PROSPECTUS
754,091 SHARES OF COMMON STOCK
VITECH AMERICA, INC.
The shareholders of Vitech America, Inc. listed in this prospectus are
offering and selling up to 754,091 shares of our common stock. 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.
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YOU SHOULD CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 FOR A
DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY A POTENTIAL INVESTOR.
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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 JULY 21, 2000
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TABLE OF CONTENTS
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WHERE YOU CAN FIND MORE INFORMATION.................................................................. 2
RISK FACTORS......................................................................................... 3
BUSINESS ............................................................................................ 8
SELLING SECURITY HOLDERS............................................................................. 9
PLAN OF DISTRIBUTION................................................................................. 10
DESCRIPTION OF SECURITIES............................................................................ 11
LEGAL MATTERS........................................................................................ 11
EXPERTS ............................................................................................ 11
INDEMNIFICATION...................................................................................... 12
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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.
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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 and 10-K/A for the fiscal year ended
December 31, 1999.
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.
(c) Current Report on Form 8-K dated June 15, 2000.
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., 2190 Northwest 89th Place, 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.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, BASED ON OUR BUSINESS AND
THE INDUSTRY IN WHICH WE OPERATE, TOGETHER WITH ALL OF THE OTHER INFORMATION
INCLUDED IN THIS PROSPECTUS, BEFORE DECIDING WHETHER TO INVEST IN OUR COMMON
STOCK. THE OCCURRENCE OF ANY OF THE FOLLOWING RISKS COULD HARM OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS. IN SUCH CASE, THE TRADING PRICE OF
OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT EXHAUSTIVE. ADDITIONAL RISKS
AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US, OR THAT WE CURRENTLY CONSIDER
IMMATERIAL, MAY ALSO HARM OUR BUSINESS.
FACTORS RELATING TO US
WE HAVE GONE FROM PROFITABILITY IN 1998 TO A NET LOSS IN 1999 AND THERE IS NO
ASSURANCE THAT WE WILL BE PROFITABLE IN THE FUTURE.
During 1999, we experienced a substantial decrease in net sales from
$195.3 million to $100.4 million and a substantial decrease of net income from
$17.9 million to a net loss of $21.1 million. These decreases were principally
related to the devaluation of the Brazilian currency, the REAL, and the related
economic conditions in Brazil. During 1999, we relied and currently we rely upon
significant borrowings to finance our working capital requirements. We may
operate in a negative cash flow from operations position for the foreseeable
future. There are no assurances that we will be profitable or operate in a cash
flow positive position.
WE ARE HIGHLY LEVERAGED AND WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL ON
ACCEPTABLE TERMS.
As of March 31, 2000, we had outstanding indebtedness from third party
lenders of $78.1 million, of which $62.5 million is convertible into our common
stock. $75.6 million of our outstanding indebtedness is due on or before May 31,
2001. We will be required to repay this indebtedness, including any unconverted
portion, either through internally generated funds or third party financing or
through refinancing of the indebtedness with the lenders. Our ability to repay
the indebtedness from internally generated funds or through refinancing will
depend in part upon our future performance which will be subject to economic,
financial, and other factors, many of which are beyond our control. Any ability
to access third party financing to repay this indebtedness will also be
substantially dependent on conditions in the financial markets which are subject
to fluctuations and factors outside of our control. Adequate funds 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 our 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 or we may default
under our existing indebtedness, any of which would harm our business. The level
of our indebtedness affects:
o our vulnerability to adverse economic and industry;
o our ability to obtain additional financing for future working capital
expenditures, general corporate and other purposes; and
o the dedication of a substantial portion of our future cash flow from
operations to the payment of principal and interest on indebtedness,
thereby reducing the funds available for operations and future business
opportunities.
WE EXPECT OUR QUARTERLY RESULTS WILL CONTINUE TO FLUCTUATE AND THIS FLUCTUATION
COULD CAUSE OUR STOCK PRICE TO DECLINE RESULTING IN INVESTOR LOSSES.
Our industry generally has been subject to seasonality and to
significant quarterly and annual fluctuations in operating results. Our
operating results have been subject to such fluctuations. Our quarterly
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net sales and operating results have varied 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; and
o product reviews and other media coverage.
As a result of these and other factors, our operating results could
fall below the expectations of securities analysts and investors in future
periods. If this happens, the market for our stock would likely decrease. Our
common stock has traded from a historical high of $21.25 to a historical low of
$4.375. Our historical financial performance is not necessarily a meaningful
indicator of future results.
WE MAY NOT BE SUCCESSFUL AS AN INFORMATION TECHNOLOGY SOLUTIONS PROVIDER.
In 1999 we began to diversify our sales mix by offering technology
services and solutions in addition to hardware and software sales. The
technology solutions and services business in Brazil is extremely competitive
and involves different operating risks than the sale of computer products and
peripherals. It is uncertain whether our technology services and solutions
business will be able to perform in a way we have anticipated. You should
consider our prospects based on the risks, expenses and difficulties frequently
encountered in the operation of a new business segment in a rapidly evolving
industry characterized by intense competition. If we are not be able to
profitably grow this portion of our business our operating results would be
affected.
WE DEPEND ON KEY PERSONNEL FOR OUR OPERATIONS AND MAY NOT BE ABLE TO FIND
ADDITIONAL PERSONNEL IF NEEDED.
We are dependent upon the efforts and abilities of senior management,
including Georges C. St. Laurent III, Chairman of the Board and Chief Executive
Officer, and William C. St. Laurent, President and Chief Operating Officer. The
loss or unavailability of the services of these individuals could harm our
business. We have obtained key-person life insurance in the amount of $2.0
million on the life of each of Messrs. St. Laurent. In addition, our ability to
attract and retain highly skilled personnel is critical to our operations. If we
are unable to attract and retain personnel with necessary skills when needed,
our business and expansion plans could be materially adversely affected.
WE DEPEND ON OUR TAX-EXEMPT STATUS IN BRAZIL.
Under Brazilian state law, our operating subsidiary in Brazil,
Microtec, is currently exempt from the payment of state import duties, state
sales tax, and state services tax through 2005. Additionally, Microtec is
exempted from the payment of Brazilian federal income tax through 2007, provided
that we meet certain budgeted production goals. The normal rate of federal
taxation on a non-exempt basis is 33%. In the event that we are unable to extend
this tax-exempt status, our after-tax earnings would decline by the amount of
the tax benefit, which may be substantial. In addition, earnings derived from
tax exemption benefits cannot be distributed as dividends to the U.S. parent
company in U.S. Dollars and are segregated for capital reserves and offsetting
accumulated losses in accordance with Brazilian law.
WE DEPEND ON OUR SUPPLIERS FOR QUALITY COMPONENTS FOR OUR MANUFACTURING PROCESS.
We purchase all of our parts from third party suppliers. Reliance on
suppliers involves several risks, including:
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o 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; and
o increases in component costs which can adversely affect our
profitability.
We have several single-source supplier relationships, either because
alternative sources are not available or the relationship is advantageous due to
performance or price. If our third party suppliers are unable to provide timely
and reliable supply, we could experience manufacturing delays or inefficiencies
which may adversely affect our results of operations.
WE DEPEND ON CREDIT SALES AND THERE ARE RISKS ASSOCIATED WITH CUSTOMER LENDING.
Our customer credit activities expose us to significant risks. At March
31, 2000, our outstanding exposure to customer credit risk was approximately
$101.2 million. In 1999, approximately 90% of our net sales were made on credit.
Our results of operations would be materially and adversely affected if demand
for customer credit falls, if Brazilian Government policies curtail our ability
to extend credit or to fund our extensions of credit or if customers fail to
timely pay their accounts receivable when due. There can be no assurance that
the allowances for doubtful accounts reserved by us will be sufficient to cover
actual losses.
WE HAVE ONLY ONE MANUFACTURING FACILITY.
All of our products are manufactured in our one facility in Brazil. In
the event this facility were to experience substantial damage or our operations
there were disrupted, we may be required to suspend manufacturing operations or
retain third party manufacturers. Any prolonged suspension or disruption of our
manufacturing operations could have a material adverse effect on us and our
results of operations.
FACTORS RELATING TO OUR INDUSTRY
WE HAVE LOST MONEY IN THE PAST DUE TO THE FLUCTUATION OF THE REAL AND WE ARE NOT
HEDGED TO PROTECT OURSELVES FROM FUTURE CURRENCY LOSSES.
The relationship of the REAL to the value of the U.S. Dollar have
affected, and may in the future affect, our financial condition and results of
operations. Principally all of our sales and receivables are denominated in the
REAL, while our operating results and payables are recorded in U.S. Dollars. The
highest hedge coverage we had at any one time had only met 20% of our exposure.
Currently, we are not engaged in hedging activities and we are not hedged
against currency risks. Any significant devaluation, such as occurred during the
first quarter of 1999, of the REAL relative to the U.S. Dollar will have a
material adverse effect on our operating results and financial condition.
WE ARE SUBJECT TO ECONOMIC, POLITICAL AND SOCIAL CONDITIONS IN BRAZIL.
The Brazilian economy has been characterized by high rates of inflation
and economic, political and social instability. This has resulted in frequent
and occasionally drastic intervention by the Brazilian government. The Brazilian
government's actions to address instability and effect other policies have often
involved wage and price controls as well as other measures, such as tariffs,
exchange controls, freezing bank accounts, imposing capital controls, seizing
assets and limiting imports into Brazil. Changes in policy and other political,
economic or social developments could have a material adverse effect on us.
CONTINUOUS AND RAPID TECHNOLOGICAL ADVANCES AND EVOLVING INDUSTRY STANDARDS
CHARACTERIZE OUR PRODUCTS AND SERVICES.
In order to remain competitive, we must respond effectively to
technological changes by continuing
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to enhance and improve our existing products and services to incorporate
emerging or evolving standards. We must also successfully develop and introduce
new products and services that meet customer requirements. We can not assure you
that we will successfully develop, market, or support these products and
services or that we will respond effectively to technological changes or new
product announcements or introductions by others which may adversely affect our
financial results. Also, as a result of technological changes, all or a portion
of our inventory may be rendered obsolete.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The markets in which we compete are highly competitive. 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. Competitors in the
computer hardware market include internationally recognized companies such as
IBM, Acer, Dell, Hewlett Packard and Compaq. We also compete with other small
manufacturers of computer equipment sold on what is known as the "gray market"
in Brazil. 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. Additionally, we compete in the systems integration
market with internationally recognized systems integrators such as IBM, EDS and
Unisys. We may not successfully compete in any market in which we conduct or may
conduct operations.
FACTORS RELATING TO THE OFFERING
A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK WILL BE ELIGIBLE FOR SALE IN
THE NEAR FUTURE, WHICH COULD CAUSE THE MARKET PRICE FOR OUR COMMON STOCK TO
DECLINE.
Sales of substantial amounts of our common stock in the public market
or the appearance that a large number of shares is available for sale, could
adversely affect the market price for our common stock. In addition to the
adverse effect a price decline could have on holders of our common stock, a
decline would likely impede our ability to raise capital through the issuance of
additional shares of our common stock or other equity securities. As of the date
of this prospectus, there were 850,794 shares of our common stock outstanding
that are not subject to lock-up but which will be eligible for sale into the
public market under Rule 144. We have issued and outstanding options and
warrants to purchase an aggregate of 5,612,378 shares of our common stock at
exercise prices between $6.50 and $22.73 per share. The existence of such
options and warrants may adversely affect the terms under which we could obtain
additional equity capital and adversely affect the market price of our common
stock. Additionally, we have 3,817,864 shares of our common stock that may be
issued pursuant to the conversion of certain convertible notes. Upon their
conversion, 954,091 of the shares will be eligible for immediate resale pursuant
to a resale registration statement filed by us.
WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION AS A RESULT OF OUR STOCK
PRICE VOLATILITY.
Securities class action litigation is often brought against a company
following a decline in the market price of its securities. This risk is
especially acute for us because companies in our industry have experienced
greater than average stock price volatility in recent years and, as a result,
have generally been subject to a greater number of securities class action
claims than companies in other industries. We may in the future be the target of
similar litigation. Securities litigation could result in substantial costs and
divert management's attention and resources, and could seriously harm our
business. Also, while we are a U.S. corporation with executive offices in
Florida, our principal operations are conducted by our Brazilian subsidiary. For
the foreseeable future, a substantial portion of our assets will be held or used
outside the U.S. Consequently, enforcement by investors of civil liabilities
under the federal securities laws may be adversely affected.
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WE EXPECT TO EXPERIENCE VOLATILITY IN OUR STOCK PRICE.
The market for securities of companies in our industry historically has
been more volatile than the market for stocks in general. Within the last 15
months, the price of our stock has fluctuated between $4.375 and $12.875. The
price of our common stock may be subject to wide fluctuations in response to:
o quarter-to-quarter variations in operating results;
o vendor additions or cancellations;
o creation or elimination of funding opportunities;
o favorable or unfavorable coverage of us or our officers by the press;
and
o the availability of new products, technology, or services.
OUR PRINCIPAL SHAREHOLDERS EXERCISE SIGNIFICANT INFLUENCE.
Our principal shareholders together will beneficially own approximately
39% of the outstanding shares of our common stock. Accordingly, our principal
shareholders are able to exercise significant influence over the election of our
Board of Directors and the outcome of all matters submitted to a vote of our
shareholders. Pursuant to our agreement, Gateway Computers may acquire control
of us through an option they have to enter into a merger agreement with us which
expires on September 16, 2001. If Gateway exercises their option they will be
able to elect our entire Board of Directors and control the outcome of all
matters submitted to a vote of our shareholders.
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BUSINESS
THE COMPANY
We are a leading manufacturer and marketer of computer products,
peripherals and software to business, governmental and individual customers in
Brazil. Our diversified family of products includes desktop and notebook
personal computers, workstations, network servers, networking equipment,
peripherals and software. We sell our own branded products and are the exclusive
distributor of Gateway computer products in Brazil.
We provide integrated information technology solutions for our
corporate and governmental customers. We recently introduced a group of
integrated solutions for specific vertical markets in response to the growing
need for client-server distributed computing solutions in Brazil. Our turn-key
business solutions include computer and networking hardware, software, Internet
connectivity and support service.
We believe that we are well positioned to capitalize on the
opportunities in the Brazilian marketplace based upon our:
o STRONG BRAND AWARENESS. Our primary brand, Microtec, has existed
since 1982 and is one of the most widely recognized and respected
brands in technology in Brazil today. We believe our well known
brand helps drive demand for our computer products and turn-key
information technology solutions. We believe that the strength of
the Microtec brand also facilitates the introduction of new
products and provides co-branding opportunities with companies
such as Gateway.
o SIGNIFICANT MANAGEMENT EXPERIENCE IN THE BRAZILIAN MARKET. Our
management team has substantial experience with prevailing
business customs, regional and national tax policies, marketing
dynamics and economic conditions in Brazil which we believe
provide us with significant competitive advantages.
o GATEWAY RELATIONSHIP. We enjoy a broad strategic relationship with
Gateway Companies, Inc., a leading direct seller of personal
computers. Our strategic relationship with Gateway allows us
access to a globally recognized brand and provides us with
assistance in vendor and supply relationships, purchasing,
engineering, brand development, logistics, financing, and
strategic development of the Brazilian market.
o NATIONAL DIRECT DISTRIBUTION NETWORK IN BRAZIL. We strive to
attain a direct relationship with the end users of our products
and services through various channels including commissioned
network representatives, our own retail stores, focused on account
teams in government and corporate markets, telemarketing, and
Internet commerce. We believe that interfacing directly with
end-users promotes customer loyalty and fosters brand awareness.
The direct end-user relationships also allow us to maintain,
monitor and update database information about our customers and
their current and future information technology products and
service needs, which can be used to shape future product offerings
and support services.
o SUBSTANTIAL INSTALLED BASE OF BUSINESS AND GOVERNMENTAL CUSTOMERS.
For 1999 approximately 70% of our net sales were derived from
business and governmental customers. We believe that this customer
base affords us additional opportunities to expand sales of our
higher margin business system integration solutions.
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SELLING SECURITY HOLDERS
We entered into an agreement with Intel Corporation which will result
in Intel's purchase of our common stock. Pursuant to the Agreement, Intel has
agreed to cancel $3,511,287 of indebtedness owed to them, plus interest from
April 1, 2000 to the effective date of this registration statement. In exchange
we have agreed to issue Intel shares of our common stock at a per share price
equal to the average closing sales price of our common stock for the 20 trading
days prior to the effective date of this registration statement. We are
obligated to file a registration statement to register all of the common stock
to be issued to Intel under the Agreement. We have reserved 725,000 shares of
our common stock for issuance to Intel, however, the actual number of shares to
be issued will depend on the average closing sales prices at the date of
issuance. Based on the average closing sales price at the date of this
prospectus, we estimate that Intel will receive approximately 620,000 shares. If
we fail to effect the registration statement within 90 days after the
registration is filed or we fail to keep the registration statement for an
agreed upon period of time as described in the Agreement, Intel shall have the
right to require the Company to repurchase any of the shares held by Intel at
the purchase price described in the Agreement.
We entered into an Agreement with Avance Technologies, USA Inc. which
will result in Avance's purchase of our common stock. Pursuant to the Agreement,
Avance has agreed to cancel $180,000 of indebtedness. In exchange we have agreed
to issue Avance 29,091 shares of our common stock. We are obligated to file a
registration statement to cover all of the common stock issued to Avance under
the Agreement. If the registration statement is not effective by September 15,
2000 we shall be required to pay Avance a fee of $5,000 for an additional thirty
(30) day extension. During the extension period interest shall accrue at the
rate of 18% on the purchase price for the shares of our common stock. If the
registration statement is not declared effective by the end of the extension
period, Avance shall have the right to require the Company to repurchase all of
the shares at a purchase price equal to a purchase described in the Agreement.
The shares listed below represent all of the shares which the selling
security holders may own.
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NUMBER OF SHARES SHARES OWNED
NAME OF SELLING SECURITY HOLDER SHARES OWNED BEING OFFERED AFTER OFFERING
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Intel Corporation 725,000 (1) 725,000 (1) --
Avance Technologies USA, Inc. 29,091 29,091 --
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(1) We have reserved 725,000 shares of our common stock for issuance to Intel,
however, the actual number of shares to be issued will depend on the average
closing sales prices at the date of issuance.
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.
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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;
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.
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DESCRIPTION OF SECURITIES
GENERAL
As of the date of this prospectus, our articles of incorporation
authorize us to issue 60,000,000 shares of common stock, no par value, and
3,000,000 shares of preferred stock, no par value . As of the date hereof, there
were outstanding 19,345,939 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.
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, P.A., Fort Lauderdale, Florida.
Atlas Pearlman owns 14,430 shares of common stock.
EXPERTS
The audited Consolidated Financial Statements of Vitech America, Inc.,
as of December 31, 1998 and 1999, and for each of the three fiscal years in the
period ended December 31, 1999, 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.
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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.
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