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, 1999.

   [ ]   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:                            Name of each exchange
        Title of each class                                 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:  $9,099,054.

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 $15,465,958.

As of March 1, 2000,  11,585,489 shares of registrant's  common stock, par value
$.001 per share,  101,374 shares of the  registrant's  series B preferred stock,
par value $.001 per share,  and  9,728,909  shares of the  registrants  series C
preferred stock, par value $.001 per share, were outstanding.


<PAGE>



                        CONVERGENCE COMMUNICATIONS, INC.
                                 March 31, 2000
                                   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

                           OUR BUSINESS AND PROPERTIES

Overview of Our Operations

         We are a leading  facilities-based  provider  of  integrated  broadband
communications  and  Internet  services  to the  business  customer  through our
metropolitan area networks.  We operate in recently  deregulated and high growth
markets,  principally  Mexico,  Central  America and the Andean  region of South
America. We offer businesses,  governmental  agencies and residential  customers
broadband, high-speed data connections,  high-speed and dial-up Internet access,
voice and video  services.  Our  networks use  technology  based on the Internet
Protocol,  or IP,  and we employ  networks  with over 270  route  kilometers  of
fiber-optic  and hybrid fiber coaxial cable,  plus "last mile"  broadband  fixed
wireless connectivity.

         We have operations in nine countries -- Mexico, Venezuela, El Salvador,
Guatemala, Panama, Costa Rica, Honduras,  Nicaragua, and the Dominican Republic.
We provide services to over 34,500 customers in 17 major  metropolitan  areas in
these countries. By December 2000, we expect to have operations in 46 cities and
serve over 59,000 customers.

     During the last year, we reached the following business milestones:

     o    In October 1999, we closed a $109.5  million  equity and debt facility
          with six strategic investors.

     o    In March 2000, we signed a conditional agreement with Alcatel, a world
          recognized  telecommunications  integrater and equipment manufacturer,
          to construct a turnkey  pan-regional  network for us and to provide us
          with up to $175  million in  financing  over the next three  years for
          network build-out and systems integration services.

     o    We closed three significant  acquisitions.  These  acquisitions  added
          over 3,500  customers to our existing  subscriber  base and gave us an
          interest in an existing  fiber-optic  network in Mexico  City.  One of
          those acquisitions was the purchase of the data services operations of
          an IBM affiliate that does business in seven Latin American countries,
          and another  acquisition  was the purchase of the second  largest data
          services  provider in Mexico.  We have also  entered  into a letter of
          intent to acquire a system in  Guatemala  which  will add over  12,835
          customers to our subscriber base.

     o    We increased  our  consolidated  revenues from $3.1 million in 1998 to
          $9.1 million in 1999, and increased our consolidated assets from $42.5
          million to $97.2 million during the same period.  Our plant,  property
          and equipment grew from $8.5 million in 1998 to $28.4 million in 1999.

     o    We  formed a joint  venture  with a major  developer  of  fiber  optic
          systems in Mexico to build  networks in seven of the largest cities in
          Mexico.

     o    We completed the  construction of our networks in El Salvador,  Panama
          and Costa Rica.

     o    We started the year without any fiber in our leased or owned networks,
          and by the  end of  this  year  we  expect  to  have  over  630  route
          kilometers of fiber.

         We  believe   that,   by  being  the  first   provider  of   integrated
telecommunications  services  in our  market  areas,  we will be able to  secure
access to a broad base of business  and  government  customers.  We also believe
that, if we develop our business  operations  on the schedule  described in this
report, we will create significant barriers for our competitors to overcome, and
that our "lowest  operating  cost"  strategy and highly  differentiated  service
offerings  will give us a competitive  advantage  over other  telecommunications
providers in our markets.

         We are designing  our network  around an IP-based  technology  platform
that uses packet  switching to transmit voice,  video and data elements over the
same system.  We intend to use the IP platform with a flexible  delivery network
that uses  fiber-optic,  coaxial  cable and wireless  distribution  systems.  We
believe this approach  allows the most  efficient  delivery of high-speed  "last
mile"  connectivity  with  our  IP-based  service  offerings,  and  provides  an
economical method for delivering high quality bundled  communications  services.
Our  telecommunications  solutions  typically  consist  of  combinations  of the
following services:

         o Network  Services.  We offer our business  customers a broad range of
end-to-end network services for their  point-to-point  and  point-to-multi-point
telecommunications  needs.  These  services  range from  simple  connections  to
customized private  telecommunications  network solutions,  including high-speed
data transmission and virtual private networks. As of March 1, 2000, we had over
500 network service customers which, in some cases, includes high-speed Internet
access (representing over 2,300 connections).

                                       3
<PAGE>


     o Internet Access. We offer Internet access services primarily to corporate
and governmental users. We also offer residential  Internet access service.  Our
services  include both high-speed and dial-up  Internet access using  high-speed
systems. As of March 1, 2000, we had over 4,300 Internet access customers in our
systems and, assuming we close the Metrotelecom transaction,  we will acquire an
additional 4,200 customers.

     o Telephone Services. We offer limited national and international telephone
services in El Salvador and, once we complete the Metrotelecom  transaction,  in
Guatemala.  We currently process nearly 1.0 million telephony minutes per month.
Once we complete  the  Metrotelecom  transaction,  that number will  increase to
approximately  9.5 million  minutes  per month.  We expect to be able to provide
telephony services in Mexico in 2000 and Venezuela in 2001.

     o Web Hosting and Other Value Added Services. We offer web hosting services
that  facilitate our  customers'  electronic  commerce and  electronic  business
initiatives.  Those services include a number of information technology services
such as web  page  design  and  the  design,  installation  and  integration  of
intranets, extranets, and virtual private data networks.

     o Video  Services.  We offer  cable  television,  or CATV,  services  in El
Salvador  (where we own the largest  CATV system) and  Guatemala,  where we have
contracted to buy the second largest CATV system. Those systems have over 37,000
subscribers.

         We  were   incorporated   in  Nevada  in  1995  as  "Wireless  Cable  &
Communications,  Inc." In  August  1998,  we  changed  our name to  "Convergence
Communications,  Inc." When we discuss our operations in this report, you should
assume we are describing our own and our  controlled  subsidiaries'  operations.
Our principal  executive  offices are located at 102 West 500 South,  Suite 320,
Salt Lake City,  Utah 84101,  and our telephone  number there is (801) 328-5618.
Our  principal  operating  offices are  located at 9050  Pembroke  Pines  Blvd.,
Pembroke Pines, Florida 33024, and our telephone number there is (954) 430-9393.
Our world wide web site is located at www.convergence-comm.net.  The information
on that site is not part of this report.  Our logo and certain  titles and logos
for our services are our property. Each trademark,  tradename or service mark of
any other company appearing in this report belongs to its holder.

         We  previously   reported  some  of  the  transactions  and  operations
information  set forth in this report in greater detail in other reports we have
filed with the  Securities  and  Exchange  Commission,  including in the reports
described below in the section entitled  "Reports on Form 8-K" and our quarterly
reports on Form 10-QSB for the periods  covered by this report.  You should read
the  information  in this  report in  connection  with those  other  reports and
filings.  In addition,  some of the matters described in this report (including,
specifically,  our proposed purchase of Metrotelecom)  occurred or are scheduled
to occur  after  December  31,  1999,  the close of the  period  covered by this
report. We have included descriptions of those matters in this report to provide
a more balanced description of our operations.


                                       4
<PAGE>

Our Market Opportunity

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

         The Latin  American  telecommunications  industry  is,  in  particular,
undergoing  dramatic  change,  including  widespread  privatization  of existing
networks.  The  countries  in  Latin  America  that  have  or are  beginning  to
deregulate  have  done so as  their  governments  have  recognized  the  need to
introduce  market  competition.   Along  with  many  other  countries,   Mexico,
Venezuela,  El Salvador,  Guatemala and the Dominican Republic have agreed under
the World Trade Organization Agreement on Basic  Telecommunications  Services to
promote competition in their countries' telecommunications industries.

         In  many  instances,   however,   the  operators  of  these  privatized
telecommunications  systems have had difficulty responding to market demands for
efficient  service,  new  fixed  lines  and the  bandwidth  necessary  for  data
transmission  and  high-speed   Internet   access.   The  increased  demand  for
telecommunications services is expected to result in a significant growth in the
revenues  generated in the Latin American  telecommunications  market,  which is
expected to total $63.7 billion in 2000 and $74.2 billion in 2002, up from $33.2
billion in 1996. Growth in overall telecommunication  revenues is expected to be
approximately  12% per year,  while  growth  from data  services  is expected to
achieve a  compounded  annual  growth rate of  approximately  41%  through  2002
(assuming relative economic stability),  compared to a compounded growth rate of
approximately  13% in the United States.  This growth will be due to a number of
factors, including:

     o  Increased   Competition.   As   competitors   enter  the  Latin  America
telecommunications market, the range of telecommunications services available to
consumers  should  expand.  Incumbent  providers  in  deregulating  markets have
existing  customer bases but, we believe,  have not focused on providing quality
services  at  competitive  prices.  Demand for  services  should  increase  once
competitors are able to offer better and cheaper service.

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

     o Changes in Technology.  Latin  American  markets have  historically  been
dependent on legacy  telecommunications  systems and the  infrastructure  of the
incumbent  operators.  These systems have generally been based on technology and
equipment having limited bandwidth capabilities and relatively poor transmission
quality.  We believe the demand for high  bandwidth and broadband  services will
increase  as  telecommunications  infrastructure  improves  and  the use of data
intensive  applications  becomes  feasible  in  Latin  America.  One of the most
notable trends arising from the growth of the Internet is the adoption of the IP
as the standard for wide-area corporate communications. IP allows computers with
different  architectures  and operating systems to communicate with one another.
We believe telecommunication  companies will increasingly shift from traditional
circuit-switched  networks to packet-switched  networks by incorporating IP into
their systems.  According to Ovum, an independent  analyst group,  the worldwide
market for IP will reach over $60 billion by 2005.

                                       5
<PAGE>


     o Increases in the Use of the Internet.  The Latin American Internet market
is  generally  thought to be several  years  behind the  Internet  market in the
United States in terms of overall  market  penetration  of both use and Internet
related  services.  Actual use varies by country,  but was  estimated  to be, on
average,  less than 1%  (compared to 18% in the United  States) in 1997,  and is
projected to increase to 4% by 2002 (compared to over 40% in the United States).

Our Business Solution

         We believe emerging technologies have significantly  enhanced the value
and capacity of networks that combine  different types of delivery  systems,  in
part because of the convergence of traditional  voice,  data and video switching
technologies.  Our IP-based  technology  platform  allows us to transmit  voice,
video  and  data  elements  over  the  same  network  using  a  combination   of
fiber-optic,  coaxial cable networks and wireless  communication  systems.  This
approach  allows us to provide "last mile"  connectivity  with IP-based  service
offerings, providing an economical method of delivering high-quality, high-speed
bundled communications services.

         We  offer a wide  variety  of  telecommunications  services,  including
broadband, high-speed data transmission, high-speed and dial-up Internet access,
voice,  video  and  value-added  services  in  many  of our  markets.  We  allow
subscribers  to combine those  services  into  individually  designed  packages,
rather than offering only  telecommunications  service  packages  designed for a
"typical"  customer.  We believe this flexible sales strategy reduces  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.

Our Business Strategies

         Our business objective is to be the premier  facilities-based  provider
of integrated broadband telecommunication solutions to business and governmental
customers in Mexico,  Central  America and the Andean region.  Our strategies to
achieve that objective include the following:

     o We focus on underserved  markets in Latin America.  We provide and intend
to expand our integrated  communication solutions in under-served markets in the
Mexican,  Central American and Andean regions of Latin America. These areas have
a combined population of more than 162 million people, and we believe there is a
large and growing demand for telecommunications  services in these markets. As a
first provider of competitively  priced bundled  telecommunications  services in
many of these rapidly deregulating markets, we believe we will be able to secure
a significant subscriber base and market share with minimal turnover.


                                       6
<PAGE>

     o We pursue  strategic  acquisitions  of  subscriber  bases  and  ancillary
services.  In  addition  to  developing  our own  subscriber  base  through  the
promotion   of  our   telecommunications   services,   we  engage  in  selective
acquisitions of existing telecommunications  subscriber bases by acquiring other
existing telecommunications  providers. We benefit from the revenue generated by
these  acquisitions and from the vertical  integration of key service providers.
During the past year, we acquired existing  telecommunications  subscriber bases
in Mexico, El Salvador,  Guatemala,  Panama, Costa Rica, the Dominican Republic,
Honduras,  and  Nicaragua,  and we have  entered  into an  agreement  to acquire
additional subscribers in Guatemala.

     o We focus on  providing  Internet  and network  services  to the  business
customer.  We are  focusing  our initial  network  development  and  acquisition
activities on adding to our  high-speed  and dial-up  Internet  access,  network
services and  value-added  services.  We believe the  subscriber  base for these
services is, in general,  more affluent and stable.  By first  emphasizing those
services, we believe we will be able to achieve positive cash flow more quickly.

     o  We  use  our  own  broadband   communications  networks.  We  provide  a
significant  portion  of  our   telecommunications   services  through  our  own
next-generation transmission networks. We intend to acquire our own transmission
networks in markets where we currently  lease network rights from other parties.
The flexibility of our network architecture allows us to minimize the deployment
of network equipment not associated with revenues,  since a significant  portion
of our planned  capital  expenditures  will be for the  purchase  of  subscriber
premises   equipment,   which  is  generally   deployed  only  when  we  acquire
subscribers.  In  addition,  our  systems do not need to cover an entire  market
before we 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.

     o We use multiple  delivery  systems.  We use a combination  of fiber-optic
cable,  coaxial  cable and broadband  fixed  wireless  transmission  networks to
deliver our  services.  We believe this  approach  allows the most  flexible and
efficient  delivery of high-speed "last mile"  connectivity and provides a lower
overall network cost for delivering our bundled telecommunications services.

     o We focus on end  users.  We offer our  services  directly  to end  users,
rather than positioning  ourselves as a wholesale network service  provider.  By
deriving our revenues from providing telecommunications services directly to end
user  customers,  we believe we will quickly  establish a sustainable  and broad
customer  base.  We also believe that,  by offering  state-of-the-art  last-mile
connectivity,  we  will  create  significant  barriers  for our  competitors  to
overcome.  This  strategy  should  minimize the risk of  generating  substantial
revenues from only a limited number of sources, and should maximize our revenues
and profitability by allowing us to access the higher priced retail market.

                                       7
<PAGE>


     o We maximize subscriber penetration and focus on the business customer. We
initially offer our services in portions of our markets where we believe we have
the most  potential  to  generate  significant  subscriber  growth.  These areas
include  the  major  metropolitan  areas of  Mexico,  Venezuela,  Guatemala,  El
Salvador, Costa Rica, and Panama, the primary business centers for each country,
which have a potentially greater demand for telecommunications services. Once we
establish  an  operating  platform  in a market  area,  we  focus on  maximizing
subscriber  growth through careful  segmentation of the business  customer base,
customizing the services we offer to each identified segment,  and competitively
pricing our services.

     o We use and support  local  management.  We rely on local  managers in our
markets.  Our local managers play an active role in securing  network rights and
obtaining necessary regulatory  approvals,  assist us in arranging,  identifying
and evaluating  opportunities  for our business,  and provide local advocacy for
our operations.  Our local managers  typically have operating  experience in the
telecommunications industry, and are supported by our corporate operations staff
in the United States.  We believe our use of local managers allows us to respond
rapidly and effectively to operational  matters,  develop and maintain effective
working  relationships with local partners and capitalize on  telecommunications
opportunities. We have recently acquired several companies and have been able to
retain their local experienced management.

     o We  enter  into  strategic  alliances.  We have  entered  into  strategic
alliances  with a number of  companies  already  active  in the  Latin  American
telecommunications  markets.  We believe these partners are both influential and
respected  within their  countries or regions,  and they  typically work closely
with our senior management.

Our Network Technology

         We employ an IP-based technology platform that uses packet switching to
transmit voice, video and data elements over the same network in the majority of
our  markets.  We  combine  this  technology  with a delivery  system  that uses
fiber-optic  networks,  coaxial  cable  networks and wireless  telecommunication
networks.  We believe this  architecture  allows the most efficient  delivery of
high-speed "last mile"  connectivity  with IP-based service  offerings,  such as
Internet,  intranet,  extranet and voice  services.  We also believe an IP-based
platform  provides an  economical  method for  delivering  high quality  bundled
communications services. We ultimately plan to provide voice, data, Internet and
video services over the same network architecture in each of our markets. In the
market areas where we have acquired  companies  that use  non-IP-based  platform
(such as  ATF/frame  relay  systems),  we intend to convert  those  networks  to
IP-based platforms.

                                       8
<PAGE>


         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.  We
believe   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 a
network's capacity.

         Circuit-switched  networks use a single circuit for each  conversation,
and route each data  transmission  separately.  Each  conversation  occupies  an
entire  circuit or portion of the network  for the  duration of the call or data
transmission,  even if there are times when no data is being  transmitted.  In a
packet-switched network, however, 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. 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.

         Packet-switched   networks   have  less   overhead   than   traditional
circuit-switched  networks,  which also  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  (which is the
equivalent  of the  contents  of eight  encyclopedia  volumes)  from New York to
London over a traditional public  circuit-switched  telephone network would cost
the  provider  approximately  $27.00.  The  cost  to move  the  same  amount  of
information over an IP network would be only about $2.00.

         We also believe our IP-based  architecture  facilitates a significantly
more  sophisticated  bandwidth  management  capability.  Most of our competitors
offer only limited bandwidth  guarantees,  such as high-level  voice,  video and
data management,  but we can actively manage bandwidth at a services layer. This
means we can allocate  bandwidth on demand to a  particular  data stream,  voice
conversation  or video stream,  as needed.  We believe this capability will be a
significant service differentiator in the market place.

         We combine 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 been
shown to be a reliable,  high-capacity,  scalable  telecommunications  transport
network  method,  and  standardized   point-to-point   and   point-to-multipoint
equipment is now available from numerous vendors.

         In late 1999, we began the process of selecting a technology partner to
assist us in the design,  construction and financing of our integrated networks.
We received  responses to our request for proposals  from several of the world's
largest telecommunications  systems builders and integrators.  In early 2000, we
narrowed the partner  selection process to three potential vendors and, in March
2000, we entered into an umbrella agreement with Alcatel. Alcatel has operations
in over 130  countries and annual  revenues of over $22 billion,  and is a world
recognized builder of next-generation telecommunications networks.

                                       9
<PAGE>


         The umbrella  agreement is contingent on our  negotiating  with Alcatel
the terms of separate turnkey contracts for the various segments of our network.
Alcatel has agreed to provide us with up to $175 million in vendor  financing as
part of the  relationship.  Under the terms of the agreement,  we will work with
Alcatel  to expand  our  networks  in 17 cities  across  Mexico,  Guatemala,  El
Salvador, Costa Rica, Panama and Venezuela.

         Alcatel has agreed to  construct a state of the art,  "pure" IP network
for us that will  function  for both voice and data  applications.  Although the
contract represents Alcatel's first next-generation IP network to be deployed in
Latin America on a pan-regional  basis,  Alcatel has significant network design,
construction and systems integration experience.  Further, our relationship with
Alcatel  is not  exclusive,  so we will be able  to use the  services  of  other
network and systems  integraters  if, for any reason,  Alcatel has difficulty in
meeting the operational specifications contained in the umbrella agreement.

Our Markets

         We have  grown  rapidly  since we began  our  operations  in 1995.  Our
customer base has increased from 900 cable  television  customers in one country
in 1997, the year we acquired our first operating system, to 659 high-speed data
customers  4,379  dial-up  Internet  customers,   and  29,000  cable  television
customers in nine  countries.  Those numbers will  increase to 1,159,  8,579 and
37,000 respectively,  when we acquire Metrotelecom.  Our customers include large
corporations and businesses,  government agencies and residential customers. Our
focus going forward will be to grow our market share among  business  customers.
The table below  provides  summary  information  regarding  our  operations  and
markets.  Our operations  are described in more detail in the individual  market
discussions on the following pages:


<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                              Customers(2)
                                                        ------------------------
       Country/Market             Operations(1)            1999          2000          GDP(3)       Population(4)
-------------------------  ---------------------------  ------------------------  --------------  -----------------
<S>                         <C>                           <C>        <C>             <C>              <C>
  Mexico                    NS, ISP, WH                      0           535         $410.0 bn           96,000,000
 Central America (5)
     El Salvador            NS, ISP, CATV, Tel, WH       26,000(6)    30,350(7)       $11.8 bn            6,200,000
     Guatemala              NS, ISP, CATV, Tel               0        12,825(8)       $18.6 bn           11,500,000
     Panama                 NS, ISP                          0          267(9)        $8.7 bn             2,700,000
     Costa Rica             NS                               0          3(10)         $9.7 bn             3,700,000
     Dominican Republic     NS                               0          10(11)        $14.6 bn            8,100,000
     Nicaragua              ISP                              0          81(12)        $2.0 bn             4,600,000
     Honduras               ISP                              0         542(13)         4.5 bn             6,200,000
 Venezuela                  NS, ISP                      1,771(14)    2,660(15)       $86.6 bn           22,800,000
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       10
<PAGE>

(1)  "NS" means network  services;  "ISP" means  high-speed or dial-up  Internet
     services;  "CATV" means cable television;  "Tel" means telephone  services;
     and "WH" means web hosting services.

(2)  As of March 31  for the year shown,  with the  exception of the figures for
     Guatemala,  which assume our acquisition of the Metrotelecom  system.  That
     acquisition  is  expected  to  occur  in  early  April  2000.  Without  the
     Metrotelecom subscribers, the customer count in Guatemala would be 125.

(3)  Gross domestic product, as estimated for 1998.

(4)  As of 1999.

(5)  At  December 31,  1998,  this market region  included our  operations in El
     Salvador,  Costa Rica and Panama. At December 31,  1999, this market region
     included our  operations  in those  countries  plus  Guatemala,  Nicaragua,
     Honduras and the  Dominican  Republic.  The customers  attributable  to our
     operations in Guatemala include the customers we will acquire in connection
     with  our  purchase  of  the  Metrotelecom  operations.   The  Metrotelecom
     operations are described below.

(6)  Represents 26,000 CATV subscribers.

(7)  Represents  29,000 CATV  subscribers,  550 network  services and high speed
     Internet access  subscribers  (with over 875  connections)  and 800 dial-up
     Internet customers.

(8)  Represents  506 high speed  data,  4,319  dial-up  Internet  and 8,000 CATV
     customers.  Includes  those  customers  and  services  associated  with the
     Metrotelecom transaction.

(9)  Represents 54 high speed Internet access and network services customers and
     213 dial-up Internet customers.

(10) Represents network services customers.

(11) Represents network services customers.

(12) Represents dial-up Internet customers.

(13) Represents dial-up Internet customers.

(14) Represents dial-up Internet customers.

(15) Represents 12 high speed Internet access and network services customers and
     2,648 dial-up Internet customers.


                                       11
<PAGE>

Mexico

         General.  We entered  the  Mexican  market in 1999.  In June  1999,  we
acquired an approximately 17% of the capacity of a fiber optic network in Mexico
City that is owned by Metronet,  S.A. de C.V., or Metronet,  and entered into an
option to purchase up to 33% of the capacity of that  network.  At closing,  the
network   consisted   of   approximately   117  route   kilometers   (containing
approximately  1,153  kilometers of fiber  strands),  and is configured in three
existing  rings. In connection  with that  transaction,  we also entered into an
agreement with Metronet to jointly pursue the  development of new fiber networks
in seven other major Mexican cities.

         In December, we acquired  International Van, S.A. de C.V., or Intervan,
a corporation  that provides data networking and network access services to over
500 corporate customers (representing over 2200 operating connections) in Mexico
through a nationwide  ATM/frame relay network.  Intervan  currently provides the
majority of its services through a leased network owned by Telmex,  the national
phone company. We intend,  however, to migrate Intervan's customers to our fiber
optic capacity in Mexico to the extent possible.

         Our Market  Opportunity.  We believe  the  Mexican  market  presents an
excellent opportunity for the expansion of our business. Mexico has a population
of approximately 96 million, with a moderate-to-high per capita income. Mexico's
gross  domestic  product  (which was  approximately  $380.9  billion in 1998) is
expected to grow by 5% in 2000, after an increase of 3.7% in 1999. Additionally,
since the signing of the NAFTA Treaty, the Mexican economy has been more closely
tied to the United States  economy,  and it weathered  the recent  international
currency turmoil better than other Latin American countries.

         Although the Mexican telecommunications market is one of the largest in
the world, Mexico had a teledensity of less than 10% in 1998 (compared with over
60% in the United States).  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,
when teledensity is expected to reach 11%. The Mexican data traffic and Internet
access  market is estimated to have a compounded  annual growth rate of 38% over
the next five years.

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

         Telecommunication   services  in  Mexico  and  service   providers  are
regulated and supervised by the Secretaria de  Comunicaciones y Transportes,  or
SCT, and the Cofetel. The SCT is the governmental agency principally responsible
for regulating telecommunications services in Mexico. Cofetel was established by
a  Presidential  Decree  as an  independent  authority  within  the  SCT  and is
responsible for

                                       12
<PAGE>

     o    issuing  secondary  regulations  applicable to the  telecommunications
          industry

     o    recommending to the SCT the grant,  amendment,  extension,  assignment
          and revocation of concessions and permits and

     o    supervising  concessionaires  engaged in interconnection  negotiations
          and,  if  necessary,  resolving  any  differences  arising  from these
          negotiations.

Cofetel  also  regulates  the  auction of radio  spectrum  frequencies.  The SCT
retains,  however,  the  authority to grant all  concessions  and permits and to
resolve  major issues in which  Cofetel can only make  recommendations,  such as
spectrum allocation and the imposition of penalties.

         Under  the Ley  Federal  de  Telecomunicaciones,  or FTL and the Ley de
Inversion Extranjera, or FIL, no more than 49% of the capital stock of a Mexican
corporation  holding a concession  to provide local  telephone,  or domestic and
international  long distance  services,  may be held by  non-Mexican  investors,
except in the case of concessions for cellular communications services, in which
the  participation  of non-Mexican  investors may exceed 49% if the  corporation
obtains the prior  approval of the National  Commission  of Foreign  Investment.
Corporations   holding  those  licenses  may  not  have  foreign  owners  which,
individually  or  collectively,  have  a  direct  participation  in  49%  of the
corporation's voting shares or effective control of the corporation.

         To  provide  public  telecommunications  services  in Mexico  through a
public network,  a service provider must obtain a concession from the SCT. Under
the FTL,  concessions  for public  networks  may not have a term of more than 30
years,  and  concessions  for  radioelectric  spectrum  may not exceed 20 years.
Concessions  may be  extended  for a term  equivalent  to the term for which the
concession was originally granted. In addition to concessions, the SCT may grant
permits for

     o    establishing,   operating  or  exploiting  private  telecommunications
          services not constituting a public network

     o    installing operating or exploiting transmission ground stations and

     o    providing telecommunications services as a reseller.

There is no specified maximum term for permits. Under the FTL, only registration
with the SCT is required to provide value-added telecommunications services

         The  telecommunications  regulations  and  the  concession  of  Telemex
contain various provisions designed to introduce  competition.  In general,  the
SCT is  authorized to grant  concessions  to other parties to provide any of the
services which Telmex has provided under its concession. In 1996, the SCT opened
the Mexican market to  competition  for  fixed-link  domestic and  international
long-distance  telephone services.  Prior to that time, as long as Telmex was in
compliance  with its  concession,  no  competing  long-distance  provider  could
operate.


                                       13
<PAGE>

         Starting   in  1997,   Telmex   was   required   to  permit  any  other
concessionaire to connect to its network. The SCT issued the technical rules for
the interconnection of competing  long-distance carriers with the Telmex network
in  July  1994,   specifying  that  there  would  be  an  unlimited   number  of
long-distance  concessions and that Telmex must provide over 200 interconnection
points by the year 2000.  The Telmex  concession  provides  that other  terms of
interconnecting,  including fees, are generally to be negotiated  between Telmex
and each other long-distance carrier.

         In 1996,  the SCT  released  rules  governing  long-distance  services,
together with basic  technical  plans for numbering and for  signaling.  The new
long-distance   rules   establish   the  general   framework   for   competitive
long-distance   services,   including  rules  regarding  customer  selection  of
carriers, allocation of service-related liabilities,  subscription,  billing and
collection.  They also provide for certain consultation and  information-sharing
mechanisms among service providers and with the SCT.

         Network  Architecture.  We currently  own 17.46% of the capacity of the
Metronet network. As of March 2000, the network had approximately 204 kilometers
of fiber in Mexico City. The network consists of three  interconnected rings and
contains, in the aggregate,  3,929 kilometers of fiber optic strands.  Under the
terms of our purchase of our capacity  rights,  we have the right to purchase up
to a total of 33.33% of the fiber optic  capacity of the network.  Additionally,
we have 2,266 fiber optic strands in Guadalajara  and 2,039  kilometers of fiber
optic  strands in  Monterrey.  Intervan  currently  uses both leased  lines from
Telmex and the Metronet network to provide  services to customers.  We intend to
migrate our customers to the Metronet network to the extent possible.

         The  Metronet  network  currently  consists of over 204  kilometers  of
fiber-optic  pathways.  We  expect  the  network  to be  increased  to over  370
kilometers  by the end of  2000.  We are also  scheduling  the  construction  of
networks in other cities in Mexico, as follows:

     o    We will  construct a network in Monterrey,  and expect to have Phase I
          of the 43 kilometer  network completed by the end of the first quarter
          of this year.

     o    We have scheduled the construction of a network in Guadalajara,  which
          we believe should be completed in the third quarter of this year.

     o    We have scheduled the construction of a 47 kilometer network in Ciudad
          Juarez,  which we believe should be completed in the fourth quarter of
          this year.

     o    We have  scheduled the  construction  of a network in Puebla and Leon,
          which we believe will be completed in 2001.

                                       14
<PAGE>


     o    We intend to enter into  alliances  with third parties that  currently
          own networks in Chihuahua and Tijuana.

         We use an IP-based  network  architecture  in all of our markets except
Mexico, which, due to current customer requirements, uses primarily an ATM/frame
relay system.  We intend,  as the market  allows,  to migrate all of our current
customers in Mexico to our IP-based system and intend to use our IP-based system
for new customers.

         Our Customers. Our customer base in Mexico consists of businesses which
subscribe to our Network Services, high-speed Internet and web hosting services.
The customers  include  multinational  corporations,  governmental  agencies and
other  businesses  in  different  industries,   including  banking,   insurance,
manufacturing, tourism, and retail operations. We intend to expand our marketing
efforts in Mexico to a broader customer base,  including  residential users and,
as regulatory  changes take place,  intend to apply for the authority to provide
telephony services.

     As of March 1, 2000, our top customers in Mexico were as follows:

     o    MCI Worldcom

     o    Grupo Seguridad Integral, S.A. de C.V. (Cometra)

     o    Qualitas Compania de Seguros, S.A. de C.V.

     o    Internacional de Ceramsca, S.A. de C.V. (Interceramic)

     o    Intermedia Communications Inc.

     o    Liberty Mexico Seguros, S.A.

     o    Independencia, S.A. (Financiera Independencia)

     o    Ernst & Young Mexico

     o    Generali Mexico Compania de Seguros, S.A.

     o    Compania Sherwin Williams, S.A. de C.V.

     o    CBI Grupo Financiero

     o    Samsung Electronics, S.A. de C.V.

         Competition.   The   telecommunications   market   in  Mexico  is  more
competitive than most other markets in which we currently operate.  Intervan was
the first  company  offering  data  transmission  services  in Mexico and is the
largest  company in the industry  independent  of carriers.  We believe no other
provider of bundled high-bandwidth services in the market focuses on "last mile"
solutions  as we do. As a result,  we believe we can  successfully  increase our
penetration in the Mexican market by adapting  operating  strategies  similar to
those we have used in our other markets.

                                       15
<PAGE>


         There  are few  companies  offering  comparable  comprehensive  datacom
services in Mexico, and almost all are carrier-related.  Our primary competitors
in Mexico  today are  Telmex,  Avantel  and  Alestra.  Additional  data  service
companies that are indirect  competitors because of a different product offering
(namely  analog-based  services) include Optel and InfoAccess.  A summary of key
operating  data is listed below.  Neither  Avantel nor Telmex  provide  services
beyond connectivity.

                         InterVan        Avantel        Alestra       Telmex
                         --------        -------        -------       ------
FR Ports                  2,200            560            980          4,500
ATM Backbone               YES             YES            YES           YES
Customers                  520             100            150           980
Value Added Services       YES             NO              NO           NO
Outsourcing                YES             NO              NO           NO
Market Share               18%             5%              6%          70%

         Telmex is the largest provider of packet-switched  data  communications
in Mexico through its subsidiary Red Uno. Telmex has successfully capitalized on
its advantage as practically the sole owner of local loops,  public switches and
last-mile  connections in many parts of the country.  Telmex acquired Red Uno, a
data  services  company  in 1996,  which  allowed  it to  position  itself  as a
facilities based VAS provider.  Telmex also offers nationwide  Internet services
under its wholly owned subsidiary UniNet,  which it merged with Red Uno. Avantel
(which is a joint  venture of MCI and Banamex  Accival)  operates  an  extensive
long-haul  fiber optic  backbone in Mexico and focuses  primarily  on  providing
capacity  for  long-distance  and  Internet  traffic.  Because of Telmex's  high
interconnection  prices and  backbone  unreliability,  Avantel  has been able to
position  itself as the main  provider  of  Internet  access to ISPs in  Mexico.
However,  Avantel has not been able to acquire a critical mass of customers that
require wide area connectivity, virtual private networks, or other services that
use  frame  relay and ATM  transmission  technology.  Alestra,  which is a joint
venture of AT&T,  Grupo Alfa and  Bancomer,  has chosen to focus its energies on
increasing its long distance business instead of providing datacom services.

Central America

         General. Our Central American market region operations are conducted in
seven countries--El Salvador, Guatemala, Panama, Costa Rica, Nicaragua, Honduras
and the Dominican Republic. We have over 32,000 customers in those market areas,
including 750 high-speed data customers  (representing over 2,000  connections),
and 1,900  dial-up and  high-speed  Internet  customers.  When we  complete  the
Metrotelecom  transaction (as described  below),  we will add 12,700  additional
customers to that  subscriber  base,  including 510 high-speed  data  customers,
4,200 dial-up and high-speed Internet customers and 8,000 CATV customers.


                                       16
<PAGE>

         We began our  operations  in the region in 1998,  when we  acquired  an
interest in an operating cable television system in El Salvador.  That system is
the largest CATV system in El Salvador.  We also provide network services,  high
speed and dial-up Internet access, web hosting and telephony services.

         In December 1999, we added to our operations in the region by acquiring
all of the  operations  of GBNet  Corporation,  or GBNet,  which  provides  data
networking and internet access services  through seven  subsidiaries to over 400
high-speed data customers  (representing  over 1,200  connections) and over 1000
dial-up Internet customers in Guatemala, Honduras, El Salvador, Nicaragua, Costa
Rica,  Panama  and the  Dominican  Republic.  The  seller of GBNet  was  General
Business Machines Corporation,  or GBM, the exclusive general distributor of IBM
products  and  services  in several  Latin  American  countries,  including  the
countries in which GBNet operates. In connection with that transaction,  we also
entered   into  a  number   of  other   agreements   with   GBM,   including   a
commercialization  agreement  under which GBNet and GBM agreed to recommend  one
another as a preferred provider of services and products,  an equipment purchase
agreement  under  which GBM agreed to provide  GBNet with  preferred  purchasing
terms  on any IBM  equipment  it  acquires  from GBM for its  operations,  and a
network  management  agreement,  under which GBNet will provide GBM with managed
data network services connections.

         Finally,  in  December  1999,  we  entered  into a letter  of intent to
purchase the stock of Grupo Metrotelecom, S.A., a Guatemala holding company that
conducts high-speed data, dial-up and high-speed Internet and telephony services
in Guatemala, and the assets of an affiliate of Metrotelecom, S.A. that provides
CATV services using its own fiber and coaxial cable network. Grupo Metrotelecom,
S.A.  and the CATV  affiliate  are  referred to in this report  collectively  as
"Metrotelecom".  Metrotelecom  currently  has  over  8000  CATV  customers,  510
high-speed  data  customers  (representing  1,500  connections),  4200  Internet
customers  and  processes  over 6 million  telephony  minutes per month.  Unless
otherwise  noted  in  this  report,  the  information   regarding  our  markets,
operations,   subscribers   and  networks   assumes  the   consummation  of  the
Metrotelecom  acquisition.  As described in more detail below, the December 1999
letter of intent  expired  in January  2000,  but we and the  sellers  are still
negotiating  the terms of the final documents for the transaction in good faith,
and we expect to close the transaction in early April,  when we receive the last
of  the  governmental  approvals  for  the  transaction.   We  cannot  give  any
assurances,  however, that the acquisition will take place, or that it will take
place on the terms described below.

         The  following  information  summarizes  our  Central  American  market
operations:

El Salvador.

         General. We currently have over 30,000 customers in El Salvador.  Those
customers include  approximately  29,000 CATV subscribers,  550 network services
and high speed Internet access customers (representing over 875 connections) and
800  dial-up  Internet  customers.  Those  customers  include  approximately  45
high-speed  data  customers  we  acquired  as part of the GBNet  acquisition  in
December 1999. The balance of our El Salvadoran  customers are serviced  through
Chispa Dos, Inc., or Chispa,  a holding  company in which we hold an approximate
33% interest that conducts  operations  exclusively  in El Salvador.  Chispa has
four operating subsidiaries, two of which provide cable television services, one
of which provides data  transmission and Internet access services,  and the last
of which will provide telephone services.  Under the terms of our acquisition of
our interest in Chispa,  we also acquired  operating and  management  control of
that entity.


                                       17
<PAGE>

         The cable television operating  subsidiaries are, together, the largest
cable  television  providers in El  Salvador,  with over 75,000 homes passed and
over 29,000 subscribers.  Those subscribers  represent  approximately 47% of the
CATV market in El Salvador.  The data  services and  Internet  access  operating
subsidiary  launched its services in early 1999 and signed up approximately  333
subscribers in its first two weeks of operations.  That system provides Internet
access over the public  switched  system to over 800  subscribers and high-speed
data services to over 550 subscribers  (representing  over 875 connections).  In
addition,  we recently  executed an  interconnect  agreement  with the incumbent
telephone provider in El Salvador, which allows us to provide telephony services
in that country.  As of March 15, 2000, we were  processing over 900,000 minutes
of telephony per month.

         Our Market  Opportunity.  We believe El Salvador  presents  significant
opportunities for providers of bundled telecommunication  services. In addition,
we believe El Salvador presents favorable market conditions and has demonstrated
its intent to promote  telecommunications  investments by adopting a fairly open
regulatory regimen.

         Despite increased investment in the telecommunications sector since the
end of the El Salvadoran 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 approximately 8.7%, and the average
waiting time for a new line was over five years.  The unmet demand for telephone
lines is  estimated  to be between  500,000  and 800,000  lines.  This need will
contribute  to strong demand for new  telephone  services and, in addition,  the
market for international-long  distance services benefits from the approximately
1 million  Salvadorans  living in the United  States.  Approximately  80% of the
international  long distance revenues from calls to El Salvador are generated by
traffic from the United States.

         El Salvador has Central  America's second largest economy.  In 1998, it
had an annual growth in real gross domestic  products of approximately  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.  The El  Salvador  inflation  rate is  also  relatively  low,  and was
approximately  4.1% per annum in 1998 and 3.5% in 1999. El  Salvador's  exchange
rate has also been historically stable.

                                       18
<PAGE>

         El  Salvador's   population   is   approximately   6.2,   million  with
approximately  1,625,000  of those  persons  living in the  capital  city of San
Salvador.  San Salvador is the financial,  commercial and political center of El
Salvador and has one of Central  America's  highest  population  densities.  The
total number of urban  households in El Salvador is approximately  725,000,  and
the average buying power per urban household is  approximately  $9,620.  The top
three out of five urban socioeconomic  segments present approximately 42% of the
total households in the country.

         Regulatory   Environment.   El  Salvador's   telecommunication  law  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 break up 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,  resolves
conflicts over  interconnection  and access issues,  awards concessions and also
allocates  frequencies.  Concessions  or licenses are required to provide local,
long distance  services and wireless  services,  although there are typically no
build-out  requirements.  The  49%  limitation  on  foreign  ownership  is  only
applicable  to radio  broadcasting  and  television  licenses.  While  rates for
telecommunication services are generally capped, operators are free to set their
actual rates anywhere below the cap. Data service providers, including ISPs, are
not required to obtain a concession or license to offer their services.

         Under the  Telecommunications  Framework  Law,  private  companies  can
currently provide the following telecommunications services in El Salvador:

     o    Wireline Voice (local and long distance)

     o    Data Services

     o    Internet access

     o    Value added services

     o    Wireless services

     o    Cable television

         Network  Architecture.  As  part of our  strategy  to  provide  bundled
high-speed internet access and data connectivity to our customers,  we completed
the  construction of our El Salvador  network in early 1999, which consists of a
fully redundant 100 kilometer fiber-optic ring interconnected with 70 kilometers
of 750 MHz two-way coaxial cable. The all-aerial  network uses coaxial cable for
"last  mile"  connectivity  to our  subscriber  locations.  The  network  covers
approximately  85% of the business  community of San  Salvador.  In areas of new
development,  we  initially  intend to use  wireless  communications  to provide
services  using  wireless  rights we  acquired in 1998,  and then  deploy  cable
through areas of higher density. We also completed the construction of a central
network  operations  center, or NOC, which monitors our El Salvadoran network 24
hours a day,  seven  days a week,  and  provides  real-time  alarm,  status  and
performance  information  and a network  point of  presence,  which  provides an
efficient  method for  detecting  potential  system faults before they occur and
minimizes our response time. During 2000, we intend to complete the upgrading of
approximately 35% of our network to a 750MHz system.

                                       19
<PAGE>


         Our  Customers.  We believe we have  achieved  significant  penetration
levels among our targeted CATV customers, and we are now expanding our marketing
efforts in El Salvador for our CATV services to a broader  residential  customer
base,  including to  subscribers  in the cities of San Miguel and Santa Ana. For
high-speed internet and data transmission  services,  we target  multinationals,
government  agencies,  and other businesses in different  industries,  including
banking,  manufacturing,  tourism and retail  operations.  We recently signed an
interconnect  agreement with the incumbent telephone company, which allows us to
provide telephony services in El Salvador. We intend to market these services to
large multinational  corporations,  governmental  agencies and other business in
different  industries,  and  thereafter,  to a broader range of residential  and
commercial operations.

     As of March 1, 2000, our largest customers in El Salvador were as follows:

     o    Hotels - Camino Real  Intercontinental,  Alameda,  Princess,  Marriot,
          Holiday Inn, Siesta, Mediterraneo Plaza, Novo, Puerto Bus

     o    Hospitals  - Centro  Ginecologico,  Hospital  de  Emergencias,  Centro
          Pediatrico, Hospital de la Mujer

     o    High Speed  Internet - Liceo Frances,  Del Sur S.A. de C.V.,  Compania
          Comercial  Curacao,  Adan Romero,  Newcom El  Salvador,  S.A. de C.V.,
          D'Casa S.A. de C.V.,  Ministerio de Educaion de El Salvadaor,  Edmundo
          Rodriguez,  Corpoweb.com  S.A. de C.V.,  Fonseca  Computadoras S.A. de
          C.V.

         Competition.  Until its  privatization,  the national telephone company
supplied all public telecommunication services in El Salvador. Beginning in July
1998,   various   entities   acquired  control  of  portions  of  El  Salvador's
telecommunication  service industry and, as a result, we currently have a number
of  competitors  in El Salvador for each of our service  offerings.  We believe,
however,  that we are currently  the only  integrated  service  provider that is
capable of  delivering  bundled  broadband,  high-speed  internet  access,  data
transmission, voice and video services to a broad range of customers.

         Based on available  data, we believe our market shares for our services
are  approximately  47% for  cable  television,  and 50%  for  Internet  access.
Information  for data  transmission  is not  generally  available.  Our  primary
competitors in El Salvador, the markets in which they compete and their relative
market shares, are as follows:

     o    Cable Television--Cable Color (34%),

                                       20
<PAGE>

     o    Internet Access--Salnet (21%), CTE (12%), Vignet (12%), Cytec (7%)

     o    Data transmission--CTE (N/A), Tortsatelsa (N/A)

Guatemala.

         General.  We recently  entered into a letter of intent for the purchase
of  Metrotelecom,  a holding company and its affiliate in Guatemala that provide
Internet access,  network services,  CATV and local and long distance  telephony
services.   Metrotelecom   provides   services  to  approximately   8,000  cable
subscribers (with over 50,000 homes passed),  4,200 Internet subscribers and 500
high-speed data customers.  Metrotelecom is the largest ISP in Guatemala and the
second  largest  provider  of  CATV  services.  In  addition,   Metrotelecom  is
processing approximately 8.5 million minutes of telephony per month, which makes
it the  largest  aggregator  of local  minutes  after  the  incumbent  telephone
operator and the  nationalized  cellular  phone  company.  We believe  that,  by
acquiring  Metrotelecom,  we will establish  ourselves as a premier  provider of
broadband,  high-speed internet access and data transmission services, voice and
video services to businesses and residential customers in Guatemala.

         We originally  agreed to acquire  Metrotelecom in February 1999.  Under
the terms of that original  agreement,  we agreed to purchase 60% of the holding
company  for the  ISP,  high-speed  data  and  telephony  services,  but not the
affiliate that owns the fiber optic network those companies use to provide their
services,  or the CATV  subscribers.  In  December  1999,  we  restructured  the
transaction and agreed to acquire 100% of the holding company (rather than 60%),
plus the assets of the  affiliate  that owns the fiber  optic  network  and CATV
subscribers.  The letter of intent  called for a closing of the  transaction  no
later  than  January  2000 (at  which  time the  letter  of  intent  technically
expired), but the parties have agreed to extend their negotiations regarding our
acquisition  of the  operations  and  assets,  and we  expect  to  complete  the
acquisition  in April 2000. In addition to the  subscribers we expect to acquire
in the  Metrotelecom  transaction,  we acquired 6 high-speed data  (representing
over  20  connections)  and 119  dial-up  Internet  customers  in  Guatemala  in
connection our acquisition of GBNet in December 1999.

         Our  Market  Opportunity.   We  believe  Guatemala  offers  significant
opportunities  for  bundled  telecommunication  services.  Guatemala  has  rapid
economic  and  population   growth,   low  penetration  of  telephone  and  data
transmission  services  and a relatively  open  regulatory  regime.  At present,
Guatemala's  teledensity is 5.3%,  the lowest in Central  America after Honduras
(4%) and  Nicaragua  (3%).  However,  we believe  Guatemala's  relatively  large
population,  combined with recently  favorable economic  conditions,  provides a
significant  potential  for  telecommunications  services  growth.  According to
industry   experts,   Guatemala's   telecommunication   sector  will  experience
significant growth following the successful privatization of Telecommunicaciones
de Guatemala,  or Telgua, in October 1998 and the entry of new service providers
into the market.  Telgua  estimates  current  demand for its phone lines  totals
approximately  one million lines,  and the official  waiting list is for 400,000
lines. The teledensity in Guatemala is expected to double by the end of 2001.

                                       21
<PAGE>


         Guatemala  has the  largest  economy in Central  America,  with a gross
domestic product of approximately $18.6 billion. It has shown relatively strong,
sustained  growth,  averaging  4.1%,  over the past four years.  We believe 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 addition, in 1996, Guatemala's government passed legislation
to liberalize and privatize the telecommunications and electricity sectors.

         The  population  of Guatemala is  approximately  12 million.  Guatemala
City, the capital of Guatemala,  has a population of  approximately  2.1 million
and is the industrial and political  center of the country.  The total number of
urban households in Guatemala is approximately  720,000,  and the average buying
power per urban household is  approximately  $14,138.  The top three of out five
urban  socioeconomic  segments in Guatemala  represent  approximately 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  providing  and
regulating  telecommunications  services in Guatemala. As of May 1997, operators
of  telecommunications  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  telephony
providers,  including a subsidiary of Metrotelecom.  These agreements  obligated
Telgua to provide interconnection  services.  Telgua initiated performance under
these agreements in February of 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.  Currently,  privately held  companies can provide  wireline voice
services (local and long distance),  data services,  dial-up Internet  services,
dedicated data services, private network services and value added services.

         Network  Architecture.  We  will  provide  our  services  in  Guatemala
primarily through Metrotelecom's network in Guatemala City, which consists of 90
kilometers of fiber optic  infrastructure with six nodes interconnected with 200
kilometers of coaxial cable. The network, which is all underground, uses coaxial
cable for "last mile" connectivity to subscriber locations. We have also secured
two blocks of frequency in Guatemala's wireless  telecommunications  spectrum to
provide our services through broadband  multi-point wireless  transmissions.  In
1999 we leased a 256 MHz  microwave  connection,  which we intend to increase to
512 MHz between our network in Guatemala  and our network in El Salvador,  which
provides us with a long distance interconnection for our services. We also built
a central NOC in Guatemala  City,  which will monitor the Guatemalan  network 24
hours  a day,  seven  days a week,  and  provide  real-time  alarm,  status  and
performance   information.    Metrotelecom's   network   in   Guatemala   covers
approximately 70% of the business community of Guatemala City.

                                       22
<PAGE>


         Our  Customers.  As of  March  1,  2000,  Metrotelecom's  top  business
customers in Guatemala were as follows:

o  United States Embassy                      o  Cemaco
o  Industria Nacional De Alimentos (INA)      o  Alamacenes Paiz
o  Vecesa                                     o  Aprofam
o  Xerox                                      o  Mislion Diamarca
o  Minugua                                    o  Mision Tecnica Alemana (GTZ)
o  Bolsa de Valores Nacional                  o  Ministerio de Energia y Minas

         Competition.  Internet  services were first  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. We
view the market for internet  access  services to individuals as competitive and
somewhat  fragmented,  but we believe 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  telecommunication services in Guatemala. At the
end of 1997,  Telgua  had  430,000  lines in  service  out of a total of 630,000
installed  lines.  In addition to Telgua's  core  business of  providing  local,
long-distance and international  telecommunication  services, it provides leased
lines,  data network  services,  and telegraph  services.  Telgua has executed a
number of access  agreements  with other operators that are planning to provide,
or have already begun providing,  domestic or international  voice services.  We
expect our  competition  in this area to  increase,  but believe we will have an
advantage over our  competitors  because our services are more reliable and cost
effective.

         In the cable  television  market,  there is one other main  provider of
CATV services in Guatemala City, and hundreds of smaller providers  operating in
rural areas throughout the country.  We believe  Metrotelecom's  CATV operations
are the second largest cable television operations in the country.

         Based on available data, we believe we will have  approximately  32% of
the Guatemalan  market for Internet access, 5% of the Guatemalan market for data
transmission  and 16% of the  Guatemalan  market for CATV once we  complete  the
Metrotelecom acquisition.  Upon the completion of that transaction,  our primary
competitors  in Guatemala,  the markets in which they compete and their relative
market shares will be as follows:

     o    Internet access--Infovia (23%), Quicknet (13%)

     o    Data transmission--Telgua (73%), Totalcom (7%), Cablenet (7%)

     o    CATV--Maya Cable (77%)

     o    Telephony--Telegua (above 70%)

                                       23
<PAGE>

Panama

         General.  In 1999,  we completed the  construction  of phase one of our
network in Panama and began  offering a full range of network  services and high
speed Internet access. As of the date of this report, we have  approximately 267
customers  in  Panama  (54  high-speed  Internet  access  and  network  services
customers and 213 dial-up  Internet  customers) which includes the operations we
acquired  in the GBNet  acquisition.  In 2000,  we intend to build  transmission
nodes in Colon and Los Pueblos, extending our services to those areas.

         Our Market  Opportunity.  We believe  the  Panamanian  market  provides
significant  opportunities for bundled  telecommunications  services. We believe
there is  significant  unmet  demand in Panama  for  basic  telephone  services,
reliable data  transmission and Internet  services,  but that the country enjoys
favorable economic conditions and an open regulatory regime for Internet access,
data transmission and value-added services.

         Cable & Wireless  Panama,  or CWP,  currently  dominates the market for
basic local,  national and  international  voice services  through its exclusive
license,  which will expire on January 1, 2003.  CWP has announced an aggressive
network  buildout  over the next few years,  as it attempts to gain market share
prior to losing its exclusive  market position.  Panama's  teledensity of 15.4%,
however, shows that there is still a high, unmet demand and growth opportunities
for telephone services.  In addition, we believe that the deregulated market for
Internet   access,   data   transmission  and  value-added   services   provides
opportunities  for  companies  like ours to  become a  significant  provider  of
bundled  high-band  width,  high-speed  Internet  access  and data  transmission
services in Panama.

         Panama's  economy is based on a  well-developed  services  sector  that
accounts for approximately  70% of the country's gross domestic  product.  These
services  include the services  relating to the  operation of the Panama  Canal,
banking, insurance, governmental operations, the Transisthmian Oil Pipeline, and
the Colon Free Zone, or CFZ. Panama's economy grew by approximately 1.5% in 1998
and is  expected to have grown by  approximately  3.1% in 1999,  resulting  in a
gross domestic  product for Panama of approximately  $8.7 billion.  Panama has a
population of approximately 2.7 million,  and the top three urban  socioeconomic
segments  represent 43% of total  households.  There are  approximately  365,000
urban  households,  and the  average  buying  power per urban  household  totals
approximately $8,865.

         Regulatory Environment. The new Telecommunications Law of 1996, and the
subsequent sale of a controlling stake of Panama's  national  telecommunications
monopoly, have significantly affected the telecommunications industry in Panama.
We  believe  these  two  events  mark  the  start  of a  liberalization  of  the
telecommunications  sector,  which is  expected  to continue on January 1, 2003,
when  CWP's  exclusive  right  to  provide  local  and  international  telephony
services,  dedicated voice circuits and public and semipublic  terminal services
will end. At that point, a number of telecommunications  services in Panama will
become completely deregulated and opened to competition.

                                       24
<PAGE>


         In July 1999,  Panama  passed a new law  regulating  television,  cable
television and  broadcasting  services.  The law, Law No. 24, provides that both
television and broadcasting  services are now considered public services subject
to  the  supervision  of  Panama's  regulatory  entity,  Ente  Regulador  de los
Servicios  Publicos,  or  ERSP.  As in  the  case  of  other  telecommunications
services,  concessions for the provision of television and broadcasting services
are granted by ERSPS.  Procedures for obtaining concessions of those services or
similar to those  established for other  telecommunication  services.  As of the
date of this  report,  the  markets  for  data  services,  Internet  value-added
services,  trunking,  satellite services, VSAT, and interactive multi-casting to
private user groups is open to competition in Panama.  Basic vocal services,  as
well as basic local and  international  services,  dedicated  voice circuits and
personal telecommunications services are closed. As of January 2003, all markets
currently closed are scheduled to be opened,  but the law is unclear with regard
to the provision of data services using cable installed plant and IP telephony.

         Network  Architecture.  In  1999 we  completed  construction  of  three
wireless hubs in Panama City to deliver  Internet  access and data  transmission
services  using a portion of the Panamanian  radio  frequency.  In addition,  we
completed  the  construction  of a NOC in Panama City and deployed a fiber-optic
connection  between our wireless hubs using pole rights we obtained from a local
power utility.  Our network  currently covers  approximately  60% of the central
business district of Panama City.

         Customers. We intend to provide our high-speed Internet access and data
transmission  services to the large business  community  located in Panama City.
The Panamanian  economy is dominated by a  well-developed  services  sector that
includes  the Panama  Canal,  banking,  insurance,  government  and the CFZ.  In
addition,  we  intend to market  our  dial-up  Internet  access  services  as an
additional service for our high-speed Internet and point-to-point  customers. We
also intend to  aggressively  market our  regional  dial-up  services,  which we
believe will be available in the second quarter of 2000.

         Competition.   Internet  services  first  became  available  in  Panama
following the launch of a microwave link with Costa Rica in June 1994. There are
five major ISPs conducting  business in the Internet services market that have a
combined  customer  base  of  approximately  35,000  subscribers.  Two of  these
competitors  (CWP and Cable Onda)  currently  provide a combination  of Internet
access and data transmission.

         We started  offering  services in Panama at the beginning of 2000.  Our
primary  competitors  in Panama,  and the market shares which they hold,  are as
follows:

     o    Internet  Access--PSINET  (51%),  Orbinet (35%), CWP (40%), Bell South
          (3%)

     o    Data Transmission--Telpan (15%), CWP (75%), others (10%)

                                       25
<PAGE>


Costa Rica.

         General.  In 1999 we completed the  installation of our NOC and one hub
as part of our metropolitan  area network in San Jose, Costa Rica and, under the
terms of the GBNet acquisition,  acquired 3 high-speed data customers, including
GBM, in the country.  Those customers  represent over 8 connections.  We provide
the  high-speed  data  services  through  an  agreement  with  RACSA  (using its
network),  and we provide  international  connectivity  to those customers using
GBNet's frame relay network.  We also currently  provide one-way video, data and
audio  connection to 10 customers in Costa Rica,  and are  conducting  technical
tests for remote surveillance video services.

         Market  Opportunity.  We  believe  the Costa  Rican  telecommunications
market presents strong opportunities for providers of bundled  telecommunication
services,  based  on  the  anticipated  deregulation  of the  market,  favorable
economic  conditions,   and  absence  of  a  single  company  offering  combined
telecommunications services.

         We also  believe  the  telecommunication  sector in Costa  Rica is more
developed than most of the 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
telecommunications market and the expected increase demand for telecommunication
services.

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

         Costa Rica has a  population  of 3.7 million,  and has been  recovering
steadily from its 1996 economic contraction.

         Gross domestic product increased 3.2% in 1997, approximately 5% in 1998
and is expected to have  increased  approximately  1.7% in 1999,  resulting in a
total  gross  domestic  product  of  approximately   $9.7  billion.   There  are
approximately  410,000 urban  households in Costa Rica,  and the average  buying
power per urban  household is  approximately  $8,928.  The top three out of five
socioeconomic segments represent approximately 50% of all households.

         Regulatory  Environment.  In March 2000, Costa Rica's government passed
legislation that will significantly restructure the country's telecommunications
sector. The underlying  approach to the legislation is a gradual  liberalization
of several key markets during the two or three years following its adoption. The
privatization  of Instituto  Costarricense  de Electridad,  or ICE, the national
telephone company, is currently not under  consideration.  Prior to the adoption
of the new law,  cable  television  was open to  competition,  but private  data
networks could be established only for a company's private use. Also, it was not
legal to provide data  networking  service to anyone other than the actual owner
of a network.  We  believe  the new  legislation  for the  restructuring  of the
country's  telecommunication  sector will open local voice,  international  long
distance,  data  services,  Internet  access,  and  wireless  voice  services to
competition.

                                       26
<PAGE>


         Network   Architecture.    In   1999,   we   completed   two   wireless
telecommunications  hubs (including one located at our NOC) which will,  subject
to our receiving  appropriate  approvals,  enable us to deliver Internet access,
data  transmission  and video  services  using a portion of the Costa Rican LMDS
wireless  telecommunications  spectrum.  In addition, we have installed over 2.8
kilometers  of  fiber-optic  cable  hubs,  as the first step  toward  building a
fiber-optic  ring that will allow us to  interconnect  our wireless hubs and our
NOC/hub. The fiber-optic cable run is in the downtown area in one of the central
business  districts  of San Jose.  Our NOC,  which we  completed  in 1999,  will
monitor our network  operations in Costa Rica 24 hours a day, 7 days a week, and
provide real-time alarm, status and performance information.

         The complete  technical plan for our network  deployment in Costa Rica,
once  deregulation  occurs,  will include the  installation of a total of 4 hubs
connected using our wireless  spectrum rights and an  approximately 56 kilometer
fiber-optic ring. The network,  once completed,  will cover approximately 80% of
the business sectors of the San Jose metropolitan area.

         Our  Customers.  Subject  to  our  receiving  appropriate  governmental
authorization,  we intend to provide our bundled services  initially to business
customers in San Jose, which has a population of approximately  1.3 million.  We
intend to offer our high-speed data transmission services to corporations, banks
and financial  institutions,  chain stores and supermarkets,  and our high-speed
Internet access to the top level of socioeconomic segment residential customers,
multi-nationals,  universities and import/export  corporations.  In addition, we
intend to market our dial-up  Internet access services to residential  customers
in the second  socioeconomic  segment as an added value to  business  high-speed
clients, and to small and medium sized companies. We are currently providing one
one-way audio video and data connection to customers.

         Competition.  There is  currently  only one Internet  service  provider
operating in Costa Rica,  which is known as RACSA.  RACSA has  approximately  20
authorized resellers.  These companies act as resellers for both Internet access
and data transmission  services.  We believe the deregulation of the Costa Rican
telecommunications  laws will allow us to  compete  in the  market for  Internet
services and other value-added services.

         ICE,  through  RACSA,  is the sole  provider of bandwidth  within Costa
Rica, so there is presently no developed market for companies to offer dedicated
data transmission  services to corporate  customers.  ICE'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  as a result of the  ratification  of the proposed
telecommunications  law, we believe that, with our  infrastructure  in place and
operational,  we will be well positioned to provide  dedicated data transmission
services to  customers.  We believe we can  differentiate  ourselves  from other
potential  competitors  in the Costa Rican market by offering  speed and network
reliability,    integrated   services   and   solutions   for   our   customers'
telecommunications  needs,  24-hour  technical  and  customer  support and quick
installation.

                                       27
<PAGE>


         The most aggressive  competitors in the market place are two television
companies,  Amzak (Cable Color) and Cable Tica,  which use existing  fiber optic
rings to provide their services and already are providing  Internet services via
cable modem.

Nicaragua, Honduras and the Dominican Republic.

         General.  We acquired our Nicaraguan,  Honduran and Dominican  Republic
operations when we acquired GBNet. We currently have over 633 customers in those
market countries,  consisting of 34 high-speed services customers  (representing
over 100  connections),  and 599 dial-up  Internet  customers.  We service those
customers  through  the  infrastructure  arrangements  we  acquired in the GBNet
acquisition.

         Our  Market  Opportunity.  We  believe  the  Nicaraguan,  Honduran  and
Dominican   Republic   markets   offer   growth    opportunities   for   bundled
next-generation  telecommunications  systems, given the significant unmet demand
for  telephone   communication   services  and  the  growing  demand  for  other
telecommunication  services in those  markets.  The  teledensity  in  Nicaragua,
Honduras and the Dominican Republic are,  respectively 3%, 4% and 9.5%, which in
each case is below the average of approximately 12% for Latin America.  Based on
data for 1993,  Nicaragua had only 67,000 telephones,  Honduras had only 105,000
telephones and the Dominican Republic had only 190,000 telephones.

         Over the past  eight  years,  Nicaragua  has  witnessed  a  significant
increase in its economic  prospects.  Notwithstanding  this  progress,  it still
remains among the poorest countries in the western  hemisphere,  with a 1998 per
capita  gross  national  product of $410.  Hurricane  Mitch  also  significantly
affected the country's  economy.  Gross domestic product growth was projected to
be  approximately  6% for each of 1998  and  1999,  but  (primarily  because  of
Hurricane Mitch) actual gross domestic product growth was only 4% in 1998 and is
expected to be 6% in 1999.

         Honduras also ranks amongst the lowest-income  countries in the western
hemisphere.  Prior to Hurricane Mitch in the fall of 1998, Honduras was pursuing
a modern  economic  reform program and had posted strong annual growth  numbers.
Hurricane Mitch, however,  dramatically changed economic forecasts for Honduras.
Honduras  sustained  approximately  $3  billion  in  damages  as a result of the
hurricane and will probably see gross domestic  product shrink by  approximately
2% in 1999. Significant aid to the country has helped stabilize the economy and,
in addition,  the Paris Club and bilateral  creditors  have offered  substantial
debt relief to the country.  The two largest cities in Honduras are Tegucigalpa,
which has a population of  approximately 2 million  people,  and San Pedro Sula,
which has a population of approximately 1 million.

         The  Dominican  Republic  is  also  one of the  poorer  Latin  American
countries.  In December 1996,  incoming President  Fernandez  presented a reform
package for the Dominican  Republic  that  included a  devaluation  of the peso,
income tax cuts,  a 50%  increase in sales  taxes,  reduced  import  tariffs and
increased gasoline prices, all in an attempt to create a market-oriented economy
that could  compete  internationally.  Most of these reforms were stalled in the
legislature,  but the economy grew vigorously in 1997 and 1998, with tourism and
telecommunications  leading the advance.  The  government is working to increase
electric  generating  capacity,  which it considers a key to continued  economic
growth,  but the  privatization  of the state  electricity  company was met with
several delays. In late September 1998,  Hurricane Georges caused  approximately
$1.3 billion in damages to the country's agriculture and infrastructure.

                                       28
<PAGE>


         Regulatory Environment. The regulatory structure for telecommunications
services  in   Nicaragua,   Honduras   and  the   Dominican   Republic   differs
substantially:

     o Nicaragua. Beginning in August 1994, Nicaragua's telecommunication sector
underwent  a series  of  major  transformations.  At that  time,  the  Instituto
Nicaraguense  de  Telecomunicaciones  y  Correos  was  divided  into  two  legal
entities--Telcor  and Eintel.  TELCOr became Nicaragua's  regulatory agency, and
EINTEL took over the functions of the country's  nationalized telephone company.
The objective was to begin the process of incorporating  new investors in EINTEL
through major changes in the Nicaraguan telecommunications laws. The August 1994
actions were  followed by the  approval,  in August 1995,  of the General Law of
Telecommunications and Other Postal Services (Law No. 200), and the promulgation
of  telecommunications  regulations  under Decree No. 19-96.  In March 1996, the
Nicaraguan assembly enacted the Telecommunications  Framework Law (Law No. 210),
which  established a new regulatory  environment and paved the way for the break
up and  privatization of the  government-owned  monopolies on  telecommunication
services.  That law also provided for the sale of 40% of the shares of EINTEL to
the public.

                  TELCOR,  the  regulatory  entity in charge of  regulation  and
oversight of the telecommunication  sector, is charged with establishing prices,
resolving  conflicts over  interconnection  and access  issues,  and also awards
concessions  and allocates  frequencies.  In December 1999, Law No. 326 modified
Article 29 of Law No. 200 by  deleting  the  limitations  on foreign  ownership.
Those limitations  formerly required  majority  ownership of  telecommunications
companies  to be held by  Nicaraguan  citizens.  The 49%  limitation  on foreign
ownership now only applies to mass media,  which  Nicaragua  designates as radio
broadcasting and television.

         The telecommunications law governs five sectors:

     o    Public services,  which are designated as essential, of utility and of
          general importance to the habitants of Nicaragua

     o    Services  of general  interest,  such as other  public  services,  not
          including  essential public services,  which are offered to the public
          under the guidance of TELCOR

                                       29
<PAGE>


     o    Services of special interest,  which are offered by an operator with a
          limited number of clients

     o    Services of particular  interest,  which are services established by a
          national or legal entity to satisfy its own needs, and

     o    Non-regulated  services,  which are services  generally  designated as
          being  those  services  that  may  be  operated  without   substantial
          limitations or governance from TELCOR

     o Dominican Republic.  In the Dominican  Republic,  the legal framework for
telecommunications is based on General  Telecommunications Law 153-98, which was
enacted in 1998, the resolutions  promulgated  under that law and the concession
agreements that have been entered into by the Dominican Republic with individual
service  providers.  Law 153-98 is the result of a joint government and industry
project  conducted with the assistance of the ITU. As part of this process,  the
ITU drafted a proposed telecommunications law and various regulations, including
interconnection   and  tariff   regulations,   in  consultation  with  Dominican
telecommunications carriers.

         The   Constitution   of  the   Dominican   Republic  also  affects  the
telecommunications  sector.  Among  other  individual  and  social  rights,  the
Constitution   guarantees   Dominican   citizens  the  freedom  of  trade.   The
Constitution  specifically  provides that monopolies may be established only for
the benefit of the Dominican government and must be created by law.

         Law 153-98  established a basic framework to regulate the installation,
maintenance  and operation of  telecommunications  networks and the provision of
telecommunications  services  and  equipment.  The law  adopted  the  "universal
service  principal," by guaranteeing  access by  telecommunications  services at
affordable  prices in low income rural and urban  areas.  The law creates a fund
for the development of the  telecommunications  sector that is supported by a 2%
tax on industry participants' billings for all telecommunications  services. The
law  eliminated  the former 10% tax  charged on billings  of  international  and
domestic long distance traffic to customers.

         Law 153-98  created an  independent  regulator  with strong  regulatory
powers,  the Instituto  Dominicano de las  Telecomunicaciones,  or INDOTEL,  and
established  the  regulator's  responsibilities,   authorities  and  procedures.
INDOTEL is charged with implementing  telecommunications development projects to
satisfy the requirements of the universal service  principal.  Law 153-98 grants
INDOTEL control over all frequency bands and channels of radio  transmission and
communications within the Dominican Republic and over its jurisdictional waters.

         Law 153-98 encourages competition in all telecommunications services by
enforcing  the right to  interconnect  with existing  participants  and ensuring
against monopolistic  practices,  but it also recognizes the legality of certain
concessions that are currently  operational.  The law establishes  mechanisms to
set cost-based  interconnection charges and to resolve interconnection  disputes
by  requiring  existing  operators  to amend  their  interconnection  agreements
consistent with the new requirements. The law also eliminates cross subsidiaries
and  provides  for  progressive  rates,  and  re-balancing  of the tariffs  that
traditionally have been subsidized, in order to reflect costs more accurately.

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<PAGE>

         We believe the increase in tariffs stipulated in the telecommunications
law will have a direct positive impact on our revenues,  since approximately 70%
of our local access lines are primary residential lines and a greater percentage
of our  network  will  consist of primary or first  lines as we expand our local
network. In addition,  interconnection  costs have been reduced to reflect costs
more closely, which should result in higher margins for our operations.  We also
expect the increase in demand for long distance  services  stemming from reduced
long distance fees to encourage continued long distance traffic growth.

     o  Honduras.  In October  1995,  the  Honduran  National  Congress  enacted
Ordinance  185-95.  The  Ordinance  modified  the Organic  Laws of the  Honduran
Telecommunications Company, which was enacted in May 1976, and which created the
National  Commission  of  Telecommunications.  The goal of the  Ordinance  is to
promote the modernization  and  privatization of the various  telecommunications
sectors.

         In September  1998, the National  Congress  adopted  Ordinance  244-98,
which  provided for the creation of a publicly and  privately  funded  entity to
oversee the operation and regulation of the Honduran telecommunications industry
and the grant of concessions and licenses.  That entity is currently  evaluating
various proposals for the private funding.

         Network  Architecture.  We provide our services in Nicaragua,  Honduras
and the Dominican Republic primarily through the networks owned by the incumbent
telecommunications  companies. In Honduras, the government owned entity HONDUTEL
provides  us  access  to the  Internet.  In  the  Dominican  Republic,  we use a
frame-relay  network and leased  lines to provide our  services.  In  Nicaragua,
HONDUTEL also provides us with access to the Internet.

         Our  Customers.  Our  customer  base  in  Nicaragua,  Honduras  and the
Dominican  Republic  consists  primarily  of the  customers  we  acquired in our
December  1999 purchase of GBNet and its operating  companies.  Those  customers
subscribe   to  our   dial-up   Internet   high-speed   services,   and  include
multi-national  corporations,  residential  customers  and other  businesses  in
different industries. We intend to expand our marketing efforts in these markets
to a broader customer base.

         As of March 1, 2000,  the number of our customers and the top customers
in each of these markets were as follows:

     o    Nicaragua--81  dial-up  customers.  Our largest customers include Casa
          Pellas, Challenge Air Cargo and the Venezuelan Embassy.

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<PAGE>

     o    Honduras--542,  of which 24 are high-speed Internet access and network
          services  customers and 518 Internet  dial-up  customers.  Our largest
          customers include Bancansa, Banco Ficohsa and La Curacad.

     o    Dominican  Republic--10  high-speed corporate  customers.  Our largest
          customers include Allegro, E Leon Jimenez and Ray-o-Vac.

         Competition. The telecommunications markets in Nicaragua,  Honduras and
the  Dominican  Republic  are not as  competitive  as other  markets in which we
currently operate, such as Mexico and Venezuela. We believe, however, that there
is currently  no other  provider of bundled  high-band  services in those market
areas that focus on "last mile" solutions.

         Based on available  data,  we believe our market shares for services in
these areas are approximately 5%, 10% and 0% for Internet access and 0%, 20% and
8% for data transmission services in, respectively,  Nicaragua, Honduras and the
Dominican Republic. Our primary competitors in these countries are as follows:

     o    Nicaragua - Telematic, IBW Internet, Alfanumeric, Cablenet and Netport

     o    Honduras - Netsys, Hondulata, and Hundutel

     o    Dominican Republic - CODETEL, GTE and TRICOM

Venezuela

         General. We launched our Venezuelan Internet access,  network services,
and value-added services in August 1998 through the acquisition of Interamerican
Net  de  Venezuela,  S.A.,  or  Inter@net.  Inter@net  is a  Venezuela  ISP  and
high-speed data provider that provides  services  primarily over leased lines to
over  2,660  billed  customers  and  850  prepaid  customers  (12 of  which  are
high-speed  data customers) in the cities of Maracaibo,  Puerto la Cruz,  Ciudad
Ojeda and Caracas.

         In  October   1999,  we  agreed  to  lease  an  existing  65  kilometer
fiber-optic network in Caracas which we will use to provide our services in that
city.  The  lease is one of a  number  of  agreements  that we  entered  into in
connection with our acquisition of $26 million credit facility from the owner of
the network.  The other  agreements  relating to the credit  facility  include a
buildout  agreement,  pursuant  to which we can ask the owner of the  network to
expand the network to locations we specify, and a commercial services agreement,
pursuant to which an affiliate of the network owner will provide us with billing
and other administrative services.

         Our Market  Opportunity.  We believe the Venezuelan  telecommunications
market    offers    growth    opportunities    for    bundled    next-generation
telecommunications  services,  given the significant  unmet demand for telephone
communications  services  and the  growing  demand for other  telecommunications
services in the market. Telecommunications is one of the fastest growing sectors
in Venezuela,  and experienced a 117% increase between 1991 and 1996. The growth
of the market was prompted,  in part, by the  privatization  of the  state-owned
monopoly telephone  services provider,  Compania Anonima Telefonos de Venezuela,
or CANTV,  and the  liberalization  of enhanced  telecommunications  services in
1991. The sector has benefited during the past few 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 4.0 million subscribers
in 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 in the year 2000, up from 16,000 users in 1996.
Cellular  mobile  telephone  penetration  is  expected to grow to 6% in the year
2000, up from 4.1% in 1997.

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<PAGE>

         Venezuela  experienced an economic  slow-down in 1998 and 1999 due to a
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.  Although  Venezuela's  gross domestic product growth was 5.1% in 1997, it
decreased by .1% in 1998, to $86.6 billion.  As a result of the recent  election
of  President  Chavez and the economic and  political  uncertainty  accompanying
those elections, Venezuela is expected to continue experiencing reduced economic
performance in the near term.

         Venezuela has a population of 22.8 million, of which 4.9 million reside
in Caracas. In Venezuela, the top three out of five urban socioeconomic segments
represents 25% of the households,  and the average buying power per household is
approximately $10,590. The relatively high average buying power per household in
the  two  top  socioeconomic  segments  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 access 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  service to competitors in the Venezuelan  market. By 2001, we believe
operators  will be  competing  for  subscribers  in all service  areas.  We also
believe  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. As of the date of this report, the
markets  for  data  services,   dedicated  network  services,  dial-up  Internet
services,  value-added services,  mobile satellite services,  trunking and rural
telephony  have been  privatized,  but the  markets  for basic  local  telephone
services,  domestic long distance and international voice services are currently
closed.

         Network  Architecture.  Inter@net  provides  its  Internet  access  and
network  services  through a system owned by the state-owned  telephone  service
provider. In Caracas, we expect to migrate a portion of our customer base to the
fiber-optic  network that we agreed to lease in late 1999. That fiber-optic ring
consists of approximately 65 kilometers of fiber cable,  configured in rings and
containing  an aggregate of 55  kilometers  of fiber cable.  The network  covers
approximately  90% of the central  business  district  of Caracas.  We intend to
construct a similar 60  kilometer  fiber  network in Maracaibo  this year.  That
network,  when completed,  will cover approximately 95% of the Maracaibo central
business  district.   We  intend  to  migrate  our  customers  from  the  leased
state-owned system to our networks as soon as possible.

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<PAGE>

         Customers.  We target the higher  socioeconomic  segments  in  Caracas,
Maracaibo and Valencia for our Internet access services. For high-speed Internet
and  data  transmission   services,  we  target   multi-national   corporations,
governmental  agencies and other businesses in different  industries,  including
banking,  manufacturing,  tourism and retail  operations.  These  customers  are
mainly  located in the central  business  districts  of Caracas and the business
districts  of  Maracaibo  and  Valencia.  As of March 1, 2000,  our top business
customers included:

o  ABB (Asea Brown Boveri)               o  Video Phaser
o  Nera Telecommunications               o  Ciber Office
o  Noble Drilling                        o  Cyber Cafe
o  Khronos Capital                       o  Carl Hansen
o  Universidad Santiago Marino           o  Ven Max
o  Richard Meyer                         o  Intellisoftware

         Competition.  CANTV has  provided  full service  telecommunications  in
Venezuela since 1894. Its monopoly for basic telephone  services is scheduled to
end in late 2000, by which time it plans to have approximately 3.2 million lines
in service. There are currently two providers of cellular voice services and two
providers of mobile operations services in Venezuela.

         Internet  service was first introduced in Venezuela in the mid-1990s by
a group of small and medium sized ISPs.  By March 1998 there were  approximately
38 ISPs in  operation.  As of year end  1998,  the total  number  of  Venezuelan
Internet   subscribers  was  estimated  to  be  130,000,  of  which  we  service
approximately 3%. We believe the data transmissions services market in Venezuela
is  fragmented,  with  at  least  seven  major  competitors  offering  dedicated
value-added  and private  network  data  services to  corporate  customers.  The
following information shows the composition of the Venezuelan telecommunications
market in each  segment  and the  approximate  market  shares  of the  principal
competitors for those services:

     o    Internet  Access--T-Net (35%), CANTV (23%),  Netpoint (6%), Compuserve
          (3%)

     o    Data Transmission--CANTV (N/A), Bantel (N/A), C-Com (N/A)

Our Other Network Rights

         Argentina. In August 1997 we formed WCI de Argentina, or WCIA, with one
of our major shareholders.  In 1998, WCIA was granted a "value added" license to
provide data  services and video  conferencing  services in  Argentina.  WCIA is
owned 80% by us and 20% by our shareholder. We do not have any active operations
in Argentina.

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<PAGE>

         Venezuela. We own approximately 78% of the stock of Caracas Viva Vision
TV, S.A., or Viva Vision,  a Venezuelan  corporation  that acts as the operating
company for a multi-channel television system in Caracas, Venezuela. The license
for the operation is held by Comunicaciones  Centurion,  S.A., or Centurion.  We
also  own  approximately  8.5%  of  Centurion.  We  are  currently  pursuing  an
arbitration  proceeding against Donald Williams, one of the persons from whom we
acquired our Viva Vision stock, relating to the breach of the representations he
and the other  sellers  of the Viva  Vision  stock made to us when we bought the
stock. As noted in more detail below in our financial statements,  in accordance
with  generally  accepted  accounting   principles  we  have  characterized  our
investment in Viva Vision and Centurion as being impaired.

         Utah (U.S.). We own an interest in wireless network rights and a leased
transmitter  facility in Park City,  Utah.  We acquired  the Park City rights in
August  1995,  and  they  are held by our  wholly-owned  subsidiary,  Transworld
Wireless Television, Inc. The Park City rights consist of four 2.5 GHz channels.
In accordance with Federal Communications Commission requirements,  we broadcast
a carrier signal over the transmitter, but we do not use the Park City rights in
any active  operations.  We intend to either  enter into a joint  venture with a
local  operating  company  in Utah to use  these  rights or sell them to a third
party.

Our Business Operations

         We have adopted a number of  procedures  and  policies  that we believe
allow  us to  operate  more  efficiently  and  provide  better  services  to our
customers. These policies and procedures include the following:

         We  Offer   Bundled   Service   Packages.   We   provide  a  number  of
telecommunications services, and anticipate that we will increase the number and
types  of the  services  we  offer  as we  build  out,  acquire  or  launch  our
telecommunications  systems.  Our services include  standard  telecommunications
services such as high-speed and dial-up  Internet  access and network  services,
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,  we allow our
subscribers to bundle our various services into  customer-specific  packages. We
believe our flexible sales strategy reduces  switching  barriers for subscribers
who may  initially  be  reluctant  to  switch  all of  their  telecommunications
services and vendors at one time or who are subject to existing contracts.

         Our  Pre-Launch  Activities.  Prior to initiating the buildout of a new
market, we conduct  pre-launch studies to evaluate the business market and other
factors relating to market  potential.  We have already  conducted  several such
studies in our markets,  and have created a development plan that identifies the
subscriber  potential of various  areas within our markets based on such factors
as television,  telephone and data penetration  rates,  income levels,  existing
competition and whether or not we have access to existing fiber-optic or coaxial
cable  networks.  Based on the  results of those  studies,  we have  defined the
probable  areas where  fiber-optic,  coaxial  cable or wireless  networks may be
required and where there is the greatest potential for subscriber growth.  After
we initiate  construction of a market's network,  and as the construction of the
network  nears  completion,  we  generally  initiate a  marketing  program.  Our
marketing programs typically include the following:

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<PAGE>

     o    door-to-door sales in commercial buildings

     o    direct mailings

     o    television and print advertisements

     o    advertising on installation vehicles

     o    Internet web pages

     o    telemarketing

     o    participation in professional forums

     o    marketing  tied to  regional  events  such as high  interest  sporting
          events

     o    free or promotional services to key or high profile users

     o    where appropriate,  the use of resellers,  agents and direct marketing
          agencies

         Our  Customer  Service.  We believe  that by  providing  high levels of
customer  service,  we  will  be  able  to  maintain  high  levels  of  customer
satisfaction and minimize subscriber  turnover.  With this objective in mind, we
have adopted operating policies under which:

     o    we complete installations promptly

     o    provide  prompt  customer  service  24 hours a day,  seven days a week
          (using a call center or customer hotline)

     o    provide timely repair service

     o    make new  subscriber  follow-up  calls  after  installation  to ensure
          customer  satisfaction.  We also impart a "customer service" mentality
          in our employees through ongoing in-house training  sessions.  We have
          also adopted various employee  incentive  programs linked to achieving
          high levels of customer satisfaction.

         Our Network Operations Centers. We deploy central node transmission and
switching  equipment in NOCs in each of our principal market areas. Our 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 our
network and,  with respect to our voice  services,  to  interconnect  with local
exchange  networks and long distance  networks.  To ensure that our networks are
working as efficiently as possible, we construct and maintain NOCs which monitor
our various microwave, fiber-optic and coaxial cable networks on a 24 hour a day
basis  and  which  provide  our  operating  personnel  with  alarm,  status  and
performance  information.  The NOCs include  equipment which allow us to conduct
preventive  maintenance  activities of that we can avoid  network  outages or to
respond promptly to any network disruption that might occur.

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<PAGE>

         Our Management  Information Systems and Billing. In the majority of our
operating markets,  we use commercial  management  information systems which are
tailored to meet the requirements of the telecommunications  industry. We intend
to standardize  these systems,  and anticipate  that the integrated  system will
allow us to monitor  customer  service and customer  payment  patterns,  monitor
subscriber  equipment  and  installations,  and manage  each  operating  network
efficiently.  We also have adopted credit  procedures  and  collection  policies
which we believe will minimize subscriber  turnover and uncollectable  accounts.
In certain  instances,  such as our  operations in Venezuela,  we may enter into
services agreements with third parties under which they will provide billing and
collection services for us.

Our Acquisition Strategy

         We intend to pursue our  expansion  strategy in the future by acquiring
broadband  telecommunication  networks  and ISPs that meet our market  selection
criteria.  We have  developed  a series of complex  criteria  to  analyze  these
prospective acquisitions. These criteria include the following:

     o    the number of potential business subscribers in the market

     o    the types of  telecommunications  services  in which  the  subscribers
          would most likely be interested

     o    license rights and concession

     o    the existence of established groupings or blocks of network rights

     o    the  nature,  quality and extent of service  provided by existing  and
          traditional communications networks in the market

     o    demographics

     o    the existence of a strong local strategic partner

     o    political and economic risk

     o    governmental regulation

     o    existing  microwave,  fiber-optic  and/or  coaxial cable  transmission
          facilities

     o    the potential to add business to our subscriber  base by acquiring the
          acquisition target's existing operations.

                                       37
<PAGE>

We also evaluate the potential  acquisition's  ability to facilitate  our use of
economies  of scale and to increase  our  operating  efficiencies,  particularly
where a market  acquisition can add subscribers or add to our existing  regional
market operations.

Our Business and Operating Issues.

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

         Governmental   Regulation.   Our  services  are  subject  to  extensive
governmental  regulation.  The amount, type and extent of that regulation varies
from country to country.  The information  set forth in the subsection  entitled
"Regulatory  Environment"  under  each  of the  market  descriptions  summarizes
certain  governmental  regulations  affecting our ability to own and operate our
networks and provide our 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 our  business as a
whole.

         Risks of Foreign Investment. We have invested and intend 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 our  competitors  or companies
upon which the operating companies and network right holders in which we have an
interest may depend for required services or materials.  Governmental actions in
the future could have a significant effect on the economic conditions in many of
the market areas in which we intend to or have invested,  and otherwise may have
a material adverse effect on our business  operations,  financial  condition and
operations.  Our  interests  in some or all of our  market  countries  could  be
adversely  affected by expropriation,  confiscatory  taxation,  nationalization,
political, economic or social instability, changes in laws or other developments
over which we have little or no control.

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

         International  Currency  Risks.  A number of the  countries in which we
operate, 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 our
operations and business.  We have adopted limited foreign currency exchange risk
procedures  and intend to adopt a country  specific  protocol  in the future for
dealing  with these risks.  There can be no  assurance,  however,  that our risk
procedures  will be adequate or  successful.  The value of the our  interests in
these countries will depend, in part, on currency restrictions and controls that




                                       38
<PAGE>



these countries may impose.

         International  Tax Risks.  We have operations in several Latin American
countries and maintain our 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 we do business,  there is no universal  method or rate of
taxation among our various market countries. In addition, distributions or other
payments we receive from our 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 we own 10% or more of the voting stock,  but our ability to claim any such
foreign tax credits and to use net foreign  losses may be subject to limitations
and  restrictions.  We have adopted limited tax planning  procedures to mitigate
the international tax risks to which we are subject,  but intend to adopt a more
comprehensive  set of planning and operational  procedures in the future.  There
can be no assurance our tax planning will be adequate or successful.

Our Properties and Facilities

         Our Equipment.  Under our letter of intent with Alcatel, we will not be
obligated to use them as the exclusive provider of our network components.  As a
result, we will have the ability to source key network  components from a number
of equipment  vendors.  Fixed local wireless  networks can be constructed  using
equipment  from  different  manufacturers  and can use  different  technologies.
Fiber-optic  and coaxial cable systems can also generally be  constructed  using
equipment from different manufacturers. This is particularly true with equipment
such as switches,  routers and servers where there are many  manufacturers  that
distribute  their  products  through a number of resellers.  We believe that, by
employing standardized  equipment, we will be able to make appropriate decisions
based on the price of the equipment, with less emphasis on the manufacturer.

         Our Office  Space.  As of March 1, 2000, we lease  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.  We  believe  our  office  space in Salt  Lake  City,  Utah and San  Jose,
California is adequate for our current needs, but we recently began negotiations
for a lease for new office space for our Florida  operations.  We believe we all
of our leases are on commercially  reasonable  terms. We also maintain,  through
our  various  subsidiaries  and  affiliates,  office  space in a  number  of the
countries in which we operate.



                                       39
<PAGE>

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

     o    the acquisition of direct ownership rights or rights of use

     o    long-term contracts with third parties

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

     o    contractual  arrangements which we believe provide us with substantial
          managerial and operational control of such assets, including ownership
          positions  in  the  operating   entities  for  the  asset  and,  where
          permissible under local law, ownership positions in the asset holder

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

Content of Our Telecommunications Services

         Our Internet Access and Network Services.  We intend to operate ISPs in
each of our  markets  and provide  Internet  access and network  services to our
subscribers in those countries.  We will offer the services as part of a bundled
offering  under our brand  name,  through a  contractual  arrangement  such as a
partnership,  management  agreement,  services  arrangements,  joint  venture or
otherwise,  or on a transport  basis where our 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.

         We also provide 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.

         Our Voice Services. We intend, subject to local regulation,  to provide
a complete  range of local  exchange and long  distance  services as part of our
services. We anticipate 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.



                                       40
<PAGE>


         Our Television Programming.  We have entered into a number of contracts
with  commercial  television  programming  suppliers and packagers for our video
programming  services.  These contracts  include both master  agreements,  under
which we use specific  programming  in most or all of our markets,  and regional
specific contracts,  pursuant to which we use programming in regional or country
specific markets.

Our Legal Formation and Development

         Our Company's Formation.  Our company was formed in August 1995 for the
purpose of continuing the  development of certain  business assets formerly held
by  Transworld  Telecommunications,  Inc., or TTI, a publicly held United States
corporation.  Through its joint venture entity, Wireless Holdings, Inc., or WHI,
TTI owned  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. In October 1999, Sprint  Corporation
acquired TTI and WHI.

         In July 1995,  TTI decided to  separate  its  business  assets into two
groups. Under the terms of the business separation, TTI formed a new corporation
(our company) to hold TTI's New Zealand and Park City, Utah network rights,  and
the  stock  of  the  new  corporation  was  then  to  be  distributed  to  TTI's
shareholders.  In order to complete the transaction, TTI formed our 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  network
rights.  TTI  immediately  transferred  the  shares of our  company to an escrow
agent, to be held for the benefit of TTI's  shareholders of record on that date.
In December 1996, we became a reporting  company under the  Securities  Exchange
Act of 1934, as amended,  pursuant to a registration statement on Form 10-SB. We
have not yet distributed the shares from the escrow.

         In  connection  with our  formation,  TTI  agreed to loan us up to $1.0
million to finance our operations. TTI loaned us those amounts, which are due in
August 2001, during 1997. We currently owe approximately  $996,000 (plus accrued
interest of approximately $330,000) under that loan.

         Subsequent Financings and Other Transactions.  Since our formation,  we
have engaged in the following significant financings and other transactions:

     o TIC  Transaction.  Prior to January 31, 1997, our primary business assets
consisted of our New Zealand  network  rights and a small  equity  interest in a
company that holds wireless  network  rights in Venezuela.  In February 1997, we
merged  a  newly  formed   wholly-owned   subsidiary  with  Telecom   Investment
Corporation,   or  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  TIC  shareholders  received  685,062  shares  of our newly
designated series A preferred shares and TIC became our wholly-owned subsidiary.
TIC's principal shareholder was George D'Ambrosio,  the late father of our Chief
Executive  Officer.  The series A preferred shares were converted into 6,850,620
common shares  effective  August 1998. As a result of our transaction  with TIC,
the former TIC shareholders and option holders acquired approximately 87% of our
voting control (on a fully diluted common share equivalent  basis).  As a result
of our subsequent  transactions  with other  investors in our stock,  the voting
control of the former shareholders and option holders of TIC has been reduced to
approximately  32%.  Our  transaction  with TIC was  accounted  for as a reverse
acquisition for accounting purposes.



                                       41
<PAGE>



     o FondElec Note and Warrant Offerings. In 1997, we 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 our  common  shares  having a value  equal to the  original  principal
amount of the notes.  Currently,  the warrants entitle their holders to purchase
approximately  331,717  of our  common  shares  at a current  exercise  price of
approximately  $2.626 per share.  FondElec Essential Services Growth Fund, L.P.,
or FondElec,  and certain of its affiliates were the principal  investors in the
notes and warrants.

     o Internexus  Stock  Purchase.  Effective  August 1997,  we sold  Petrolera
Argentina San Jorge S.A.  228,658 of our common shares and 150,380 of our series
A preferred shares for $10 million. The series A preferred shares were converted
into  1,503,800  of our common  shares  effective  August 1998.  Petrolera  also
acquired the right to purchase,  for a nominal  purchase price, an amount of our
common  shares  and/or  series A preferred  shares  sufficient  to maintain  its
percentage  interest  in the voting  control of our  company if we entered  into
transactions for the sale of our securities with certain specified parties on or
before  November  1,  1997.  We  entered  into  transactions  with  two of those
specified parties and, as a result,  Petrolera acquired an additional 199,912 of
our  common  shares  and  23,822 of our  series A  preferred  shares for a total
purchase price of $7,831.  Petrolera subsequently  transferred its common shares
and preferred shares to Internexus, S.A. which is owned by the same shareholders
as Petrolera.  The 23,822 series A preferred  shares were converted into 238,220
of our common shares effective August 1998.

     o FondElec  Stock  Purchase.  Effective  November 1997, we sold FondElec an
aggregate of 424,876 of our common shares and 71,442  series A preferred  shares
for a total  purchase price of  $5,248,795.  The series A preferred  shares were
converted into 714,432 of our common shares in August 1998.

     o Viva Vision  Transaction.  In August  1997,  we acquired 78% of an entity
that operated a cable television  operation in Caracas,  Venezuela.  The entity,
Viva Vision, operated the system using a wireless telecommunications  concession
held  by  Comunicaciones  Centurion,  S.A.  We are  also an  approximately  8.5%
shareholder  of Centurion.  We purchased our interest in Viva Vision for a total
of $1.2  million in cash and  delivered  450,571  shares of our common stock and
101,378 shares of our series B preferred stock for the interest.



                                       42
<PAGE>



     o Acquisition of our El Salvador Operations.  In July 1998, we and FondElec
formed Chispa as a holding company for the acquisition of two subscription cable
television  companies  in El  Salvador.  The  seller  of  the  cable  television
operations was Star Industries, S.A., a Panamanian corporation.  Under the terms
of the agreements for the transactions,  we acquired a 49.5% interest in Chispa,
while FondElec  acquired a 50.5% interest.  The agreements,  provided,  however,
that we would have operating control of Chispa, that we would hold a majority of
the board of  directors'  seats,  and that we would  have the  right to  acquire
FondElec's  interest in Chispa under certain  conditions.  We paid approximately
$2.7 million for our  interest in Chispa and we are required to make  additional
capital  contributions  to it (either in the form of debt or equity) to fund our
prorata portion of its operating costs and deferred  purchase price payments (as
described below) for the two cable television operating subsidiaries.

         The total purchase price for the two operating  subsidiaries was $16.91
million,  approximately  $4.77 million of which we and FondElec paid at closing,
and the balance (approximately $12.14 million, representing the deferred portion
of the purchase price) was paid through  Chispa's  delivery of three  promissory
notes. The first promissory note was in the amount of $5.2 million,  and was due
on February 17, 1999. The second  promissory note, in the approximate  principal
amount of $3.47 million, was due on May 17, 1999, and the final promissory note,
in the original principal amount of $3.47 million,  is due on July 17, 2000. The
amounts  due under  the first and  second  promissory  notes  were  non-interest
bearing,  but the amounts  under the third  promissory  note bear  interest.  In
connection  with  the  closing,  Chispa  also  paid  approximately  $430,000  of
outstanding debt of the cable television operating systems to third party banks.
Chispa has paid the first and second promissory notes.

         In December, 1998, Chispa sold a portion of its equity to a third party
investor  and,  as a result of that  transaction,  our  interest  in Chispa  was
reduced to 44.03%.  Under our  agreements  with  FondElec  and that third  party
shareholder, we still maintained management control over Chispa so that we could
consolidate the results of its operations in our financial statements.

         In October 1999, in connection  with an equity and debt  financing that
we completed with six accredited  investors,  one of those investors  acquired a
direct  interest in Chispa for $5.25 million in cash.  In  connection  with that
purchase, we acquired additional shares in Chispa by capitalizing  approximately
$900,000 on the amounts owed us. As a result of that  transaction,  we currently
hold  approximately  32.64% of  Chispa.  Under the  management  and  shareholder
agreements  for  Chispa,  however,  we  maintain  day-to-day  control  over  its
operations and are entitled to elect 50% of its directors.

     o December 1998  Financings.  In December  1998, we sold $10 million of our
subordinated and exchangeable  promissory notes to FondElec and Internexus.  The
notes were  exchangeable,  at our election,  for preferred  stock having certain
rights  and  preferences  upon the  purchase  by third  parties  of at least $10
million of such preferred stock. The notes bore interest at 10% per annum,  were
due December 23, 2001,  and included  warrants for common shares while the notes
were outstanding.  At the request of FondElec, two of our officers and directors
also  agreed to grant a  FondElec  affiliate  an option to  acquire a portion of
their common shares.  We paid these notes in full in connection with our October
1999 financing  transactions.  We issued  warrants to acquire a total of 454,622
common  shares under the notes.  FondElec  holds  227,311 of those  warrants and
Internexus holds the balance of 227,311 warrants.  The warrants have an exercise
price of $7.50 per common share.

                                       43
<PAGE>

     o Metronet Acquisition.  In June 1999, we acquired approximately 17% of the
capacity of a fiber-optic  network in Mexico City.  The owner of the network was
Metronet, S.A. de C.V., or Metronet.

         We paid $3,928,616  (plus $589,292 in value added taxes and $200,000 in
related  transaction  costs)  for the  capacity.  At the  closing,  we also paid
$149,565  (plus  $22,435 in value added taxes) for a two year option to purchase
additional  capacity  which,  with the capacity we acquired,  will result in our
owning a total of approximately  33% of the network's  capacity.  If we exercise
our option for the  additional  capacity in full,  the  purchase  price for that
additional  capacity would be $4,464,230  (plus value added taxes  applicable to
the  acquisition).  We may  acquire  the  additional  capacity  in  one or  more
portions,  so long as the exercise  price for any portion we acquire is at least
$500,000.  If we acquire any portion of the  additional  capacity after December
15, 1999,  the purchase price for that portion is increased by 3% for each month
after December 15, 1999 and through the closing for that portion.

         In  connection  with our  purchase of the  capacity,  we entered into a
maintenance agreement that governs the terms of our use of the acquired capacity
(and the additional  capacity if we purchase it) and the network's  maintenance.
The maintenance  agreement  remains in effect as long as we hold any interest in
the  network,  subject  to our right to  terminate  the  agreement  on any fifth
anniversary of the agreement.

         We also agreed with Metronet to jointly  pursue the  development of new
fiber networks in the Mexican cities of Monterrey,  Guadalajara, Puebla, Cancun,
Ciudad Juarez, Leon and Tijuana,  and such other locations in Mexico as we agree
from time to time. We will be responsible  jointly for  determining  the nature,
structure,  magnitude and  geographic  coverage of any  development  projects in
those  markets,  as well as the  manner  in which  the  rights  in each of those
projects will be owned by us and Metronet.

         We  financed  our  capacity  purchase  through a  $2,615,925  loan from
FondElec  and a $2,550,000  loan from  Internexus.  The loans were  evidenced by
senior  promissory  notes  which  bore  interest  at 10% per  annum and were due
(together with unpaid interest) on the earlier of January 3, 2000 or our receipt
of proceeds  from any equity or debt  financing.  FondElec and  Internexus  also
received  warrants  to acquire  shares of our common  stock while the notes were
outstanding and a premium based on the actual  repayment date of the notes,  and
the performance of our obligations  under the promissory  notes was secured by a
proxy to vote common shares held by certain of our officers and  directors.  The
premium  amount  varied  depending  on the  repayment  date  of the  notes,  but
represented an annual interest rate of 55% on the unpaid amounts. The promissory
notes were paid in full in October 1999, when (as described  below) we closed an
equity and debt financing with six accredited investors,  including FondElec and
Internexus.  A total number of 96,870 shares are issuable  under the warrants at
an exercise  price of $7.50 per share.  FondElec  holds  warrants  for 49,053 of
those common shares and Internexus holds warrants for 47,817 shares.

                                       44
<PAGE>

     o Bridge Loans.  In August,  September and October 1999 we borrowed a total
of $2.5 million from FondElec and Internexus for our business purposes. FondElec
loaned us a total of $1.0 million of those amounts, and Internexus loaned us the
balance. The loans were due in November and December of 1999. All unpaid amounts
under the loans bore  interest at 13% per annum.  Both  FondElec and  Internexus
received  warrants to acquire common shares in connection with the  transaction.
The  number of shares  subject to the  warrants  was based on the period of time
that the amounts  under the loan were  outstanding.  The loan from  FondElec was
guaranteed by certain of our officers and directors,  who pledged their interest
in a company that holds approximately 900,000 of our common shares. An affiliate
of  FondElec  has an option to acquire  their  interest  in that  company  under
certain  circumstances.  The loans from FondElec and  Internexus  were repaid in
October 1999 by part of the proceeds from the financing transaction we completed
with six  accredited  investors.  FondElec and Internexus can acquire a total of
18,204  common  shares  (at an  exercise  price of $7.50  per  share)  under the
warrants they received in the loan  transactions.  FondElec  holds  warrants for
10,688 of those shares, and Internexus holds warrants for 7,516 common shares.

     o October 1999 Financing.  In October 1999 we closed the first portion of a
$109.5 million  private equity and credit  facility  financing  package with six
accredited  investors.  At the closing, we received $33 million in cash from the
sale of 4.4 million shares of our series C convertible  preferred stock to three
of the six accredited investors' and exchanged approximately $15 million of debt
we  previously  issued  to  two  of  the  accredited   investors  (FondElec  and
Internexus)  into  1,995,577  shares of series C stock.  Those five parties also
acquired options to purchase  2,558,230  additional shares of our series C stock
and warrants to purchase  1,598,894 shares of our common stock, and two existing
shareholders  (Internexus and FondElec) acquired additional warrants to purchase
520,000 shares of our common stock.

     The parties to the stock purchase agreement included:

     o    Telematica EDC, C.A., or Telematica

     o    TCW/CCI Holding LLC, or TCW

     o    the International Finance Corporation, or IFC

     o    Glacier Latin America, LTD, or Glacier

     o    FondElec

     o    Internexus.

                                       45
<PAGE>

         The IFC was named as a party to the agreement, but pursuant to a waiver
by the other  parties,  did not join in the  execution  of the  agreement at the
first closing.  The IFC had until November 19, 1999 to join in the agreement and
to fund its purchase obligations under it.

         Under the agreement, Telematica and TCW were obligated to purchase, for
cash, an additional  2,666,666  shares of series C stock,  options for 1,066,666
shares of series C stock and warrants for 666,666 shares of our common stock for
$20 million at a second  closing that was to be held after the parties  received
clearance under the Hart-Scott-Rodino  Anti-trust  Improvements Act of 1976. The
IFC was also  obligated  to purchase  666,666  shares of series "C" stock and to
acquire an option for  266,666  shares of our series C stock and on warrant  for
166,666  shares of our common stock for $5 million if it joined in the execution
of the financing  agreement.  In early November 1999 we received clearance under
the  anti-trust  laws and, on November 16, 1999, we closed the second portion of
the  financing.  At the  closing,  we  received  $25  million  in cash from TCW,
Telematica and the IFC in exchange for the securities described in the preceding
sentences.  In  connection  with the closing,  we paid our  financial  advisor a
placement fee (and  associated  amounts for expenses) of $2.6 million and issued
it a  four-year  warrant  to acquire  303,333 of our common  shares at $7.50 per
share.  We also paid FondElec an advisory fee of $1,081,500  for their  services
relating to the transaction.

         Under the terms of the financing  agreement,  Telematica also invested,
at the second closing, $5.25 million in Chispa, our El Salvador holding company.
Telematica also agreed to negotiate with us, in good faith, the terms of a joint
venture  agreement,  pursuant  to which  Telematica  and we will each  invest $5
million  to  conduct   telecommunications   operations  in  Columbia.   Finally,
Telematica  also agreed to enter into a long-term  $26 million  credit  facility
with our wholly-owned  Venezuelan subsidiary,  Inter@net and, in connection with
that transaction,  agreed to enter into a fiber-optic  lease,  pursuant to which
Inter@net will lease a portion of Telematica's  existing  fiber-optic network in
Caracas,   Venezuela,   and  a  commercial  services   agreement,   under  which
Telematica's  affiliate will provide  billing,  collection and other  commercial
services to Inter@net.

         A portion of the $26 million credit facility,  $7 million, will be paid
to Inter@net in cash, and the $19 million balance will be advanced to Inter@net,
as  required,  for the purpose of paying its  obligations  under the fiber lease
agreement and the commercial services  agreement.  The outstanding amounts under
the credit  facility bear interest at 3% per year.  Interest will be capitalized
during the first four years of the  facility  and,  thereafter,  are  payable in
cash. The outstanding  principal and unpaid interest  amounts under the facility
are  convertible  to shares of  Inter@net at  Telematica's  election at any time
after the third  anniversary  of the facility,  but  Telematica  can convert the
amounts  due under the  facility  prior to the third  anniversary  if  Inter@net
defaults under the facility.  Assuming the draw down of the entire  facility and
no payment by  Inter@net  of any of the  advanced  amounts,  the  principal  and
interest   advanced  under  the  facility  would  be  convertible   into  shares
representing  50% of  Inter@net's  equity  ownership.  The credit  facility also
provides for a corresponding  subscription right in Telematica's favor, pursuant
to which it is allowed to purchase 50% of the outstanding stock of Inter@net for
$26  million.  As  Inter@net  draws on the  credit  facility,  the  subscription
obligation is proportionately reduced. Any election by Telematica to convert the
amounts due under the facility into shares of Inter@net  must be exercised  with
the subscription right.

                                       46
<PAGE>

         In connection with the closing of the debt and equity facility, we, the
six accredited  investors and certain other parties  (including Lance D'Ambrosio
and Troy D'Ambrosio, who are our officers and directors) executed a shareholders
agreement which provides, among other things, that the shareholder parties to it
may  not  transfer  their  securities  in  our  company  (other  than  to  their
affiliates) except under limited circumstances. The agreement also provides that
each of the  shareholders  will vote for the  election,  at any  election of the
board of directors, for designees of certain other parties to the agreement. Our
directors will make all decisions with respect to ordinary matters regarding our
business and operations by a simple majority vote of the directors  present at a
meeting duly called and convened, but certain actions will require the vote of a
designated director of any three of five director groups,  certain other actions
will require the vote of a designated  director of any four of the five director
groups,  and other  actions will require the vote of a designated  director from
all five director  groups.  The five director groups are the groups of directors
designated by:

     o    Lance  and Troy  D'Ambrosio  and the  estate of their  father,  George
          D'Ambrosio.

     o    TCW.

     o    Telematica.

     o    FondElec.

     o    Internexus.

         We believe the issuance of our securities to the  accredited  investors
was exempt from the  registration  requirements of the federal  securities laws.
The investors were all  sophisticated  investors,  they conducted  extensive due
diligence of our  operations  in  connection  with their  investments,  and they
represented that they were acquiring our securities for investment purposes.

     o  GBNet  Acquisition.  On  December  15,  1999,  we  acquired  all  of the
outstanding  stock of GBNet. The seller of GBNet was GBM, which is the exclusive
general  distributor  of IBM  products and  services in several  Latin  American
countries, including the countries in which GBNet operates.

         The total purchase price for GBNet was $13 million, of which we paid $4
million  in cash at  closing.  We paid  the  balance  of the  purchase  price by
delivering  four  promissory  notes  which are due on the first  through  fourth
anniversaries  of the  closing.  The  notes,  which  bear  no  interest,  are in
principal  amounts  sufficient  to provide GBM with an imputed  interest rate of
10.75% per annum through their anticipated  payment dates. Our obligation to pay
the deferred portions of the purchase price is secured by a pledge of the shares
of GBNet, as well as its operating subsidiaries. A portion of the pledged shares
will  be  released  to us as we pay  down  the  promissory  notes.  GBM  will be
entitled, however, to retain at least 51% of the pledged shares until we pay all
of the amounts under the promissory notes.

                                       47
<PAGE>

     o Intervan  Acquisition.  On December  24,  1999,  we  acquired  all of the
outstanding  stock of  International  Van S.A. de C.V.,  or  Intervan.  Intervan
provides  data  networking  and network  access  services to customers in Mexico
through a  nationwide  ATM  network.  The seller of  Intervan  was  Controladora
S.O.E., S.A. de C.V.

         The total purchase price for Intervan was $21 million, of which we paid
$15 million in cash at the closing. We paid the balance of the purchase price by
delivering  two  promissory  notes  which  are  due  on  the  first  and  second
anniversaries  of the closing.  The promissory  note due in December 2000 is for
$4,500,000 and is non-interest bearing. The promissory note due in December 2001
is for $1,500,000  and bears  interest  during the second year at the rate of 8%
per annum.  The  amounts  represented  by the  promissory  notes are  subject to
downward  adjustment  if Intervan  suffers  recurring  revenue  losses after the
closing.

     o Metrotelecom  Acquisition.  In December 1999, we entered into a letter of
intent to acquire 100% of Metrotelecom.  Metrotelecom  provides  Internet access
services,  high speed data transmission services,  cable television services and
telephony services in Guatemala through an operating fiber optic network located
in Guatemala  City. The letter of intent required the closing of the transaction
to be completed by the end of January  2000,  but the parties have  continued to
work toward the closing, which is now scheduled for April 2000.

         The purchase price for Metrotelecom will be $13.5 million,  of which we
will pay $3.75 million in cash at closing.  We will also deliver  121,212 of our
common shares at closing,  which the parties agree has a value of $1 million. We
will pay the balance of the purchase  price,  $8.75 million,  by delivering four
promissory  notes at  closing.  The notes are due on the  first  through  fourth
anniversary  of the closing,  and bear  interest at a rate of 7% per annum.  The
note due on the first  anniversary is in the original  principal amount of $4.75
million,  and each of the three other notes is in the amount of $1.333  million.
The amount of the first note is subject  to  adjustment,  depending  on the cash
balance and  intercompany  debt of the parties as of the closing date. To secure
our performance under the letter of intent,  we deposited  $375,000 in cash with
an escrow agent in late December  1999. At the closing of the  transaction,  the
amounts held in the escrow will be paid to the sellers and credited  against the
cash portions of the purchase price.

         As part  of the  transaction,  we  will  enter  into a  series  of side
agreements  relating  to our  use of  certain  intellectual  property  that  was
developed  by some  of  Metrotelecom's  principals.  The  intellectual  property
includes  an  operating  and  business  reporting  computer  program and related
software,  as well as certain  operating  technology  and  software  relating to
Metrotelecom's  IP-based technology platform.  Under the terms of the technology
agreement,  we  will  receive  a  worldwide  non-exclusive  license  to use  the
technology.

     o Alcatel Vendor Financing.  In March 2000, we signed a $175 million vendor
financing package preliminary  umbrella agreement with Alcatel.  Under the terms
of the agreement, Alcatel will assist us in the construction of our networks and
provide  systems  integration  services over the next three years.  Alcatel will
finance  up to  $175  million  for the  purpose  of  covering  up to 100% of the
equipment and related services it supplies to us, as well as our purchase of OEM
and other equipment or services through Alcatel.  The agreement is contingent on
the  negotiation  of a  number  of  individual  turnkey  contracts,  as  well as
ancillary  contracts  relating to the securitization of our obligations to repay
Alcatel the amounts we borrow.

                                       48
<PAGE>

         The financing will be structured as three separate loans  (covering our
three basic marketing areas). We will be required to repay the principal amounts
we draw under the financing agreement in quarterly  installments,  commencing 30
months from the closing date. The actual number of quarterly  installments  will
be negotiated by the parties based on a to-be-agreed upon business plan, but the
final  maturity date for the  financing is currently  scheduled to be in January
2007. The financing  will generally be available  through June 30, 2002. We will
pay  interest  on  the  borrowed  amounts  at a  rate  which  we  believe  to be
competitive.

         We will be required to make mandatory  prepayments on the drawn amounts
from any  refinancings  we obtain,  from a portion of our excess cash flow, from
insurance  payments (above thresholds that we will agree upon) and from the sale
of any of our assets.

         The loan will be secured by a comprehensive security package which will
include:

     o    A  pledge  of  their  stock  in our  company  by  each  of  our  major
          shareholder groups.

     o    Pledges of our stock and other equity interests in our subsidiaries.

     o    A first and perfected  security  interest,  to the extent permitted by
          law, in our licenses and permits for the  operation of our networks or
          systems.

     o    A security  interest in our equipment,  supplies,  inventory and other
          personal property.

     o    An assignment, for security purposes, of our material contracts.

     o    A security interest in our accounts receivable.

         In connection with the transaction,  we will be required to pay Alcatel
a commitment fee and an  arrangement  fee, and to issue them warrants in amounts
which we believe are consistent with fees and equity interests  payable to large
vendors for similar transactions.

         We  are  currently   negotiating  the  definitive   documents  for  the
transaction,  and expect to execute  those  documents  in the second  quarter of
2000.  Even  though the  parties  have  spent  considerable  time and  resources
negotiating the terms of the letter of intent,  we can give no assurance that we
will execute  definitive  documents for the transaction with Alcatel or that, if
we do, the definitive documents will not contain terms and conditions materially
different from those described above.

                                       49
<PAGE>

EMPLOYEES
---------
         As of March 1, 2000, we had approximately 475 full-time  employees and,
once we close  the  Metrotelecom  transaction,  we will have  approximately  725
full-time employees. Approximately 30 of our employees work in our United States
offices,  and  the  balance  work in our  subsidiary  operation  offices  in our
markets.  Our  employees  are  not  represented  by  any  unions  or  collective
bargaining entities.

LITIGATION
----------
         In September 1998, we filed two arbitration  proceedings against Donald
Williams, one of our former directors and officers. The first proceeding relates
to a claim for  indemnification for breach of the representations and warranties
made by Mr.  Williams in 1997 when we  purchased of our interest in Viva Vision.
The  other  arbitration  proceeding  requests  a  declaratory  judgment  that we
terminated Mr.  Williams in August 1998 for "cause." The  employment  action was
dismissed in early March 2000.

         In early April 1999, we were 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 for an investment  they  allegedly made in Viva Vision (or
certain  entities  that  previously  held or had the right to  operate  the same
network  rights as Viva Vision does)  before we  purchased  our interest in that
company.  In September 1999, the New Jersey court granted our motion to move the
action to  Federal  District  Court in Utah.  In  February  2000 the  plaintiffs
dismissed the suit without prejudice.

         In August 1999,  we settled a lawsuit that had been filed against us in
Nevada.  Under the terms of the settlement,  we purchased the plaintiff's common
shares for  approximately  $965,000.  We believe the  settlement was in our best
long-term interest.

         Certain  of our  officers  and  directors  have acted as  officers  and
directors of TTI. In December 1997, TTI 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  TTI's
interest  in  certain  United  States  network  rights.  In  October  1999,  TTI
successfully  emerged from  bankruptcy  when Sprint  Corporation  bought TTI and
those United States network rights.

         In March  2000,  we were  named as  defendant  in an action  brought in
federal court in California. The suit claims we defrauded the plaintiffs in 1997
when we diluted  their  position by  engaging  in our merger  with TIC,  that we
breached  contractual  obligations  to offer them a portion of the securities we
sold other parties,  and that the promissory note we executed in favor of TTI is
due now, rather than in August 2001. The plaintiff, which is the assignee of the
promissory  note we executed in favor of TTI in 1997, is in litigation with TTI,
and both TTI and the  plaintiff  are claiming  rights in the note.  We intend to
vigorously defend the action.

                                       50
<PAGE>

                     DIVIDENDS DISTRIBUTIONS AND REDEMPTIONS

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

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

         October 1999 Transactions. In October 1999, we entered into a series of
agreements  relating to our sale to six  accredited  investors  of shares of our
newly designated series C stock. Two of the accredited  investors,  FondElec and
Internexus,  acquired  their shares through the conversion of debt we had issued
them, and the four other investors acquired their shares for cash. In connection
with that transaction,  we, the accredited investors and certain of our existing
shareholders,  entered into an agreement under which TCW,  Telematica,  FondElec
and its affiliates,  Internexus and the group  represented by Lance  D'Ambrosio,
Troy  D'Ambrosio  and the Estate of George S.  D'Ambrosio,  each  agreed to vote
their shares in favor of one designee to our Board of Directors by each of those
shareholder groups (while our Board of Directors consisted of five members),  or
two  designees  to our Board of  Directors  (while it consists of ten  members).
Messrs. Baeza and Bahamonde are the designees of TCW, Messrs. Corredor and Magan
are the  designees  of  Telematica,  Mr.  Schiller  and Mr.  Fucaraccio  are the
designees of Internexus,  Mr.  Sorenson and Mr.  Acosta-Rua are the designees of
FondElec,  and Troy  D'Ambrosio  and Lance  D'Ambrosio  are the designees of the
D'Ambrosio group,  under that agreement.  Those shareholder  parties hold all of
our  outstanding  series C shares  and  approximately  82.3% of our  outstanding
common shares.

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

     o    In August 1997,  we sold  Internexus  $10 million of our capital stock
          and  Internexus  and  we  formed  a  subsidiary  for  the  purpose  of
          developing network rights in Argentina.  The subsidiary is held 80% by
          us and 20% by Internexus.

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

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

                                       51
<PAGE>

     o    In 1997, we sold secured  promissory notes,  together with warrants to
          acquire  common  shares,  to five  accredited  investors,  including a
          warrant for 175,954  common  shares to an affiliate  of  FondElec.  We
          subsequently  repaid those  notes.  In 1997,  we also issued  FondElec
          warrants to acquire an additional  50,000 common shares (at $0.875 per
          share) for services it provided to TIC before the TIC transaction

     o    In November 1997, we sold FondElec $5 million of our capital stock.

     o    Our  subsidiaries  have  entered  into a  number  of  agreements  with
          FondElec and its affiliates with respect to our business operations in
          El Salvador.  Those agreements include the purchase agreements whereby
          we acquired our interest in Chispa and its operating  subsidiaries  in
          that  country,  the sale by  Chispa  of its  capital  stock to a third
          party,  and the documents  relating to the  refinancing of the payment
          obligations for the operating  companies with a commercial lender. Our
          El  Salvador  subsidiary  has also  agreed to grant  FondElec  and our
          company  warrants to acquire shares of its capital stock in connection
          with any loan by us or FondElec to the El  Salvador  subsidiary.  When
          Telematica  purchased its interest in Chispa in October  1999,  Chispa
          used a portion of the  proceeds  from that sale ($3.8  million) to pay
          FondElec amounts Chispa owed it.

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

     o    In August 1999, we entered into an advisory  services  agreement  with
          FondElec  relating  to  our  payment  of  certain  fees  to  FondElec,
          including  fees  (totaling  $1,654,000)  relating  to the  sale of our
          series C stock in our October  1999  financing  transactions.  We paid
          FondElec  the fees due it under the October  financing  when we closed
          the  financing.  FondElec  also  receives  $50,000 per quarter for the
          advisory services it provides us under the agreement.

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

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

     o    In connection with our October 1999 financing transactions, Telematica
          acquired   approximately   32.6%  of  Chispa  for  $5.25  million.  In
          connection  with  Telematica's   acquisition  of  that  interest,   we
          capitalized approximately $900,000 of the amounts that Chispa owed us,
          and Chispa used a portion of the proceeds from Telematica's investment
          (approximately  $3.8 million) to pay a portion of the amounts that the
          subsidiary owed FondElec.

                                       52
<PAGE>

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

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

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

                                 OUR MANAGEMENT

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

Name                         Age     Position
----                         ---     --------
Lance D'Ambrosio............  42     Chief Executive Officer and Chairman of the
                                     Board of Directors
Brian Reynolds..............  43     President and Chief Operating Officer
Jerry Slovinski.............  43     Senior Vice President and Chief Financial
                                     Officer
Troy D'Ambrosio.............  39     Senior Vice President, Legal &
                                     Administration, Director
William Levan...............  45     Senior Vice President, Engineering &
                                     Technology
Jose Miguel Padron..........  45     Vice President, Chief Executive Officer,
                                     CCI Central America
Luis de la Fuente...........  53     Vice President of Strategic Alliances
Sam Nash....................  55     Acting Chief Executive Officer, CCI
                                     Venezuela
Mario Vasquez...............  43     Chief Executive Officer, CCI Mexico
Anthony Sansone.............  35     Vice President, Treasurer and Corporate
                                     Secretary
Gary Barlow.................  34     Vice President of Accounting and Taxation
Mario L. Baeza..............  48     Director
Norberto Corredor...........  36     Director
Gaston Acosta-Rua...........  35     Director
Jorge Fucaraccio............  56     Director
Peter Schiller..............  64     Director
George Sorenson.............  44     Director
Salomon Magan...............  48     Director
Alfonso Bahamonde...........  57     Director

                                       53
<PAGE>

Our Senior Management Team

         Lance D'Ambrosio,  Chief Executive Officer and Chairman of the Board of
Directors.  Mr. D'Ambrosio has been involved in the telecommunications  business
for over nine years and has over 20 years of entrepreneurial  business and sales
experience.  Mr.  D'Ambrosio  is  responsible  for our  acquisitions,  strategic
planning and mergers,  and is responsible  for all of our financing  plans.  Mr.
D'Ambrosio  was one of our  founders  and has been our Chief  Executive  Officer
since inception.  Between 1992 and 1995, Mr. D'Ambrosio served as the President,
Chief  Executive  Officer  and a Director  of TTI, a wireless  cable  television
company  in the  United  States  that had  operations  in six  markets.  TTI was
recently sold to Sprint  Corporation.  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.

         Brian  Reynolds,  President and Chief Operating  Officer.  Mr. Reynolds
joined  us in July  1998 as our  President  and  Chief  Operating  Officer.  Mr.
Reynolds has over 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 us, Mr.  Reynolds acted as a
telecommunications  consultant  to a number of entities,  including our company.
Between  1994 and 1997,  Mr.  Reynolds  served  as Chief  Operating  Officer  of
Wireless  Holdings,  Inc.,  or WHI,  where he was  responsible  for start-up and
growth of its  high-speed  data and wireless cable  operations.  During 1993 and
1994, he was Chief Operating Officer for Australia Media LTD., a combined direct
broadcast  and  wireless  video  company  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.  Before  working for  Sacramento  Cable,  Mr.  Reynolds held
various management positions with Warner Cable. Mr. Reynolds received a Bachelor
of Arts Degree from Rutgers University with an emphasis in Accounting.

                                       54
<PAGE>

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

         Troy  D'Ambrosio,   Senior  Vice  President  Legal  &   Administration,
Director.  Mr.  D'Ambrosio has 18 years of business and  government  experience,
including four years of telecommunications  experience prior to joining us as an
officer in October  1998.  Before  joining  us, he served as Vice  President  of
Administration  and as a Director of TTI and also served in executive  positions
and as a director of WHI and its subsidiaries. TTI and WHI were recently sold to
Sprint  Corporation.  Between  September 1996 and October 1998,  Mr.  D'Ambrosio
served as the Manager of Mutual Fund  Operations for Wasatch  Advisors,  Inc., a
registered  investment  advisory  firm which  manages  approximately  $1 billion
dollars in separately  managed  accounts and maintains a family of mutual funds.
Between July 1992 and November 1993,  Mr.  D'Ambrosio was a Vice President and a
partner  in  a  public  relations  firm  specializing  in  legal,  economic  and
government  relations for business.  Between 1985 and 1992,  Mr.  D'Ambrosio was
with American Stores  Company,  a food and drug retailer with sales in excess of
$20  billion  annually,  where he served  most  recently  as Vice  President  of
Corporate Communications and Government Relations.

         William  Levan,  Senior Vice  President  Engineering & Technology.  Mr.
Levan joined us in March 1998 as our Senior Vice President of  Engineering.  Mr.
Levan is a 23-year  veteran of the  telecommunications  industry and holds seven
patents.  Between 1994 and 1998, he held senior management positions with Hybrid
Networks  in   Cupertino,   California,   most   recently  as  its  Director  or
Applications,  where he was  responsible  for  pre-sales  support  of its Hybrid
Series 2000 broadband modem system.  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.

         Jose Miguel  Padron,  Vice  President and Chief  Executive  Officer CCI
Central America.  Mr. Padron is Vice President & Chief Executive  Officer of our
Central America Region operations.  Mr. Padron originally joined us 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 us in February 1999. Mr.
Padron is the founder of Inter@net, the Venezuelan ISP we 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.

                                       55
<PAGE>

         Luis de la Fuente,  Vice  President of Strategic  Alliances.  Mr. De la
Fuente is our Vice President of Strategic Alliances and also acts as Chairman of
our Mexican operations. Mr. De la Fuente has over 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.

         Samuel Nash, Vice President and Chief Executive  Officer CCI Venezuela.
Mr. Nash has over 30 years of telecommunications  industry experience. He joined
us in February 1999 as our Chief Operating Officer for CCI Mexico.  From January
1998 to 1999, Mr. Nash was responsible for Amaritel/Maxcom,  Mexico's first CLEC
startup, where he served as General Manager,  Network Services and Long Distance
Strategic  Business  Units.  Prior  to  joining  Amaritel,  Mr.  Nash  was  Vice
President,   International   Marketing  &  Business   Development,   for  Sattel
Communications, an affiliate of Hughes Communications, in Calabasas, California.
From 1988 to 1997, Mr. Nash was President of Target Planning  Consulting,  which
served the  telecommunications  and computer industries in the United States and
Canada.  Between  1974 and 1988,  Mr. Nash held  several  positions  at Northern
Telecom  Ltd.,   including  Corporate  Assistant  Vice  President  Product  Line
Management and Director of Marketing & Sales, International Operations. Mr. Nash
holds an  Engineering  Master of  Science  Degree  and Ph.D  Degree  in  Digital
Telecommunications from Eindhoven University of Technology, The Netherlands, and
a Master of Business Administration from Harvard University.

         Mario Vasquez,  Chief Executive Officer CCI Mexico.  Mr. Vasquez joined
us in 1999 when we  acquired  Intervan,  the second  largest  carrier in Mexico,
where he was the President and Chief Executive Officer. Mr. Vasquez has a master
of science in  telecommunications  (University  of Essex,  Great Britain) and an
engineering  degree  in  electronics  and   communications   (Universidad  Ibero
Americana,  Mexico) and brings 26 years of experience in the telecommunication's
field.  Mr. Vasquez began his  telecommunications  career as design  engineer of
radio systems for Ingenieria de Radio (IRASA) in 1975. Between 1979 and 1987, he
was  responsible  for technology  planning and evaluation at Telefonos de Mexico
(Telmex),  the  incumbent  carrier  in  Mexico.  Between  1993 and 1998,  he was
Director  and  General  Manager for Mexico and  Central  America  for  Newbridge
Networks,  and between 1990 and 1993 he was Director of Cable  Systems for AT&T.
Between 1988 and 1990, he was Vice President of Network  Design and  Engineering
for Sersa-Geocomm.

                                       56
<PAGE>

         Anthony Sansone, Vice President, Treasurer and Corporate Secretary. Mr.
Sansone has been with our company since its inception and, until 1998,  acted as
our  controller  in  addition  to his  duties  as our  Corporate  Secretary  and
Treasurer.  Mr.  Sansone has eleven 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 in 1991.

         Gary Barlow, Vice President of Accounting and Taxation.  Mr. Barlow has
twelve years of accounting and financial  experience,  including  eight years of
big-five public  accounting  experience and a combined four years with a Fortune
100 company and another public accounting firm.  Between 1992 and 1996, he was a
senior  auditor  with Price  Waterhouse  in  Northern  California,  serving  SEC
registrant  clients in the high technology  industry.  Between 1997 and 1999, he
was an audit  manager with Deloitte & Touche in Salt Lake City,  Utah,  where he
served  various  clients,  including  SEC  registrants.  Mr.  Barlow  received a
Bachelor of Science degree in Accounting from the University of Utah in 1992 and
is a Certified Public Accountant.

         Mario Baeza,  Director.  Mr. Baeza is the Chairman and Chief  Executive
officer of TCW/Latin  America  Partners,  L.L.C.,  which is the managing general
partner of  TCW/Latin  America  Private  Equity  Partners,  L.P., a $230 million
partnership  organized  by Baeza & Company and jointly  owned by Baeza & Company
and Trust Company of the West.  The fund makes  privately-negotiated  equity and
equity-related  investments in companies in Latin America.  Trust Company of the
West is a global  asset  management  firm with over $60 billion of assets  under
management.  Between  1994 and 1996,  Mr.  Baeza was  President  of  Wasserstein
Perella  International  Limited and Chief Executive Officer of Grupo Wasserstein
Perella,  the Latin  America  division of the firm.  From 1974 to 1994 he was an
associate  and  then,  at the age of 29,  became a  partner,  at the law firm of
Debevoise  &  Plimpton,  where  he  specialized  in  international  mergers  and
acquisitions, international finance and leveraged buyout transactions. Mr. Baeza
has been a Herman Phleger Visiting Professor of Law at Stanford Law School and a
Lecturer  in Law at Harvard Law  School.  Mr.  Baeza is a member of the board of
directors of Air Products and Chemical Company,  an industrial company listed on
the New York Stock Exchange, the Ariel Mutual Funds Complex,  Tendtudo Holdings,
L.L.C.,  Brazil's leading national do-it-yourself home improvement retail chain,
Dekor  Internacional  S.A. de C.V.,  one of  Mexico's  largest  home  finishings
chains,  GDC Alimentos,  S.A.,  Brazil's leading canned seafood  company,  Camil
Alimentos,  S.A., one of Brazil's  leading branded rice and beans processors and
distributors, Dermet de Mexico, Mexico's leading specialty chemical distributor,
and Marta Harff,  a leading  Argentine  brand and retailer of feminine  personal
care products.

                                       57
<PAGE>

         Norberto   Corredor,   Director.   Mr.   Corredor  is  the  Manager  of
Telecommunications  and Automation Services for C.A. La Electricidad de Caracas,
SACA, a Venezuelan  utility  company that is an affiliate of Telematica EDC, one
of our  shareholders.  In that  capacity,  he is  responsible  for  acquisition,
planning,  operation and maintenance of the company's telecommunications network
and automation systems. He has held different management positions during his 15
years with the  company,  including  as a manager  assigned to work in Montreal,
Canada,  where he lead a  development  team  for the  electric  network  control
system.  Mr.  Corredor  has  also  been  involved  in  the  development  of  the
telecommunications  networks and automation  systems of several  utilities in El
Salvador and Colombia.

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

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

         Peter Schiller, Director. Since 1993, Mr. Schiller has been employed by
Bolland S.A and its affiliates, including Petrolera Argentina San Jorge S.A. and
OEA Services,  all of which are Argentinean  corporations engaged in oil and gas
services, where he currently serves as the Director of New Business Development.
Between 1976 and 1993,  Mr.  Schiller held general  management  positions in the
heavy  electromechanical  manufacturing,  automotive  components and non-ferrous
metals industries.  Between 1961 and 1975, Mr. Schiller held a number of product
design and quality control  management  positions in the electrical,  automotive
and tractor industries.

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

                                       58
<PAGE>

         Salomon  Magan,  Director.  Mr.  Magan is Executive  Vice  President of
Strategic  Planning at Grupo EDC (and affiliate of Telematica  EDC), where he is
responsible  for overseeing the company's  strategy and evaluating its portfolio
of investments. He has held several different management positions during his 18
years with the group, and most recently served as Executive Manager,  Generation
and   Transmission,   where   he  was   also   responsible   for   the   group's
telecommunications  operations,  and as Coordinator of the Organizational Change
Committee.  Mr. Magan is a member of the board of directors of several companies
that operate in the utility,  communications and electrical services industries,
including  Energia  del  Pacifico,  EPSA,  and  electric  utility  in  Colombia,
Genevapca CA, Venezuela's leading independent power producer, Telecommunications
de Caracas, CA, which has an agreement with Orbcomm International  Partners, LP,
to offer data communications,  in Central America, and the Caribbean through Low
Earth Orbit Satellite Constellation.

         Alfonso  Bahamonde  Director.  Mr.  Bahamonde is Managing  Director and
Principal in General Partner of TCW/Latin America Partners, LLC (an affiliate of
TCW/CCI  Holding) where he is responsible for managing its business  operations,
including  sourcing,  analyzing and monitoring  its private equity  investments.
Prior to joining TCW/Latin America Partners in September 1996, Mr. Bahamonde was
the Senior  Managing  Director  and Chief  Investment  Officer of Latin  America
Private Equity Partners,  LLC and, immediately prior to that, was Senior Advisor
for  Wasserstein  Perella  & Co.,  Inc.  Mr.  Bahamonde  has  also  held  senior
management  and  officer  positions  with  Continental  Bank,  N.A.,  and  Chase
Manhattan Bank, N.A., primarily in their South American operations.

Our Advisory Board

         We have formed an advisory  board for the  purpose of  assisting  us in
identifying  market and product  development  opportunities,  reviewing with our
management the progress of our specific projects,  recruiting our top management
and  evaluating  our  operational  systems and, in general,  assisting us in our
regulatory and strategic planning.  Members of the advisory board are leaders in
the  fields of  business  and  telecommunications  and  generally  meet with our
management  on an informal  basis.  Our advisory  board has received  options to
acquire a total of 150,000 of our common shares (at our average  exercise  price
of $6.42 per share) as compensation for their services.

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

                                       59
<PAGE>

         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.

Our Board of Directors and Other Information.

         Our Amended and Restated  Certificate of  Incorporation  provides for a
classified Board of Directors consisting of three classes. The directors in each
class serve  staggered  three year terms.  The Class 3 directors,  consisting of
Messrs.  Schiller,  Magan and Bahamonde serve until 2002. The Class 2 directors,
consisting of Messrs.  Troy  D'Ambrosio , Baeza and Corredor,  serve until 2003.
The Class 1 directors,  consisting of Messrs.  Lance D'Ambrosio,  Acosta-Rua and
Fucaraccio,  serve until 2001. At each annual meeting of our  shareholders,  the
successors to the class of directors  whose term expires at that meeting will be
elected to hold office for a term expiring at the annual meeting of shareholders
held in the third year  following  the year of their  election.  Our Amended and
Restated  Certificate  of  Incorporation  provides that directors may be removed
only for cause and only by the affirmative  vote of the holders of two-thirds of
the common shares entitled to vote.

Our Board of Directors Committees

         During 1999, our Board of Directors held 9 meetings,  and each director
attended at least 75% of those meetings. During 1999, the Board of Directors had
four standing committees,  the Audit Committee,  the Compensation Committee, the
Executive Committee and the Special Committee.  However, the Board met as a full
board,  rather than as  committees,  during all of 1999. In December  1999,  the
Board  of  Directors  discontinued  the  Special  Committee,  which  was  formed
primarily  for the purpose of  overseeing  any public  offerings  we made of our
securities.

         Our Audit  Committee  is charged  with the  review of the  professional
services we receive from our independent auditors,  determining the independence
of those auditors,  determining the accuracy of our annual financial statements,
determining  the  appropriateness,  efficiency  and  accuracy  of our  system of
internal accounting controls and financial  reporting  practices,  and reviewing
such other matters  regarding our financial  procedures as may be brought to its
attention  or as may be  specifically  delegated  to it from time to time by our
Board. Upon the Audit Committee's review of any of those matters,  it is charged
with preparing and submitting  periodic reports,  summaries and proposals to our
Board of Directors regarding those matters,  which may then be acted upon by our
full Board.  During 1999, the Audit Committee  consisted of Messrs.  Fucaraccio,
Sorenson  and Troy  D'Ambrosio.  As the  result of the  resignation  of  Messrs.
Sorenson and D'Ambrosio as directors in order to facilitate  the  appointment of
Messrs.  Baeza  and  Corredor  to the  Board of  Directors  in  October  1999 in
connection with our closing of our October 1999  financing,  between October and
December,  the  Audit  Committee  consisted  solely of Mr.  Fucaraccio.  Between
December 1999 and February 2000,  Messrs.  Lance  D'Ambrosio,  Baeza,  Corredor,
Fucarracio and Acosta-Rua  comprised the committee.  In February 2000, the Board
appointed Messrs. Bahamonde, Sorenson, Troy D'Ambrosio, Schiller and Corredor to
serve on the committee and, in March 2000, Mr.  Corredor was appointed  chairman
of the committee.

                                       60
<PAGE>

         Our  Compensation  Committee  is charged with the review of the levels,
form, policies and procedures for the compensation of our executives and agents,
the  review  of  our  pension  and  other  benefit  programs,   and  such  other
compensation  matters as may be brought to its  attention or as may be delegated
to it by our Board.  Upon the  Compensation  Committee's  review of any of those
matters, it is charged with preparing and submitting periodic reports, summaries
of proposals to our Board of Directors regarding those matters for action by the
entire Board. During 1999, the Compensation  Committee consisted of Messrs. Troy
D'Ambrosio,  Acosta-Rua and Fucaraccio.  As the result of the resignation of Mr.
D'Ambrosio as a director in order to facilitate the appointment of Messrs. Baeza
and Corredor to the Board of Directors  in October 1999 in  connection  with our
closing of our October 1999 financing,  between October and December,  the Audit
Committee consisted of Messrs. Acosta-Rua and Fucaraccio.  Between December 1999
and February 2000, Messrs.  Lance D'Ambrosio,  Baeza,  Corredor,  Fucarracio and
Acosta-Rua  comprised  the  committee.  In February  2000,  the Board  appointed
Messrs.  Baeza, Lance D'Ambrosio,  Fucaraccio,  Acosta-Rua and Magan to serve on
the committee, with Messrs. Lance D'Ambrosio and Baeza acting as co-chairman.

         Our Executive  Committee is charged with the  performance of the duties
of our Board of Directors between regularly scheduled meetings of the Board and,
in that capacity,  is charged with the functions,  and has the authority of, the
full Board of Directors with regard to matters addressed by it. During 1999, the
Executive Committee consisted of Messrs.  Lance D'Ambrosio,  Acosta-Rua and Troy
D'Ambrosio. As the result of the resignation of Troy D'Ambrosio as a director in
order to facilitate the  appointment of Messrs.  Baeza and Corredor to the Board
of Directors in October 1999 in connection  with our closing of our October 1999
financing,  between October and December,  the Executive  Committee consisted of
two members,  Lance D'Ambrosio and Gaston Acosta-Rua.  Between December 1999 and
February  2000,  Messrs.  Lance  D'Ambrosio,  Baeza,  Corredor,  Fucarracio  and
Acosta-Rua  comprised  the  committee.  In February  2000,  the Board  appointed
Messrs. Baeza,  Acosta-Rua,  Fucaraccio,  Lance D'Ambrosio and Magan to serve on
the committee.

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

                                       61
<PAGE>

Our Director Compensation.

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

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

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

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

Our Executive Compensation

         The following  information  summarizes the  compensation we paid to our
Chief  Executive  Officer and our four other most highly  compensated  executive
officers whose total salary and bonus exceeded  $100,000 during the fiscal years
ended  December  31, 1999,  December 31, 1998 and December 31, 1997.  We did not
award any of those executive officers any options or stock awards during 1999.

                                       62
<PAGE>

<TABLE>
<CAPTION>

                                                      Annual Compensation
                                        ---------------------------------------------
                                                                                           Other Annual
      Name and Principal Position          Year          Salary             Bonus          Compensation
 ------------------------------------   ----------   --------------   ---------------   -------------------
<S>                                        <C>         <C>                <C>              <C>
  Lance D'Ambrosio                         1999        $165,000           $41,250          $13,800(3)
     Chief Executive Officer               1998        $165,000           $12,500          $13,800(3)
     And Board Chairman                    1997        $165,000(2)         $6,875          $13,800(1), (3)

  Brian Reynolds                           1999        $135,000           $33,750           $6,000
     President and Chief Operating         1998        $135,000(4)        $15,000           $6,000(1)
  Officer                                  1997          $-0-              $-0-              $-0-

  Jerry Slovinski                          1999        $133,333           $32,500          $26,000(1), (6)
     Senior Vice President and             1998        $130,000(5)         $-0-             $6,000(1)
  Chief Financial Officer                  1997          $-0-              $-0-              $-0-

  William Levan                            1999        $120,000           $30,000           $6,000
     Senior Vice President                 1998        $120,000(7)        $10,000           $6,000(1)
  Engineering and Technology               1997          $-0-              $-0-              $-0-

  Troy D'Ambrosio                          1999        $105,000           $26,250           $6,000
     Senior Vice President Legal &         1998        $105,000(8)         $5,000           $6,000(1)
  Legal & Administration                   1997          $-0-              $-0-              $-0-
_______________________
</TABLE>

(1)  Person named was our  employee  during only a part of the year in question.
     The amount shown  assumes full year  premiums on group term life  insurance
     and medical and dental insurance.

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

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

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

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

(6)  Includes a $20,000 loan that was forgiven on November 1, 1999.

(7)  Reflects  full year base salary.  Mr.  Levan became a salaried  employee on
     March 31, 1998.

(8)  Reflects full year base salary.  Mr.  D'Ambrosio became a salaried employee
     on October 1, 1998.


                                       63
<PAGE>

FISCAL YEAR-END OPTION VALUE

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

<TABLE>
<CAPTION>
                                     Number of Securities                  Value of Unexercised
                                    Underlying Unexercised                     In-the-Money
                                 Options at Fiscal Year-End (#)         Options at Fiscal Year-End
                         ------------------------------------     -----------------------------------
   Name                     Exercisable         Unexercisable         Exercisable        Unexercisable
----------------------      -----------         -------------         -----------        ------------
<S>                           <C>                  <C>                <C>                 <C>
Brian Reynolds                183,333              166,667            $1,191,645          $1,083,335
Jerry Slovinski               100,000              150,000              $300,000            $262,500
William Levan                  50,000              100,000              $144,500            $289,000
</TABLE>


         For purposes of determining the values of the options held by the named
executive  officers,  we assumed that the common  shares  underlying  the option
granted had a value of $7.50 per share, which is the estimated fair market value
our  Board  of  Directors  attributed  to  that  stock  on  October 15,  1999 in
connection with the sale of our series C stock. The option value is based on the
difference  between  the  fair  market  value of those  shares,  and the  option
exercise  price per share,  multiplied  by the  number of shares  subject to the
options.

Our Employment Agreements

         We typically enter into an employment agreement with each of our senior
management and key personnel.  The employment  agreements generally have initial
terms of between one and three  years.  Under the  agreements,  the  employee is
entitled to a base salary plus incentive bonuses,  as determined by the Board of
Directors, standard benefits such as health and life insurance and reimbursement
of reasonable  expenses.  The base annual salaries for our senior management and
key personnel during 1999 were as follows:

     o    $165,000 for Lance D'Ambrosio

     o    $135,000 for Mr. Reynolds

     o    $133,333 for Mr. Slovinski

     o    $120,000 for Mr. Levan

     o    $105,000 for Troy D'Ambrosio


The  agreements  also  provide  for moving  allowances  in some  instances.  The
employment agreements for a number of our senior management also provide for the
grant of options.  The option grants are generally  subject to vesting schedules
and require the employee to forfeit portions of the here vested options if he or
she  terminates  the  relationship.  In two  instances  (in the  case of  senior
management personnel who have significant management responsibility for and over
the operation of one of our general market regions),  we have agreed to grant to
the employee a 5% equity interest in our joint ventures and/or our  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 us or other parties in our joint ventures and/or our  subsidiaries
of up to a set amount.

                                       64
<PAGE>

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

Limitations of Liability and Indemnification

         Our  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 an act or omission that involves intentional misconduct or a
knowing violation of the law, or payment of improper  distributions.  Nevada law
also permits a corporation to indemnify any current or former director, officer,
employee or agent if the person  acted in good faith and in a manner in which he
reasonably  believed  to be in or  not  opposed  to  the  best  interest  of the
corporation.  In the case of a criminal proceeding,  the indemnified person must
also have had no reasonable cause to believe that his conduct was unlawful.

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

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

Our Employee Benefit Plans

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

                                       65
<PAGE>

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

         A total  of  1,250,000  common  shares  were  originally  reserved  for
issuance  under the  Incentive  Plan.  Our Board  increased the number of common
shares reserved under the Incentive Plan to 1,820,229  common shares in December
1998. A total of 1,202,000  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
exercised as of March 1, 2000.

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

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

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

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

                                       66
<PAGE>

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

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

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

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

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

              MATTERS SUBMITTED TO THE VOTE OF THE SECURITY HOLDERS

         During  1999 we did not hold an  annual  meeting  of  stockholders.  On
January 14, 2000,  however, we held our annual meeting for the year 2000. At the
meeting, the stockholders:

                                       67
<PAGE>

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

     o    Ratified and approved the appointment of Deloitte & Touche, LLP as our
          independent public accountants for the fiscal year ending December 31,
          1999.

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

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

                           OUR PRINCIPAL STOCKHOLDERS

         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership of our  outstanding  securities as of March 1, 2000 by the
following parties:

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

     o    each  director  and each of our Chief  Executive  Officer and the next
          four highest paid officers, or "Named Executive Officers"

     o    all directors and our executive officers as a group.


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

                                       68
<PAGE>

<TABLE>
<CAPTION>
               Name of                                                 Number of     Percentage of
           Beneficial Owner                     Class                   Shares          Class(1)
           ----------------                     -----                   ------          ------
<S>                                      <C>                          <C>               <C>
TCW/CCI Holding LLC(2)                   Common                              -0-          (*)
    (5% Shareholder)                     Series C Preferred            4,666,666         42.2%

Telematica EDC, C.A.(3)                  Common                              -0-          (*)
    (5% Shareholder)                     Series C Preferred            4,666,666         42.2%

FondElec Essential Service(4)            Common                        2,733,597         22.6%
   Growth Fund, L.P.                     Series C Preferred              933,332          9.3%
    (5% Shareholder)

Internexus, S.A.(5)                      Common                        2,461,234         20.7%
    (5% Shareholder)                     Series C Preferred            1,860,475         18.1%

Estate of George S.                      Common                        1,003,286          8.7%
   D'Ambrosio(6)                         Series C Preferred                  -0-          (*)
    (5% Shareholder)

International Finance                    Common                              -0-          (*)
 Corporation(7)                          Series C Preferred              933,332          9.3%
    (5% Shareholder)

Glacier Latin-America                    Common                              -0-          (*)
 LTD(8)                                  Series C Preferred              560,000          5.7%
    (5% Shareholder)

Lance D'Ambrosio(9)                      Common                        3,564,552         30.8%
    (CEO, Director)                      Series C Preferred                  -0-          (*)

Brian Reynolds(10)                       Common                          183,333          1.6%
    (Pres. and COO)                      Series C Preferred                  -0-          (*)

Jerry Slovinski(11)                      Common                          100,000          (*)
    (Sr. VP and CFO)                     Series C Preferred                  -0-          (*)

Troy D'Ambrosio                          Common                          580,336          5.0%
    (Sr. VP/Director)                    Series C Preferred                  -0-          (*)

William Levan(12)                        Common                           50,000          (*)
    (Sr. VP)                             Series C Preferred                  -0-          (*)

                                       69
<PAGE>

Jose Miguel Padron(13)                   Common                           33,333          (*)
    (VP/CEO of                           Series C Preferred                  -0-          (*)
    Central America
    Operations)

Luis de la Fuente(14)                    Common                           34,000          (*)
    (VP/CEO of Mexico                    Series C Preferred                  -0-          (*)
    Operations)

Anthony Sansone(15)                      Common                          165,555          1.4%
    (Vice President                      Series C Preferred                  -0-          (*)
    Treasurer/Secretary)

Gaston Acosta-Rua(16)                    Common                            4,000          (*)
    (Director)                           Series C Preferred                  -0-          (*)

Jorge Fucaraccio(17)                     Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

Mario Baeza(18)                          Common                              -0-          (*)
    (Director)                           Series C Preferred               10,000          (*)

Norberto Corredor(19)                    Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

George Sorenson(20)                      Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

Peter Schiller(21)                       Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

Salomon Magan (22)                       Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

Alfonso Bahamonde(23)                    Common                              -0-          (*)
    (Director)                           Series C Preferred                  -0-          (*)

All directors and officers as a group    Common                        4,719,455         39.3%
(16 persons)(24)                         Series C Preferred               10,000          (*)
----------------------
*Less than 1%
</TABLE>

                                       70
<PAGE>


(1)  Based on  11,585,489  outstanding  shares  of common  stock  and  9,728,909
     outstanding shares of series C preferred stock. We also have 101,374 shares
     of series B preferred stock outstanding, but have not included those shares
     in this chart. The series B shares are held by approximately  nine holders,
     and two of those holders  (Donald  Williams and his  affiliates,  Caribbean
     Communications,  S.A., own  approximately  65% of all the series B shares).
     The inclusion of any shares as "beneficially  owned" does not constitute an
     admission of beneficial  ownership  (which has a broad definition under the
     securities laws) of those shares.  Unless otherwise indicated,  each person
     listed  has sole  investment  and voting  power with  respect to the shares
     listed. Also, each person is deemed to beneficially own any shares issuable
     on  exercise  of stock  options or  warrants  held by that  person that are
     currently exercisable or that become exercisable within 60 days after March
     1, 2000.

(2)  Includes an option to acquire  1,333,333 shares of series C Stock. Does not
     include 833,333 shares of common stock that may be acquired under the terms
     of a warrant  issued to the  stockholder in October 1999, but which may not
     be exercised until the occurrence of certain specified corporate events.

(3)  Includes an option to acquire  1,333,333 shares of series C Stock. Does not
     include 833,333 shares of common stock that may be acquired under the terms
     of a warrant  issued to the  stockholder in October 1999, but which may not
     be exercised until the occurrence of certain specified corporate events.

(4)  Includes an option to acquire  266,666  shares of series C Stock.  Includes
     513,006 common shares under warrants  granted to the  stockholder  prior to
     October 1999.  Does not include  426,666 shares of common stock that may be
     acquired under the terms of warrants  issued to the  stockholder in October
     1999,  but  which may not be  exercised  until the  occurrence  of  certain
     specified corporate events.

(5)  Includes an option to acquire  531,564  shares of series C Stock.  Includes
     282,644 common shares under warrants  granted to the  stockholder  prior to
     October  1999.  Also  includes  options to acquire 8000 common shares which
     were granted to Internexus'  designees to our Board of Directors  under our
     Director Stock Plan, but which were assigned to Internexus  under the terms
     of the designees'  arrangements  with Internexus.  Does not include 592,228
     shares of common  stock that may be  acquired  under the terms of  warrants
     issued to the  stockholder  in October 1999, but which may not be exercised
     until the occurrence of certain specified corporate events.

(6)  George  D'Ambrosio was the father of Lance  D'Ambrosio and Troy D'Ambrosio.
     Lance  D'Ambrosio  has been  appointed the personal  representative  of the
     Estate of George  S.  D'Ambrosio.  Lance  D'Ambrosio  disclaims  beneficial
     ownership of the shares held by the Estate.

                                       71
<PAGE>

(7)  Includes an option to acquire  266,666  shares of series C Stock.  Does not
     include 166,666 shares of common stock that may be acquired under the terms
     of warrants issued to the stockholder in October 1999, but which may not be
     exercised until the occurrence of certain specified corporate events.

(8)  Includes an option to acquire  160,000  shares of series C Stock.  Does not
     include 100,000 shares of common stock that may be acquired under the terms
     of warrants issued to the stockholder in October 1999, but which may not be
     exercised until the occurrence of certain specified corporate events.

(9)  Includes shares held in the name of Mr.  D'Ambrosio and held in the name of
     entities over which Mr. D'Ambrosio has voting and/or beneficial control and
     for  which he does not  disclaim  beneficial  ownership.  Does not  include
     1,003,286  common  shares held by the Estate of George S.  D'Ambrosio,  for
     which Lance  D'Ambrosio  acts as personal  representative  and for which he
     disclaims beneficial ownership.

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

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

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

(13) Includes options to acquire 33,333 common shares.

(14) Includes options to acquire 34,000 common shares.

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

(16) Mr.  Acosta-Rua  is a principal of FondElec and certain of its  affiliates.
     Mr. Acosta-Rua disclaims beneficial interest in the shares held by FondElec
     and its affiliates. Also includes options to acquire 4,000 common shares.

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

(18) Mr. Baeza is a principal of TCW/CCI  Holding or its  affiliates,  and is an
     officer  and sole  member of a company  that is a member of an entity  that
     controls TCW/CCI Holding.  The shares of series C Stock shown for Mr. Baeza
     reflect  his  indirect  interest in TCW/CCI  Holding's  shares.  Mr.  Baeza
     disclaims  beneficial interest in the shares held by TCW/CCI Holding except
     to the extent of that indirect interest.

(19) Mr.  Corredor is an officer of Telematica or its  affiliates.  Mr. Corredor
     disclaims  beneficial  interest in the shares held by Telematica  except to
     the extent shown.

                                       72
<PAGE>

(20) Mr. Sorenson is a principal of FondElec.  Mr. Sorenson disclaims beneficial
     interest in the shares held by FondElec.  Also includes  options to acquire
     4,000 common shares.

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

(22) Mr. Magan is an officer of an affiliate of Telematica.  Mr. Magan disclaims
     beneficial interest in the shares held by Telematica.

(23) Mr.  Bahamonde  is a principal  of an  affiliate  of TCW/CCI  Holding.  Mr.
     Bahamonde  disclaims  beneficial  interest  in the  shares  held by TCW/CCI
     Holding.

(24) Assumes the matters  set forth in notes 1 through 23.  Includes  options to
     acquire 466,666 common shares.



PART 2.
-------
                MARKET FOR EQUITY AND RELATED SHAREHOLDER MATTERS

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

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

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

                                       73
<PAGE>

         As of the date of this report,  there are  approximately 440 holders of
our  outstanding  common  shares,  nine  holders  of our  outstanding  series  B
preferred shares and six holders of our outstanding series C preferred shares.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           OF CERTAIN RELEVANT FACTORS

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

Overview

         We are in the business of providing high quality,  low-cost  integrated
communications  services using our own metropolitan area networks.  We intend to
operate primarily in recently deregulated and high-growth  markets,  principally
in Mexico,  Central  America and the Andean  region of Latin  America.  We offer
customers  broadband,  high-speed  data  connections,   high-speed  and  dial-up
Internet  access,  voice and video  services in a number of our markets using an
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 our inception in 1995 until 1998, our main activities consisted of
acquiring licenses and authorizations in our various market countries, acquiring
building access rights,  hiring  management and other key personnel,  developing
operating  systems and activities  directly  associated with the acquisition and
deployment of our various  networks.  During fiscal 1998, we first  acquired the
ability  to  provide,  or  introduced,  significant  bundled  telecommunications
services in our markets.

         Since our  inception,  we have  sustained  net losses and negative cash
flow,  both of which have been  significant.  We expect the losses and  negative
cash flow to  continue  until we  develop  a  customer  base that will  generate
sufficient  revenues  to fund our  operating  expenses.  We expect that our 2000
operating and net losses and negative  operating  cash flow will be greater than
in 1999. We also  anticipate that the execution of our business plan will result
in a rapid expansion of our operations,  which may place a significant strain on
our  management,  financial  and other  resources.  Our  ability  to manage  the
problems associated with this expansion will depend,  among other things on, our
ability  to  monitor  operations,  control  costs,  maintain  effective  quality
control, secure necessary interconnect and regulatory approvals, expand internal
management,   technical,   information  and  accounting   systems  and  attract,
assimilate and retain  qualified  management  and  professional  personnel.  Our
inability or failure to effectively manage these issues effectively could result
in significant  subscriber turnover,  stagnant or decreasing  subscriber growth,
managerial  inefficiencies,  missed  corporate  opportunities  and continuing or
increased losses.

                                       74
<PAGE>

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

Accounting Treatment

         Our assets consist primarily of those assets we acquired as a result of
our formation, and those we acquired in the transaction with TIC. 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,   or  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.


                                       75
<PAGE>

Results of Our Operations

1999 compared to 1998

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

         TOTAL REVENUES
         (in thousands)                          1999             1998
         -------------------------              ------           ------
         Intervan (1)                          $   172                -
         GBnet (2)                                 197                -
         Inter@net (3)                           1,156          $   399
         Chispa (3)                              7,562            2,537
         Parent Company and others                  13              177
                                               -------          -------
              Consolidated total               $ 9,100          $ 3,113
                                               =======          =======
-------------------
(1)  1999 revenue includes only eight days of ownership.

(2)  1999 revenue includes only sixteen days of ownership.

(3)  1998 revenue represents less than six months of ownership.

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

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

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

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

                                       76
<PAGE>

         Salaries,  Wages and Benefits. Our salaries, wages and benefits totaled
$5.8  million,  an increase of $3 million (or 107%),  from 1998. We maintained a
total of 490  employees  at December  31,  1999,  compared to 242  employees  at
December 31, 1998. The increase in headcount  reflects both the normal increases
associated with our maturing  operation and the employees we acquired during the
month of December 1999 in our purchases of Intervan and GBnet, which had 126 and
29  employees,  respectively,  at December 31, 1999.  We increased the salaries,
wages and benefits of our  personnel to match market rates and increases in cost
of living.

         Selling, General and Administrative Expenses. We incurred SG&A expenses
of $7.0 million in 1999,  an increase of $2.3 million (or 46%) compared to 1998.
The  increase in SG&A  expenses  reflects  growth in our  operations,  including
completing  significant  acquisitions in 1999 and 1998, as well as the increased
development of our networks. The increase in SG&A reflects:

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

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

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

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

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

         Asset  Impairment.  Since 1997, we have owned  approximately 78% of the
stock  of  Viva  Vision,  which  acts as the  operating  company  for the  local
multi-point  distribution service license held by Centurion.  The total purchase
price for our interest in Viva Vision was approximately $8,300,000, of which the
majority  of the  purchase  price  was  allocated  to an  intangible  asset.  In
connection with the Viva Vision transaction,  we also acquired an 8.46% interest
in Centurion for  approximately  $845,000.  During the fourth  quarter of fiscal
1999, we determined  that our related Viva Vision recorded assets and intangible
assets and our investment in Centurion,  totaling  approximately $5.7 million as
of December 31, 1999 may be impaired.  As a result,  a  recoverability  and fair
value  assessment of the related assets in accordance  with  generally  accepted
accounting  principles  was completed by  management,  which  concluded that the
assets would not be  recovered.  Accordingly,  we recorded an impairment of $5.7
million for the year ended December 31, 1999.

                                       77
<PAGE>

         Interest Expense, Net. Our net interest expense totaled $3.3 million in
1999, consisting of interest expense of $3.7 million and interest income of $0.4
million.  Net interest  expense for 1999  increased  $2.9 million from 1998. The
increase in net interest  expense was  primarily  attributable  to our increased
indebtedness  from  acquisition and financing  activities.  The average interest
rate  recorded  on our  indebtedness  outstanding  as of 1999 was  approximately
10.75%, compared to approximately 10% for 1998.

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

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

     o    the increase in our  amortization  expense on  intangible  assets as a
          result of acquisitions

     o    increased interest expense attributable to our increased  indebtedness
          as a result of acquisitions

     o    the impairment of our Viva Vision and Centurion intangible assets, and

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

1998 compared to 1997

         During the year ended  December 31, 1998, we completed our  development
activities  and  commenced  planned  principal   operations.   We  were  in  the
development stage at December 31, 1997.

         Revenues.  Our  revenues for 1998  totaled  $3.1  million,  compared to
$0.004  million for 1998,  representing a $3.1 million  increase.  The following
table shows our revenues by operating subsidiary for 1998 and 1997:

                                       78
<PAGE>

         TOTAL REVENUES
         (in thousands)                             1998              1997
         -------------------------                 -----             -----
         Inter@net(1)                             $   399                -
         Chispa (1)                                 2,537                -
         Parent Company and others                    177            $  40
                                                  -------            -----
              Consolidated total                  $ 3,113            $  40
                                                  =======            =====
----------------
(1)  1998 revenues represent less than six months of ownership.


         The  increase  in revenues in 1998 was  primarily  attributable  to the
acquisition of our ownership  interests in Inter@net and Chispa for five and six
months of 1998, respectively.

         Variable Cost of Services.  Our variable cost of services  totaled $1.9
million in 1998, an increase of $1.7 million from 1997.  Of total  variable cost
of services for 1998, $1.4 million related to Chispa's operations in El Salvador
and $0.2 million related to Inter@net's operations in Venezuela.

         Salaries,  Wages and Benefits. Our salaries, wages and benefits totaled
$2.8 million in 1998,  an increase of $2.5 million  from 1997.  We  maintained a
total of 242 employees at December 31, 1998, compared to fewer than 20 employees
at December 31, 1997. The increase in headcount reflects normal increases in our
employee count as our operations  matured and the employees we acquired  through
our  acquisitions  during  the  months of July and  August of 1998 of Chispa and
Inter@net, which had 180 and 42 employees, respectively, at December 31, 1998.

         Selling, General and Administrative Expenses. We incurred SG&A expenses
of $4.8 million in 1998, an increase of $3.0 million (or 167%) compared to 1997.
The  increase in SG&A  expenses  reflects  growth in our  operations,  including
completing  significant  acquisitions  in 1998 and increased  development of our
networks. The increase in SG&A reflects:

o    consulting, legal and tax advisor fees, which totaled $2.3 million in 1998,
     compared with $1.2 million for 1997

o    a 196% increase in travel and promotion  costs to $0.7 million  compared to
     $0.2 million in 1997

o    the increase  related  primarily to the expansion of our operations into El
     Salvador and Venezuela and researching  potential business offerings in New
     Zealand and Central America

         Leased License  Expense.  During 1998, after completing a review of our
business plan, we determined to focus our business activities on the acquisition
and  development of Latin America  assets and  businesses.  Accordingly,  leased
license  expense in 1998 primarily  represents an acceleration of the intangible
asset amortization  related to the New Zealand license rights we had owned since
our inception.

                                       79
<PAGE>

         Stock  Compensation  Expense.  We incurred non-cash stock  compensation
expense in 1998 totaling $0.8 million.

         Depreciation  and  Amortization.   Our  depreciation  and  amortization
expense  totaled $2.9 million in 1998,  representing an increase of $2.3 million
compared to 1997. The significant increase relates primarily to the amortization
of intangible assets relating to acquisitions.

         Interest  Expense,  Net. Our net interest expense totaled $0.4 million,
consisting  of  interest  expense of $0.7  million and  interest  income of $0.3
million.  Net interest  expense for 1998  decreased  $0.3 million from 1997. The
decrease in interest  expense was due primarily to recording of interest expense
for warrants we issued below fair value with debt in 1997.

         Net Loss.  We incurred a net loss of $10.2 million in 1998, an increase
of $5.6 million, compared to 1997. The principal reasons for the increase were

     o    the increase in our  amortization  expense on  intangible  assets as a
          result of acquisitions

     o    the amortization of our New Zealand assets

     o    and the increase in SG&A expenses due to the growth in our operations

Liquidity and Capital Resources

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

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

     o    unused proceeds from our October 1999 Financing

     o    borrowings under any definitive vendor financing  agreement we execute
          with Alcatel

     o    additional  private  equity  transactions  relating to the exercise of
          outstanding  options and warrants,  particularly the options we issued
          the six  accredited  investors  in  connection  with our October  1999
          financing transactions.

                                       80
<PAGE>

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

         During 1999, our operating activities used $4.8 million,  compared with
$4.3 million during 1998. Our investing  activities  used $31.6 million in 1999,
compared with $7.8 million during 1998. These changes are primarily attributable
to our GBnet and Intervan  acquisitions,  for which we paid a combined  total of
$18.0  million in net cash on the closing  dates.  Our capital  expenditures  of
$13.1  million  also  contributed  to  the  significant  increase  in  investing
activities  during  1999.  Financing  activities,  principally  our October 1999
financing,  provided  $58.4  million in net cash flow during  1999,  compared to
$10.2 million in 1998.

         As of  December  31,  1999,  we had  current  assets of $31.0  million,
compared to $10.1  million as of  December  31,  1998,  for an increase of $20.9
million. The increase in current assets was primarily due to an increase in cash
as a result of the October 1999 financing.

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

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


                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.

                                       81
<PAGE>

                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Paragraph  16(a) of the  Securities  Exchange Act of 1934, or the "Exchange
Act", requires our executive officers and directors,  and persons who own 10% or
more  of a  registered  class  of our  equity  securities,  which  we  refer  to
collectively as "Reporting Persons", to file reports of ownership and changes in
ownership  with the  Securities  and  Exchange  Commission  if we and our equity
securities  meet certain  requirements.  We have  received  copies of filings on
Forms 3 or 4 for the year ended  December  31,  1999 for Mario  Baeza,  Norberto
Corredor, TCW and Telematica (and certain of TCW's and Telematica's affiliates).
Based solely on our review of these Forms, we believe they were timely filed. We
have not received  Forms 3, 4 or 5 from any other of our  Reporting  Persons for
that period.

                               REPORTS ON FORM 8-K

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

     o    Report on Form 8-K for the event date June 15,  1999,  relating to our
          acquisition of fiber-optic capacity in Mexico City from Metronet.

     o    Report on Form 8-K for the event  date  August 6,  1999,  relating  to
          FondElec's  loan to us of $1 million  and the  dismissal  of a lawsuit
          against us that was brought in the federal district court in the State
          of Nevada.

     o    Report on Form 8-K for the event date  September 3, 1999,  relating to
          Internexus'  loan to us of $1  million  in  September  of 1999  and an
          additional loan of $500,000 in October 1999. The report also describes
          the status of an upgrade to our private  network  concession  that had
          been granted to us by the licensing  authority in  Venezuela,  and the
          grant by the U.S. District Court for the District of New Jersey of our
          motion to move certain  litigation  that was filed  against us in that
          court  in early  1999 to the  United  States  District  Court  for the
          District of Utah.

     o    Report on Form 8-K for the event date  October 18,  1999,  relating to
          our closing of the first portion of our $109.5 million  private equity
          and credit facility  financing package with six accredited  investors,
          and the transactions related to those investments.

     o    Report on Form 8-K for the event date  November 16, 1999,  relating to
          our closing of the final portion of our $109.5 million  private equity
          and credit facility financing package.

     o    Report on Form 8-K for the event date  December 15, 1999,  relating to
          our acquisition of GBNet.

                                       82
<PAGE>

     o    Report on Form 8-K for the event date  December 24, 1999,  relating to
          our acquisition of Intervan.


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                                85
          Consolidated Balance Sheets                                 86
          Consolidated Statements of Operations                       88
          Consolidated Statements of Cash Flows                       89
          Consolidated Statements of Stockholders' Equity             91
          Notes to Consolidated Financial Statements                  93




                                       83
<PAGE>




INDEPENDENT AUDITORS' REPORT

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

We have audited the  accompanying  consolidated  balance  sheets of  Convergence
Communications,  Inc. and subsidiaries,  (the "Company") as of December 31, 1999
and 1998, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the three years in the period ended December
31, 1999. Our audits also included the financial  statement  schedule  listed in
the Index at Exhibit 99. These consolidated  financial  statements and financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  financial  position  of the  Company  at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with accounting  principles  generally accepted in the United States of America.
Also, in our opinion,  such financial  statement  schedule,  when  considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly, in all material aspects, the information set forth therein.


DELOITTE & TOUCHE LLP

Salt Lake City, Utah
March 28, 2000


                                       84
<PAGE>


<TABLE>
<CAPTION>

CONVERGENCE COMMUNICATIONS, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
----------------------------------------------------------------------------------------------------------------
                                                                                    December 31,    December 31,
                                                                                        1999           1998
                                                                                   --------------  -------------
<S>                                                                                <C>             <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                      $  26,303,296   $  4,315,281
    Accounts receivable - net (Note 2)                                                 3,180,748        432,868
    Due from affiliate (Notes 7 and 12)                                                        -      5,000,000
    Inventory - net (Note 2)                                                             262,177        205,408
    Other current assets                                                               1,225,490        173,160
                                                                                   --------------  -------------
                  Total current assets                                                30,971,711     10,126,717

INVESTMENT IN CENTURION (Note 2)                                                               -        845,955
PROPERTY AND EQUIPMENT - net (Notes 2 and 4)                                          28,446,776      8,524,521
INTANGIBLE ASSETS - net (Note 5)                                                      36,660,025     22,650,040
OTHER ASSETS                                                                           1,126,011        325,811
                                                                                   --------------  -------------
TOTAL ASSETS                                                                       $  97,204,523   $ 42,473,044
                                                                                   ==============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Notes payable - current portion (Note 9)                                       $  11,190,987   $  8,676,722
    Accounts payable and accrued liabilities (Note 6)                                  6,851,249      4,344,561
    Due to affiliates (Note 7)                                                           122,356      1,074,855
                                                                                   --------------  -------------
                  Total current liabilities                                           18,164,592     14,096,138

LONG-TERM LIABILITIES:
    Subordinated  exchangeable  promissory  notes (payable
     to related  parties) (Notes 10 and 12)                                                    -     10,000,000
    Notes payable - long-term portion (Note 9)
                                                                                      11,389,937      3,987,268
    Long-term debt (payable to related parties) (Note 7)
                                                                                       2,595,634      1,224,504
    Other long-term liabilities
                                                                                         185,686        135,091
                                                                                   --------------  -------------
                  Total long-term liabilities
                                                                                      14,171,257     15,346,863
MINORITY INTEREST IN SUBSIDIARIES
                                                                                       5,493,394      2,345,517
                                                                                   --------------  --------------
                  Total liabilities
                                                                                      37,829,243     31,788,518
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS' EQUITY  (Note 10):
    Series "B" Preferred stock; $0.001 par value; 750,000 shares authorized:
       101,374 shares issued and outstanding in 1999 and 1998.
                                                                                             101            101
    Series "C" Preferred stock; $0.001 par value; 14,250,000 shares authorized:
       9,728,909 shares issued and outstanding in 1999 and 1998.
                                                                                           9,729              -
    Common stock; $0.001 par value; 100,000,000 shares authorized:
       11,585,489 and 11,738,277 outstanding in 1999 and 1998, respectively
                                                                                          11,585         11,738
    Additional paid-in capital
                                                                                      95,147,893     26,179,739
    Accumulated deficit
                                                                                    (35,764,016)   (15,486,537)
    Accumulated other comprehensive loss
                                                                                        (30,012)       (20,515)
                                                                                   --------------  -------------
                  Total stockholders' equity
                                                                                      59,375,280     10,684,526
                                                                                   --------------  -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $  97,204,523   $ 42,473,044
                                                                                   ==============  =============
</TABLE>


See notes to consolidated financial statements.



                                       85
<PAGE>


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

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
-----------------------------------------------------------------------------------------------------------------------
                                                                   Year Ended          Year Ended          Year Ended
                                                                  December 31,        December 31,        December 31,
                                                                      1999                1998                1997
                                                              ------------------  ------------------  -----------------
<S>                                                           <C>                 <C>                 <C>
NET REVENUES FROM SERVICES                                        $   9,099,054       $   3,113,482         $   40,186
                                                              ------------------  ------------------  -----------------
COSTS AND EXPENSES:
    Variable cost of services                                         3,202,017           1,876,133            165,048
    Salaries, wages and benefits                                      5,768,580           2,756,212            343,072
    Selling, general and administrative                               7,041,690           4,776,292          1,750,454
    Depreciation and amortization (Notes 2, 4 and 5)                  5,308,489           2,864,789            619,182
    Asset impairment (Note 2)                                         5,680,101                   -                  -
    Leased license expense                                               72,421             708,912            116,161
    Stock option compensation expense (Note 11)                       1,251,349             753,046            962,738
                                                              ------------------  ------------------  -----------------
                 Total costs and expenses                            28,324,647          13,735,384          3,956,655
                                                              ------------------  ------------------  -----------------
OPERATING LOSS                                                      (19,225,593)        (10,621,902)        (3,916,469)
OTHER INCOME AND (EXPENSES):
    Interest expense, net (Notes 7 and 9)                            (3,274,814)           (401,695)          (690,836)
    Net gain (loss) on foreign exchange                                  27,488             (6,497)                  -
                                                              ------------------  ------------------  -----------------
                 Total other expense                                 (3,247,326)           (408,192)          (690,836)
                                                              ------------------  ------------------  -----------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                      (22,472,919)        (11,030,094)        (4,607,305)
PROVISION FOR INCOME TAXES                                              (50,183)                  -                  -
                                                              ------------------  ------------------  -----------------
LOSS BEFORE MINORITY INTEREST                                       (22,523,102)        (11,030,094)        (4,607,305)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES                             2,245,623             799,298             13,011
                                                              ------------------  ------------------  -----------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                     $  (20,277,479)      $ (10,230,796)      $ (4,594,294)
                                                              ==================  ==================  =================
Net loss per basic and diluted common share (see Note 2)         $        (1.48)      $       (0.87)      $      (0.57)
                                                              ==================  ==================  =================
Weighted-average number of common shares:
    Basic and diluted                                                13,660,881          11,736,927          8,044,827
                                                              ==================  ==================  =================

See notes to consolidated financial statements.
</TABLE>



                                       86
<PAGE>


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

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
---------------------------------------------------------------------------------------------------------------
                                                               Year Ended      Year Ended        Year Ended
                                                              December 31,     December 31,     December 31,
                                                                  1999            1998              1997
                                                             --------------- ---------------- -----------------
<S>                                                          <C>               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                  $(20,277,479)    $(10,230,796)    $  (4,594,294)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
         Depreciation and amortization                           5,308,489        2,864,789           619,182
         Provision for bad debts                                   363,005                -                 -
         Minority interest in loss of subsidiaries              (2,245,623)        (799,298)          (13,011)
         Asset impairment (Note 2)                               5,680,101          545,055                 -
         Issuance of options for common shares below fair
         value                                                   1,251,349        1,000,245         1,479,074
         Amortization of discount on notes payable                 682,440          554,731                 -
         Issuance of warrants below fair value                     162,191                -           657,143
         Change in assets and liabilities, net of effects
           of acquisitions:
            Accounts receivable                                   (573,033)         301,927               959
            Due from affiliate                                   5,000,000           42,919                 -
            Inventory                                              (81,376)         (56,887)           33,225
            Other current assets                                  (687,897)        (257,442)          260,998
            Other assets                                          (561,485)        (489,798)            1,258
            Accounts payable and accrued liabilities             1,602,914        1,776,763          (473,491)
            Due to affiliates                                     (491,541)         348,689                 -
            Other long-term liabilities                             50,595          115,425                 -
                                                             --------------- ---------------- -----------------
                Net cash used in operating activities           (4,817,350)      (4,283,678)       (2,028,957)
                                                             --------------- ---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Investment in Centurion                                              -                -          (805,955)
    Reverse acquisition of CCI                                           -                -            56,582
    Purchase of wireless licenses                                 (512,944)               -                 -
    Cash paid in GBnet acquisition, net                         (4,000,000)               -                 -
    Cash paid in Intervan acquisition, net                     (13,979,747)               -                 -
    Cash paid in Chispa Dos acquisition, net                             -       (2,248,641)                -
    Cash paid in Inter@net acquisition, net                              -         (961,412)                -
    Cash paid in Viva Vision acquisition, net                            -                -          (387,318)
    Purchase of minority interest in Viva Vision                         -                -          (800,000)
    Purchases of property and equipment                        (13,087,570)      (4,546,900)         (128,779)
                                                             --------------- ---------------- -----------------
                Net cash used in investing activities          (31,580,261)      (7,756,953)       (2,065,470)
                                                             --------------- ---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of common stock                           -        3,161,661         1,967,945
    Net proceeds from issuance of Series "C" Preferred
    Stock (Note 12)                                             53,578,039                -                 -
    Net proceeds from issuance of Series "A" Preferred Stock             -        1,794,965         8,332,055
    Repurchases of treasury stock prior to retirement           (1,215,860)               -                 -
    Increase in minority interest from issuance of
    subsidiary common stock                                      5,725,000          500,000                 -
    Proceeds from related party note                                     -        5,000,000
    Proceeds from related party borrowings                      11,935,422           98,286           919,333
    Payments on related party  borrowings and outstanding
    debt                                                       (15,581,076)               -          (962,293)
    Proceeds from promissory notes                               4,335,000                -         2,300,000
    Payments on promissory notes                                  (383,334)        (350,000)       (2,300,000)
                                                             --------------- ---------------- -----------------
                Net cash provided by financing activities       58,393,191       10,204,912        10,257,040
                                                             --------------- ---------------- -----------------
EFFECT OF EXCHANGE RATES ON CASH                                    (7,565)         (20,515)                -
                                                             --------------- ---------------- -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            21,988,015       (1,856,234)        6,162,613
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                 4,315,281        6,171,515             8,902
                                                             --------------- ---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                    $ 26,303,296      $ 4,315,281      $  6,171,515
                                                             =============== ================ =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the year for interest                     $ 1,621,896       $   12,143       $    30,996
                                                             =============== ================ =================
    Cash paid during the year for income taxes (including
    prepaid)                                                    $  113,418       $   38,055         $       -
                                                             =============== ================ =================

See  Note  16 to  the  consolidated  financial  statements  for  other  non-cash
financing and investing activities.

See notes to consolidated financial statements.
</TABLE>
                                       87
<PAGE>



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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                                                Preferred Stock
                                                            -------------------------------------------------------------------
                                                                      Series "A"              Series "B"               Series "C"
                                                            ------------------------------------------------------------------------
                                                   Total         Shares       Amount       Shares      Amount      Shares    Amount
                                             -------------  ------------------------------------------------------------------------
<S>                                          <S>              <C>          <C>          <C>         <C>         <C>        <C>
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        --        --
Comprehensive loss:
   Net loss for the year
   ended December 31, 1998                      (10,230,796)        --           --           --         --          --        --
   Other comprehensive loss consisting of
     foreign currency  translation adjustment       (20,515)        --           --           --         --          --        --
                                               ------------   ----------   ----------   ----------  ---------  ----------  ---------
     Total comprehensive loss                   (10,251,311)        --           --           --         --          --        --
Issuance of CCI common stock and Series
   "A" Preferred shares for cash                  4,956,626       91,180           91         --         --          --        --
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        --        --
Comprehensive loss:
   Net loss for the year
   ended December 31, 1999                      (20,277,479)        --           --           --         --          --        --
   Other comprehensive loss consisting of
     foreign currency translation adjustment         (9,497)        --           --           --         --          --        --
                                               ------------   ----------   ----------   ----------  ---------  ----------  ---------
     Total comprehensive loss                   (20,286,976)        --           --           --         --          --        --

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



                                       88
<PAGE>




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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
--CONTINUED--
                                                         Common Stock            Additional                    Accumulated
                                                ------------------------------    Paid-in      Accumulated    Other Compre-
                                                    Shares           Amount       Capital       Deficit       hensive Loss
                                                -----------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>            <C>             <C>
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)          --
Comprehensive loss:
   Net loss for the year
   ended December 31, 1998                             --             --             --      (10,230,796)          --
   Other comprehensive loss consisting of
     foreign currency  translation adjustment          --             --             --             --     $    (20,515)
                                               ------------   ------------   ------------   ------------   ------------
     Total comprehensive loss                          --             --             --      (10,230,796)       (20,515)
Issuance of CCI common stock and Series
   "A" Preferred shares for cash                    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)
Comprehensive loss:
   Net loss for the year
   ended December 31, 1999                             --             --             --      (20,277,479)          --
   Other comprehensive loss consisting of
     foreign currency translation adjustment           --             --             --             --     $     (9,497)
                                               ------------   ------------   ------------   ------------   ------------
     Total comprehensive loss                          --             --             --      (20,277,479)       (30,012)

Issuance of Series "C"
Preferred Stock, net                                   --             --       67,784,469           --             --
Issuance of warrants                                   --             --          750,677           --             --
Repurchases and retirements
of common stock                                    (152,788)          (153)    (1,215,707)          --             --
Forgiveness of related party liability                 --             --          235,175           --             --
Issuance of warrants on debt                           --             --          162,191           --             --
Issuance of options for common shares
   below fair value                                    --             --        1,251,349           --             --
                                               ------------   ------------   ------------   ------------   ------------
BALANCE, DECEMBER 31, 1999                       11,585,489   $     11,585   $ 95,147,893    (35,764,016)  $    (30,012)
                                               ============   ============   ============   ============   ============
</TABLE>


                                       88 (a)
<PAGE>



See notes to consolidated financial statements.

CONVERGENCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

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

     From its inception, the Company has focused on providing telecommunications
     services using high speed transmission  networks within and across national
     borders.  The Company  intends to capitalize on the rapidly  growing demand
     for  telecommunications  services in countries emerging from developing and
     state-controlled  economies  and where there is growing  liberalization  of
     regulations governing the provision of telecommunications services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of  Presentation - The Company's  consolidated  financial  statements
     have  been  prepared  on a going  concern  basis,  which  contemplates  the
     realization of assets and  satisfaction of liabilities in the normal course
     of business.

     Since its inception, the Company has sustained net losses and negative cash
     flow,  due  primarily to  amortization  of  intangible  assets  relating to
     acquisitions,  interest expense on debt relating to acquisitions,  start-up
     costs,  legal and professional  expenses,  and charges for depreciation and
     other costs relating to its  acquisition  and  development of its business.
     The Company  expects to continue to experience net losses and negative cash
     flow through at least 2001,  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 intends to meet its operational and
     capital  expenditure  requirements during 2000 from a combination of unused
     proceeds  from its  recent  equity  financing,  additional  private  equity
     transactions  and an equipment  financing  facility with a vendor equipment
     provider.

     Principles of Consolidation - The consolidated financial statements include
     the accounts of the Company,  all wholly and  majority-owned  subsidiaries,
     and its 32.6% interest in Chispa Dos, Inc.  ("Chispa"),  the holding entity
     of Cablevisa,  S.A.,  Multicable  S.A. and Cybernet de El Salvador S.A. The
     Company has  operating  control and 50% of the Board of Directors  seats of
     Chispa.  All significant  intercompany  accounts and transactions have been
     eliminated in consolidation.

     Use of Estimates in Preparing  Financial  Statements - The  preparation  of
     financial  statements  in conformity  with  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.

                                       89
<PAGE>

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

     Accounts  Receivable - No single customer accounted for greater than 10% of
     accounts  receivable  at December  31,  1999 and 1998.  The  allowance  for
     doubtful  accounts was $366,448 and $328,283 at December 31, 1999 and 1998,
     respectively.

     Inventories  -  Inventories  of  subscriber   installation   materials  and
     subscriber  converter  boxes are  stated at the  lower of  average  cost or
     market. The inventory balance reflects an inventory reserve of $259,579 for
     excess and obsolescence at December 31, 1999 and 1998.

     Property and  Equipment - Property and  equipment  are recorded at cost and
     depreciated  using the  straight-line  method over the  following  expected
     useful lives:
                                                      Life in years
                                                      -------------
           Buildings and improvements                 10 - 20 years
           Operating communications equipment          2 - 10 years
           Furniture, fixtures and equipment           2 - 10 years

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

     Since  1997,  the  Company  has owned  78.14% of the stock of Caracas  Viva
     Vision TV, S.A., a Venezuelan Corporation ("Viva Vision") which acts as the
     operating company for the local multi-point  distribution  service ("LMDS")
     license held by  Comunicaciones  Centurion  S.A.  ("Centurion").  The total
     purchase  price for the 78.14%  interest in Viva  Vision was  approximately
     $8,300,000, of which the majority of the purchase price was allocated to an
     intangible  asset.  In  connection  with the Viva Vision  transaction,  the
     Company  also  acquired an 8.46%  interest in Centurion  for  approximately
     $845,000.  During the fourth quarter of fiscal 1999, the Company determined
     that  the  Visa  Vision  recorded  assets  and  intangible  assets  and the
     investment in Centurion totaling  $5,680,000 as of December 31, 1999 may be
     impaired.  As a result, a  recoverability  and fair value assessment of the
     related assets in accordance with generally accepted accounting  principles
     was completed by management,  which  concluded that the assets would not be
     recovered. Accordingly, management recorded an impairment of $5,680,000 for
     the year ended December 31, 1999.

                                       90
<PAGE>

     Revenue  Recognition - The Company provides  telecommunication  services to
     its customers  pursuant to  contracts,  which range from six months to five
     years but generally  are for three years.  The customer  generally  pays an
     installation  charge and a monthly  fee based on the  quantity  and type of
     equipment installed. Services are billed on a monthly, predetermined basis,
     which  coincides  with  when  the  services  are  rendered.   Revenues  for
     multi-channel television services are recognized in the period during which
     the  services are  provided.  All revenues and expenses are recorded on the
     accrual basis. No single  customer  accounted for greater than 10% of total
     revenue from services for the years ended December 31, 1999, 1998 and 1997.

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

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

     Foreign Currency  Translation - All of the Company's  subsidiaries,  except
     for GBnet and Inter@net, operate using the local currency as the functional
     currency.  Accordingly,  all assets and liabilities of these  subsidiaries,
     except for GBnet 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) income, a
     separate component of stockholders' equity.

     GBnet and Inter@net use the U.S. dollar as the functional currency.

     Net Loss Per Basic and Diluted  Common  Shares - Net loss per common  share
     and common share  equivalents  is computed by both the basic method,  which
     uses the  weighted  average  number of common  shares and the common  stock
     equivalents on a voting basis for the Series B and Series C preferred stock
     outstanding,  and the diluted  method,  which includes the dilutive  common
     shares from stock  options and warrants,  as calculated  using the treasury
     stock method. At December 31, 1999, 1998 and 1997, all options and warrants
     were antidilutive due to the losses of the Company.

     Fair Value of Financial  Instruments - The Company's financial  instruments
     include  cash and cash  equivalents,  receivables,  payables  and short and
     long-term  debt.  The fair  value of such  financial  instruments  has been
     determined  using  available  market  information  and interest rates as of
     December 31, 1999 and 1998. The recorded value of each financial instrument
     approximates its fair value.

     Comprehensive  Loss - The Company reports  comprehensive loss in accordance
     with  Statements  of  Financial  Accounting  Standards  ("SFAS")  No.  130,
     "Reporting  Comprehensive  Income".  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.

                                       91
<PAGE>

     Segment Reporting - Effective January 1, 1998, the Company adopted SFAS No.
     131, "Disclosures About Segments of an Enterprise and Related Information".
     SFAS No. 131  changes the way public  companies  report  information  about
     segments  of  their  business  in their  annual  financial  statements  and
     requires them to report  selected  segment  information in their  quarterly
     reports  issued to  shareholders.  SFAS No. 131 also  requires  entity-wide
     disclosures about the products and services an entity provides, the foreign
     countries  in which it holds  assets and  reports  revenues,  and its major
     customers.

     Recently  Issued  Financial  Accounting  Standards - In June 1998, SFAS No.
     133,  "Accounting for Derivative  Instruments  and Hedging  Activities" was
     issued.  SFAS No. 133  establishes  accounting and reporting  standards for
     derivative  instruments and hedging activities.  It requires that an entity
     recognize all  derivative  assets or  liabilities  in the balance sheet and
     measure those  instruments at fair value. SFAS No. 133 is effective for the
     Company's financial  statements for the year beginning January 1, 2001. The
     Company  is  currently  evaluating  the  effects  of  SFAS  No.  133 on its
     financial statements.

     Reclassifications - Certain  reclassifications  of previously reported 1998
     and 1997 amounts have been made to conform to the 1999 classifications.

3. ACQUISITIONS

     Intervan  Acquisition - On December 24, 1999,  Convergence  Communications,
     S.A. de C.V.  ("CCI  Mexico"),  a wholly owned  subsidiary  of the Company,
     acquired all of the outstanding stock of Intervan from Controladora S.O.E.,
     S.A.  de C.V.,  a  Mexican  corporation  ("SOE").  Intervan  provides  data
     networking  and network  access  services to over 420  customers  in Mexico
     through a nationwide ATM network. The total purchase price for Intervan was
     approximately  $21,000,000  ($20,338,705 effective purchase price including
     the  discount  on  the  notes  of  $661,295),  of  which  CCI  Mexico  paid
     $15,000,000  in cash at the closing.  The balance of the purchase price was
     paid through CCI Mexico's delivery of two promissory  notes,  which are due
     on the first and second  anniversaries of the closing.  The promissory note
     due on  December  24,  2000 is in the  face  amount  of  $4,500,000  and is
     non-interest  bearing.  The promissory  note due on December 24, 2001 is in
     the face amount of $1,500,000 and bears interest  during the second year at
     the rate of 8% per annum.  The notes were  recorded at the present value of
     approximately  $5,300,000,  which  reflects  the  estimated  market rate of
     interest of 10.75%.  The amounts  represented by the  promissory  notes are
     subject to downward adjustment if Intervan suffers recurring revenue losses
     after the closing. The allocation below represents a preliminary allocation
     of the purchase price.

                                       92
<PAGE>

     The preliminary purchase price was allocated as follows:

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

     GBnet  Acquisition  - On  December  15,  1999,  the Company  completed  the
     acquisition of all of the  outstanding  capital stock of GBnet from General
     Business  Machines  ("GBM") for a total purchase price of  $13,000,000,  of
     which the Company paid  $4,000,000  in cash at the closing.  The balance of
     the purchase price, or $9,000,000 (after discount of promissory notes), was
     paid through the delivery of four  promissory  notes,  which are due on the
     first through fourth  anniversaries  of the closing.  The allocation  below
     represents a preliminary  allocation of the purchase price.  The promissory
     notes,  which are non-interest  bearing,  are in face amounts sufficient to
     provide GBM with an imputed interest rate of 10.75% per annum through their
     anticipated  payment dates.  The Company's  obligations to pay the deferred
     portions  of the  purchase  price are  secured by a pledge of the shares of
     GBnet,  as well as its operating  subsidiaries.  A portion of those pledged
     shares  will be  released  to the  Company  as it pays down the  promissory
     notes.  GBM will be entitled  to retain at least 51% of the pledged  shares
     until the Company pays all amounts due under the promissory notes.

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

     The preliminary purchase price was allocated as follows:

          Fair value of assets acquired:

          Current assets                                       $   268,161
          Property and equipment                                 2,872,908
          Intangible assets (primarily subscriber rights)        9,858,931
          Liabilities assumed                                         None
                                                                -----------
                                                               $13,000,000
                                                                ===========

     Inter@net Acquisition - On August 17, 1998, the Company acquired all of the
     outstanding stock of Telecom, a Panamanian  corporation,  which own 100% of
     the  stock  of  Inter@net,  for a total  purchase  price  of  approximately
     $2,400,000, including certain shareholder liabilities assumed in connection
     with the  acquisition.  The purchase  price  consisted of $450,000 in cash,
     $800,000 in promissory  notes (one promissory note for $200,000 was paid on
     August 17, 1999, and a second promissory note for $600,000 is due on August
     17, 2000) and 85,714 of the  Company's  common  shares.  The parties to the
     Inter@net  acquisition 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  until  August  2000 to insure the  accuracy  of  Telecom's  and the
     selling shareholders' representations regarding the business of Inter@net.

                                       93
<PAGE>

     The purchase price was allocated as follows:

          Fair value of net assets acquired:                    $    6,130
          Intangible assets (subscriber rights and goodwill)     2,393,870
                                                                 ----------
                                                                $2,400,000
                                                                 ==========

     El Salvador  Acquisition  - In July 1998,  the Company and FondElec  formed
     Chispa as a holding company for the acquisition of two  subscription  cable
     television companies in El Salvador from Star Industries,  S.A., ("Star") a
     Panamanian  corporation.   Under  the  terms  of  the  agreements  for  the
     transactions,  the  Company  acquired a 49.5%  interest  in  Chispa,  while
     FondElec  acquired  a 50.5%  interest.  The  agreements  provided  that the
     Company would have  operating  control of Chispa,  would hold a majority of
     the  board  of  directors'  seats,  and  would  have the  right to  acquire
     FondElec's  interest in Chispa under certain  conditions.  The Company paid
     approximately $2,500,000 for its interest in Chispa and is required to make
     additional  capital  contributions  to it  (either  in the  form of debt or
     equity) to fund its pro rata  portion of the  operating  costs and deferred
     purchase price payments (as described  below) for the two cable  television
     operating subsidiaries.

     The total  purchase  price  for the two  operating  subsidiaries  was about
     $16,909,000,  approximately  $4,800,000  of which the Company and  FondElec
     paid at  closing,  and the balance was paid  through  Chispa's  delivery of
     three  promissory  notes.  The first  promissory  note was in the amount of
     $5,201,000,  and was due on February 17, 1999. The second  promissory note,
     in the approximate principal amount of $3,467,000, was due on May 17, 1999,
     and  the  final  promissory  note,  in the  original  principal  amount  of
     $3,467,000,  is due on July 17,  2000.  The amounts due under the first and
     second  promissory notes were non-interest  bearing,  but the amounts under
     the third  promissory  note bears  interest at 7%. In  connection  with the
     closing, Chispa also paid approximately $430,000 of outstanding debt of the
     cable television operating systems to third party banks.

     The purchase price was allocated as follows:

          Fair value of net assets acquired:                    $ 3,588,254
          Intangible  assets  (subscriber and franchise
          rights and goodwill)                                   13,320,746
                                                                -----------
                                                                $16,909,000
                                                                ===========

     In  December  1998,  Chispa  sold a portion of its equity to a third  party
     investor  for  $700,000  (comprised  of  $500,000  in cash  and a  $200,000
     promissory  note)  and,  as a result  of that  transaction,  the  Company's
     interest in Chispa was reduced to 44.03%.

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

                                       94
<PAGE>

     Pro Forma Effect of  Acquisitions  - The  following  pro forma  information
     reflects the results of the Company's operations as if the Intervan, GBnet,
     Inter@net  and  Chispa  acquisitions  had  occurred  as of January 1, 1997,
     adjusted for the effect of the amortization of intangible assets,  interest
     expense on  acquisition  debt,  the change in  minority  interest,  and any
     increases  of  depreciation  expense  due to the  increase to fair value of
     fixed assets.

                                                Years Ended December 31,
                                                ------------------------
                                            1999         1998           1997
     Pro forma results                 -----------   -----------   ------------
          Revenue                     $ 29,369,852  $ 22,442,575  $  14,143,768
          Net loss                    $(23,623,326) $(18,517,316) $ (16,643,543)
     Net loss per common share
         and common share equivalent
         (basic and diluted)          $      (1.73) $      (1.58) $      (2.07)

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

4. PROPERTY AND EQUIPMENT

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

                                                         1999             1998
                                                   --------------   ------------
        Land                                       $     586,400    $   586,400
        Buildings and improvements                       325,754        156,414
        Operating communications equipment            28,590,650      6,439,998
        Furniture, fixtures and other equipment        1,637,135        532,353
                                                   --------------   ------------
                       Total                          31,139,939      7,715,165
        Less - accumulated depreciation               (6,379,544)      (534,737)
                                                   --------------   ------------
                       Total                          24,760,395      7,180,428
        Network construction in progress               3,686,381      1,344,093
                                                   --------------   ------------
        Property and equipment, net                $  28,446,776    $ 8,524,521
                                                   ==============   ============

5. INTANGIBLE ASSETS

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

                                       95
<PAGE>

                                         1999             1998           Years
                                   --------------    -------------    ---------
        License rights             $     512,944     $    658,252       5 - 15
        Contract rights                        -        9,343,999       7 - 10
        Subscriber rights             32,524,143        8,924,317        5 - 7
        Franchise rights               4,111,528        4,111,528         20
        Goodwill                       2,815,598        2,815,598         20
                                   ---------------   -------------
                                      39,964,213       25,853,694
        Accumulated amortization      (3,304,188)      (3,203,654)
                                   --------------    -------------
                                   $  36,660,025     $ 22,650,040
                                   ==============    =============

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued  liabilities  consisted of the following as of
     December 31:
                                           ---------------    --------------
                                                1999                1998

                 Accounts payable          $    1,865,119      $   3,488,492
                 Accrued liabilities            4,238,208            652,632
                 Deferred revenue                 747,922            203,437
                                           ---------------     --------------
                     Total                 $    6,851,249      $   4,344,561
                                           ===============     ==============

7. RELATED PARTY TRANSACTIONS

     In August 1999,  the Company  entered into an advisory  services  agreement
     with FondElec relating to payment of certain fees to FondElec.  The Company
     paid  $1,654,000  to  FondElec  relating  to  certain  consulting  services
     provided to the Company,  including  services related to the sale of Series
     "C" Preferred Stock in the October 1999 financing transactions. The Company
     recorded  $1,281,500  as  equity  transaction  costs  and  the  balance  as
     administration  expenses.  FondElec is also entitled to receive $50,000 per
     quarter  for the  services  it  provides  the  Company  under the  advisory
     agreement.  A  subsidiary  of  Chispa  also has  outstanding  debt  owed to
     FondElec of  $1,269,497,  plus accrued  interest of $81,725 using a rate of
     12%. This debt is  subordinated to another  third-party  bank notes payable
     with a final maturity date of 2004.

     During 1999, the Company  borrowed  $1,000,000 from FondElec and $1,500,000
     from Internexus for business purposes.  FondElec and Internexus  received a
     total of 18,204 warrants to acquire common stock at $7.50 per share.  These
     loans were repaid in October 1999.

     In 1998, the Company  granted  FondElec an option to purchase 50,000 common
     shares at $0.875 per share for advisory services. In 1997, the Company sold
     a series of secured  promissory  notes and  warrants  in private  placement
     transactions.  The  Company  issued a total  of  331,717  warrants  in this
     transaction.  The warrants have a five-year  exercise  period and allow the
     holder to purchase  common  shares of the  Company at $2.626 per share.  An
     affiliate of FondElec,  who was an investor in the notes,  received 175,954
     of the  warrants.  The  remaining  warrants  were issued to  non-affiliated
     investors.

     In connection with a reverse acquisition that occurred in 1997, the Company
     assumed a note  payable to  Transworld  Telecommunications,  Inc.  ("TTI").
     Interest  on any  outstanding  balance  accrues  at 8% per  annum  with the
     principal and interest  becoming due and payable in full on August 1, 2001.
     As of December 31, 1999,  $996,707 (plus accrued  interest of $329,430) was
     outstanding on the loan.

                                       96
<PAGE>

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

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:

                                                            1999         1998
        Federal income tax benefit at statutory rate        ----         -----
           of 34%                                     $(6,877,280)  $(3,478,471)
        State and local income taxes
        Foreign rate differential                      (1,011,365)     (511,540)
        Increase (decrease) in taxes resulting from:      769,464       365,686
             Effect of true-up of prior year items
        Change in valuation allowance:                    194,574      (893,146)
             Federal

             State                                      3,128,188     2,538,755
             Foreign                                      460,027       372,539
        Permanent Differences                           1,055,861       990,572
             Federal
             State                                         15,500        31,117
             Foreign                                        2,279         4,576
                                                        2,312,935       579,912
                                                      ------------  ------------
        Total                                         $    50,183   $        -0-
                                                      ============  ============

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

                                                1999                1998
                Current:
                     Federal               $           --      $           --
                     State                             --                  --
                     Foreign                       50,183                  --
                                           --------------      ---------------
                                                   50,183                  --
                Deferred:
                     Federal                   (3,128,188)         (2,538,755)
                     State                       (460,027)           (372,539)
                     Foreign                   (1,055,861)           (990,572)
                Valuation Allowance             4,644,076           3,901,866
                                           ---------------     ---------------
                Total Provision            $       50,183      $          -0-
                                           ===============     ===============

     As of December 31, 1999, the Company has net operating  loss  carryforwards
     of approximately  $12,000,000.  The net operating loss  carryforwards  will
     begin to expire in 2010.  The Company also has foreign net  operating  loss
     carryforwards  of  approximately  $5,800,000.  The Company  has  recorded a
     valuation  allowance to reflect the estimated amount of deferred tax assets
     which, more likely than not, will not be realized.

                                       97
<PAGE>

     The  long-term  net  deferred  tax assets at December 31, 1999 and 1998 are
     fully  reserved  with a  valuation  allowance  due to  the  uncertainty  of
     realization and are comprised of the following:

                                                    1999             1998
                                              --------------    ------------
        Deferred Tax Assets:
        Net operating loss carryforwards
              Federal                         $   4,072,489      $ 1,503,146
              State                                 600,105          221,583
              Foreign                             2,069,156        1,056,286
        Basis in intangibles                      1,180,804          959,585
        Related party accruals                      161,323          223,627
        Stock options deferred                    1,711,246        1,223,220
        Impairment of license rights                185,319          185,319
        Inventory reserve                            43,616           32,051
        Provision for bad debts                      96,246           43,783
        Accrued severance pay                        47,980           30,765
        Other                                         8,768            4,159
                                              --------------     ------------
                 Total deferred tax asset        10,177,052        5,483,524
        Deferred Tax Liabilities:

         Basis in fixed assets                      (80,684)         (31,232)
        Valuation allowance                     (10,096,368)      (5,452,292)
                                              --------------     ------------
        Total net deferred tax asset          $        --        $       --
                                              ==============     ============

9. NOTES PAYABLE

     The Company has the following  notes  outstanding  of December 31 (see Note
     3):
<TABLE>
<CAPTION>
                                                                                             1999                1998
                                                                                       -----------------    ----------------
<S>                                                                                    <C>                  <C>
       Notes Payable for the Intervan acquisition represented by two promissory
           notes  with a combined face value of $6,000,000.  The first
           promissory note of $4,500,000 is non-interest bearing maturing
           December 24, 2000.  The second note of $1,500,000 bears interest at
           8% in the second year only maturing December 24, 2001.  Both
           promissory notes were discounted at 10.75%, which reflects the
           estimated market rate of interest   The amortization of the discount
           on these notes was $9,930 as of December 31, 1999.                          $      5,267,035

       Notes Payable for the GBnet  acquisition  represented  by four  non-interest
           bearing  promissory  notes with a combined face value of $11,795,000.
           These four promissory notes were discounted at 10.75%, which reflects
           the estimated market rate of interest. The four notes mature annually
           on December 14, 2000 through 2003. The  amortization  of the discount
           on these notes was $51,038 as of December 31, 1999.                                9,051,038

                                       98
<PAGE>

       Notes Payable from a  third-party  bank.  This note bears  interest at LIBOR
           plus 4.75%, which reflects the estimated market rate of interest. The
           note has mandatory quarterly payments maturing in 2004.                            3,951,669

       Notes Payable for the Inter@net  acquisition  represented  by two promissory
           notes with a  combined  face value of  $800,000  at a stated  rate of
           5.72%.  Both promissory  notes were discounted at 10%, which reflects
           the estimated market rate of interest.  The first promissory note, in
           the face  amount of  $200,000,  plus  accrued  interest,  was paid on
           August 17,  1999.  A payment of  approximately  $35,000 on the second
           note, including interest, was also paid on August 17, 1999.                          524,036      $      754,907

       Notes Payable for the Chispa  acquisition  payable to Star on  February  17,
           1999 with a face value of $5,201,481 and no stated interest rate was
           paid in 1999.                                                                                          5,138,577

       Notes Payable for the Chispa acquisition payable to Star on May 17, 1999,
           with a face value of $3,467,654 and no stated interest rate was
           refinanced with a third-party bank.                                                                    3,343,384

       Notes Payable for the Chispa acquisition 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 the  acquisition  date.  The
           amortization of the discount on this note was $520,054 as of December
           31, 1999.                                                                          3,787,146           3,427,122
                                                                                       -----------------    ----------------
       Total notes payable                                                                   22,580,924          12,663,990
       Less current portion                                                                 (11,190,987)         (8,676,722)
                                                                                       -----------------    ----------------
       Long-term portion                                                               $     11,389,937     $     3,987,268
                                                                                       =================    ================
</TABLE>

     The scheduled  maturities  of notes payable and long-term  debt at December
     31, 1999 are as follows:

               Year ending December 31:

                   2000                           $    11,190,987
                   2001                                 3,103,048
                   2002                                 2,328,589
                   2003                                 2,592,050
                   2004                                 3,366,250
                                                  ----------------
                   Total                          $    22,580,924
                                                  ================

         The collateral on the Chispa acquisition related notes and refinancings
         include the tangible assets of Chispa's subsidiaries.

10. PREFERRED STOCK

     In conjunction  with the equity financing on October 12, 1999, the Board of
     Directors  designated  the  Series C  Preferred  Stock as a new  series  of
     preferred stock. The  non-redeemable  convertible  Series C Preferred Stock
     consists of  14,250,000  shares of  preferred  stock,  par value $0.001 per
     share, and has the following general rights and preferences:  (1) they vote
     with the  outstanding  shares of the  Company's  common  stock and Series B
     Preferred Stock (unless  otherwise  required by law), and have one vote per
     share;  (2) they are convertible into shares of the Company's common stock,
     initially  on a  one-for-one  basis.  The  conversion  ratio is  subject to
     adjustment for fundamental corporate transactions.  Conversion is generally
     optional, but is mandatory upon the occurrence of a disposition event (sale
     of  Company  or  initial  public  offering);  (3) they  have a  liquidation
     preference  of $7.50 which is superior to the Company's  common stock,  but
     subordinate to the Company's Series B Preferred Stock.

                                       99
<PAGE>

     At December  31, 1999,  the  authorized  number of shares of the  Company's
     preferred stock was 15,000,000,  $0.001 par value,  with 14,250,000  shares
     and 750,000  shares  designated  as Series C  Preferred  Stock and Series B
     Preferred  Stock,  respectively.  None of the Company's  preferred stock is
     redeemable.

     At December 31, 1999 and 1998, the Company had designated 750,000 shares of
     its preferred stock as Series B Preferred  Stock. The rights and privileges
     of the  Series  B  Preferred  Stock  are  as  follows:  (1)  they  carry  a
     liquidation  preference  of  $35  per  share  and  the  Series  B  receives
     liquidation  proceeds prior to any liquidation  distributions to the common
     shareholders;  (2) they carry voting  rights that entitle the holder to one
     vote per share and the holders vote together  with the common  shareholders
     as one  class on all  matters;  (3) they are  non-redeemable;  (4) they pay
     non-cumulative  dividends in the annual  amount of 6.75% per share  payable
     semiannually  on  January  1 and July 1 of each  year  (payable  in cash or
     additional Series B Preferred Stock, at Company's option); and (5) they are
     convertible  only into  common  shares of the Company on the earlier of the
     third anniversary of their initial issuance, 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  Stock 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 Stock is convertible  into the number of common shares obtained
     by dividing $35 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 Stock is convertible
     into such number of common  shares as is  determined by dividing $35 by the
     public offering price.

     Prior to August 17, 1998,  the Company had designated  4,250,000  shares of
     its  preferred  stock as Series A Preferred  Stock.  All Series A Preferred
     Stock was converted to common stock in 1998.

     On December  23,  1998,  the Company  issued  $10,000,000  of  subordinated
     exchangeable  promissory notes to FondElec and Internexus,  S.A. which have
     been  subsequently  converted into Series C Preferred  Stock related to the
     October 1999 financing.  (See Note 12) These notes also included 454,622 in
     common  stock  warrants  at  an  exercise  price  of  $7.50,  which  remain
     outstanding  as of December  31, 1999.  The  warrants are only  exercisable
     should the value of the  Company's  common stock rise to 150% or greater of
     the warrant price. During 1999, additional interest expense of $162,191 was
     recognized  on this debt for the  difference  between the interest  rate at
     which the debt was issued  and the  estimated  interest  rate for which the
     debt would have been issued in the absence of the warrants.

                                      100
<PAGE>

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, 1999,  the
     Company has granted  28,774  non-employee  director  stock  options.  As of
     December 31, 1998,  the Company had not granted any  non-employee  director
     stock options.

     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.  The  Company's  board of directors  subsequently
     increased  this number in December 1998 to allow for a maximum of 1,820,229
     shares to be awarded. The Company's Board of Directors administers the plan
     and  determines  the amount of awards and other terms and conditions of the
     awards.  Stock appreciation rights may be granted under the Incentive Plan.
     As of December 31, 1999,  the Company has granted  1,202,000  options under
     the Incentive  Plan.  As of December 31, 1998,  the Company had not granted
     any options under the Incentive Plan.

     During 1999,  11,714 common  shares were awarded from the original  Telecom
     option authorized pool.

     Stock Option  Awards - The total stock  options  granted by the Company are
     summarized in the table below:
<TABLE>
<CAPTION>

                                                              Options          Price Range         Weighted
          1999:                                                                                    Average
                                                                                                   Exercise Price
                                                         ------------------    ----------------    -----------------
<S>                                                      <C>                   <C>                 <C>
               Outstanding at beginning of year                  1,492,842       $0.35 - 7.50         $3.31
               Granted                                             295,048        $0.88- 7.50         $5.40
               Canceled                                                  0
                                                         ------------------
               Outstanding at end of year                        1,787,890       $0.35 - 7.50         $3.66
                                                         ==================



                                                         Number                Price Range         Weighted
          1998:                                          of Options                                Average
                                                                                                   Exercise Price
                                                         ------------------    ----------------    -----------------
               Outstanding at beginning of year                     14,999        $0.35 - 3.50         $3.36
               Exchanged Series A Preferred options                395,000               $0.88         $0.88
               Granted
               Canceled                                          1,082,843        $0.88 - 7.50         $4.20
                                                                         0
                                                         ------------------
               Outstanding at end of year                        1,492,842        $0.35 - 7.50         $3.31
                                                         ==================

                                      101
<PAGE>


                                                         Number                Price Range         Weighted
          1997:                                          of Options                                Average
                                                                                                   Exercise Price
                                                         ------------------    ----------------    -----------------
               Outstanding at beginning of year                     35,714     $0.35               $0.35
               Granted                                              14,999     $0.35 - 3.50        $3.36
               Canceled                                             35,714     $0.35               $0.35
                                                         ------------------
               Outstanding at end of year                           14,999     $0.35 - 3.50        $3.36
                                                         ==================

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

     Options Outstanding and Exercisable

             Options Outstanding                       Options Exercisable
---------------------------------------------   --------------------------------
                  Weighted
                  Average           Weighted                           Weighted
                  Remaining         Average                            Average
   Options        Contractual       Exercise          Options          Exercise
   Outstanding    Life              Price             Exercisable      Price

      846,605      2.65              0.92              654,938          0.99
      404,285      3.93              4.52              124,285          4.34
      537,000      4.01              7.31               35,000          7.14
----------------                                 -------------
    1,787,890                                         814,223
================                                 =============


     The Company  accounts for stock options  granted to employees using APB No.
     25. Accordingly, compensation cost has been recognized for all stock option
     grants,  which were issued with an exercise  price below the estimated fair
     value at the date of grant.  The total stock option  expense  recognized in
     1999,   1998  and  1997  was   $1,251,349,   $1,000,245   and   $1,479,074,
     respectively,  of  which  $1,251,349,  $753,046  and  $962,738  related  to
     compensation expense and the remaining amounts 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 (based on the  Black-Scholes
     option valuation model),  the Company's net loss and net loss per basic and
     diluted common share would have changed to the pro forma amounts  indicated
     below:

                                      102
<PAGE>

<TABLE>
<CAPTION>
                                                      Years Ended December 31
                                           ----------------------------------------------
                                                 1999             1998           1997
                                           ---------------  --------------  -------------
<S>                                        <C>              <C>             <C>
     Net loss:
             As reported                   $ (20,277,479)   $ (10,230,796)  $ (4,594,294)
             Pro forma                     $ (20,532,818)   $ (10,278,111)  $ (4,632,242)
     Net loss per the weighted
     average common share (basic
     and diluted):
             As reported                   $       (1.48)   $       (0.87)  $      (0.57)
             Pro forma                     $       (1.50)   $       (0.87)  $      (0.57)
</TABLE>

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

     The fair value of each option grant is estimated on the date of grant using
     the Black  Scholes  valuation  model method  prescribed by SFAS No. 123 for
     nonpublic  entities  with the  following  assumptions:  no  volatility;  no
     dividend  yield,  risk-free  interest  rates  ranging  from  4% to 6%,  and
     expected lives ranging from 1 to 3 years.

12. STOCK PURCHASE AGREEMENTS

     October 1999  Financing.  In October and November  1999, the Company closed
     certain  components  of a total  $109,500,000  private  equity  and  credit
     facility  financing  package with six  accredited  investors.  By the final
     closing,  the Company  had  received  $58,000,000  in cash from the sale of
     7,733,332  shares of Series C Preferred Stock to four of the six accredited
     investors'  and  exchanged  approximately  $15,000,000  of debt the Company
     previously  issued  to  two  of  the  accredited  investors  (FondElec  and
     Internexus)  into  1,995,577  shares  of  Series  C  Preferred  Stock.  The
     investors also acquired options to purchase 3,891,562  additional shares of
     Series C  Preferred  Stock and  warrants to  purchase  2,432,226  shares of
     common  stock,  and two existing  shareholders  (Internexus  and  FondElec)
     acquired  additional  warrants to purchase  520,000 shares of common stock.
     The preferred  stock options have an exercise  price of $7.50 per share and
     expire in July 2000.  The warrants have  exercise  prices that are based on
     certain contractual yields contingent upon certain events, as agreed in the
     warrant  agreement.  The warrants have an estimated value of $0.26 each. In
     connection  with this  financing,  the Company also  granted its  financial
     advisor in the  transaction  a 4-year  warrant to  acquire  303,333  common
     shares at $7.50 per share.

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

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

                                      103
<PAGE>

     A portion of the $26,000,000 credit facility,  or $7,000,000,  will be paid
     to  Inter@net  in cash,  and the  $19,000,000  balance  will be advanced to
     Inter@net, as required, for the purpose of paying its obligations under the
     fiber  lease  agreement  and  the  commercial   services   agreement.   The
     outstanding amounts under the credit facility bear interest at 3% per year.
     Interest  will be  capitalized  during the first four years of the facility
     and, thereafter,  are payable in cash. The outstanding principal and unpaid
     interest  amounts under the facility are convertible to shares of Inter@net
     at  Telematica's  election at any time after the third  anniversary  of the
     facility,  but  Telematica  can convert the amounts due under the  facility
     prior to the third  anniversary  if Inter@net  defaults under the facility.
     Assuming the  draw-down of the entire  facility and no payment by Inter@net
     of any of the advanced  amounts,  the principal and interest advanced under
     the  facility  would  be  convertible  into  shares   representing  50%  of
     Inter@net's equity ownership. The Company would retain operating control of
     Inter@net.   The  credit   facility  also  provides  for  a   corresponding
     subscription right in Telematica's  favor,  pursuant to which it is allowed
     to purchase 50% of the outstanding  stock of Inter@net for $26 million.  As
     Inter@net  draws on the credit  facility,  the  subscription  obligation is
     proportionately  reduced. Any election by Telematica to convert the amounts
     due under the facility into shares of Inter@net  must be exercised with the
     subscription right.

13. LEASES

     Metronet  Capital Lease. In June 1999, the Company  acquired  approximately
     17% of the capacity of a fiber-optic  network in Mexico City.  The owner of
     the network was Metronet,  S.A. de C.V., or ("Metronet").  The Company paid
     $4,717,908  for the capacity.  This  transaction  was recorded as a prepaid
     capital lease, therefore, there are no future obligations.  At the closing,
     the Company also paid $172,000 for a two year option to purchase additional
     capacity  which when  combined  with the capacity  already  acquired,  will
     result in the Company owning a total of approximately  33% of the network's
     capacity.

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

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

                                      104
<PAGE>

              Year ending December 31:
                      2000                            $ 950,079
                      2001                              791,394
                      2002                              746,471
                      2003                              472,303
                      2004 and thereafter             1,181,077
                                                     -----------
                      Total future lease payments    $4,141,324
                                                     ===========

     Total rent expense  under the operating  leases in 1999,  1998 and 1997 was
     $908,538, $363,618, and $9,209, respectively.

14. COMMITMENTS AND CONTINGENCIES

     Litigation  -  In  September   1998,  the  Company  filed  two  arbitration
     proceedings  against Donald  Williams,  a former director and officer.  The
     first proceeding relates to a claim for  indemnification  for breach of the
     representations  and  warranties  made by Mr.  Williams  in 1997  when  the
     investment  in Viva  Vision  occurred.  The  other  arbitration  proceeding
     requests  a  declaratory  judgment  of  the  Company's  termination  of Mr.
     Williams  in  August  1998 for  "cause."  The  employment  arbitration  was
     dismissed in March 2000.

     Dismissal of Suit - On August 9, 1999,  the Company  settled a  shareholder
     suit by agreeing to purchase the  plaintiffs'  common shares in the Company
     for $965,860.

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

15. OPERATING SEGMENT INFORMATION

     The  Company  makes key  financial  decisions  based on  certain  operating
     results of its  subsidiaries  and revenue  types.  The Company's  operating
     segment  information,  is as follows for the years ended December 31, 1999,
     1998 and 1997:

         NET REVENUES FROM SERVICES BY SUBSIDIARY:
<TABLE>
<CAPTION>

         DIAL UP INTERNET ACCESS                     1999                 1998                1997
                                              ------------------     ----------------     --------------
<S>                                           <C>                    <C>                  <C>
         Intervan (in Mexico)                 $               -      $             -      $           -
         GBnet (in Central America)                      31,359                    -                  -
         Inter@net (in Venezuela)                     1,086,932              399,399                  -
         Chispa Dos (in El Salvador)                    159,530                    -                  -
         Parent Company and others                            -                    -                  -
                                              ------------------     ----------------     --------------
              Consolidated total              $       1,277,821      $       399,399      $           -
                                              ==================     ================     ==============

                                      105
<PAGE>

         HIGH SPEED DATA                              1999                1998                1997
         INTERNET ACCESS
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $         172,355      $             -      $           -
         GBnet (in Central America)                     165,274                    -                  -
         Inter@net (in Venezuela)                        33,191                    -                  -
         Chispa Dos (in El Salvador)                     66,468                    -                  -
         Parent Company and others                        9,754                    -                  -
                                              ------------------     ----------------     --------------
              Consolidated total              $         447,042      $             -      $           -
                                              ==================     ================     ==============


         CABLE TELEVISION                              1999               1998                1997
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $               -      $             -      $           -
         GBnet (in Central America)                           -                    -                  -
         Inter@net (in Venezuela)                             -                    -                  -
         Chispa Dos (in El Salvador)                  6,412,776            2,181,850                  -
         Parent Company and others                            -              177,049             40,186
                                              ------------------     ----------------     --------------
              Consolidated total              $       6,412,776      $     2,358,899      $      40,186
                                              ==================     ================     ==============

         OTHER                                        1999                1998                1997
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $               -      $             -      $           -
         GBnet (in Central America)                           -                    -                  -
         Inter@net (in Venezuela)                        35,537                    -                  -
         Chispa Dos (in El Salvador)                    922,433              355,184                  -
         Parent Company and others                        3,445                    -                  -
                                              ------------------     ----------------     --------------
              Consolidated total              $         961,415      $       355,184      $           -
                                              ==================     ================     ==============

         TOTAL REVENUES                               1999                1998                1997
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $         172,335      $             -      $           -
         GBnet (in Central America)                     196,633                    -                  -
         Inter@net (in Venezuela)                     1,155,660              399,399                  -
         Chispa Dos (in El Salvador)                  7,561,207            2,537,034                  -
         Parent Company and others                       13,219              177,049             40,186
                                              ------------------     ----------------     --------------
              Consolidated total              $       9,099,054      $     3,113,482      $      40,186
                                              ==================     ================     ==============

         OPERATING                                    1999                1998                1997
         INCOME (LOSS)
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $        (76,576)      $             -      $           -
         GBnet (in Central America)                      14,699                    -                  -
         Inter@net (in Venezuela)                     (880,496)            (206,617)                  -
         Chispa Dos (in El Salvador)                (1,986,749)          (1,551,907)                  -
         Parent Company and other                  (16,296,473)          (8,863,378)        (3,916,469)
                                              ------------------     ----------------     --------------
              Consolidated total              $    (19,225,593)      $  (10,621,902)      $ (3,916,469)
                                              ==================     ================     ==============

                                      106
<PAGE>

         CAPITAL EXPENDITURES                         1999                1998                1997
         DEPRECIATION EXPENSE
         AMORTIZATION EXPENSE
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)
            Capital expenditures                              -
            Depreciation expense              $          18,856
            Amortization expense                         29,983

         GBnet (in Central America)
            Capital expenditures                              -
            Depreciation expense                         48,162
            Amortization expense                         68,465

         Inter@net (in Venezuela)
            Capital expenditures                        357,697      $       209,637
            Depreciation expense                        136,313                9,028
            Amortization expense                        225,006               25,310

         Chispa Dos (in El Salvador)
            Capital expenditures                      4,201,237            1,272,303
            Depreciation expense                      1,326,678              245,881
            Amortization expense                      1,902,195              879,410

         Parent Company and other
            Capital expenditures                      8,528,636            3,064,960      $     128,779
            Depreciation expense                        159,237              194,608             85,220
            Amortization expense                      1,393,594            1,510,552            533,962
                                              ------------------     ----------------     --------------

         Consolidated totals:
            Capital expenditures              $      13,087,570      $     4,546,900      $     128,779
            Depreciation expense                      1,689,246              449,517             85,220
            Amortization expense                      3,619,243            2,415,272            533,962


         TOTAL ASSETS                                1999                 1998                1997
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $      22,998,357      $             -      $           -
         GBnet (in Central America)                  13,205,355                    -                  -
         Inter@net (in Venezuela)                     3,293,363            3,050,928                  -
         Chispa Dos (in El Salvador)                 22,588,457           19,395,740                  -
         Parent Company and others                   35,118,991           20,026,376         17,489,106
                                              ------------------     ----------------     --------------
              Consolidated total              $      97,204,523      $    42,473,044      $  17,489,106
                                              ==================     ================     ==============

         LONG-LIVED ASSETS                          1999                  1998                1997
                                              ------------------     ----------------     --------------
         Intervan (in Mexico)                 $      19,068,279      $             -      $           -
         GBnet (in Central America)                  12,731,839                    -                  -
         Inter@net (in Venezuela)                     3,040,167            3,043,789                  -
         Chispa Dos (in El Salvador)                 17,916,020           17,382,219                  -
         Parent Company and others                   12,350,496           10,748,553         10,145,698
                                              ------------------     ----------------     --------------
              Consolidated total              $      65,106,801      $    31,174,561      $  10,145,698
                                              ==================     ================     ==============
</TABLE>

                                      107
<PAGE>

16.      SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<S>                                                                                       <C>
         Acquisition of Intervan (December 24, 1999):
                    Estimated fair value of assets acquired, including intangible
                      assets and equipment (net of cash acquired)                         $     21,980,304
                    Fair value of liabilities assumed                                           (2,743,452)
                    Notes payable                                                               (5,257,105)
                                                                                          -----------------
                         Cash paid (net of cash acquired)                                 $     13,979,747
                                                                                          =================

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

         Acquisition of Inter@net (August 17, 1998):
                    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
                                                                                           ================

         Acquisition of Chispa (July 17, 1998):
                    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
                                                                                          =================

         Acquisition of Viva Vision (August 15, 1997):
                    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>


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

     The Company converted a liability of approximately $900,000 into additional
     interest owned in Chispa.  This conversion brought the Company's  ownership
     percentage to 32.6%.

                                      108
<PAGE>

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

17. SUBSEQUENT EVENTS

     Metrotelecom  Acquisition.  In December  1999,  the Company  entered into a
     letter of intent to acquire 100% of Metrotelecom. Metrotelecom is a holding
     company for three  Guatemalan  subsidiaries  that provide  internet  access
     services, high speed data transmission services,  cable television services
     and  telephony  services  in  Guatemala.  As part of the  transaction,  the
     Company  will also  acquire an  operating  fiber  optic  network  and cable
     television  operation  located  in  Guatemala  City.  The  letter of intent
     required that the transaction be closed by the end of January 2000, but the
     parties have  continued  their  negotiations  since then and  contemplate a
     closing in early April 2000.

     The  purchase  price for  Metrotelecom  will be  $13,500,000,  of which the
     Company  will pay  $3,750,000  in cash at closing.  The  Company  will also
     deliver 121,212 of common shares at closing, in which the parties agree has
     a value of  $1,000,000.  The Company  will pay the balance of the  purchase
     price,  $8,750,000  by delivering  four  promissory  notes at closing.  The
     notes, are due on the first through fourth anniversary of the closing,  and
     bear  interest at a rate of 7% per annum.  The  promissory  note due on the
     first  anniversary is in the original  principal amount of $4,750,000,  and
     each of the three other notes is in the amount of $1,333,000. The amount of
     the first note is subject to adjustment,  depending on the cash balance and
     intercompany debt of the parties as of the closing date.

     Alcatel Vendor Financing.  In March 2000, the Company signed a $175,000,000
     vendor  financing  letter of intent  with  Alcatel.  Under the terms of the
     letter of intent,  Alcatel will assist the Company in the  construction  of
     networks  and  provide  systems  integration  services  over the next three
     years.  Alcatel will finance up to $175,000,000 for the purpose of covering
     up to 100% of the equipment and related  services  supplied to the Company,
     as well as the  Company's  purchase of OEM and other  equipment or services
     through Alcatel.

     The Company is  currently  negotiating  the  definitive  documents  for the
     transaction,  and it  expects  to  execute  those  documents  in the second
     quarter of 2000. Even though the parties have spent  considerable  time and
     resources negotiating the terms of the letter of intent, the Company cannot
     give assurance that the Company will execute  definitive  documents for the
     transaction with Alcatel.

     Litigation . In March 2000, the Company was named as defendant in an action
     brought  in  federal  court in  California.  The suit  claims  the  Company
     defrauded the plaintiffs in 1997 when the Company  diluted the  plaintiff's
     position by engaging in the merger with Telecom Investment  Corporation and
     that the promissory  note the Company  executed in favor of TTI is due. The
     plaintiff,  which is the assignee of a promissory note the Company executed
     in favor of TTI in 1997, is in litigation with TTI.

                                      109
<PAGE>


PART 3.
-------


INDEX TO EXHIBITS

Exhibit
No.                           Exhibit                                     Page
--------                      -------                                     -----
3.1       Articles of Incorporation                                            *
3.2       Bylaws                                                               *
3.3       Amended and Restated Articles of Incorporation                       *
4.1       Statement  of Rights  and  Preferences  for the  Series A
          Preferred Stock                                                      *
4.2       Statement  of Rights  and  Preferences  for the  Series B
          Preferred Stock                                                      *
4.3       Statement  of  Right  and  Preferences  for the  Series C
          Preferred Stock                                                Ex. 4.3
4.4       Amendment to Series C Certificate                              Ex. 4.4
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  December23,  1998
          among  the   Company,   Internexus,   S.A.  and  FondElec
          Essential Services Growth Fund, L.P.                                 *
10.13     Form of  Promissory  Note issued in  connection  with the
          Securities Purchase Agreement dated December 23, 1998                *
10.14     Participation  Agreement,  dated October 15, 1999,  among
          TelemAtica  EDC,  C.A.,   TCW/CCI  Holding  LLC,  Glacier
          Latin-America    Ltd.,    the    International    Finance
          Corporation,  FondElec  Essential  Services  Growth Fund,
          L.P.,  Internexus S.A.  (collectively,  the "Investors"),
          the Company and other parties                                        *
10.15     Option  Agreement,  dated  October  18,  1999,  among the
          Company and the Investors                                            *
10.16     Form of Series C Warrant,  dated  October  18,  1999,  as
          issued in favor of each Investor                                     *
10.17     CCI  Shareholder's  Agreement,  dated  October 18,  1999,
          among the Company, the Investors, and other parties                  *
10.18     Amended and Restated Registration Rights Agreement, dated
          October 19, 1999 among the investors and other parties               *
10.19     Stock  Purchase   Agreement   between  General   Business
          Machines Corporation and the Company,  dated December 15,
          1999                                                          Ex.10.19
10.20     Stock   Purchase    Agreement   for   the   purchase   of
          International Van, S.A. de C.V., dated December 24, 1999      Ex.10.20
21.1      Subsidiaries of the Registrant                                Ex. 21.1
27.1      Financial Data Schedule                                       Ex. 27.1
99        Valuation and Qualifying Accounts                               Ex. 99


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



                                      110
<PAGE>



                               SIGNATURES

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

                               CONVERGENCE COMMUNICATIONS, INC.

3-29-2000                          /s/ Lance D'Ambrosio
----------------------         -------------------------------------------------
Date                           Lance D'Ambrosio
                               Chairman and Chief Executive Officer
                               (Principal Executive Officer)


                               CONVERGENCE COMMUNICATIONS, INC.

3/29/2000                          /s/ Jerry Slovinski
----------------------         -------------------------------------------------
Date                           Jerry Slovinski
                               Senior Vice President and Chief Financial Officer
                               (Principal Financial Officer)

DIRECTORS
----------
3-29-2000                         /s/ Lance D'Ambrosio
----------------------         -------------------------------------------------
Date                           Lance D'Ambrosio


3-29-2000                        /s/ Troy D'Ambrosio
----------------------         -------------------------------------------------
Date                           Troy D'Ambrosio


3-29-2000                        /s/ Mario Baeza
----------------------         -------------------------------------------------
Date                           Mario Baeza


3-29-2000                        /s/ Alfonso Bahamonde
----------------------         -------------------------------------------------
Date                           Alfonso Bahamonde


3-29-2000                        /s/ Norberto Corredor
----------------------         -------------------------------------------------
Date                           Norberto Corredor


3-29-2000                        /s/ Salomon Magan
----------------------         -------------------------------------------------
Date                           Salomon Magan


3-29-2000                        /s/ Peter Schiller
----------------------         -------------------------------------------------
Date                           Peter Schiller


3-29-2000                        /s/ Jorge Fucaraccio
----------------------         -------------------------------------------------
Date                           Jorge Fucaraccio


3-29-2000                        /s/ George Sorenson
----------------------         -------------------------------------------------
Date                           George Sorenson


3-29-2000                         /s/ Gaston Acosta-Rua
----------------------         -------------------------------------------------
Date                           Gaston Acosta-Rua