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


                                   FORM 10-K/A


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

                   For the Fiscal Year Ended December 31, 1999

                         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.)


                            2190 Northwest 89th Place
                            Miami, Florida 33172-2427
               (Address of principal executive offices, zip code)

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

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:
                           Common Stock, No Par Value


         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 ___

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _X_

         The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 30, 2000 was approximately $45 million.

         As of March 30, 2000 there were 16,345,939 shares of the Common Stock
of the Company, no par value, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.


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                                     PART I

ITEM 1.  BUSINESS

The Company

         Vitech America, Inc. (the "Company") is engaged in the marketing and
delivery of PC-based information technology solutions direct to business and
individual clients. Activities include the manufacture and marketing of PCs,
servers and related products, business systems integration products and turn-key
business solutions, including software, hardware, data communications,
installation, training and support, as well as the financing of the purchase
thereof. The Company's principal operations are conducted in Brazil by its
Brazilian subsidiaries where substantially all of the Company's revenues have
been recognized. The U.S. parent company, Vitech America, Inc., is based in
Miami, Florida and sources components in the United States and throughout the
world and engages in the distribution of those components to its subsidiary's
manufacturing operation in Brazil. The Company's products, which include desktop
PCs, notebooks, workstations, network servers, peripherals, software, business
systems integration products and turn-key business solutions, are marketed under
brand names owned or licensed by the Company directly to end-users through a
variety of channels in the Brazilian marketplace.

Company Strengths

         The Company believes that it is particularly well-positioned to
capitalize upon the anticipated growth in Brazil based upon:

o    The Company's strong brand awareness as a quality brand in the market.
     Microtec, the Company's primary brand, is the oldest brand in personal
     computers in Brazil since it began selling in 1982.

o    The Company's significant experience in the Brazilian market, including
     substantial managerial participation by Brazilian nationals at all levels
     of the organization. The Company has successfully used Brazilian executives
     to assist in the adaptation of the direct selling model for the
     infrastructure realities of Brazil.

o    The Company's knowledge of prevailing business customs, importation
     practices, technology and labor bases, regional and national tax policies,
     marketing dynamics, and economic conditions in Brazil.

o    The Company's low-cost manufacturing and quality engineering capabilities
     in Brazil. As the market becomes more efficient in Brazil, the Company
     believes that its dedication to a low-cost quality manufacturing operation
     will become an increasingly important competitive advantage for the
     Company.

o    The Company's national direct distribution network in Brazil, which enables
     the Company to maintain a direct relationship with the end-user in Brazil,
     thus overcoming significant infrastructure barriers.

o    The Company's strong base of direct business customers has allowed it to
     diversify its sales and has provided additional opportunity for expanding
     sales in these markets with the Company's business systems integration
     solutions.

Business Strategy

         The Company's business strategy comprises the following:

o    Direct Marketing. The Company's strategy is centered around attaining a
     direct relationship with the end-users for information technology products
     through various channels including commissioned network representatives,
     Company owned retail showrooms, focused account teams in government and
     corporate markets, telemarketing, and internet commerce. The Company
     believes that this strategy offers several competitive advantages. The
     direct sales strategy helps the Company maintain competitive pricing by
     avoiding the cascade of sales taxes which accrue each time a product
     changes hands in Brazil. The direct strategy also helps avoid additional
     markups and inventory carrying and occupancy costs associated with
     traditional third party distribution and retail channels. Working directly
     with end-users promotes customer loyalty and fosters brand awareness. The
     direct end-user relationships also allow the Company to maintain, monitor
     and update database information about customers and their current and
     future information technology products and service needs, which can be used
     to shape future product offerings and support services.


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<PAGE>
o    Gateway Relationship. The Company enjoys a broad strategic relationship
     with Gateway Companies, Inc. ("Gateway"), a leading direct seller of
     personal computers in the United States. Gateway provides broad assistance
     in vendor and supply relationships, purchasing, engineering, brand
     development, logistics, financing, and strategic development of the market.
     The Company has rights for exclusive use of the Gateway brand in Brazil.
     The Company intends to use this relationship in order to realize the
     synergies between the companies and develop its business model in Brazil
     and in other markets. See "Management's Discussion and Analysis of
     Financial Condition and Results of Operations".

o    Brand Development. The Company's primary brand, Microtec, has existed since
     1982 and as such is one of the most widely recognized and respected brands
     in technology in the Brazil today. The Company intends to continue to
     develop its brand and trade names in support of its direct marketing
     efforts. The Company believes that such efforts will enhance the awareness
     of the Company's products among the end-users of information technology and
     enable the Company to expand the penetration of its products and to
     participate in the broader information technology markets in Brazil and
     other emerging markets. The Company believes that using the strength of the
     Microtec brand will allow for the entry of new brands which it will
     introduce into the market, such as Gateway.

o    Systems Integration. The Company is dedicated to expanding its market by
     providing integrated turn-key business solutions (including computer
     hardware, software, networking, internet and support services) for its
     corporate and government customers. In doing so, the Company seeks to widen
     its market in Brazil from the estimated $2.5 billion annual market for PCs
     to the estimated $15 billion annual market for all information technology
     expenditures. As part of this strategy, in 1999 the Company introduced a
     series of new integrated solution products labeled Microtec Digital World.
     See "Item 1. Business - Products".

o    Leading-Edge Technology. The Company is dedicated to providing leading-edge
     information technology solutions to its customers. The Company has
     established an exclusive relationship with Gateway, a leading direct seller
     of PCs and servers in the United States; Gateway is considered a
     sophisticated developer of personal computers for end-users using the
     latest technology available from Intel and other suppliers considerably in
     advance of the market. As part of the relationship with Gateway, the
     Company benefits from technology and processes developed by Gateway. Also,
     the Company has established non-exclusive strategic relationships with the
     world's leading information technology developers, including Intel Corp.
     and Microsoft. The Company is a direct Original Equipment Manufacturer
     ("OEM") supplier of Intel products and a participant in the "Intel Inside"
     cooperative marketing program. The Company also is one of several companies
     in Brazil which, in addition to being a direct OEM supplier of Microsoft
     products, is a Microsoft Solutions Provider for database, network and
     connectivity solutions utilizing Microsoft technology. The Company believes
     that these relationships, together with market information obtained from
     its direct relationship with end-users, will continue to allow the Company
     to bring leading-edge technology to the Brazilian market on a timely basis.

o    New Market Expansion. The Company's growth initiatives include identifying
     other countries that have similar infrastructure characteristics to the
     Brazilian market. The Company believes that there are opportunities for
     adaptation of the Company's business model in other South American
     countries including Argentina, Chile, and Uruguay.

Industry Overview

         With a population of 172 million people and a GDP of over $560 billion,
Brazil is the fifth largest country in the world (by population) and the largest
in Latin America, measured by both its population and the size of its economy.
As a result of the increasing stability of the economy and the growth of a
middle class in Brazil, demand for PCs and business systems integration products
in Brazil has increased significantly over the last five years. Prior to 1993,
the market for computer products in Brazil was closed to foreign competition,
protected from foreign imports and reserved for Brazilian companies. During this
period of protection, the demand for computers was left largely unfulfilled,
resulting in pent-up demand for all kinds of information technology products,
including PCs and servers. Beginning in 1993, with the opening of the market to
foreign competition and the continued expansion of the middle class, the market
for computers in Brazil expanded at the average annualized rate of approximately
30% on a unit basis through 1999. The Company believes that the market for
information technology products in Brazil is expected to continue to grow for at
least the next 5 years.

         The market for computer products in Brazil is challenged by a basic
lack of infrastructure. Difficulty in telecommunications and data communications
has made the task of creating broad band solutions to add value for business
clients more difficult, but creating substantial opportunities for those able to
understand and develop solutions which overcome those barriers. The same lack of
infrastructure prevents the pure "U.S. style" build-to-order tele-marketing
model or "PCs by mail" model from being an efficient distribution strategy for
Brazil. With the direct sales model in the United States, a customer sees an
advertisement in a periodical or on television, calls the manufacturer or
marketer, gives a credit

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<PAGE>

card number, and the machine is shipped direct via express freight within
several days. In Brazil, there are several infrastructure barriers which prevent
the pure U.S. model from being successfully implemented, including:

o    Telecommunications. The telecommunication infrastructure in Brazil is both
     inefficient and underdeveloped. With only approximately 12 million
     telephone lines for the 160 million inhabitants in Brazil, the lack of
     telephone lines is a primary barrier for direct selling in Brazil. This
     barrier makes it challenging for a seller of information technology
     solutions to maintain the necessary relationships with end-users from a
     single centralized location.

o    Consumer Credit. The lack of available credit to consumers is a significant
     barrier for selling PCs in the consumer markets. There is very low
     penetration of credit cards in Brazil, and even less penetration with
     sufficiently high credit limits to allow the purchase of major items such
     as PCs. In addition, there is a lack of a central credit-reporting bureau
     which encompasses factors relating to an individual's credit history which
     would allow for a rapid and high-quality credit decision in light of the
     lack of credit cards.

o    Low installed base of PCs. The installed base of PCs in Brazil is
     approximately 50 per 1,000 inhabitants, as compared to approximately 595
     per 1,000 in the U.S. and approximately 170 per 1,000 in the countries of
     Southern Europe. With such a low installed base, the majority of the growth
     of PC sales in Brazil is coming from the first time PC buyer as opposed to
     in the U.S. where the majority of the growth is coming from the second or
     third generation PC buyer. First time PC buyers generally require more
     "hand-holding" at the time of sale in order to get comfortable with the
     purchase. Direct personal contact at retail shops or by internal sales
     persons and external representatives through office or home visits allows
     the Company to overcome this barrier. As the market develops, and the
     installed base increases, and as credit cards become more widely used, the
     pure "U.S. style" build-to-order tele-marketing model will become more
     successful in Brazil. The Company allocates sales and marketing resources
     on each of its channels according to their relative success in generating
     sales. In the future, as one channel such as telemarketing becomes more
     effective, the Company will allocate more resources to that effort.

o    Logistics. The underdeveloped transportation infrastructure and the
     bureaucratic importation processes in Brazil pose a logistical challenge
     for operating in the Brazilian market. Due to the geographic size of Brazil
     and its transportation infrastructure, there are no efficient express
     delivery services available for delivering products to customers from a
     centralized distribution point. Additionally, since principally all of the
     Company's components for its products are sourced directly from component
     manufacturers located in the U.S. and in Asia, the transit times and the
     bureaucratic importation procedures make it very difficult to operate a
     just-in-time manufacturing operation.


Products

Microtec Digital World

         During 1999, the Company entered into the larger market for information
technology solutions, launching Microtec Digital World ("MDW"), a group of
integrated solutions for specific vertical markets. Simultaneously the Company
launched a marketing campaign, and road show targeting business clients to
increase awareness of these solutions, and the Company's capability to solve
their needs for information technology platforms, in a modular, scalable,
web-centric format. The information technology solutions products launched under
MDW contain components of hardware, software, internet, installation, training,
support and administration. The solutions are directed toward strategically
chosen markets where the Company has a traditional presence and a known customer
base. MDW provides a one-stop shopping approach in its niche markets. Based
around web centric software, MDW solutions include Microtec Educational, Smart
Health, Smart City, and Retail Automation, as well as customer-specific projects
in e-commerce and web-centric solutions for Business clients.

o    Microtec Educational is the first fully integrated enterprise resource
     planning solution for public and private schools in Brazil. The solution
     includes web-centric administration software which allows management of
     school networks to manage all levels of assets to improve the efficiency of
     operations and improve learning, as well as to allow all participants in
     the educational process to participate in the day-to-day interchange of
     information important to healthy and positive learning environments. The
     solution also includes teaching software. The product targets public and
     private schools, approximately 100,000 in Brazil, and reflects a market of
     approximately $1 billion per year. The educational markets in other
     countries are being considered for the further expansion of this product.

o    Smart City is an integrated solution directed at the administrative and
     fiscal management for the 5,600 municipal governments in Brazil. Under the
     program developed by the United Nations, PNUD/PNAFEM, $2.2 billion has been
     made available for the support and financing of automation projects for
     improving the efficiency of municipal



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<PAGE>

         government operations. The automation of the municipalities in Brazil
         with solutions under specifications of and approved by PNUD/PNAFEM is
         required under federal law.

o        Smart Health is a web-centric solution for managing health systems in
         Brazil from small clinics to large public hospitals. It uses a hybrid
         set of tools, including smart card technology, and web based tools to
         provide for simplified and convenient client scheduling, as well as all
         aspects of health management. The Brazilian health industry had
         revenues of over R$40.0 billion in 1999, with R$15.0 billion in
         Hospitals. There are 50,000 health clinics and medical offices as well
         as 7,500 hospitals. Brazilian hospitals currently have a very low level
         of computerization, with less than 2.8% having any kind of enterprise
         management system.

o        Microtec's Retail Automation solution targets markets such as chains of
         gas stations, supermarkets, pharmacies, and other retail
         establishments. It provides sales checkout automation, control of
         inventories at the point of sale, and all aspects of tax compliance and
         regulations. The Company estimates that the overall market in Brazil
         for this product is approximately $700 million per year.

Computer Systems

         The market for personal computers and related products is significant
and growing in Brazil, reflecting an increasing demand for PCs and related
products. Until 1993, the market for computer products in Brazil was closed to
foreign competition, protected from foreign imports and reserved for Brazilian
companies. During this period of protection, the demand for computers in Brazil
was left largely unfulfilled, resulting in pent-up demand for computers and
other technology products. Beginning in 1993, however, import restrictions were
lifted resulting in the expansion, at an annualized rate in excess of 30%, of
the market for computers in Brazil. The Company, as a vertically integrated
computer manufacturer and direct marketer based in Brazil, has established a
full line of computer products using Intel processors and Microsoft Windows
software, from low-end workstations to high-end multimedia workstations and
powerful multi-processor servers, in order to meet the increasing demand in
Brazil for information technology solutions. The Company's products include
desktop PCs, notebooks, workstations, network servers, peripherals, software,
business systems integration equipment and turn-key business solutions. The
Company offers its products under the Microtec Vision, Microtec Mythus, Microtec
Quest, Microtec Spalla and Microtec Vesper names. In 1999, the Company entered
into a broad relationship with Gateway. The Company currently sells certain
Gateway branded products in Brazil and expects to expand its manufacturing and
marketing of Gateway products in Brazil.

Business Systems Integration; Client-Server Applications

         The Company has created a family of products and services in response
to the need for client-server distributed computing solutions in Brazil. The
Company offers a range of powerful symmetrical multi-processor super-servers.
The Company markets a full line of local area network and wide area network
parts, including bridges, multiplexors, DSU/CSU, buffers, modems, bridges,
routers and wide area networks for system integrators and their customers. As a
developing country migrating from a mainframe system-dominant environment,
Brazil has a large demand for distributed computing solutions through the
establishment of client-server networks in an effort to become more competitive
in the world markets. Many of the Company's system integration customers do not
yet have the expertise to design complex systems. In response, the Company
assembled its own dedicated business systems integration team that supplies
technical expertise to design turn-key business solutions including local area
network or wide area network systems for the Company's corporate and
governmental customers.

Customer Financing

         Financing is an important component of the Company's operations. Before
extending credit to a prospective customer, the Company thoroughly analyzes the
credit history and ability to pay of such prospective customer. The Company only
extends credit after performing such credit analysis with respect to each
prospective customer on a case-by-case basis. The Company has developed specific
credit analysis procedures for individual and business customers.

         All installment sales to individual customers are conducted in
accordance with a credit manual (the "Credit Manual") that has been developed by
the Company based upon the Company's experience in the Brazilian market. The
Credit Manual sets forth guidelines and procedures for gathering and confirming
information related to a prospective customer and his, her or its credit
history, and for deciding whether and in what amounts to extend credit to such
customer.


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<PAGE>

         Certain procedures must be followed before the Company may extend
credit. Individuals wishing to make a purchase utilizing installment sale
agreements must fill out a standard form wherein the applicant must specify
certain information, including income, taxpayer registration number, address and
age. The Company also requires that the applicant provide bank references in the
application form. In addition to the information provided in the application,
the Company requires the applicant to provide proof of income or employment,
residence and the identity information issued by the Brazilian government. The
Credit Manual also provides for alternative requirements based on the
applicant's profession and income stream. No credit will be extended to
individuals under the age of 21, or to any applicant that does not produce
evidence that he or she has been employed in the same job and has resided in the
same place for at least one year.

         Business entities seeking to finance the purchase of computers and
related products are subject to a credit analysis similar to that undergone by
individual consumers. As with individual consumers, credit applications are
processed and reviewed directly by the Company in accordance with the Credit
Manual. Business customers seeking to make a purchase on credit are required to
fill out a standard form in which they must disclose organizational information,
such as the nature of business, taxpayer registration number, commercial and
banking references and business address. Furthermore, business customers must
also submit copies of various documents to be examined by the credit analysts,
such as financial statements, corporate organizational documents and taxpayer
registration card.

         Information about individual and business customers' credit history is
obtained in several ways. The credit analyst will verify the accuracy of the
information provided by the individual or business in the application. Further,
the credit analyst will consult with the local office of the Sistema de Protecao
ao Credito ("SPC"), a credit history database organized by commercial
associations throughout Brazil containing information on local sales. The credit
analyst will also consult SERASA, a centralized database developed by Brazilian
financial institutions that gathers credit history information obtained through
banks, notaries and some commercial associations. To date, however, there is no
centralized credit history database in Brazil that gives a complete picture of a
customers' overall credit history, nor is there any means in Brazil for
independently verifying a consumer's level of indebtedness.

         After the information provided by an individual consumer or business
customer has been verified, a credit analyst will have to prepare a report
indicating whether or not credit should be extended to the prospective client.
Depending on the amount of credit being sought by a client, it may be extended
directly by the analyst or it may require additional review by a senior analyst
or a credit committee consisting of senior management.

         According to Brazilian law, most of the purchases made by governmental
entities must be conducted through a bidding process. The Company is an active
participant in bidding processes in order to obtain contracts with governmental
entities. Due to the fact that each bidding process is conducted in connection
with a specific invitation to bid, the decision to extend credit to such a
governmental entity and, thus, to present a bid proposal, will vary from case to
case. Because credit history databases generally do not provide extensive credit
information on governmental entities, prior to the presentation of the bid
proposal, the Company will often informally exchange credit information with
companies that had previously extended credit to the governmental entity
conducting the bidding process. Depending on the type of governmental entity,
some limited credit history information may also be available through SERASA.
Finally, the Company will examine whether the payments to be made as a result of
the bidding process are to be included in the budget of such a governmental
entity. The Company will not extend credit to a governmental entity if the
budget of such entity does not expressly include the payments under the bidding
process.

Logistics and Materials Management

         Virtually all of the products that the Company purchases are received
and consolidated in containers at the Company's U.S. facility for sea or air
freight to the Company's facilities in Ilheus or Salvador, Brazil. These
destinations contain deep-water ports with modern handling and storage
facilities. The Company is highly-sophisticated in Brazilian customs matters and
is knowledgeable in producing appropriate documentation to expedite customs
clearance and importation of components. Upon receipt in Brazil, the goods are
expedited through customs by Company personnel so that goods spend a minimum
amount of time at the port facility. The Company maintains a fleet of
tractor-trailers and a larger fleet of vans and trucks for final delivery to the
Company's distribution points and to end-users.

         Operating in the Brazilian market requires dedicated logistics and
materials handling experience in order to overcome the infrastructure challenges
of Brazil and in order to take advantage of the tax incentives afforded to local
manufacturers. The Company maintains an integrated manufacturing requirements
planning system in order to achieve the Company's objective of fulfilling its
manufacturing needs while optimizing its investments in inventory. The Company


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<PAGE>

sources components directly from major technology manufacturers and distributors
in Asia and the United States. Components are then shipped to the Company's
manufacturing facilities in Brazil on a coordinated basis to allow production
goals to be met in accordance with its sales objectives. The Company's material
requirements planning system allows it to track and control components
throughout the entire procurement process.

         During 1999, the Company applied for and received approval from the
federal tax authorities in Brazil for an in-bond warehouse at its facilities in
Ilheus, Brazil. Under the program, called RECOF, the Company should be able to
transfer shipments within 24 hours form the port of entry to its own in-bond
facility, versus the current system which requires imported products to be held
at the ports of entry until all importation processing is completed and all
duties and fees are paid. Under the new RECOF program, the Company will have
on-line processing from its in-bond warehouse in Ilheus and will be allowed
immediate use of the product in production and a deferment of import duties and
fees by up to 30 days after use of the product in production.

Engineering and Manufacturing

         The Company has an experienced engineering department comprised of 20
engineers at its facilities in Brazil. The engineering department is responsible
for designing products, producing the technical specifications for components
required for manufacture, training personnel, line engineering, and quality
control/quality assurance programs. The engineering group constructs the bill of
materials of components that are required for manufacture and designs the
manufacturing line so that the tasks can be undertaken reliably within the
capabilities of the Company's specially trained labor force.

         Another part of the engineering group supports the sales force and is
responsible for the design of local area network or wide area network systems
for the Company's customers and their end users. Outside contractors are also
used to enhance certain product offerings by the Company.

         The Company's manufacturing facilities consist of a modern 160,000
square-foot leased facility in Ilheus. Management believes that these facilities
will allow the Company to continue to operate at its anticipated capacity levels
for at least the next 12 months. The 160,000 square-foot leased facility in
Ilheus that the Company currently occupies may be available for purchase through
auction and the Company is currently evaluating the purchase thereof. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" and See "Item 2. Properties".

Work Force and Training Program

         The Company has elected to locate its principal manufacturing facility
in a remote region of Brazil in order to benefit from lower costs. Many of the
cities and states in which the Company operates, especially those in remote
regions, do not have sufficient technical educational facilities and, where such
facilities do exist, they are located in areas with higher labor costs. In
response to this lack of technical education, the Company has created its own
technical training program to create a technically adept labor force by training
workers in various technical phases of assembly line manufacturing. The Company
believes that this training will often confront and mitigate cultural
differences that may interfere with an employee's motivation and productivity.

         The Company has designed internal training programs that build
technical skills for entry level employees. Entry level employees engage in
assembly work, packing, shipping, and cleaning, and require a great deal of
training and supervision. All of the Company's entry level employees are
compensated at a level in excess of the national minimum wage which is
approximately R$151 per month (or approximately US$87). Technical personnel have
had either technical school or university level training. These workers are
usually upwardly mobile and are recruited either from other companies or
technical schools. Although these technical personnel must be taught specific
work-related skills, they usually come to the Company well-trained. Engineers
are university trained and normally have Microsoft and/or Cisco training, some
with certification; they are generally paid between 5 and 50 times the minimum
wage. See "Item 1. Business - Employees".

Quality Assurance and Service

         The Company addresses quality assurance at all stages of the production
process. First, components considered for use in standard systems are tested for
compatibility by the Company's engineering staff. Second, incoming components
receive a physical damage inspection on receipt and again at the start of the
production process. A statistical sampling of components in every category is
electronically tested prior to assembly. Each complete unit is then functionally
tested at the end of the production process to demonstrate that all components
are engaged and fully operational. Thereafter, each



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<PAGE>

complete unit is "burned-in" for at least three hours. This process involves
running a test program which sequentially tests each component to verify
prescribed operation. The Company has implemented a total quality program at its
manufacturing facility in Ilheus, Bahia and has an ISO-9001 process
certification. This program includes training employees company wide on the
processes and methods involved in achieving the Company's goal of zero defects.

         In addition to the total quality control procedure in its production
process, the Company provides post sales technical support for its products.
Such technical support is provided by the Company's national network of sales
agents and by making available engineers and technicians who perform in-house
and local on-site servicing for corporate and government clients. Additionally,
the Company offers through its call center, a telephone support service
providing personalized attention to its customers.

Distribution and Marketing

         The Company's strategy is centered around attaining a direct
relationship with the end-users for information technology products through
various channels including commissioned network representatives, Company owned
retail showrooms, focused account teams in government and corporate markets,
telemarketing, and internet commerce. The Company believes that this strategy
offers several competitive advantages. The direct sales strategy helps the
Company maintain competitive pricing by avoiding the cascade of sales taxes
which accrue each time a product changes hands in Brazil. The direct strategy
also helps avoid additional markups and inventory carrying and occupancy costs
associated with traditional third party distribution and retail channels.
Working directly with end-users promotes customer loyalty and fosters brand
awareness. The direct end-user relationships allow the Company to maintain,
monitor and update database information about customers and their current and
future information technology products and service needs, which can be used to
shape future product offerings and support services. The Company, operating
through its sales and marketing teams, has built a national direct distribution
network for Brazil. This distribution network includes access to large markets
in Brazil for computer systems and business systems integration products.
Customers include small and medium-sized businesses, large corporations,
government agencies, major retailers, and consumers.

         The Company's primary channels of distribution are as follows:

o    Network Representatives. Network representatives, working through regional
     managers who control 60 regions covering all of Brazil, sell house-to-house
     and office-to-office. This strategy enables the Company to have direct
     contact with end-users, and allows for the efficient gathering of credit
     information and administration of the sales process in remote areas where
     the Company's direct sales teams or local points of presence do not have
     adequate penetration. These network representatives work as independent
     contractors on a strict commission basis and use the Company's retail
     showrooms as regional distribution hubs. There are currently in excess of
     250 active network representatives. Prior to becoming active, all of the
     Company's network representatives participate in a sales and technical
     training program administered by the Company and designed to insure a
     marketing presentation that is consistent with the Company's quality and
     standards.

o    Direct Sales Teams. The Company has established a sales team that is
     focused on selling the Company's products and services directly to business
     and governmental clients. The Company has invested in creating a staff of
     48 internal sales, support, technical, and engineering professionals to
     handle the design, quotation, build, installation and support of high-end
     network systems and turn-key business solutions based on the Windows-NT
     Cluster applications, Intel symmetrical processing server technology, and
     Cisco IP networking technology, as well as the MDW product offerings. In
     addition, the Company participates in a wide variety of government and
     corporate bids. The Company also uses outside consultants to administer
     such bid processes.

o    Company Owned Retail Showrooms. In order to enhance the Company's
     relationship with the end-user, the Company has established its own retail
     stores, or local points of presence (POPs), located in important strategic
     markets in Brazil. The Company believes that these stores are an important
     part to overcoming the infrastructure barriers in Brazil and establishing a
     direct relationship with the end-users of the Company's products. The
     Company currently owns 15 stores within its retail network in Brazil. In
     addition to facilitating direct sales to end-users, these stores serve as
     important regional distribution and support centers. In 1999, with the
     introduction of MDW, the POPs expanded their profile of operations with the
     inclusion of business direct sales persons to attend to the region's
     corporate and government clients.

o    Telemarketing. Telemarketing is a program established in 1997 to sell the
     Company's products direct to consumer end-users and to market the Company's
     products to small resellers. In addition to generating sales to end-users,
     this channel



                                       8
<PAGE>

     also serves as a lead-generator for network representatives and the direct
     sales staff. The Company is also using this program as a test-bed for
     specific sales programs and promotions. The telemarketing call center,
     which currently has 15 telephone operators, is also integrated with the
     Company's technical assistance hotlines.

o    Internet Sales. In 1998, the Company launched its internet store
     (www.Microtec.com.br) for selling its computers. The web site was designed
     specifically for the Brazilian market allowing for high speed interactive
     information research and product purchases over the existing
     telecommunications infrastructure in Brazil. The web site offers clear
     informational product presentations, fast page download and site navigation
     considering the bandwidth limitations in Brazil, security for online
     purchases, and online post-sales technical support. During 1999, the
     Company introduced a Gold Customer plan for business-to-business sales,
     where specialized clients are given specific home pages to facilitate their
     specific purchasing process. The Gold plan includes any specific pricing,
     delivery and labeling customizations already included so that the
     adaptation for the specific customer is reduced on an ongoing basis,
     reducing costs for the client and the Company.

Corporate Structure

     The Company has a U.S. parent company, Vitech America, Inc., a Florida
corporation, with operations based in Miami, Florida. The U.S. parent company
sources components in the U.S. and throughout the world and engages in the
distributions of those components to its subsidiary's (Microtec's) manufacturing
operation in Brazil.

         In 1995, the Company formed a wholly owned subsidiary in Brazil,
Bahiatech - Bahia Tecnologia Ltda. ("Bahiatech") to engage in the manufacture
and sale of computers and consumer electronics primarily to the individual
consumer market in Brazil.

         In July 1997, the Company acquired 94.4% of the outstanding capital
stock of Microtec Sistemas Industria e Comercio S.A. ("Microtec"). Based in Sao
Paulo, Brazil, Microtec is engaged in the manufacture and sale of PCs and
servers in Brazil. Microtec sells directly to corporate and government clients
and through a nationwide network of over 300 channel partners who represent
Microtec's products. Microtec participates heavily in all levels of governmental
bids and public solicitations in Brazil. As the oldest computer manufacturer in
Brazil (founded in 1983), Microtec has established a brand name recognized for
quality products and services in the Brazilian market. Microtec has extensive
experience in the engineering and design of PCs, and its facility has been
granted ISO-9001 process certification as well as other technical and quality
certifications necessary to compete in governmental bids and public
solicitations in Brazil. With a nationwide network of technical assistance and
service centers, Microtec has one of the most extensive post-sale support
systems in Brazil. With Microtec's strong penetration in the corporate and
government markets and the Company's prior strength in the consumer market, the
acquisition has enabled the Company to broaden its customer base and diversify
its sales. In September of 1998, the Company acquired an additional 4.1% of the
outstanding capital of Microtec to bring the Company's total ownership up to
98.5%.

         In furtherance of its business strategy to develop direct relationships
with the end-users of its products, the Company acquired a majority interest in
Tech Shop Holdings, USA, Inc., the parent of Tech Shop, Ltda. and Tech Stock,
Ltda. ("Techshop"), located in Belo Horizonte, Brazil, in November 1997. During
the same month, the Company also acquired a majority interest in Recife
Holdings, USA, Inc., the parent of Rectech-Recife Tecnologia, Ltda. ("Rectech").
The operations of Techshop and Rectech include regional distribution and retail
sales of computers and related equipment in the corporate and consumer markets
in Brazil. The companies are well suited to the Company's strategy of selling
directly to individual consumers as well as corporate clients and governmental
entities, and these subsidiaries add strength to the Company's direct marketing
and support services in the central and northeastern regions of Brazil. In
December of 1998, the Company increased its ownership position of Techshop and
Rectech to 99%.

         During the year ended December 31, 1999, the Company consolidated the
operations and transferred certain assets and liabilities of its Brazilian
subsidiaries, Bahiatech, Techshop, and Rectech, into the operations of Microtec.
The remaining operations of Bahiatech which were not transferred to Microtec
included certain assets and liabilities associated with Bahiatech's consumer
electronics manufacturing business. Principally all of the assets and
liabilities of Techshop and Rectech were transferred to Microtec. After the
transfer the Company sold Bahiatech with its consumer electronics operation,
Techshop, and Rectech to an unrelated third party for an aggregate sales price
of $4 million and recorded a gain on the sale of $2.7 million which is reflected
in the accompanying consolidated statement of operations for the year ended
December 31, 1999. The terms of the sale were $850,000 in cash and the Company
received a four year note, payable in



                                       9
<PAGE>

equal monthly installments, for the balance. The Company discounted the note at
the effective interest rate of 9% per annum.

Gateway Relationship

         In September 1999, the Company formed a strategic alliance with Gateway
which resulted in a $31 million investment by Gateway. Pursuant to a Convertible
Loan Agreement (the "Loan Agreement"), the investment was in the form of a 10%
Convertible Promissory Note. The Note bears interest at 10% per annum with
interest payable quarterly. The Note matures on March 16, 2001. The Note is
initially convertible at $11.02 (the "initial Conversion Price") subject to
stock-splits, stock dividends, rights offering by the Company and certain
combinations, capitalizations, reclassifications, extraordinary distributions
and other similar events. Under the terms of the Agreement, beginning six months
after the Closing Date, Gateway may demand registration of the securities
underlying the Note. William C. St. Laurent and Georges C. St. Laurent, III, the
Company's President and Chief Executive Officer, jointly and severally, have
guaranteed $11,000,000 of the Note.

         In no event shall the Company issue more than 19.9% of the then issued
and outstanding shares of Common Stock of the Company, unless the Company shall
obtain stockholder approval or a waiver of such requirement by the Nasdaq Stock
Market. Messrs. St. Laurent have agreed to vote their shares in favor of any
transaction contemplated by the Agreement, at any meeting, for the purpose of
issuing in excess of 19.9% of the Company's Common Stock.

         The Company also was granted an option, exercisable at the Company's
election, to acquire certain exclusive territorial rights in Brazil from
Gateway. For this option, the Company issued 538,284 shares of the Company's
common stock to Gateway.

         Gateway was also granted an option, exercisable within two years from
the Closing Date, to engage in the following transactions with the Company: (i)
extend an additional $40 million convertible loan to the Company on the same
terms and conditions as the Note, with a conversion price equal to the lower of
(x) $11.02 per share or (y) a 20% premium over the then market value of the
Company's common stock as reported on the Nasdaq Stock Market determined by
taking the arithmetic average of the closing price of the Company's common stock
for a period of twenty (20) trading days preceding the date on which Gateway
gives notice of its intent to exercise this option and/or (ii) subject to
compliance with applicable law, enter into a merger agreement whereby the
Company's shareholders shall have the option to (x) exchange their shares for
$14.00 per share in cash or (y) one share of a new callable putable common stock
(the "New Stock"). The New Stock shall have a call provision whereby Gateway
will have the right to call 100% (and not less than 100%) of the New Stock,
including all vested options, which it does not already own, at a price which
shall be determined by the Company's performance. The New Stock shall also have
a put provision whereby the New Stock holders will have the right to put
annually to Gateway 100% (and not less than 100%) of their New Stock, including
all vested dilutive options and warrants, at a price which shall be determined
by the Company's performance. See "Factors Affecting the Company's Business and
Prospects - Ability to Exercise Control by the Principal Shareholders."

Tax-Exempt Status

         The government of the State of Bahia, Brazil has issued a decree that
exempts companies such as the Company's subsidiary, Microtec, from the payment
of state import duties, state sales tax, and state services tax. Microtec has
received an exemption from such taxes through and including the year 2005.
Additionally, Microtec is exempted from the payment of Brazilian federal income
tax through and including the year 2007, provided that the Company meets certain
budgeted production goals. Based upon the Company's experience in Brazil, it
believes that it will be able to renew its state incentives, although no
assurances can be give that the Company will be able to successfully renew such
initiatives. The Company is not exempted from the payment of a federal social
contribution tax of approximately 12% of pre-tax income. The normal rate of
federal taxation on a non-exempt basis is 33%. In the event that the Company is
unable to extend such tax-exempt status, the Company's after-tax earnings as a
percentage of sales would decline by the amount of the tax benefit, which may be
substantial. See "Factors Affecting the Company's Business and Prospects -
Expiration of Tax-Exempt Status".

Competition

         The manufacturing and distribution of computer equipment and related
products is highly competitive and requires substantial capital. The Company
competes with, and will compete with, numerous international, national, and
regional



                                       10
<PAGE>

companies, many of which have significantly larger operations and
greater financial, marketing, human, and other resources than the Company, which
may give such competitors competitive advantages, including economies of scale
and scope. Competitors include internationally recognized companies such as IBM,
Acer, Dell, Hewlett Packard and Compaq. Additionally, the Company competes with
internationally recognized systems integrators such as IBM, EDS and Unisys.
Competition is based on price, product quality, customer support and the ability
to deliver products in a timely fashion. No assurance can be given that the
Company will successfully compete in any market in which it conducts or may
conduct operations.

         In addition, the Company competes with other small manufacturers of
computer equipment sold on what is known as the "gray market" in Brazil. Such
manufacturers are able to sell such equipment at prices that are often
significantly lower than those offered by the Company and other legitimate
manufacturers. Gray market manufacturers are able to offer lower prices because
of the avoidance of import duties and other taxes, and the avoidance of
necessary software licensing fees. There can be no assurance that gray market
activity will not continue to flourish putting downward pressures on the
Company's profit margins as result of low pricing strategies.

Technology Acceptance Corp.

         In April 1998, the Company entered into an accounts receivable
financing program with Technology Acceptance Corp. ("TAC"), an independently
owned special purpose corporation, whereby certain of its accounts receivable
may be sold by the Company's subsidiary (the "Seller") 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 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 year ended December 31, 1998, the Company completed the sale
of an aggregate face amount of approximately $140 million of its accounts
receivable to TAC at a discount of approximately $7.5 million for cash and a
subordinated debenture. The subordinated debenture is a revolving, non-interest
bearing, bearer note, which constitutes the Company's retained interest in the
program.

         The receivables arise out of sales of computer equipment and related
products, and, to a lesser extent, from the sale of consumer electronics
products by the Company. The receivables consist of installment sale agreements,
in which the originator retains a security interest in the equipment until the
final installment has been paid in full, and trade acceptance bills arising from
sales to corporate and governmental customers in the Brazilian market. In the
case of installment sale agreements, each installment constitutes a separate
receivable. For purposes of the TAC program, the receivables are classified into
three categories: (i) installment sale agreements accompanied by the delivery of
post-dated checks signed by the obligor, corresponding to each scheduled
installment with maturities up to twenty-four months; (ii) installment sale
agreements, accompanied by a promissory note, in which the obligor receives
payment coupons prior to each due date, such coupons payable over a period of up
to twenty-four months; and (iii) trade acceptance bills of corporate and
governmental obligors, with an average maturity of 60-70 days. Before extending
credit to a prospective customer, the Company thoroughly analyzes the credit
history of such prospective customer. Credit is extended only after performing
such credit analysis with respect to each prospective customer on a case-by-case
basis. The Company has developed specific credit analysis procedures with
respect to each of the three categories of customers described above.

         The receivables purchased by TAC are subject to the following
concentration limits: (i) the sum of outstanding stated amounts of receivables
in the receivables pool due from any individual consumer may not exceed $5,000,
(ii) the sum of the outstanding stated amount of receivables in the receivables
pool from any single corporation, partnership or governmental entity may not
exceed five percent (5%) of the aggregate outstanding stated amount of the
receivables, and (iii) the sum of the outstanding stated amounts of receivables
in the receivable pool due from corporate, partnership and governmental
interests or corporations may not exceed fifty percent (50%) of the aggregate
outstanding stated amount.

         The notes were offered by TAC with maturities ranging from three months
to three years. Each series of notes will have terms as may be specified in a
supplement relating to such series. Such terms will include (i) the issue date
and maturity date, (ii) the principal amount of such series, (iii) the interest
rate, (iv) the interest payment dates, and (v) a sinking



                                       11
<PAGE>

fund payment schedule. Maturities may range from sixty days to three years. The
notes may be issued on a discounted, non-interest bearing basis or on a fixed
rate basis or any combination thereof.

         There is a repurchase provision whereby the Seller, as defined in the
program, 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
affect such substitution is less than the repurchase price thereof, then a cash
payment must be paid for the excess of the repurchase price over the net present
value of the additional receivables transferred to TAC pursuant to such
substitution. The U.S. parent company of the Seller, Vitech America, Inc.,
serves as guarantor of the repurchase obligation. If repurchase obligation is
not complied with on or prior to the required repurchase date, the U.S. parent
company is required to deposit, within twenty-four hours of the expiration of
the required repurchase date, the amount of the repurchase price not paid. As a
result of the structure of the program, at December 31, 1999, 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.

     Unibanco-Uniao de Bancos Brasileiros S.A. was the arranger of the sale and
notes program. The Bank of New York is the trustee, paying and transfer agent
and registrar for the notes, and Banco Credibanco S.A. is the Brazilian
collateral agent.

         In January 1999, the Brazilian government allowed its currency, the
Real, to trade freely against other foreign currencies, which resulted in an
immediate devaluation of the Real against the U.S. dollar in excess of 30%. With
the post devaluation exchange rates of the Real to the U.S. dollar the
overcollateral ratio for TAC fell below its required minimum which caused
trigger and default events, as defined, of the TAC program. As a result, the
Company has not been selling any of its accounts receivable to TAC, and may not,
other than pursuant to its repurchase obligation. Additionally, with the
devaluation of the Real against the U.S. dollar in excess of the overcollateral
ratio, the Company's residual interest in the program represented by the
subordinated debentures has been written down to zero from its values at
December 31, 1998.

         In June 1999, TAC received approval on a consent solicitation proposal
made to the holders of TAC notes for temporary and permanent adjustments to the
structure of the TAC program in order to allow the TAC program to operate more
effectively in the post devaluation environment. With the approval of the
consent solicitation, TAC paid a 1% fee to the holders of TAC notes and the
Company put up additional collateral (in the form of eligible accounts
receivable) for the benefit of the TAC note holders to put the collateralization
ratio at 100%. Since June, however, because of the continuing difficult economic
conditions of Brazil, the poor payment performance of the receivables held by
TAC and the conditions of the financial markets which have prohibited TAC from
refinancing its short-term obligations, TAC has not had the liquidity available
to meet is current obligations which has caused trigger and default events for
TAC. Considering these events, the TAC program is expected to remain in default
and to self-amortize over the life of the receivable portfolio held by TAC. The
Company also believes that TAC will no longer be a viable financing source for
the Company in the future. While the Company believes that it will continue to
be able to maintain its obligations under the repurchase provision and that it
has adequately reserved for such contingent liability, there can be no
assurances that the Company will have available the required accounts
receivables or cash liquidity to affect such repurchases.

Backlog; Unfulfilled Contract Manufacturing Obligations

         The Company's backlog through fiscal year end as of December 31, 1999
was approximately $ 4.6 million. The Company expects to ship its entire current
backlog within the Company's current fiscal year. Variations in the magnitude
and duration of contracts received by the Company and customer delivery
requirements may result in substantial fluctuations in backlog from period to
period. Since customers may cancel or reschedule deliveries, backlog may not be
a meaningful indicator of future financial results.

Regulation and Environmental Matters

         The Company believes that its facilities and practices for controlling
and disposing of the limited amount of wastes it produces are in compliance with
applicable environmental laws and regulations in Brazil.


                                       12
<PAGE>

Trademarks

     The Company's products are marketed and sold under Company-owned
trademarks, including Vision and Microtec's Mythus, Quest, Spalla, Vesper,
Microtec Digital World, and Mr. Micro.

Employees

         As of December 31, 1999, the Company employed approximately 750
persons, including 3 executive officers, 30 executive personnel, 20 engineering
personnel, and 120 administrative personnel. The Company believes that its
employee relations are satisfactory. See "Item 1. Business - Work Force and
Training Program".

ITEM 2.  PROPERTIES

         The Company's corporate headquarters are located in Miami, Florida. The
Company leases, from an unaffiliated landlord, approximately 23,000 square feet
of office and warehouse space in Miami. The office and warehouse space lease
expires in March 2005. The Company pays annual rent of approximately $146,000
plus its allocable share of real estate taxes, insurance, and other assessments.

         The Company's Brazilian operations are centered in the states of Sao
Paulo and Bahia. The Company leases approximately 15,000 square feet of office
space in Sao Paulo for an annual rent of approximately $156,000. The lease on
such property expires in April 2000 with an option to renew for up to three more
years. The Company is currently evaluating the renewal of the lease. The Company
leases approximately 160,000 square feet of manufacturing and administrative
space in Ilheus for an annual rent of approximately $122,000. Such lease expires
in May 2000, with an option to renew for up to three years. The Company is
currently evaluating the renewal of such lease and the possible purchase of the
facility. In addition, the Company leases warehouse and retail space in Recife
and Belo Horizonte.

         The Company believes that in the event that the lease with respect to
any of the aforementioned facilities should not be renewed, alternative space
will be available at comparable rates.

         In addition to the facilities discussed above, the Company owns, for
investment purposes, two undeveloped parcels of land near Ilheus. The Company
does not plan to make material capital expenditures or improvements with respect
to this property during the next fiscal year.

Legal Proceedings

         On October 28, 1995, Meris Financial Incorporated ("Meris") entered
into a Loan Agreement with the Company pursuant to which Meris made available a
loan to the Company in the principal amount of US$ 2,000,000. The loan was to
mature on October 28, 1997 and bore interest at a rate of 12% per annum payable
monthly. The loan was secured by the assets of the Company exclusive of
inventory and receivables. In connection with the loan, Meris received a
guarantee by Georges St. Laurent III and William C. St. Laurent, the President
and Chief Operating Officer of the Company, and his wife, Wendy St. Laurent, a
stock pledge agreement by such parties, a collateral assignment of various
rights of the St. Laurents as well as assignments of life insurance policies on
the lives of Messrs. St. Laurent and St. Laurent. The note was convertible into
approximately 4.7% of the shares of the Company's common stock. In addition,
certain options were provided to Meris which afforded them the right to purchase
up to an aggregate of 5% capital stock interest in the Company. On July 20,
1996, the Company and Meris entered into an Amendment of such Loan Agreement
pursuant to which the Company was obligated to make principal and interest
payment during the period between July 20, 1996 and by November 1, 1996, with
the remaining principal balance to be paid on November 1, 1996. In connection
with the Amendment, the conversion rights provided by the Note and the options
were cancelled provided all payments of principal and interest under the Note
are made as set forth above. The Company made all payments in accordance with
such Amendment and on October 30, 1996, repaid the note in full. In February of
1998, Meris filed a UCC-3 in favor of the Company releasing any claim that Meris
had on the assets of the Company as a result of a UCC-1 filed when Meris entered
into the Loan Agreement with the Company.

         In October 1996, Meris had advised the Company that, irrespective of
the Amendment, it believed it had certain rights to an equity ownership position
in the Company. In June 1998, Meris filed a law suit with the United States
District Court in Arizona affirming such claim against the Company. While the
Company believes such claims are without merit, Georges C. St. Laurent III and
William C. St. Laurent have agreed to settle such equity claims, should the need
arise, from their personal share holdings. Expenses associated with defending
this claim are incurred as an expense by the Company. In



                                       13
<PAGE>

November, 1999, the Company filed a motion for dismissal of the case reiterating
the Company's position that it had complied with all the terms of the loan
agreement between the Company and Meris and any amendment thereto. The court has
decided not to rule on the Company's motion for dismissal until the Company has
entered into settlement discussions with Meris in an attempt to reach a
settlement on the case. Should the Company be unsuccessful in reaching an
agreeable settlement with Meris during such court suggested settlement
discussions, then the Company will pursue its motion filed for the dismissal of
the case.

     The Company had been named in a lawsuit in the United States by IBM
relating to TNT Systems, Inc., a business in which Georges C. St. Laurent III,
the Company's Chairman of the Board and Chief Executive Officer, was a 60%
shareholder and which ceased operations in 1993. The Company believed that the
IBM lawsuit was frivolous and without merit and was not likely to have a
material adverse effect on the Company's financial conditions or results of
operation. Additionally, Georges C. St. Laurent III had agreed to indemnify the
Company against any and all claims having to do with this lawsuit. In September
1999, Georges C. St. Laurent III settled the case with IBM and accordingly the
lawsuit against the Company was dropped by IBM.

         Other than as discussed above and other than in the ordinary course of
its business, the Company knows of no other material litigation or claims
pending, threatened, or contemplated to which the Company is or may become a
party.

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

         No matter was submitted to a vote of the Company's stockholders,
through the solicitation of proxies or otherwise, during the fourth quarter of
fiscal 1999.



                                       14
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

         The Common Stock of the Company is traded on The Nasdaq National Market
tier of The Nasdaq Stock Market under the symbol: VTCH. The following table sets
forth, for the period indicated, the high and low sales price for the Common
Stock as reported in the consolidated transaction reporting system. The
information set forth in this table has been adjusted to reflect a 10% Common
Stock dividend that was distributed on July 27, 1998.

                                                       HIGH              LOW
                                                       ----              ---
      FISCAL YEAR 1998:
          Quarter ended March 31                      $ 17.16          $ 13.41
          Quarter ended June 30                       $ 19.25          $ 14.77
          Quarter ended September 30                  $ 21.25          $  7.50
          Quarter ended December 31                   $ 18.00          $  8.25

      FISCAL YEAR 1999:
          Quarter ended March 31                      $ 15.50          $  8.00
          Quarter ended June 30                       $ 12.75          $  7.88
          Quarter ended September 30                  $ 12.88          $  6.88
          Quarter ended December 31                   $ 10.00          $  6.00

Holders

         As of March 30, 2000 there were approximately 2,250 holders of record
of the Common Stock.

Dividends

         On June 15, 1998, Vitech declared a 10% Common Stock dividend. The
dividend was distributed on July 27, 1998 to holders of record of the Common
Stock as of July 13, 1998. Other than this dividend, Vitech has not declared or
paid any dividends on the Common Stock since inception nor does it intend to pay
any cash dividends to its shareholders in the foreseeable future. The Company
currently intends to reinvest earnings, if any, in the development and expansion
of its business. The declaration of dividends in the future will be at the
discretion of the Board of Directors and will depend upon the earnings, capital
requirements, and financial position of the Company, general economic
conditions, and other pertinent factors.

         For the foreseeable future, Microtec does not intend to distribute any
retained earnings to the U.S. parent company, Vitech America, Inc., but intends
to reinvest such earnings, if any, in the development and expansion of its
business. Up to now, substantially all of the retained earnings of the Company
on a consolidated basis have been attributable to the Company's Brazilian
subsidiaries including Microtec. Microtec is exempted from the payment of
Brazilian federal income tax through and including the year 2007, provided that
the Company meets certain budgeted production goals. The Company is not exempted
from the payment of a federal social contribution tax of approximately 12% of
pre-tax income. The normal rate of federal taxation on a non-exempt basis is
33%. 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. For the years
ended December 31, 1999, 1998 and 1997 the tax exemption benefits amounted to
approximately $0, $5,600,000 ($0.42 per share), and $3,000,000 ($0.25 per
share), respectively. See "Factor Affecting the Company's Business and Prospects
- Restrictions on the Company's Ability to Distribute Earnings Derived from Tax
Exemption Benefits.", and "Business - Tax-Exempt Status".



                                       15
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

Statement of Operations Data:
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                     ---------------------------------------------------------------------------------------
                                          1999               1998              1997              1996             1995
                                     ---------------    ---------------    -------------     -------------    --------------
<S>                                  <C>                <C>                <C>               <C>              <C>
Sales                                $  100,423,084     $  195,334,579     $117,537,403      $ 73,321,398     $  48,488,996
Cost of sales                            59,655,561        115,630,389       76,813,191        53,470,340        39,156,239
Gross profit                             40,767,523         79,704,190       40,724,212        19,851,058         9,332,757
Selling, general and
  administrative expenses                28,496,987         41,586,843       18,167,737         8,083,287         1,234,108
Income from operations                   12,270,536         38,117,347       22,556,475        11,767,771         8,098,649
Interest and financing
  expense                                17,127,358         17,357,001,       6,011,396         2,310,704           328,278
Other expense (income)                   (2,719,065)                 -                -                 -                 -
Foreign currency exchange
  losses                                 19,009,336          1,603,670        2,665,224           547,077            16,229
Net income (loss) (1)                   (21,103,093)        17,862,012       12,792,261         8,230,588         6,904,834

Earnings (loss) per common
  share - Basic                               (1.42)              1.36             1.07              0.90              0.78

Earnings (loss) per common
  Share - Assuming dilution                   (1.42)              1.34             1.06              0.85              0.76

Balance Sheet Data:
                                                                       As of December 31,
                                     ---------------------------------------------------------------------------------------
                                          1999               1998              1997              1996             1995
                                     ---------------    ---------------    -------------     -------------    --------------
Current assets                       $   93,955,121     $  147,179,591     $121,939,015      $ 41,959,441     $  21,267,881
Working capital                          45,933,686         70,174,161       82,555,097        31,873,405         6,412,154
Total assets                            148,438,177        195,666,975      155,504,902        47,376,586        22,260,817
Long-term liabilities                    46,691,710         16,440,190       61,085,153         1,757,367                 0
Total liabilities                        94,713,145         93,445,620      100,469,071        11,843,403        14,855,727
Shareholders' equity (1)                 53,725,032        102,221,355       53,608,389        35,533,183         7,405,090
</TABLE>

--------------
(1) Restrictions presently exist on the ability of the Company's subsidiary to
distribute dividends derived from certain tax exemption benefits. See Part II,
Item 5 "Dividends" and the Notes to the Company's Financial Statements contained
elsewhere in this report.


                                       16
<PAGE>

ITEM 7.  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 operations as a percentage of the
Company's consolidated net sales:
<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                                          ----------------------------------------------------------------------------------
                                                    1999                         1998                        1997
                                          --------------------------    ------------------------    ------------------------
<S>                                         <C>              <C>         <C>             <C>         <C>             <C>
Net sales                                   $ 100,423,084    100%        $ 195,334,579   100%        $ 117,537,403   100%
Cost of sales                                  59,655,561    59.4          115,630,389   59.2           76,813,191   65.4
Gross profit                                   40,767,523    40.6           79,704,190   40.8           40,724,212   34.6
Selling, general and
  administrative expenses                      28,496,987    28.4           41,586,843   21.3           18,167,737   15.5
Income from operations                         12,270,536    12.2           38,117,347   19.5           22,556,475   19.1
Net interest and financing expense             17,127,358    17.1           17,357,001    8.9            6,011,396    5.1
Other expense (income)                         (2,719,065)   (2.7)
Foreign currency exchange losses               19,009,336    18.9            1,603,670    0.8            2,665,224    2.3
Net income (loss)                           $ (21,103,093)  (21.0)%      $  17,862,012    9.1%       $  12,792,261   10.9%
</TABLE>

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998

         Net sales decreased by $94.9 million, or approximately 49%, to $100.4
million for the year ended December 31, 1999, as compared to $195.3 million for
the year ended December 31, 1998. For the year ended December 31, 1999, the
Company sold approximately 71,000 PC units as compared to approximately 110,000
PC units during the year ended December 31, 1998. Such decrease in sales (both
in dollars and in PC units sold) was primarily attributable to the devaluation
of the Real, which occurred in January 1999, and the resulting unfavorable
business conditions in Brazil which have resulted in reduced demand as well as
less liquidity in the borrowing capacity among the Company's customers and in
the market in general. After the devaluation the Company had customers
postponing their information technology purchases until the economic conditions
stabilized in Brazil. The Company also had to cancel contracts with its
customers to renegotiate their pricing to reflect the post devaluation exchange
rates. Also, after the devaluation, the Company adjusted the sale prices of its
products in Reais upward and maintained them indexed to the U.S. dollar. This
resulted in the Company's products becoming more expensive in the Brazilian
currency which contributed to the reduced demand. During the second quarter of
1999, the Company began to see the business conditions improve in Brazil. This
began with the stabilizing of the Real in the currency markets which occurred
around mid-April. Although the Company has experienced sequential quarter to
quarter growth in sales during 1999, the market conditions have still not yet
returned to the pre-devaluation levels.

         Cost of sales during the year ended December 31, 1999 were $59.7
million, representing 59.4% of sales during the period, as compared to $115.6
million for the year ended December 30, 1998, representing 59.2% of sales for
the period. The increase in cost of sales as a percentage of sales during the
year ended December 31, 1999, when compared to the year ended December 31, 1998,
was attributable to the downward pressures that the Company has been
experiencing on its unit sales prices which has exceeded any decreases in
component costs. Average unit sales have decreased from approximately $2,000 at
the beginning of the year to approximately $1,350 at the end of the year. This
overall industry trend has been intensified in Brazil this year with the effects
of the devaluation which have reduced consumer buying power and intensified
competition. The Company does expect that any further increases in costs of
sales as a percentage of sales can be mitigated by the Company's continued
integration of services and integrated solutions (products which contain a lower
cost of sales as a percentage of sales) into its product offerings and through
the Company's efforts to reduce component costs through the Gateway
relationship.

         Selling, general, and administrative expenses decreased by $13.1
million, or approximately 31.5%, to $28.5 million for the year ended December
31, 1999, as compared to $41.6 million for the year ended December 31, 1998. The
decrease was primarily attributable to the devaluation of the Real which reduced
the expenses in U.S. dollar terms of the Company's Brazilian subsidiaries. Also
contributing to the decrease was the execution of the Company's expense
reduction plans as part



                                       17
<PAGE>

of its consolidation of the operations of its two subsidiaries, Bahiatech and
Microtec which involved closing the Microtec factory in the state of Sao Paulo
and eliminating redundant positions. Selling, general, and administrative
expense as a percentage of sales was 28.4% for the year ended December 31, 1999,
compared to 21.3% for the year ended December 31, 1998. Such increase was
primarily attributable to the reduced level of sales for the year.

         Income from operations decreased by $25.8 million, or approximately
67.8%, to $12.3 million for the year ended December 31, 1999, as compared to
$38.1 million for the year ended December 31, 1998. Such decrease was primarily
attributable to the aforementioned decrease in sales. Income from operations as
a percentage of sales decreased to 12.2% for the year ended December 31, 1999
from 19.5% for the year ended December 31, 1998. This decrease was primarily
attributable to the aforementioned increase in selling, general, and
administrative expense as a percentage of sales.

         Interest and financing expense decreased by $0.2 million, or
approximately 1.3%, to $17.1 million for the year ended December 31, 1999, as
compared to $17.3 million for the year ended December 31, 1998. Interest and
financing expense as a percentage of sales increased to 17.1% for the year ended
December 31, 1999 from 8.9% for the year ended December 31, 1998. This increase
was primarily attributable to the Company's increased use of debt financing to
support its working capital needs and the increase costs of such financing.

         During the year ended December 31, 1999, the Company experienced a
foreign currency exchange loss of $19 million, or 18.9% of sales, associated
with certain U.S. dollar denominated monetary assets and liabilities of the
Company's Brazilian subsidiaries. This is compared to a foreign currency
exchange loss of $1.6 million, or 0.8% of sales for the year ended December 31,
1998. The increase was a direct result of the devaluation of the Brazilian
currency which occurred during the first quarter of 1999. At December 31, 1999,
the Commercial Market Rate for the Real was R$1.802 per US$1.00 as compared to
R$1.2090 per US$1.00 at December 31, 1998.

         The Company experienced a net loss for the year ended December 31, 1999
of $21.1 million, or $1.42 per share assuming dilution, representing -21% of
sales during the period, as compared to net income of $17.9 million, or $1.34
per share assuming dilution, representing 9.1% of sales during the year ended
December 31, 1998. The decrease in net income was primarily attributable to the
aforementioned decrease in sales that resulted from devaluation and the
unfavorable business conditions.

Year Ended December 31, 1998 Compared to the Year Ended December 31, 1997

         Net sales increased by $77.8 million, or approximately 66%, to $195.3
million for the year ended December 31, 1998, as compared to $117.5 million for
the year ended December 31, 1997. For the year ended December 31, 1998, the
Company sold approximately 110,000 PC units as compared to approximately 72,000
PC units during the year ended December 31, 1997. Such increase in sales (both
in dollars and in PC units sold) was primarily attributable to the acquisition
of 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 year ended December 31, 1998 were $115.6
million, representing 59.2% of sales during the period, as compared to $76.8
million for the year ended December 31, 1997, representing 65.4% of sales for
the period. The decrease in cost of sales as a percentage of sales during the
year ended December 31, 1998, when compared to the year ended December 31, 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 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, PCs.
The Company phased out the contract manufacturing of consumer electronics in
July 1997, and as a result, none of the sales during the year ended December 31,
1998 resulted from such business. During the year ended December 31, 1997,
approximately 9% of the Company's sales resulted from the contract manufacturing
of consumer electronics.


                                       18
<PAGE>

         Selling, general, and administrative expenses increased by $23.4
million, or approximately 129%, to $41.6 million for the year ended December 31,
1998, as compared to $18.2 million for the year ended December 31, 1997. The
increase was primarily attributable to the acquisition of 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 21.3% for the year December 31, 1998, compared to 15.5%
for the year ended December 31, 1997. Such increase was primarily attributable
to the acquisition of Microtec and the incorporation of its selling, general and
administrative expenses into the Company's operations, which more than offset
the Company's increases in sales in percentage terms. 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. Additionally,
the Company is implementing certain expense reduction plans as part of its
consolidation of the operations of Bahiatech and Microtec.

         Income from operations increased by $15.5 million, or approximately
69%, to $38.1 million for the year ended December 31, 1998, as compared to $22.6
million for the year ended December 31, 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 19.5% for the year ended December 31, 1998 from 19.1% for the
year ended December 31, 1997. This increase was primarily attributable to the
aforementioned decrease in cost of sales as of percentage of sales which more
than offset the increase in selling, general, and administrative expenses as a
percentage of sales.

         Interest and financing expense increased by $11.4 million, or
approximately 190%, to $17.4 million for the year ended December 31, 1998, as
compared to $6 million for the year ended December 31, 1997. Interest and
financing expense as a percentage of sales increased to 8.9% for the year ended
December 31, 1998 from 5.1% for the year ended December 31, 1997. These
increases were primarily attributable to the Company's increased use of debt
financing and the discount on the sale of accounts receivable to TAC to support
its working capital needs. Additionally, interest and financing expense for the
year ended December 31, 1998 includes a non-recurring charge of $1,079,609
associated with the additional shares given as an incentive for certain holders
of convertible notes to convert their notes early into the Common Stock of the
Company during the third quarter of 1998, and a financing expense of $1,150,000
associated with a put premium for certain convertible notes that were put to the
Company during the fourth quarter of 1998. See "Liquidity and Capital
Resources".

         During the year ended December 31, 1998, the Company experienced a
foreign currency transaction loss of $1.6 million, or 0.8% of sales, from the
settlement of certain receivables and payables denominated in the Brazilian
Real. At December 31, 1998, the Commercial Market Rate for the Real was R$1.2090
per US$1.00 as compared to R$1.1164 per US$1.00 at December 31, 1997.

         Net income increased by $5.1 million, or approximately 40%, to $17.9
million for the year ended December 31, 1998, as compared to $12.8 million for
the year ended December 31, 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. Net income as a
percentage of sales decreased to 9.1% for the year ended December 31, 1998 from
10.9% for the year ended December 31, 1997. This decrease was primarily
attributable to the increases in interest and financing expense as a percentage
of sales which more than offset the increase in income from operations as a
percentage of sales.

         Net income per common share, assuming dilution, increased by $0.28, or
approximately 26%, to $1.34 for the year ended December 31, 1998, as compared to
$1.06 for the year ended December 31, 1997.

Hedging Activities

         Although the Company's consolidated financial statements are presented
in U.S. Dollars in accordance with U.S. generally accepted accounting
principles, the Company's transactions are consummated in both the Real and the
U.S. Dollar. Inflation and fluctuations in exchange rates have had, and may
continue to have, an effect on the Company's results of operations and financial
condition. Although the Company had used Real futures and options contracts
during 1996, in an effort to hedge against currency risks, its highest coverage
at any one time had only met 20% of its exposure, consisting of accounts
receivable denominated in Reais, net of accounts payable and other current
liabilities denominated in Reais.



                                       19
<PAGE>

Currently, the Company is not engaged in any hedging activities. The Company is,
however, analyzing its exposure to currency risks and developing a plan to use
hedging activities to offset currency risks as it deems appropriate. Currently
though the Company is not adequately 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 could have a material adverse effect on the
Company's operating results.

Liquidity and Capital Resources

         The Company's primary cash requirements have been to fund the payment
of accounts payable and to meet certain debt maturities. During the year ended
December 31, 1999, the Company used debt financing to satisfy its working
capital requirements.

         At December 31, 1999, the Company had a working capital surplus of
$45.9 million compared to $70.2 million at December 31, 1998. This decrease in
working capital was primarily attributable to the devaluation of the Brazilian
currency and the corresponding devaluation of the Company's accounts receivable.

         Net cash used in operating activities for the year ended December 31,
1999 was $21.1 million as compared to $0.3 million in cash provided by operating
activities during the year ended December 31, 1998 and resulted primarily from
the net loss for the period and the repayment of trade accounts payable and
accrued expenses and taxes which more than offset the decreases in accounts
receivable for the period.

         Net cash used in investing activities was $9.2 million for the year
ended December 31, 1999. Such use of cash was primarily related to the
acquisition of software to be integrated for resale with the Company's
integrated product offerings, for the purchase of computer hardware and software
to support the Company's management information system, and investments in
technology and equipment to automate the Company's manufacturing operations. Net
cash provided from financing activities was $24.1 million for the year ended
December 31, 1999 and resulted primarily from the short-term debt borrowings
from a related party and from a convertible note investment made by Gateway
Companies, Inc. as the result of a strategic alliance formed in September 1999.

         The Company has a revolving line of credit in the amount of $2,000,000
with Eastern National Bank in Miami, Florida, with which the Company maintains
its primary banking relationship. This credit line is secured by a lien on
certain property owned by the Company. The credit line bears interest at a
floating rate equal to prime plus two. As of December 31, 1999, there was $1.8
million owed under the facility.

         As of December 31, 1999, the Company had approximately $3.1 million in
short-term borrowings from various banks in Brazil with rates of interest
averaging 2.5% per month and maturing on a revolving basis. As of December 31,
1999, the Company had available approximately $20 million in unused credit
facilities at various banks in Brazil at rates of approximately 2.5% per month
and subject to certain collateral requirements as defined.

         On October 31, 1998, the holders of an aggregate principal amount of
$17,967,320 of the Company's convertible notes exercised their put right,
pursuant to the terms of the notes, and requested the Company to repurchase the
remaining balance of the notes at a put price equal to 110% of the principal
amount. In accordance with the terms of the notes, the Company was to pay the
put price in four equal monthly installments commencing November 30, 1998, with
interest on each installment accruing at the rate of 10% per annum. The Company
made the first two of such payments on November 30, 1998 and December 31, 1998.
In February 1999, the Company entered into an agreement with the holders to
repay the remaining principal outstanding on the notes over a five month period
commencing March 31, 1999, with monthly principal payments of approximately $2
million plus accrued interest. The Company repaid a portion of the notes during
this period and in a series of transactions between April and July of 1999, the
holders of such convertible notes sold the remaining principal balance of
$5,237,745 of their notes to an unrelated third party investor. Simultaneously
with such sale, the Company amended and restated the terms of the convertible
notes and entered into revised put and call agreements for the notes. The
revised terms provide the note holder with a conversion price equal to $11 per
share and provide the holder with the right to require the Company to repurchase
the notes at a premium during a put period, as defined in the agreement. In the
event the Company declines to repurchase the notes upon the exercise of a holder
put option during a put period, the conversion price of the note would be
adjusted to equal 85% of the market price, as defined. In October 1999, the
holders of these notes exercised their put right to require the Company to
repurchase these notes at a premium, as defined in the agreement, which resulted
in the conversion of a principal amount of $4,679,765 plus accrued interest and
put premiums of their notes into 950,000 shares of the Common stock of the
Company. As of December 31, 1999, there was a principal amount of $557,765
outstanding on such notes.


                                       20
<PAGE>

         In April 1999, in order to induce the holders of $3,621,875 of the
Company's 10% convertible notes, the Company amended and restated the terms of
the notes. The conversion price of the notes was adjusted to $10 per share and
the holders were provided with an additional put option in October of 1999 and
again in April of 2000. In October 1999, the holders of these notes exercised
their put right to require the Company repurchase the notes at 120% of the
principal amount. In November, the Company began to repay the notes in
accordance with their terms over a four month period. The outstanding balance on
the notes at December 31, 1999 was $1,875,156.

         In April 1998, the Company entered into an accounts receivable
financing program with TAC, an independently owned special purpose corporation,
whereby certain of its accounts receivable may be sold 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 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.

         There is a repurchase provision whereby the Seller, as defined in the
program, 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
affect such substitution is less than the repurchase price thereof, then a cash
payment must be paid for the excess of the repurchase price over the net present
value of the additional receivables transferred to TAC pursuant to such
substitution. The U.S. parent company of the Seller, Vitech America, Inc.,
serves as guarantor of the repurchase obligation. If the repurchase obligation
is not complied with on or prior to the required repurchase date, the U.S.
parent company is required to deposit, within twenty-four hours of the
expiration of the required repurchase date, the amount of the repurchase price
not paid. As a result of the structure of the program, at December 31, 1999,
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.

         In January 1999, the Brazilian government allowed its currency, the
Real, to trade freely against other foreign currencies, which resulted in an
immediate devaluation of the Real against the U.S. dollar in excess of 30%. With
the post devaluation exchange rates of the Real to the U.S. dollar the
overcollateral ratio for TAC fell below its required minimum which caused
trigger and default events, as defined, of the TAC program. As a result, the
Company has not been selling any of its accounts receivable to TAC, and may not,
other than pursuant to its repurchase obligation. Additionally, with the
devaluation of the Real against the U.S. dollar in excess of the overcollateral
ratio, the Company's residual interest in the program represented by the
subordinated debentures has been written down to zero from its values at
December 31, 1998.

         In June 1999, TAC received approval on a consent solicitation proposal
made to the holders of TAC notes for temporary and permanent adjustments to the
structure of the TAC program in order to allow the TAC program to operate more
effectively in the post devaluation environment. With the approval of the
consent solicitation, TAC paid a 1% fee to the holders of TAC notes and the
Company put up additional collateral (in the form of eligible accounts
receivable) for the benefit of the TAC note holders to put the collateralization
ratio at 100%. Since June, however, because of the continuing difficult economic
conditions of Brazil, the poor payment performance of the receivables held by
TAC and the conditions of the financial markets which have prohibited TAC from
refinancing its short-term obligations, TAC has not had the liquidity available
to meet its current obligations which has caused trigger and default events for
TAC. Considering these events, the TAC program is expected to remain in default
and to self-amortize over the life of the receivable portfolio held by TAC. The
Company also believes that TAC will no longer be a viable financing source for
the Company in the future. While the Company believes that it will continue to
be able to maintain its obligations under the repurchase provision and that it
has adequately reserved for such contingent liability, there can be no
assurances that the Company will have available the required accounts
receivables or cash liquidity to affect such repurchases.

         In March of 1999, the Company received loans from a related party for
the principal amount of $10.5 million in addition to the $6.7 million in loans
that the Company had received in 1998 from such related party. The $10.5 million
loan bears interest at the annual rate of 10% and is payable upon demand with 90
days notice. The loan is evidenced by a



                                       21
<PAGE>

promissory note and, at the makers option, can be exchanged for a convertible
note (convertible at $9.25) should the loan not be repaid at maturity. In
connection with the loan, the Company issued four year warrants to purchase
300,000 shares of the Company's common stock at a purchase price of $9.25 per
share. During 1999, the Company repaid approximately $3.6 million on such loans.

         In May 1999, the Company completed a private placement of a $10 million
convertible debenture. The debenture is a two year 10% note convertible into the
Company's common stock at an initial conversion price of $11.00. The debenture
contains a provision whereby the holder may require the Company to repurchase
the debenture after nine months at a price equal to 112% of the principal amount
and on a quarterly basis thereafter at a price adjusted accordingly. Should the
holder elect to require the Company to repurchase the debentures, the Company
may repay the debentures in four equal monthly payments. If the Company elects
not to repurchase the notes, the conversion price of the debentures will be
adjusted to equal 85% times the market price, as defined, at the time of
conversion. The Company issued 100,000 warrants to purchase shares of the
Company's common stock in connection with this financing and 36,000 warrants to
the placement agent.

         In April 1999, the Company received a short-term loan from Gateway for
the principal amount of $11 million, bearing interest at the annual rate of 10%.
The loan originally had a term of 90 days, but was extended by mutual agreement
to 180 days. The proceeds of the loan were used for the repayment of
indebtedness and for general working capital purposes. This short term-loan was
repaid in full out of the proceeds from a convertible note investment by Gateway
made in September 1999 as discussed below.

         In September 1999, the Company formed a strategic alliance with Gateway
which resulted in a $31 million investment by Gateway. Pursuant to a Convertible
Loan Agreement (the "Loan Agreement"), the investment was in the form of a 10%
Convertible Promissory Note. The Note bears interest at 10% per annum with
interest payable quarterly. The Note matures on March 16, 2001. The Note is
initially convertible at $11.02 (the "initial Conversion Price") subject to
stock-splits, stock dividends, rights offering by the Company and certain
combinations, capitalizations, reclassifications, extraordinary distributions
and other similar events. Under the terms of the Agreement, beginning six months
after the Closing Date, Gateway may demand registration of the securities
underlying the Note. William C. St. Laurent and Georges C. St. Laurent, III, the
Company's President and Chief Executive Officer, jointly and severally, have
guaranteed $11,000,000 of the Note.

         In no event shall the Company issue more than 19.9% of the then issued
and outstanding shares of Common Stock of the Company, unless the Company shall
obtain stockholder approval or a waiver of such requirement by the Nasdaq Stock
Market. Messrs. St. Laurent have agreed to vote their shares in favor of any
transaction contemplated by the Loan Agreement, at any meeting, for the purpose
of issuing in excess of 19.9% of the Company's Common Stock.

         The Company also was granted an option, exercisable at the Company's
election, to acquire certain exclusive territorial rights in Brazil from
Gateway. For this option, the Company issued 538,284 shares of the Company's
common stock to Gateway.

         Gateway was also granted an option, exercisable within two years from
the Closing Date, to engage in the following transactions with the Company: (i)
extend an additional $40 million convertible loan to the Company on the same
terms and conditions as the Note, with a conversion price equal to the lower of
(x) $11.02 per share or (y) a 20% premium over the then market value of the
Company's common stock as reported on the Nasdaq Stock Market determined by
taking the arithmetic average of the closing price of the Company's common stock
for a period of twenty (20) trading days preceding the date on which Gateway
gives notice of its intent to exercise this option and/or (ii) subject to
compliance with applicable law, enter into a merger agreement whereby the
Company's shareholders shall have the option to (x) exchange their shares for
$14.00 per share in cash or (y) one share of a new callable putable common stock
(the "New Stock"). The New Stock shall have a call provision whereby Gateway
will have the right to call 100% (and not less than 100%) of the New Stock,
including all vested options, which it does not already own, at a price which
shall be determined by the Company's performance. The New Stock shall also have
a put provision whereby the New Stock holders will have the right to put
annually to Gateway 100% (and not less than 100%) of their New Stock, including
all vested dilutive options and warrants, at a price which shall be determined
by the Company's performance.

         During the year ended December 31, 1999, the Company consolidated the
operations and transferred certain assets and liabilities of its Brazilian
subsidiaries, Bahiatech, Techshop, and Rectech, into the operations of Microtec.
The remaining operations of Bahiatech which were not transferred to Microtec
included certain assets and liabilities associated with Bahiatech's consumer
electronics manufacturing business. Principally all of the assets and
liabilities of Techshop and



                                       22
<PAGE>

Rectech were transferred to Microtec. After the transfer the Company sold
Bahiatech with its consumer electronics operation, Techshop and Rectech to an
unrelated third party for an aggregate sales price of $4 million and recorded a
gain on the sale of $2.7 million which is reflected in the accompanying
consolidated statement of operations for the year ended December 31, 1999. The
terms of the sale were $850,000 in cash and the Company received a four year
note, payable in equal monthly installments, for the balance. The Company
discounted the note at the effective interest rate of 9% per annum.

Business Conditions

         In January 1999, the Brazilian government allowed its currency, the
Real, to trade freely against other foreign currencies, which resulted in an
immediate devaluation of the Real against the U.S. dollar. The Company's
accounts receivable are denominated in the Real while principally all of the
Company's trade accounts payable and other debts are denominated in U.S.
dollars. Accordingly, with the devaluation, the Company recorded a currency
transaction loss of $19,009,336 associated with dollar-denominated monetary
assets and liabilities held by the Company's Brazilian subsidiaries.

         Furthermore, the devaluation and the resulting unfavorable business
conditions in Brazil have resulted in reduced demand as well as less liquidity
in the borrowing capacity among the Company's customers and in the market in
general. In an effort to minimize any further effects of the currency
devaluation, unfavorable business conditions and to improve the liquidity of the
Company, management has taken the following actions:

     o    Indexed the pricing of its products in Reais to the U.S. dollar.

     o    Significantly reduced the credit terms that it extends to customers.

     o    Renegotiated trade accounts payable of approximately $22 million at
          December 31, 1998 to terms which average 12 months.

     o    Negotiated short term financing (see Liquidity and Capital resources
          above).

     o    Modified the repayment terms of certain convertible notes.

     o    Continue to negotiate with TAC (see notes 4 and 5 to the company's
          consolidated financial statements).

     o    Completion of the consolidation of the manufacturing facilities and
          reduction of certain overheads in 1999 which reduces administrative
          expenses and inventory carrying costs.

         While the Company continues to believe that the long-term growth
opportunities remain for the Brazilian information technology market, it
continues to evaluate the impact of the current business conditions on its
operations. The ultimate resolution of these matters could have a material
adverse effect on the financial condition and results of operation for future
quarters.

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 and as of December 31, 1999 had determined that its internal information
systems are Year 2000 compliant.

         Through December 31, 1999, 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

                                       23
<PAGE>

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. Since the beginning of the Year 2000, the Company has not
experienced any material adverse conditions related Year 2000 compliance.

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.
In January of 1999, however, the Brazilian government implemented a new foreign
currency exchange policy whereby it allowed the Real to trade freely against
other foreign currencies, which resulted in an immediate devaluation of the Real
against the U.S. Dollar. While the Brazilian government with its economic
policies has been able to maintain inflation at acceptable levels after the
devaluation of its currency in January, there can no assurance that such
policies will continue to be effective at combating inflation and further
devaluation of Brazil's currency or that the Company's assessment of the
movement of the Brazilian currency will be effective in managing its exposure to
devaluation and inflation. Inflation rates in Brazil for the years 1999, 1998,
1997 and 1996 were approximately 9.7%, 1.7%, 7.5%, and 10.3%, respectively. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Hedging Activities".

Recent Accounting Pronouncement

         In June of 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" which is
effective for fiscal years beginning after June 15, 2000. The objective of the
statement is to establish accounting and reporting standards for derivative
instruments and hedging activities. The Company may use foreign currency forward
contracts, a derivative instrument, to hedge foreign currency transactions and
anticipated foreign currency transactions. The adoption of this new accounting
pronouncement is not expected to be material to the Company's consolidated
financial position or results of operations.

Foreign Currency Translation

         The financial statements of the Company have been prepared in
accordance with U.S. generally accepted accounting principles and are stated 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 were 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.

FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS

         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. Shareholders should
carefully consider the information set



                                       24
<PAGE>

forth in such disclosure and the following risk factors which constitutes
cautionary statements identifying important factors that could cause actual
results to differ materially from those in the forward-looking statements.

Factors Relating to the Company

         Management of Growth. Although the Company experienced a decrease in
sales and net income during the year ended December 31, 1999, since inception
the Company has experienced substantial growth through both internal operations
and acquisitions. Consolidated net sales and consolidated net income increased
to $195 million and $17.9 million, respectively, for the year ended December 31,
1998, from $117.5 million and $12.8 million, respectively, for the year ended
December 31, 1997. Consolidated net sales and consolidated net income increased
to $73.3 million and $8.2 million, respectively, for the year ended December 31,
1996, from $48.5 million and $6.9 million, respectively, for the year ended
December 31, 1995. There can be no assurance that such growth will continue, and
if such growth continues, that the Company's infrastructure will continue to be
sufficient to support such larger enterprise. See "Risk Factors - Dependence on
Key Personnel; Recruitment of Additional Personnel", "Management's Discussion
and Analysis of Financial Condition and Results of Operations", "Business -
Employees".

         Dependence on Key Personnel; Recruitment of Additional Personnel. The
ability of the Company to attract and retain highly skilled personnel is
critical to the operations of the Company. To date, the Company has been able to
attract and retain the personnel necessary for its operations. However, there
can be no assurance that the Company will be able to do so in the future,
particularly in light of the Company's expansion plans. If the Company is unable
to attract and retain personnel with necessary skills when needed, its business
and expansion plans could be materially adversely affected. The Company is
dependent upon the efforts and abilities of Georges C. St. Laurent III, its
Chairman of the Board and Chief Executive Officer, and William C. St. Laurent,
its President and Chief Operating Officer, each of whom is a substantial
shareholder in the Company. The loss or unavailability of the services of either
of these individuals for any significant period of time could have a material
adverse effect on the Company's business prospects. The Company has obtained,
and is the sole beneficiary of, key-person life insurance in the amount of $2
million on the life of each of Messrs. St. Laurent. There can be no assurance
that such insurance will continue to be available on reasonable terms, or at
all.

         Fluctuation of Quarterly Results. The computer industry generally has
been subject to seasonality and to significant quarterly and annual fluctuations
in operating results, and the Company's operating results have been subject to
such fluctuations. The Company's quarterly net sales and operating results may
vary significantly as a result of, among other things, historical seasonal
purchasing patterns and the general economic climate in Brazil, the volume and
timing of orders received during a quarter, variations in sales mix, delays in
production schedules, new product developments or introductions, availability of
components, changes in product mix and pricing, and product reviews and other
media coverage. The Company's sales plan provides for approximately 40% of the
Company's sales to be made to federal, state, and municipal government
customers. Such sales at times may involve large contracts that can be a
significant part of the Company's sales. The Company's sales to the consumer and
small business markets fluctuate seasonally and are dependent in part on the
spending patterns of its customers, which in turn are subject to prevailing
economic conditions. Historically, the Company's sales have increased in the
third and fourth quarters due, in part, to holiday spending. Accordingly, 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 period to period. See the
Notes to the Company's Consolidated Financial Statements.

         Possible Need for Additional Financing. In order to pursue the
Company's business strategy, the Company may need to seek additional funding
through public or private financing and may, when attractive sources of capital
become available, elect to obtain capital in anticipation of such needs.
Adequate funds for growth through internal expansion and through acquisitions
may not be available when needed or may not be available on terms favorable to
the Company. If additional funds are raised by issuing equity securities or
related instruments with conversion or warrant features, dilution to existing
shareholders may result. If funding is insufficient, the Company may be required
to delay, reduce the scope of or eliminate some or all of its expansion
programs. In addition, the Company has in the past sought funding through third
parties related to the Company's management and there can be no assurance that
these sources can be relied upon in the future. In April 1998, the Company has
entered into an accounts receivable financing facility with TAC, an
independently owned special purpose corporation, pursuant to which TAC issues
and sells senior notes to investors collateralized by certain receivables of the
Company. The Company is required to repurchase these receivables under certain
circumstances, including their non-payment.


                                       25
<PAGE>

         Additionally, the Company has approximately $13.5 million in debt
payable upon demand with 90 days notice. The Company currently believes that the
projected cash flows from continuing operations and existing and contemplated
sources of credit will be sufficient to satisfy its capital requirements and
finance its plans for expansion for the next 12 months. Such belief is based on
certain assumptions, and there can be no assurance that such assumptions are
correct. Accordingly, there can be no assurance that such resources will be
sufficient to satisfy the Company's capital requirements or expansion plans for
such period. There can be no assurance that such contemplated sources will be
available at the time they are needed. Furthermore, with the economic conditions
which occurred in Brazil during 1999 and the conditions of the financial markets
which prohibited TAC from refinancing its short term obligations, TAC has not
had the liquidity available to meets its current obligations which has caused
trigger and default events for TAC. Considering these events, the TAC program is
expected to self-amortize over the life of the receivable portfolio held by TAC
and the Company believes that TAC will no longer be a financing source for the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Business - Technology Acceptance Corp".

         Competition. The manufacturing and sale of computer equipment and
related products is highly competitive and requires substantial capital. The
Company competes 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 the Company, which
may give such competitors competitive advantages, including economies of scale
and scope. Competitors in the computer hardware market include internationally
recognized companies such as IBM, Acer, Dell, Hewlett Packard and Compaq.
Additionally, the Company competes in the systems integration market with
internationally recognized systems integrators such as IBM, EDS and Unisys.
Competition is based on price, product quality, customer support and the ability
to deliver products in a timely fashion. No assurance can be given that the
Company will successfully compete in any market in which it conducts or may
conduct operations.

         In addition, the Company competes with other small manufacturers of
computer equipment sold on what is known as the "gray market" in Brazil. Such
manufacturers are able to sell products at prices that are often significantly
lower than those offered by the Company and other legitimate manufacturers. Gray
market manufacturers are able to offer lower prices because of the avoidance of
import duties and other taxes, and the avoidance of necessary software licensing
fees. There can be no assurance that gray market activity will not continue to
flourish, putting downward pressures on the Company's profit margins as result
of low pricing strategies.

         Importance of Customer Credit and Risks of Customer Lending. Credit
sales are an important component of the Company's results of operations. In
1999, approximately 90% of the Company's net sales revenue was accounted for by
sales on credit. The Company's results of operations could be materially and
adversely affected if demand for customer credit falls, or if Brazilian
Government policies curtail the Company's ability to extend credit or to fund
its extensions of credit. In addition, the Company's customer credit activities
expose it to significant risks. At December 31, 1999, the Company's outstanding
exposure to customer credit risk was approximately $108 million, including the
balance of accounts receivable sold to TAC. While an allowance for doubtful
accounts (including those sold to TAC) is made monthly based on management's
reviews of prior period losses and anticipated losses, there can be no assurance
that such allowances would be sufficient to cover actual losses. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business - Customer Financing".

         Dependence on Suppliers. The Company's manufacturing process requires a
high volume of quality components that are procured from third party suppliers.
Reliance on suppliers, as well as industry supply conditions, generally involves
several risks, including the possibility of defective parts (which can adversely
affect the reliability and reputation of the Company's products), a shortage of
components and reduced control over delivery schedules (which can adversely
affect the Company's manufacturing efficiencies) and increases in component
costs (which can adversely affect the Company's profitability). The Company has
several single-sourced supplier relationships, either because alternative
sources are not available or the relationship is advantageous due to
performance, quality, support, delivery, capacity or price considerations. If
these sources are unable to provide timely and reliable supply, the Company
could experience manufacturing delays or inefficiencies, adversely affecting its
results of operations. During the year ended December 31, 1999, the Company had
no supplier that accounted for more than 10% of purchases. Substantially all of
the Company's inventory has, and will be, purchased from manufacturers and
distributors with whom the Company has entered into non-exclusive agreements,
which are typically cancelable upon 30 days written notice. There can be no
assurance that such agreements will not be canceled. The loss of, or significant
disruptions in relationships with, suppliers could have a material adverse
effect on the Company's business since there can be no assurance that the
Company will be able to replace lost suppliers on a timely basis. See "Business
- The Company", "- Industry Overview", "- Business Strategy", and "-Logistics
and Materials Management".


                                       26
<PAGE>

         Tax-Exempt Status. The government of the State of Bahia, Brazil has
issued a decree that exempts companies such as the Company's subsidiary,
Microtec, from the payment of state import duties, state sales tax, and state
services tax. Microtec has received an exemption from such taxes through and
including the year 2005. Additionally, Microtec is exempted from the payment of
Brazilian federal income tax through and including the year 2007, provided that
the Company meets certain budgeted production goals. The Company is not exempted
from the payment of a federal social contribution tax of approximately 12% of
pre-tax income. The normal rate of federal taxation on a non-exempt basis is
33%. In the event that the Company is unable to extend such tax-exempt status,
the Company's after-tax earnings as a percentage of net sales would decline by
the amount of the tax benefit, which may be substantial. See "Business - Tax
Exempt Status".

         Consequences of Technological Changes. The market for the Company's
products is characterized by continuous and rapid technological advances and
evolving industry standards. Compatibility with industry standards in areas such
as operating systems and communications protocols is material to the Company's
marketing strategy and product development efforts. In order to remain
competitive, the Company must respond effectively to technological changes by
continuing to enhance and improve its existing products to incorporate emerging
or evolving standards, and by successfully developing and introducing new
products that meet customer requirements. There can be no assurance that the
Company will successfully develop, market, or support such products or that the
Company will respond effectively to technological changes or new product
announcements or introductions by others. In the event that the Company does not
enhance and improve its products, the Company's sales and financial results
could be materially adversely affected. In addition, there can be no assurance
that, as a result of technological changes, all or a portion of the Company's
inventory would not be rendered obsolete. See "Business - Products".

     Affiliated Transactions and Conflicts of Interest. The Company has, since
1995, received loans and sold securities and certain of its accounts receivable
to Georges C. St. Laurent Jr. ("GSL Jr."), the father of Georges C. St. Laurent
III, the Company's Chairman of the Board and Chief Executive Officer, and
William C. St. Laurent, the Company's President and Chief Operating Officer. The
Company believes that the terms of these transactions were no less favorable to
the Company than could be obtained from unaffiliated third parties. To the
extent the Company enters into transactions with affiliated persons and entities
in the future, it will do so only on terms no less favorable to the Company than
those available from unaffiliated third parties. See "Management's Discussion
and Analysis of Financial Condition and Results of Operation", and the Notes to
the Company's Consolidated Financial Statements.

         Assets Outside the U.S.; Enforceability of Civil Liabilities Against
Foreign Persons. While the Company is a U.S. corporation with executive offices
in Florida, its principal operations are conducted by its Brazilian
subsidiaries. For the foreseeable future, a substantial portion of the Company's
assets will be held or used outside the U.S. (in Brazil). Consequently,
enforcement by investors of civil liabilities under the Federal securities laws
may be adversely affected by the fact that, while the Company is located in the
U.S., its principal subsidiaries and operations are located in Brazil. Although
the Company's executive officers and directors are residents of the U.S., except
for William R. Blackhurst, who is a resident of Brazil, and Francisco Suarez,
who is a resident of Mexico, all or a substantial portion of the assets of the
Company are located outside the U.S.

         Restrictions on the Company's Ability to Distribute Earnings Derived
from Tax Exemption Benefits. For the foreseeable future, Microtec does not
intend to distribute any retained earnings to the U.S. parent company, Vitech
America, Inc., but intends to reinvest such earnings, if any, in the development
and expansion of its business. Up to now, substantially all of the retained
earnings of the Company on a consolidated basis have been attributable to the
Company's Brazilian subsidiaries including Microtec. Microtec is exempted from
the payment of Brazilian federal income tax through and including the year 2007,
provided that the Company meets certain budgeted production goals. The Company
is not exempted from the payment of a federal social contribution tax of
approximately 12% of pre-tax income. The normal rate of federal taxation on a
non-exempt basis is 33%. 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. For the years ended December 31, 1999, 1998 and 1997 the tax exemption
benefits amounted to approximately $0, $5,600,000 ($0.42 per share), and
$3,000,000 ($0.25 per share), respectively. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation", "Dividend Policy" and
"Exchange Rates".

         Government Regulation. The manufacture of computer equipment and
related products is subject to various forms of government regulation in the
United States and Brazil. The Company and its operations are affected by
technology transfer and licensing regulations, tariff regulations, regulations
governing currency conversion and transfers of profits between jurisdictions,
and labor regulations, among others. While the Company does not believe that
such regulations adversely affect the Company or its business presently, there
can be no assurance that such regulations will not materially



                                       27
<PAGE>

adversely affect the Company in the future. In addition, the government of
Brazil has exercised, and continues to exercise, substantial influence over many
aspects of the private sector in Brazil.

         Share Price Volatility. The market for securities of technology
companies and companies that participate in emerging markets historically has
been more volatile than the market for stocks in general. The price of the
Common Stock may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, announcement of
acquisitions, vendor additions or cancellations, creation or elimination of
banking or other funding opportunities, favorable or unfavorable coverage of the
Company or its officers by the press, and the availability of new products,
technology, or services. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations that have particularly
affected the market price for many technology and emerging market companies,
both related and unrelated to the operating results of such companies. These
market fluctuations and other factors may affect the market for the Common
Stock. See "Price Range of Common Stock".

         Dependence on Manufacturing Facilities. The Company operates one
manufacturing facilities in Ilheus, Bahia, Brazil. In the event such facility
were to experience substantial damage or disruption of its operations for any
reason, the Company may be required to suspend manufacturing operations or
transfer manufacturing operations to an independent facility for an indefinite
period of time. While the Company maintains insurance covering various
contingencies, any such suspension or disruption of its manufacturing operations
could have a material adverse effect on the Company and its results of
operations. See "Item 2. Properties".

     Ability to Exercise Control by the Principal Shareholders. The Company's
principal shareholders (Georges C. St. Laurent III and William C. St. Laurent)
together beneficially own approximately fifty-six percent (56%) of the
outstanding shares of common stock. Accordingly, the principal shareholders are
able to elect the entire Board of Directors and control the outcome of all
matters submitted to a vote of the shareholders of the Company.

         Gateway currently holds less than three percent (3%) of the outstanding
shares of the Company, and therefore has no ability to designate any members of
the Board of Directors or to control the outcome of any matters submitted to a
vote by our shareholders. However, pursuant to an agreement with the Company,
Gateway may acquire control of the Company through an option to, among other
things, enter into a merger agreement, subject to compliance with applicable
law, with the Company which expires on September 16, 2001. Accordingly, if
Gateway exercises such 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. There can be no assurance that such option will be exercised.

         Year 2000 Compliance. Many existing computer systems and applications,
and other control devices, use only two digits to identify a year in the date
code field, and were not designed to account for the upcoming change in the
century. As a result, such systems and applications could fail or create
erroneous results unless corrected so that they can process data related to the
year 2000. The Company relies on its systems, applications and devices in
operating and monitoring all major aspects of its business, including financial
systems (such as general ledger, accounts payable and accounts receivable
modules), inventory and receivables systems, customer services, infrastructure,
embedded computer chips, networks and telecommunications equipment and end
products. The Company also relies, directly and indirectly, on systems of
external business enterprises such as distributors, suppliers, creditors,
financial organizations, and governmental entities, for accurate exchange of
data. Although 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, as the
Company could be affected through disruptions in the operation of the
enterprises with which the Company interacts. Based on the information currently
available, the Company believes that the costs associated with the year 2000
issue, and the consequences of incomplete or untimely resolution of the year
2000 issue, will not have a material adverse effect on its business, financial
condition and results of operations in any given year; however, there can be no
assurance that year 2000 issues will not have a material adverse effect on the
Company's business, financial condition or results of operations. Since the
beginning of the Year 2000, the Company has not experienced any material adverse
conditions related Year 2000 compliance. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Year 2000
Compliance".

Factors Relating to Brazil

         Political and Economic Conditions. The Brazilian economy has been
characterized by frequent and occasionally drastic intervention by the Brazilian
government. The Brazilian government has often changed monetary, credit, tariff
and other policies to influence the course of Brazil's economy. The Brazilian
government's actions to control inflation and effect



                                       28
<PAGE>

other policies have often involved wage and price controls as well as other
measures, such as freezing bank accounts, imposing capital controls and limiting
imports into Brazil. Changes in policy involving tariffs, exchange controls, and
other matters could have a material adverse effect on the Company, as could
inflation, devaluation, social instability and other political, economic or
diplomatic developments, and the Brazilian government's response to such
developments.

         The Brazilian political environment has been marked by high levels of
uncertainty since the country returned to civilian rule in 1985 after 20 years
of military government. The death of a President-elect in 1985 and the
resignation of another President in 1992 during his impeachment trial, as well
as frequent turnovers at and immediately below the cabinet level, particularly
in the economic area, historically have contributed to the absence of a coherent
and sustained policy to confront Brazil's economic problems.

         Mr. Fernando Henrique Cardoso, the Finance Minister at the time of the
implementation of Brazil's latest economic stabilization plan, was elected
President in October 1994. The Real Plan, which has significantly reduced
inflation since the introduction of the Real in July 1994, has been continued by
the Cardoso government. See "Impact of Extreme Inflation" below. President
Cardoso has continued to support free market and privatization measures of
recent years, and his government has taken steps in this regard, such as
proposing measures for the liberalization of the state petroleum and
telecommunications monopolies and the privatization of a number of state-owned
enterprises. Although these liberalization measures have enjoyed broad political
and public support, some important political factions remain opposed to
significant elements of the reform program. In addition, President Cardoso was
elected as the leader of a coalition of political parties and governs Brazil by
coalition government. As a result, President Cardoso's leadership of Brazil is
likely to be subject to more compromises and accommodations than if his party
alone had received support from the majority of voters. Furthermore, the
Brazilian government's desire to control inflation and to reduce budget deficits
may cause it to take actions that will slow or halt Brazilian economic growth.

         Impact of Extreme Inflation. Brazil has historically experienced
extremely high rates of inflation. Inflation itself, as well as certain
governmental measures to combat inflation, have in the past had significant
negative effects on the Brazilian economy. Inflation, actions taken to combat
inflation and public speculation about possible future actions have also
contributed significantly to economic uncertainty in Brazil and to heightened
volatility in the Brazilian securities markets. Beginning in December 1993, the
Brazilian government introduced the Real Plan, an economic stabilization plan
designed to reduce inflation by reducing certain public expenditures, collecting
liabilities owed to the Brazilian government, increasing tax revenues,
continuing the privatization program and introducing a new currency. On July 1,
1994, as part of the Real Plan, the Brazilian government introduced the Real.
Since the introduction of the Real, Brazil's inflation rate has been
substantially lower than in previous periods. Inflation, as measured by the
IGP-DI, was approximately 2,708%, 910%, 15.7%, 10.3%, 7.5%, 1.7% and 9.7% in
1993, 1994, 1995, 1996, 1997, 1998, and 1999, respectively. There can be no
assurance, however, that the recent lower level of inflation will continue or
that future Brazilian governmental actions (including actions to adjust the
value of the Brazilian currency such as the devaluation of the Real in January
1999) will not trigger an increase in inflation or that any such increase will
not have a material adverse effect on the Company.

         Effects of Exchange Rate Fluctuations. The relationship of Brazil's
currency to the value of the U.S. Dollar, and the rates of devaluation of
Brazil's currency relative to the prevailing rates of inflation have affected,
and may affect, the Company's financial condition and results of operations.
Principally all of the Company's sales are denominated in the Real, while the
Company's operating results are recorded in U.S. Dollars. Any significant
devaluation of the Real relative to the U.S. Dollar could have a material
adverse effect on the Company's operating results. Although the Company had used
Real futures and options contracts during 1996, in an effort to hedge against
currency risks, its highest coverage at any one time had only met 20% of its
exposure, consisting of accounts receivable denominated in Reais, net of
accounts payable and other current liabilities denominated in Reais. Currently,
the Company is not engaged in any hedging activities. The Company is, however,
analyzing its exposure to currency risks and developing a plan to use hedging
activities to offset currency risks as it deems appropriate. Currently though
the Company is not adequately 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 could have a material adverse effect on the
Company's operating results. Currency transaction losses for the years ended
December 31, 1999 and 1998 were $19,009,336 and $1,603,670, respectively, and
were associated with dollar-denominated monetary assets and liabilities held by
the Company's Brazilian subsidiaries.

         In the event of a significant devaluation of the Brazilian currency in
relation to the U.S. Dollar or other currencies, the ability of the Company to
meet its foreign currency denominated obligations could be adversely and
materially affected. Increases in the rate of inflation in Brazil subsequent to
such a devaluation of the Brazilian currency could adversely affect the
business, results of operations and financial condition of the Company. Although
the exchange rate between the Real and



                                       29
<PAGE>

the U.S. dollar had been relatively stable from mid-July 1994 through late 1998,
the spread of the Asian and Russian economic difficulties to South America
culminated in the devaluation of the Real in mid-January 1999. By the end of
January 1999, the real dropped against the dollar by approximately 45% compared
to the end of December 1998. Although some recent economic measures have been
taken by the Brazilian Federal Government in an effort to stabilize the Real,
the potential for future devaluation or volatility continues to persist. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Impact of Extreme Inflation".

         Exchange Controls and Restrictions. Brazilian law provides that,
whenever there is a serious imbalance in Brazil's balance of payments or serious
reasons to foresee such imbalance, the Brazilian government may, for a limited
period of time, impose restrictions on the remittance to foreign investors of
the proceeds of their investments in Brazil, as it did for approximately six
months in 1989 and early 1990, and on the conversion of Brazilian currency into
foreign currencies. No assurance can be given that the international transfer of
Reais or the Floating Market will remain legally or commercially available to
Brazilian residents. There can be no assurance that the Brazilian government
will not in the future impose more restrictive foreign exchange regulations that
would have the effect of preventing or restricting the Company's access to
foreign currency that it may require to meet its foreign currency obligations
under foreign currency denominated liabilities.

         Change of Economic Environment. Despite the success to date of the Real
Plan in reducing inflation in Brazil, the fiscal adjustment program necessary to
reduce government expenditures is not complete after the fifth year of the Real
Plan. There can be no assurance that the Real Plan will be more successful than
previous economic programs in reducing inflation over the long term, especially
in light of (i) the Brazilian congress' delay in the Real Plan and in the reform
of the social security system, and (ii) the negative effects of the Asian,
Russian and Latin American crises on Brazil, which has caused a flight of
foreign investment, the devaluation of the Real and new inflationary pressures
on the Brazilian economy. Accordingly, periods of substantial inflation may once
again have significant adverse effects on the Brazilian economy, on the value of
the Real and on the Company's financial condition, results of operations and
future prospects.




                                       30
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA





                          Independent Auditor's Report
                          ----------------------------





Board of Directors and Shareholders
Vitech America, Inc.



We have audited the accompanying consolidated balance sheet of Vitech America,
Inc. and Subsidiaries as of December 31, 1999 and December 31, 1998, and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for each of the three years ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 1997 financial statements of Microtec Sistemas
Industria e Comercio S.A. (Microtec), a subsidiary, which statements reflect
revenues of $34,714,000 for the period July 10, 1997 (date of acquisition)
through December 31, 1997 and are included in the consolidated totals. The
financial statements of Microtec were audited by other auditors whose report
thereon has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Microtec, is based solely upon the report of the other
auditors.

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

In our opinion, based upon our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Vitech America, Inc. and
Subsidiaries as of December 31, 1999 and 1998 and the results of its operations
and its cash flows for each of the three years ended December 31, 1999 in
conformity with generally accepted accounting principles.


/s/  Pannell Kerr Forster PC

New York, New York
April 12, 2000


                                      F-1

<PAGE>
<TABLE>
<CAPTION>


                              VITECH AMERICA, INC.
                           Consolidated Balance Sheet


Assets                                                                                        December 31,
                                                                                    ------------------------------
                                                                                         1999              1998
                                                                                    ----------------  ------------
<S>                                                                                 <C>              <C>
Current assets
     Cash and cash equivalents                                                      $   1,024,420    $   7,719,185
     Accounts receivable, net                                                          58,772,833       75,893,857
     Inventories, net                                                                  28,678,882       40,351,585
     Deferred tax asset                                                                 1,510,000               --
       Taxes receivable credits                                                         2,468,391               --
     Due from officers                                                                    179,093               --
       Investment in subordinated debentures - short term                                      --       14,676,585
     Other current assets                                                               1,321,502        8,538,379
                                                                                    -------------    -------------
                  Total current assets                                                 93,955,121      147,179,591

Property and equipment, net                                                            24,113,528       19,696,097
Investment in subordinated debentures - long term                                              --        2,677,906
Investments                                                                             1,104,222        1,248,434
Goodwill, net                                                                          19,097,686       20,191,646
Deferred tax asset                                                                             --        1,567,000
Other assets                                                                           10,167,620        3,106,301
                                                                                    -------------    -------------

                  Total assets                                                      $ 148,438,177    $ 195,666,975
                                                                                    -------------    -------------

                                           Liabilities and Shareholders' Equity
Current liabilities
     Trade accounts payable                                                         $  25,208,408    $  36,748,951
     Accrued expenses                                                                   1,986,919        4,811,130
     Taxes payable                                                                             --        1,804,792
       Deferred tax liability                                                             940,000        1,041,000
     Notes payable - related party                                                     13,564,505        6,700,000
     Current maturities of long-term debt                                               1,371,757          863,021
     Short-term debt                                                                    4,949,846       25,036,536
                                                                                    -------------    -------------
                  Total current liabilities                                            48,021,435       77,005,430
                                                                                    -------------    -------------

Long-term liabilities
       Convertible notes                                                               43,882,921       13,730,535
     Long-term debt                                                                     2,808,789        2,709,655
                                                                                    -------------    -------------
                           Total long-term liabilities                                 46,691,710       16,440,190
                                                                                    -------------    -------------

Commitments and contingencies

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,
     16,345,939 and 14,635,655 shares issued and outstanding                           72,385,718       60,844,866
     Accumulated other comprehensive loss                                             (43,541,146)      (4,607,064)
     Retained earnings                                                                 24,880,460        45,983,553
                                                                                    -------------    -------------
                  Total shareholders' equity                                           53,725,032      102,221,355
                                                                                    -------------    -------------

                  Total liabilities and shareholders' equity                        $ 148,438,177    $ 195,666,975
                                                                                    -------------    -------------
</TABLE>

See notes to consolidated financial statements

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

                              VITECH AMERICA, INC.
                      Consolidated Statement of Operations

                                                                                           Year Ended
                                                                                          December 31,
                                                                         ------------------------------------------------
                                                                             1999              1998             1997
                                                                         --------------    -------------   --------------
<S>                                                                                 <C>              <C>              <C>
Net sales                                                                 $ 100,423,084    $ 195,334,579    $ 117,537,403

Cost of sales                                                                59,655,561      115,630,389       76,813,191
                                                                          -------------    -------------    -------------

         Gross profit                                                        40,767,523       79,704,190       40,724,212

Selling, general and administrative expenses                                 28,496,987       41,586,843       18,167,737
                                                                          -------------    -------------    -------------

         Income from operations                                              12,270,536       38,117,347       22,556,475
                                                                          -------------    -------------    -------------

Other (income) expenses
     Interest expense                                                        15,488,266       17,021,670        6,416,206
     Interest (income)                                                       (2,464,155)      (8,240,546)      (1,866,222)
     Discount on sale of receivables                                          4,103,247        7,496,268        1,497,412
        Other expense (income)                                               (2,719,065)              --               --
     Foreign currency exchange losses                                        19,009,336        1,603,670        2,665,224
     Other financing expenses                                                        --        1,079,609          (36,000)
                                                                          -------------    -------------    -------------

         Total other expenses                                                33,417,629       18,960,671        8,676,620
                                                                          -------------    -------------    -------------

         Income (loss) before provision (benefit) for
               income taxes and minority interest                           (21,147,093)      19,156,676       13,879,855

Provision (benefit) for income taxes                                            (44,000)       2,007,830          980,510
                                                                          -------------    -------------    -------------

              Income (loss) before minority interest                        (21,103,093)      17,148,846       12,899,345

Minority interest                                                                    --         (713,166)         107,084
                                                                          -------------    -------------    -------------

                  Net income (loss)                                       $ (21,103,093)   $  17,862,012    $  12,792,261
                                                                          -------------    -------------    -------------



Earnings (loss) per common share - Basic:
       Net income (loss)                                                  $ (21,103,093)   $  17,862,012    $  12,792,261
       Weighted common shares                                                14,899,862       13,166,157       11,924,422
       Net income (loss) per common share                                 $       (1.42)   $        1.36    $        1.07
                                                                          -------------    -------------    -------------

Earnings (loss) per common share - Assuming dilution:
       Net income (loss)                                                  $ (21,103,093)   $  17,862,012    $  12,792,261
       Weighted common shares                                                14,899,862       13,348,269       12,033,798
       Net income (loss) per common share                                 $       (1.42)   $        1.34    $        1.06
                                                                          -------------    -------------    -------------
</TABLE>

See notes to consolidated financial statements

                                      F-3
<PAGE>
<TABLE>
<CAPTION>



                                               VITECH AMERICA, INC.
                             Consolidated Statement of Changes in Shareholders' Equity
                               For the Years Ended December 31, 1999, 1998 and 1997

                                                                                                   Accumulated
                                                  Number of        Common          Retained       Comprehensive
                                                    Shares          Stock          Earnings            Loss           Total
                                                -------------   -------------   -------------    --------------   -------------
<S>                                                <C>          <C>             <C>              <C>              <C>
Balance at December 31, 1996                       11,794,705   $  20,203,903   $  15,329,280    $          --    $  35,533,183

       Issuance of common stock for
        cash from the exercise of
        warrants ($9.09 per share)                     22,327         202,960              --               --          202,960

       Issuance of common stock for
        acquisition of business ($12.73
        per share)                                    212,145       2,700,000              --               --        2,700,000

       Issuance of common stock for
        acquisition of businesses
        ($16.25 per share)                            146,462       2,379,985              --               --        2,379,985

       Net income                                          --              --      12,792,261               --       12,792,261
                                                -------------   -------------   -------------    -------------    -------------

Balance at December 31, 1997                       12,175,639      25,486,848      28,121,541               --       53,608,389

      Issuance of common stock for cash
        from the exercise of warrants
        ($9.09 per share)                               2,200          20,000              --               --           20,000

      Issuance of common stock for cash
        from the exercise of warrants
        ($12.73 per share)                             27,500         350,075              --               --          350,075

      Issuance of common stock for
        conversion of notes payable
        ($14.40 average price per share)            2,430,316      34,987,943              --               --       34,987,943

      Net income                                           --              --      17,862,012               --       17,862,012

      Foreign currency translation adjustment              --              --              --       (4,607,064)      (4,607,064)
                                                -------------   -------------   -------------    -------------    -------------

Balance at December 31, 1998                       14,635,655      60,844,866      45,983,553       (4,607,064)     102,221,355

      Issuance of common stock for
        acquisition of Gateway
        territorial rights
        option ($8.06 average price per share)        538,284       4,340,184              --               --        4,340,184

      Issuance of common stock for
        payment of financing expenses and other
        debt ($6.58 average price per share)          222,000       1,461,398              --               --        1,461,398

      Issuance of common stock for
        conversion of notes payable
        ($6.04 average price per share)               950,000       5,739,270              --               --        5,739,270


      Net (loss)                                           --              --     (21,103,093)              --      (21,103,093)

      Foreign currency translation                         --              --              --      (38,934,082)     (38,934,082)

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

Balance at December 31, 1999                       16,345,939   $  72,385,718   $  24,880,460    $ (43,541,146)   $  53,725,032
                                                -------------   -------------   -------------    -------------    -------------
</TABLE>

See notes to consolidated financial statements

                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                              VITECH AMERICA, INC.
                      Consolidated Statement of Cash Flows

                                                                                      Year Ended December 31,
                                                                         --------------------------------------------
                                                                              1999           1998             1997
                                                                         ------------    ------------    ------------
<S>                                                                    <C>              <C>               <C>
Cash flows from operating activities
     Net income                                                          $(21,103,093)   $ 17,862,012    $ 12,792,261
     Adjustments to reconcile net income to net cash provided (used)
              Depreciation                                                  3,164,680       2,584,643       1,184,707
              Amortization of goodwill                                      1,093,960         924,949         321,369
              Amortization of deferred costs                                2,076,507          77,846              --
              Minority interest                                                    --        (713,166)        107,084
              Other financing expenses                                      1,059,290       1,079,609              --
              Gain on sale of business                                     (2,700,898)             --              --
              Provision for doubtful accounts                              (1,644,251)      3,314,367         286,276
              Provision for inventory obsolescence                         (1,228,750)        913,546              --
              Deferred income taxes                                          (215,303)        669,000        (398,995)
              Changes in assets and liabilities
              Accounts receivable                                           8,301,780     (39,980,910)    (22,137,077)
              Inventories                                                    (490,318)     (6,918,044)    (12,259,189)
              Other assets                                                     81,142      (6,097,756)     (4,855,932)
              Trade accounts payable                                       (8,416,009)     21,266,311       1,858,457
              Accrued expenses                                               (347,314)      1,679,460         502,512
              Due to/from officers                                           (179,093)        370,623        (298,411)
              Income and sales taxes payable                                 (596,279)      3,315,737      (1,333,389)
                                                                         ------------    ------------    ------------
                  Net cash provided (used) in operating activities        (21,143,949)        348,227     (24,230,327)
                                                                         ------------    ------------    ------------
Cash flows from investing activities
     Purchases of property and equipment                                   (9,630,614)     (7,266,677)     (6,597,303)
       Proceeds from sale of business, net of cash sold                       663,882              --              --
       Payment for business acquisitions, net of cash acquired                     --      (3,810,166)    (10,376,969)
     Other investments                                                       (271,615)        (66,802)       (398,440)
                                                                         ------------    ------------    ------------
                  Net cash (used) in investing activities                  (9,238,347)    (11,143,645)    (17,372,712)
                                                                         ------------    ------------    ------------
Cash flows from financing activities
     Deferred financing expense                                              (524,000)     (1,804,204)       (637,609)
     Net proceeds (payments) under short-term bank borrowings             (16,259,131)      6,848,617      13,443,649
       Net payments of taxes payable                                         (206,110)       (163,077)       (230,236)
     Proceeds from notes payable - related party                           10,500,000       6,700,000       5,000,000
     Repayment of notes payable - related party                            (3,635,495)             --     (10,000,000)
       Proceeds from convertible note - related party                              --              --      20,000,000
     Proceeds from convertible notes                                       41,000,000              --      38,608,250
       Repayments of convertible notes                                     (6,167,634)    (11,173,215)
     Payment of note payable for business acquisition                              --      (2,231,250)     (3,718,750)
     Proceeds from notes payable                                                   --              --         768,225
     Repayment of notes payable                                              (571,046)     (1,236,975)       (886,549)
     Net proceeds from sale of common stock                                        --         370,075         202,960
                                                                         ------------    ------------    ------------
                  Net cash provided (used) by financing activities         24,136,584      (2,690,029)     62,549,940
                                                                         ------------    ------------    ------------

Foreign exchange effect on cash and cash equivalents                         (449,053)     (1,500,000)             --

                                                                         ------------    ------------    ------------
                  Net increase (decrease) in cash and cash equivalents     (6,694,765)    (14,985,447)     20,946,901

Cash and cash equivalents - beginning of year                               7,719,185      22,704,632       1,757,731
                                                                         ------------    ------------    ------------
Cash and cash equivalents - end of year                                  $  1,024,420    $  7,719,185    $ 22,704,632
                                                                         ------------    ------------    ------------
</TABLE>

See notes to consolidated financial statements

                                      F-5
<PAGE>
<TABLE>
<CAPTION>


                              VITECH AMERICA, INC.
                Consolidated Statement of Cash Flows (continued)


                                                                                               Year Ended
                                                                                              December 31,
                                                                           -------------------------------------------------
                                                                                 1999              1998             1997
                                                                           ---------------    --------------   -------------
<S>                                                                        <C>                <C>              <C>
Supplemental disclosure of cash flow information
     Cash paid during the year for
         Interest and discount on sale of receivables                      $    14,915,825    $   12,504,000   $   6,836,325
                                                                           ---------------    --------------   -------------
         Income taxes                                                      $             -    $      351,552   $     565,446
                                                                           ---------------    --------------   -------------

Supplemental schedule of non-cash investing and financing activities
       Conversion of note payable to 950,000 shares of common stock        $     5,739,270    $            -   $           -
                                                                           ---------------    --------------   -------------
       Issuance of 222,000 shares of common stock as payment for
         financing expenses and other debt                                 $     1,461,398    $            -   $           -
                                                                           ---------------    --------------   -------------
       Issuance of 538,284 for acquisition of territorial rights option    $     4,340,184    $            -   $           -
                                                                           ---------------    --------------   -------------
       Conversion of notes payable to 2,430,316 shares of common stock     $             -    $   34,154,500   $           -
                                                                           ---------------    --------------   -------------
     Note receivable in partial payment for sale of business               $     2,637,126    $            -   $           -
                                                                           ---------------    --------------   -------------
       Investment in property and equipment through financing
         agreements                                                        $     2,160,000    $    2,122,330   $     871,503
                                                                           ---------------    --------------   -------------
       Issuance of common stock and a note payable for the
         acquisitions of subsidiaries                                      $             -    $            -   $  11,029,985
                                                                           ---------------    --------------   -------------
</TABLE>
                                      F-6

See notes to consolidated financial statements


<PAGE>



                              VITECH AMERICA, INC.
                   Notes to Consolidated Financial Statements
                                December 31, 1999


Note 1 - Organization and principal industry
--------------------------------------------

Vitech America, Inc. (the "Company"), a Florida corporation, was incorporated in
June 1993. The Company, through its subsidiaries, is engaged in the manufacture
and sale of computer equipment and related products. On March 7, 1995, the
majority shareholders of the Company formed Bahiatech Bahia Tecnologia, Ltda.
("Bahiatech") and on October 12, 1995, the Company acquired a 99% interest in
Bahiatech. Bahiatech, located in Ilheus, Bahia, Brazil, is engaged in the
manufacture and sale of computer and electronic equipment and their components.
On July 10, 1997, the Company acquired a 94.4% interest in Microtec Sistemas
Industria e Comercio S.A. ("Microtec"). Microtec, located in Sao Paulo, Brazil,
is engaged in the manufacture and sale of computers and related products. In
September 1998, the Company acquired an additional 4.1% interest in Microtec to
bring its total ownership interest up to 98.5%. In November 1997, the Company
acquired a controlling interest in Techshop Ltda., Tech Stock Ltda.
(collectively "Techshop") and Rectech - Recife Tecnologia Ltda. ("Rectech"), all
of which are located in Brazil and are engaged in the distribution and retail
sale of computers and related equipment. In December 1998, the Company acquired
an additional interest in Techshop Ltda., Tech Stock Ltda. and Rectech - Recife
Tecnologia Ltda., to bring its ownership interest up to 99% for each.

         During the year ended December 31, 1999, the Company consolidated the
operations and transferred certain assets and liabilities of its Brazilian
subsidiaries, Bahiatech, Techshop, and Rectech, into the operations of Microtec.
The remaining operations of Bahiatech which were not transferred to Microtec
included certain assets and liabilities associated with Bahiatech's consumer
electronics manufacturing business. Principally all of the assets and
liabilities of Techshop and Rectech were transferred to Microtec. After the
transfer the Company sold Bahiatech with its consumer electronics operation,
Techshop, and Rectech to an unrelated third party for an aggregate sales price
of $4 million and recorded a gain on the sale of $2.7 million which is included
in other (income) expense in the accompanying consolidated statement of
operations for the year ended December 31, 1999. The terms of the sale were
$850,000 in cash and the Company received a four year note, payable in equal
monthly installments, for the balance. The Company discounted the note at the
effective interest rate of 9% per anum.

All of the sales of the Company are concentrated in Brazil, with approximately
0%, 0% and 9% to one unrelated customer in 1999, 1998 and 1997, respectively.

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 - Summary of significant accounting policies
---------------------------------------------------

Principles of consolidation
---------------------------

The consolidated financial statements include the accounts of the Company and
its majority owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

Use of estimates
----------------

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during reporting
periods. Actual results could differ from these estimates.

Cash and cash equivalents
-------------------------

The Company considers all highly liquid investments with an original maturity of
three months or less at the time of acquisition to be a cash equivalent. The
Company maintains its cash in bank deposit accounts which, at times, may exceed

                                      F-7
<PAGE>



                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


federally insured limits. The Company has not experienced any losses in such
accounts. The Company believes it is not exposed to any significant credit risk
on cash and cash equivalents.

Inventories
-----------

Inventories are stated at the lower of cost (first-in, first-out method or
average cost method) or market. Inventories consist primarily of components and
subassemblies and finished products held for sale. Rapid technological change
and new product introductions and enhancements could result in excess or
obsolete inventory. To minimize this risk, the Company evaluates inventory
levels and expected usage on a periodic basis and records adjustments as
required.

Certain components and products that meet the Company's requirements are
available from a limited number of suppliers. The rapid rate of technological
change and the necessity of developing and manufacturing products with short
life-cycles may intensify these risks. The inability to obtain components and
products as required, or to develop alternative sources, if and as required in
the future, could result in delays or reductions in product shipments, which in
turn could have a material adverse effect on the Company's business, financial
condition, and results of operations.

Disclosure about fair value of financial instruments

The carrying amount of the Company's financial instruments is a reasonable
approximation of fair value, except for related party debt which is not
practical to estimate as no similar market exists for these instruments.

Property and equipment
----------------------

Property and equipment are stated at cost. The cost of maintenance and repairs
is charged against results of operations as incurred. Depreciation is computed
over the estimated service lives of the related assets using the straight-line
method. When assets are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the respective accounts and any gain
or loss is recognized.

Revenue recognition
-------------------

The Company's policy is to record revenues upon transfer of title to the
customer. Title transfers to the customer upon receipt of the merchandise by the
customer.

The Company discounts all of the sales associated with its "10X" consumer
financing program using a present value calculation with an imputed annual rate
of 15%. Such 10X program enables customers to enter into a consumer contract
with the Company whereby the customer makes equal monthly payments over a
specified term ranging from 6 to 24 months. The discounted portion of such
revenues is then recognized over the remaining term of the contract.

Purchased and developed software
--------------------------------

The Company capitalizes the qualifying costs of developing its software
products. Capitalization of such costs requires that technological feasibility
has been established. The Company defines the establishment of technological
feasibility as the completion of all planning, designing, coding and testing
activities that are necessary to establish products that meet design
specifications, including functions, features and technical performance
requirements. Development costs incurred prior to the establishment of
technological feasibility are expensed as incurred. When the software is fully
documented and available for unrestricted sale, capitalization of development
costs ceases, and amortization commences and is computed on a product-by-product
basis, based on a straight-line basis over the economic life of the product.

The Company capitalizes as purchased software the costs associated with software
products either purchased from other companies for resale or developed by other
companies under contract with the Company. The cost of the software is amortized
on the same basis as capitalized software development costs. The amortization
period is re-evaluated quarterly

                                      F-8
<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


with respect to certain external factors including the estimated economic life
and changes in software and hardware technologies.

The establishment of technological feasibility and the ongoing assessment of
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, technological feasibility, anticipated future gross revenues,
estimated economic life and changes in software and hardware technologies.
Realization of capitalized software costs is subject to the Company's ability to
market its software products in the future and generate cash flows sufficient to
support future operations.

Goodwill
--------

Goodwill, representing the excess of the cost over the net tangible and
identifiable assets of acquired businesses, is stated at cost and is amortized,
on a straight-line basis, over the estimated future periods to be benefited (20
years). On an annual basis, the Company reviews the recoverability of goodwill
based primarily upon an analysis of undiscounted cash flows from the acquired
businesses. At December 31, 1999 and 1998, the accumulated amortization of
goodwill was $2,340,278 and $1,246,318, respectively.

Investments
-----------

Investments include land held for development which is carried at cost and is
comprised of undeveloped parcels near Ilheus, Bahia, Brazil.

Research and development
------------------------

Research and product development costs are expensed as incurred. For the years
ended December 31, 1999, 1998 and 1997, research and development expenses
amounted to $2,919,000, $1,736,000, and $1,346,000, respectively.

Income taxes
------------

The Company applies the asset and liability approach to financial accounting and
reporting for income taxes. The difference between the financial statement and
tax bases of assets and liabilities is determined annually. Deferred income tax
assets and liabilities are computed for those differences that have future tax
consequences using the currently enacted tax laws and rates that apply to the
period in which they are expected to affect taxable income. Valuation allowances
are established, if necessary, to reduce the deferred tax asset to the amount
that will more likely than not be realized. Income tax expense is the current
tax payable or refundable for the period plus or minus the net change in the
deferred tax assets and liabilities.

Microtec operates in the North-east region of Brazil and enjoys an exemption
from income taxes through and including the year 2007. Microtec is entitled to
an exemption from income taxes on the Brazilian operating profit ("Lucro da
Exploracao") once twenty percent of the budgeted production goals in units are
met in each year during the exemption period. This benefit is reported as a
reduction of income tax expense for the period in which earned.

Net income (loss) per share
---------------------------

Basic and diluted earnings (loss) per share ("EPS") are calculated in accordance
with SFAS 128, "Earnings Per Share". Basic EPS is computed by dividing reported
net income (loss) by the weighted average shares outstanding. Diluted EPS
assumes the conversion of outstanding convertible debt and the dilutive effect
of stock options and warrants. The following table sets forth the computation of
basic and diluted earnings (loss) per share:

                                      F-9
<PAGE>
<TABLE>
<CAPTION>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                                                                         Year Ended
                                                                        December 31,
                                                       -------------------------------------------
                                                            1999             1998          1997
                                                       --------------    -----------   -----------
<S>                                                     <C>              <C>            <C>
Net income (loss) for basic
  income (loss) per common share                      $   (21,103,093)   $17,862,012   $12,792,261

Adjustments to net income (loss) (a)                               --             --            --
                                                       --------------    -----------   -----------

Net income (loss) for diluted
  income (loss) per common share                       $  (21,103,093)   $17,862,012   $12,792,261
                                                       --------------    -----------   -----------

Weighted average number of shares
  for basic income (loss) per share                        14,899,862     13,166,157    11,924,422

Dilutive securities:
    Stock options (b)                                              --        142,515        81,746
    Warrants (b)                                                   --         39,597        27,630
    Convertible debt (a)                                           --             --            --
                                                       --------------    -----------   -----------

Weighted average number of shares
  for diluted income (loss) per share                      14,899,862     13,348,269    12,033,798
                                                       --------------    -----------   -----------

Net income (loss) per common share:
    Basic                                              $        (1.42)   $      1.36   $      1.07
                                                       --------------    -----------   -----------
    Assuming Dilution                                  $        (1.42)   $      1.34   $      1.06
                                                       --------------    -----------   -----------
</TABLE>

(a)          For the years ended December 31, 1999, 1998, and 1997, the effects
             on earnings per share of the 10% convertible notes (see Note 12),
             which are convertible into 4,005,380; 930,369; and 3,990,447 shares
             of common stock, respectively, would have been antidilutive and
             therefore are not included in the above computation.
(b)          For the year ended December 31, 1999, the effect on earnings per
             share of 4,065 outstanding stock options and 11,150 warrants would
             have been antidilutive and therefore are not included in the
             computation.

For the year ended December 31, 1999, there were 4,798,282 outstanding stock
options and 859,101 warrants 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 year ended December 31,
1998, there were 3,300,000 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.
In 1997, there were 3,326,400 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.

Translation into U.S. dollars
-----------------------------

The financial statements of the Company have been prepared in accordance with
U.S. generally accepted accounting principles and are stated 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 were 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

                                      F-10
<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


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. Any translation adjustments are reflected as a
component of shareholders' equity. In addition, the Company recorded a currency
exchange transaction loss associated with dollar-denominated monetary assets and
liabilities held by the Company's Brazilian subsidiaries.

Exemption of value added tax (ICMS)
-----------------------------------

Microtec is exempt from ICMS (Value Added Tax) on imported materials and
components, and on the sales of the finished products arising from such raw
materials through and including the year 2005. The benefits are reflected in
sales and cost of sales.

International operations
------------------------

The Company operates in one industry segment (the manufacture and distribution
of computer and electronic equipment and related products) and manufactures and
markets its products and services through its foreign subsidiaries located in
Brazil. As a result, principally all of the Company's sales and operations are
subject to certain risks, including adverse developments in the foreign
political and economic environment, exchange rates, tariffs and other trade
barriers, staffing and managing foreign operations and potentially adverse tax
consequences. There can be no assurance that any of these factors will not have
a material adverse effect on the Company's financial condition or results of
operations in the future. During 1999 and 1998, the Company did not enter into
any significant foreign exchange contracts as a hedge against exposures to
fluctuations in currency exchange rates associated with its foreign
subsidiaries.

Stock-based compensation
------------------------

The Company accounts for its stock option plan in accordance with Accounting
Principles Board Opinion No. 25 (APB Opinion No. 25) and related
interpretations. The Company adopted the disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS 123). The Company has included in note 13, the impact of
the fair value of employee stock-based compensation plans on net income and
earnings per share on a pro forma basis for awards granted.

Comprehensive Income
--------------------

         The Company adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income" during the year ended December
31, 1998. SFAS 130 establishes rules for the reporting and presentation of
comprehensive income (loss) and its components. The Company's comprehensive
income (loss) is comprised of net income (loss) adjusted for foreign currency
translation. For the year ended December 31, 1999, the Company had a
comprehensive loss of $60 million as compared to a reporting net loss of $21.1
million. The comprehensive loss includes a cumulative translation adjustment of
$38.9 million associated with the translation of the Company's subsidiary
financial statements to the US dollar. For the year ended December 31, 1998,
comprehensive income was $13.3 million as compared to reported net income of
$17.9 million. Comprehensive income includes a cumulative translation adjustment
of $4.6 million. For the year ended December 31, 1997, comprehensive income and
reported net income were the same.

                                      F-11

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Segment data
------------

During 1998, the Company adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information." SFAS No. 131 supercedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise", replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal reporting that is used by management for making
operating decisions and assessing performance as the source of the Company's
reportable segments. SFAS 131 also requires disclosures about products and
services, geographic areas and major customers. The adoption of SFAS 131 did not
affect the consolidated financial position or results of operations of the
Company. Management has determined it operates in one industry segment.

New Accounting Pronouncement
----------------------------

In June of 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" which is
effective for fiscal years beginning after June 15, 2000. The objective of the
statement is to establish accounting and reporting standards for derivative
instruments and hedging activities. The Company may use foreign currency forward
contracts, a derivative instrument, to hedge foreign currency transactions and
anticipated foreign currency transactions. The adoption of this new accounting
pronouncement is not expected to be material to the Company's consolidated
financial position or results of operations.

Note 3 - Related party transactions
-----------------------------------

As discussed in note 8, the Company has outstanding debt obligations to a
related party.

During 1999 and 1998, the Company bought and sold products and services from/to
ITC.net, an entity related through common ownership, valued in the amount of
approximately $3.5 million and $1.1 million, respectively. As of December 31,
1999, the Company had a receivable outstanding from ITC.net of $1.6 million
which is included in trade accounts receivable. At December 31, 1998, the
Company had a payable outstanding to ITC.net of $329,548 included in trade
accounts payable. Additionally, during 1998, the Company entered into a joint
marketing agreement with ITC.net, whereby the two companies will cross sell each
others products. In consideration for the joint marketing agreement, ITC.net
granted to the Company's shareholders of record date March 1, 1999, warrants to
purchase one share of ITC.net common stock for every share of the Company owned
by the shareholder. The warrants have an exercise price of $0.15 per share and
are non-exercisable and non-transferable until such time that there is an
effective registration statement covering the securities of ITC.net.

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

Accounts receivable as of December 31 consisted of the following:
<TABLE>
<CAPTION>
                                                           1999               1998
                                                     --------------     ---------------
<S>                                                  <C>                <C>
Trade accounts receivables                           $   62,628,660     $    81,393,935
Allowance for doubtful accounts                          (3,855,827)         (5,500,078)
                                                     --------------     ---------------
                                                     $   58,772,833     $    75,893,857
                                                     --------------     ---------------
</TABLE>

In April 1998, the Company entered into an accounts receivable financing program
with Technology Acceptance Corp. ("TAC"), an independently owned special purpose
corporation, whereby certain of its accounts receivable may be sold by the
Company's subsidiary (the "Seller") 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 notes under a note program. TAC

                                      F-12
<PAGE>


                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


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 year ended December 31, 1998, the Company completed the sale of an
aggregate face amount of approximately $140 million of its accounts receivable
to TAC at a discount of approximately $7.5 million for cash and a subordinated
debenture. The subordinated debenture is a revolving, non-interest bearing,
bearer note, which constitutes the Company's retained interest in the program.
(See Note 5.)

There is a repurchase provision whereby the Seller, as defined in the program,
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
affect such substitution is less than the repurchase price thereof, then a cash
payment must be paid for the excess of the repurchase price over the net present
value of the additional receivables transferred to TAC pursuant to such
substitution. The U.S. parent company of the Seller, Vitech America, Inc.,
serves as guarantor of the repurchase obligation. If the repurchase obligation
is not complied with on or prior to the required repurchase date, the U.S.
parent company is required to deposit, within twenty-four hours of the
expiration of the required repurchase date, the amount of the repurchase price
not paid. As a result of the structure of the program, at December 31, 1999,
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 - Investment in subordinated debentures
----------------------------------------------

In connection with the TAC financing program whereby the Company receives cash
and subordinated debentures (which represents its retained interest in the
program) in consideration for the sale of its accounts receivable to TAC, the
Company has an investment in subordinated debentures at December 31 as follows:
<TABLE>
<CAPTION>

                                      1999                1998
                               --------------      ---------------
<S>                            <C>                 <C>
Current portion                $            -      $    14,676,585
Long term portion                           -            2,677,906
                               --------------      ---------------
      Total                    $            -      $    17,354,491
                               --------------      ---------------
</TABLE>

The subordinated debentures are U.S. dollar denominated, non-interest bearing
bearer notes that are subordinated to the senior notes issued by TAC and arise
from the overcollateral amount and the unpaid principal amount of each series of
senior notes outstanding. The financing program requires a minimum
overcollateral ratio, as defined, of 125%. With the exception of amounts payable
to it on any excess overcollateral date, as defined, the bearer of the debenture
will not be entitled to receive any payment until the final termination date, as
defined, of the program. The overcolleral ratio of the program at December 31,
1998 was approximately 127%.

In January 1999, the Brazilian government allowed its currency, the Real, to
trade freely against other foreign currencies, which resulted in an immediate
devaluation of the Real against the U.S. dollar in excess of 30%. With the post
devaluation exchange rates of the Real to the U.S. dollar, the overcollateral
ratio for TAC fell below its required minimum which caused trigger and default
events, as defined, of the TAC program. As a result, the Company has not been
selling any of its accounts receivable to TAC, and may not, other than pursuant
to its repurchase obligation. Additionally, with the devaluation of the Real
against the U.S. dollar in excess of the overcollateral ratio, the Company's
residual interest in the program represented by the subordinated debentures has
been written down to zero from its values at December 31, 1998.

In June 1999, TAC received approval on a consent solicitation proposal made to
the holders of TAC notes for temporary and permanent adjustments to the
structure of the TAC program in order to allow the TAC program to operate more
effectively in the post devaluation environment. With the approval of the
consent solicitation, TAC paid a 1% fee to the

                                      F-13

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


holders of TAC notes and the Company put up additional collateral (in the form
of eligible accounts receivable) for the benefit of the TAC note holders to put
the collateralization ratio at 100%. Since June, however, because of the
continuing difficult economic conditions of Brazil, the poor payment performance
of the receivables held by TAC and the conditions of the financial markets which
have prohibited TAC from refinancing its short-term obligations, TAC has not had
the liquidity available to meet its current obligations which has caused trigger
and default events for TAC. Considering these events, the TAC program is
expected to remain in default and to self-amortize over the life of the
receivable portfolio held by TAC. The Company also believes that TAC will no
longer be a viable financing source for the Company in the future. While the
Company believes that it will continue to be able to maintain its obligations
under the repurchase provision and that it has adequately reserved for such
contingent liability, there can be no assurances that the Company will have
available the required accounts receivables or cash liquidity to affect such
repurchases.

Note 6 - Inventories
--------------------

Inventories as of December 31 are summarized as follows:
<TABLE>
<CAPTION>

                                                            1999             1998
                                                      --------------  ----------------
<S>                                                   <C>             <C>
Finished goods                                        $    3,856,000  $      8,962,317
Work in process                                               24,000           893,905
Components in the factory                                 21,175,385        22,886,048
Components in transit  (a)                                 3,824,747         9,039,315
                                                      --------------  ----------------
                                                          28,880,132        41,781,585
Less allowance for obsolescence                             (201,250)       (1,430,000)
                                                      --------------  ----------------
                                                      $   28,678,882  $     40,351,585
                                                      --------------  ----------------
</TABLE>

(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 7 - Property and equipment
-------------------------------

Property and equipment at December 31 is summarized as follows:
<TABLE>
<CAPTION>

                                                            1999              1998
                                                      ---------------    --------------
<S>                                                   <C>                <C>
Property                                              $     2,267,675    $    3,889,000
Furniture, office and transportation
 equipment                                                  9,453,885         8,198,197
Warehouse and manufacturing equipment                       8,692,503         7,029,570
Computers and telecommunications equipment                 10,923,857         4,066,794
Construction in progress and projects                         395,505         1,604,516
                                                      ---------------    --------------
                                                           31,733,425        24,788,077
Less accumulated depreciation                              (7,619,897)       (5,091,980)
                                                      ---------------    --------------
                                                      $    24,113,528    $   19,696,097
                                                      ---------------    --------------
</TABLE>

The Company leases equipment under capital leases (see note 10 and 15). As of
December 31, 1999 and 1998, the cost of such equipment approximated $4,383,000
and $2,223,000, respectively. As of December 31, 1999 and 1998, accumulated
amortization of equipment under capital leases was approximately $701,000 and
$260,000, respectively.

                                      F-14

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Note 8 - Notes payable and convertible debt - related party
-----------------------------------------------------------

The Company had the following note payable to an affiliate of the majority
shareholders' at December 31:
<TABLE>
<CAPTION>

                                                                          1999               1998
                                                                    ---------------    ---------------
<S>                                                                 <C>                <C>
Promissory notes payable, due on demand with 90 days
  notice bearing interest at 10% in 1999 and 15% in 1998            $    13,564,505    $     6,700,000
</TABLE>

In March of 1999, the Company received loans from a related party, Georges C.
St. Laurent Jr., ("GSL Jr."), the father of Georges C. St. Laurent III, the
Chairman of the Board and Chief Executive Officer of the Company, and William
St. Laurent, the President and Chief Operating Officer of the Company, for the
principal amount of $10.5 million in addition to the $6.7 million in loans that
the Company had received in 1998 from such related party. The $10.5 million loan
bears interest at the annual rate of 10% and is payable upon demand with 90 days
notice. The loan is evidenced by a promissory note and, at the makers option,
can be exchanged for a convertible note (convertible at $9.25) should the loan
not be repaid at maturity. In connection with the loan, the Company issued four
year warrants to purchase 300,000 shares of the Company's common stock at a
purchase price of $9.25 per share. During 1999, the Company repaid approximately
$3.6 million of such loans.

On June 26, 1997, the Company completed a private placement of a two year senior
convertible note to 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.

During 1999, 1998 and 1997, the Company incurred interest expense of $1,365,475,
$77,424, and $1,265,754, respectively, in connection with related party loans.
In addition, during 1998 the Company recorded a financing expense of $706,500
for the issuance of the additional shares included as an incentive for GSL Jr.'s
conversion of the notes.

                                      F-15

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Note 9 - Short-term debt
------------------------

Short-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
                                                                         1999              1998
                                                                    --------------    --------------
<S>                                                                 <C>               <C>
Short-term bank loans denominated in Brazilian currency
  bearing interest rates averaging 2.5% per month (2.5% per
  month in 1998) and maturing on a revolving basis                  $    3,094,430    $   11,629,143

Short-term bank loans denominated in US dollars,
  bearing interest rates averaging 1% per month and maturing
  on a revolving basis                                                   1,855,416        13,407,393
                                                                    --------------    --------------
                                                                    $    4,949,846    $   25,036,536
                                                                    --------------    --------------
</TABLE>

Weighted average interest rate on short-term borrowing amounted to approximately
1.5% and 1% per month for the years ended December 31, 1999 and 1998,
respectively.

As of December 31, 1999, the Company had available approximately $20 million in
unused credit facilities at various banks in Brazil at rates of approximately
2.5% per month and subject to certain collateral requirements as defined.

Note 10 - Long-term debt
------------------------

Long-term debt at December 31, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
                                                                    1999           1998
                                                                ------------   -----------
<S>                                                               <C>            <C>
Construction loan payable                                       $        --    $   623,305

Note payable maturing October 1999 which requires monthly
 payments of $10,503 applied first to interest at 6.67% per
 annum and the balance to reduction of principal                         --         92,074

Note payable maturing September 2001 which requires quarterly
 payments of $13,075 applied first to interest at 10.5% per
 annum and the balance to reduction of principal                     82,625        123,529

Note payable maturing August 2001 which requires monthly
 payments of $750 applied first to interest at 9.9% per
 annum and the balance to reduction of principal. (Repaid in
 1999)                                                                   --         20,578

Note payable maturing September 2001 which requires monthly
 payments of $10,754 applied first to interest at 8.47% per
 annum and the balance to reduction of principal.                   209,214             --

Capital leases payable (a)                                        3,473,071      1,622,621

Others                                                              415,636      1,090,569
                                                                -----------    -----------
                                                                  4,180,546      3,572,676
Less current maturities                                          (1,371,757)      (863,021)
                                                                -----------    -----------
                                                                $ 2,808,789    $ 2,709,655
                                                                -----------    -----------
</TABLE>
                                      F-16


<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


(a)           In March 1998, the Company entered into a capital lease for
              $1,200,000 for the purchase of manufacturing equipment. The
              capital lease has a term of 60 months, bears an adjustable
              interest rate (currently 9.9%) and requires a monthly payment of
              $25,437. In October 1998, the Company entered into a capital lease
              for $529,105 for the acquisition of equipment. The capital lease
              has a term of 3 years and bears an annual interest rate of 9.7%
              and requires quarterly payments of $51,000. In November 1999, the
              Company restructured an operating lease for computer software as a
              capital lease in the principal amount of $2,160,000. The capital
              lease has a term of 36 months and bears an annual interest rate of
              10.29% and requires monthly payments of $70,000.

Maturities of long-term debt at December 31, 1999 are as follows:

   Year ending
   December 31,
   ------------

       2000              $    1,371,757
       2001                   1,599,456
       2002                     912,305
       2003                     259,738
       2004                      37,290
                         --------------
                         $    4,180,546
                         --------------

Note 11 - Income taxes
----------------------

The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>

                     1999           1998           1997
                 -----------    -----------    -----------
<S>              <C>            <C>            <C>
Current
     Federal     $        --    $        --    $    39,342
     State                --             --             --
     Foreign              --      1,338,830        989,718
                 -----------    -----------    -----------
                          --      1,338,830      1,029,060
                 -----------    -----------    -----------
Deferred
     Federal              --             --             --
     State                --             --             --
     Foreign         (44,000)       669,000        (48,550)
                 -----------    -----------    -----------
                     (44,000)       669,000        (48,550)
                 -----------    -----------    -----------
                 $   (44,000)   $ 2,007,830    $   980,510
                 -----------    -----------    -----------
</TABLE>

There were no material reconciling items between the U.S. Federal Statutory tax
rate and the effective tax rate on U.S. based income.

Included in the accompanying balance sheet at December 31, 1999, is a current
deferred tax asset of $1,510,000 and a current deferred tax liability of
$940,000 related to the operations of Microtec. Included in the accompanying
balance sheet at December 31, 1998, is a non-current deferred tax asset of
$1,567,000 and a current deferred tax liability of $1,041,000 related to the
operations of Microtec. Deferred income taxes reflect the effects of (a)
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes
calculated using enacted rates in effect in the years in which the differences
are expected to reverse and (b) tax-loss carryforwards.

                                      F-17

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Principal components of deferred tax assets and liabilities included in the
balance sheet at December 31 are as follows:
<TABLE>
<CAPTION>

                                                 1999           1998
                                             -----------    -----------
<S>                                          <C>            <C>
Deferred tax assets (liabilities)
  Net operating loss carryforward            $ 3,719,000    $ 1,567,000
  Operating costs currently not deductible     1,850,000        925,000
  Revenues currently not taxable              (2,711,000)    (1,966,000)
                                             -----------    -----------
                                               2,858,000        526,000
  Less valuation allowance                    (2,288,000)            --
                                             -----------    -----------
          Net deferred tax assets            $   570,000    $   526,000
                                             -----------    -----------
</TABLE>

The valuation allowance at December 31, 1999 relates entirely to the deferred
tax assets generated by the Company's U.S. operations and is principally
attributable to the net operating loss carryforward available to the Company to
offset future taxable income. The change in the valuation allowance for 1999
resulted from a valuation allowance placed on the deferred tax assets of the
Company based on management's evaluation of the likelihood of the realization of
the future benefits related to these accounts. Although the realization of the
net deferred tax asset is not assured, management believes such realization is
more likely than not to occur. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period should be reduced.

At December 31, 1999, the Company had the following net operating tax loss
carryforwards in the indicated geographical areas with the following expiration
dates:
<TABLE>
<CAPTION>
<S>                                         <C>                 <C>
              Brazil (Microtec)             $    6,485,000      No expiration date
              United States (Vitech U.S.         5,500,000      Expires during the
              operations)                                       years 2018 and 2019
</TABLE>

The Brazilian federal statutory income tax rate varies according to the level of
income and to the taxes and levies applicable to any one year. The federal
statutory income tax rate applicable to the subsidiary is a composite rate
approximating 33% for 1999 and 1998. This rate includes a 12% (8% for 1998)
federal levy on net income, sometimes referred to as Social Contribution. The
difference from the effective tax rate and the composite rate relates to the
income tax exemption of Microtec as described in note 2.

As of December 31, 1999 and 1998, the Company has not provided for withholding
or U.S. federal income taxes on accumulated undistributed earnings of its
foreign subsidiaries as the Company does not intend to distribute such earnings
in the foreseeable future. The cumulative undistributed earnings of the
Company's foreign subsidiaries amounted to $23,536,302 and $39,430,996 at
December 31, 1999 and 1998, respectively. (See note 13.)


                                      F-18
<PAGE>


                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Note 12 - Convertible notes
---------------------------

Convertible notes at December 31 are as follows:
<TABLE>
<CAPTION>
                                                                      1999              1998
                                                                  -------------     ------------
<S>                                                               <C>               <C>
10% convertible notes due October 2000, convertible
    at $10 (subject to adjustment in certain events)              $   1,875,156     $ 13,280,535
10% convertible notes due October 2000, convertible
    at $11 (subject to adjustment in certain events)                    557,765                -
10% convertible note due September 2000,
    convertible at $10                                                  450,000          450,000
10% convertible notes due May 2001, convertible
    at $11 (subject to adjustment in certain events)                 10,000,000                -
10% convertible note due March 2001, convertible
    at $11.02                                                        31,000,000                -
                                                                  -------------     ------------
                                                                  $  43,882,921     $ 13,730,535
                                                                  -------------     ------------
</TABLE>

On October 31, 1998, the holders of an aggregate principal amount of $17,967,320
of the Company's convertible notes exercised their put right, pursuant to the
terms of the notes, and requested the Company to repurchase the remaining
balance of the notes at a put price equal to 110% of the principal amount. In
accordance with the terms of the notes, the Company was to pay the put price in
four equal monthly installments commencing November 30, 1998, with interest on
each installment accruing at the rate of 10% per annum. The Company made the
first two of such payments on November 30, 1998 and December 31, 1998. In
February 1999, the Company entered into an agreement with the holders to repay
the remaining principal outstanding on the notes over a five month period
commencing March 31, 1999, with monthly principal payments of approximately $2
million plus accrued interest. The Company repaid a portion of the notes during
this period and in a series of transactions between April and July of 1999, the
holders of such convertible notes sold the remaining principal balance of
$5,237,745 of their notes to an unrelated third party investor. Simultaneously
with such sale, the Company amended and restated the terms of the convertible
notes and entered into revised put and call agreements for the notes. The
revised terms provide the note holder with a conversion price equal to $11 per
share and provide the holder with the right to require the Company to repurchase
the notes at a premium during a put period, as defined in the agreement. In the
event the Company declines to repurchase the notes upon the exercise of a holder
put option during a put period, the conversion price of the note would be
adjusted to equal 85% of the market price, as defined. In October 1999, the
holders of these notes exercised their put right to require the Company to
repurchase these notes at a premium, as defined in the agreement, which resulted
in the conversion of a principal amount of $4,679,765 plus accrued interest and
put premiums of their notes into 950,000 shares of the Common stock of the
Company. As of December 31, 1999, there was a principal amount of $557,765
outstanding on such notes.

In May 1999, the Company completed a private placement of a $10 million
convertible debenture. The debenture is a two year 10% note convertible into the
Company's common stock at an initial conversion price of $11. The debenture
contains a provision whereby the holder may require the Company to repurchase
the debenture after nine months at a price equal to 112% of the principal amount
and on a quarterly basis thereafter at a price adjusted accordingly. Should the
holder elect to require the Company to repurchase the debentures, the Company
may repay the debentures in four equal monthly payments. If the Company elects
not to repurchase the notes, the conversion price of the debentures will be
adjusted to equal 85% times the market price, as defined, at the time of
conversion. The Company issued 100,000 warrants to purchase shares of the
Company's common stock in connection with this financing and 36,364 warrants to
the placement agent. The investors were accredited and sophisticated and was
provided with and had access to relevant information concerning the Company. The
security was exempt from registration pursuant to Rule 506 of Regulation D and
Section 4(2) of the Securities Act.

In September 1999, the Company formed a strategic alliance with Gateway
Companies Inc. ("Gateway") which resulted in a $31 million investment by Gateway
in the form of a 10% convertible promissory note. The note is convertible at
$11.02, bears interest at 10% per annum with interest payable quarterly, and
matures in March 2001. (See note 17.)

                                      F-19

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


During the years ended December 31, 1999 and 1998, the Company incurred
financing expense of approximately $1,777,000 and $1,150,000, respectively, in
connection with the put and call provisions of convertible notes. During the
year ended December 31, 1998, the Company incurred a financing expense of
$373,109 for the issuance of additional shares of common stock as an incentive
for conversion of certain convertible notes. In addition, during the year ended
December 31, 1999, the Company incurred fees and expenses of approximately
$1,724,000 in connection with the issuance of convertible notes which are being
amortized over the life of the notes.

Note 13 - Shareholders' equity
------------------------------

Common stock
------------
<TABLE>
<CAPTION>

Information on warrants is shown in the following table:

                                               Warrants          Warrants            Price            Weighted
                                             Outstanding        Exercisable          Range         Average Price
                                           --------------     -------------     ---------------   ---------------
<S>                                               <C>               <C>            <C>    <C>               <C>
Balances at December 31, 1996                     250,026            30,026     $  9.09 - 12.73   $         12.27
  Granted in 1997                                 241,387           241,387        8.00 - 15.00             15.00
  Became exercisable                                    -           220,000               12.73             12.73
  Warrants exercised                              (22,326)          (22,326)               9.09              9.09
                                           --------------     -------------     ---------------   ---------------

Balance at December 31, 1997                      469,087           469,087        9.09 - 15.00             13.62
  Granted in 1998                                       -                 -                   -                 -
  Became exercisable                                    -                 -                   -                 -
  Warrants exercised                              (29,700)          (29,700)       9.09 - 12.73             12.46
                                           --------------     -------------     ---------------   ---------------

Balance at December 31, 1998                      439,387           439,387        9.09 - 15.00             13.94
  Granted in 1999                                 436,364           436,364        9.25 - 13.20             10.09
  Became exercisable                                    -                 -                   -                 -
  Warrants exercised                                    -                 -                   -                 -
  Warrants expired                                 (5,500)           (5,500)               9.09              9.09
                                           --------------     -------------     ---------------   ---------------
Balance at December 31, 1999                      870,251           870,251     $  8.00 - 15.00   $         10.97
                                           --------------     -------------     ---------------   ---------------
</TABLE>

Of the warrants outstanding, 192,500 expire in November 2001, 241,387 expire in
October 2002, 300,000 expire in July 2003, and 136,364 expire in May 2004.

Subsidiary retained earnings and dividends
------------------------------------------

For the foreseeable future, Microtec does not intend to distribute any retained
earnings to the U.S. parent company, Vitech America, Inc., but intends to
reinvest such earnings, if any, in the development and expansion of its
business. Up to now, substantially all of the retained earnings of the Company
on a consolidated basis have been attributable to the Company's Brazilian
subsidiaries including Microtec. Microtec is exempted from the payment of
Brazilian federal income tax through and including the year 2007, provided that
the Company meets certain budgeted production goals. The Company is not exempted
from the payment of a federal social contribution tax of approximately 12% of
pre-tax income. The normal rate of federal taxation on a non-exempt basis is
33%. 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. For the years
ended December 31, 1999, 1998 and 1997 the tax exemption benefits amounted to
approximately $0, $5,600,000 ($0.42 per share), and $3,000,000 ($0.25 per
share), respectively.

                                      F-20

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Stock options

Information on stock options is shown in the following table:
<TABLE>
<CAPTION>

                                               Options            Options            Price            Weighted
                                             Outstanding        Exercisable          Range         Average Price
                                           --------------     -------------     ---------------   ---------------
<S>                                             <C>               <C>           <C>               <C>
Balances at December 31, 1996                   4,744,663         4,605,260     $  .04  - 22.73   $         18.10

Granted in 1997                                   144,427                 -       8.18  - 16.36             12.16
Became exercisable                                      -           176,437        .04  - 16.36              8.09
Exercised                                        (152,130)         (152,130)      .04  -   1.16               .07
Other                                              24,387           (26,180)                  -                 -
                                           --------------     -------------     ---------------   ---------------
Balances at December 31, 1997                   4,761,347         4,603,387        .04  - 22.73             18.40

Granted in 1998                                    33,000                 -               14.09             14.09
Became exercisable                                      -           103,730        .04 -  14.09              4.51
Exercised                                         (11,440)          (11,440)                .04               .04
Other                                             (28,600)           (2,200)                  -                 -
                                           --------------     -------------     ---------------   ---------------
Balances at December 31, 1998                   4,754,307         4,693,477         .04 - 22.73             18.14

Granted in 1999                                    86,300                 -        9.00 - 18.00              9.59
Became exercisable                                                  147,130          .04 - 1.16               .23
Exercised (a)                                     (38,260)          (38,260)         .04 - 1.16               .32
                                           --------------     -------------     ---------------   ---------------

Balances at December 31, 1999 (b)               4,802,347         4,802,347     $   .04 - 22.73   $         18.44
                                           --------------     -------------     ---------------   ---------------
</TABLE>
(a)      Such exercised options consisted of options issued by principal
         shareholders to certain employees of the Company. The exercise of such
         options did not result in the issuance of new shares by the Company.

(b)      Of the options outstanding at December 31, 1999, 90,220 consist of
         options issued by principal shareholders to certain employees of the
         Company. The exercise of such options will not result in the issuance
         of new shares by the Company. The remainder of such options consist of
         options granted by the Company to purchase shares from the Company.

In January 1999, 1998 and 1997, the Company granted options to purchase up to
40,000, 33,000 and 22,000 shares of common stock to directors with an exercise
price of $9.00, $14.09 and $8.18 per share, respectively.

During 1997, the Company granted options to purchase a total of 82,827 shares of
the Company's common stock at exercise prices of from $10.91 to $16.36 per share
to a related party. Such options were granted in connection with consulting
services performed for the Company. The options are exercisable for a five year
period. The options were issued pursuant to the provisions of the Company's 1996
Stock Option Plan.

In June 1997, the majority shareholders of the Company transferred a portion of
their options totaling 330,000 to purchase shares of the Company's common stock
to certain members of the Company's management. The options are exercisable at
$13.64 per share, and were transferred with the same terms and conditions as
originally granted.

The Company applies APB Opinion No. 25 and related interpretations in accounting
for its stock option plans and, accordingly, no compensation cost has been
recognized because stock options granted under the plans were at exercise prices
which were equal to or greater than market value at date of grant. Had
compensation expense been determined as provided in SFAS 123 for stock options
using the Black-Sholes option-pricing model, the pro forma effect on the
Company's net income (loss) and per share amounts would have been:

                                      F-21

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999

<TABLE>
<CAPTION>

                                            1999               1998               1997
                                       --------------    ----------------   ---------------
<S>                                    <C>               <C>                <C>
Net income (loss)
    As reported                        $ (21,103,093)    $     17,862,012   $    12,792,261
    Pro forma                            (21,329,103)          17,680,512        12,565,061

Income (loss) per share
    Basic
          As reported                  $       (1.42)    $           1.36   $          1.07
          Pro forma                            (1.43)                1.34              1.05
    Assuming dilution
          As reported                  $       (1.42)    $           1.34   $          1.06
          Pro forma                            (1.43)                1.32              1.04
</TABLE>

The fair value of each option grant is calculated using the following weighted
average assumptions:

<TABLE>
<CAPTION>
                                         1999             1998            1997
                                     ------------     ------------    -----------
<S>                                       <C>              <C>            <C>
Expected life (years)                     5                4               4
Interest rate                             6%               6%              6%
Volatility                                25%              40%            30%
Dividend yield                            0%               0%              0%
</TABLE>

Note 14 - Major suppliers
-------------------------

The Company purchased merchandise principally from suppliers located in the
United States. In 1999, no one supplier accounted for in excess of 10% of total
purchases. In 1998, purchases from one unrelated supplier account for
approximately 15.5% of total purchases. In 1997, one unrelated supplier
accounted for 12% of total purchases.

Note 15 - Commitments and contingencies
---------------------------------------

In February 2000, the Company entered into a five-year noncancelable lease
agreement for an office and warehouse building in Miami, Florida, at an annual
rental of approximately $146,000. The lease requires the Company to pay for its
proportionate share of real estate taxes, insurance and other taxes and
assessments.

The Company's Brazilian operations are centered in the states of Sao Paulo and
Bahia. The Company leases approximately 15,000 square feet of office space in
Sao Paulo for an annual rent of approximately $156,000. The lease on such
property expires in April 2000 with an option to renew for up to three more
years. The Company is currently evaluating the renewal of the lease. The Company
leases approximately 160,000 square feet of manufacturing and administrative
space in Ilheus for an annual rent of approximately $122,000. Such lease expires
in May 2000, with an option to renew for up to three years. The Company is
currently evaluating the renewal of such lease and the possible purchase of the
facility. In addition, the Company leases warehouse and retail space in Recife
and Belo Horizonte.

In 1998, the Company entered into operating leases for equipment ranging from 36
to 84 months and requiring monthly payments of $105,965. These leases are
noncancelable and expire at various dates through 2005.

In December 1998, the Company entered into sale leaseback transaction, whereby
the Company sold a net amount of $2,500,000 of assets to an unrelated third
party. The Company in turn entered into an operating lease for the use of the
assets. In November 1999, the Company restructured an operating lease for
computer software as a capital lease in the principal amount of $2,160,000.

                                      F-22
<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


The following are the minimum lease payments that will have to be made in each
of the years indicated based on capital and operating leases (inclusive of the
warehouse and office lease) in effect as of December 31, 1999:

                                      Capital        Operating
                                      Leases           Leases
                                   ------------     ------------
2000                               $  1,367,329      $   622,029
2001                                  1,261,664          592,563
2002                                    993,579          522,199
2003                                    287,731          514,489
2004                                    191,821          514,489
Thereafter                                    -          268,663
                                   ------------     ------------
Total minimum lease payments          4,102,124      $ 3,034,432
                                                    ------------
Less amount representing
  interest                            (629,053)
                                   ------------
Present value of minimum
  lease payments                      3,473,071
Less current portion                (1,216,458)
                                   ------------
Long term portion                  $  2,256,613
                                   ------------

Rent expense under all operating leases in 1999, 1998 and 1997, was
approximately $948,000, $831,000, and $495,000, respectively.

The Company has a revolving line of credit in the amount of $2,000,000 with
Eastern National Bank in Miami, Florida, with which the Company maintains its
primary banking relationship. This credit line is secured by a lien on certain
property owned by the Company. The credit line bears interest at a floating rate
equal to prime plus two. As of December 31, 1999, there was $1.8 million owed
under the facility.

The Company is subject to inspections and potential claims arising out of the
conduct of its business, principally in connection with tax, labor and
government regulatory matters, and is the defendant in certain legal actions
arising from its normal business practice. While the ultimate results of
inspections, claims, administrative processes and lawsuits cannot be determined,
management does not expect that the resolution of such matters will have a
material effect on the financial position or future results of operations of the
Company.

Note 16 - Retirement savings plan

Effective April 1, 1997, the Company established a retirement savings plan which
qualifies under Section 401(k) of the Internal Revenue Code. This retirement
plan allows eligible employees to contribute a percentage of their income on a
pretax basis to the plan. The Company matches 25% of the first 6% of the
employee's contribution. Such matching Company contributions are invested in
shares of the Company's common stock and have a five-year vesting period. In
addition, the plan provides for a discretionary employer contribution which may
be determined each year by the Company's Board of Directors. The Company made no
contributions to the plan during 1999, 1998 or 1997 other than the Company's 25%
matching amounts.

Note 17 - Gateway strategic alliance

In April 1999, the Company received a short-term loan from Gateway for the
principal amount of $11 million, bearing interest at the annual rate of 10%. The
loan originally had a term of 90 days, but was extended by mutual agreement to
180 days. The proceeds of the loan were used for the repayment of indebtedness
and for general working capital purposes. This short term-loan was repaid in
full out of the proceeds from a convertible note investment by Gateway made in
September 1999 as discussed below.

                                      F-23

<PAGE>

                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


In September 1999, the Company formed a strategic alliance with Gateway which
resulted in a $31 million investment by Gateway. Pursuant to a Convertible Loan
Agreement (the "Loan Agreement"), the investment was in the form of a 10%
Convertible Promissory Note. The Note bears interest at 10% per annum with
interest payable quarterly. The Note matures on March 16, 2001. The Note is
initially convertible at $11.02 (the "initial Conversion Price") subject to
stock-splits, stock dividends, rights offering by the Company and certain
combinations, capitalizations, reclassifications, extraordinary distributions
and other similar events. Under the terms of the Agreement, beginning six months
after the Closing Date, Gateway may demand registration of the securities
underlying the Note. William C. St. Laurent and Georges C. St. Laurent, III, the
Company's President and Chief Executive Officer, jointly and severally, have
guaranteed $11,000,000 of the Note.

In no event shall the Company issue more than 19.9% of the then issued and
outstanding shares of Common Stock of the Company, unless the Company shall
obtain stockholder approval or a waiver of such requirement by the Nasdaq Stock
Market. Messrs. St. Laurent have agreed to vote their shares in favor of any
transaction contemplated by the Agreement, at any meeting, for the purpose of
issuing in excess of 19.9% of the Company's Common Stock.

The Company also was granted an option, exercisable at the Company's election,
to acquire certain exclusive territorial rights in Brazil from Gateway. For this
option, the Company issued 538,284 shares of the Company's common stock to
Gateway.

Gateway was also granted an option, exercisable within two years from the
Closing Date, to engage in the following transactions with the Company: (i)
extend an additional $40 million convertible loan to the Company on the same
terms and conditions as the Note, with a conversion price equal to the lower of
(x) $11.02 per share or (y) a 20% premium over the then market value of the
Company's common stock as reported on the Nasdaq Stock Market determined by
taking the arithmetic average of the closing price of the Company's common stock
for a period of twenty (20) trading days preceding the date on which Gateway
gives notice of its intent to exercise this option and/or (ii) subject to
compliance with applicable law, enter into a merger agreement whereby the
Company's shareholders shall have the option to (x) exchange their shares for
$14.00 per share in cash or (y) one share of a new callable putable common stock
(the "New Stock"). The New Stock shall have a call provision whereby Gateway
will have the right to call 100% (and not less than 100%) of the New Stock,
including all vested options, which it does not already own, at a price which
shall be determined by the Company's performance. The New Stock shall also have
a put provision whereby the New Stock holders will have the right to put
annually to Gateway 100% (and not less than 100%) of their New Stock, including
all vested dilutive options and warrants, at a price which shall be determined
by the Company's performance.

Note 18 - Business Conditions
-----------------------------

In January 1999, the Brazilian government allowed its currency, the Real, to
trade freely against other foreign currencies, which resulted in an immediate
devaluation of the Real against the U.S. dollar. The Company's accounts
receivable are denominated in the Real while principally all of the Company's
trade accounts payable and other debts are denominated in U.S. dollars.
Accordingly, with the devaluation, the Company recorded a currency transaction
loss of $19,009,336 associated with dollar-denominated monetary assets and
liabilities held by the Company's Brazilian subsidiaries.

                                      F-24
<PAGE>


                              VITECH AMERICA, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


Furthermore, the devaluation and the resulting unfavorable business conditions
in Brazil have resulted in reduced demand as well as less liquidity in the
borrowing capacity among the Company's customers and in the market in general.
In an effort to minimize any further effects of the currency devaluation,
unfavorable business conditions and to improve the liquidity of the Company,
management has taken the following actions:

     o Indexed the pricing of its products in Reais to the U.S. dollar.
     o Significantly reduced the credit terms that it extends to customers.
     o Renegotiated trade accounts payable of approximately $22 million at
       December 31, 1998 to terms which average 12 months.
     o Negotiated short term financing.
     o Modified the repayment terms of certain convertible notes.
     o Continue to negotiate with TAC (see notes 4 and 5).
     o Completion of the consolidation of the manufacturing facilities
       and reduction of certain overheads in 1999 which reduces
       administrative expenses and inventory carrying costs.

While the Company continues to believe that the long-term growth opportunities
remain for the Brazilian information technology market, it continues to evaluate
the impact of the current business conditions on its operations. The ultimate
resolution of these matters could have a material adverse effect on the
financial condition and results of operation for future quarters.

Note 19 - Quarterly financial information (unaudited)
-----------------------------------------------------

The following table presents the unaudited quarterly financial information for
the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                           Quarter Ended
                                            ----------------------------------------------------------------------------
                                                December 31,        September 30         June 30,          March 31,
                                            ------------------- ------------------- ----------------- ------------------
<S>                                         <C>                 <C>                 <C>               <C>
1999
  Net sales                                 $       31,287,094  $       28,191,885  $     25,641,391  $      15,302,714
  Income from operations                             1,801,657           5,030,826         5,237,735            200,318
  Net income (loss)                                    603,162             550,580           465,423        (22,722,258)
  Earnings (loss) per common
      share - Basic                                       0.04                0.04              0.03              (1.55)
  Earnings (loss) per common
      share - Diluted                                     0.04                0.04              0.03              (1.55)
                                            ------------------- ------------------- ----------------- ------------------

1998
  Net sales                                 $       75,513,490  $       47,410,603  $     38,635,842  $      33,774,664
  Income from operations                            13,925,160          11,066,274         7,195,953          5,929,960
  Net income                                         6,192,570           4,638,840         3,924,101          3,106,500
  Earnings per common share - Basic                       0.42                0.36              0.32               0.26
  Earnings per common share - Diluted                     0.42                0.36              0.32               0.25
                                            ------------------- ------------------- ----------------- ------------------
</TABLE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.


                                      F-25
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Our directors and executive officers and their ages are as follows:
<TABLE>
<CAPTION>

                  Name                             Age                                 Position
                  ----                             ---                                 --------
<S>                                                 <C>          <C>
Georges C. St. Laurent, III (1)                     39           Chairman of the Board of Directors and Chief
                                                                 Executive Officer
William C. St. Laurent (2)                          35           President, Chief Operating Officer, and Director
Edward A. Kelly                                     32           Chief Financial Officer
Francisco Suarez Warden (1)                         57           Director
H.R. Shepherd (1)(2)                                78           Director
William Robin Blackhurst (2)                        65           Director
</TABLE>
-------------
(1)      Member of the Compensation Committee.
(2)      Member of the Audit Committee.

         Georges C. St. Laurent III. Mr. St. Laurent has served as Chairman of
the Board and Chief Executive Officer of the Company since 1993. Between 1986
and January 1993, Mr. St. Laurent operated a proprietary firm, GSL Trading Co.,
Miami, Florida, which was engaged in the re-manufacturing of computer hardware
for sale to Brazil and other countries in Latin America. Between 1986 and 1993,
Mr. St. Laurent was also an officer and principal shareholder of TNT Systems
Inc., which was a computer parts broker selling to customers in Latin America
and the U.S. Between 1983 and 1986, Mr. St. Laurent was a member of the Chicago
Mercantile Exchange and was engaged in trading activities for his proprietary
account specializing in currency options and futures market making. Since 1986
to the present, Mr. St. Laurent has been a director of Clinica Kirpalmar, a
not-for-profit Latin American medical foundation. Mr. St. Laurent graduated from
Yale University in 1982 with a B.S. in Molecular Biology. Georges C. St. Laurent
III is the brother of William C. St. Laurent.

         William C. St. Laurent. Mr. St. Laurent has served as President and
Chief Operating Officer of the Company and a Director since 1993. Mr. St.
Laurent has also served as Vice Chairman of the Board of Directors of the
Western Bank of Oregon from January 1989 through January 1996. Mr. St. Laurent
previously owned several private foods processing companies located in Oregon
from 1988 to 1992. Mr. St. Laurent graduated from Cornell University in 1986
with a B.S. in Hotel Administration. Mr. St. Laurent also owns 100% of the
voting shares of Vitoria Tecnologia S.A., which was the primary customer of the
Company from inception until Vitoria Tecnologia S.A. ceased operations in March
of 1996. William C. St. Laurent is the brother of Georges C. St. Laurent III.

         Edward A. Kelly, Mr. Kelly has served as the Chief Financial Officer of
the Company since June 1997. Prior to his appointment as Chief Financial
Officer, Mr. Kelly had served as the Company's Corporate Controller since June
of 1996. Mr. Kelly graduated from the University of Florida with a Bachelor of
Science Degree in Finance and holds a Master of Business Administration from the
University of Florida. Prior to joining the Company, Mr. Kelly worked as an
associate with a seed capital fund that assisted start-up technology companies.
Prior to that, Mr. Kelly worked in the cellular telephone industry with Bell
South Mobility, Inc.

         Francisco Suarez Warden, CPA. Mr. Suarez has served as Director of the
Company since February 2000. Mr. Suarez is the Director of Human Resources for
Groupo Financiero Bancomer, Mexico. He has over 25 years of senior management
experience with U.S Fortune 500 companies operating in Latin America. Mr. Suarez
is a former President of the Mexican Institute of Financial Executives and Vice
President of the Board of the National Chapter. He received his CPA degree from
the Instituto Tecnologico de Monterrey, Mexico.

         H.R. Shepherd. Mr. Shepherd has been a director of the Company since
November 1996. Since 1993, Mr. Shepherd has served as special advisor to the
Chairman of Medeva PLC, an international pharmaceutical company. From 1955 to
1993 Mr. Shepherd served as Founder and Chairman of Armstrong Pharmaceuticals,
previously known as Aerosol Techniques, a pharmaceutical drug delivery company
which was acquired by Medeva PLC. Mr. Shepherd presently is the Chairman of the
Albert F. Sabin Vaccine Foundation.

         William Robin Blackhurst. Mr. Blackhurst has served as Director of the
Company since January 1998. Mr. Blackhurst retired in 1997 after serving as

                                       31
<PAGE>

managing director for the Sao Paulo office of UBS Securities LLC since 1994.
Prior to 1994, Mr. Blackhurst was engaged in managerial positions at Banco
Multiplic S.A., ACP (Automated Call Processing), Inc. and Brazil Venture Capital
Partic. Ltda. Mr. Blackhurst holds a Master of Arts degree in Law from the
Balliol College, Oxford University in England.

Meetings and Committees of the Board of Directors

         During the Company's fiscal year ended December 31, 1999, the Company's
Board of Directors held four (4) meetings and took action an additional one (1)
time by Unanimous Written Consent. Each member of the Board participated in each
action of the Board.

         The Board of Directors of the Company has established a Compensation
Committee and an Audit Committee. The Compensation Committee administers the
Company's stock option plan and makes recommendations to the full Board of
Directors concerning compensation, including incentive arrangements, of the
Company's officers and key employees. The members of the Compensation Committee
are Georges C. St. Laurent, H.R. Shepherd, and Francisco Suarez. During the year
ended December 31, 1999, the Compensation Committee held one (1) meeting. The
Audit Committee reviews the engagement of the independent accountants and
reviews the independence of the accounting firm. The Audit Committee also
reviews the audit and non-audit fees of the independent accountants and the
adequacy of the Company's internal accounting controls. The members of the Audit
Committee are William St. Laurent, William Robin Blackhurst and H.R. Shepherd.
During the year ended December 31, 1999, the Audit Committee held one (1)
meeting. The Compensation Committee and the Audit Committee consist of a
majority of independent directors.

         Directors who are not employees of the Company are paid $2,500 per
meeting for serving as directors.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors and executive officers,
and persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent (10%) stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners have been complied
with for the period to which this proxy relates.

ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth information relating to the compensation
paid by the Company for the past three fiscal years to: (i) the Company's
Chairman and Chief Executive Officer; and (ii) each of the Company's executive
officers who earned more than $100,000 during the fiscal year ended December 31,
1999 (collectively, the "Named Executive Officers"):

<TABLE>
<CAPTION>
                                                                                          Stock       All Other Annual
Name and Principal Position               Year              Salary        Bonus          Options (#)    Compensation
---------------------------               ----              ------        -----          -----------    ------------
<S>                                       <C>             <C>              <C>             <C>            <C>
Georges C. St. Laurent, III,              1999            $192,000         $50,000            --              --
   Chairman of the Board                  1998            $240,000         $50,000            --              --
   and Chief Executive                    1997            $240,000         --                 --              --
   Officer

William C. St. Laurent,                   1999            $192,000         $50,000            --              --
    President and                         1998            $240,000         $50,000            --              --
    Chief Operating Officer               1997            $240,000         --                 --              --

Edward A. Kelly                           1999            $100,000         $30,000            25,000          --
    Chief Financial                       1998            $100,000         $18,063            --              --
    Officer                               1997             $68,500         $13,000            27,500          --
</TABLE>
------------------
                                       32


<PAGE>

Option Grants in Last Fiscal Year

         During the year ended December 31, 1999, the Company granted options to
purchase 25,000 shares of the Common Stock of the Company to Edward A. Kelly.
The options are exercisable at a price of $9.00 per share and are exercisable
over a five year period. Other than this, no other options were granted to the
Named Executive Officers during the year ended December 31, 1999.

Aggregated Fiscal Year-End Options Value Table

         The table below sets forth certain information pertaining to
unexercised stock options held by the Named Executive Officers during the year
ended December 31, 1999. No Stock Options were exercised by the Named Executive
Officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
                                                       Number of Unexercised Options    Value of Unexercised In-the-Money
                                 Shares                  Held  at December 31, 1999        Options at December 31, 1999
                               Acquired on     Value     --------------------------        ----------------------------
Name                            Exercise     Realized     Exercisable Unexercisable        Exercisable    Unexercisable
----                            --------     --------     -------------------------        -----------    -------------
<S>                                <C>           <C>        <C>              <C>                     <C>        <C>
Georges C. St. Laurent, III        0             0          2,075,700        0                       $0         0
William C. St. Laurent             0             0          1,994,300        0                       $0         0
Edward A. Kelly                    0             0             59,540        0                  $47,450         0
</TABLE>
---------------------
(1)       The closing bid quotation for the Company's Common Stock as reported
          by the Wall Street Journal on December 31, 1999 was $8.00 and $5.69 on
          April 26, 2000.

1996 Stock Option Plan

         The 1996 Stock Option Plan provides for the grant of options to
purchase up to 550,000 shares of Common Stock to employees, officers, directors,
and consultants of the Company. Options may be either incentive stock options
within the meaning of Section 422 of the United States Internal Revenue Code of
1986, as amended (the Code ), or non-qualified options. Incentive stock options
may be granted only to employees of the Company, while non-qualified options may
be issued to non-employee directors, consultants, and others, as well as to
employees of the Company. The plan is in addition to the currently outstanding
options to purchase 330,000 shares of Common Stock that Georges C. St. Laurent
III and William C. St. Laurent have elected to reserve for the transfer to
employees of the Company.

         The Plan is administered by the Compensation Committee of the Board of
Directors, which determines, among other things, those individuals who shall
receive options, the time period during which the options may be partially or
fully exercised, the number of shares of Common Stock issuable upon the exercise
of each option, and the option exercise price.

         The exercise price of an incentive stock option may not be less than
the fair market value per share of Common Stock on the date the option is
granted. The exercise price of a non-qualified option may be established by the
Board of Directors (or the Compensation Committee). The aggregate fair market
value (determined as of the date the option is granted) of Common Stock for
which any person may be granted incentive stock options which first become
exercisable in any calendar year may not exceed $100,000. No person who owns,
directly or indirectly, at the time of the granting of an incentive stock option
to such person, 10% or more of the total combined voting power of all classes of
stock of the Company (a 10% Shareholder ) shall be eligible to receive any
incentive stock options under the Plan unless the exercise price is at least
110% of the fair market value of the shares of Common Stock subject to the
option, determined on the date of grant. Non-qualified options are not subject
to such limitations.

         Incentive stock options may not be transferred by an optionee other
than by will or the laws of descent and distribution, and, during the lifetime
of an optionee, the option may be exercised only by the optionee. In the event
of termination of employment for cause or voluntary termination of employment by
the optionee, the option will expire upon such termination. In the event of
termination of employment other than by death or disability, for cause, or
voluntary termination by the optionee, the optionee will have no more than
thirty days after such termination during which the optionee shall be entitled
to exercise the option, unless otherwise determined by the Board of Directors.
Upon termination of employment of an optionee by reason of death or permanent
and total disability, such optionee s options remain exercisable for one year
thereafter to the extent such options were exercisable on the date of such
termination. No similar limitation applies to non-qualified options.

                                       33
<PAGE>

         Options under the Plan must be issued within ten years from August 20,
1996, the effective date of the Plan. Incentive stock options granted under the
Plan cannot be exercised more than ten years from the date of grant. Incentive
stock options issued to a 10% Shareholder are limited to five year terms.
Options granted under the Plan generally provide for the payment of the exercise
price in cash and may provide for the payment of the exercise price by delivery
to the Company of shares of Common Stock already owned by the optionee having a
fair market value equal to the exercise price of the options being exercised, or
by a combination of such methods. Therefore, if so provided in an optionee s
grant, such optionee may be able to tender shares of Common Stock to purchase
additional shares of Common Stock and may theoretically exercise all of his or
her stock options with no additional investment other than the consideration
paid for the purchase of such optionee s original shares.

         Any unexercised options that expire or that terminate upon an
employee's ceasing to be employed by the Company become available again for
issuance under the Plan.

         The Plan may be terminated or amended at any time by the Board of
Directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the Plan may not be
increased without the consent of the shareholders of the Company.

         As of the date of this Proxy, options for 287,127 shares of Common
Stock have been issued pursuant to this plan. Such options were issued to
employees, directors and consultants of the Company at exercise prices ranging
from $6.50 to $18.00 per share.

Board Compensation Committee Report or Executive Compensation

         The following statement made by the Compensation Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of such Acts.

         The Compensation Committee is responsible for making recommendations to
the Board of Directors concerning executive compensation, including base
salaries, bonuses, awards of stock options and reimbursement of certain business
related costs and expenses. The Compensation Committee currently consists of
Messrs. Georges C. St. Laurent III, H.R. Shepherd, and Francisco Suraez Warden,
Messrs. Shepherd and Suarez are non-employee directors of the Company. Mr. St.
Laurent does not vote on or participate in discussions concerning his
compensation.

         In determining the compensation of the Company's Executive officers,
the Compensation Committee takes into account all factors which it considers
relevant, including the business conditions in general and in the Company's line
of business during the year in light of such conditions, the market compensation
for executives of similar background and experience, and the performance of the
specific executive officer under consideration and the business area of the
Company for which such executive officer is responsible. The structure of each
executive compensation package is weighted toward incentive forms of
compensations, including stock options, so that such executive's interest is
aligned with the interests of the shareholders of the Company. The Compensation
Committee believes that granting stock options provides an additional incentive
to executive officers to continue in the service of the Company and gives them
an interest similar to shareholders in the success of the Company. The
Compensation program for the executive officers in 1999 consisted of base
salaries, cash bonuses and stock option grants and reimbursement of certain
business related expenses.

         To the extent readily determinable, another factor the Compensation
Committee considers when determining compensation is the anticipated tax
treatment to the Company and to the executive officer of various payments and
benefits. For example, some types of compensation plans and their deductibility
by the Company depend upon the timing of an executive officer's vesting or
exercise of previously granted rights. Further interpretations of, and changes
in the tax laws and other factors beyond the Compensation Committee's control
also could affect the deductibility of compensation.

                                          Compensation Committee

                                          Georges C. St. Laurent III, Chairman
                                          H.R. Shepherd
                                          Francisco Suarez Warden

                                       34
<PAGE>

Stock Performance Graph










                                [OBJECT OMITTED]
























                                       35

<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth Common Stock ownership information as of
April 26, 2000, with respect to (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and named executive officer of the Company and (iii) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
                                                                                                   Percentage Beneficially
Name and Address of Beneficial Owner (1)                          Number of Shares                         Owned (2)
----------------------------------------                          ----------------                         ---------
<S>                                                                <C>       <C>                             <C>
Georges C. St. Laurent, III                                        6,232,610 (3)                             33.8%
William C. St. Laurent                                             5,783,325 (4)(5)                          31.5%
H.R. Shepherd                                                         53,000 (6)                              *
William Robin Blackhurst                                              31,000 (7)                              *
Francisco Suarez Warden                                               10,000 (8)                              *
Edward A. Kelly                                                      104,300 (9)                              *
Georges C. St. Laurent, Jr.                                        3,357,827 (10)                            20.1%
    5115 Dubois Avenue
    Vancouver, WA 98661
Gateway Companies, Inc.                                            3,351,351 (11)                            17.5%
    4545 Towne Centre Court
    San Diego, CA 92121
St. Denis J. Villere & Company, Inc.                               1,060,616                                  6.5%
    210 Baronne St., Suite 808
    New Orleans, LA 70112-1727
All directors and named executive                                 12,214,235 (12)                            59.3%
    officers as a group (6 persons)
</TABLE>
----------------------
*      Less than 1%
(1)    Unless otherwise indicated, the address of each of the listed beneficial
       owners identified is c/o Vitech America, Inc., 2190 N.W. 89th Place,
       Miami, Florida 33172. Unless otherwise noted, the Company believes that
       all persons named in the table have sole voting and investment power with
       respect to all shares of Common Stock beneficially owned by them.
(2)    A person is deemed to be the beneficial owner of securities that can be
       acquired by such person within 60 days from the date of this Proxy
       Statement upon the exercise of options. Each beneficial owner's
       percentage ownership is determined by assuming that options that are held
       by such person (but not those held by any other person) and that are
       exercisable within 60 days from the date of this Proxy Statement have
       been exercised. As of April 26, 2000 there were 16,345,939 shares of
       Common Stock outstanding.
(3)    Includes options to purchase 2,075,700 shares of Common Stock.
(4)    Includes 2,485,608 shares of Common Stock held by Wolf Partners, a family
       Limited Partnership of which William C. St. Laurent is the general
       partner.
(5)    Includes options to purchase 1,994,300 shares of Common Stock.
(6)    Includes options to purchase 53,000 shares of Common Stock.
(7)    Includes options to purchase 31,000 shares of Common Stock.
(8)    Includes options to purchase 10,000 shares of Common Stock.
(9)    Includes options to purchase 99,540 shares of Common Stock.
(10)   Includes options  and warrants to purchase 387,467 shares of Common
       Stock.
(11)   Includes an option to convert a convertible note into 2,813,067 shares of
       Common Stock.
(12)   See notes (3)-(9) above.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In March 1999, the Company received a loan from Georges St. Laurent
Jr., the father of Georges St. Laurent III, the Company's Chairman of the Board
and Chief Executive Officer, and William St. Laurent, the Company's President
and Chief Operating Officer, ("GSL Jr"), for the principal amount of $10.5
million. This loan was in addition to the $6.7 million in loans that the Company
had received in 1998 from GSL Jr. The $6.7 million loans are evidenced by
promissory notes, are secured by certain assets of the Company, bear interest at
the annual rate of 10%, and are payable upon demand with 90 days notice. The
$10.5 million loan is evidenced by a promissory note, bears interest at the
annual rate of 10%, and, at the makers option, can be exchanged for a
convertible note (convertible at $9.25) should the loan not be repaid on demand
with 90 days notice. In connection with this loan the Company issued to GSL Jr.,
warrants to purchase 300,000 shares of the common stock of the Company at an

                                       36
<PAGE>

exercise price of $9.25 per share. During 1999, the Company repaid approximately
$3.6 million of such loans.

         During 1999 and 1998, the Company bought and sold products and services
from/to ITC.net, an entity related through common ownership, valued in the
amount of approximately $3.5 million and $1.1 million, respectively. As of
December 31, 1999, the Company had a receivable outstanding from ITC.net of $1.6
million. Additionally, during 1998, the Company entered into a joint marketing
agreement with ITC.net, whereby the two companies will cross sell each others
products. In consideration for the joint marketing agreement, ITC.net granted to
the Company's shareholders of record date March 1, 1999, warrants to purchase
one share of ITC.net common stock for every share of the Company owned by the
shareholder. The warrants have an exercise price of $0.15 per share and are
non-exercisable and non-transferable until such time that there is an effective
registration statement covering the securities of ITC.net.

         In April 1999, the Company received a short-term loan from Gateway
Companies, Inc. ("Gateway") for the principal amount of $11 million, bearing
interest at the annual rate of 10%. The loan originally had a term of 90 days,
but was extended by mutual agreement to 180 days. The proceeds of the loan were
used for the repayment of indebtedness and for general working capital purposes.
This short term-loan was repaid in full out of the proceeds from a convertible
note investment by Gateway made in September 1999 as discussed below.

         In September 1999, the Company formed a strategic alliance with Gateway
which resulted in a $31 million investment by Gateway. Pursuant to a Convertible
Loan Agreement (the "Loan Agreement"), the investment was in the form of a 10%
Convertible Promissory Note. The Note bears interest at 10% per annum with
interest payable quarterly. The Note matures on March 16, 2001. The Note is
initially convertible at $11.02 (the "initial Conversion Price") subject to
stock-splits, stock dividends, rights offering by the Company and certain
combinations, capitalizations, reclassifications, extraordinary distributions
and other similar events. Under the terms of the Agreement, beginning six months
after the Closing Date, Gateway may demand registration of the securities
underlying the Note. William C. St. Laurent and Georges C. St. Laurent, III, the
Company's President and Chief Executive Officer, jointly and severally, have
guaranteed $11,000,000 of the Note. Messrs. St. Laurent have agreed to vote
their shares in favor of any transaction contemplated by the Loan Agreement, at
any meeting, for the purpose of issuing in excess of 19.9% of the Company's
common stock.

         The Company also was granted an option, exercisable at the Company's
election, to acquire certain exclusive territorial rights in Brazil from
Gateway. For this option, the Company issued 538,284 shares of the Company's
common stock to Gateway.

         Gateway was also granted an option, exercisable within two years from
the Closing Date, to engage in the following transactions with the Company: (i)
extend an additional $40 million convertible loan to the Company on the same
terms and conditions as the Note, with a conversion price equal to the lower of
(x) $11.02 per share or (y) a 20% premium over the then market value of the
Company's common stock as reported on the Nasdaq Stock Market determined by
taking the arithmetic average of the closing price of the Company's common stock
for a period of twenty (20) trading days preceding the date on which Gateway
gives notice of its intent to exercise this option and/or (ii) subject to
compliance with applicable law, enter into a merger agreement whereby the
Company's shareholders shall have the option to (x) exchange their shares for
$14.00 per share in cash or (y) one share of a new callable putable common stock
(the "New Stock"). The New Stock shall have a call provision whereby Gateway
will have the right to call 100% (and not less than 100%) of the New Stock,
including all vested options, which it does not already own, at a price which
shall be determined by the Company's performance. The New Stock shall also have
a put provision whereby the New Stock holders will have the right to put
annually to Gateway 100% (and not less than 100%) of their New Stock, including
all vested dilutive options and warrants, at a price which shall be determined
by the Company's performance.

         During the year ended December 31, 1999, the Company purchased products
valued at $2,640,000 from Gateway. At December 31, 1999, the Company had an
outstanding accounts payable to Gateway of $487,000.

         In March 2000, the Company entered into a $10.0 million loan agreement
with Gateway for the purchase of components. The one year loan bears interest at
10% per year payable quarterly. At the option of Gateway, the principal and/or
interest on the note is convertible into the common stock of the Company if not
repaid at maturity.

         During 1999, the Company made loans to Georges C. St. Laurent III, the
Company's Chairman of the Board and Chief Executive Officer. The highest amount
outstanding during the year was approximately $650,000. The balance outstanding
at December 31, 1999 was $179,093.

                                       37
<PAGE>



                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 8-K

(a)   The following are filed as part of this report:

         Financial statements and financial statement schedules - see "Item 8.
Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>
Exhibits:
<S>          <C>
(2.1)        Contract for Discontinuation of Company Participations and other Agreements between Vitech America, Inc., Microtec
             Holding USA, Inc. and Microhold Participacoes e Empreendimentos S/C Ltda. dated July 10, 1997. (2)
(2.2)        Purchase agreement between Vitech America, Inc. and Microtec Holdings USA, Inc. dated July 10, 1997. (2)
(2.3)        Buy-Sell Contract between Vitech America, Inc. and Tech Shop Holdings USA, Inc. dated November 17, 1997. (4)
(2.4)        Buy-Sell Contract between Vitech America, Inc. and Recife Holdings USA, Inc. dated November 18, 1997. (4)
(3.1)        Articles of Incorporation dated June 24, 1993. (1)
(3.2)        Amendments to the Company's Articles of Incorporation dated November 13, 1995 and July 26, 1996. (1)
(3.3)        By-Laws of the Company. (1)
(4.1)        Form of Common Stock Certificate. (1)
(10.1)       Stock Option Plan. (1)
(10.5)       Option Agreements for William C. St. Laurent and Georges St. Laurent, III. (1)
(10.17)      Securities Purchase Agreement dated October 10, 1997, by and between the Company, H.W. Partners, L.P., as
(10.18)      Form of Convertible Promissory Note dated October 10, 1997 for the Investors. (3)
(10.19)      Put and Call Agreement dated October 10, 1997 between the Company and the Investors. (3)
(10.20)      Registration Rights Agreement dated October 10, 1997 between the Company and the Investors. (3)
(10.21)      Form of Convertible Promissory Note dated October 10, 1997. (3)
(10.22)      Master Sales and Servicing Agreement among Technology Acceptance Corp., Technology Trust S.A., Bahiatech - Bahia
(10.23)      Convertible Loan Agreement between Vitech America, Inc. and Gateway Companies, Inc. dated September 19, 1999. (6)
(10.24)      Convertible Promissory Note dated September 16, 1999. (6)
(10.25)      Guaranty dated September 16, 1999. (6)
(21)         Subsidiaries of the Company.
(23.1)       Consent of Independent Accountants
(27.1)       Financial Data Schedule
--------------
(1)  Incorporated by reference to exhibit filed with the Company's Registration
     Statement on Form S-1, file #333-11505.
(2)  Incorporated by reference to exhibit filed with the Company's Form 8-K dated July 10, 1997 as amended.
(3)  Incorporated by reference to exhibit filed with the Company's Form 8-K dated October 10, 1997.
(4)  Incorporated by reference to exhibit filed with the Company's Form 8-K dated November 17, 1997.
(5)  Incorporated by reference to exhibit filed with the Company's Form 10-Q for the quarterly period ended
     March 31, 1998.
(6)  Incorporated by reference to exhibit filed with the Company's Form 8-K dated
     September 16, 1999.
</TABLE>
(b)   Reports on Form 8-K:

         None.



                                       38
<PAGE>



                                    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/  Georges C. St. Laurent III
     -------------------------------
Georges C. St. Laurent
Chairman of the Board and
Chief Executive Officer

Date:  April 13, 2000

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

                Signature                                    Title                                      Date
                ---------                                    -----                                      ----
<S>                                         <C>                                                    <C>
/s/  Georges C. St. Laurent III             Chairman of the Board of Directors                     April 13, 2000
------------------------------------------- and Chief Executive  Officer  (Principal
Georges C. St. Laurent, III                 Executive Officer)


/s/  William St. Laurent                    President, Chief Operating Officer and                 April 13, 2000
------------------------------------------- Director
William St. Laurent


/s/  Edward A. Kelly                        Chief Financial Officer                                April 13, 2000
------------------------------------------- (Principal Accounting Officer)
Edward A. Kelly


/s/  H.R. Shepherd                                                                                 April 13, 2000
-------------------------------------------
H.R. Shepherd                               Director


/s/  William Robin Blackhurst                                                                      April 13, 2000
-------------------------------------------
William Robin Blackhurst                    Director


/s/  Francisco Suarez                                                                              April 13, 2000
-------------------------------------------
Francisco Suarez                            Director
</TABLE>

                                       39