UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



                    For Quarterly Period Ended June 30, 1998


                         Commission File Number 0-21369



                               VITECH AMERICA, INC
             (Exact name of registrant as specified in its charter)


       FLORIDA                                              65 041 9086
(State of incorporation)                            (I.R.S. Employer ID No.)



                            8807 Northwest 23 Street
                            Miami, Florida 33172-2419
               (Address of principal executive offices, zip code)


       Registrant's telephone number, including area code: (305) 477-1161


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___


         As of August 14, 1998, there were 14,651,652shares of the Common Stock
of the Company, no par value, outstanding.


<PAGE>
ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                   VITECH AMERICA, INC.
                                                       Balance Sheet

                                                          Assets
                                                                                            June 30,         December 31,
                                                                                              1998               1997
                                                                                        -----------------  -----------------
                                                                                          (unaudited)
<S>                                                                                    <C>                <C>
Current assets
     Cash and cash equivalents                                                          $     33,295,091   $     22,704,632
     Accounts receivable, net                                                                 32,319,570         59,137,869
     Inventories, net                                                                         51,253,971         34,347,087
        Investment in subordinated debenture, current portion                                  8,625,991                  -
     Deferred tax asset                                                                          702,000            702,000
     Due from officers                                                                            67,601            370,623
     Other current assets                                                                      5,122,225          4,676,804
                                                                                        -----------------  -----------------
                  Total current assets                                                       131,386,449        121,939,015

Property and equipment, net                                                                   19,432,462         12,946,523
Investment in subordinated debenture                                                           1,380,287                  -
Investments                                                                                    1,249,985          1,181,632
Goodwill                                                                                      17,267,455         17,570,705
Deferred tax asset                                                                               481,000            493,000
Other assets                                                                                   3,498,275          1,374,027
                                                                                        -----------------  -----------------

                  Total assets                                                          $    174,695,913   $    155,504,902
                                                                                        -----------------  -----------------

                                           Liabilities and Shareholders' Equity
Current liabilities
     Trade accounts payable                                                             $     19,355,371   $     15,482,640
     Accrued expenses                                                                          3,360,113          3,131,670
     Current maturities of long-term debt                                                        440,041            350,439
        Taxes payable                                                                             81,998                  -
     Short-term debt                                                                          28,405,501         20,419,169
                                                                                        -----------------  -----------------
                  Total current liabilities                                                   51,643,024         39,383,918
                                                                                        -----------------  -----------------

Long-term liabilities
       Convertible notes - related party                                                      20,000,000         20,000,000
       Convertible notes                                                                      38,608,250         38,608,250
     Income and sales tax payable                                                                      -            472,839
     Long-term debt                                                                            3,359,180          2,004,064
                                                                                        -----------------  -----------------
                           Total long-term liabilities                                        61,967,430         61,085,153
                                                                                        -----------------  -----------------

Commitments and contingencies

Minority interest                                                                                695,469          1,427,442
                                                                                        -----------------  -----------------

Shareholders' equity
     Preferred stock, no par value, 3,000,000 shares authorized, no shares issued                      -                  -
     Common stock, no par value, 30,000,000 shares authorized,
        12,177,839 and 12,175,639 shares issued and outstanding                               25,506,848         25,486,848
     Retained earnings                                                                        35,152,142         28,121,541
     Accumulated other comprehensive income(loss)                                               (269,000)
                                                                                        -----------------  -----------------
                  Total shareholders' equity                                                  60,389,990         53,608,389
                                                                                        -----------------  -----------------

                  Total liabilities and shareholders' equity                            $    174,695,913   $    155,504,902
                                                                                        -----------------  -----------------
</TABLE>
See notes to financial statements

                                       2
<PAGE>
<TABLE>
<CAPTION>

                                                    VITECH AMERICA, INC.
                                                    Statement of Income
                                                         (unaudited)


                                                         Three Months Ended                         Six Months Ended
                                                --------------------------------------      ----------------------------------
                                                  June 30, 1998      June 30, 1997           June 30, 1998    June 30, 1997
                                                ------------------ -------------------      ---------------- -----------------
<S>                                             <C>                        <C>              <C>               <C>
Net sales                                       $      38,635,842          23,342,760       $    72,410,486   $    40,337,322

Cost of sales                                          22,430,545          15,563,048            43,137,869        27,589,677
                                                ------------------   -----------------      ----------------  ----------------

         Gross profit                                  16,205,297           7,779,712            29,272,617        12,747,645

Selling, general and administrative expenses            9,009,344           3,235,437            16,146,704         5,677,333
                                                ------------------   -----------------      ----------------   ---------------

         Income from operations                         7,195,953           4,544,275            13,125,913         7,070,312
                                                ------------------   -----------------      ----------------   ---------------

Other (income) expenses
     Interest expense, net                              1,835,832             332,178             3,248,011           711,460
     Discount on sale of receivables                    1,579,364             293,000             1,579,364           293,000
     Foreign currency exchange losses                     267,678           1,039,865             1,393,351         1,270,856
                                                ------------------   -----------------      ----------------   ---------------

         Total other expenses                           3,682,874           1,665,043             6,220,726         2,275,316
                                                ------------------   -----------------      ----------------   ---------------

         Income before provision for income
                 taxes and minority interest            3,513,079           2,879,232             6,905,187         4,794,996

Provision for income taxes                                348,000             139,423               606,560           266,033
                                                ------------------   -----------------      ----------------   ---------------

              Income before minority interest           3,165,079           2,739,809             6,298,627         4,528,963

Minority interest                                        (759,022)                  -              (731,974)                -
                                                ------------------   -----------------      ----------------   ---------------

                  Net income                    $       3,924,101    $      2,739,809       $     7,030,601    $    4,528,963
                                                ------------------   -----------------      ----------------   ---------------



Net income per common share - Basic:
       Weighted common shares                          12,177,839          11,799,109            12,176,739        11,796,909
       Net income per common share              $            0.32    $           0.23       $          0.58    $         0.38
                                                ------------------   -----------------      ----------------   ---------------

Net income per common share - Assuming dilution:
       Weighted common shares                          12,457,002          11,817,854            12,421,487        11,810,393
       Net income per common share              $            0.32    $           0.23       $          0.57    $         0.38
                                                ------------------   -----------------      ----------------   ---------------

</TABLE>
See notes to financial statements
                                       3

<PAGE>
<TABLE>
<CAPTION>
                                                   VITECH AMERICA, INC.
                                                  Statement of Cash Flows
                                                        (unaudited)


                                                                                               Six Months Ended
                                                                                  ------------------------------------------
                                                                                     June 30, 1998         June 30, 1997
                                                                                  --------------------   -------------------
<S>                                                                               <C>                    <C>
Cash flows from operating activities
     Net income                                                                   $         7,030,601    $        4,528,963
     Adjustments to reconcile net income to net cash provided 
      from/(used) in operating activities
            Depreciation                                                                    1,150,003               387,853
              Amortization of goodwill                                                        439,250                     -
              Minority interest                                                              (731,974)                    -
              Accumulated translation adjustment                                             (269,000)
            Allowance for doubtful accounts                                                  (504,494)              375,432
              Reserve for inventory obsolescence                                              568,204                83,459
            Changes in assets and liabilities
              Accounts receivable                                                          17,316,515            (6,824,996)
              Inventories                                                                 (17,475,088)          (11,183,394)
              Deferred tax asset                                                               12,000            (1,310,641)
              Other assets                                                                 (4,080,614)             (869,514)
              Trade accounts payable                                                        3,872,731             5,939,833
              Accrued expenses                                                                228,443               (48,059)
              Due from officers                                                               303,022                68,859
              Income and sales taxes payable                                                1,592,943               587,138
                                                                                  --------------------   -------------------
                                      Total adjustments                                     2,421,941           (12,794,030)
                                                                                  --------------------   -------------------

                      Net cash provided from / (used) in operating activities               9,452,542            (8,265,067)
                                                                                  --------------------   -------------------
Cash flows from investing activities
     Purchases of property and equipment                                                   (6,455,941)           (2,361,703)
       Adjustment to business acquisition valuation                                          (136,000)                    -
     Other investments                                                                        (68,353)              (18,008)
                                                                                  --------------------   -------------------
                      Net cash used in investing activities                                (6,660,294)           (2,379,711)
                                                                                  --------------------   -------------------
Cash flows from financing activities
     Net proceeds under short-term bank borrowings                                         10,231,736             3,855,396
       Net payments of taxes payable                                                         (472,839)             (353,486)
     Payment of note payable for business acquisition                                      (2,231,250)                    -
        Payments under long-term debt                                                               -               (27,160)
        Proceeds from note payable - related party                                                  -             5,000,000
        Proceeds from issuance of convertible note - related party                                  -            10,000,000
     Net proceeds of notes payable                                                            250,564
     Net proceeds from sale of common stock                                                    20,000                40,000
                                                                                  --------------------   -------------------
                      Net cash provided by financing activities                             7,798,211            18,514,750

                                                                                  --------------------   -------------------
                      Net increase in cash and cash equivalents                            10,590,459             7,869,972

Cash and cash equivalents - beginning of period                                            22,704,632             1,757,731
                                                                                  --------------------   -------------------
Cash and cash equivalents - end of period                                        $         33,295,091    $        9,627,703
                                                                                  --------------------   -------------------

Supplemental disclosure of cash flow information
     Cash paid during the year for
         Interest and discount on sale of receivables                            $          5,602,329    $        1,004,460
                                                                                 ---------------------  --------------------
         Income taxes                                                            $             85,952    $          110,496
                                                                                 ---------------------  --------------------

Supplemental schedule of non-cash investing and financing activities
       Investment in property equipment through financing  agreements            $          1,180,000    $                -
                                                                                 ---------------------  --------------------
</TABLE>
See notes to financial statements
                                       4

<PAGE>
                              Vitech America, Inc.
                          Notes to Financial Statements
                                  June 30, 1998


Note 1 - Basis of presentation
------------------------------

The accompanying unaudited financial statements of Vitech America, Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements have been included, and all adjustments are of a normal and recurring
nature. The financial statements as of and for the interim period ended June 30,
1998 should be read in conjunction with the Company's financial statements as of
and for the year ended December 31, 1997, which are included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Operating results for the three month period and the six month period ended June
30, 1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

The financial statements for 1998 and 1997 include the accounts of the Company
and its subsidiaries. All of the Company's sales are concentrated in Brazil. The
Company had one customer that accounted for in excess of 5% of sales during the
six month period ended June 30, 1998. During the six month period ended June 30,
1997, approximately 25% of the Company's sales were to one unrelated customer.

On June 15, 1998, the Board of Directors of the Company, approved a 10% common
stock dividend to be distributed to shareholders of record of the Company's
common stock as of July 13, 1998. The common stock issued as a result of this
stock dividend was distributed on July 27, 1998. All references in this report
to the common stock of the Company and net income per common share have been
recalculated to reflect the 10% common stock dividend.

Note 2 - Significant accounting policy - Translation into U.S. Dollar
---------------------------------------------------------------------

The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States in U.S. dollars.
Until December 31, 1997, amounts in Brazilian currency were remeasured into U.S.
Dollars in accordance with the methodology set forth in Statement of Financial
Accounting Standards No. 52 ("SFAS 52") as it applies to entities operating in
highly inflationary economies. The assets and liabilities of the Company's
subsidiaries are translated into U.S. dollars at exchange rates in effect at the
balance sheet date for monetary items and at historical rates for nonmonetary
items. Revenue and expense accounts are translated at the average exchange rate
in effect during each month, except for those accounts that relate to
nonmonetary assets and liabilities which are translated at historical rates.

Effective January 1, 1998, the Company determined that Brazil ceased to be a
highly inflationary economy under SFAS 52. Accordingly, as of January 1, 1998,
the Company began using the Brazilian currency, the Real, as the functional
currency of its Brazilian subsidiaries. As a result, all assets and liabilities
are translated into dollars at period end exchange rates and all income and
expense items are translated into U.S. dollars at the average exchange rate
prevailing during the period. In addition, the Company recorded a currency
exchange loss associated with dollar-denominated monetary assets and liabilities
held by the Company's Brazilian subsidiaries. Any translation adjustments are
reflected as a component of shareholders' equity.

Note 3 - Net income per share
-----------------------------

In 1997, the Financial Accounting Standards Board issued Statement No. 128 (SFAS
128), "Earnings per Share". SFAS 128 replaced the calculation of primary and
fully diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of stock options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where appropriate, restated to
conform to the SFAS 128 requirements.

                                       5
<PAGE>
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,                 Six Months Ended,
                                                           ----------------------------------      ---------------------------------
                                                                1998               1997                 1998              1997
                                                           ---------------    ---------------      ---------------    --------------
<S>                                                        <C>                <C>                  <C>                <C>          
                  Net income for basic and diluted
                    income per common share                $    3,924,101     $    2,739,809       $    7,030,601     $   4,528,963
                                                           ---------------    ---------------      ---------------    --------------

                  Weighted average number of shares            12,177,839         11,799,109           12,176,739        11,796,909
                    for basic income per share

                  Dilutive securities:
                      Stock options                               216,367             13,588              191,035             9,150
                      Warrants                                     62,796              5,157               53,713             4,334
                                                           ---------------    ---------------      ---------------    --------------

                  Weighted average number of shares
                    for diluted income per share               12,457,002         11,817,854           12,421,487        11,810,393
                                                           ---------------    ---------------      ---------------    --------------

                  Net income per common share:
                      Basic                                $         0.32     $         0.23       $         0.58     $        0.38
                      Diluted                              $         0.32     $         0.23       $         0.57     $        0.38
</TABLE>

The effects on earnings per share of the $58,608,250 aggregate principal amount
of 10% convertible notes would have been antidilutive and therefore are not
included in the computations.

For the three month period and the six month period ended June 30, 1998, there
were 3,000,000 outstanding stock options not included in the computation of
diluted earnings per share of common stock because the options' exercise prices
were greater than the average market price of the common shares. For the three
month period and the six month period ended June 30, 1997, there were 4,041,456
outstanding stock options and 419,443 warrants not included in the computation
of diluted earnings per share of common stock because the options and warrants'
exercise prices were greater than the average market price of the common shares.

Note 4 - Accounts receivable
----------------------------

Accounts receivable consisted of the following:

                                                                   June 30,
                                                                     1998
                                                                ---------------

             Trade accounts receivable                          $   34,000,786
             Allowance for doubtful accounts                        (1,681,216)
                                                                ---------------
                     Total                                      $   32,319,570
                                                                ---------------

In April 1998, the Company entered into an accounts receivable financing program
with Technology Acceptance Corp. ("TAC"), an independently owned special purpose
corporation, whereby the Company's subsidiary, Bahiatech - Bahia Tecnologia
Ltda. ("Bahiatech"), may sell certain of its accounts receivable to TAC. The
program is a $150 million collateralized global medium term note program whereby
TAC may issue notes which are collateralized by the purchased accounts
receivable. TAC is an exempted company incorporated under the laws of the Cayman
Islands. One hundred percent (100%) of TAC's voting shares are held by a Cayman
Islands trust. TAC is a special purpose company that was established solely to
participate in the securitization, to acquire and hold the designated
receivables and to issue collateralized global medium term notes under a note
program. TAC has covenanted in the indenture pursuant to which the notes are
issued not to engage in any activities other than those contemplated by the
indenture. The receivables constitute the principal asset of TAC.

During the quarter ended June 30, 1998, the Company completed the sale of an
aggregate amount of approximately R$71.5 million (or approximately U.S.$63
million) of its accounts receivable to TAC at a discount of approximately R$3.3
million (or approximately U.S.$2.9 million) for cash and a subordinated note.
The subordinated note is a revolving non-interest bearing bearer note.

                                       6
<PAGE>

There is a repurchase provision whereby Bahiatech is required to repurchase the
receivables sold to TAC under certain circumstances including default under the
program, delinquencies or violations of certain concentration limits. The
repurchase obligation may be satisfied by transferring to TAC, for no additional
consideration, an aggregate amount of additional receivables the net present
value of which is equal to the repurchase price. If the net present value of the
receivables available to Bahiatech to effect such substitution is less than the
relevant repurchase price thereof, then Bahiatech will be required to pay in
cash the excess of the repurchase price over the net present value of the
additional receivables transferred to TAC pursuant to such substitution. The
Company serves as guarantor of the repurchase obligation. If Bahiatech fails to
comply in full with its repurchase obligation on or prior to the relevant
repurchase date, the Company shall be required to deposit, within twenty-four
(24) hours of such expired required repurchase date, the amount of the
repurchase price not paid by Bahiatech. As a result of the structure of the
program, there is a contingent liability in the amount of approximately $41
million which represents the balance, at face value, of the accounts receivable
sold to TAC. The Company maintains an allowance for doubtful accounts on its
balance sheet with respect to the sold receivables.

Note 5 - Inventories
--------------------

Inventories are summarized as follows:

                                                           June 30,
                                                             1998
                                                      -----------------

Consigned inventories                                 $     4,830,460
Finished goods                                             12,471,697
Work in process                                             3,031,489
Components in the factory                                  19,032,825
Components in transit  (a)                                 12,972,158
                                                      -----------------
                                                           52,338,629
Allowance for obsolescence                                 (1,084,658)
                                                      -----------------
        Total                                         $    51,253,971
                                                      -----------------

(a)      Components in transit consist of inventories in the Company's Miami,
         Florida facility and inventories in route to the Company's factories in
         Brazil.

Note 6 - Stock options
----------------------

In January 1998, the Company granted options to purchase 30,000 shares of the
Company's common stock at an exercise price of $14.09 per share to Directors of
the Company. The options were granted pursuant to the provisions of the
Company's 1996 Stock Option Plan.

Note 7 - Comprehensive Income
-----------------------------

The Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income" during the six month period ended June
30, 1998. SFAS 130 establishes new rules for the reporting and presentation of
comprehensive income and its components. The Company's comprehensive income is
comprised of net income adjusted for foreign currency translation. For the three
month period and six month period ended June 30, 1998, comprehensive income was
not materially different from reported net income.

Note 8 - Subsequent Events
--------------------------

In July 1998, the Company issued 1,459,060 shares of Common Stock upon
conversion of $20 million of principal amount of 10% convertible notes. In
August 1998, the Company issued 944,476 shares of Common Stock upon conversion
of $13.8 million of principal amount of 10% convertible notes. The Company has
registered the resale of the shares of common stock issuable upon conversion of
such 10% convertible notes.

                                       7
<PAGE>
ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
information contained in the Consolidated Financial Statements and the Notes
thereto appearing elsewhere in this report.

Results of Operations

         The following table sets forth for the periods indicated certain line
items from the Company's statement of income as a percentage of the Company's
consolidated sales:
<TABLE>
<CAPTION>
                                               Three Months Ended                    Six Months Ended
                                               ------------------                    ----------------
                                        June 30, 1998      June 30, 1997      June 30, 1998     June 30, 1997
                                        -------------      -------------      -------------     -------------
<S>                                          <C>               <C>                <C>                <C> 
Net sales                                    100%              100%               100%               100%
Cost of sales                                58.1              66.7               59.6               68.4
Gross profit                                 41.9              33.3               40.4               31.6
Selling, general and
  administrative expenses                    23.3              13.9               22.3               14.1
Income from operations                       18.6              19.5               18.1               17.5
Interest and financing expense                8.8               2.7                6.7                2.5
Foreign currency exchange losses              0.7               4.5                1.9                3.2
Net Income                                   10.2              11.7                9.7               11.2
</TABLE>

         Net sales increased by $15,293,081, or approximately 66%, to
$38,635,842 for the second quarter of 1998 as compared to $23,342,760 for the
second quarter of 1997. For the six month period ended June 30, 1998, net sales
increased by $32,073,164, or approximately 80%, to $72,410,486 as compared to
$40,337,322 for the six month period ended June 30, 1997. For the six month
period ended June 30, 1998, the Company sold approximately 46,000 units as
compared to approximately 27,000 units during the six month period ended June
30, 1997. Such increase in sales was primarily attributable to the acquisition
of Microtec Sistema Industria e Comercio S.A. ("Microtec"), increased demand by
the Company's customers, the expansion of the Company's direct end-user sales
strategy and the expansion of the Company's sales through new channels and into
new markets. The acquisition of Microtec, which was completed in July 1997 and
accounted for under the purchase method of accounting, has enabled the Company
to expand into the corporate and governmental markets offering complete
integrated solutions from high-end network servers to low-end workstations.
Additionally, the acquisitions of two retail and distribution operations in the
fourth quarter of 1997 strengthened the Company's direct relationship with
end-users in the consumer market.

         Cost of sales during the second quarter of 1998 were $22,430,545,
representing 58.1% of sales during the period, as compared to $15,563,048 for
the second quarter of 1997, representing 66.7% of sales for the period. Cost of
sales during the six month period ended June 30, 1998 were $43,137,869,
representing 59.6% of sales during the period, as compared to $27,589,677 for
the six month period ended June 30, 1997, representing 68.4% of sales for the
period. The decrease in cost of sales as a percentage of sales during the
quarter and six month period ended June 30, 1998, when compared to the quarter
and six month period ended June 30, 1997, was attributable to the expansion of
the Company's end-user sales strategy which has provided the Company with better
control over its margins through the elimination of distribution layers and the
retention of pricing power. The decrease was also attributable to the Company's
product mix. As the Company has expanded into the corporate and governmental
markets with integrated network solutions, there were a higher percentage of
servers and networking products, which have a higher margin, included in its
sales mix. Also contributing to the reduction in cost of sales as a percentage
of sales was the Company's reduction of consumer electronics in its product mix.
Contract manufacturing of consumer electronics represents a lower margin sale
than that of the Company's core products, personal computers. The Company phased
out the contract manufacturing of consumer manufacturing in July 1997, and as a
result, none of the sales during the six month period ended June 30, 1998
resulted from such business. During the six month period ended June 30, 1997,
approximately 25% of the Company's sales resulted from the contract
manufacturing of consumer electronics.

         Selling, general, and administrative expenses increased by $5,773,907,
or approximately 178%, to $9,009,344 for the second quarter of 1998 as compared
to $3,235,437 for the second quarter of 1997. For the six month period ended
June 30, 1998, selling, general, and administrative increased by $10,469,370, or
approximately 184%, to $16,146,704 as compared to $5,677,333 for the six month
period ended June 30, 1997. The increase was primarily attributable to the
acquisition of 

                                       8
<PAGE>
Microtec and to the increased costs associated with expanding the
Company's manufacturing capacity as well as the increase in operating expenses
required to meet the demands of the Company's growth. Selling, general, and
administrative expense as a percentage of sales was 23.3% for the quarter ended
June 30, 1998, compared to 13.9% for the quarter ended June 30, 1997. Such
increase was primarily attributable to the acquisition of Microtec and the
incorporation of its general and administrative expenses into the Company's
operations which more than offset the Company's increases in sales. Also
contributing to the increase in selling, general, and administrative expenses as
a percentage of sales was the increased marketing expenditures associated with
the Company's direct end-user sales strategy and the increased operating
expenses associated with selling higher end integrated networking systems. While
the level of these expenses in future years can not be predicted and is
dependent in large part upon the Company's success in implementing its business
strategy, management anticipates that the increased expenses will be offset by
the increases in revenues resulting from the expansion of distribution channels.

         Income from operations increased by $2,651,678, or approximately 58%,
to $7,195,953 for the second quarter of 1998 as compared to $4,544,275 for the
second quarter of 1997. For the six month period ended June 30, 1998, income
from operations increased by $6,055,601, or approximately 86%, to $13,125,913 as
compared to $7,070,312 for the six month period ended June 30, 1997. Such
increase was primarily attributable to the aforementioned increase in sales and
the decrease in cost of sales as a percentage of sales which more than offset
the increase in selling, general, and administrative expenses. Income from
operations as a percentage of sales increased to 18.2% for the six month period
ended June 30, 1998 from 17.5% for the six month period ended June 30, 1997.
This increase was primarily attributable to the aforementioned decrease in cost
of sales as a percentage of sales which more than offset the increase in sales
and increase in selling, general, and administrative expenses as a percentage of
sales.

         Interest and financing expense increased by $2,790,017, or
approximately 446%, to $3,415,196 for the second quarter of 1998 as compared to
$625,178 for the second quarter of 1997. For the six month period ended June 30,
1998, interest and financing expense increased by $3,822,915, or approximately
381%, to $4,827,375 as compared to $1,004,460 for the six month period ended
June 30, 1997. This increase was primarily attributable to the Company's
increased use of debt financing and the discounted sale of accounts receivable
to support its working capital needs.

         During the six month period ended June 30, 1998, the Company
experienced a foreign currency exchange loss of $1,393,351 from the settlement
of certain receivables and payables denominated in the Brazilian Real and the
translation of financial statements from the Real to the U.S. Dollar as compared
to $1,270.856 during the six month period ended June 30, 1997. At June 30, 1998,
the Commercial Market Rate for the Real was R$1.1566 per US$1.00 as compared to
R$1.1164 per US$1.00 at December 31, 1997.

         Net income increased by $1,184,293, or approximately 42%, to $3,924,101
for the second quarter of 1998 as compared to $2,739,809 for the second quarter
of 1997. For the six month period ended June 30, 1998, net income increased by
$2,501,639, or approximately 55%, to $7,030,601 as compared to $4,528,963 for
the six month period ended June 30, 1997. The increase in net income was
primarily attributable to the aforementioned increase in income from operations
which more than offset increases in interest and financing expense and foreign
currency exchange losses. Net income as a percentage of sales decreased to 9.7%
for the six month period ended June 30, 1998 from 11.2% for the six month period
ended June 30, 1997. This decrease was primarily attributable to the increases
in interest and financing expense as a percentage of sales and foreign currency
exchange losses as a percentage of sales which more than offset the increase in
income from operations as a percentage of sales.

         Net income per common and common share equivalent, assuming dilution,
increased by $0.09, or 39%, to $0.32 for the second quarter of 1998 as compared
to $0.23 for the second quarter of 1997. For the six month period ended June 30,
1998, net income per common and common share equivalent, assuming dilution
increased by $0.19, or approximately 50%, to $0.57 as compared to $0.38 for the
six month period ended June 30, 1997.

Hedging Activities

         Although the Company's financial statements are presented in U.S.
Dollars in accordance with generally accepted accounting principles, the
Company's transactions are consummated in both the Brazilian Real and the U.S.
Dollar. Inflation and devaluation have had, and may continue to have, an effect
on the Company's results of operations and financial condition. Although the
Company had used Brazilian 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, however,
the Company is constantly monitoring its exposure to currency risks and plans to
use hedging activities to offset currency risks as it deems appropriate.
Accordingly, any significant devaluation of the Real relative to the U.S. Dollar
could have a material adverse effect on the Company's operating results.

                                       9
<PAGE>
Liquidity and Capital Resources

         The Company's primary cash requirements have been to fund increased
levels of inventories and accounts receivable. During the six month period ended
June 30, 1998, the Company used cash generated from operations, short-term bank
borrowings, and accounts receivable financing to finance its working capital
needs.

         At June 30, 1998, the Company had a working capital surplus of
$79,743,425 compared to $82,555,097 at December 31, 1997. This decrease in
working capital was primarily attributable to the decreased levels of accounts
receivable which more than offset the increases in the increased levels of
inventory and trade accounts payable and short-term debt.

         Net cash generated by operating activities for the six month period
ended June 30, 1998 was $9,452,542 as compared to $8,265,067 in cash used by
operating activities during the six month period ended June 30, 1997. The
increase in cash generated was primarily attributable to the increases in net
income and the sale of accounts receivable to TAC, which more than offset the
increases in inventories and other assets.

         Net cash used in investing activities was $6,660,294 for the six month
period ended June 30, 1998. Such use of cash was primarily related to the
purchase of production equipment associated with the expansion of the Company's
manufacturing capacity, the purchase of computer hardware and software to
support the Company's management information system and the acquisition of
facilities.

         Net cash provided from financing activities was $7,798,211 for the six
month period ended June 30, 1998 and resulted primarily from short-term
borrowings at various banks in Brazil.

         The Company has a revolving line of credit in the amount of $4,000,000
with Eastern National Bank in Miami, Florida, with which the Company maintains
its primary banking relationship. Such line consists of $3,000,000 for working
capital and $1,000,000 for trade finance used to support letters of credit which
the Company may issue to secure purchase obligations. This credit line is
secured by a lien on certain property owned by the Company. The credit line
bears interest at the rate of 8.75% and terminates in June 1999. As of June 30,
1998, there was $2,800,000 owed under this facility. As of June 30, 1998, the
Company had approximately $25,600,000 in short-term borrowings from various
banks in Brazil with rates of interest averaging 1.5% per month and maturing on
a revolving basis through June 1999.

         On June 26, 1997, the Company completed a private placement of a two
year senior convertible note to Georges C. St. Laurent Jr. ("GSL Jr.") for the
principal amount of $10 million. The note accrued interest at an annual rate of
10% payable monthly and was convertible into Common Stock, in whole or in part,
at the rate of one share of Common Stock for each $13.64 of principal converted.
The proceeds of the note were used for the acquisition of Microtec and for
general working capital purposes. On July 15, 1998, GSL Jr. converted such note
into an aggregate of 755,333 shares of Common Stock, which included 22,000
shares as an incentive for GSL Jr. to convert such note.

         On August 19, 1997, the Company entered into a loan agreement with GSL
Jr. for a principal amount of up to $10,000,000 to be evidenced by senior
convertible notes. The notes had a two year term and accrued interest at an
annual rate of 10% payable monthly and were convertible into Common Stock, in
whole or in part, at the rate of one share of Common Stock for each $14.64 of
principal converted. On August 19, 1997, the Company issued the first of such
notes for the principal sum of $5,000,000. On October 10, 1997, the Company
issued the second of such notes for the principal sum of $5,000,000. The
proceeds of the notes were used for general working capital purposes. The
Company registered the resale of the shares of Common Stock issuable upon
conversion. On July 15, 1998, GSL Jr. converted such notes into an aggregate of
703,727 shares of Common Stock, which included 21,497 shares as an incentive for
GSL Jr. to convert such notes.

         On October 10, 1997, the Company completed a private placement of three
year 10% convertible promissory notes (the "Notes") resulting in gross proceeds
to the Company of $20,000,000. The private placement was between the Company and
four institutional investors. The Notes are initially convertible at a
conversion price of $15.00 subject to stock-splits, stock dividends, rights
offering other similar events. In the event that the Company shall have declined
to repay in full, following the exercise by noteholders of the First or Second
Put Right (as defined below), the Initial Conversion Price shall be (i) the
lesser of .85 multiplied by the 10-day weighted average sale price on Nasdaq as
reported by Bloomberg, LP (or other principal exchange on which the Company's
securities are traded) for the lowest 10-day consecutive period during the 30
consecutive trading day period ending one trading day prior to the conversion
date or (ii) $15.00 per share. The net proceeds of this offering were used for
the repayment of $10 million of 20% notes payable to GSL Jr., for the purchase
of Microtec and for general corporate and working capital purposes.

                                       10
<PAGE>
         Beginning October 10, 1998 and continuing for a period of 30 days
thereafter, each noteholder shall have the right ("First Put Right") to request
the Company to repurchase all, but not less than all of the outstanding Notes
held by such holder at a price equal to 110% of the principal amount thereof,
plus accrued and unpaid interest thereon. Commencing 180 days after the First
Put Date and continuing for a period of 30 days thereafter, each Noteholder
shall have a second right (the "Second Put Right") to request the Company to
repurchase all, but not less than all of the outstanding Notes at a price equal
to 115% of the principal amount thereof plus accrued and unpaid interest
thereon. The purchase price for any Put Right shall be paid in four equal
monthly installments on the last business day of each month commencing on the
first full month following the put notice with respect to the applicable First
or Second Put Right, with interest on each installment at the rate of 10% per
annum. The Company shall have the right at any time from time to time commencing
on October 10, 1998 to purchase 8.33% of the Notes in any one month from any
holder at a call price at 112% of the principal amount, plus accrued in unpaid
interest thereon provided that such call price shall be increased by 1% per
month. In July 1998, holders of the Notes converted $400,000 of principal plus
accrued interest into 26,780 shares of Common Stock.

         Additionally, on October 10, 1997, the Company completed the issuance
of an additional $18,608,250 of three year 10% convertible notes. The notes were
issued in a private placement transaction to 52 accredited investors. The net
proceeds from such offering were used for the expansion of inventory, the
increase of manufacturing capacity and for the repayment of short-term debt to
Brazilian banks. The Offering, which was not conditioned on completion of the
previously described offering of Notes, provided for the issuance of convertible
notes containing substantially the same terms and conditions of the Notes as set
forth above. The Company has registered the resale of the shares of Common Stock
issuable upon conversion. In August 1998, certain holders of these notes
converted $13,754,500 in principal into an aggregate of 944,476 shares of Common
Stock, which included 27,509 shares as an incentive for the noteholders to
convert.

         The issuance of 71,006 shares of Common Stock as incentives for the
conversion of $33,754,500 of convertible notes as discussed above is anticipated
to result in a charge to earnings, during the third quarter of 1998, equal to
the fair market value of such shares. This charge will be offset in part by the
corresponding reduction in interest payments associated with such notes. In
addition, any premiums paid in connection with the put or call provisions of the
convertible note discussed above may result in a charge to earnings.

         In April 1998, the Company entered into an accounts receivable
financing program with TAC, an independently owned special purpose corporation,
whereby the Company's subsidiary, Bahiatech, may sell certain of its accounts
receivable to TAC. The program is a $150 million collateralized global medium
term note program whereby TAC may issue notes which are collateralized by the
purchased accounts receivable. See Note 3 to the Company's Consolidated
Financial Statements as of June 30, 1998.

         In 1996, the Company began the development of a new 70,000 square foot
manufacturing plant and administrative center in Ilheus, Brazil. In connection
with the development thereof, the Company secured a $3.4 million loan from the
Development Bank of the State of Bahia to fund the development of such new
facility. The loan facility consists of a working capital line of credit of
approximately $785,000 and a construction loan credit facility of approximately
$2,619,000. The credit facility is expected to cover 100% of the construction
costs of the facility. In 1997, the Company suspended the ground breaking of
such new manufacturing facility, but intends to restart such construction in the
first half of 1999. As of December 31, 1997, the Company had a balance of
$757,664 associated with such construction loan credit facility. The Company has
become aware that the current leased manufacturing facility in Ilheus that it
currently occupies will be available for purchase through auction and the
Company is currently evaluating the purchase thereof.

         In March 1998, the Company entered into a capital lease of $1,200,000
for the acquisition of equipment. The capital lease has a term of 60 months and
bears an adjustable interest rate (currently 9.9%). In July 1998, the Company
entered into a capital lease of $2,900,000 for the acquisition of equipment.
This capital lease has a term of 84 months and accrues interest at a fixed
annual rate of 8%.

         In connection with its acquisition of Microtec in 1997, the Company
recorded a provision for costs relating to the involuntary termination and
relocation of Microtec employees in the amount of $1.1 million. Such provision
is associated with the Company's plans to cease certain manufacturing operations
at Microtec's facility and to consolidate all of the manufacturing of the
Company at its facility in Bahia. As of June 30, 1998, the Company had incurred
approximately $50,000 in expenses relating to such provision.

         On June 15, 1998, the Board of Directors of the Company, approved a 10%
Common Stock dividend to be distributed to shareholders of record of the
Company's common stock as of July 13, 1998. The Common Stock issued as a result
of this stock dividend was distributed on July 27, 1998. All references in this
report to the common stock of the Company and earnings per share have been
recalculated to reflect the 10% dividend.

                                       11
<PAGE>
         The market for Computer products in Brazil can be affected by seasonal
purchasing patterns and the general economic climate in Brazil. Accordingly, the
Company's quarterly net sales and results of operations may vary significantly
from quarter to quarter. The Company's historical financial performance is not
necessarily a meaningful indicator of future results and, in general, management
expects that the Company's financial results may vary materially from quarter to
quarter.

Year 2000 Compliance

         Computers, software and other equipment utilizing microprocessors that
use only two digits to identify a year in a date field may be unable to process
accurately certain date-based information at or after the year 2000. The Company
recognizes the need to insure that its operations will not be adversely affected
by Year 2000 software failures. Software failures due to processing errors
potentially arising from calculations using the year 2000 date are a recognized
risk, and the Company is addressing this issue on several different fronts.

         The Company believes that all Company-branded hardware products shipped
since January 1997 are Year 2000 compliant. Earlier Company-branded hardware
products can be made Year 2000 compliant through BIOS upgrades or software
supplements. In addition to internal Year 2000 software and equipment
implementation activities, the Company is in contact with its suppliers to
assess their compliance. There can be no assurance that there will not be a
material adverse effect on the Company if third parties do not convert their
systems in a timely manner and in a way that is compatible with the Company's
systems. The Company believes that its actions with suppliers will minimize
these risks.

         Finally, the Company has established an internal workforce to
coordinate solutions for the Year 2000 issue for its own internal information
systems with a goal of having all its internal information systems Year 2000
compliant by the end of 1998.

         Through June 30, 1998, the Company has not incurred material expenses
relating to Year 2000 compliance efforts and believes that the expenses
associated with completing its Year 2000 compliance plans will not have a
material adverse impact on the Company's operations. Internal and external
expenses specifically associated with modifying internal-use software for the
Year 2000 will be expensed as incurred. The Company's current estimates of the
amount of time and expenses necessary to implement and test its computer systems
are based on the facts and circumstances existing at this time. Nevertheless,
achieving Year 2000 compliance is dependent on many factors, some of which are
not completely within the Company's control. Should either the Company's
internal system or the internal systems of one or more significant vendors or
suppliers fail to achieve Year 2000 compliance, the Company's business and its
results of operations could be adversely affected.

         Statements contained in this report that are not based on historical
fact are "forward-looking statements" within the meaning of the private
securities litigation reform act of 1995. Forward-looking statements may be
identified by the use of forward looking terminology such as "may," "will,"
"expect," "believe," "estimate," "anticipate," "continue," or similar terms or
variations of those terms or the negative of those terms. There are many factors
that affect the Company's business and the results of its operations and may
cause the actual results of operations in future periods to differ materially
from those currently expected or desired. These factors include, but are not
limited to: receipt and fulfillment of expected orders, changes in general
business and economic conditions, the growth of segments in which the Company
operates, market volatility; the effectiveness of price and other competition
faced by the Company; the market acceptance of the Company's products and the
timing of such acceptance; the change in customers' buying patterns; changes in
the Company's sales practice; the raising of capital and other important
factors.

Impact of Inflation on Results of Operations, Liabilities and Assets

         For many years prior to July 1994, the Brazilian economy was
characterized by high rates of inflation and devaluation of the Brazilian
currency against the U.S. Dollar and other currencies. However, since the
implementation in July of 1994 of the Brazilian government's latest
stabilization plan, the "Real Plan", inflation, while continuing, has been
significantly reduced and the rate of devaluation has substantially diminished.
The Company has assessed the movement of the Brazilian currency based upon the
trading ranges stated by the policy of the Central Bank of Brazil and has been
able to offset any material effects of inflation. The Company has, at times,
used Brazilian Real futures and options contracts from the Chicago Mercantile
Exchange in order partially to offset Brazilian currency exposure. There can be
no assurance that the Real Plan will continue to be effective in combating
inflation and devaluation of Brazil's currency or that the Company's assessment
of the movement of Brazilian currency will be correct in the future. Inflation
rates in Brazil for the years 1997, 1996 and 1995 were approximately 7.5%, 10.3%
and 22%, respectively.

                                       12
<PAGE>
Recent Accounting Pronouncements

The Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income" during the six month period ended June
30, 1998. SFAS 130 establishes new rules for the reporting and presentation of
comprehensive income and its components. The Company's comprehensive income is
comprised of net income, foreign currency translation adjustments and unrealized
gains and losses on marketable securities held as available-for-sale
investments. Comprehensive income was not materially different from reported net
income.

Foreign Currency Translation

The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States in U.S. dollars.
Until December 31, 1997, amounts in Brazilian currency were remeasured into U.S.
Dollars in accordance with the methodology set forth in Statement of Financial
Accounting Standards No. 52 ("SFAS 52") as it applies to entities operating in
highly inflationary economies. The assets and liabilities of the Company's
subsidiaries are translated into U.S. dollars at exchange rates in effect at the
balance sheet date for monetary items and at historical rates for nonmonetary
items. Revenue and expense accounts are translated at the average exchange rate
in effect during each month, except for those accounts that relate to
nonmonetary assets and liabilities which are translated at historical rates.

Effective January 1, 1998, the Company determined that Brazil ceased to be a
highly inflationary economy under SFAS 52. Accordingly, as of January 1, 1998,
the Company began using the Brazilian currency, the Real, as the functional
currency of its Brazilian subsidiaries. As a result, all assets and liabilities
are translated into dollars at period end exchange rates and all income and
expense items are translated into U.S. dollars at the average exchange rate
prevailing during the period. In addition, the Company recorded a currency
exchange loss associated with dollar-denominated monetary assets and liabilities
held by the Company's Brazilian subsidiaries.




                                       13

<PAGE>
                              II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company's Annual Shareholders' Meeting was held on June 15, 1998.
At the Annual Meeting, the Company's shareholders were asked to consider and
vote upon the following matters:

         (1)  The election of six members of the Company's Board of Directors to
              serve until the Company's 1999 Annual Meeting of Shareholders or
              until their successors are duly elected and qualified;
         (2)  A proposal to approve an increase in the number of shares which 
              may be granted  under the Company's  1996
              Stock Option Plan from 200,000 shares to 500,000 shares; and
         (3)  The ratification of the appointment of Pannell Kerr Forster PC as
              auditors of the Company's financial statements for the fiscal year
              ending December 31, 1998.

         The following six members of the Company's Board of Directors were duly
elected :
<TABLE>
<CAPTION>

           Director                   Votes For           Votes Against          Votes Withheld
-------------------------------- --------------------- --------------------- -----------------------
<S>                                   <C>                                            <C>  
Georges C. St. Laurent III            9,989,825                 -                    4,200
William C. St. Laurent                9,989,125                 -                    4,900
Joseph K. Meyer                       9,990,025                 -                    4,000
H.R. Shepherd                         9,990,015                 -                    4,010
Touma Makdassi Elias                  9,989,525                 -                    4,500
William Robin Blackhurst              9,990,025                 -                    4,000
</TABLE>

         The results of the vote on the Company's proposal to approve an
increase in the number of shares which may be granted under the Company's 1996
Stock Option Plan from 200,000 shares to 500,000 shares, were as follows:
<TABLE>
<CAPTION>

                Votes For          Votes Against        Abstentions           Not Voted
          ---------------------- ------------------- ------------------- --------------------

<S>             <C>                   <C>                  <C>                <C>      
                9,809,487             179,888              4,650              1,261,269
</TABLE>

         The results of the vote on the ratification of the appointment of
Pannell Kerr Forster PC as auditors of the Company's financial statements for
the fiscal year ending December 31, 1998, were as follows:
<TABLE>
<CAPTION>

                Votes For          Votes Against        Abstentions           Not Voted
          ---------------------- ------------------- ------------------- --------------------

<S>             <C>                    <C>                 <C>                <C>      
                9,975,180              13,945              4,900              1,095,576
</TABLE>

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits required by item 601 of Regulation S-K

         The following exhibits are filed as part of this report:

                                       14
<PAGE>

         Exhibits:
         (27.1)   Financial Data Schedule

(b) Reports on Form 8-K.

         None.


                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Vitech America, Inc.

By: /s/  Edward A. Kelly
-----------------------------------
Edward A. Kelly
Chief Financial Officer
(authorized officer and chief accounting officer)

Date:  August 14, 1998


  


                                       15