city of Maracaibo.
The Company has a NOC in Maracaibo, which monitors its networks.

         Inter@net  is expected  to launch its  Internet  services in  Valencia,
which has a population of 1.3 million,  by October 1999. Upon  construction of a
point  of  presence  in  Valencia,  it will  offer  residential  and  commercial
customers dial-up and high-speed  Internet access services.  The Company intends
to construct a wireless hub in Valencia in the fourth quarter of 1999.

         Puerto La Cruz,  which has a population  of 1.0  million,  is currently
served  by an ISP  node.  The  Company  anticipates  that  its  Puerto  La  Cruz
operations  will become the platform for the  expansion of its  operations  into
Eastern Venezuela.

         The  Company  intends  to  market  a wide  range of  Internet  and data
transmission   services  in  Venezuela  by  promoting  its  high-speed  Internet
connections and competitive pricing structures,  while offering a high degree of
reliability.  Inter@net intends to offer its commercial customers dedicated data
transmission  services at  connectivity  speeds ranging from 256 Kbps to 2 Mbps,
while its direct  competitors  offer speeds of only up to 128 Kbps. In addition,
Inter@net's  services are offered in various  price and usage plans  designed to
meet the differing needs of the customers.  It currently  offers several dial-up
Internet  services,  including  limited  dial-up  (up to 40 hours)  for  $35.00,
unlimited  dial-up for $43, or pre-paid  dial-up  Internet  access  services for
residential  customers  and  corporate  limited for $40,  unlimited for $60, and
multi-login  accounts  services for commercial  customers.  Inter@net intends to
offer a complete business package,  which includes web page design, web hosting,
video conferencing and up to 2 Mbps of Internet connectivity.

         The Company  also intends to launch  voice  services in its  Venezuelan
metropolitan  markets.  The launch of its voice services will be contingent upon
its receipt of  governmental  approval to provide those  services.  Venezuela is
scheduled to privatize its telephony services rights in the year 2000.

         Network  Architecture.  Inter@net provides its Internet access and data
transmission  services  through  a  system  owned by the  state-owned  telephone
service  provider.  The Company is also building,  or expects to build,  several
wireless  hubs in Caracas,  Maracaibo  and Valencia to provide  high-speed  data
services in all of its current  Venezuelan  markets.  Through its first wireless
hub, the Company covers over nine square kilometers,  reaching approximately 20%
of the central  business  district in Caracas.  Once all five wireless hubs have
been completed (which the Company anticipates will be in 1999), the network will
cover approximately 85% of the central business district in Caracas.

         Customers.  The Company  targets the higher  socioeconomic  segments in
Caracas, Maracaibo and Valencia for its Internet access services. For high-speed
Internet and data  transmission  services,  the Company targets  multinationals,
government  agencies and other  businesses  in different  industries,  including
banking, manufacturing,  tourism, and retail. These customers are mainly located
in the central business district of Caracas and business  districts in Maracaibo
and Valencia.

<TABLE>
<CAPTION>
     As of March 1, 1999, the Company's top business customers were as follows:
<S>                                     <C>                                     <C>
--------------------------------------- --------------------------------------- ---------------------------------
 Dresser de Venezuela                    Hotel del Lago Intercontinental         Corpozulia
 ABB Vetco Gray                          Novell Drilling                         Transporte Faga Bobinelli
 Servicio Halliburton                    Air Drilling                            Televiza
 Union Texas                             Diario C.A. Panorama                    Telecolor Canal 41
 Propilven                               Diario El Regional                      Web cafe
--------------------------------------- --------------------------------------- ---------------------------------
</TABLE>

         Competition.  CANTV has provided full service  telecommunications since
1894.  CANTV's monopoly for basic telephone services is scheduled to end in late
2000.  By 2000,  CANTV plans to have  approximately  3.2  million  main lines in
service. There are currently two providers of cellular voice services,  with two
additional providers scheduled to launch service in the first quarter of 1999.

         Internet  service was first introduced in Venezuela in the mid-1990s by
a group of small and medium size ISPs. By March 1998,  there were  approximately
38 ISPs in  operation.  As of  year-end  1998,  the  total  number  of  Internet
subscribers  was  estimated  to  be  130,000.  The  Company  believes  the  data
transmission  services  market in Venezuela is  fragmented,  with at least seven
major  competitors  offering  dedicated  value-added  and private  network  data
services to corporate customers.

<TABLE>
<CAPTION>
         The following table shows the composition of the Venezuelan  telecommunications market in each segment, the
approximate market shares of the principal competitors and a price comparison of the products offered:
<S>                 <C>                  <C>                  <C>
------------------- -------------------- -------------------- ------------------------------------------------------
Segment             Competitor           Market share         Product / Price
------------------- -------------------- -------------------- ------------------------------------------------------
Internet access     T-Net                35%                  Limited (10 hrs) $15.58 / Unlimited $52.64
                    CANTV                23%                  Limited (10 hrs) $15.84 / Unlimited $57.22
                    Netpoint             6%                   Limited (10 hrs) $20.07 / Unlimited N/A
                    Inter@net            3%(1)                Limited (40 hrs) $35.00 / Unlimited $43.00
                    Compuserve           3%                   N/A
------------------- -------------------- -------------------- ------------------------------------------------------
Data transmission   CANTV                N/A                  256 Kbps / $1,183(2)
                    Bantel               N/A                  256 Kbps / $2,000(2)
                    C-Com                N/A                  256 Kbps / $3,400(2)
                    Inter@net            N/A                  256 Kbps / $499 + $199 installation
------------------- -------------------- -------------------- ------------------------------------------------------
(1)  Represents market share on a national basis. In the Maracaibo, Ciudad Ojeda region, where Inter@net started its
     operations, the Company has an approximate market share of 30% for Internet access services.
(2)  Monthly rates, not including installation fee.
Source: Convergence Communications, Inc.; Booz, Allen & Hamilton.
</TABLE>

Costa Rica

         General. The Company's wholly owned subsidiary, Television Interactiva,
S.A.  ("Television  Interactiva"),  is developing a metropolitan area network in
San Jose using 2 GHz of bandwidth  in the 28 GHz  frequency  range.  The Company
intends to offer Internet and high-speed data services over this network, and is
currently conducting tests on it.

<TABLE>
<CAPTION>
The table below provides an overview of the Company's current operations in Costa Rica:

---------------------------------------------------------------------------------------
Profile
---------------------------------------------------------------------------------------
<S>                           <C>
Services offered              Data transmission
                              Dial-up Internet access
----------------------------- ---------------------------------------------------------
Markets served                San Jose
----------------------------- ---------------------------------------------------------
Number of accounts            Market trials
----------------------------- ---------------------------------------------------------
Wireless spectrum             2 GHz in the 27.5 GHz range
----------------------------- ---------------------------------------------------------
Network infrastructure        San Jose:
                              -   2 Wireless hubs installed; 1 under construction
                              -   5 km of fiber-optic cable
                              -   Network Operations Center
                              -   Network Point of Presence
                              -   120 Analog lines
----------------------------- ---------------------------------------------------------
Network coverage              70% of the Central Business District
----------------------------- ---------------------------------------------------------
Source:  Convergence Communications, Inc.
</TABLE>

Market   Opportunity.   The  Company  believes  that  the  Costa  Rican
telecommunications market presents strong opportunities for providers of bundled
telecommunications  services,  based on: (i) the anticipated deregulation of the
market,  (ii) favorable economic conditions and (ii) absence of a single company
offering combined telecommunications services.

         The Company  believes  the  telecommunications  sector in Costa Rica is
more  developed  than most  other  countries  in the  Central  American  region.
However,  the teledensity  rate is still relatively low, as evidenced by a total
of 16.1 lines per 100 persons in 1998. The telecommunications sector is expected
to experience significant growth as a result of the upcoming deregulation of the
market and expected increased demand for telecommunications services.

         Costa  Rica  experienced  a 46%  growth  in CATV  subscribers  in 1997,
equating  to a 9.3%  penetration  of an  estimated  600,000 TV  households.  The
penetration  rate  is  below  that  of the  Latin  American  average  of  13.9%,
indicating  a potential  for  continued  subscriber  growth.  Over the next five
years, the CATV market is forecasted to grow at an average of 28%. As of January
1, 1999,  there were 40,000  commercial  Internet  dial-up  subscribers in Costa
Rica, up from 20,000 subscribers in 1997, an annual growth rate of 100%.

         Costa Rica,  with a  population  of 3.7  million,  has been  recovering
steadily from its 1996 economic contraction.  GDP growth was 3.2% in 1997 and is
expected  to be 4.9% for 1998,  resulting  in a total GDP of $9.7  billion.  The
total number of urban households in Costa Rica is approximately 407,400, and the
average buying power per urban household totals $8,928.  The top three (of five)
SES represent approximately 50% of households.

         Regulatory   Environment.   Costa  Rica's   government  is  considering
legislation    that    would    significantly    restructure    the    country's
telecommunications  sector.  The  legislation  is  expected to be adopted in the
second  or third  quarter  of  1999.  The  underlying  approach  of the  pending
legislation is a gradual liberalization of several key markets during the next 2
to 3 years. The privatization of Instituto  Costarricense de Electridad ("ICE"),
the national telephone company, is currently not under consideration.

<TABLE>
<CAPTION>
The table below sets forth the regulatory environment of the telecommunications market in Costa Rica:

-------------------------- ------------------------------ ---------------------------- --------------------------
 Markets Currently Open      Markets Currently Closed            Markets Open               Other Potential
                                                              Post-Liberalization            Opportunities
                                                                   ('99-'01)
-------------------------- ------------------------------ ---------------------------- --------------------------
<S>                        <C>                            <C>                          <C>
Cable television           Local voice                    Local voice (2000)           IP telephony
Private data networks      Domestic long distance         International
                           International long distance    long-distance voice (2001)
                           Data services                  Data services (1999)
                           Internet access:  bandwidth    Internet access (1999)
                           exclusively provided via       ISPs can offer services
                           RACSA                          independently
                                                          Wireless voice services
                                                          (1999)
-------------------------- ------------------------------ ---------------------------- --------------------------
Source: Booz, Allen & Hamilton; Convergence Communications, Inc.
</TABLE>

      Operations   Overview.   The  Company   began  its   investigation   of
opportunities in the Costa Rican  telecommunications  market in 1996. During the
interim  period of market  deregulation,  its acquired  Television  Interactiva,
which has the  rights  to  operate 2 GHz of  bandwidth  in the 28 GHz  frequency
range. The network right holder of the bandwidth is Papeles de Curcuma,  S.A., a
Costa Rican corporation  ("PDC"). The license allows the use of the spectrum for
video and data services  throughout  Costa Rica, but does not currently  provide
the Company with the right to provide voice services.

         The   Company   intends  to  become  a  leading   provider  of  bundled
high-bandwidth,  high-speed Internet access, high-speed data transmission, voice
and video services to business,  governmental and residential customers in Costa
Rica. The Company is currently establishing an ISP infrastructure,  by using the
Guatemalan operations as a model, and it intends to enter the market, as soon as
the market  deregulation takes place. The Company believes there is currently no
other competitor in the market building a comparable  infrastructure  to provide
bundled telecommunication  services.  Therefore, the Company believes it will be
well  positioned to gain a significant  market share in its targeted Costa Rican
markets if the deregulation opens the market to competition.

         The Company will initially focus its  development  efforts in the Costa
Rican capital of San Jose,  which has a population  of 1.3 million.  The Company
initiated  construction of  high-bandwidth  facilities in San Jose in July 1998,
began  market tests of its network in February  1999,  and  anticipates  it will
launch its high-speed Internet access and data transmission services in San Jose
in the third quarter of 1999 assuming the receipt of appropriate authorizations.

         Television  Interactiva is currently building its Costa Rican sales and
marketing team. Prior to the deregulation of the market,  the Company intends to
build  credibility with selected  corporate  customers through marketing trials,
product  demonstrations,  and direct marketing.  After the liberalization of the
market, it will  aggressively  market its services through a radio and newspaper
introductory campaign and through telemarketing.  Other promotional introductory
strategies  will  include  discounts  per  amount of  services  purchased,  free
installations for high-end customers, cybercards and free membership promotions.

         The  Company  intends  to offer  dedicated  high-speed  connections  to
business  customers with private networks at speeds varying from 128 Kbps, for a
current  monthly charge of $350, to 1 Mbps for a current charge of $800, plus an
installation  fee of $700. In addition to  high-speed  Internet  connections  to
business and high-end  residential  users,  the Company intends to offer dial-up
Internet  access  to  middle-class  residential  customers,  students  and small
companies.  Limited  dial-up  Internet  access  will  initially  be offered at a
monthly fee of $30, while unlimited  access will be offered at $40, both with an
installation  charge of $35.  Several other services will be offered,  including
e-mail only, weekend only and multilogin.

         Network  Architecture.  Television  Interactiva  recently completed two
wireless  hubs and has another hub under  construction,  which will enable it to
deliver (subject to the receipt of appropriate  approvals) Internet access, data
transmission and video services using the 2 GHz of bandwidth.  In addition,  its
has installed over 5 km of fiber-optic cable, connecting its two hubs, and is in
the process of constructing a 19km fiber-optic ring to interconnect its wireless
hubs and NOC.  This network will cover 70% of the central  business  district in
San Jose.  Television  Interactiva is also currently  building a NOC, which will
monitor its networks 24 hours a day,  seven days a week,  and provide  real-time
alarm, status and performance information.

         Customers.   The  Company  intends  to  provide  its  bundled  services
initially to  businesses  and  residential  customers  in San Jose,  which has a
population  of 1.3 million.  The Company  intends to offer its  high-speed  data
transmission services to corporations,  banks and financial institutions,  chain
stores and super markets.  It will offer its high-speed  Internet  access to the
top two (of five) SES residential  customers,  multinationals,  universities and
import/export  corporations.  In  addition,  it intends  to market  its  dial-up
Internet access  services to residential  customers in the second and third SES,
to students and to small and medium sized companies.

         Competition. There are currently five ISPs operating in Costa Rica, all
of which are licensed agents of Radiografica  Costarricense,  S.A. ("RACSA"),  a
subsidiary of ICE. These ISPs act as resellers for RACSA's  Internet  access and
data  transmission  services.  Leading market  players expect  legislation to be
passed in the second or third quarter of 1999,  which will liberalize the market
for Internet services and value-added services.

         Since RACSA is the sole  provider of bandwidth in Costa Rica,  there is
presently no developed market for companies to offer dedicated data transmission
services to corporate  customers.  RACSA's customers  routinely  experience slow
data  transmission  speeds,  low network  reliability,  long  waiting  times for
installation  and  repair,  and poor  customer  service.  If the market for data
services is  liberalized  in the  upcoming  telecommunications  law, the Company
believes that, with its infrastructure in place and operational, it will be well
positioned  to  provide  dedicated  data  transmission  services  to  customers.
Television  Interactiva  believes it can differentiate itself from its potential
competitors  by offering  (i) speed and  network  reliability,  (ii)  integrated
solutions for  telecommunication  needs,  (iii)  24-hour  technical and customer
support, and (iv) installation within 48 hours.

<TABLE>
<CAPTION>
         The following table shows the Costa Rican  telecommunications  market and the segments in which the Company
intends to start operations:

----------------------- -------------------------- ------------------- ---------------------------------------------
Segment                 Competitor                 Market share        Product/ Price
----------------------- -------------------------- ------------------- ---------------------------------------------
<S>                     <C>                        <C>                 <C>
Internet access         RACSA                      100%                Limited (10 hrs) $20.00
                        Television Interactiva     -                   Limited $30.00 / unlimited $40.00
----------------------- -------------------------- ------------------- ---------------------------------------------
Data transmission       RACSA                      N/A                 256 Kbps / $1,485(1)
                        Television Interactiva     -                   256 Kbps / $150 + $700(2)
----------------------- -------------------------- ------------------- ---------------------------------------------
(1) Monthly charge, does not include installation fee.
(2) Monthly charge, plus installation fee.
Source: Convergence Communications, Inc.; Booz, Allen & Hamilton.
</TABLE>

Panama

         General.  The Company owns 90% of Wireless  Communications  Panama S.A.
("Wireless Panama"),  which holds or has rights to use 1.4 GHz of high-frequency
radio spectrum in the 28GHz range to provide data  services,  video services and
"value  added"  services in Panama.  The  Company  initiated  construction  of a
broadband  facility in Panama City in May 1998 and has two operational  wireless
hubs.  The  Company  anticipates  that it will  offer a full  range  of data and
Internet services in Panama by June 1999.

<TABLE>
<CAPTION>
The table below provides an overview of the Company's operations in Panama:

---------------------------------------------------------------------------------------
Profile
----------------------------- ---------------------------------------------------------
<S>                           <C>
Services offered              Data transmission
                              Dial-up Internet access
----------------------------- ---------------------------------------------------------
Markets served                Panama City
----------------------------- ---------------------------------------------------------
Number of accounts            Market trials
----------------------------- ---------------------------------------------------------
Wireless spectrum             1.4 GHz in the 28Ghz range
----------------------------- ---------------------------------------------------------
Network infrastructure        Panama City:
                              -    2 Wireless hubs operational
----------------------------- ---------------------------------------------------------
Network coverage              80% of the central business district
----------------------------- ---------------------------------------------------------
Source:  Convergence Communications, Inc.
</TABLE>

       Market  Opportunity.  The  Company  believes  that  the  Panama  market
provides significant opportunities for bundled telecommunications  services. The
Company's  belief is premised on (i) the significant  unmet demand in Panama for
basic telephone services, reliable data transmission and Internet services, (ii)
favorable economic  conditions and an economy dominated by the service industry,
(iii)  open  regulatory  regime  for  Internet  access,  data  transmission  and
value-added services, and (iv) deregulation of the telecommunications  market in
the near future.

         Cable & Wireless Panama currently dominates the market for basic local,
national and international  voice services through its exclusive license,  which
will expire on January 1, 2003. It has announced an aggressive network build-out
over the next few years as it attempts to gain market  share prior to losing its
exclusive market position. However, Panama's teledensity of 15.4% indicates that
there is still a high,  unmet  demand and  growth  opportunities  for  telephone
services.  In addition,  the Company  believes that the  deregulated  market for
Internet access, data transmission and value-added  services, in connection with
the service  sector,  provides  opportunities  for a company like the Company to
become a significant  provider of bundled  high-bandwidth,  high-speed  Internet
access and data transmission services.

         Panama's  economy is based on a  well-developed  services  sector  that
accounts for  approximately  70% of its GDP.  Services include the Panama Canal,
banking,  insurance,  government,  the Transisthmian Oil Pipeline, and the Colon
Free  Zone  (CFZ).  Panama's  economy  grew by 4.4% in 1997 and is  expected  to
increase by 3.0% in 1998,  resulting  in total GDP of $8.7  billion.  In Panama,
which has a population of 2.7 million,  the top three urban SES represent 43% of
total households. The total number of urban households is approximately 366,400,
and the average buying power per urban household totals $8,863.

         Regulatory Environment. The new telecommunications law of 1996, and the
subsequent sale of a controlling stake of Panama's  national  telecommunications
monopoly,  have changed the face of the  telecommunications  industry in Panama.
These  two   developments   marked  the  start  of  a   liberalization   of  the
telecommunications  sector,  which is  expected  to continue on January 1, 2003,
when  the  exclusive  rights  granted  to Cable &  Wireless  Panama  to  provide
telecommunication   services   will   end.   At  that   point,   a   number   of
telecommunications services in Panama will be completely deregulated and open to
competition.

         The Ministry of Government in Panama regulates the broadcasting sector,
including all radio stations, television stations, and cable TV. Broadcasting is
defined  as  one-way,  point to  multipoint  transmission  of  content,  and the
definition  applies to radio,  television  and cable  companies.  Under  current
legislation it is technically feasible for any company to apply for and obtain a
license to provide CATV services.  However,  in reality, it is very difficult to
obtain a cable  license,  as the process for entering the cable industry is much
less transparent than the process of obtaining a license.

<TABLE>
<CAPTION>
The table below sets forth the regulatory environment of the telecommunications market in Panama:

------------------------------ ------------------------------- --------------------------- -------------------------
                                                                  Markets Opening post
   Markets Currently Open         Markets Currently Closed            January 2003            Undefined Markets
------------------------------ ------------------------------- --------------------------- -------------------------
<S>                            <C>                             <C>                         <C>
Data services                  Basic voice services            All currently closed        Provision of data
Internet                       Basic local; services           services                    services via cable
Value-added services           Basic international services                                installed plant
Trunking                       Dedicated voice circuits                                    IP telephony
Satellite services             Personal telecommunications
VSAT                           service
Interactive multicasting to    Mobile cellular services
private user groups
------------------------------ ------------------------------- --------------------------- -------------------------
Source: Booz, Allen & Hamilton.
</TABLE>

        Operations  Overview.  The Company owns 90% of Wireless  Panama,  which
holds or has the rights to use 1.4 GHz of  high-frequency  radio spectrum in the
28 GHz range and the  required  concessions  to provide  Internet  access,  data
transmission,  video and "value added" services in Panama. The Company initiated
construction  of a broadband  facility in Panama City in July 1998, is currently
operating two wireless  hubs, and is currently  performing  market trials on its
network.  The  Company  anticipates  it will  offer  Internet  access  and  data
transmission  services in Panama by June 1999.  After deployment of its services
in Panama City, the Company intends to launch its services  programs  throughout
the remainder of Panama.

         The Company is  currently  in the process of  building  its  Panamanian
sales and  marketing  team.  Prior to the full  deployment  of its  network,  it
intends  to  aggressively  market  its  services  to a wide  range of  potential
business  and  governmental  customers  through  an  introductory  campaign  and
telemarketing.  The Company intends to offer its high-speed  Internet access and
data  transmission  services.  The Company will  initially  offer its commercial
customers dedicated  transmission  services of 256 Kbps for $300 per month, plus
an  installation  fee of $700.  It intends to offer  dial-up  Internet  services
initially for a monthly fee of $25.
Dial-up Internet access for businesses will initially cost $56 per month.

         In order to more quickly gain a significant market share in Panama, the
Company is pursuing  the  acquisition  of an ISP,  as well as actively  pursuing
in-country strategic alliances or partnerships.

         Network Architecture.  The Company recently completed two wireless hubs
in Panama City to deliver Internet access and data  transmission  services using
the 1.4 GHz of  high-frequency  radio spectrum it holds or has the right to use.
In  addition,  the Company is building a NOC in Panama to monitor its  networks.
The Company  recently  received  authorization  from Cable & Wireless  Panama to
deploy a fiber-optic  connection  between its wireless  hubs,  and also recently
entered  into a pole rights  agreement  with the local power  utility to use its
utility  poles.  The Company  expects to have its network fully deployed by June
1999. When it is completed,  the Company anticipates that its network will cover
80% of the central business district of Panama City.

         Customers.  The  Company  intends to provide  its  high-speed  Internet
access and data transmission, services to the large business community in Panama
City. The Panamanian  economy is dominated by a  well-developed  services sector
that   includes  the  Panama  Canal,   banking,   insurance,   government,   the
Transisthmian  Oil Pipeline,  and the CFZ. In addition,  the Company  intends to
market its dial-up Internet access services to residential  customers,  students
and small and medium sized companies.

         Competition.   Internet  services  first  became  available  in  Panama
following  the  launch  of a  microwave  link  with  Costa  Rica in  June  1994.
Currently, there are five major ISPs active in the Internet services market that
have a combined customer base of approximately  35,000 subscribers.  Only one of
these competitors  currently  provides a combination of Internet access and data
transmission.  The Company believes it will be the first integrated  provider of
high-bandwidth,  high-speed  Internet access and data  transmission  services in
Panama  that will be able to  compete on the basis of  network  reliability  and
price.

<TABLE>
<CAPTION>
         The following  table shows the composition of the  telecommunications  market in Panama in the segments the
Company intends to start operations:


---------------------- ----------------------- ----------------------- ---------------------------------------------
Segment                Competitor              Market share            Product / Price
---------------------- ----------------------- ----------------------- ---------------------------------------------
<S>                    <C>                     <C>                     <C>
Internet access        Sinfonet                51%                     Limited (10 hrs) $25.00(1)
                       Orbinet                 35%                     Limited (10 hrs) $29.00(1)
                       C&W Panama              6%                      Limited (10 hrs) $20.00 + $1.00 per hour(1)
                       C-Com                   4%                      N/A
                       GBM Panama              4%                      N/A
                       Wireless Panama         N/A                     Limited $25.00(1)
---------------------- ----------------------- ----------------------- ---------------------------------------------
Data transmission      Telpan                  55%                     N/A
                       C&W Panama              27%                     128 Kbps / $960 + $1,182 installation(2)
                       C-Com                   18%                     N/A
                       Wireless Panama         N/A                     256 Kbps / $300 + $700 installation(2)
---------------------- ----------------------- ----------------------- ---------------------------------------------
(1) Monthly charge.
(2) Monthly charge, plus installation fee.
         Source: Convergence Communications, Inc.; Booz, Allen & Hamilton.
</TABLE>

Mexico

         Market Opportunity. The Company recently signed a letter of intent with
a Mexican  telecommunications  company to obtain an interest in its  fiber-optic
network in Mexico City.  The Company is currently  preparing a business plan for
developing  operations in six other cities in Mexico.  The Company  believes the
Mexican market presents an excellent  opportunity for expansion of its business.
Mexico has a  population  of 96  million,  with a  moderate-to-high  per capital
income. The GDP of the country is expended to grow by 3% in 1999 and 5% in 2000.
Additionally,  since the signing of the NAFTA  treaty,  the Mexican  economy has
been more closely tied to the United States economy and has weathered the recent
international currency turmoil.

         Although the Mexican telecommunications market is one of the largest in
the world,  Mexico had a teledensity of less than 10% in 1998.  Between 1990 and
1996, the number of installed lines in Mexico  increased from 5.4 million to 8.8
million lines,  an increase of 60%. The number of installed lines is expected to
increase to 12.1 million in 2002, and teledensity is expected to reach 11%.

         Business Strategy.  Although the telecommunications market in Mexico is
more  competitive  than  most  other  markets  in which  the  Company  currently
operates,  the Company  believes there is currently no other provider of bundled
high-bandwidth  services in the market  focusing on "last-mile"  solutions.  The
Company  believes  it can  successfully  enter the  Mexican  market by  adopting
operating  strategies similar to those it uses in its other markets.  In Mexico,
the Company intends to (i) develop  packet-switched  IP-based  metropolitan area
networks;  (ii) acquire  strategic  network  assets and ISPs to  accelerate  its
entrance  into the market by gaining an existing  customer  base and  cash-flow;
(iii) focus on the end user;  (iv) offer bundled  services;  (v) acquire  strong
local management; and (vi) form strategic alliances with strong local partners.

         Execution to Date.  In 1995,  the Company  began  analyzing the Mexican
telecommunications  market and exploring  opportunities in it. In November 1998,
the  Company  hired Luis de la Fuente,  the former  Chief  Operating  Officer of
Amaritel,  Mexico's largest  competitive  access provider,  to act as CEO of the
Company's  Mexico  operations.  Additionally  the Company has retained Sam Nash,
former General Manager of Network Services for Amaritel, as a consultant.

         In March  1999,  the  Company  entered  into a letter  of  intent  with
MetroNet,  S.A. a developer of metropolitan area fiber-optic networks in Mexico.
Under the letter of intent,  the Company will acquire an interest in  MetroNet's
fiber-optic  network in Mexico City,  which consists of  approximately  80 route
kilometers (or 7,000 fiber  kilometers)  and is configured in two rings. A third
ring is planned  for 1999.  When the third  ring is  deployed,  the Mexico  City
network will consist of over 270 route  kilometers.  Under the letter of intent,
the  Company  and  MetroNet  also agreed to jointly  develop  metropolitan  area
fiber-optic  networks in six  additional  cities in Mexico by the year 2001. See
"Description of the Company's Business-Note Regarding Acquisitions."

         The Company has identified or is exploring several  additional  Mexican
acquisitions  and  strategic  alliances  it  believes  would be  valuable to the
success of its  business  plan.  These  acquisition  and  alliances  include (i)
wireless spectrum that can be leased or acquired; (ii) ISPs; and (iii) long-haul
backbone capacity.

Other Company Network Rights

         Argentina.  In August 1997, in connection  with the sale by the Company
of an approximately  18% shareholder  position to a third party, the Company and
that third party formed WCI de Argentina,  an Argentinean  corporation ("WCIA").
See "Legal Formation and Development - Internexus  Transaction," below. In 1998,
WCIA was granted a "value  added"  license to provide  data  services  and video
conferencing services in Argentina.  WCIA is owned 80% by the Company and 20% by
the third party shareholder.

         Venezuela.  In August  1997,  the  Company  acquired a 78%  interest in
Caracas Viva Vision,  S.A.  ("CVV"),  a  Venezuelan  corporation  that holds the
exclusive right to commercialize 1GHz of frequency in the Venezuelan 28GHz range
(the  "CVV  Transaction").  In  connection  with the  transaction,  the  Company
acquired an 8.46% interest in  Comunicaciones  Centurion,  S.A., the entity that
holds the concession to those rights. CVV currently utilizes the spectrum rights
to provide television programming to approximately 695 subscribers. In September
1998, the Company  instituted an arbitration  action against a former  principal
shareholder of CVV for  indemnification  for breaches of the representations and
warranties made by CVV and the selling  shareholders  regarding CVV's operations
in the CVV purchase  agreements.  See  "Litigation,"  below. The Company and the
shareholder  have  stayed the  arbitration  pending  the  outcome of  settlement
negotiations.

         New  Zealand.  The Company  acquired  network  rights in New Zealand in
August  1995.  The  Company's  New Zealand  network  rights are held by Auckland
Independent Television Services, Ltd. ("AITS"), a New Zealand corporation, which
is owned 94.9% by the Company. AITS holds (under two licenses from network right
holders) four channels in the 2.3 GHz frequency range in the Auckland area. AITS
has also acquired (as the network rights holder) the exclusive rights to utilize
equipment  in  the  40  GHz  frequencies  in  the  Auckland,   Christchurch  and
Wellington/Petone  areas, with countrywide  expansion rights as applied for on a
city-by-city  basis.  AITS's 40 GHz license  rights permit the delivery of data,
telephony and video services.  The Company intends to enter into a joint venture
with a local  operating  company in New Zealand,  which will operate the network
rights  on behalf  of the  Company,  or sell  these  network  rights in the near
future.  The terms of the 40 GHz license  rights  require  AITS to pay an annual
renewal fee, which the Company has not paid for 1999.

         Utah (U.S.). The Company owns an interest in certain network rights and
a leased  transmitter  facility  in Park City,  Utah.  The Park City rights were
acquired  by  the  Company  in  August  1995  and  are  held  by  the  Company's
wholly-owned subsidiary, Transworld Wireless Television, Inc. ("TWTV"). The Park
City rights consist of four 2.5 GHz channels.  The Company intends to enter into
a joint venture with a local operating  company in Utah,  which will operate the
network  rights on behalf of the Company,  or sell these  network  rights in the
near future.

Business Operations

         The Company has adopted a number of procedures and policies it believes
will  facilitate  the efficient  operation of its business.  These  policies and
procedures include the following:

         Bundled Service Packages.  The Company  currently  provides a number of
telecommunications  services,  and anticipates  that it will increase the number
and types of the services it provides as it builds out, acquires or launches its
telecommunications    systems.    These    services   will   include    standard
telecommunications  services such as high-speed and dial-up  Internet access and
high-speed data transmission,  local and long distance voice services, and video
services,  as well as  value-added  telecommunications  services  such as  video
conferencing,  web  hosting and virtual  private  networks.  To the extent it is
possible and consistent  with its service  offerings in any particular  country,
the  Company  intends  to  provide  subscribers  with the  ability to bundle the
various  services  offered by the Company  without the constraints of inflexible
package  requirements or  product-specific  boundaries.  The Company  believes a
flexible  sales  strategy  will  help  reduce   switching   barriers  for  those
subscribers   who  may   initially   be   reluctant   to  switch  all  of  their
telecommunications  services  and vendors at one time or are subject to existing
contracts.

         Pre-Launch  Activities.  Prior  to  initiating  the  buildout  of a new
market,  the Company  conducts  pre-launch  studies to evaluate  the  population
demographics.  The Company has already  conducted  several  such  studies in its
markets.  The  Company  has  created  a  development  plan that  identifies  the
subscriber  potential of various  areas  within its markets  and,  based on such
factors as  television,  telephone and data  penetration  rates,  income levels,
existing  competition  and  whether or not the  Company  has access to  existing
fiber-optic or coaxial cable networks,  it has defined the probable locations of
the network  central node  transmission  facility,  any required  cell sites for
retransmission  and any  areas  where  fiber-optic,  coaxial  cable or  wireless
networks  may  be  required.   As  the   construction   of  a  central  node  or
retransmission  facility  nears  completion,  the Company  generally  conducts a
marketing  program  targeted to those areas  identified  as having the  greatest
potential for subscriber  growth.  The Company's  marketing  programs  typically
include (i)  telemarketing,  (ii)  neighborhood  door-to-door  sales,  including
multiple  dwelling  unit  meetings and door  hangers,  (iii)  marketing  tied to
regional  events  such  as  high  interest  sporting  events,   (iv)  telephone,
television and print advertisements, (v) promotional activities such as referral
programs and promotional gifts, (vi) direct mailings,  (vii) Internet web pages,
(viii) advertising on installation vehicles,  (ix) participation in professional
forums, (x) automated e-mail messages,  (xi) free or promotional services to key
or high profile users,  (xii) launch  promotional  activities,  and (xiii) where
appropriate, the use of resellers, agents and direct marketing agencies.

         Installation.  The  Company's  installation  packages  for its services
generally include a standard rooftop mounted transceiver for wireless service or
hardwire  cable  connection and other related  equipment,  such as cabling and a
data modem, which will be located at the subscriber's location.

         Customer Service. The Company believes that by providing high levels of
customer  service,  it  will  be  able  to  maintain  high  levels  of  customer
satisfaction and minimize subscriber turnover.  With this objective in mind, the
Company  has  adopted   operating   policies   under  which  it  (i)   completes
installations  promptly,  (ii) provides prompt customer  service 24 hours a day,
seven days a week using a call center or customer hotline, (iii) provides timely
repair service, and (iv) makes new subscriber follow-up calls after installation
to ensure customer  satisfaction.  The Company also imparts a "customer service"
mentality  in its  employees  through  ongoing  in-house  training  sessions and
intends to establish an employee  forum to  facilitate  an exchange of ideas for
improvements  in customer  service.  The Company also  intends to adopt  various
employee  incentive  programs  linked  to  achieving  high  levels  of  customer
satisfaction.

         Network   Operations   Centers.   The  Company   deploys  central  node
transmission  and switching  equipment in NOCs in each of its  principal  market
areas.  The Company's  networks are engineered to provide  subscribers  with the
ability to interconnect  with the Internet,  as well as with other locations the
customer  may have  within  the  Company's  network  and,  with  respect  to the
Company's voice services,  to interconnect with local exchange networks and long
distance networks. In order to ensure that the Company's networks are working as
efficiently as possible, the Company constructs and maintains NOCs which monitor
its various microwave, fiber-optic and coaxial cable networks on a 24 hour a day
basis  and  which  provide  its  operating  personnel  with  alarm,  status  and
performance information. The NOCs include equipment, which allows the Company to
conduct preventive  maintenance  activities in order to avoid network outages or
to respond promptly to any network disruption that might occur.

         Management Information Systems and Billing. The Company uses commercial
management information systems in its operations, which are tailored to meet the
requirements  of  the  subscription  telecommunications  industry.  The  Company
intends to standardize these systems, and anticipates that the integrated system
will  allow the  Company  to  monitor  customer  service  and  customer  payment
patterns,  monitor  subscriber  equipment  and  installations,  and manage  each
operating  network  efficiently.  The Company has also adopted credit procedures
and collection  policies,  which it believes,  will minimize subscriber turnover
and uncollectable accounts.

Acquisition Strategy

         The Company  intends to pursue its expansion  strategy in the future by
acquiring  high-bandwidth   telecommunication   networks  and  ISPs  in  markets
(principally  in Central  America,  the Andean  region and Mexico) that meet its
market  selection  criteria.  The  Company  has  developed  a series of  complex
criteria to analyze  prospective  acquisitions of market networks and subscriber
systems.  These criteria include (i) the number of potential  subscribers in the
market, (ii) the types of  telecommunications  services in which the subscribers
would most likely be interested, (iii) network frequency availability,  (iv) the
existence of established  groupings or blocks of network rights, (v) the nature,
quality   and  extent  of  service   provided  by   existing   and   traditional
communications  networks in the market,  (vi)  topography,  (vii)  demographics,
(viii) the existence of a strong local  strategic  partner,  (ix)  political and
economic risk, (x) governmental regulation, (xi) existing microwave, fiber-optic
and/or coaxial cable transmission facilities,  and (xii) the potential to add to
the Company's  subscriber  base by acquiring the acquisition  target's  existing
operations.  The Company also evaluates the potential  acquisition's  ability to
facilitate the Company's use of economies of scale and to increase its operating
efficiencies, particularly where a market acquisition can add subscribers or add
to existing regional market clusters.

Business and Operating Issues.

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

         Governmental  Regulation.  The provision of the Company's services will
be subject to extensive governmental regulation.  The amount, type and extent of
that regulation varies from country to country. The information set forth in the
subsection   entitled   "Regulatory   Environment"  under  each  of  the  market
descriptions summarizes certain governmental regulations affecting the Company's
ability to own and  operate  its  networks  and  provide  its  services in those
markets. 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 the Company's business as a whole.

         Risks and Foreign  Investment.  The Company has invested and intends to
continue to invest substantial resources outside the United States.  Governments
of many  developing  countries  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  competitors of the
Company or  companies  upon which the  operating  companies  and  network  right
holders in which the Company has an interest may depend for required services or
materials. Governmental actions in the future could have a significant effect on
the economic conditions in many of the market areas in which the Company intends
to or has  invested,  and otherwise  may have a material  adverse  effect on the
Company's business operations, financial condition and operations. The Company's
interests in some or all of its market countries could be adversely  affected by
expropriation,  confiscatory taxation,  nationalization,  political, economic or
social instability, changes in laws or other developments over which the Company
has little or no control.

         Network  Issues.  The Company will be required to 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 the
governmental  agencies  will not seek to limit,  revoke or  otherwise  adversely
modify the terms of any such 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 a loss or revocation of the network rights.

         International  Currency  Risks.  A number of the countries in which the
Company  operates,  such as Venezuela,  have  experienced  substantial  rates of
inflation and  resulting  high  interest  rates,  sometimes for a period of many
years.  Inflation  and  fluctuations  in  interest  rates  could have a material
adverse effect on the Company's operations and business. The Company has adopted
limited foreign currency exchange risk procedures and intends to adopt a country
specific protocol in the near future. There can be no assurance,  however,  that
the Company's risk procedures  will be adequate or successful.  The value of the
Company's  interests  in these  countries  will  depend,  in part,  on  currency
restrictions and controls that these countries may impose.

         International  Tax Risks.  The  Company  currently  has  operations  in
several Latin American countries and maintains its principal business offices in
the United States. Each of these countries has its own taxing laws,  regulations
and policies. These laws, regulations and policies may differ significantly from
country to country.  In addition,  although tax treaties currently exist between
and among a number of the countries in which the Company does business, there is
no  universal  method or rate of taxation  among the  Company's  various  market
countries.  In addition,  distributions  or other payments the Company  receives
from its  operating  subsidiaries  or affiliates  may be subject to  withholding
taxes  imposed by the  jurisdictions  in which such  entities  are formed or are
operating.  United States  corporations  may generally claim foreign tax credits
against  their  United  States  federal  income  tax  expenses  for any  foreign
withholding  taxes held or actually  paid with respect to companies in which the
Company owns 10% or more of the voting stock, but the Company's ability to claim
any such foreign tax credits and to utilize net foreign losses may be subject to
limitations  and  restrictions.  The Company has  adopted  limited tax  planning
procedures to mitigate the international  tax risks to which it is subject,  and
intends to adopt a comprehensive  set of planning and operational  procedures in
the future.  There can be no assurance  that the  Company's tax planning will be
adequate or successful.

Properties and Facilities

         Equipment.  The Company believes it 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
utilize 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.  The Company believes that, by employing standardized equipment,  the
Company  will be able to make  appropriate  decisions  based on the price of the
equipment, with less emphasis on the manufacturer.

         Office Space.  The Company  leases  approximately  2,500 square feet of
office  space in Salt  Lake  City,  Utah  under a lease  agreement  expiring  in
September  2000,  approximately  3,500  square feet of office  space in Pembroke
Pines, Florida under a lease expiring in 2001 and approximately 3000 square feet
of office  space in San Jose,  California  under a lease  expiring in 2001.  The
Company believes its office space is adequate for its current needs. The Company
also maintains, through its various subsidiaries and affiliates, office space in
a number of the countries in which it operates.

         Network and Other  Rights.  The Company holds  license  rights  (either
directly or derivatively) for microwave point-to-multi-point  telecommunications
networks and interests in fiber-optic and coaxial cable networks in its markets.
It generally has acquired those rights pursuant to (i) the acquisition of direct
ownership   rights,   (ii)  long-term   contracts  with  third  parties,   (iii)
arrangements  where it is the  majority  or sole owner of the  entity  that owns
those assets, or (iv) contractual arrangements which it believes provide it 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-multi-point  microwave communications
networks in most markets that meet the Company's market selection  criteria have
already been granted to (or been applied for by) third  parties.  Therefore,  in
order to build and operate  wireless  portions of the Company's  networks in new
markets where it does not already control network rights,  the Company 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.

Telecommunications Services Content

         Internet and Data Services Content. The Company intends to operate ISPs
in  each  of  the  targeted  countries  to  provide  Internet  access  and  data
transmission  services to the  Company's  subscribers  in those  countries.  The
Company  will  offer  the  services  as part of a  bundled  offering  under  the
Company's brand name, through a contractual arrangement (partnership, management
agreement, services arrangements, joint venture or otherwise), or on a transport
basis (where the Company's networks will act as a "pipeline" for the ISP). These
data services include routing,  addressing,  DNS, registration services, network
security and fire walls, intranet services,  e-mail, news services,  and hosting
and peering services.

         The Company also provides local dedicated data transmission circuits or
virtual private networks. These lines, which typically link customers' computers
together to create larger networks,  are used by banks, billing clearing houses,
advertising agencies, hospitals and other business to exchange large data files,
as well as by any business to connect offices for file sharing,  e-mail and work
group applications.

         The  Company  is  negotiating  with a  number  of ISPs  in its  markets
regarding their  acquisition or for terms under which the Company and those ISPs
would,  on a  partnering,  joint  venture or other  contractual  basis,  provide
Internet access and data transmission services using the Company's networks.

         Voice Services.  The Company intends,  subject to local regulation,  to
provide a complete range of local exchange and long distance services as part of
its services.  The Company  anticipates  these services will include basic local
services,  access to long distance and dedicated  lines,  direct inward dialing,
custom  calling  services and, in the case of long distance  services,  domestic
intramarket,  intermarket and international calling, toll free services, calling
card and conference call bridging and other enhanced services.

         Television  Programming.  The  Company  has  entered  into a number  of
contracts with commercial television programming suppliers and packagers for its
video  programming  services.  These contracts  include both master  agreements,
under which the Company uses specific programming in most or all of its markets,
and regional specific contracts,  pursuant to which the Company uses programming
in regional or country specific markets.

Legal Formation and Development

         Company Formation. The Company was formed for the purpose of continuing
the  development  of  certain   business  assets  formerly  held  by  Transworld
Telecommunications,  Inc.  ("TTI"),  a publicly held United States  corporation.
Through its joint venture entity, Wireless Holdings, Inc., TTI owns interests in
operating  and  non-operating  wireless  communications  networks  in six United
States markets. TTI also owned an interest in certain New Zealand and Park City,
Utah network rights. See "Business and Properties Litigation."

         In July  1995,  the board of  directors  of TTI voted to  separate  its
business assets into two groups. Under the terms of the business separation, TTI
agreed to form a new  corporation  -(the  Company) to hold TTI's New Zealand and
Park City, Utah network rights, and the stock of that corporation was then to be
distributed to TTI's  shareholders.  In order to complete the  transaction,  TTI
formed the Company and, in August 1995, it issued 1,000,000 shares of its common
stock to TTI in  exchange  for TTI's  interest in the New Zealand and Park City,
Utah  networks.  TTI  immediately  transferred  the shares of the  Company to an
escrow agent, to be held for the benefit of TTI's shareholders of record on that
date, until the Company complied with certain  securities law  requirements.  In
December  1996, the Company  registered the shares under the federal  securities
laws under the  Securities  Exchange  Act of 1934,  as  amended,  pursuant  to a
registration  statement on Form 10-SB.  The Company has not yet  distributed the
shares from escrow.

         TIC  Transaction.  Prior to January 31,  1997,  the  Company's  primary
business  assets  consisted of its New Zealand  network rights and a 4.4% equity
interest  in  Comunicaciones  Centurion,  S.A.,  a company  that holds  wireless
network  rights in  Venezuela.  See  "Description  of the  Company's  Business -
Markets - Other Company Network Rights."

         In  February  1997,  the  Company  merged a newly  formed  wholly-owned
subsidiary  with Telecom  Investment  Corporation  ("TIC").  TIC held or had the
right to acquire wireless telecommunication rights in a number of Latin American
countries,  including Venezuela,  Costa Rica, Panama, Peru and Guatemala.  Under
the terms of the merger, the former  shareholders of TIC received 685,062 shares
of the Company's  newly  designated  Series A Preferred  Shares and TIC became a
wholly-owned  subsidiary of the Company (the "TIC  Transaction").  The principal
shareholder  of TIC was George  D'Ambrosio,  the father of the  Company's  Chief
Executive Officer. The Series "A" Preferred Shares were converted into 6,850,620
Common Shares effective  August 21, 1998. See "Matters  Submitted to the Vote of
Security  Holders,"  below.  As a  result  of the TIC  Transaction,  the  former
shareholders and option holders of TIC acquired  approximately 87% of the voting
control of the Company on a fully diluted common share  equivalent  basis.  As a
result of the  Internexus  Transaction,  the  FondElec  Transaction  and the CVV
Transaction the interests of the former  shareholders  and option holders of TIC
were reduced to  approximately  54.6% of the voting control of the Company.  The
TIC  Transaction  was  accounted  for as a reverse  acquisition  for  accounting
purposes.  See  "Management's   Discussion  and  Analysis  of  Certain  Relevant
Factors."

         Note and  Warrant  Offerings.  In 1997,  the  Company  sold a series of
secured  promissory notes and warrants in private  placement  transactions.  The
aggregate  principal amount of the notes (which were retired in full in November
1997) was $871,095. The warrants provide their holders with the right to acquire
the number of Common Shares of the Company  having a value equal to the original
principal amount of the notes. Currently,  the warrants entitle their holders to
purchase  approximately  331,719  Common Shares at a current  exercise  price of
approximately  $2.63 per share.  FondElec and certain of its affiliates were the
principal investors in the notes and warrants.

         On December  23,  1998,  the Company  sold $10 million of  subordinated
exchangeable promissory notes, to FondElec and Internexus, as defined below. The
Notes are  exchangeable,  at the election of the Company,  for  preferred  stock
having certain rights and  preferences  upon the purchase by third parties of at
least $10 million of such  preferred  stock.  See  "Management's  Discussion and
Analysis of Certain  Relevant  Factors - Liquidity  and Capital  Resources"  and
"Certain  Transactions."  The Notes bear  interest at 10%,  are due December 23,
2001, and include warrants for Common Shares while the Notes are outstanding.

         Internexus  Transaction.  Effective  August 1, 1997,  the Company  sold
Petrolera  Argentina San Jorge S.A. 228,658 Common Shares and 150,380 Series "A"
Preferred Shares for $10.0 million pursuant to the Internexus  Transaction.  The
Series  "A"  Preferred  Shares  were  converted  into  1,503,800  Common  Shares
effective  August 24,  1998.  See  "Matters  Submitted  to the Vote of  Security
Holders,"  below.  Petrolera also acquired the right to purchase,  for a nominal
purchase price,  Common Shares and/or Series "A" Preferred Shares  sufficient to
maintain  its  percentage  interest in the voting  control of the Company if the
Company  entered into  transactions  for the sale of its securities with certain
specified  parties  on or  before  November  1,  1997.  As a  result  of the CVV
Transaction  and the  FondElec  Transaction,  Petrolera  acquired an  additional
199,912  Common  Shares  and  23,822  Series  "A"  Preferred  Shares for a total
purchase price of $7,831.  Petrolera subsequently  transferred its Common Shares
and Preferred Shares to Internexus,  which is owned by the same  shareholders as
Petrolera.  The 23,822 Series "A" Preferred  Shares were  converted into 238,220
Common Shares  effective August 24, 1998.  Internexus also acquired  warrants to
purchase  Common  Shares  under  the  terms of the  Notes.  See also  "Principal
Stockholders."

         FondElec  Transaction.  Effective  November 1, 1997,  the Company  sold
FondElec an aggregate of 424,876  Common  Shares and 71,442 Series "A" Preferred
Shares for a total purchase price of $5,248,795 in the FondElec Transaction. The
Series "A" Preferred  Shares were converted into 714,432 Common Shares effective
August 24, 1998. See "Matters Submitted to the Vote of Security Holders," below.
FondElec and its affiliates also hold warrants to purchase an additional 175,953
Common  Shares,  exclusive  of the warrants to acquire  Common  Shares they will
receive under the terms of the Notes. See also "Principal Stockholders."

EMPLOYEES

         As of March  1,  1999,  the  Company  had in  excess  of 200  full-time
employees. Upon the consummation of the Metro Transaction, the Company will have
approximately 300 employees.  The Company's employees are not represented by any
unions or collective bargaining entities.

LITIGATION

         In  September  1998,  the  Company  filed two  arbitration  proceedings
against Donald Williams, a former director and officer of the Company. The first
proceeding   relates  to  a  claim  for   indemnification   and  breach  of  the
representations  and warranties made by Mr. Williams and other parties  pursuant
to the Company's  acquisition of an interest in certain Venezuelan  corporations
that hold and have the right to operate 1 GHz  frequency  in the 28 GHz range in
Venezuela. The other arbitration proceeding requests a declaratory judgment that
the Company's  termination of Mr. Williams as an employee in August 1998 was for
"cause." Both  arbitrations  have been stayed  pending the outcome of settlement
negotiations  between the parties. In early April 1999, the Company was named as
a  defendant  in an  action  filed in New  Jersey  by a group of  United  States
investors who believe they have claims  against Mr.  Williams with respect to an
investment  made  in  those  Venezuelan   entities  (or  certain  entities  that
previously  held or had the right to operate  those same  network  rights).  The
plaintiffs  have asserted that they have claims  against the Company as a result
of the Company's investment in the Venezuelan entities. The Company believes the
claims of the plaintiffs  regarding the Company are without merit.  

         The Company is also  involved in, and pursues,  routine  legal  actions
relating to its business operations, including customer collection activities.

         Certain of the Company's  officers and directors  acted as officers and
directors  of TTI.  See  "Management."  In December  1997,  that entity  filed a
petition  under  Chapter 11 of the United States  Bankruptcy  Code in connection
with the defense and prosecution of litigation  claims relating to a contract by
a third party to acquire certain United States network rights.

                     DIVIDENDS DISTRIBUTIONS AND REDEMPTIONS

         The Company has not  declared or paid any  dividends  to the holders of
its Common Stock or Series B Preferred Stock.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  following  information   summarizes  certain  transactions  either
engaged in by the Company  during the past two years,  or proposed to be engaged
in by the Company, involving its executive officers,  directors, 5% stockholders
and immediate family members of those persons:

         In February, 1997, a wholly-owned subsidiary of the Company merged with
and into TIC. TIC was the surviving  entity in the  transaction.  Certain of the
former  shareholders  of TIC serve as officers and directors of the Company.  In
addition,  the father of the Company's Chief Executive  Officer was the majority
shareholder of TIC. See "Principal  Stockholders"  below. In connection with the
TIC transaction,  the Company assumed an interest-bearing  note in the amount of
$180,281  due to an  entity  controlled  by the  father of the  Company's  Chief
Executive  Officer.  As of December 31, 1998,  $138,129 plus accrued interest of
$74,783 were  outstanding on the loan. The Company also has a current  liability
to an  entity  owned  by that  same  person  in the  amount  of  $100,000  for a
commitment fee related to the entity's  investment  that secured the New Zealand
channel  rights  prior to TTI's  involvement  in New  Zealand.  TTI assumed this
liability in connection  with its  acquisition of the New Zealand rights and the
Company subsequently assumed the liability in connection with the its formation.
In addition, prior to the Company's merger with TIC, TIC entered into a services
agreement with Bridgport Financial, Inc. ("Bridgeport"), a principal of which is
the same person.  Under the terms of the agreement,  TIC retained  Bridgeport to
provide advisory services  relating to the acquisition,  ownership and operation
of   telecommunications   services  in  Latin  America,   Europe  and  Asia.  In
consideration  for these  services,  TIC agreed to pay Bridgport a percentage of
TIC's gross annual revenues. The minimum amount payable to Bridgeport is $20,833
per month. The term of the services agreement extends through December 31, 2001.
Under  the  terms  of the  agreement,  its  terms  apply to the  gross  revenues
generated  by the  Company.  The  Company,  Bridgeport  and  its  principal  are
currently  negotiating  the  terms of the  modification  or  termination  of the
services  agreement and the  satisfaction  of all amounts due under the loan and
the commitment fee.

         Effective  August 20,  1998,  the Company and  FondElec  entered into a
non-exclusive agreement under which FondElec agreed to provide advisory services
to the Company relating to the acquisition of controlling interests in companies
engaged in telecommunication services in Latin America, with particular emphasis
on investments in Mexico,  Guatemala,  El Salvador,  Argentina,  and Brazil. The
agreement  requires FondElec to provide standard  investment  advisory services,
but neither  FondElec nor any of its  principals is required to take part in any
solicitation  of investors or otherwise  participate  in the marketing of any of
the  Company's  securities.  The term of the  agreement  is one  year.  Based on
FondElec's  belief that its advisory  services will enhance the Company's value,
but that the  Company's  current  resources  should be used for the  launch  and
acquisition of its  communications  networks,  FondElec agreed to forego payment
for its  services  unless  the  Company  raised  equity,  debt,  or  other  cash
consideration  from third parties on or before the  termination of the agreement
in August 1999.  The fee, in the amount of the lesser of 3% of the amount of the
amount raised or $750,000, will be paid from the gross proceeds of any such debt
or equity proceeds.

         In February  1999,  Chispa  entered into a short term loan  transaction
with  FondElec  pursuant  to  which  it  acquired  funds  that it used to pay an
installment  obligation due under the terms of its acquisition of Cablevisa.  If
the loan is converted into a long term loan, Chispa has agreed to grant FondElec
warrants to acquire common shares of Chispa and other financial remuneration.

         In December  1998,  the Company sold the Notes,  as defined  below,  to
FondElec and Internexus.  Under the terms of the Notes,  FondElec and Internexus
receive  warrants  to acquire the  Company's  Common  Shares.  In  addition,  in
connection   with  the  placement  of  the  Notes,   certain  of  the  Company's
shareholders  entered into an agreement with FondElec and  Internexus  regarding
the  designation  of,  and  voting  for,  directors.  Under the  agreement,  the
shareholder  group,  FondElec and  Internexus are each entitled to designate two
persons to be nominated as members of the  Company's  board of directors and the
other parties to the agreement are obligated to vote their shares in the Company
for the election of those designees.  The voting agreement also contains certain
restrictions on the corporate actions the Company may undertake.  The Company is
not a party to the voting agreement.

                                   MANAGEMENT

         The Company's  directors,  executive officers and key employees,  as of
the date hereof,  and their respective ages and positions with the Company,  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 the  Company's  directors  or  executive
officers.  The  Company's  board of  directors  is  currently  comprised  of six
members.  Executive  officers are chosen by, and serve at the discretion of, the
board of directors:

<TABLE>
<CAPTION>
Name                                     Age   Position 
<S>                                      <C>   <C>
Lance D'Ambrosio......................   41    Chief Executive Officer and Chairman of the Board of Directors
Brian Reynolds........................   42    President and Chief Operating Officer
Jerry Slovinski.......................   42    Senior Vice President and Chief Financial Officer
Troy D'Ambrosio.......................   38    Senior Vice President, Legal & Administration, Director
William Levan.........................   44    Senior Vice President, Engineering & Technology
Dennis Gundy..........................   54    Senior Vice President, Telephony
Ricky Posner..........................   34    Vice President and Chief Executive Officer, CCI - Central America
Jose Miguel Padron....................   44    Vice President and Chief Executive Officer, CCI - Andean Region
Luis de la Fuente.....................   52    Vice President and Chief Executive Officer, CCI - Mexico
Anthony Sansone.......................   34    Treasurer and Corporate Secretary
Gerald Peters.........................   58    Controller
Gaston Acosta-Rua.....................   34    Director
Jorge Fucaraccio......................   54    Director
Peter Schiller........................   63    Director
George Sorenson.......................   43    Director
</TABLE>

Senior Management Team

         Lance D'Ambrosio,  Chief Executive Officer and Chairman of the Board of
Directors.  Mr.  D'Ambrosio  is the Chairman of the Board of Directors and Chief
Executive Officer of the Company, and holds other executive officer and director
positions in the Company's subsidiaries and affiliates.  Mr. D'Ambrosio has been
involved in the telecommunications business for over eight years and has over 20
years of  entrepreneurial  business  and sales  experience.  Mr.  D'Ambrosio  is
responsible for the Company's acquisitions,  strategic planning and mergers, and
is responsible for all financing plans for the Company.  Mr. D'Ambrosio  founded
CCI in 1995 and has led the Company since its inception.  Between 1992 and 1995,
Mr. D'Ambrosio  served as the President,  Chief Executive Officer and a Director
of Transworld  Telecommunications,  Inc.  ("TTI"),  a wireless cable  television
company  in the United  States  that had  operations  in six  markets.  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,  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.  Mr.  D'Ambrosio  holds a Bachelor  of Science in
Marketing and Management from the University of Utah.

         Brian  Reynolds,  President and Chief Operating  Officer.  Mr. Reynolds
joined the Company,  effective July,  1998, as its President and Chief Operating
Officer. Mr. Reynolds has over 18 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 the Company, Mr.
Reynolds  acted as a  telecommunications  consultant  to a number  of  entities,
including  the  Company.  Between  1994 and 1997 Mr.  Reynolds  served  as Chief
Operating Officer of Wireless Holdings,  Inc. ("WHI"),  where he was responsible
for start-up and growth of its high-speed  data and wireless  cable  operations.
Between 1993 and 1994, he was Chief Operating  Officer for Australia Media LTD.,
a combined  direct  broadcast and wireless video company that  currently  serves
over 100,000 customers.  Mr. Reynolds was a founder of Sutter Buttes Cablevision
and Pacific Australia West Cable in Northern California.  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.  Prior to 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  20  years  of  financial  and   accounting   experience  in  the
telecommunications  industry.  After eight years with Arthur Anderson,  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.
Prior to joining  CCI, 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 is a Director of the Company and Senior Vice President
Legal &  Administration.  Mr. D'Ambrosio has 17 years of business and government
experience,  including  four  years of  telecommunications  experience  prior to
joining CCI as an officer in October  1998.  Prior to joining  CCI, he served as
Vice  President  of  Administration  and as a Director of TTI and also served in
executive  positions  and as a  director  of WHI  and its  subsidiaries  Between
September  1996 and October 1998,  Mr.  D'Ambrosio  has 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 a Vice  President of Corporate  Communications
and Government  Relations.  Mr. D'Ambrosio received a Bachelor of Arts degree in
Political Science from the University of Utah.

         William  Levan,  Senior Vice  President  Engineering & Technology.  Mr.
Levan  joined  the  Company  in  March  1998 as its  Senior  Vice  President  of
Engineering.  Mr. Levan is a 23-year veteran of the telecommunications  industry
and holds seven  patents.  Between July of 1997 and February of 1998,  Mr. Levan
acted as the Director,  Applications  Hybrid Networks in Cupertino,  California,
where he was  responsible  for  pre-sales  support  of its  Hybrid  Series  2000
broadband  modem  system.  Between  1994 and July 1997,  he was the  Director of
Hardware Engineering for Hybrid Networks in Cupertino,  California. Between 1991
and August 1994,  Mr. Levan was the Chief  Technology  Engineer for the Foothill
College  District in Cupertino,  California,  where he was  responsible  for the
design, and supervised installation, of the district wide broadband voice, video
and data network.  Mr. Levan received his B.S.E.E.  from Ohio State  University,
with an emphasis in Electrical Engineering.

         Dennis  Gundy,  Senior Vice  President  Telephony.  Mr. Gundy began his
telecommunications career 36 years ago and has served in numerous capacities for
MCI,  Sprint,  and Pacific Bell in the United  States and 22 foreign  countries.
Since  1980,  Mr.  Gundy  has been  involved  with  start-up  telecommunications
companies.  Mr. Gundy is a founding  partner of U.S. Sprint and was instrumental
in the start-up and early growth of the company.  Mr. Gundy previously served as
Vice President and General Manager of  SERSA/GeoComm,  a Mexico  City-based long
distance and data carrier and  Executive  Vice  President of St.  Thomas and San
Juan Telephone Company. Mr. Gundy received his B.S.E.E. from Western Technical.

         Ricky Posner,  Vice President and Chief  Executive  Officer CCI Central
America.  Mr. Posner is a Vice  President and Chief  Executive  Officer of CCI's
Central  American  operations.  Mr.  Posner has over 14 years  experience in the
telecommunications and media industries. Prior to joining CCI, Mr. Posner worked
for Metro,  starting in 1996.  Mr.  Posner has also held  positions  with Warner
Espanola and El Deseo,  a Spanish  film  producer and  distributor.  Mr.  Posner
received a B.S. in Communications from Northwestern University,  and is a native
of Colombia.

         Jose Miguel  Padron,  Vice  President and Chief  Executive  Officer CCI
Andean Region.  Mr. Padron is Vice President & Chief Executive  Officer of CCI's
Andean Region  operations.  Mr. Padron originally joined CCI in 1998, but took a
leave  of  absence  shortly  thereafter  to  act as  Director  of  CONATEL,  the
Venezuelan  governmental  agency  that is the  equivalent  of the United  States
Federal Communications  Commission.  Mr. Padron rejoined the Company in February
1999.  Mr.  Pardon is the founder of  Inter@net,  the  Venezuelan  ISP which CCI
acquired in July,  1998. Mr. Padron is also a founder and was the Vice President
of  Satvenca,  a  Venezuelan  satellite  television  station  telecommunications
company.  Mr. Padron  received a Bachelor of Science in  Mechanical  Engineering
from Universidad Metropolitana in Venezuela and a Master of Engineering Sciences
Degree from Lamar University.

         Luis de la Fuente,  Vice  President  and Chief  Executive  Officer  CCI
Mexico.  Mr. De la Fuente is a Vice  President  and Chief  Executive  Officer of
CCI's   Mexico   operations.   Mr.   De  la   Fuente   has   over  30  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.

         Anthony Sansone,  Treasurer and Corporate Secretary. Mr. Sansone is the
Secretary and Treasurer of the Company and served as its Controller  until 1998.
Mr.  Sansone has ten years of  financial,  accounting  and business  experience,
including seven 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 in 1988 and a Master of
Business Administration degree from the University of Utah.

         Gerald Peters, Controller. Mr. Peters is the Controller of the Company.
Mr.  Peters  has  23  years  of  telecommunications   accounting  and  financial
experience, most recently as Controller of U.S. Diagnostic, Inc. Mr. Peters also
served as Director of Cash  Management for  Cablevision  System Corp.,  and Vice
President and Controller for Warner Cable Communications, Inc. He holds a B.B.A.
in Accounting from City College of New York.

         Gaston  Acosta-Rua,  Director.  Mr.  Acosta-Rua  is a  Director  of the
Company.  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. Mr. Acosta-Rua received a Juris Doctorate from the George Mason
School of Law in 1991,  and a Bachelor of Arts  Degree in  Computer  Science and
Finance from Furman University.

         Jorge  Fucaraccio,  Director.  Mr.  Fucaraccio  is a  Director  of  the
Company.  Since 1994, Mr. Fucaraccio has been an advisor to Petrolera  Argentina
San  Jorge  S.A.  and  Bolland  S.A.,  Argentinean  corporations,   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 (the
"INTI")  where he was  responsible  for managing all technical  departments  and
research   centers  of  the  INTI,   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.   Mr.
Fucaraccio  received a  Licentiate  in Physical  Sciences  from the Buenos Aires
University  in 1970.  He has also  served  as  "guest  worker"  at the  National
Institutes  of  Standards  and  Technology  (formerly  the  National  Bureau  of
Standards) in Maryland under a fellowship  sponsored by the United Nations.  Mr.
Fucaraccio also engaged in  post-graduate  research  activities at the Technical
University of Denmark (Lyngby).

         Peter  Schiller,  Director.  Mr. Schiller is a Director of the Company.
Since 1993,  Mr.  Schiller has been employed by Bolland S.A and its  affiliates,
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.  Mr.
Schiller  received a degree in Electrical  Engineering from the University of La
Plata,  Argentina  and  pursued a three year,  post-graduate  course in Business
Management at the Argentine Catholic University in Buenos Aires, Argentina.  Mr.
Schiller engaged in post-graduate  studies in oil and gas  specialization at the
Argentine Catholic University in Buenos Aires.

         George  Sorenson,  Director.  Mr. Sorenson is a Director of the Company
and also served as a Director of TTI.  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.  Mr.  Sorenson  received a Bachelor of Arts degree in
Finance  from the  University  of Utah and a Masters in  International  Business
Management from the American Graduate School of International Management.

Advisory Board

         The Company has formed an advisory  board for the purpose of  assisting
it in the  identification  of  market  and  product  development  opportunities,
reviewing  with  management  the progress of the  Company's  specific  projects,
recruiting and evaluating the Company's  management and operational systems and,
in general,  assisting the Company in its  regulatory  and  strategic  planning.
Members  of the  advisory  board  are  leaders  in the  fields of  business  and
telecommunications  and  generally  meet  with the  Company's  management  on an
informal basis.

         Noe Kenig,  Chairman,  CCI Advisory Board. Mr. Kenig is chairman of the
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.

Board of Directors and Other Information.

         The  Company's  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.  The Class 3 directors
(consisting  of Troy  D'Ambrosio)  serve  until  1999,  the  Class  2  directors
(consisting of Messrs.  Sorenson and Schiller) serve until 2000, and the Class 1
directors  (consisting of Messrs.  Lance D'Ambrosio,  Acosta-Rua and Fucaraccio)
serve until 2001. At each annual meeting of the shareholders of the Company, the
successors to the class of directors  whose term expires at such 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.  The  Company's
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.

Board of Directors Committees

         The Board of Directors has established four  committees,  the Executive
Committee,  the Audit  Committee,  the  Compensation  Committee  and the Special
Committee.  Each of  these  committees  is  responsible  to the  full  Board  of
Directors,  and, in general,  its  activities are subject to the approval of the
full Board of Directors.

         The Executive  Committee is charged with  overseeing  the operations of
the  Company,  and  generally  has all of the  authority  of the  full  Board of
Directors between regularly  scheduled  meetings of the full Board of Directors.
The Executive Committee is comprised of Messrs. Lance D'Ambrosio, Acosta-Rua and
Troy D'Ambrosio.

         The  Audit   Committee  is   primarily   charged  with  the  review  of
professional  services  provided  by the  Company's  independent  auditors,  the
determination  of the  independence  of  such  auditors,  the  annual  financial
statements  of the  Company  and the  Company's  system of  internal  accounting
controls.  The Audit  Committee  also reviews such other matters with respect to
the accounting, auditing and financial reporting practices and procedures of the
Company  as it may  find  appropriate  or as may be  brought  to its  attention,
including the selection and retention of the Company's independent  accountants.
Messrs.  Fucaraccio,  Sorensen and Troy  D'Ambrosio  serve as the members of the
Audit Committee.

         The  Compensation  Committee  is  charged  with the  responsibility  of
reviewing executive salaries,  administering bonuses, incentive compensation and
stock option  plans of the  Company,  and  approving  the other  benefits of the
executive officers of the Company. The Compensation Committee also consults with
the Company's  management  regarding  pension and other benefit  plans,  and the
Company's  compensation policies and practices in general.  Messrs.  Fucaraccio,
Acosta-Rua  and  Troy  D'Ambrosio  serve  as the  members  of  the  Compensation
Committee.  There  are  no  interlocking  relationships,  as  described  by  the
Securities and Exchange Commission, between the Compensation Committee Members.

         The Special Committee is a director and non-director  committee charged
with  overseeing  the  actions to be taken by the  Company  with  respect to any
registered  public  offerings  of the  Company's  securities  and certain  other
matters  delegated to it by the Board of Directors or Executive  Committee,  and
the board members of that  committee  generally have all of the authority of the
full  Board of  Directors  on  issues  relating  to such  matters.  The  Special
Committee is comprised of Board members Lance D'Ambrosio, and Gaston Accosta-Rua
and non-Board  members Jerry  Slovinski  and Anthony  Sansone,  who serve as the
Company's  Senior Vice President and Chief  Financial  Officer and Secretary and
Treasurer, respectively.

Director Compensation.

         Directors do not receive cash  compensation for serving on the Board of
Directors or any committee of the Board,  or for any other services  rendered to
the Company in their capacity as director of the Company, but are reimbursed for
expenses they incur in connection with attending Board or committee meetings. In
addition,  Directors  who are not  employees of the Company are awarded  options
pursuant to the terms of the Company's  1998 Director  Stock Plan (the "Director
Plan").

         The Board of Directors  adopted the Director Plan in June 1998, and the
shareholders  approved it at the  Company's  annual  meeting  held on August 17,
1998. A total of 100,000  Common  Shares are  reserved  for  issuance  under the
Director  Plan.  The Director Plan provides each  non-employee  director with an
aggregate annual compensation retainer of options (each, a "Director Option") to
acquire 8,000 Common Shares of the Company.  Each Director  Option is granted on
the first day after the last day of each calendar quarter for services performed
during the preceding quarter.  The first director options were granted under the
Director Plan on January 1, 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 has the status of  non-employee  director.  If a  non-employee
director no longer  serves as a director  of the  Company  for any reason,  that
director is entitled to all unpaid portions of his or her Director Option (which
will accrue on a daily basis  through  the date of his or her  termination  as a
director).

         Each Director Option vests on the first  anniversary of the date of its
grant, and the Director Options expire, if unexercised, five years from the date
of grant.  The exercise price of each Director  Option is 85% of the fair market
value of the Common Shares on the date of grant.  The number of Shares  issuable
in  connection  with the  Director  Option  and the  aggregate  number of Shares
remaining  available for issuance  under the Director  Plan are  proportionately
adjusted to reflect any subdivision or combination of outstanding  Common Shares
of the Company.

         The  Director  Plan  will  continue  until May 30,  2008,  unless it is
terminated prior to that time by action of the Board of Directors.  The Board of
Directors  may from time to time amend,  modify or suspend the Director 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  Plan  will  be  effective  prior  to the  approval  by  the  Company's
shareholders  to the extent that approval is then  required by applicable  legal
requirements,  and (ii) the  Director  Plan will not be  amended  more than once
every  six  months  to  the  extent   such   limitation   is  required  by  Rule
16b-3(c)(2)(ii) (or any successive  provision) under the Securities Exchange Act
of 1934, as then in effect.

Executive Compensation

         The following table  summarizes the  compensation  paid to or earned by
the  Company's  Chief  Executive  Officer and the four most  highly  compensated
executive officers whose total salary and bonus exceeded $100,000 (collectively,
the "Named Executive  Officers") during the fiscal years ended December 31, 1998
and December 31, 1997.  During the fiscal year ended December 31, 1996,  none of
the  Company's   officers  received  any  cash  compensation,   bonuses,   stock
appreciation rights, long-term compensation, stock awards or long-term incentive
rights from the Company.

<TABLE>
<CAPTION>
                                                     Annual Compensation
                                                                                           Other Annual
 Name and Principal Position              Year        Salary             Bonus             Compensation(1)
<S>                                       <C>        <C>                <C>                <C>
-------------------------------------     ----       ----------         ---------          ---------------
Lance D'Ambrosio                          1998       $165,000           $12,500              $13,800(3)
     Chief Executive Officer              1997       $165,000(2)         $6,875              $13,800(3)
     and Board Chairman
Brian Reynolds                            1998       $135,000(4)        $15,000                  $6,000
     President and Chief Operating        1997         $-0-              $-0-                    $6,000
     Officer
Jerry Slovinski                           1998       $130,000(5)         $-0-                    $6,000
     Senior Vice President and Chief      1997         $-0-              $-0-                    $6,000
     Financial Officer
William Levan                             1998       $120,000(6)        $10,000                  $6,000
     Senior Vice President                1997         $-0-              $-0-                      $-0-
     Engineering and Technology
Troy D'Ambrosio                           1998       $105,000(7)         $5,000                  $6,000
     Senior Vice President Legal &        1997         $-0-              $-0-                      $-0-
     Administration
_______________________
(1)  Represents full year premiums on group term life insurance and medical and dental insurance.

(2)  Reflects full year base salary.  Mr. D'Ambrosio became a salaried employee of the Company on August 1, 1997.

(3)  Includes an automobile allowance of $7,800.

(4)  Reflects full year  base salary.  Mr. Reynolds became a salaried employee of the Company on July 1, 1998.

(5)  Reflects full year base salary.  Mr. Slovinski became a salaried employee of the Company on November 1, 1998.

(6)  Reflect full year base salary.  Mr. Levan became a salaried employee of the Company on March 31, 1998.

(7)  Reflect full year base salary.  Mr. D'Ambrosio became a salaried employee of the Company on October 1, 1998.
</TABLE>

<TABLE>
<CAPTION>
Stock Option Grants

         The following table provides  information  relating to stock options awarded to each of the Named Executive Officers during
the fiscal year ended December 31, 1998.

<CAPTION>
                                                         Common Shares
                                               Option Grants in Last Fiscal Year

                                                       Individual Grants
                                          --------------------------------------------
                                                                                         Potential Realizable
                                                                                         Value at Assumed 
                                            Percent of                                   Annual  Rate of Stock
                            Number of     Total Options                                  Appreciationfor
                           Underlying      Granted to        Exercise                    Option Term(3)
                             Options       Employees in      Price Per    Expiration
       Name                Granted(#)     Fiscal Year(1)     Share(2)         Date         5%($)        10%($)

----------------------     ----------     -------------      ---------    ----------     ----------------------
<S>                        <C>           <C>                 <C>                         <C>           <C>
Brian Reynolds              100,000             100%           $1.00      12/31/2001     $813,500      $857,000

_______________________

(1)  Based on options for an aggregate of 100,000 Common Shares granted during the fiscal year ended December 31, 1998.

(2)  On the date of the grant of the options for the Common Shares, the Board of Directors of the Company estimated that the fair
     market value of that stock was $4.61.

(3)  Potential  realizable  value is based on the  assumption  that the Common Shares of the Company  appreciates at the annual rate
     shown (compounded  annually) from the date of grant until the expiration of the option term. These numbers are calculated based
     on the requirements  promulgated by the Securities and Exchange  Commission and do not reflect the Company's estimate of future
     stock price growth.
</TABLE>

<TABLE>
<CAPTION>
Fiscal Year-End Option Value

         The following  table  provides  information  regarding the number and value of options to acquire Common Shares held by the
Named Executive Officers on December 31, 1998.
<S>                                    <C>                 <C>                  <C>                <C>
                                             Number of Securities                 Value of Unexercised
                                            Underlying Unexercised                     In-the-Money
                                                  Options at                             Options at
                                             Fiscal Year-End (#)                      Fiscal Year-End(1)
                                       ---------------------------------        -------------------------------- 
              Name                     Exercisable         Unexercisable        Exercisable         Unexercisable
----------------------------------     -----------         -------------        -----------         -------------
Brian Reynolds                           100,000                -0-               $770,000              $-0-

______________________

         For purposes of determining the values of the options held by the Named
Executive  Officers,  the Company assumed that the Common Shares  underlying the
option  had a value of  $8.70  per  share on  December  31,  1998,  which is the
estimated  fair market value the Board of Directors  attributed to that stock on
December  23,  1998 in  connection  with  the  Company's  sale of the  Notes  to
Internexus and FondElec and the  corresponding  conversion  price for the Notes.
The option  value is based on the  difference  between the fair market  value of
such shares on  December  31,  1998,  and the option  exercise  price per share,
multiplied by the number of shares subject to the options.
</TABLE>

Employment Agreements

         The Company has adopted a policy of entering into employment agreements
with each of its senior  management  and key  personnel,  and has either entered
into an  employment  agreement  with each of those  persons or has  approved the
terms of their  agreements.  The  employment  agreements  generally have initial
terms of between one and three  years.  Under the  agreements,  the  employee is
entitled to a base  salary  ($165,000  for Lance  D'Ambrosio,  $135,000  for Mr.
Reynolds,  $130,000 for Mr.  Slovinski,  $120,000 for Mr. Levan and $105,000 for
Troy  D'Ambrosio),  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 the
Company's  senior  management  also  provide  for  the  grant  of  options.  See
"Management - Executive  Compensation"  and  "Management - Stock Option Grants,"
above.  In limited  circumstances  (primarily  in the case of senior  management
personnel  who  have  significant  management  responsibility  for and  over the
operation  of  one of the  Company's  general  market  regions)  the  employment
agreements  provide  for the  grant to the  employee  in  question  of an equity
interest in the joint ventures  and/or Company  subsidiaries  operating in those
regions. These grants typically provide that the equity interest received by the
employee  is  non-dilutable  to the extent of the  investment  by the Company or
other parties in the joint ventures  and/or Company  subsidiaries of up to a set
amount.

         The  employment  contracts  may be  terminated by the Company for cause
(which is defined in the agreements) or without cause. In addition, the employee
can terminate the contract on notice to the Company 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 the Company  believes are consistent with industry
practice.

Limitations of Liability and Indemnification

         The Company's Amended and Restated  Certificate of Incorporation limits
the personal  liability of  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 (i) an act or omission that involves  intentional
misconduct  or a knowing  violation  of the law,  or (ii)  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.

         The Company's  Bylaws provide that, to the full extent permitted by the
Company's  Amended and  Restated  Certificate  of  Incorporation  and the Nevada
Business  Corporation  Act, the Company will indemnify (and advance expenses to)
the Company's  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. Any such indemnification
is in addition to the advancement of expenses.

         At present,  there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification by the
Company  would  be  required  or  permitted.  The  Company  is not  aware of any
threatened  litigation  or  proceeding  which  would  result in a claim for such
indemnification.

Employee Benefit Plans

         In June,  1998,  the Board adopted the 1998 Stock  Incentive  Plan (the
"Incentive Plan"). The Incentive Plan was approved by the Company's shareholders
in August 1998. See "Submission of Matters to the Vote of Security Holders." The
Board believes that the  availability of stock options and other incentives that
are permitted to be awarded under the Incentive Plan are an important  factor in
the Company's  ability to attract and retain qualified  employees and to provide
incentives for them to exert their best efforts on behalf of the Company.

         All  employees,  consultants,  advisors,  officers and directors of the
Company and its  subsidiaries 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. The Board of Directors  increased the number
of Common Shares  reserved for issuance  under the  Incentive  Plan to 1,820,229
Common Shares in December 1998. A total of 1,757,000  options 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  granted as of March 1, 1999.  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 the Company or  repurchased  by the
Company,  the Common  Shares  again  become  available  for  issuance  under the
Incentive Plan.

         The 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  ("ISO"),  as defined in Section 422 of
the Internal  Revenue Code of 1986, as amended (the "Code"),  or a non-statutory
stock option ("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  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 the Board,  and may be
less than the fair market value of the Common Shares on the date of the grant.

         The Board may award  Common  Shares under the  Incentive  Plan as stock
bonuses, restricted stock awards, or otherwise. The 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 pursuant
to  stock  awards  under  the  Incentive  Plan is  determined  by the  Board  of
Directors. No stock awards have yet been granted under the Incentive Plan.

         Stock  appreciation  rights ("SARs") may be granted under the Incentive
Plan.  SARs may, but need not, be granted in connection  with an option grant or
an outstanding  option  previously  granted under the Incentive  Plan. An SAR is
exercisable  only at the time or times  established  by the Board.  If an SAR 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.  The Board may
withdraw any SAR granted under the Incentive Plan at any time and may impose any
condition upon the exercise of a SAR or adopt rules and regulations from time to
time  affecting  the rights of holders  of SARs.  No SARs have yet been  granted
under the Incentive Plan.

         The Board may also grant cash bonus rights under the Incentive  Plan in
connection with (i) options granted or previously granted,  (ii) SARs granted or
previously  granted,  (iii) stock awarded or previously  awarded and (iv) 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.

         The   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").  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 the Board for the
period  covered  by the  awards  are met and the  employee  satisfies  any other
restrictions  established by the Board.  The performance  goals are expressed as
one or more targeted  levels of  performance  with respect to the Company or any
subsidiary,  division or other unit of the Company, including performance levels
relating  to  earnings,   earnings  per  share,  stock  price  increase,   total
stockholder  return  (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 August  17,  1998,  the  Company  held its 1998  annual  meeting  of
stockholders.  At the meeting, the Company's stockholders approved the Company's
Amended and Restated Certificate of Incorporation,  which was previously adopted
by the Company's  Board of Directors.  The Amended and Restated  Certificate  of
Incorporation amended the Company's Certificate of Incorporation by (i) changing
the Company's name to  "Convergence  Communications,  Inc.," and (ii) increasing
the Company's  authorized stock to 100 million shares of Common Stock, par value
$.001 per share,  and 15 million shares of Preferred  Stock, par value $.001 per
share. The Amended and Restate  Certificate of Incorporation was filed on August
24, 1998 with the Nevada  Secretary of State. At the meeting on August 17, 1998,
the  shareholders  also  approved  a 1 for 3.5  reverse  split of the  Company's
outstanding capital stock and an agreement under which the Company's outstanding
Series A Preferred Shares were exchanged for Common Shares, on a Preferred Share
to Common Share ratio of 1 to 10.  Unless  otherwise  noted in this report,  all
share  amounts  and share  descriptions  contained  in this  report  reflect the
exchange  of the Series A Preferred  Shares for Common  Shares and the 1 for 3.5
reverse split of the  Company's  outstanding  capital stock on a retroactive  or
current basis, as appropriate.

         At the annual meeting,  and as part of the amendment and restatement of
the Company's Certificate of Incorporation, the shareholders of the Company also
approved a classified  board and elected eight persons to the Company's Board of
Directors.  Those members  consisted of Lance  D'Ambrosio,  Donald Williams,  E.
Andrew  Lowe,  Troy  D'Ambrosio,   George  Sorenson,  Gaston  Acosta-Rua,  Jorge
Fucaraccio and Peter Schiller.

         The shareholders  also approved,  at the annual meeting,  the Company's
1998 Stock Incentive Plan and the 1998 Directors Stock Plan.

         For a  more  detailed  description  of  the  matters  addressed  by the
shareholders at the annual meeting, see the Company's definitive proxy statement
on Form 14A, dated July 24, 1998. See also, the Company's current report on Form
8-KA,  dated  October  23,  1998.  See also  "Management  - Board  of  Directors
Committees,"  "Management - Director  Compensation,"  and "Management - Employee
Benefit Plans."

                             PRINCIPAL STOCKHOLDERS

         The  following  table  sets forth  certain  information  regarding  the
beneficial ownership of the Company's outstanding securities as of March 1, 1999
by (i) all those  persons or  entities  known by the  Company  to be  beneficial
owners  of 5%  or  more  of  each  class  of  its  outstanding  securities  ("5%
Shareholders"),  (ii) each  director and each of the Company's  Chief  Executive
Officer and the next four highest paid officers  ("Named  Executive  Officers"),
and (iii) all directors  and the Company's  executive  officers  (including  the
Named  Executive  Officers)  as  a  group.  The  data  presented  are  based  on
information  provided  to the  Company  by the  Named  Executive  Officers,  the
Company's directors and its 5% Shareholders.

<TABLE>
<CAPTION>
                                                                      Common Share
                           Number and Class of      Ownership          Equivalent
    Beneficial Owner            Shares(1)         Percentage(1)       Ownership(2)
-----------------------    ------------------     -------------       ------------
<S>                        <C>                    <C>                 <C>
5% Shareholders
  George D'Ambrosio(3)         3,492,852             29.0%               28.8%
                                 Common              Common

  FondElec Group, Inc.(4)      2,486,963             20.2%               20.4%
                                 Common              Common

  Internexus, S.A.(5)          2,226,675             18.4%               18.3%
                                 Common              Common

  Donald Williams                 96,988                *                   *
                                 Common
                                  19,761               19.5
                              B Preferred

  Caribbean Communications       206,126               1.7%               2.0%
    Group, S.A.                  Common
                                 46,378              45.7%
                               B Preferred

  Amsterdam Pacific, L.L.C.       34,920                *                   *
                                 Common
                                  9,918                9.8%
                               B Preferred

  Group Radio Centro              51,682                *                   *
                                 Common
                                  11,628              11.5%
                               B Preferred

  Officers & Directors

   Lance D'Ambrosio (6)         1,110,700              9.2%               9.1%
                                 Common              Common

   Brian Reynolds (7)            100,000                *                   *
                                 Common

   Jerry Slovinski                  -                   *                   *

   Dennis Gundy                     -                   *                   *

   William Levan                    -                   *                   *

   George Sorenson(8)             5,333                 *                   *
                                Common(14)

   Troy D'Ambrosio(9)            580,336               4.8%               4.7%
                                 Common              Common

   Gaston Acosta-Rua(10)          5,333                 *                   *
                                Common(14)

   Jorge Fucaraccio(11)             -                   *                   *

   Peter Schiller(12)               -                   *                   *

   All    Directors   and       2,092,208             17.4%               17.2%
    Officers  as a  Class        Common              Common
    (16 Persons) (13)

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

*Represents beneficial ownership of less than 1% of the security in question.
1    Based on 12,025,633  outstanding  Common Shares and 101,379  outstanding  Series B Preferred Shares.  The number of outstanding
     Common  Shares  assumes the closing of the Metro  Transaction  and the  issuance  by the  Company of 287,356  Common  Shares in
     connection  therewith.  The inclusion herein of any shares as beneficially owned does not constitute an admission of beneficial
     ownership of those shares. Unless otherwise indicated,  each person listed has sole investment and voting power with respect to
     the  shares  listed.  In  accordance  with the  rules of the  Securities  and  Exchange  Commission,  each  person is deemed to
     beneficially  own any shares  issuable  upon  exercise  of share  options or warrants  held by such  person that are  currently
     exercisable or that become exercisable within 60 days after March 1, 1999.
2    Assumes the matters set forth in footnote 1. Also assumes, based on the stated rights and preferences of the Series B Preferred
     Shares, that each Series B Preferred Share has the voting rights of one Common Share.
3    Includes  shares  held in the name of Mr.  D'Ambrosio  and held in the name of  entities  over  which  Mr.  D'Ambrosio  (either
     individually  or with family  members)  has voting  and/or  beneficial  control and for which he does not  disclaim  beneficial
     ownership.  Also  includes  shares held by Mr.  D'Ambrosio  as nominee  for a general  partnership  whose other  partner is Mr.
     D'Ambrosio's son, Lance D'Ambrosio.
4    Reflects shares held by FondElec and its affiliates.  Includes  options to acquire 45,000 Common Shares and warrants to acquire
     221,372 Common  Shares.  The number of Common Shares subject to the option and warrants is subject to adjustment if the Company
     engages in certain fundamental corporate transactions.
5    Includes shares held in the name of Internexus and its affiliates, including (i) options to acquire 10,667 Common Shares issued
     to Messrs.  Fucaraccio and Schiller under the Company's  Director Stock Plan which they are required,  under the terms of their
     contractual agreements with Internexus, to assign to Internexus, and (ii) warrants to acquire 45,418 Common Shares.
6    Includes shares held in the name of Mr. D'Ambrosio and shares 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.  Does not  include  shares held by Mr.
     D'Ambrosio's father as nominee for a partnership in which Mr. D'Ambrosio is a 50% partner.
7    Includes options to acquire 100,000 Common Shares.
8    Includes options to acquire 5,333 Common Shares.  Mr. Sorenson is a principal of FondElec.  Mr. Sorenson  disclaims  beneficial
     interest in the shares held by FondElec.
9    Includes  shares  held in the name of Mr.  D'Ambrosio  and held in the name of an  entity  over  which Mr.  D'Ambrosio  (either
     individually  or with family  members)  has voting  and/or  beneficial  control and for which he does not  disclaim  beneficial
     ownership.
10   Includes options to acquire 5,333 Common Shares. Mr. Acosta-Rua is a principal of FondElec. Mr. Acosta-Rua disclaims beneficial
     interest in the shares held by FondElec.
11   Mr. Fucaraccio provides consulting services to Internexus.  Mr. Fucaraccio  disclaims beneficial interest in the shares held by
     Internexus,  including  options to acquire 5,333 Common Shares awarded to him (but assigned to Internexus)  under the Company's
     Director Stock Plan.
12   Mr.  Schiller is an officer of  Internexus.  Mr.  Schiller  disclaims  beneficial  interest  in the shares held by  Internexus,
     including options to acquire 5,333 Common Shares awarded to him (but assigned to Internexus) under the Company's Director Stock
     Plan.
13   Based on the matters described in footnotes 4 through 13; includes options and warrants to acquire 260,667 Common Shares.
14   Represents options to acquire Common Shares issued under the Company's Director Stock Plan.
</TABLE>


PART 2.

                MARKET FOR EQUITY AND RELATED SHAREHOLDER MATTERS

         There has been no  established  public  market for the  Common  Shares,
Series A Preferred  Shares,  or Series B Preferred  Shares of the  Company.  The
Company cannot predict the effect, if any, that future sales of shares of Common
Shares,  or Series B Preferred  Shares,  or the  availability of such shares for
sale,  will  have  at any  market  price  prevailing  from  time  to time on the
Company's  equity  securities.  Future  sales of  substantial  amounts  of stock
(whether  common or preferred)  could  adversely  affect any  prevailing  market
prices of the Company's outstanding equity securities.

         All of the  currently  issued and  outstanding  shares of the Company's
Common  Shares and  Series B  Preferred  Shares  were  issued by the  Company in
transactions  which the Company  believes  did not involve  unregistered  public
offerings.  The 1,000,000 Common Shares issued in connection with the Separation
and the Series A Preferred  Stock issued in connection with the formation of the
Company are  "restricted  securities"  but are  eligible  for sale in the public
market subject to the volume,  affiliate,  timing and manner of sale limitations
of Rule 144 promulgated under the Securities Act of 1933, as amended. The Series
B Preferred Shares  outstanding are currently  "restricted  securities," as that
term is defined in the federal  securities  laws,  and may not be resold  unless
registered  under the Securities Act of 1933, as amended,  or sold in connection
with an  exemption  therefrom,  including  Rule  144.  All or a  portion  of the
restricted  shares  may in the  future  become  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.

         The Company has previously  issued warrants,  which were not registered
under the federal or state  securities  laws in reliance  upon  exemptions  from
registration  contained  in those  laws.  The  warrants  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  hereof,  there are  approximately  440  holders  of the
outstanding  Common Shares and 9 holders of the  outstanding  Series B Preferred
Shares.  The Company has not declared or paid any cash dividends on any class of
its equity  securities.  The Company does not anticipate paying dividends on its
equity securities in the near future.


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           OF CERTAIN RELEVANT FACTORS

         The following  information should be read in conjunction with "Selected
Consolidated Financial Data" and the Company's Consolidated Financial Statements
and  notes  thereto  provided  elsewhere  in  this  report.   This  Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  and
other parts of this report may contain  forward-looking  statements that involve
risks and uncertainties.  The Company's actual results may differ  significantly
from the results  discussed  in such  forward-looking  statements.  Factors that
might cause such  differences  include,  but are not  limited to, the  Company's
history of unprofitability and the continuing  uncertainty of its profitability,
the Company's ability to develop and introduce new services, the consummation of
certain asset and  subscriber  acquisition  agreements to which the Company is a
party,  the  uncertainty of market  acceptance of the Company's new and existing
services,  the  Company's  reliance on  collaborative  partners,  the  Company's
limited  sales  and  marketing  experience,   risks  associated  with  obtaining
governmental  approvals  for the  Company's  services,  the  highly  competitive
industry  in which the  Company  operates  and the rapid  pace of  technological
change within that industry,  changes in or failure to comply with  governmental
regulations,  the Company's dependence on key employees and general economic and
business  conditions,  some or all of which may be  beyond  the  control  of the
Company.

Overview

         The Company was formed to provide  high  quality,  low-cost  integrated
communications  services using its own metropolitan  area networks.  The Company
intends to operate  primarily in recently  deregulated and high-growth  markets,
principally  in Central  America,  the Andean  region and  Mexico.  The  Company
currently  offers  customers   high-bandwidth,   high-speed  data   connections,
high-speed and dial-up Internet access,  voice and video services in a number of
its markets using an Internet  protocol-based  technology  platform and networks
that  employ  fiber-optic  and hybrid  fiber  coaxial  cable,  plus "last  mile"
high-band width fixed wireless systems.

         From the Company's  inception in 1995 until 1998,  its main  activities
consisted  of  acquiring  licenses  and  authorizations  in its  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 the Company's various networks.  During fiscal
1998,  the  Company  first  acquired  the  ability to  provide,  or  introduced,
significant bundled telecommunications services in its markets.

         Since its inception,  the Company has sustained net losses and negative
cash flow, both of which have been  significant.  The Company expects the losses
and negative  cash flow to continue  until it develops a customer base that will
generate sufficient revenues to fund its operating expenses. The Company expects
that its 1999 operating and net losses and negative  operating cash flow will be
greater  than in 1998 as it begins its first full year of  providing  commercial
services in its various markets. The Company also anticipates that the execution
of its business plan will result in a rapid expansion of its  operations,  which
may place a significant strain on the Company's management,  financial and other
resources.  The Company's ability to effectively manage the problems  associated
with this expansion will depend upon, among other things, its 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.  The Company's  inability or failure to
effectively manage these issues could result in significant subscriber turnover,
stagnant or decreasing  subscriber  growth,  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 the  Company's  business
operations    and   strategy    for   becoming   a   premier    facilities-based
telecommunications  provider in its various  markets.  For example,  the Company
utilizes, as part of its operating network, wireless technology. This technology
has been used by other telecommunications  providers for a significant period of
time,  but  the  Company's  point  to  multi-point   technology  has  only  been
commercially  used on a  limited  basis.  Although  the  Company  selected  that
technology  because it believes it  complements  the  wireline  technologies  it
otherwise  employs  in its  networks,  if that  technology  does not  perform as
expected  or provide the  advantages  that the Company  expects,  the  Company's
business,  financial  condition  and  the  results  of  its  operations  may  be
materially  and adversely  affected.  Further,  the Company  employs an IP-based
technology  platform that utilizes packet switching to transmit voice, video and
data  elements  over  the same  network.  The  Company  believes  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.  The  Company
believes 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 the Company's technology platform does not perform as expected
or provide the advantages the Company expects, its business, financial condition
and the  results  of its  operations  could  also be  materially  and  adversely
affected.

Accounting Treatment

         The Company's assets consist primarily of two groups--those  assets the
Company  acquired  as a result of its  formation,  and those it  acquired in its
transaction   with   TIC.   See   "Business   Properties-Legal   Formation   and
Development-Company  Formation." As a result of the TIC transaction,  the former
shareholders  of TIC obtained a  significant  portion of the voting power of the
combined  companies  on  a  common  share  equivalent  basis.  Accordingly,   in
conformance with generally accepted accounting principles (GAAP), the merger has
been  accounted  for  as  a  "reverse  acquisition."   Consistent  with  reverse
acquisition  accounting  treatment,  the financial  statements presented for the
fiscal year ended  December  31, 1996 are the  financial  statements  of TIC and
differ from the consolidated financial statements of Convergence Communications,
Inc. and its subsidiaries as previously  reported.  The  consolidated  financial
statements  presented  include the  operations  of TIC for the fiscal year ended
December 31, 1996 and the period January 1, 1997 through February 3, 1997 and of
Convergence Communications, Inc. and its subsidiaries for the period February 4,
1997 (the effective date of the TIC acquisition) to December 31, 1998.

Results of Operations

    Year ended December 31, 1998 compared to the year ended December 31, 1997

         The Company was in the development  stage at December 31, 1997.  During
the year  ended  December  31,  1998,  the  Company  completed  its  development
activities and commenced its planned principal operations.

         For the year ended  December  31,  1998,  the Company  had  revenues of
$3,113,482  as compared to $40,186 for the same period in 1997,  for an increase
of $3,073,296.  In accordance  with GAAP, the revenues  include the results from
the El Salvador  Entities  beginning  July 17, 1998,  the results from Inter@net
beginning  August 17, 1998,  and the results from CVV beginning  August 15, 1997
(with each starting date representing the acquisition date).

         The cost of service  increased  $1,711,085,  from $165,048 for the year
ended December 31, 1997 to $1,876,133 in 1998. The increase is primarily related
to the  additional  revenues  earned in 1998.  The  Company's  gross  margin was
$1,237,349 for the year ended December 31, 1998,  compared to ($124,862) for the
same period in 1997.

         Operating   expenses  for  the  year  ended   December  31,  1998  were
$11,859,251 compared to $3,791,607 for 1997, for an increase of $8,067,644. This
increase  was  primarily  due to an increase in general and  administrative  and
professional  fees  related to the  Company's  acquisitions  and addition of new
employees,  the  additional  depreciation  and  amortization  from the Company's
acquired  operations and the write-off of a portion of the Company's New Zealand
assets  associated  with a change in the Company's  business plan. The Company's
operating loss was $10,621,902 for the year ended December 31, 1998, compared to
$3,916,469 for the year ended December 31, 1997.

         Interest  income for the year ended  December  31,  1998 was  $268,996,
compared to $116,367 in 1997.  Interest expense decreased $130,015 from $807,203
for the year ended December 31, 1997 to $677,188 for the year ended December 31,
1998.  The  decrease was due  primarily  to  recording  of interest  expense for
warrants  issued below fair market value in 1997,  and was offset by an increase
in interest expense incurred by the Company under the Acquisition Debt.

         Minority  interest in loss of  subsidiaries  was  $799,298 for the year
ended  December  31, 1998,  compared to $13,011 for the year ended  December 31,
1997. The increase was due to the recording of the minority  interest for the El
Salvador Transaction and the additional issuance of shares of Chispa in December
1998.

         As a result of the foregoing, the Company's net loss for the year ended
December  31, 1998 was  $10,230,796,  compared to  $4,594,294  for 1997,  for an
increase of $5,636,502.

    Year ended December 31, 1997 compared to the year ended December 31, 1996

         For the year ended  December  31,  1997,  the Company  had  revenues of
$40,186 from the multi-channel video services provided in Caracas,  Venezuela by
CVV, which manages the Venezuelan network. In accordance with GAAP, the revenues
and expenses  for CVV are reported for the period  August 15, 1997 (the date the
Company acquired its initial 68.14% interest in CVV) to December 31, 1997. Prior
to 1997,  the  Company  did not have  revenues.  The cost of  service  for CVV's
revenues was $165,048 for the year ended December 31, 1997.

         Operating expenses for the year ended December 31, 1997 were $3,791,607
compared to $399,620 for 1996, for an increase of $3,391,987.  This increase was
primarily due to stock option  compensation  expense and incurred by the Company
in 1997 for options granted below fair value and  professional  fee expense,  an
increase in general and  administrative  and  professional  fees  related to the
acquisition  of the  Company's  Venezuelan  network  rights  and  the  Petrolera
Transaction and FondElec  Transaction,  and the  depreciation,  amortization and
lease expense from the Company's New Zealand assets and the  Venezuelan  assets.
The Company's  operating  loss was  $3,916,469  for the year ended  December 31,
1997, compared to $399,620 for the year ended December 31, 1996.

         Interest income for the year ended December 31, 1997 was $116,367.  The
Company had no interest income during 1996. Interest expense increased $784,255,
from $22,948 for the year ended December 31, 1996 to $807,203 for the year ended
December 31, 1997. The increase was due primarily to additional interest expense
incurred  by the  Company  under  the  promissory  notes the  Company  issued in
mid-1997,  which  were  repaid in  November  1997,  and the  warrants  issued in
connection with those notes, which were issued at a price below fair value.

         Minority  interest  in loss of  subsidiaries  was  $13,011 for the year
ended  December  31,  1997 . This loss  related  to the  Company's  New  Zealand
subsidiary, AITS. There was no minority interest prior to 1997.

         As a result of the foregoing, the Company's net loss for the year ended
December 31, 1997 was $4,594,294, compared to $422,568 for 1996, for an increase
of $4,171,726.

Liquidity and Capital Resources

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

         As of December 31, 1998, the Company had current assets of $10,126,717,
compared to $6,455,282 as of December 31, 1997,  for an increase of  $3,671,435.
The  increase in current  assets was  primarily  due to an increase in cash as a
result of the Notes,  and the  acquisition  of the  operations  of Inter@net and
Chispa.

         The Company had current  liabilities  of $14,096,138 as of December 31,
1998,  compared  to  $1,961,413  as of  December  31,  1997,  for an increase of
$12,134,725.  The increase in current  liabilities  was due to the assumption by
the Company of the current  liabilities  of  Inter@net  and Chispa,  the current
portion of debt  related to the issuance of notes in the  Inter@net  Transaction
and the El Salvador  Transaction  ("Acquisition  Debt"), an increase in accounts
payable for purchases an increase in related party accrued  consulting  fees and
an increase in due to  affiliates.  Long term debt increased  $14,216,203,  from
$1,130,660  at  December  31, 1997 to  $15,346,863  at December  31,  1998.  The
increase was due primarily to the Acquisition Debt,  foreign severance  accruals
and the issuance of the Notes.

         The Company's principal sources of funds are its available resources of
cash and cash  equivalents.  At December 31, 1998, the Company had cash and cash
equivalents  of $4.3 million.  In early January,  1999, the Company  received an
additional $5 million in conjunction with the Notes.

         The cash flow  generated  by the  Company's  operations  and  projected
network  launches  will not be  sufficient  to  cover  the  Company's  projected
operating  expenses,  general and  administrative  expenses and start-up  costs.

         The ability of the Company to provide the services  contemplated by its
business  plan  will  be  dependent  upon  the  Company  obtaining   substantial
additional  sources of funds to finance  its  business  plan.  While the Company
believes that it may be able to obtain financing  through  additional  equity or
debt financing or otherwise,  no assurances can be given that any such financing
will be available, or that the Company will be able to obtain any such financing
on favorable terms.

         The Company  currently  estimates that it will require  between $25 and
$30  million to build out and  launch  its  operations  in  accordance  with its
business  plans during 1999. The Company has the ability to moderate its capital
spending  and  losses by varying  the number and extent of its market  build out
activities  and the  services it offers in its various  markets.  If the Company
elects to slow the speed (or  narrows  the  focus)  of its  business  plan,  the
Company will be able to reduce its capital  requirements and losses.  The actual
costs of building out and  launching  the  Company's  markets  would depend on a
number of  factors,  however,  including  the  Company's  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 the Company may offer,  regulatory  changes and changes in  technology.  In
addition,  actual  costs and  revenues  could vary from the  amounts the Company
expects or  budgets,  possibly  materially,  and such  variations  are likely to
affect how much  additional  financing the Company will need for its operations.
Accordingly, there can be no assurance that the Company's actual financial needs
will not exceed the  anticipated  amounts  available to it (including  from new,
third parties) described above.

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

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

    -    The Company recently  completed a debt financing  pursuant to the terms
         of the  Notes.  The Notes,  represented  by  subordinated  exchangeable
         promissory  notes of the Company in the  original  aggregate  principal
         amount  of $10  million,  were  acquired  by  FondElec  and  Internexus
         pursuant to the terms of a note purchase  agreement  dated December 23,
         1998.  Internexus  funded its portion of its  purchase of the notes ($5
         million)  in early  January  1999.  The notes bear  interest at 10% per
         annum, are due on December 23, 2001, and include warrants for shares of
         the Company's common stock while the notes are  outstanding.  The Notes
         are  exchangeable,  at the  election  of the  Company,  for shares of a
         to-be-designated  series of preferred  stock  acceptable in content and
         form to Internexus  and FondElec if third parties  purchase at least an
         additional   $10  million  of  that  preferred   stock.   See  "Certain
         Transactions."

    -    The Company is currently in  negotiations  to obtain third party equity
         and debt financing for its activities and management believes that this
         funding can be obtained under satisfactory terms. While there can be no
         assurance  that the  Company  will secure  such  financing,  management
         believes that this is achievable prior to June 30, 1999.

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

    -    Management has  negotiated an agreement with a significant  stockholder
         to support  its  working  capital  needs by  refinancing  approximately
         $5,000,000 of the Company's notes payable due on February 17, 1999 on a
         longer  term  basis.  Additionally,  to the extent  that the  Company's
         working capital is  insufficient to meet its remaining  $3,467,654 note
         repayment  due in May 1999,  the  stockholder  has committed to advance
         additional capital to fund the required payment.

The Year 2000 Issue

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

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

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

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


                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Paragraph  16(a) of the Securities  Exchange Act of 1934 (the "Exchange
Act") requires the Company's  executive officers and directors,  and persons who
own  10% or  more of a  registered  class  of the  Company's  equity  securities
(collectively, "Reporting Persons"), to file reports of ownership and changes in
ownership  with the  Securities  and Exchange  Commission if the Company and its
equity  securities  meet certain  requirements.  The Company has not received or
reviewed any filings under Section 16(a) for any Reporting Person, including any
filing on Forms 3, 4 or 5. The persons  constituting  the Reporting  Persons are
described in the section entitled "Principle Stockholders."

                               REPORTS ON FORM 8-K

         The registrant  has filed the following  reports on Form 8-K during the
period covered by this report:

         Report on Form 8-K dated September 1, 1998, relating to the acquisition
of the Company's  interest in Intra@net  (amended October 5, 1998 to reflect the
filing of financial statements)
         Report on Form 8-K dated October 23, 1998,  relating to the resignation
of certain directors (amended October 23, 1998)

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                                     68
            Consolidated Balance Sheets                                      69
            Consolidated Statements of Operations                            70
            Consolidated Statements of Stockholders' Equity                  71
            Consolidated Statements of Cash Flows                            72
            Notes to Consolidated Financial Statements                       73


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, formerly Wireless Cable & Communications,
Inc.,  (the  "Company")  as of  December  31,  1998 and  1997,  and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years ended December 31, 1998, 1997 and 1996. These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  financial  position  of the  Company  at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years  ended  December  31,  1998,  1997 and 1996,  in  conformity  with
generally accepted accounting principles.

The Company was in the development  stage at December 31, 1997.  During the year
ended December 31, 1998, the Company  completed its  development  activities and
commenced its planned principal operations.




DELOITTE & TOUCHE LLP

Salt Lake City, Utah
April 14, 1999




<PAGE>

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

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
-------------------------------------------------------------------------------------------------------------------------
                                                                                        December 31,         December 31,
                                                                                           1998                 1997
                                                                                     ---------------      ---------------
<S>                                                                                  <C>                  <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                           $ 4,315,281          $ 6,171,515
    Accounts receivable - net                                                               432,868                9,754
    Note proceeds due from affiliate (Note 9)                                             5,000,000                    -
    Due from affiliates                                                                           -               36,950
    Inventory (Note 2)                                                                      205,408               32,074
    Prepaid license fees (Note 2)                                                            57,359              186,982
    Other current assets                                                                    115,801               18,007
                                                                                     ---------------      ---------------
                    Total current assets                                                 10,126,717            6,455,282
INVESTMENT IN CENTURION (Note 2)                                                            845,955              845,955
PROPERTY AND EQUIPMENT - net (Notes 2 and 4)                                              8,524,521              421,944
INTANGIBLE ASSETS - net (Note 5)                                                         22,650,040            9,723,754
OTHER ASSETS                                                                                325,811               42,171
                                                                                     ---------------      ---------------
TOTAL ASSETS                                                                           $ 42,473,044         $ 17,489,106
                                                                                     ===============      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Notes payable (Note 9)                                                              $ 8,676,722            $ 350,000
    Accounts payable and accrued liabilities (Note 6)                                     3,976,651              801,855
    Foreign bank lines of credit outstanding (Note 9)                                        27,281                    -
    Accrued consulting fees (payable to related parties) (Note 7)                           340,629              100,000
    Due to affiliates (Note 7)                                                            1,074,855              709,558
                                                                                     ---------------      ---------------
                    Total current liabilities                                            14,096,138            1,961,413
LONG-TERM LIABILITIES:
    Long-term debt (payable to related parties) (Note 7)                                  1,224,504            1,130,660
    Subordinated exchangeable promissory notes (payable to related parties) (Note 9)     10,000,000                    -
    Notes payable (Note 9)                                                                3,987,268                    -
    Accrued foreign severance                                                               135,091                    -
                                                                                     ---------------      ---------------
                    Total long-term liabilities                                          15,346,863            1,130,660
MINORITY INTEREST IN SUBSIDIARIES                                                         2,345,517               18,067
                                                                                     ---------------      ---------------
                    Total liabilities                                                    31,788,518            3,110,140
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS' EQUITY  * (Notes 1 and 10):
    Series "A" Preferred stock; $0.001 par value; 0 shares authorized, issued
        and outstanding in 1998; 4,250,000 authorized: 839,526 shares issued
        and outstanding in 1997 (10-1 liquidation preference over common).                        -                  839
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:
        101,374 shares issued and outstanding in 1998 and 1997.                                 101                  101
    Common stock; $0.001 par value; 100,000,000 shares authorized:
        11,738,277 and 1,744,999 shares issued and outstanding in
        1998 and 1997, respectively.                                                         11,738                1,745
    Additional paid-in capital                                                           26,179,739           19,632,022
    Accumulated deficit                                                                 (15,486,537)          (5,255,741)
    Accumulated other comprehensive loss                                                    (20,515)                   -
                                                                                     ---------------      ---------------
                    Total stockholders' equity                                           10,684,526           14,378,966
                                                                                     ---------------      ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $ 42,473,044         $ 17,489,106
                                                                                     ===============      ===============

*  Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

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

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

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------------------------------------------------------------------------
                                                                    Year Ended          Year Ended       Year Ended
                                                                   December 31,        December 31,     December 31,
                                                                       1998              1997               1996
                                                                  ---------------    --------------    ---------------
<S>                                                               <C>                <C>               <C>
NET REVENUES                                                         $ 3,113,482          $ 40,186                $ -
COST OF SERVICE                                                        1,876,133           165,048                  -
                                                                  ---------------    --------------    ---------------
GROSS MARGIN                                                           1,237,349          (124,862)                 -
OPERATING EXPENSES:
     Professional fees (Note 11)                                       2,270,588         1,200,102            176,488
     Depreciation and amortization (Notes 2, 4 and 5)                  2,864,789           619,182                  -
     Leased license expense (Note 13)                                    708,912           116,161                  -
     General and administrative                                        5,261,916           893,424            223,132
     Stock option compensation expense (Note 11)                         753,046           962,738                  -
                                                                  ---------------    --------------    ---------------
                      Total                                           11,859,251         3,791,607            399,620
                                                                  ---------------    --------------    ---------------
OPERATING LOSS                                                       (10,621,902)       (3,916,469)          (399,620)
OTHER INCOME AND (EXPENSES):
     Interest income                                                     268,996           116,367                  -
     Interest expense (Notes 7 and 9)                                   (677,188)         (807,203)           (22,948)
                                                                  ---------------    --------------    ---------------
                      Total                                             (408,192)         (690,836)           (22,948)
                                                                  ---------------    --------------    ---------------
NET LOSS BEFORE MINORITY INTEREST                                    (11,030,094)       (4,607,305)          (422,568)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES (Note 1)                       799,298            13,011                  -
                                                                  ---------------    --------------    ---------------
NET LOSS                                                           $ (10,230,796)     $ (4,594,294)        $ (422,568)
                                                                  ===============    ==============    ===============

Net loss per basic common share* (see Note 2)                            $ (0.87)          $ (0.57)           $ (0.99)
                                                                  ===============    ==============    ===============
Net loss per diluted common share* (see Note 2)                          $ (0.87)          $ (0.57)           $ (0.99)
                                                                  ===============    ==============    ===============

Weighted-average common shares*
     Basic                                                            11,736,927         8,044,827            428,571
                                                                  ===============    ==============    ===============
     Diluted                                                          12,482,241         8,584,532            428,659
                                                                  ===============    ==============    ===============


* Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders
     on August 17, 1998 and the adoption of Statements of Financial Accounting Standards (SFAS)
     No. 128, "Earnings Per Share," effective December 31, 1997.

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, 1998, 1997, AND 1996
--------------------------------------------------------------------------------------------------------------------------

                                                                  Series "A" Preferred Stock    Series "B" Preferred Stock
                                                                  --------------------------    --------------------------
                                                       Total         Shares *     Amount           Shares *     Amount
                                                    ------------    ----------  ---------         ----------  ---------
<S>                                                 <C>             <C>         <C>               <C>         <C>
BALANCE, DECEMBER 31, 1995                           $ (238,450)

Net loss for the year ended December 31, 1996          (422,568)
                                                    ------------    ----------  ---------         ----------  ---------

BALANCE, DECEMBER 31, 1996                             (661,018)

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

    Addition of CCI common stock                         86,990

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

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

Issuance of warrants below fair value                   657,143

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

Issuance of options for common shares and
    Series "A" Preferred shares below fair value      1,479,074

Net loss for the year ended December 31, 1997        (4,594,294)
                                                    ------------     ----------  ---------          ----------  ---------

BALANCE, DECEMBER 31, 1997                           14,378,966       839,526        839             101,374        101

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

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

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

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

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

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

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

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

*  Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

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

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
-------------------------------------------------------------------------------------------------------------------------
                                                       Common Stock          Additional                      Accumulated
                                                   ---------------------      Paid-in         Accumulated   Other Compre-
                                                   Shares *     Amount        Capital           Deficit      hensive Loss
                                                   ----------   --------    -------------    ------------   ------------
<S>                                                <C>          <C>         <C>              <C>            <C>
BALANCE, DECEMBER 31, 1995                           428,571    $   429                          (238,879)

Net loss for the year ended December 31, 1996                                                    (422,568)
                                                   ----------   --------    -------------     ------------   ------------

BALANCE, DECEMBER 31, 1996                           428,571        429                          (661,447)

Reverse acquisition of TIC:
    Exchange of TIC common shares for CCI
    Series "A" Preferred shares                     (428,571)      (429)        $ 14,315

    Addition of CCI common stock                   1,041,494      1,041           85,949

Exchange of CVV common stock for CCI common
    shares and Series "B" Preferred shares           450,563        451        7,095,948

Issuance of CCI common stock and Series
    "A" Preferred shares for cash                    228,658        229        9,999,621

Issuance of warrants below fair value                                            657,143

Issuance of CCI common stock and Series
    "A" Preferred shares for cash                     24,284         24          299,972

Issuance of options for common shares and
    Series "A" Preferred shares below fair value                               1,479,074

Net loss for the year ended December 31, 1997                                                  (4,594,294)
                                                   ----------   --------    -------------     ------------   ------------

BALANCE, DECEMBER 31, 1997                         1,744,999      1,745       19,632,022       (5,255,741)

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

      Total comprehensive loss                             -          -                -      (10,230,796)       (20,515)

Issuance of CCI common stock and Series
    "A" Preferred shares for cash                    600,504        600        4,955,935

Conversion of Series "A" Preferred shares into
    common shares                                  9,307,060      9,307           (8,377)

Exchange of Telecom common stock for CCI
    common shares                                     85,714         86          599,914

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

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

BALANCE, DECEMBER 31, 1998                        11,738,277   $ 11,738     $ 26,179,739    $ (15,486,537)     $ (20,515)
                                                   ==========   ========    =============    ============    ============

*  Retroactively restated for the 1 to 3.5 reverse stock split approved by the Company's shareholders on August 17, 1998.

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
--------------------------------------------------------------------------------------------------------------------------
                                                                            Year Ended       Year Ended       Year Ended
                                                                            December 31,     December 31,     December 31,
                                                                              1998             1997             1996
                                                                          --------------   -------------    --------------
<S>                                                                       <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                              $ (10,230,796)   $ (4,594,294)       $ (422,568)
    Adjustments to reconcile net loss to net cash used in
        development activities:
           Depreciation and amortization                                      2,864,789         619,182                 -
           Minority interest in loss of subsidiaries                           (799,298)        (13,011)                -
           Provision for impairment of long-lived assets                        545,055               -                 -
           Issuance of options for common shares below fair value             1,000,245       1,479,074                 -
           Amortization of discount on notes payable                            554,731               -                 -
           Issuance of warrants below fair value                                      -         657,143                 -
           Change in assets and liabilities, net of effects
             of acquisitions of Telecom and interest in Chispa:
              Accounts receivable - net                                         301,927             959                 -
              Due from affiliates                                                42,919               -                 -
              Inventory                                                         (56,887)         33,225                 -
              Prepaid license fees                                               (9,500)        (11,769)          (13,778)
              Other current assets                                             (247,942)        272,767                 -
              Other assets                                                     (489,798)          1,258                 -
              Accounts payable and accrued liabilities                        1,536,134        (473,491)          195,206
              Accrued consulting fees                                           240,629               -                 -
              Due to affiliates                                                 348,689               -                 -
              Accrued foreign severance                                         115,425               -                 -
                                                                          --------------   -------------    --------------
                    Net cash used in operating activities                    (4,283,678)     (2,028,957)         (241,140)
                                                                          --------------   -------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investment in Centurion                                                           -        (805,955)                -
    Reverse acquisition of WCCI                                                       -          56,582                 -
    Acquisition of Chispa (net of cash acquired)                             (2,248,641)              -                 -
    Acquisition of Telecom (net of cash acquired)                              (961,412)              -                 -
    Acquisition of CVV (net of cash acquired)                                         -        (387,318)                -
    Purchase of minority interest in CVV                                              -        (800,000)                -
    Purchases of equipment                                                   (4,546,900)       (128,779)                -
                                                                          --------------   -------------    --------------
                    Net cash used in investing activities                    (7,756,953)     (2,065,470)                -
                                                                          --------------   -------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                                    3,161,661       1,967,945                 -
    Proceeds from issuance of Series A preferred stock                        1,794,965       8,332,055                 -
    Increase in minority interest from issuance of subsidiary common stock      500,000               -                 -
    Proceeds from related party note                                          5,000,000
    Proceeds from related party borrowings                                       98,286         919,333           235,033
    Payments on related parties borrowings                                            -        (962,293)                -
    Proceeds from promissory notes                                                    -       2,300,000                 -
    Payments on promissory notes                                               (350,000)     (2,300,000)                -
                                                                          --------------   -------------    --------------
                    Net cash provided by financing activities                10,204,912      10,257,040           235,033
                                                                          --------------   -------------    --------------

EFFECT OF EXCHANGE RATES ON CASH                                                (20,515)              -                 -
                                                                          --------------   -------------    --------------
NET INCREASE (DECREASE) IN CASH                                              (1,856,234)      6,162,613            (6,107)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                              6,171,515           8,902            15,009
                                                                          --------------   -------------    --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $ 4,315,281     $ 6,171,515           $ 8,902
                                                                          ==============   =============    ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the year for interest                                     $ 12,143        $ 30,996               $ -
                                                                          ==============   =============    ==============

See Notes 1, 3 and 14 to the consolidated financial statements for other non-cash financing and investing activities.

See notes to consolidated financial statements.
</TABLE>

<PAGE>

CONVERGENCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.       ORGANIZATION AND BUSINESS COMBINATION

         Business   Description   -   Convergence   Communications,   Inc.  (the
         "Company"), formerly Wireless Cable & Communications, Inc. ("WCCI"), is
         a  facilities-based  provider  of  high-quality,   low-cost  integrated
         communications services through its own metropolitan area networks. The
         Company  operates in  recently  deregulated  and high  growth  markets,
         principally in Central American and the Andean region. The Company owns
         (i) a 44.03% interest in Chispa Dos, Inc. ("Chispa") which is a holding
         company for two  subsidiaries  that  provide  multi-channel  television
         services  to  over  26,000  subscribers  in  El  Salvador  and  another
         subsidiary that recently began providing  Internet  services (under the
         terms of the  Company's  acquisition  of its interest in Chispa Dos, it
         also acquired operating and management  control of the entity);  (ii) a
         100% interest in Interamerican  Telecom,  Inc.,  ("Telecom") the parent
         company of Interamerican Net de Venezuela,  S.A. ("Inter@net") which is
         providing  Internet  services to  approximately  3,400  subscribers  in
         Venezuela;  and (iii) a 78.14% interest in Caracas Viva Vision TV, S.A.
         ("CVV"),  a local  multi-point  distribution  service ("LMDS") wireless
         communications  system in Venezuela that currently  provides service to
         approximately 695 subscribers.

         In addition,  the Company has  interests in seven other  entities  that
         either hold the right to operate wireless telecommunications systems or
         have the right to manage and commercialize wireless  telecommunications
         rights  held by other  parties:  (i) an  8.46%  interest  in  Centurion
         Comunicaciones,  S.A.  ("Centurion"),  the  entity  that holds the LMDS
         rights in  Venezuela;  (ii) a 94.9%  interest in  Auckland  Independent
         Television  Services,  Ltd.  ("AITS"),  which  holds  license and lease
         rights in four multi-channel, multi-point distribution service ("MMDS")
         channels in three New Zealand cities; (iii) a 100% interest in Wireless
         Communications  Holding  -  Guatemala,  S.A.  ("WCH  -  Guatemala"),  a
         corporation which has been formed to acquire and operate LMDS rights in
         Guatemala;  (iv) a 100%  interest in Sociedad  Television  Interactiva,
         S.A.  ("TISA"),  a corporation that has the right to manage and operate
         an  LMDS  system  in  Costa  Rica;  (v)  a  90%  interest  in  Wireless
         Communications  Panama,  S.A.  ("WC -  Panama"),  which will act as the
         operating company for an LMDS system in Panama; (vi) an 80% interest in
         WCI de Argentina ("WCIA"), which holds a value added license to provide
         telecommunications  services in Argentina; and (vii) a 100% interest in
         Transworld Wireless Television, Inc. ("TWTV"), a corporation that holds
         four MMDS channels and a leased transmitter in Park City, Utah.

         The  Company  has also  signed a  Memorandum  of  Understanding  with a
         Bahamas  corporation  for the  purchase  of 80% of three  companies  in
         Guatemala  providing  telecommunications  services,  including Internet
         services, to approximately 12,000 subscribers (see update in Note 16).

         Organization  - On  January  31,  1997,  the  Company  entered  into  a
         transaction with Telecom Investment  Corporation  ("TIC"),  pursuant to
         which TIC merged with a newly  formed  wholly-owned  subsidiary  of the
         Company,  NewWCCI,  Inc.  (the  "Merged  Companies").  The  merger  was
         effective  February 4, 1997. Under the terms of the merger,  the former
         shareholders  of TIC received  685,063  shares of the  Company's  newly
         designated  Series "A" Preferred  Shares and for state law purposes TIC
         became a  wholly-owned  subsidiary  of the Company.  As a result of the
         merger, the former shareholders of TIC obtained  approximately 87.7% of
         the voting power of the Merged  Companies on a common share  equivalent
         basis  (as  of  February  4,  1997).   Generally  accepted   accounting
         principles typically require that the company whose shareholders retain
         the majority voting interest in the combined business be treated as the
         acquirer  for  accounting  purposes.  Accordingly,  the merger has been
         accounted for as a "reverse  acquisition"  whereby TIC is considered to
         have  acquired  (as of February 4, 1997) an 87.7%  interest on a common
         share  equivalent  basis in the  Company  using  the  purchase  method.
         However,  the Company  remains the legal entity and the  Registrant for
         Securities and Exchange Commission reporting purposes.

         Consistent  with the  reverse  acquisition  accounting  treatment,  the
         financial  statements  presented  through  December  31,  1997  are the
         financial statements of TIC and differ from the consolidated  financial
         statements of the Company and its subsidiaries as previously  reported.
         The consolidated  financial statements presented include the operations
         of TIC through February 3, 1997 and of the Company and its subsidiaries
         from  February  4,  1997  (effective  date  of  the   acquisition)  and
         afterward.

         Generally  accepted  accounting  principles require that the assets and
         liabilities  of the Company  (the legal  acquirer)  be recorded at fair
         value at the date of the merger. Based on management's  estimates,  the
         fair value of the Company was not significantly different than its book
         carrying  value.  Therefore,  the assets and liabilities of the Company
         have been recorded at their carryover book value as of February 4, 1997
         (the effective  date of the merger) to reflect the reverse  acquisition
         of the Company as follows:

         Current assets (including cash of $56,582)            $         217,017
         License rights                                                  913,500
         Equipment (net)                                                     217
         Other long term assets                                          577,347
         Current liabilities                                           (463,191)
         Long-term debt                                              (1,126,823)
         Minority interest                                              (31,077)
                                                               -----------------
         Stockholders' equity (net)                            $          86,990
                                                               =================

         Pro forma  consolidated  results of  operations  of TIC,  including the
         Company and subsidiaries from the date of merger, as though the reverse
         acquisition had occurred at the beginning of the periods presented, are
         $4,645,113  and $1,005,584 of net loss for the years ended December 31,
         1997 and 1996, respectively.

         Development  Stage Entity - The Company was in the development stage at
         December 31, 1997. During the year ended December 31, 1998, the Company
         completed  its   development   activities  and  commenced  its  planned
         principal operations.

         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.

         Since its inception,  the Company has sustained net losses and negative
         cash flow,  due  primarily to start-up  costs,  legal and  professional
         expenses,  interest  expense on debt and charges for  depreciation  and
         amortization   and  other  costs  relating  to  its   acquisition   and
         development  of its  business.  The  Company  expects  to  continue  to
         experience  negative cash flow through at least 2000,  and may continue
         to do so thereafter while it develops and expands its business, even if
         individual systems of the Company become profitable.

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

         -    The Company is  currently  in  negotiations  to obtain third party
              equity  and  debt  financing  for its  activities  and  management
              believes  that this  funding  can be obtained  under  satisfactory
              terms.  While  there can be no  assurance  that the  Company  will
              secure such financing, management believes that this is achievable
              prior to June 30, 1999.
         -    Management is  undertaking  actions  designed to conserve cash and
              control  costs as they  pursue  additional  financing  and capital
              resources.
         -    Management   has   negotiated  an  agreement  with  a  significant
              stockholder  to support its working  capital needs by  refinancing
              approximately  $5,000,000  of the  Company's  notes payable due on
              February  17, 1999 on a longer term  basis.  Additionally,  to the
              extent that the Company's  working capital is insufficient to meet
              its  remaining  $3,467,654  note  repayment  due in May 1999,  the
              stockholder  has committed to advance  additional  capital to fund
              the required payment.

         The Company's  continuation  as a going  concern is dependent  upon its
         ability  to  generate  a cash flow  contribution  and  secure  adequate
         financing or  additional  equity,  and  ultimately to achieve cash flow
         positive   operations  in  order  to   satisfactorily   meet  its  debt
         obligations.  The consolidated  financial statements do not include any
         adjustments that might result from the outcome of these uncertainties.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of  Consolidation - The  consolidated  financial  statements
         include the accounts of the Company,  its majority-owned  subsidiaries,
         and  Chispa,  a minority  owned  subsidiary  of which the  Company  has
         operating  control and a majority of the Board of Directors  seats. All
         significant intercompany accounts and transactions have been eliminated
         in consolidation.

         Foreign  Currency  Translation  - All  of the  Company's  subsidiaries,
         except for CVV and  Inter@net,  operate using the local currency as the
         functional currency.  Accordingly,  all assets and liabilities of these
         subsidiaries,  except for CVV and Inter@net,  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.

         Because the  Venezuelan  bolivar is  considered  a highly  inflationary
         currency,  CVV and  Inter@net  use the U.S.  dollar  as the  functional
         currency.   Accordingly,  assets  and  liabilities  are  translated  at
         period-end  exchange  rates,except for inventories and property,  plant
         and equipment,  which are translated at historical rates.  Revenues and
         expenses are translated at average  exchange rates in effect during the
         period, except for costs related to balance sheet items, which are held
         and translated at historical rates.  Foreign currency translation gains
         and losses from CVV and  Inter@net are included in expenses as they are
         incurred and were not  material  for the years ended  December 31, 1998
         and 1997.

         Use of Estimates in Preparing Financial Statements - The preparation of
         financial  statements in conformity with generally accepted  accounting
         principles  requires  management to make estimates and assumptions that
         affect the reported amounts of assets and liabilities and disclosure of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.

         Recognition   of   Revenues,   Costs  and   Expenses  -  Revenues   for
         telecommunications and multi-channel television services are recognized
         in the  period  during  which  the  services  are  provided.  Costs and
         expenses are recorded on the accrual basis.

         Inventories -  Inventories  of  subscriber  installation  materials and
         subscriber  converter  boxes are stated at the lower of average cost or
         market.

         Prepaid License Lease Fees - Prepaid license lease fees are prepayments
         of annual  license  or lease fees  relating  to the  Company's  license
         rights and are expensed over the annual license or lease period.

         Investment  in  Centurion  -  The  Company  uses  the  cost  method  of
         accounting for its investment in Centurion as it holds less than 20% of
         the  voting  shares of the  entity and the  Company  does not  exercise
         significant  influence.  As of December 31, 1998 and 1997,  the Company
         had invested a total of $845,955 for an 8.46% interest in Centurion.

         Property and Equipment - Equipment is stated at cost.  Depreciation  is
         computed using the  straight-line  method over the expected useful life
         of the assets as follows:

                                                                 Life in years
                                                                 ---------------
              Buildings and improvements                            20 years
              Telecommunications equipment                        5 - 10 years
              Subscriber equipment                                 2 - 5 years
              Machinery and equipment                              2 - 5 years
              Furniture and equipment                             2 - 10 years
              Vehicles and tools                                  5 - 10 years

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

         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.

         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.

         After completing a review of the Company's business plan, including the
         plans for the New Zealand  prepaid and intangible  assets,  the Company
         determined that it should maintain its current focus on the acquisition
         and development of Latin American  assets and businesses.  Based on its
         revised business plan, the Company further  determined that it would be
         in its best  interest  to search  for a joint  venture  partner  in New
         Zealand to develop the Company's New Zealand  license  rights or seek a
         purchase of the New Zealand prepaid and intangible  assets.  Due to the
         uncertainty  of the  full  recoverability  of the New  Zealand  assets,
         management recorded an impairment of $545,055 to leased license expense
         for the year ended December 31, 1998.

         Fair  Value  of  Financial   Instruments  -  The  Company's   financial
         instruments,   when  valued  using  market  interest  rates,   are  not
         materially  different  from the amounts  presented in the  consolidated
         financial statements.

         Comprehensive  Loss - Effective  January 1, 1998,  the Company  adopted
         Statements  of  Financial   Accounting   Standards  ("SFAS")  No.  130,
         "Reporting  Comprehensive Income", and reclassified  comprehensive loss
         for 1998 to conform  with SFAS No. 130.  This  statement  requires  the
         Company to display an amount  representing total comprehensive loss for
         each applicable period.  Accumulated other  comprehensive loss consists
         entirely of foreign currency translation  adjustments.  The Company had
         no components of other  comprehensive  loss during 1997 or 1996 and is,
         therefore, not required to report comprehensive loss for those periods.

         Segment Reporting - Effective January 1, 1998, the Company adopted SFAS
         No.  131,  "Disclosures  About  Segments of an  Enterprise  and Related
         Information".  The Company  reviewed its operations in accordance  with
         SFAS No. 131 and  determined  that there were no  reportable  operating
         segments for the year ending December 31, 1998.

         Reclassifications  - Certain  reclassifications  of previously reported
         1997  and  1996   amounts  have  been  made  to  conform  to  the  1998
         classifications.

3.       ACQUISITIONS

         Inter@net  Transaction - On August 17, 1998 the Company acquired all of
         the  outstanding  stock  of  Telecom  for a  total  purchase  price  of
         approximately $2.4 million,  including certain shareholder  liabilities
         assumed in connection with the transaction  ("Inter@net  Transaction").
         The  purchase  price  consisted  of  approximately  $450,000  in  cash,
         $800,000 in promissory  notes (one  promissory note for $200,000 due on
         August 17,  1999,  and a second  promissory  note for  $600,000  due on
         August 17, 2000) and 85,714 of the Company's common shares. The parties
         to the  Inter@net  Transaction  valued the  Company's  common shares at
         $600,000.  The Company also paid  approximately  $550,000 in connection
         with the acquisition for the purpose of paying off debt owed by Telecom
         to its former  shareholders.  Approximately  $600,000  of the  purchase
         price will be held in escrow for two years to insure  the  accuracy  of
         Telecom's and the selling shareholders'  representations  regarding the
         business of Inter@net, Telecom's wholly-owned subsidiary.

         Inter@net is an Internet service provider in Venezuela. Inter@net holds
         two concessions  from the Venezuelan  government.  The first concession
         permits Inter@net to provide value-added  services throughout Venezuela
         and the second  concession  allows it to provide  private data services
         networks throughout Venezuela. Inter@net provides its Internet and data
         services  through a system owned by the state-owned  telephone  service
         provider.

         The following table shows the non-cash investing activities  associated
         with the Inter@net Transaction:

<TABLE>
<CAPTION>
         SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITES:
            Acquisition of Telecom (August 17, 1998)
                 <S>                                                         <C>
                 Fair value of assets acquired,  including intangible assets
                    and equipment (net of cash acquired)                     $        2,836,402
                 Fair value of liabilities assumed                                    (520,083)
                 Common stock issued                                                  (600,000)
                 Notes payable                                                        (754,907)
                                                                                ----------------
                    Cash paid (net of cash acquired)                         $          961,412
                                                                                ================
</TABLE>
         El Salvador  Transaction - Effective  July 17, 1998 the Company  (49.5%
         ownership) and FondElec  Essential  Services  Growth Fund,  L.P. (50.5%
         ownership)  (together  with  its  affiliates,   ("FondElec")  acquired,
         through  Chispa (a  newly-formed  joint venture  corporation),  all the
         outstanding stock of two El Salvadorian  corporations,  Cablevisa, S.A.
         ("Cablevisa") and Multicable,  S.A. ("Multicable")  (collectively,  the
         "El  Salvador  Companies")  from Star  Industries,  S.A.,  a Panamanian
         corporation ("Star") (the "El Salvador  Transaction").  The El Salvador
         Companies own and operate multi-channel subscription television systems
         in  the  Republic  of  El  Salvador.  The  El  Salvador  Companies  had
         approximately  24,000  subscribers on the date of the acquisition.  The
         two  companies  provide  their  multi-channel  subscription  television
         services  through their own networks of  fiber-optic  and  copper-based
         cable.  The El Salvador  Companies  have also been granted the right to
         use 200 MHz of El Salvador's 2.5 GHz wireless communications  frequency
         band.

         Under  the  terms of the  parties'  agreements  regarding  Chispa,  the
         Company  has 56.8%  voting  control of Chispa,  holds a majority of the
         Board of  Directors  seats for  Chispa,  and has the  right to  acquire
         FondElec's  interest in Chispa under  certain  conditions.  The Company
         paid  approximately  $2.5  million for its  interest in Chispa,  and is
         required to make additional capital  contributions to Chispa (either in
         the form of debt or  equity) to fund its pro rata  portion of  Chispa's
         operating  costs and deferred  purchase price payments for the stock of
         Cablevisa and Multicable,  as described  below. If the Company fails to
         make those payments, its interest in Chispa is subject to dilution.

         The purchase  price for the El Salvador  Companies was $16.91  million.
         Approximately  $4.77 million of the purchase  price was paid in cash at
         closing,  and the balance of the purchase price  (approximately  $12.14
         million) was paid through Chispa's  delivery of three promissory notes.
         The  first  promissory  note,  in  the  original  principal  amount  of
         approximately  $5.2 million,  was due and payable on February 17, 1999.
         This  note  was  paid in  February  1999  (see  Note  16).  The  second
         promissory  note,  in the original  principal  amount of  approximately
         $3.47 million, is due and payable on May 17, 1999. The final promissory
         note, in the original principal amount  approximately $3.47 million, is
         due on July 17,  2000.  The  amounts  due under  the  first and  second
         promissory  notes  are  non-interest  bearing  (except  in the event of
         default by Chispa,  in which case the notes will bear  interest  at the
         rate of 7% per annum from the date of  default),  but the  amounts  due
         under the third  promissory  note bear  interest  at the rate of 7% per
         annum.  If Chispa  defaults on the payment of any amounts due under any
         of the notes,  Star may accelerate all remaining  amounts due under all
         of the notes. In connection with the closing, Chispa also paid $428,339
         of outstanding debt of the El Salvador  Companies to third party banks.
         The  amortization of the discount on notes payable resulted in interest
         expense of $542,565 for the year ended December 31, 1998. (See Note 9).

         The payment obligations under the first and second promissory notes are
         secured by a pledge of a portion of the  shares  acquired  by Chispa in
         the  El  Salvador  Companies  and  a  mortgage  over  the  El  Salvador
         Companies'  real property.  The amounts due under the third  promissory
         note are unsecured,  but in connection  with the  transaction  FondElec
         delivered  a  letter  to  Star  evidencing  its  agreement  to  provide
         sufficient  capital (either in the form of debt or equity) to Chispa to
         pay the amounts due under the second and third  promissory  notes.  The
         security  interest  encumbering  the pledged  shares and the  mortgaged
         property  will be released as Chispa  makes  payment of portions of the
         purchase price. Under the terms of the promissory notes,  Chispa is not
         required to make any payments if it has a claim for indemnification for
         any breach by Star or its principals of any representation, warranty or
         covenant  relating to the transaction,  unless an arbitration panel has
         ruled that the claim for  indemnification  is without  merit or Star or
         its principals have fully indemnified Chispa for the breach.

         The following table shows the non-cash investing activities  associated
         with the El Salvador Transaction:

<TABLE>
<CAPTION>
         SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITES:
              Acquisition of El Salvador Companies (July 17, 1998)
                      <S>                                                              <C>
                      Fair value of assets acquired,  including intangible assets
                        and equipment (net of cash acquired)                           $        17,508,080
                      Fair value of liabilities assumed                                        (1,266,173)
                      Notes payable                                                           (11,366,518)
                      Minority interest                                                        (2,626,748)
                                                                                          -----------------
                           Cash paid (net of cash acquired)                            $         2,248,641
                                                                                          =================
</TABLE>

         The Company  originally owned 49.5% of the outstanding stock of Chispa.
         In December  1998,  Chispa  sold an  additional  12.4113  shares of its
         capital  stock to a third party for $700,000  (comprised of $500,000 in
         cash and a  $200,000  promissory  note due  February  17,  1999).  This
         transaction  decreased the Company's  ownership in Chispa to 44.03%. In
         conjunction with this transaction,  the Company, FondElec and the third
         party  signed a  shareholders'  agreement  which,  among other  things,
         provides the Company with operating control of Chispa.

         CVV Acquisition - On November 8, 1996, the Company,  acting as an agent
         for TIC,  entered into an agreement under which the Company executed an
         option to acquire all of the stock of CVV (the "Option Agreement"). CVV
         is a  Venezuelan  corporation  which has entered into  agreements  with
         Centurion to market and commercialize  certain LMDS frequencies  within
         the country of Venezuela.

         On July 24, 1997 and August 13, 1997, the Company  executed  amendments
         to the Option  Agreement  whereby  CVV, as  contemplated  by the Option
         Agreement,  amended the terms of the  contract  between the Company and
         two of the principal  shareholders (who collectively held approximately
         68.14% of the total outstanding  shares of CVV). Under the terms of the
         amendment,  the Company agreed to purchase the 68.14%  interest held by
         those  parties for $200,000 in cash,  450,565  shares of the  Company's
         common stock,  101,374 shares of the Company's newly designated  Series
         "B" Preferred  Shares and a promissory  note in the amount of $200,000.
         The promissory note accrued interest at the rate of 6.75% per annum. On
         August 15, 1997,  the Company  completed  the purchase of the 68.14% of
         CVV.  On  December  2,  1997,  the  Company  paid in full the  $200,000
         promissory note, along with $4,403 of accrued interest.

         The  Company  and the  shareholders  of CVV  also  executed  an  escrow
         agreement under which the  shareholders of CVV deposited  50,792 shares
         of the Company's common stock and 11,428 shares of the Company's Series
         "B" Preferred Stock,  representing a portion of the  consideration  for
         the  transaction,  with an escrow agent in order to provide the Company
         with security for the  performance of the  obligations and the accuracy
         of the representations contained in the Option Agreement.

         On August 1, 1997,  the Company and the  remaining  shareholder  of CVV
         entered  into  another  additional  amendment  to the Option  Agreement
         whereby the Company  agreed to purchase an additional  10% of the total
         outstanding  shares of CVV for $800,000 in cash.  On November 21, 1997,
         the Company and the remaining shareholder of CVV completed the purchase
         of that 10% interest and entered into an additional  three-year  option
         agreement  pursuant to which the Company acquired the right to purchase
         the remaining shares of CVV not held by the Company for $2,000,000. The
         Company  paid and expensed  $50,000 for the first twelve  months of the
         option  and had the  right to pay an  additional  $50,000  annually  to
         extend the option through November 2000.

         As  discussed  in  Note  14,  the  Company  has  filed  an  arbitration
         proceeding  relating  to claims for  indemnification  and breach of the
         representations and warranties made under the Option Agreement.

         The following table shows the non-cash investing activities  associated
         with the CVV Transaction:

<TABLE>
<CAPTION>
         SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITES:
              Acquisition of CVV (August 15, 1997)
                      <S>                                                              <C>
                      Fair value of assets acquired,  including intangible assets
                         and equipment (net of cash acquired)                          $         8,485,740
                      Fair value of liabilities assumed                                        (1,001,922)
                      Common stock issued                                                      (3,548,250)
                      Series B Preferred stock issued                                          (3,548,250)
                                                                                          -----------------
                           Cash paid (net of cash acquired)                            $           387,318
                                                                                          =================
</TABLE>

         Pro Forma Effect of Acquisitions - The following pro forma  information
         reflects the results of the  Company's  operations  as if the Inter@net
         and El Salvador  transactions  and the CVV  acquisition had occurred at
         the beginning of the periods presented,  adjusted for the effect of the
         amortization of intangible  assets interest expense on acquisition debt
         and an increase  of  depreciation  expense due to the  increase to fair
         value of fixed assets.

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                                ------------------------
           <S>                                      <C>                 <C>                <C>
                                                          1998                1997               1996
            Pro forma results                       ---------------     --------------     ---------------
                Revenue                             $    6,810,194      $   4,295,821      $    4,476,733
                Net loss                            $  (12,485,785)     $  (8,395,738)     $   (4,036,702)
           Net  loss  per   common   share          
               and common share  equivalent
               (basic and diluted method)           $        (1.06)     $       (1.04)     $        (9.42)
</TABLE>

         These pro forma  results have been  prepared for  comparative  purposes
         only and do not  purport to be  indicative  of what  operating  results
         would  have  been  had the  acquisition  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:
<TABLE>
<CAPTION>
                                                                              1998               1997
                                                                          -------------    ------------
                   <S>                                                   <C>               <C>
                   Land                                                   $    586,400     $         -
                   Buildings and improvements                                  156,414               -
                   Telecommunications equipment                              5,907,229            4,117
                   Subscriber equipment                                        381,204          266,602
                   Machinery and equipment                                     151,565          183,717
                   Furniture and equipment                                     425,403           37,702
                   Vehicles and tools                                          106,950           15,026
                                                                          -------------    ------------
                                                                             7,715,165          507,164
                   Less - accumulated depreciation                            (534,737)         (85,220)
                                                                          ------------     ------------
                                                                             7,180,428          421,944
                   Network construction in progress                          1,344,093               -
                                                                          -------------    --------------
                                                                          $  8,524,521     $    421,944
                                                                          =============    ==============
</TABLE>

5.       INTANGIBLE ASSETS
<TABLE>
<CAPTION>
         Intangible assets and their respective amortization lives are as follows as of December 31:

                                                         1998                  1997            Years
                                                   -----------------      ---------------     --------
                 <S>                               <C>                    <C>                 <C>
                 License Rights                    $        658,252       $     1,164,833        10
                 Contract Rights                          9,343,999             9,343,999      7 - 10
                 Subscriber Lists                         8,924,317                    -         5
                 Franchise Rights                         4,111,528                    -        20
                 Goodwill                                 2,815,598                    -        20
                                                   -----------------      ---------------
                                                         25,853,694           10,508,832
                 Accumulated amortization                (3,203,654)            (785,078)
                                                   -----------------      ---------------
                                                   $     22,650,040       $     9,723,754
                                                   =================      ===============
</TABLE>
<TABLE>
<CAPTION>

6.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

                                                                              1998             1997
                                                                          ------------     -------------
                   <S>                                                    <C>              <C>
                   Accounts payable                                       $  3,488,492     $     534,290
                   Accrued license lease fees                                   41,945           121,621
                   Accrued payroll, taxes and benefits                          93,740            98,044
                   VAT and other taxes payable                                  67,736                 -
                   Other accrued liabilities                                    81,301            47,900
                   Deferred income                                             203,437                 -
                                                                          -------------    --------------
                                                                          $  3,976,651     $     801,855
                                                                          =============    ==============
</TABLE>

7.       RELATED PARTY TRANSACTIONS
 
         In connection with the August 1997 Internexus  Transaction described in
         Note 12, the Company and  Internexus  formed WCI de  Argentina  for the
         purpose of pursuing  telecommunications  opportunities in Argentina. As
         of December 31, 1998,  Internexus  had loaned WCI de Argentina  $98,286
         which has been recorded in due to affiliates.

         In connection with the CVV  Transaction,  the Company assumed  accounts
         payable  and  accrued  liabilities  totaling  $520,609  due to a former
         member of the Company's board of directors,  to entities  controlled by
         this same former director, and to Centurion (whose shareholders include
         this same director,  an entity  controlled by this former  director and
         the Company).

         In connection  with the merger with TIC, the Company  assumed a note in
         the amount of $180,281 due to an entity controlled by the father of the
         Chief  Executive  Officer of the Company.  The note  agreement is dated
         January 1, 1997,  is due on demand  and bears  interest  at the rate of
         12%. As of December 31, 1998, $138,129 plus accrued interest of $74,783
         was  outstanding  on the loan.  The  Company  also  assumed a  services
         agreement  dated  January  1, 1997 under  which an entity  owned by the
         father of the Chief  Executive  Officer  of the  Company  will  provide
         consulting services to TIC in exchange for fees equal to the greater of
         $250,000 per year  (except the first year minimum  payment is $150,000)
         or 2% of the first $50,000,000 of TIC's annual revenues and 1% of TIC's
         gross revenues in excess of $50,000,000. The agreement expires December
         31,  2001 and is  renewable  by mutual  consent of both  parties to the
         agreement  for  successive  one-year  periods.  The first year  minimum
         payment of $150,000  was made in October  1997.  The Company also has a
         current  liability  to an  entity  owned  by the  father  of the  Chief
         Executive  Officer  of the  Company  in the  amount  of  $90,629  as of
         December  31,  1998,  for a finder's  fee  related  to the New  Zealand
         channel  frequencies.  The  Company  and the entity  controlled  by the
         father of the Chief Executive  Officer have agreed upon terms to settle
         all  amounts  owed to this  entity  which is subject to approval by the
         Company's board of directors.

         In  connection  with the reverse  acquisition  described in Note 1, the
         Company  assumed a note payable due to  Transworld  Telecommunications,
         Inc.  ("TTI").  Certain of the  Company's  officers and  directors  are
         shareholders in 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, 1998, $996,707 (plus accrued
         interest of $227,797) 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>
                                                                                 1998               1997
                                                                              -----------        -----------
                  <S>                                                         <C>                <C>
                  Federal income tax benefit at statutory rate of 34%         (3,478,471)        (1,562,060)
                  State and local income taxes                                  (511,540)          (229,717)
                  Foreign rate differential                                      365,686             63,939
                  Increase (decrease) in taxes resulting from:
                       Effect of true-up of prior year items                    (893,146)          (571,232)
                  Change in Valuation Allowance:
                       Federal                                                 2,538,755            457,627
                       State                                                     372,539             57,825
                       Foreign                                                   990,572            636,364
                  Permanent Differences
                       Federal                                                    31,117              4,173
                       State                                                       4,576                617
                       Foreign                                                   579,912               None
                                                                              ---------------    --------------
                  Total                                                             NONE               NONE
                                                                              ===============    ==============
</TABLE>

         The  following  table  presents the U.S. and foreign  components of the
         provision (benefit) for income taxes:
<TABLE>
<CAPTION>
                                                                                 1998                1997
                                                                             -------------        -----------
                  <S>                                                        <C>                  <C>
                  Current:
                       Federal                                                      None               None
                       State                                                        None               None
                       Foreign                                                      None               None
                                                                             -------------        ------------
                                                                                    None               None
                  Deferred:
                       Federal                                                (2,538,755)           (457,627)
                       State                                                    (372,539)            (57,825)
                       Foreign                                                  (990,572)           (636,364)
                  Valuation Allowance                                          3,901,866           1,151,816
                                                                             --------------       ------------
                  Total Provision (Benefit)                                         NONE               NONE
                                                                             ==============       ============
</TABLE>

         As of  December  31,  1998,  the  Company  has  federal  and  state net
         operating   loss   carryforwards   of   approximately   $4,421,000  and
         contribution  carryforwards of approximately $12,000. The net operating
         loss  carryforwards  will begin to expire in 2010. The Company also has
         foreign net operating loss  carryforwards of approximately  $3,226,000.
         We have 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, 1998 and December
         31,  1997 are fully  reserved  with a  valuation  allowance  due to the
         uncertainty of realization and are comprised of the following:

<TABLE>
<CAPTION>
                                                                          1998                 1997
                  Deferred Tax Assets:                               ----------------     ----------------
                  <S>                                                <C>                  <C>
                  Net operating loss carryforwards
                        Federal                                      $     1,503,146      $       459,797
                        State                                                221,583               67,617
                        Foreign                                            1,056,286              427,837
                  Basis in fixed assets                                         None                  799
                  Basis in intangibles                                       959,585              594,376
                  Related Party Accruals                                     223,627                 None
                  Stock Options Deferred                                   1,223,220                 None
                  Impairment of License Rights (Foreign)                     185,319                 None
                  Inventory Reserve (Foreign)                                 32,051                 None
                  Provision for Bad Debts (Foreign)                           43,783                 None
                  Accrued Severance Pay (Foreign)                             30,765                 None
                  Other                                                        4,159                 None
                                                                     ----------------     ----------------
                           Total deferred tax asset                        5,483,524            1,550,426
                  Deferred Tax Liabilities:                                                
                   Basis in fixed assets                                     (31,232)                None
                  Valuation allowance                                     (5,452,292)          (1,550,426)
                                                                     ----------------     ----------------
                  Total net deferred tax asset                                  NONE                 NONE
                                                                     ================     ================
</TABLE>

9.       NOTES PAYABLE

         Notes Payable - In conjunction  with the Inter@net  Transaction and the
         El Salvador  Transaction,  the Company issued the following  promissory
         notes in 1998 (see Note 3):
<TABLE>
           <S>                                                                              <C>   
                                                                                                    1998
                                                                                                -------------
           Borrowings  under the  Inter@net  Transaction  in the amount of $200,000 with a
               stated  interest  rate of 5.72%.  The  payment of  $200,000,  plus  accrued
               interest is due on August 17,  1999.  Using an imputed  rate of interest of
               10% the present  value of this note was  estimated at $191,671 as of August
               17, 1998.  The  amortization  of the discount on this note was $3,090 as of
               December 31, 1998.                                                           $        194,761
           Borrowings  under the  Inter@net  Transaction  in the amount of $600,000 with a
               stated  interest  rate of 5.72%.  The  payment of  $600,000,  plus  accrued
               interest is due on August 17,  2000.  Using an imputed  rate of interest of
               10% the present  value of this note was  estimated at $551,070 as of August
               17, 1998.  The  amortization  of the discount on this note was $9,076 as of
               December 31, 1998.                                                                    560,146
           Borrowings  under the El Salvador  Transaction  payable to Star on February 17,
               1999 with a face value of $5,201,481  and no stated  interest  rate.  Using
               an  imputed  rate of  interest  of 10% the  present  value of this note was
               estimated  at  $4,907,928  as of July 17,  1998.  The  amortization  of the
               discount on this note was $230,649 as of December 31, 1998.                         5,138,577
           Borrowings  under the El Salvador  Transaction  payable to Star on May 17, 1999
               with a face  value of  $3,467,654  and no stated  interest  rate.  Using an
               imputed  rate of  interest  of 10% the  present  value  of  this  note  was
               estimated  at  $3,191,498  as of July 17,  1998.  The  amortization  of the
               discount on this note was $151,886 as of December 31, 1998.                         3,343,384
           Borrowings under the El Salvador  Transaction  payable to Star on July 17, 2000
               with a face value of  $3,467,654  and a stated  interest  rate of 7%. Using
               an  imputed  rate of  interest  of 10% the  present  value of this note was
               estimated  at  $3,267,092  as of July 17,  1998.  The  amortization  of the
               discount on this note was $160,030 as of December 31, 1998.                         3,427,122
                                                                                                -------------
           Total notes payable                                                                    12,663,990
           Less current portion                                                                  (8,676,722)
                                                                                                -------------
           Long-term portion                                                                $      3,987,268
                                                                                                =============
</TABLE>

         The Company  also had  borrowings  under a line of credit  arrangement,
         payable to a  Venezuelan  bank at a market  rate of  interest,  payable
         under varying installments through May 1999 totaling $27,281.

         The  maturities  of the notes payable are as follows as of December 31,
         1998:

                     Year ending December 31:
                         1999                                    $     8,676,722
                         2000                                          3,987,268
                                                                   -------------
                         Total                                   $    12,663,990
                                                                   =============

         During  1997,  the  Company  issued  a  $350,000   promissory  note  in
         conjunction  with the  Company's  purchase of a 7.5%  interest in TISA.
         This promissory note was paid in November 1998.

         Subordinated  Exchangeable Promissory Notes - On December 23, 1998, the
         Company sold $10 million of subordinated  exchangeable promissory notes
         to FondElec and Internexus,  S.A.  ("Internexus")  (the "Notes").  Both
         FondElec   and   Internexus   are  related   parties.   The  Notes  are
         exchangeable,  at  the  election  of  the  Company,  for  shares  of  a
         to-be-designated  series of Preferred  Stock having  certain rights and
         preferences  upon the purchase by third parties of at least $10 million
         of the such  Preferred  Stock.  The Notes bear interest at 10%, and are
         due  December  23,  2001.  The Notes also  include  warrants to acquire
         Common Shares having a value of 3.5% per month of the principal balance
         of the Notes  while the Notes are  outstanding  at an initial  price of
         $8.70  per  share  (subject  to  adjustment  for  future  issuances  of
         securities  and  other   fundamental   corporate   transactions).   The
         additional interest expense 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 was not  significant in
         1998.  The  Company  received  the  $5,000,000  of  proceeds  due  from
         Internexus  under the Notes in early  January  1999.  This  amount  was
         recorded as a note proceeds due from affiliate as of December 31, 1998.

         In  conjunction  with the sale of the Notes,  certain of the  Company's
         shareholders  entered into an agreement  with  FondElec and  Internexus
         regarding the designation of, and voting for,  directors which replaced
         the  terms  of the  FondElec  Transaction  and  Internexus  Transaction
         described  in Note 12.  Under the  agreement,  the  shareholder  group,
         FondElec and  Internexus  are each entitled to designate two persons to
         be nominated  as members of the  Company's  board of directors  and the
         other  parties to the  agreement  are obligated to vote their shares in
         the Company for the election of those  designees.  The voting agreement
         also contains certain restrictions on the corporate actions the Company
         may undertake. The Company is not a party to the voting agreement.

         Secured  Promissory Notes - During 1997, the Company borrowed  $850,000
         through secured  promissory notes which were  subsequently paid in full
         in 1997. The former holders of the promissory notes also have the right
         until January 31, 2002, subject to certain conditions and restrictions,
         to exercise  warrants to purchase up to 331,717 shares of the Company's
         common  stock at $2.63  per  share.  The  Company  recognized  interest
         expense in 1997 of $657,143,  which represented 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.  Two  principals  of the entity that holds  option to
         acquire  175,954  shares  of  the  Company's  common  stock  were  also
         directors of the Company (see Note 12).

10.      PREFERRED STOCK

         At December 31, 1998, the authorized  number of shares of the Company's
         preferred stock was 15,000,000,  $0.001 par value,  with 750,000 shares
         designated  as Series "B"  Preferred  shares.  In 1998,  the  Company's
         shareholders  approved the Company's  Amended and Restated  Articles of
         Incorporation,  which were previously adopted by the Company's board of
         directors.  The Amended and Restated Articles of  Incorporation,  among
         other  things,:  (i) increased  the number of authorized  shares of the
         Company's  preferred  stock from 5,000,000 to 15,000,000;  (ii) changed
         the par value of each  Preferred  share  from  $0.01 to  $0.001;  (iii)
         removed the  designation  for Series "A"  Preferred  Shares (which were
         exchanged for common shares on a 10 for 1 basis  pursuant to a separate
         agreement);  and  (iv)  approved  a 1 for  3.5  reverse  split  of  the
         Company's outstanding capital stock (the "Reverse Split").

         Prior to August 17,  1998 and at  December  31,  1997,  the Company had
         designated  4,250,000  shares  of its  preferred  stock as  Series  "A"
         Preferred Shares. The rights and privileges of the Series "A" Preferred
         Shares were as follows:  (1) they carried  voting  rights that entitled
         the holder to 10 votes per share and the holders  voted  together  with
         the common  shares as one class on all matters;  (2) if dividends  were
         distributed,  the Series "A"  Preferred  Shares  received an amount per
         share  equal to ten times the  dividend  per share  paid to the  common
         shareholders;  and  (3)  in the  case  of a  liquidation,  dissolution,
         consolidation,  merger or other similar type of transaction, the Series
         "A"  Preferred  Shares would have received an amount per share equal to
         ten times the aggregate consideration paid per common shares.

         At December  31, 1998 and 1997,  the  Company  had  designated  750,000
         shares of its  preferred  stock as Series  "B"  Preferred  Shares.  The
         rights  and  privileges  of the  Series  "B"  Preferred  Shares  are as
         follows: (1) they carry a liquidation  preference of $35 per share ($10
         per share in 1997,  prior to the  Reverse  Split)  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  noncumulative  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
         Shares,  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,   the  date  preceding  the  closing  of  an
         underwritten  public offering  resulting in net proceeds to the Company
         of $15 million and a market  capitalization  of $50 million  (including
         all  amounts   received  by  the  Company  in   conjunction   with  the
         underwritten  public offering) or the sale of all or substantially  all
         of the  Company's  business  or assets or a  similar  transaction.  The
         Series "B" Preferred  Shares are convertible  into common shares of the
         Company  as  follows  (i) in the event of the  occurrence  of the third
         anniversary  or the sale of all or  substantially  all of the Company's
         business  or  assets,  each  share of  Series  "B"  Preferred  Share is
         convertible  into the number of common shares  obtained by dividing $35
         (after the Reverse  Split) by the price per common share as  determined
         in good faith by the board of directors of the Company, and (ii) in the
         case of an  underwritten  public  offering,  each Series "B"  Preferred
         Share is convertible into such number of common shares as is determined
         by dividing $35 (after the Reverse Split) by the public offering price.

11.      STOCK PLANS, COMMON STOCK AND PREFERRED STOCK OPTIONS

         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,  1998,  the  Company  has not  granted  any  non-employee
         director  stock  options  and options to acquire  100,000  non-employee
         director plan shares are available for grant.

         Stock  Incentive  Plan - In June 1998 the Company's  board of directors
         adopted  the 1998 Stock  Incentive  Plan (the  "Incentive  Plan").  The
         Incentive  Plan was approved by the  Company's  shareholders  in August
         1998.  The  Incentive  Plan  originally  reserved a total of  1,250,000
         common shares for issuance under the plan. This number was subsequently
         increased by the Company's board of directors 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.  There were no options  granted
         under these plans in 1998.

         Stock Option  Awards - The Company has also awarded other stock options
         which are summarized in the table below:
<TABLE>
<CAPTION>
                Common Stock Options:
                  <S>  <C>                                          <C>                  <C>
                                                                        Number           Range of Exercise
                  1998:                                               of Shares           Price Per Share
                       Outstanding at beginning of year                     14,999         $0.35 - $3.50
                       Exchanged Series A Preferred options                395,000             $0.88
                       Granted                                             164,177         $0.88 - $1.00
                       Canceled                                                  0               -
                                                                    ---------------
                       Outstanding at end of year                          574,176         $0.35 - $3.50
                       Weighted  average exercise price of options
                           granted during year                                                 $0.96


                                                                        Number           Range of Exercise
                  1997:                                               of Shares           Price Per Share
                       Outstanding at beginning of year                     35,714             $0.35
                       Granted                                              14,999         $0.35 - $3.50
                       Canceled                                             35,714             $0.35
                                                                    ---------------
                       Outstanding at end of year                           14,999         $0.35 - $3.50
                       Weighted  average exercise price of options
                           granted during year                                                 $3.36


                                                                        Number           Range of Exercise
                                                                      of Shares           Price Per Share
                  1996:
                       Outstanding at beginning of year                          0
                       Granted                                              35,714             $0.35
                       Canceled                                                  0
                                                                    ---------------
                       Outstanding at end of year                           35,714             $0.35
                       Weighted  average exercise price of options
                           granted during year                                                 $0.35
</TABLE>

                The amounts  reported in this table have been  restated  for the
                Reverse Split.

                Preferred Stock Options:

                On December 22, 1997,  the Board of Directors  authorized  stock
                options for 199,811 shares of Series "A" Preferred  Stock (which
                were subsequently  exchanged for 570,891 authorized common stock
                options after the exchange of the Series "A" Preferred Stock for
                common shares and the application of the Reverse Split. In 1997,
                39,500  Series "A" Preferred  options  (restated for the Reverse
                Split) were granted with a $7.88  exercise  price;  such options
                were exchanged into 395,000 common stock options in 1998.

                There were no preferred stock options outstanding during 1996.

                The common and preferred options are all fully vested and expire
                between 1999 and 2001.

         The Company  accounts for stock options  granted  using the  Accounting
         Principles Board ("APB") Opinion 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 1998 and  1997  were
         $1,000,245 and $1,479,074, respectively, of which $753,046 and $962,738
         related to  compensation  expense and $247,199 and $516,336  related to
         professional fees expense,  respectively. Had compensation cost for the
         Company's  stock options been  determined  based on the estimated  fair
         value at the grant dates for awards  consistent  with SFAS No. 123, the
         Company's  net loss and net loss per  common  share  and  common  share
         equivalent would have changed to the pro forma amounts indicated below:

<TABLE>
           <S>                                       <C>                  <C>                <C>
                                                              1998               1997              1996
           Net loss:                                 ------------------   ---------------    --------------
                   As reported                       $      (10,230,796)  $    (4,594,294)   $    (422,568)
                   Pro forma                         $      (10,278,111)  $    (4,632,242)   $    (422,568)
           Net  loss  per  weighted   average
               common    share   (basic   and
               diluted method):
                   As reported                       $            (0.88)  $         (0.58)   $       (0.99)
                   Pro forma                         $            (0.88)  $         (0.58)   $       (0.99)
</TABLE>

         The  amounts  listed in the table have been  restated  for the  Reverse
         Split and the adoption of Statements of Financial  Accounting Standards
         No. 128, "Earnings Per Share," effective December 31, 1997.

         The fair value of each option  grant is  estimated on the date of grant
         using  the  Black-Scholes   option-pricing  model  with  the  following
         weighted-average  assumptions  used for grants in 1998,  1997 and 1996:
         dividend yield of 0%,  expected  volatility of 0%,  risk-free  interest
         rates  ranging  from 4% to 7%, and expected  lives  ranging from 2 to 4
         years.

12.      STOCK PURCHASE AGREEMENTS

         November  1997 -  Effective  November 1, 1997,  the Company  executed a
         Stock Purchase  Agreement with FondElec which owned (at that time) 8.6%
         of the Company's  equity  structure on a common share  equivalent basis
         pursuant to which the Company  agreed to sell equity  securities of the
         Company  which were  sufficient  to bring  FondElec's  ownership of the
         Company up to 18% of the Company's  total equity  structure on a common
         share   equivalent   basis  for   $5,248,795  in  cash  (the  "FondElec
         Transaction").  On  November  21,  1997,  FondElec  closed  a  $300,000
         investment in the Company under the terms of the FondElec  Transaction.
         On  February  25,  1998,  FondElec  closed  the  remaining   $4,948,795
         investment under the FondElec Transaction.

         The  FondElec   Transaction   gave  FondElec  certain  minority  rights
         provisions  which were  terminated  on December 23, 1998 in  connection
         with the sale of the Notes and replaced by the provisions  described in
         Note 9.

         August 1997 - Effective  August 1, 1997,  the Company  executed a Stock
         Purchase   Agreement   with   Petrolera   Argentina  San  Jorge,   S.A.
         ("Petrolera")  to sell equity  securities of the Company  equivalent to
         18%  of  the  Company's  total  equity  structure  on  a  common  share
         equivalent   basis   for   $10,000,000   in   cash   (the   "Internexus
         Transaction").  Under the  terms of the  agreement,  the 18%  ownership
         interest  was  non-dilutive  until the  earlier of  September  30, 1997
         (including  transactions that close before November 1, 1997, which were
         the subject of serious negotiations on September 30, 1997), or when the
         Company had closed an additional  $10,000,000 of equity  financing from
         certain other third parties.  The Internexus  Transaction was completed
         on August 30, 1997. Petrolera subsequently  transferred its interest in
         the  Company to  Internexus,  a company  owned by the  shareholders  of
         Petrolera.

         As a result of the  Company's  acquisition  of its  interest  in CVV as
         described  in Note 3,  Internexus  acquired  additional  shares  of the
         Company's  common  stock and  Series  "A"  preferred  stock in order to
         maintain its 18% effective voting control percentage in the Company.

         The Internexus  Transaction  gave  Internexus  certain  minority rights
         provisions  which were  terminated  on December 23, 1998 in  connection
         with the sale of the Notes and replaced by the provisions  described in
         Note 9.

         In conjunction  with the Internexus  Transaction,  the Company borrowed
         $2,100,000  on  August 4,  1997.  The loan bore  interest  at 10%,  was
         unsecured,  and was repaid with accrued  interest at the closing of the
         Internexus  Transaction  when the  outstanding  principal  and  accrued
         interest  were  applied  towards  the  purchase  price  payment  in the
         Internexus Transaction.

13.      OPERATING LEASES

         The Company leases  corporate  office space and equipment in the United
         States and at foreign  locations under operating leases with terms that
         range  between 3 and 5 years.  The Company  also is  obligated  to make
         annual future minimum lease  payments  relating to four channels in New
         Zealand  which have been  converted to U.S.  dollars using the December
         31, 1998 exchange rate of $0.53.  Future  minimum annual lease payments
         under the Company's operating leases are as follows:

             Year ending December 31:
             1999                                           $  620,058
             2000                                              597,171
             2001                                              602,934
             2002                                              611,263
             2003                                              202,788
             2004 and thereafter                                17,100
                                                       ---------------
             Total future lease payments                    $2,371,064
                                                       ===============

         Total  rent  expense  under the  operating  leases in 1998 and 1997 was
         $363,618 and $9,209,  respectively.  In 1996, the Company shared office
         space with TTI and paid a nominal fee. Total leased license expense was
         $708,912  (including the recorded impairment loss of $545,055 discussed
         in Note 2),  $116,161  for 1998 and  1997,  respectively,  There was no
         leased license expense in 1996.

14.      COMMITMENTS AND CONTINGENCIES

         Litigation  - In  September  1998,  the Company  filed two  arbitration
         proceedings  against Donald Williams,  a former director and officer of
         the   Company.   The   first   proceeding   relates   to  a  claim  for
         indemnification  and breach of the  representations and warranties made
         by Mr. Williams and other parties pursuant to the Company's acquisition
         of an interest in certain  Venezuelan  corporations  that hold and have
         the right to operate 1 GHz  frequency in the 28 GHz range in Venezuela.
         The other arbitration  proceeding requests a declaratory  judgment that
         the Company's termination of Mr. Williams as an employee in August 1998
         was for "cause." Both arbitrations have been stayed pending the outcome
         of settlement  negotiations  between the parties. On April 9, 1999, the
         Company  was  named as a  defendant  in an  action by a group of United
         States investors who believe they have claims against Mr. Williams with
         respect to an investment made in those Venezuelan  entities (or certain
         entities  that  previously  held or had the right to operate those same
         network  rights).  The  plaintiffs  have asserted that they have claims
         against  the  Company as a result of the  Company's  investment  in the
         Venezuelan. The Company believes the claims of the plaintiffs regarding
         the Company are without merit.  In addition,  the sellers from whom the
         Company  acquired its interests in the  Venezuelan  entities  agreed to
         indemnify  the Company for  breaches of any  representations  they made
         regarding the status of those entities,  their  liabilities and assets.
         The  sellers  did not note the  potential  claim of the  United  States
         investors on the disclosure schedules for investment.

         The Company is also  involved in, and pursues,  routine  legal  actions
         relating to its  business  operations,  including  customer  collection
         activities.

         On October 15,  1996,  TIC entered into a  definitive  agreement  under
         which  TIC and a third  party  group  agreed to form a  corporation  in
         Panama to provide an LMDS  wireless  service  in  Panama.  The  Company
         agreed to  provide  all  funding to the  corporation  in return for 90%
         ownership in the Panamanian corporation.  The other 10% is owned by the
         license  holder and shall not be diluted or reduced by any  issuance of
         additional securities.  The Panamanian corporation will pay the license
         holder a one-time  fee of $5,000 upon the  initiation  of service and a
         rental fee of $6,000 per year for the first five years of the contract.

         Effective  August 20,  1998,  the Company and  FondElec  entered into a
         non-exclusive agreement under which FondElec agreed to provide advisory
         services to the  Company  relating to the  acquisition  of  controlling
         interests in companies engaged in  telecommunication  services in Latin
         America, with particular emphasis on investments in Mexico,  Guatemala,
         El Salvador,  Argentina and Brazil.  The agreement requires FondElec to
         provide standard investment advisory services, but neither FondElec nor
         any of its principals is required to take part in any  solicitation  of
         investors  or  otherwise  participate  in the  marketing  of any of the
         Company's  securities.  The term of the agreement is one year.  The fee
         under the  agreement  is the  lesser of 3% of any equity  raised  after
         August 20, 1998 (up to a maximum of $750,000), however, there is no fee
         due if the Company does not raise any  additional  equity by August 20,
         1999.

         None of the above  agreements is with a foreign  government nor foreign
         government  employees.  The agreements are with foreign corporations or
         individuals.

15.      GEOGRAPHICAL REPORTING

         As  of  December  31,  1998,  the  Company  conducted  active  business
         operations outside the United States in El Salvador and Venezuela.  The
         following is a summary extract of the Company's  foreign  operations in
         El Salvador and Venezuela and identifiable  assets in New Zealand,  and
         Costa Rica for fiscal year 1998:

<TABLE>
<CAPTION> 
                                        Sales to
                                      Unaffiliated                               Identifiable
                                        Customers            Net Loss               Assets
                                   ----------------    -----------------     -----------------
                  <S>             <C>                  <C>                   <C>
                  United States    $              -    $      (5,669,828)    $      13,327,377
                  El Salvador             2,606,199             (769,077)           19,395,740
                  Venezuela                 507,283           (2,369,186)           10,608,892
                  Guatemala                       -             (356,314)            1,010,868
                  New Zealand                     -             (835,061)              241,944
                  Costa Rica                      -             (231,330)              692,854
                  Eliminations                    -                     -          (2,804,631)
                                      --------------      ----------------      ---------------
                  Total            $      3,113,482    $     (10,230,796)    $      42,473,044
                                      ==============      ================      ===============
</TABLE>

         As  of  December  31,  1997,  the  Company  conducted  active  business
         operations  outside the United States in Venezuela.  The following is a
         summary  extract of the Company's  foreign  operations in Venezuela and
         identifiable assets in New Zealand and Costa Rica for fiscal year 1997:

<TABLE>
<CAPTION>
                                        Sales to
                                      Unaffiliated                               Identifiable
                                        Customers            Net Loss               Assets
                                      -------------       ---------------       --------------
                  <S>              <C>                 <C>                   <C>
                  United States    $              -    $      (3,675,494)    $       6,403,903
                  Venezuela                  40,186             (645,507)            9,585,670
                  New Zealand                     -             (273,293)              994,149
                  Costa Rica                      -                -                   750,000
                  Eliminations                    -                -                  (244,616)
                                      --------------      ----------------      ---------------
                  Total            $         40,186    $      (4,594,294)    $      17,489,106
                                      ==============      ================      ===============
</TABLE>

16.      SUBSEQUENT EVENTS

         Guatemala  Transaction - In February 1999, the Company  entered into an
         agreement  to acquire 60% of a  Guatemalan  holding  company  that owns
         companies which provide Internet and multi-channel  television services
         to over 12,400  subscribers  in Guatemala and initiated  local and long
         distance  telephony services in February 1999. The agreement is subject
         to the  seller's  meeting  certain  conditions  prior  to  closing  the
         transaction.

         The purchase  price for the  Company's  60% interest of the  Guatemalan
         holding  company will be $7.5  million,  consisting  of $2.0 million in
         cash and  promissory  notes due through the second  anniversary  of the
         closing,  common  shares of the Company  having a value (based on a per
         common  share  price of $8.70) of $2.5  million,  and $3.0  million  in
         "capital  notes" due  through  the fifth  anniversary  of the  closing.
         Payments  by the Company  under the  capital  notes will be used by the
         sellers to fund their  continuing  40% share of any  additional  equity
         capital required by the Guatamalan  holding company to meet its working
         capital,  expansion and operating  requirements.  The purchase price is
         subject to adjustment under certain conditions.

         El Salvador  Note Payable  Payment - In February  1999,  the first note
         payable payment of approximately  $5.2 million was due to Star.  Chispa
         is in the  process of  refinancing  this  payment  and the May 17, 1999
         payment  with a third party bank.  In order to allow Chispa to make the
         February  17,  1999  payment  and  continue  to pursue the  refinancing
         opportunity,  FondElec  loaned  Chispa the funds  required  to make the
         February  17,  1999  payment.  The  loan  was in the  form of a  90-day
         promissory note bearing interest at 12.0% (see Note 1).

         GBM Agreement - In March 1999,  the Company had reached an  arrangement
         with GBM  Corporation,  an IBM alliance  company,  who is the exclusive
         provider of IBM computer  hardware and software in El Salvador ("GBM"),
         to provide data transmission  services to GBM's 120 business customers,
         which  cumulatively  have over 20,000 separate  connections.  Under the
         terms of the  arrangement,  GBM will act as a reseller of the Company's
         services  and will be entitled to a fixed  percentage  of the  revenues
         generated by each of its customers.  Also, GBM will have exclusivity to
         market the  Company's  services  to a  pre-agreed  number of  potential
         business clients for a period of six months.



PART 3.

INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No.
                                                        Exhibit                                               Page
<S>          <C>                                                                                              <C>
3.1          Articles of Incorporation                                                                         *
3.2          Bylaws                                                                                            *
3.3          Amended and Restated Articles of Incorporation                                                  98-107
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                              *
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.     108-143
                   and FondElec Essential Services Growth Fund, L.P.
10.13        Form of Promissory Note issued in connection with the Securities Purchase Agreement dated     144-162
                   December 23, 1998
12.1         Computation of Earnings Per Share                                                             163-165
21.1         Subsidiaries of the Registrant                                                                    166
27.1         Financial Data Schedule                                                                           167


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

                                   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.

April 14, 1999                 /S/ Lance D'Ambrosio
----------------------         -------------------------------------------------
Date                           Lance D'Ambrosio
                               Chairman and Chief Executive Officer
                               (Principal Executive Officer)


                               CONVERGENCE COMMUNICATIONS, INC.

April 14, 1999                 /S/ Jerry Slovinski
----------------------         -------------------------------------------------
Date                           Jerry Slovinski
                               Senior Vice President and Chief Financial Officer
                               (Principal Financial Officer)

DIRECTORS

April 14, 1999                 /S/ Lance D'Ambrosio
----------------------         -------------------------------------------------
Date                           Lance D'Ambrosio


April 14, 1999                 /S/ Troy D'Ambrosio
----------------------         -------------------------------------------------
Date                           Troy D'Ambrosio


April 14, 1999                 /S/ Jorge Fucaraccio
----------------------         -------------------------------------------------
Date                           Jorge Fucaraccio


April 14, 1999                 /S/ Peter Schiller
----------------------         -------------------------------------------------
Date                           Peter Schiller


April 14, 1999                 /S/ Gorge Sorenson
----------------------         -------------------------------------------------
Date                           George Sorenson


April 14, 1999                 /S/ Gaston Acosta-Rua
----------------------         -------------------------------------------------
Date                           Gaston Acosta-Rua


                                  EXHIBIT INDEX

Exhibit 
No.                                Exhibit                                  Page
3.3          Amended and Restated Articles of Incorporation               ______

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

12.1         Computation of Earnings Per Share                             _____

21.1         Subsidiaries of the Registrant                                _____

27.1         Financial Data Schedule                                       _____