As filed with the Securities and Exchange Commission on July 21, 1999
Registration No. 333-80711
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VITECH AMERICA, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0419086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
8807 Northwest 23rd Street
Miami, Florida 33172
(305) 477-1161
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
<TABLE>
<CAPTION>
<S> <C>
William C. St. Laurent With copies to: James M. Schneider, Esq.
Vitech America, Inc. Joel D. Mayersohn, Esq.
8807 Northwest 23rd Street Atlas, Pearlman, Trop & Borkson, P.A.
Miami, Florida 33172 200 East Las Olas Blvd., Suite 1900
(305) 477-1161 Fort Lauderdale, Florida 33301
Telecopier: (305) 477-1379 (954) 763-1200
Telecopier: (954) 766-7800
</TABLE>
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
-i-
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount Of
Title Of Each Class Of To Be Offering Price Aggregate Registration
Securities To Be Registered Registered Per Share(1) Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value per
share reserved for issuance upon
conversion of Convertible
Debentures(2) 2,181,818 $11.00 $23,999,998 $6,672
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value per
share reserved for issuance upon
exercise of Common Stock Purchase
Warrants(3) 100,000 $11.50 $1,150,000 $320
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value per
share reserved for issuance upon
conversion of Convertible Notes(4) 45,000 $10.00 $450,000 $126
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 2,326,818 $25,599,998 $7,118
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457 under the Securities Act of 1933.
(2) To be offered and sold by selling security holders upon conversion of two
year $10,000,000 aggregate principal amount convertible debentures.
(3) To be offered and sold by selling security holders upon exercise of common
stock purchase warrants.
(4) To be offered and sold by a selling security holder upon conversion of a
$450,000 convertible promissory note.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
-ii-
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION DATED JULY 21, 1999
2,326,818 Shares of Common Stock
VITECH AMERICA, INC.
The shareholders of Vitech America, Inc. listed in this prospectus are
offering and selling up to 2,326,818 shares of our common stock. The shares
include up to 45,000 shares issuable upon conversion of a $450,000 convertible
promissory note and up to 2,181,818 issuable upon conversion of $10,000,000
aggregate principal amount of 10% convertible debentures and 100,000 warrants to
purchase common stock held by selling security holders. We expect that
shareholders using this prospectus will sell the stock
o in ordinary brokers' transactions;
o in transactions directly with market makers; or
o in privately negotiated sales or otherwise.
The selling security holders will determine when they will sell shares,
and in all cases they will sell shares at the current market price or at
negotiated prices at the time of the sale. We will pay the expenses incurred to
register the shares for resale, but the selling security holders will pay any
underwriting discounts, concessions, or brokerage commissions associated with
the sale of their shares. The selling security holders and any brokers and
dealers that they use may be considered to be "underwriters" within the meaning
of the securities laws, and any commission received and any profits realized by
them on the sale of shares may be considered to be underwriting compensation.
See "Plan of Distribution."
We will not receive any of the proceeds from the sales by selling
security holders. Securities laws and SEC regulations may require selling
security holders to deliver this prospectus to purchasers when they resell their
shares of common stock.
-----------------------
You should consider the "Risk Factors" beginning on page 4 for a discussion of
certain matters that should be considered by a potential investor.
-----------------------
The common stock offered or sold under this prospectus has not been
approved or disapproved by the Securities and Exchange Commission or any State
Securities Commission, nor have these organizations determined that this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is __________, 1999
-1-
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION.................................................................. 2
RISK FACTORS......................................................................................... 4
BUSINESS............................................................................................. 13
SELLING SECURITY HOLDERS............................................................................. 14
PLAN OF DISTRIBUTION................................................................................. 15
DESCRIPTION OF SECURITIES............................................................................ 17
LEGAL MATTERS........................................................................................ 17
EXPERTS.............................................................................................. 17
INDEMNIFICATION...................................................................................... 18
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE
TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission ("SEC"). You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on public reference rooms. Our SEC
filings are also available to the public from the SEC's website at
"http://www.sec.gov." The SEC also allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus and the
information that we file later with the SEC will automatically update and
supersede this information. We will incorporate by reference the documents
listed below and any future filings we make we will make with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
-2-
<PAGE>
You may request a copy of these filings, at no cost by writing or
telephoning our chief financial officer at the following address: Vitech
America, Inc., 8807 Northwest 23rd Street, Miami, Florida 33172 (305-477- 1161).
Except for the historical information contained herein, the matters
discussed in this prospectus under "Risk Factors", in addition to certain
statements contained elsewhere in this prospectus or in our filings under the
Securities Exchange Act of 1934, (the "Exchange Act"), are "Forward-Looking
Statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and are thus prospective. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual future results
or trends to differ materially from future results or trends expressed or
implied by such forward-looking statements. The most significant of such risks,
uncertainties and other factors are discussed in this prospectus under "Risk
Factors" and prospective investors are urged to carefully consider such factors.
Updated information will be periodically provided by us as required by the
Securities Act and the Exchange Act. We, however, undertake no obligation to
publicly release the results of any revisions to such forward-looking statements
which may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
This prospectus is part of a Registration Statement we filed with the
SEC. You should rely only on the information and representations provided in
this prospectus. We have authorized no one to provide you with different
information. We are not making offers for the securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
-3-
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following Risk
Factors, in addition to the other information set forth in this prospectus in
evaluating an investment in the securities offered hereby.
FACTORS RELATING TO US
We may not be able to sustain our current growth
Although we experienced a loss in sales for the quarter ended March 31,
1999, since inception we have experienced substantial growth through both
internal operations and acquisitions. Consolidated net sales and consolidated
net income increased to $195 million and $17.9 million, respectively, for the
year ended December 31, 1998, from $117.5 million and $12.8 million,
respectively, for the year ended December 31, 1997. Consolidated net sales and
consolidated net income increased to $117.5 million and $12.8 million,
respectively, for the year ended December 31, 1997, from $73.3 million and $8.2
million, respectively, for the year ended December 31, 1996. For the year ended
December 31, 1995, consolidated net sales and consolidated net income increased
to $48.5 million and $6.9 million, respectively, from $17.5 million and $0.15
million, respectively, for the year ended December 31, 1994. There can be no
assurance that such growth will continue, and if such growth continues, that our
infrastructure will be sufficient to support such a larger enterprise.
We depend upon key personnel for our operations
Our ability to attract and retain highly skilled personnel is critical
to our operations. To date, we have been able to attract and retain the
personnel necessary for our operations. Because of our expansion plans, there
can be no assurance that we will be able to do so in the future. If we are
unable to attract and retain skilled personnel our business and expansion plans
could be materially adversely affected. We are dependent upon the efforts and
abilities of Georges C. St. Laurent III, the Chairman of the Board and Chief
Executive Officer, and William C. St. Laurent, the President and Chief Operating
Officer. Each of these individuals is a substantial shareholder of the Company.
The loss or unavailability of the services of either of these individuals for
any significant period of time could have a material adverse effect on our
business prospects. We are the sole beneficiary of key-person life insurance in
the amount of $2 million on the life of each of Messrs. St. Laurent. There can
be no assurance that such insurance will continue to be available on reasonable
terms, or at all.
Fluctuation in our operating results may affect our stock price
Our operating results have been subject to seasonality and to
significant quarterly and annual fluctuations. Our quarterly net sales and
operating results may vary significantly as a result of, among other things:
o historical seasonal purchasing patterns and the general economic
climate in Brazil;
o the volume and timing of orders received during a quarter;
o variations in sales mix;
o delays in production schedules;
o new product developments or introductions;
o availability of components;
o changes in product mix and pricing;
o product reviews and other media coverage.
Our sales plan provides for approximately forty percent (40%) of our sales to be
made to federal, state, and municipal government customers. Such sales at times
may involve large contracts that can be a significant part of our sales. Our
sales to the consumer and small business markets fluctuate seasonally and are
dependent in part on the spending patterns of our customers, which in turn are
subject to prevailing economic conditions. Historically, our sales have
increased in the third and fourth quarters due, in part, to holiday spending.
Accordingly, our historical financial performance is not necessarily a
-4-
<PAGE>
meaningful indicator of future results and, in general, management expects that
our financial results may vary materially from period to period.
We may not be able to obtain additional capital on acceptable terms
We may need to seek additional funding through public or private
financing and may elect to obtain capital in anticipation of such needs.
Adequate funds for growth through internal expansion and through acquisitions
may not be available when needed or may not be available on terms favorable to
us. If additional funds are raised by issuing equity securities or related
instruments with conversion or warrant features, dilution to existing
shareholders may result. If funding is insufficient, we may be required to
delay, reduce the scope of or eliminate some or all of our expansion programs.
In addition, we have in the past sought funding through third parties related to
our management and there can be no assurance that these sources can be relied
upon in the future. More recently, we have entered into a receivables financing
facility with Technology Acceptance Corp. ("TAC"), an independently owned
special purpose corporation, pursuant to which TAC issues and sells senior notes
to investors collateralized by certain receivables of the Company. We are
required to repurchase these receivables under certain circumstances, including
their non-payment.
Additionally, at the end of July we have approximately $21 in debt
maturing. We believe that the projected cash flows from continuing operations
and existing and contemplated sources of credit will be sufficient to satisfy
our capital requirements. Such belief is based on certain assumptions, and there
can be no assurance that such assumptions are correct. Accordingly, there can be
no assurance that such resources will be sufficient to satisfy our capital
requirements or expansion plans. There can be no assurance that such
contemplated sources will be available at the time they are needed or that the
receivables financing facility with TAC will be available to us for financing
accounts receivable at favorable terms.
We may not be able to compete effectively in our industry
The manufacturing and sale of computer equipment and related products
is highly competitive and requires substantial capital. We compete with, and
will compete with, numerous international, national, and regional companies,
many of which have significantly larger operations and greater financial,
marketing, human, and other resources than us, which may give such competitors
competitive advantages. Competitors in the computer hardware market include
internationally recognized companies such as IBM, Acer, Dell, Hewlett Packard
and Compaq. Additionally, we compete in the systems integration market with
internationally recognized systems integrators such as IBM, EDS and Unisys.
Competition is based on price, product quality, customer support and the ability
to deliver products in a timely fashion. No assurance can be given that we will
successfully compete in any market in which we conduct or may conduct
operations.
In addition, we compete with other small manufacturers of computer
equipment sold on the "gray market" in Brazil. Such manufacturers are able to
sell products at prices that are often significantly lower than those offered by
us and other legitimate manufacturers. Gray market manufacturers are able to
offer lower prices because of the avoidance of import duties and other taxes,
and the avoidance of necessary software licensing fees. There can be no
assurance that gray market activity will not continue to flourish, putting
downward pressures on our profit margins as result of low pricing strategies.
-5-
<PAGE>
We depend on credit sales and there are risks to customer lending
Credit sales are an important component of our results of operations.
In 1998, approximately ninety percent (90%) of our net sales revenue was
accounted for by sales on credit (with terms from 1 to 24 months). Our results
of operations could be materially and adversely affected if demand for customer
credit falls, or if Brazilian Government policies curtail our ability to extend
credit or to fund our extensions of credit. In addition, our customer credit
activities expose it to significant risks. At March 31, 1999, our outstanding
exposure to customer credit risk was approximately $83.3 million, including the
balance of accounts receivable sold to TAC. While an allowance for doubtful
accounts (including those sold to TAC) is made monthly based on management's
reviews of prior period losses and anticipated losses, there can be no assurance
that such allowances would be sufficient to cover actual losses.
We depend on our suppliers for quality components for our manufacturing process
Our manufacturing process requires a high volume of quality components
that are procured from third party suppliers. Reliance on suppliers, as well as
industry supply conditions, generally involves several risks, including:
o the possibility of defective parts (which can adversely affect
the reliability and reputation of our products);
o a shortage of components and reduced control over delivery
schedules (which can adversely affect our manufacturing
efficiencies);
o increases in component costs (which can adversely affect our
profitability).
We have several single-sourced supplier relationships, either because
alternative sources are not available or the relationship is advantageous due to
performance, quality, support, delivery, capacity or price considerations. If
these sources are unable to provide timely and reliable supply, we could
experience manufacturing delays or inefficiencies, adversely affecting our
results of operations. During the year ended December 31, 1998, we had one
supplier which accounted for more than ten percent (10%) of purchases.
Substantially all of our inventory has, and will be, purchased from
manufacturers and distributors with whom we have entered into non-exclusive
agreements, which are typically cancellable upon 30 days written notice. There
can be no assurance that such agreements will not be canceled. The loss of, or
significant disruptions in relationships with, suppliers could have a material
adverse effect on our business since there can be no assurance that we will be
able to replace lost suppliers on a timely basis.
We depend on our tax-exempt status in Brazil
The government of the State of Bahia, Brazil has issued a decree that
exempts companies such as our subsidiary, Bahiatech - Bahia Tecnologia, Ltda.,
from the payment of state import duties, state sales tax, and state services
tax. Bahiatech has received an exemption from such taxes through and including
the year 2003. Additionally, Bahiatech is exempted from the payment of Brazilian
federal income tax through and including the year 2004, provided that we meet
certain budgeted production goals. We are not exempted from the payment of a
federal social contribution tax of approximately eight percent (8%) of pre-tax
income. The normal rate of federal taxation on a non-exempt basis is
thirty-three percent (33%). If we are unable to extend such tax-exempt status,
our after-tax earnings as a percentage of net sales would decline by the amount
of the tax benefit, which may be substantial.
In December of 1997, as a result of our plan to consolidate the
manufacturing operations of Microtec Sistemas Industria e Comercio S.A. by
relocating it to the State of Bahia, Microtec applied with the State of Bahia
and the federal government of Brazil for the same tax incentives that have been
granted to Bahiatech. Microtec has been granted the state tax incentives from
the state of Bahia and will enjoy such state tax holiday through 2005. Should
Microtec be granted the federal incentive, it would enjoy the federal income tax
holiday through 2007. While we believe that Microtec will be granted this
federal incentive, there is no assurance that Microtec's eligibility will be
approved.
-6-
<PAGE>
Our products are characterized by continuous and rapid technological advances
and evolving industry standards
Compatibility with industry standards in areas such as operating
systems and communications protocols is material to our marketing strategy and
product development efforts. In order to remain competitive, we must respond
effectively to technological changes by continuing to enhance and improve our
existing products to incorporate emerging or evolving standards, and by
successfully developing and introducing new products that meet customer
requirements. There can be no assurance that we will successfully develop,
market, or support such products or that we will respond effectively to
technological changes or new product announcements or introductions by others.
If we do not enhance and improve our products, our sales and financial results
could be materially adversely affected. In addition, there can be no assurance
that, as a result of technological changes, all or a portion of our inventory
would not be rendered obsolete.
Our transactions with related parties creates conflicts of interest
We have, since 1995, received loans and sold securities and certain of
our accounts receivable to Georges C. St. Laurent Jr. ("GSL Jr."), the father of
Georges C. St. Laurent III, our Chairman of the Board and Chief Executive
Officer, and William C. St. Laurent, our President and Chief Operating Officer.
We believe that the terms of these transactions were no less favorable to us
than what could have been obtained from unaffiliated third parties. To the
extent that we enter into transactions with affiliated persons and entities in
the future, we will do so only on terms no less favorable to us than those
available from unaffiliated third parties.
Our assets are located outside the U.S. and enforceability of civil liabilities
against foreign persons is difficult
While we are a U.S. corporation with executive offices in Florida, our
principal operations are conducted by our Brazilian subsidiaries. A substantial
portion of our assets will be held or used outside the U.S. (in Brazil).
Consequently, enforcement by investors of civil liabilities under the Federal
securities laws may be adversely affected by the fact that, while we are located
in the U.S., our principal subsidiaries and operations are located in Brazil.
Although our executive officers and directors are residents of the U.S., except
for Messrs. Touma Makdassi Elias and William R. Blackhurst, who are residents of
Brazil, all or a substantial portion of our assets are located outside the U.S.
Repatriation of excess retained earnings through the floating rate market is
volatile
For the foreseeable future, Bahiatech does not intend to distribute any
excess retained earnings to Vitech, but intends to reinvest such earnings, if
any, in the development and expansion of its business. Up to now, substantially
all of our retained earnings on a consolidated basis have been attributable to
Bahiatech. Bahiatech is exempted from the payment of Brazilian federal income
tax through and including the year 2004, provided that Bahiatech meets certain
budgeted production goals. Tax exemption benefits cannot be distributed as
dividends to the parent company in U.S. Dollars and are segregated for capital
reserves and offsetting accumulated losses in accordance with Brazilian law. For
the years ended December 31, 1998, 1997 and 1996 the tax exemption benefits
amounted to approximately $5,600,000 ($0.42 per share), $3,000,000 ($0.25 per
share) and $2,200,000 ($0.22 per share), respectively.
In the future, should Bahiatech wish to remit retained earnings in
excess of the tax exemption benefits in U.S. Dollars, it may do so only in Reais
convertible into U.S. Dollars in the floating rate exchange market. There are
two legal foreign exchange markets in Brazil: the Commercial Market and the
Floating Market. The "Commercial Market Rate" is the commercial selling rate for
Brazilian currency into U.S. Dollars, as reported by the Central Bank. The
"Floating Market Rate" generally applies to transactions to which the Commercial
Market Rate does not apply. Prior to the implementation of the Real Plan, the
Commercial Market Rate and the Floating Market Rate differed significantly at
times. Since the introduction of the Real, the two rates have not differed
-7-
<PAGE>
significantly. However, there can be no assurance that there will not be
significant differences between the two rates in the future. Both the Commercial
Market Rate and the Floating Market Rate are reported by the Central Bank on a
daily basis.
In order for a company to remit retained earnings abroad in U.S.
dollars at the Commercial Market Rate, Brazilian law first requires the
registration of the foreign capital upon which those retained earnings were
made. Bahiatech has not made such registration and therefore is only able to
remit excess retained earnings at the Floating Market Rate. We use the
Commercial Market Rate for the translation of Bahiatech's results into U.S.
Dollars. In the event that Bahiatech remits excess retained earnings at the
Floating Market Rate, there can be no assurance that such remittance will not
vary from our reported results because of the differences between the Commercial
Market Rate and the Floating Market Rate. Although Microtec does not currently
intend to distribute any retained earnings to Vitech, it is currently eligible
to remit retained earnings in U.S. Dollars at the Commercial Market Rate.
The exercise of options and warrants will have dilutive effect
We have issued and outstanding, options and warrants to purchase an
aggregate of 5,430,214 shares of common stock at exercise prices between $8.18
and $22.73 per share, including 4,635,827 options issued to directors,
consultants, and employees. The existence of such options and warrants may
adversely affect the terms under which we could obtain additional equity
capital. The exercise of these options and warrants may cause significant
dilution and materially and adversely affect the market price of the common
stock.
Shares eligible for future sale
As of the date of this prospectus, we have 14,635,655 shares of common
stock outstanding, and 5,566,578 shares of common stock issuable upon the
exercise of options and warrants. Of such shares outstanding or issuable,
13,199,880 are not registered and are held by our "affiliates" within the
meaning of the Securities Act and are subject to the resale limitations of Rule
144 promulgated under the Securities Act (the "Restricted Shares"). We issued
the Restricted Shares in private transactions in reliance upon one or more
exemptions contained in the Securities Act. The Restricted Shares are or will be
deemed to be "restricted securities" within the meaning of Rule 144 promulgated
under the Securities Act and may be publicly sold if registered under the Act or
held by the holder thereof for a prescribed amount of time, if the other
conditions of Rule 144 are satisfied. As of the date of this prospectus,
8,457,757 of the Restricted Shares, will have either been held for more than one
year and are eligible for public sale in accordance with the requirements of
Rule 144, or are eligible for resale pursuant to currently effective
registration statements. In addition to the Restricted Shares, we have 1,832,689
shares of common stock that may be issued pursuant to the conversion of certain
convertible notes. Such shares upon conversion will be eligible for resale
pursuant to a resale registration statement on file with the SEC.
We are controlled by principal shareholders
Our principal shareholders (Georges C. St. Laurent III and William C.
St. Laurent) together beneficially own approximately fifty eight percent (58%)
of the outstanding shares of common stock. Accordingly, the principal
shareholders are able to elect our entire Board of Directors and control the
outcome of all matters submitted to a vote of the shareholders of the Company.
See "Description of Securities".
We are subject to burdensome government regulation
The manufacture of computer equipment and related products is subject
to various forms of government regulation in the United States and Brazil
including, but not limited to, the following:
o technology transfer and licensing regulations;
o tariff regulations;
o regulations governing currency conversion and transfers of
profits between jurisdictions;
o labor regulations.
-8-
<PAGE>
We do not believe that such regulations adversely affect us or our business
presently; however, there can be no assurance that such regulations will not
materially adversely affect us in the future. In addition, the government of
Brazil has exercised, and continues to exercise, substantial influence over many
aspects of the private sector in Brazil.
We have implemented anti-takeover provisions that could prevent an acquisition
of Vitech America at a premium price
The Board of Directors is authorized to issue shares of preferred stock
and to determine the dividend, liquidation, conversion, redemption, and other
rights, preferences, and limitations of such shares without any further vote or
action of the shareholders. Accordingly, the Board of Directors is empowered,
without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting, or other rights which could adversely affect
the voting power or other rights of the holders of the common stock. In the
event of issuance, the preferred stock could be used as a method of discouraging
and delaying or preventing a change in control of the Company. We have no
present intention to issue any shares of its preferred stock, although there can
be no assurance that we will not do so in the future. See "Description of
Securities Preferred Stock".
We expect to experience volatility in our stock price
The market for securities of technology companies and companies that
participate in emerging markets historically has been more volatile than the
market for stocks in general. The price of the common stock may be subject to
wide fluctuations in response to the following:
o quarter-to-quarter variations in operating results;
o announcement of acquisitions, vendor additions or cancellations;
o creation or elimination of banking or other funding opportunities;
o favorable or unfavorable coverage of the Company or its officers by
the press;
o the availability of new products, technology, or services.
In addition, the stock market has from time to time experienced extreme price
and volume fluctuations that have particularly affected the market price for
many technology and emerging market companies, both related and unrelated to the
operating results of such companies. These market fluctuations and other factors
may affect the market for the common stock.
We have only one manufacturing facility
We operate one manufacturing facility in Brazil, in Ilheus, Bahia. In
the event such facility were to experience substantial damage or disruption of
its operations for any reason, we may be required to suspend manufacturing
operations or transfer manufacturing operations to an independent facility for
an indefinite period of time. While we maintain insurance covering various
contingencies, any such suspension or disruption of our manufacturing operations
could have a material adverse effect on us and our results of operations.
Year 2000 Compliance
Many existing computer systems and applications, and other control
devices, use only two digits to identify a year in the date code field, and were
not designed to account for the upcoming change in the century. As a result,
such systems and applications could fail or create erroneous results unless
corrected so that they can process data related to the year 2000. We rely on our
systems, applications and devices in operating and monitoring all major aspects
of its business, including financial systems (such as general ledger, accounts
payable and accounts receivable modules), inventory and receivables systems,
customer services, infrastructure, embedded computer chips, networks and
-9-
<PAGE>
telecommunications equipment and end products. We also rely, directly and
indirectly, on systems of external business enterprises such as distributors,
suppliers, creditors, financial organizations, and governmental entities, for
accurate exchange of data. Although we are in contact with our suppliers to
assess their compliance, there can be no assurance that there will not be a
material adverse effect on us if third parties do not convert their systems in a
timely manner and in a way that is compatible with our systems, as we could be
affected through disruptions in the operation of the enterprises with which we
interact. Based on the information currently available, we believe that the
costs associated with the year 2000 issue, and the consequences of incomplete or
untimely resolution of the year 2000 issue, will not have a material adverse
effect on our business, financial condition and results of operations in any
given year; however, there can be no assurance that year 2000 issues will not
have a material adverse effect on our business, financial condition or results
of operations.
FACTORS RELATING TO BRAZIL
We are subject to political and economic conditions
The Brazilian economy has been characterized by frequent and
occasionally drastic intervention by the Brazilian government. The Brazilian
government has often changed monetary, credit, tariff and other policies to
influence the course of Brazil's economy. The Brazilian government's actions to
control inflation and effect other policies have often involved wage and price
controls as well as other measures, such as freezing bank accounts, imposing
capital controls and limiting imports into Brazil. Changes in policy involving
tariffs, exchange controls, and other matters could have a material adverse
effect on the Company, as could inflation, devaluation, social instability and
other political, economic or diplomatic developments, and the Brazilian
government's response to such developments.
The Brazilian political environment has been marked by high levels of
uncertainty since the country returned to civilian rule in 1985 after 20 years
of military government. The death of a President-elect in 1985 and the
resignation of another President in 1992 during his impeachment trial, as well
as frequent turnovers at and immediately below the cabinet level, particularly
in the economic area, historically have contributed to the absence of a coherent
and sustained policy to confront Brazil's economic problems.
Mr. Fernando Henrique Cardoso, the Finance Minister at the time of the
implementation of Brazil's latest economic stabilization plan, was elected
President in October 1994. The Real Plan, which has significantly reduced
inflation since the introduction of the Real in July 1994, has been continued by
the Cardoso government. See "Brazil has historically experienced high rates of
inflation" below. President Cardoso has continued to support free market and
privatization measures of recent years, and his government has taken steps in
this regard, such as proposing measures for the liberalization of the state
petroleum and telecommunications monopolies and the privatization of a number of
state-owned enterprises. Although these liberalization measures have enjoyed
broad political and public support, some important political factions remain
opposed to significant elements of the reform program. In addition, President
Cardoso was elected as the leader of a coalition of political parties and
governs Brazil by coalition government. As a result, President Cardoso's
leadership of Brazil is likely to be subject to more compromises and
accommodations than if his party alone had received support from the majority of
voters. Furthermore, the Brazilian government's desire to control inflation and
to reduce budget deficits may cause it to take actions that will slow or halt
Brazilian economic growth.
Brazil has historically experienced extremely high rates of inflation
Inflation itself, as well as certain governmental measures to combat
inflation, have in the past had significant negative effects on the Brazilian
economy. Inflation, actions taken to combat inflation and public speculation
about possible future actions have also contributed significantly to economic
uncertainty in Brazil and to heightened volatility in the Brazilian securities
markets. Beginning in December 1993, the Brazilian government introduced the
Real Plan, an economic stabilization plan designed to reduce inflation by
reducing certain public expenditures, collecting liabilities owed to the
Brazilian government, increasing tax revenues, continuing the privatization
-10-
<PAGE>
program and introducing a new currency. On July 1, 1994, as part of the Real
Plan, the Brazilian government introduced the Real. Since the introduction of
the Real, Brazil's inflation rate has been substantially lower than in previous
periods. Inflation, as measured by the IGP-DI, was approximately 2,708%, 910%,
15.7%, 9.3%, 7.5% and 1.7% in 1993, 1994, 1995, 1996, 1997 and 1998,
respectively. There can be no assurance, however, that the recent lower level of
inflation will continue or that future Brazilian governmental actions (including
actions to adjust the value of the Brazilian currency such as the devaluation of
the Real in January 1999) will not trigger an increase in inflation or that any
such increase will not have a material adverse effect on the Company.
We are subject to exchange rate fluctuations
The relationship of Brazil's currency to the value of the U.S. Dollar,
and the rates of devaluation of Brazil's currency relative to the prevailing
rates of inflation have affected, and may affect, the Company's financial
condition and results of operations. Principally all of the Company's sales are
denominated in the Real, while the Company's operating results are recorded in
U.S. Dollars. Any significant devaluation of the Real relative to the U.S.
Dollar could have a material adverse effect on the Company's operating results.
Although the Company had used Real futures and options contracts during 1996, in
an effort to hedge against currency risks, its highest coverage at any one time
had only met 20% of its exposure, consisting of accounts receivable denominated
in Reais, net of accounts payable and other current liabilities denominated in
Reais. Currently, the Company is not engaged in any hedging activities. Currency
transaction losses for the years ended December 31, 1998 and 1997 were
$1,603,670 and $2,665,224, respectively, and were associated with
dollar-denominated monetary assets and liabilities held by the Company's
Brazilian subsidiaries. For the quarter ended March 31, 1999 we experienced a
currency translation loss of $16,656,880 due to the devaluation of the Real
against the U.S. dollar which occurred in January 1999.
In the event of a significant devaluation of the Brazilian currency in
relation to the U.S. Dollar or other currencies, our ability to meet our foreign
currency denominated obligations could be adversely and materially affected.
Increases in the rate of inflation in Brazil subsequent to such a devaluation of
the Brazilian currency could adversely affect our business, results of
operations and financial condition. Although the exchange rate between the Real
and the U.S. dollar had been relatively stable from mid-July 1994 through late
1998, the spread of the Asian and Russian economic difficulties to South America
culminated in the devaluation of the Real in mid-January 1999. By the end of
January 1999, the real dropped against the dollar by approximately 45% compared
to the end of December 1998. Although some recent economic measures have been
taken by the Brazilian Federal Government in an effort to stabilize the Real,
the potential for future devaluation or volatility continues to persist.
Our exchange controls and restrictions
Brazilian law provides that, whenever there is a serious imbalance in
Brazil's balance of payments or serious reasons to foresee such imbalance, the
Brazilian government may impose restrictions on the remittance to foreign
investors of the proceeds of their investments in Brazil, as it did for
approximately six months in 1989 and early 1990, and on the conversion of
Brazilian currency into foreign currencies. No assurance can be given that the
international transfer of Reais or the Floating Market will remain legally or
commercially available to Brazilian residents. There can be no assurance that
the Brazilian government will not in the future impose more restrictive foreign
exchange regulations that would have the effect of preventing or restricting our
access to foreign currency that it may require to meet its foreign currency
obligations under foreign currency denominated liabilities.
Brazil's economic environment is subject to change
Despite the success to date of the Real Plan in reducing inflation in
Brazil, the fiscal adjustment program necessary to reduce government
expenditures is not complete after the fifth year of the Real Plan. There can be
no assurance that the Real Plan will be more successful than previous economic
programs in reducing inflation over the long term, especially in light of (i)
the Brazilian congress' delay in the Real Plan
-11-
<PAGE>
and in the reform of the social security system, and (ii) the negative effects
of the Asian, Russian and Latin American crises on Brazil, which has caused a
flight of foreign investment, the devaluation of the Real and new inflationary
pressures on the Brazilian economy. Accordingly, periods of substantial
inflation may once again have significant adverse effects on the Brazilian
economy, on the value of the Real and on the Company's financial condition,
results of operations and future prospects.
-12-
<PAGE>
BUSINESS
The Company
Vitech America, Inc. and subsidiaries are engaged in the manufacture
and direct marketing of PCs and related products, business systems integration
products and turn-key business solutions, as well as the financing of the
purchase thereof, in the Federal Republic of Brazil. Our principal operations
are conducted in Brazil by our Brazilian subsidiaries. The parent company,
Vitech America, Inc., is based in Miami, Florida and sources components in the
United States and throughout the world and engages in the distribution of those
components to its subsidiaries' manufacturing operations in Brazil.
Substantially all of our revenues have been recognized in Brazil by our
subsidiaries. Our products, which include desktop PCs, notebooks, workstations,
network servers, peripherals, software, business systems integration products
and turn-key business solutions, are marketed under brand names owned or
licensed by us directly to end-users through a variety of channels in the
Brazilian marketplace. In addition, we maintain an engineering support service
dedicated to assisting customers in effecting networking and systems integration
solutions, and to providing technical support to the end-users of our products.
-13-
<PAGE>
SELLING SECURITY HOLDERS
On May 21, 1999 (the "Original Issue Date"), we issued $10,000,000
aggregate principal amount of two year 10% convertible debentures. Interest on
the debentures is payable quarterly on March 31, June 30, September 30 and
December 31 of each year beginning June 30, 1999. We may, at our option, pay
interest in shares of common stock based upon the lower of (i) the closing bid
price per share of our common stock or (ii) $11.00 on the date such interest is
due. A default under the debenture includes, but is not limited to (i) any
default in payment of principal or interest on the debentures, provided that no
occurrence of a default in payment of interest shall exist if we cure such
amount within five (5) days following receipt of written notice of such default;
(ii) we fail to observe or perform any other covenant agreement or warranty
contained in the debenture and such failure or breach shall not be remedied
within ten (10) days after written notice; (iii) we or any of our subsidiaries
shall have commenced against us or any of our subsidiaries a case under any
applicable bankruptcy laws; (iv) we shall default after the lapse of any
applicable grace period of any obligations under any indebtedness in an amount
exceeding $500,000; (v) our common stock shall fail to be listed for trading on
Nasdaq or shall be suspended from trading on Nasdaq for more than three (3)
days; and (vi) the Registration Statement relating to the common stock shall not
have been declared effective on or prior to the 180th day after the date of
issuance of the convertible debentures. The debentures are initially convertible
at a conversion price of $11.00 (the "Initial Conversion Price"), subject to
stock splits, stock dividends, rights offering by us in certain combinations,
capitalizations, reclassifications, extraordinary distributions and other
similar events. In the event that we shall decline to repay in full, following
the exercise by the debenture holder of the put right (as defined below), the
Initial Conversion Price shall be the lesser of (i) .85 multiplied by the 10-day
volume weighted average closing price as reported on Nasdaq as reported by
Bloomberg Informational Services, Inc. (or other principal exchange on which our
securities are traded) for the lowest 10-day consecutive day period during the
30 consecutive trading day period ending one trading day prior to the conversion
date, and (ii) $11.00 per share. We are authorized to issue up to 2,927,130
shares of common stock in connection with this transaction without seeking
shareholder approval. In addition the 10% convertible debentures prohibit each
holder from converting in excess of 4.999% and 9.999%, respectively, of the
outstanding shares of common stock following such conversion. Either restriction
may be waived by a holder of 10% convertible debentures upon not less than 75
days' notice to us.
Beginning February 21, 2000, and continuing for a period of 10 days
thereafter, each debenture holder shall have the right to request that we
repurchase all, but not less than all, of the outstanding debentures held by
such holder at a price equal to 112% of the principal amount thereof (the "Put
Price"), plus accrued and unpaid interest thereon. The Put Price shall be
adjusted as follows: (i) one hundred and sixteen percent (116%) of the principal
amount of the Debentures to be repaid, plus all accrued and unpaid interest
thereon if the Put Date occurs on or after the 361st day after the Original
Issue Date and prior to the 450th day after the Original Issue Date, (ii) one
hundred and twenty percent (120%) of the principal amount of the Debentures to
be repaid, plus all accrued and unpaid interest thereon if the Put Date occurs
on or after the 451st day after the Original Issue Date and prior to the 540th
day after the Original Issue Date, (iii) one hundred and twenty-four percent
(124%) of the principal amount of the Debentures to be repaid, plus all accrued
and unpaid interest thereon if the Put Date occurs on or after the 541st day
after the Original Issue Date and prior to the 630th day after the Original
Issue Date, and (iv) one hundred and twenty-eight percent (128%) of the
principal amount of the Debentures to be repaid, plus all accrued and unpaid
interest thereon if the Put Date occurs on or after the 631st day after the
Original Issue Date. In connection with the issuance of the convertible
debentures we also issued to investors warrants to purchase 100,000 shares of
our common stock at an exercise price of $11.50 per share. The exercise price is
subject to adjustment for stock splits, stock dividends, rights offering by us
and certain combinations, capitalization, reclassifications, extraordinary
distributions and other similar events. The warrants expire May 21, 2004.
We are also obligated under the terms of the agreement to prepare and
file a registration statement providing for the resale of the shares of common
stock issuable upon conversion of the convertible debenture within 30 days of
May 21, 1999, and to use our best efforts to have such registration statement
declared effective on or before August 19, 1999.
On September 30, 1998, we issued a two year ten percent (10%)
convertible note for the total amount of $450,000 to Little Wing LP. The note is
convertible into 45,000 shares of our common stock. We have agreed to register
the resale of such shares issuable upon conversion of the note.
-14-
<PAGE>
The shares listed below represent all of the shares which each selling
security holder currently owns, or which each selling security holder may own,
on conversion of a ten percent (10%) convertible note.
<TABLE>
<CAPTION>
Number of Shares Shares Owned
Name of Selling Security Holder Shares Owned Being Offered After Offering
- ------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
Advantage Fund II Ltd. 833,637(1)(2) 1,597,274(1)(2) 0
Koch Investment Group Ltd. 357,272(2)(3) 684,544(2)(3) 0
Little Wing LP(4) 217,473 45,000 172,473
</TABLE>
- --------------------
(1) Includes (i) 636,364 shares of Common Stock issued upon conversion of
the 10% convertible debentures, assuming conversion at $11.00 per share
(which price will fluctuate after February 21, 2000 in the event the
put price is not paid after the debentures are put to the Company),
(ii) 127,273 shares of common stock as payment of interest, assuming
all such interest is paid in shares of common stock and the debentures
remain outstanding for two years and (iii) 70,000 shares of common
stock issuable upon the exercise of warrants.
(2) Because the number of shares of common stock issuable upon conversion
of the debentures and as payment of interest thereon may be dependent
in part upon the market price of the common stock prior to a
conversion, the actual number of shares of common stock that will be
issued in respect of such conversions or interest payments and,
consequently, offered for sale under this registration statement,
cannot be determined at this time. However, the Company has
contractually agreed to include herein 200% of the shares of common
stock issuable upon conversion of the debentures and as payment of
interest thereon.
(3) Includes (i) 272,727 shares of common stock issued upon conversion of
the 10% convertible debentures, assuming conversion at $11.00 per share
(which price will fluctuate after February 21, 2000 in the event the
put price is not paid after the debentures are put to the Company),
(ii) 54,545 shares of common stock as payment of interest, assuming all
such interest is paid in shares of common stock and the debentures
remain outstanding for two years and (iii) 30,000 shares of common
stock issuable upon the exercise of warrants.
(4) Represents shares of common stock issuable upon conversion of the two
year ten percent (10%) convertible note in the principal amount of
$450,000.
We will pay all costs and expenses related to sale and delivery of the
shares, the Registration Statement and prospectus. We will not pay selling
commissions and expenses associated with any sale by the selling security
holders.
No selling security holder is or has been an officer, or held any
position with us, nor have there been any material relationships between the
selling security holders and us during the past three years.
PLAN OF DISTRIBUTION
The selling security holders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling security holders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
-15-
<PAGE>
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling security holders
to sell a specified number of such shares at a stipulated
price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling security holders may also sell shares under Rule 144 under
the Securities Act, if available, rather than under this prospectus.
The selling security holders may also engage in short sales against the
box, puts and calls and other transactions in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling security holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the selling security holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling security holders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The selling security holders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
selling security holders. We have agreed to indemnify the selling security
holders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
-16-
<PAGE>
DESCRIPTION OF SECURITIES
General
As of the date of this prospectus, our articles of incorporation
authorize us to issue 30,000,000 shares of common stock, no par value, and
3,000,000 shares of preferred stock, no par value (the "Preferred Stock"). As of
June 10, 1999, there were outstanding 14,635,655 shares of common stock and no
shares of Preferred Stock.
Common Stock
Each shareholder has the right to one vote per share on all matters
which require their vote. Holders of common stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds
legally available therefor. In the event of a liquidation, dissolution, or
winding up of Vitech, holders of common stock are entitled to share ratably all
assets remaining after payment of liabilities. Holders of common stock have no
preemptive rights and have no rights to convert their common stock into any
other securities.
Preferred Stock
Our preferred stock may be issued in one or more series, the terms of
which may be determined at the time of issuance by the Board of Directors,
without further action by shareholders, and may include voting rights (including
the right to vote as a series on particular matters), preferences as to
dividends and liquidation, conversion rights, redemption rights, and sinking
fund provisions. The issuance of any such preferred stock could adversely affect
the rights of the holders of common stock and, therefore, reduce the value of
the common stock. The ability of the Board of Directors to issue preferred stock
could discourage, delay, or prevent a takeover of Vitech. See "Risk Factors - We
have implemented anti-takeover provisions that could prevent an acquisition of
Vitech America at a premium price."
NASDAQ National Market
Our common stock is traded on the Nasdaq National Market under the
symbol "VTCH".
Transfer and Warrant Agent and Registrar
Our transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for the Company by Atlas, Pearlman, Trop & Borkson P.A., Fort
Lauderdale, Florida. Atlas, Pearlman, Trop & Borkson own shares of common stock.
EXPERTS
The audited Consolidated Financial Statements of Vitech America, Inc.,
as of December 31, 1998 and 1997, and for each of the three fiscal years in the
period ended December 31, 1998, incorporated by reference into this prospectus,
have been audited by Pannell Kerr Forster PC, independent certified public
accountants, as indicated in their report with respect thereto, and incorporated
by reference herein in reliance upon the authority of said firm as experts in
giving said reports.
-17-
<PAGE>
INDEMNIFICATION
The Articles of Incorporation of the Company provide that every
director and every officer of the corporation, every former director and former
officer of the corporation, and every person who may have served at the request
of the corporation as a director or officer of another corporation in which the
corporation owns shares of capital stock or of which it is a creditor, and the
heirs, executors, administrators, and assignors of all of the above persons
shall be indemnified by the corporation for expenses actually and necessarily
incurred by him in connection with the defense of any action, suit, or
proceeding to which he may be a party by reason of his being or having been a
director or officer of the corporation or of such other corporation regardless
of whether or not he continues to be a director or officer at the time of
incurring such expenses, except with respect to matters as to which he shall be
finally adjudged in such action, suit, or proceeding to be liable for negligence
or misconduct in the performance of his duty. The rights of indemnification set
forth in the Articles of Incorporation shall not be exclusive of any other
rights to which such person may be entitled by law or otherwise.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of the director and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Florida law. In addition,
each director will continue to be subject to liability for: (a) violations of
criminal laws, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for, or
assenting to, an unlawful distribution; and (d) willful misconduct or conscious
disregard for the best interests of the Company in a proceeding by, or in the
right of, the Company to procure a judgment in its favor or in a proceeding by,
or in the right of, a shareholder. The statute does not effect the director's
responsibilities under any other law.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-18-
<PAGE>
PART II
II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Registration Fees - Securities and
Exchange Commission $ 6,562
Cost of Printing and Engraving $ 1,000
Legal Fees and Expenses $ 15,000
Accounting Fees and Expenses $ 5,000
Blue Sky Fees and Expenses $ 500
Miscellaneous $ 1,938
------------
Total $ 30,000
*Estimated
Item 15. Indemnification of Directors and Officers.
The Articles of Incorporation of the Company provide that every
director and every officer of the corporation, every former director and former
officer of the corporation, and every person who may have served at the request
of the corporation as a director or officer of another corporation in which the
corporation owns shares of capital stock or of which it is a creditor, and the
heirs, executors, administrators, and assignors of all of the above persons
shall be indemnified by the corporation for expenses actually and necessarily
incurred by him in connection with the defense of any action, suit, or
proceeding to which he may be a party by reason of his being or having been a
director or officer of the corporation or of such other corporation regardless
of whether or not he continues to be a director or officer at the time of
incurring such expenses, except with respect to matters as to which he shall be
finally adjudged in such action, suit, or proceeding to be liable for negligence
or misconduct in the performance of his duty. The rights of indemnification set
forth in the Articles of Incorporation shall not be exclusive of any other
rights to which such person may be entitled by law or otherwise.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of the director and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Florida law. In addition,
each director will continue to be subject to liability for: (a) violations of
criminal laws, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for, or
assenting to, an unlawful distribution; and (d) willful misconduct or conscious
disregard for the best interests of the Company in a proceeding by, or in the
right of, the Company to procure a judgment in its favor or in a proceeding by,
or in the right of, a shareholder. The statute does not effect the director's
responsibilities under any other law.
Item 16. Exhibits and Consolidated Financial Statement Schedules.
<TABLE>
<CAPTION>
a. The exhibits constituting part of the Registration Statement
are as follows:
<S> <C>
(1.1) Form of Underwriting Agreement. (1)
(1.2) Form of Representative's Warrant Agreement. (1)
(2.1) Contract for Discontinuation of Company Participations and other
Agreements between Vitech America, Inc., Microtec Holding USA, Inc. and Microhold Partipacoes e
Empreendimentos S/C Ltda. dated July 10, 1997. (2)
(2.2) Purchase agreement between Vitech America, Inc. and Microtec Holdings
USA, Inc. dated July 10, 1997. (2)
(2.3) Buy-Sell Contract between Vitech America, Inc. and Tech Shop Holdings
USA, Inc. dated November 17, 1997.(4)
II-1
<PAGE>
(2.4) Buy-Sell Contract between Vitech America, Inc. and Recife Holdings USA,
Inc. dated November 18, 1997. (4)
(3.1) Articles of Incorporation dated June 24, 1993.(1)
(3.2) Amendments to the Company's Articles of Incorporation dated November 13, 1995 and July 26, 1996. (1)
(3.3) By-Laws of the Company. (1)
(4.1) Form of Common Stock Certificate. (1)
(5.1) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. concerning legality of shares being registered pursuant
to the Registration Statement.*
(10.1) Stock Option Plan. (1)
(10.5) Option Agreements for William C. St. Laurent and Georges St. Laurent, III. (1)
(10.13) Senior convertible note payable to Georges St. Laurent Jr. dated June 26, 1997. (2)
(10.15) Senior Convertible Note dated August 19, 1997 to Georges C. St. Laurent Jr. (5)
(10.16) Senior Convertible Note dated October 10, 1997 to Georges C. St. Laurent Jr. (5)
(10.17) Securities Purchase Agreement dated October 10, 1997, by and between the Company, H.W. Partners, L.P., as
Purchaser's Representative and Investor. (3)
(10.18) Form of Convertible Promissory Note dated October 10, 1997 for the Investors. (3)
(10.19) Put and Call Agreement dated October 10, 1997 between the Company and the Investors. (3)
(10.20) Registration Rights Agreement dated October 10, 1997 between the Company and the Investors. (3)
(10.21) Form of Convertible Promissory Note dated October 10, 1997. (3)
(10.22) Master Sales and Servicing Agreement among Technology Acceptance Corp., Technology Trust S.A.,
Bahiatech-Bahia Tecnologia Ltda., Banco Credibanco, S.A. and Vitech America, Inc. dated April 16, 1998.(7)
(10.23) Form of Convertible Promissory Note dated September 30, 1998 for Little Wing LP.(8)
(10.24) Convertible Debenture Purchase Agreement dated May 21, 1999, by and between the Company and Advantage
Fund II Ltd. and Koch Investment Group Ltd., as Investors.(8)
(10.25) Form of Convertible Debenture dated May 21, 1999.(8)
(10.26) Registration Rights Agreement dated May 21, 1999 between the Company, Advantage Fund II Ltd. and Koch
Investment Group Ltd.(8)
(10.27) Form of Warrant dated May 21, 1999.(8)
(21) Subsidiaries of the Company. (6)
(23.1) Consent of Pennell Kerr Forster PC. *
(23.2) Consent of Atlas, Pearlman, Trop & Borkson, P.A., counsel for the Company, is included in an opinion
filed in Exhibit 5.1*
- --------------------
* Filed herewith.
(1) Incorporated by reference to exhibit filed with the Company's Registration Statement on Form S-1, file #333-11505.
(2) Incorporated by reference to exhibit filed with the Company's Form 8-K dated July 10, 1997 as amended.
(3) Incorporated by reference to exhibit filed with the Company's Form 8-K dated October 10, 1997.
(4) Incorporated by reference to exhibit filed with the Company's Form 8-K dated November 17, 1997.
(5) Incorporated by reference to exhibit filed with the Company's Form 10-Q for the quarterly period ended September 30,
1997.
(6) Incorporated by reference to exhibit filed with the Company's Form 10-K for the year ended December 31, 1998.
(7) Incorporated by reference to exhibit filed with the Company's Form 10-Q for the quarterly period ended March 31, 1998.
(8) Incorporated by reference to exhibit filed with the Company's Registration Statement on Forms S-3, file
# 333-80711.
</TABLE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement which includes any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officer, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
II-2
<PAGE>
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Miami, State
of Florida on this 21st day of July, 1999.
<TABLE>
<CAPTION>
<S> <C>
VITECH AMERICA, INC.
By: /s/ WILLIAM C. ST. LAURENT
---------------------------------
William C. St. Laurent, President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ GEORGES C. ST. LAURENT, III Chairman of the Board of Directors July 21, 1999
- ------------------------------------------ and Chief Executive Officer
Georges C. St. Laurent, III (Principal Executive Officer)
/s/ WILLIAM C. ST. LAURENT President, Chief Operating Officer July 21, 1999
- ------------------------------------------ and Director
William C. St. Laurent
/s/ EDWARD A. KELLY Chief Financial Officer July 21, 1999
- ------------------------------------------ (Principal Accounting Officer)
Edward A. Kelly
/s/ JOSEPH K. MEYER
- ------------------------------------------
Joseph K. Meyer Director July 21, 1999
/s/ H.R. SHEPHERD
- ------------------------------------------
H.R. Shepherd Director July 21, 1999
/s/ TOUMA MAKDASSI ELIAS
- ------------------------------------------
Touma Makdassi Elias Director July 21, 1999
/s/ WILLIAM ROBIN BLACKHURST
- ------------------------------------------
William Robin Blackhurst Director July 21, 1999
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibits:
(5.1) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. concerning legality
of shares being registered pursuant to the Registration Statement.
(23.1) Consent of Pannell Kerr Forster PC.
(23.2) Consent of Atlas, Pearlman, Trop & Borkson, P.A., counsel for the
Company, is included in an opinion filed in Exhibit 5.1
Exhibit 5.1
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Direct Line: (954) 766-7858
July 21, 1999
Vitech America, Inc.
8807 Northeast 23rd Street
Miami, Florida 33172
Re: Registration Statement on Form S-3; Vitech America, Inc. (the
"Company"), 2,326,818 shares of Common Stock
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of 2,326,818 shares of Common Stock, no par value (the "Common Stock")
to be sold by the selling security holders designated in the Registration
Statement. The shares of Common Stock to be sold consist of (i) up to 45,000
shares issuable upon conversion of a $450,000 aggregate convertible promissory
note ("Convertible Note"), held by a selling security holder; (ii) 2,181,818
shares issuable upon conversion of $10,000,000 aggregate principal amount of 10%
convertible debentures (the "Convertible Debentures"), held by selling security
holders; and (iii) 100,000 shares issuable upon exercise of warrants (the
"Warrants") issued in a private placement by the Company in May 1999.
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Articles of Incorporation (as amended), By-Laws, instruments pertaining to the
issuance of the shares of Common Stock, and related exhibits and corporate
minutes provided to us by the Company. In all such examinations, we have assumed
the genuineness of all signatures on original documents, and the conformity to
originals or certified documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain corporate records and
documents of the Company, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company, and we
express no opinion thereon.
<PAGE>
Based upon and in reliance of the foregoing, we are of the opinion that
the common stock to be issued upon conversion of the Convertible Note,
Convertible Debentures and exercise of the Warrants, is and when issued in
accordance with the terms of such security, will be validly issued, fully paid
and non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission. Members of Atlas,
Pearlman, Trop & Borkson, P.A. own shares of the Company's common stock.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
By: /s/ Atlas, Pearlman, Trop & Borkson, P.A.
------------------------------------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated April 12, 1999, on our audit of the consolidated
financial statements of Vitech America, Inc. and Subsidiaries as of December 31,
1998 and 1997 and for each of the three years ended December 31, 1998 in this
Amendment No. 1 to Form S-3 Registration Statement of Vitech America, Inc. and
Subsidiaries (File No. 333-80711).
/s/ Pannell Ken Forster PC
----------------------------------
PANNELL KERR FORSTER PC
New York, New York
July 21, 1999
