SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X]        ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
           EXCHANGE ACT OF 1934 [FEE REQUIRED]

           For the fiscal year ended JUNE 30, 1996

                                       OR

[_]        TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

               For the transition period from ________ to ________

                         Commission file number 0-27494

                         FIRST SOUTH AFRICA CORP., LTD.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           BERMUDA                                          N/A
 ------------------------------              ----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

             CLARENDON HOUSE, CHURCH STREET, HAMILTON HM CX, BERMUDA
          ------------------------------------------------------------
             (Address of Principal Executive Offices with Zip Code)

       Registrant's telephone number, including area code (441) 295-1422

Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered

                 NONE                                   NONE
               --------                               --------

Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $.01 PAR VALUE
                          ----------------------------
                                ("Common Stock")

                           CLASS A REDEEMABLE WARRANTS
                          ----------------------------
                              ("Class A Warrants")

                           CLASS B REDEEMABLE WARRANTS
                          ----------------------------
                              ("Class B Warrants")

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  [_]



<PAGE>



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 Registrants  knowledge,  in definitive  proxy or information  statements
incorporated  by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]

The   aggregate   market  value  of  the   Registrants   Common  Stock  held  by
non-affiliates of the Registrant as of September 5, 1996, was $15, 376,410.

As of September 5,1996 there were 2,300,000  shares of the  Registrant's  Common
Stock outstanding and 1,842,500 shares of the Registrant's Class B Common Stock.






                                        2

<PAGE>




                                     PART 1

ITEM 1.    DESCRIPTION OF BUSINESS

           First South Africa  Corp.,  Ltd.,  ("the  Company")  was organized to
acquire,  own and operate seasoned,  closely held companies in South Africa with
annual sales in the range of approximately $5 to $50 million.  Since its initial
public offering on January 24, 1996, the Company has acquired through its wholly
owned  subsidiary,   First  South  African  Holdings  (Pty)  Ltd.("FSAH"),   six
businesses  based  in  South  Africa  ("the  Acquisitions")  that are as a group
engaged in the following industry segments:

           1.  High quality plastic packaging machinery.
           2.  Metal washers used in the fastener industry.
           3.  Air conditioning and refrigeration machinery components.
           4.  Processed foods.

           Upon completion of its initial public  offering the Company  acquired
Starpak  (Pty)  Limited,  which is engaged in the  manufacture  of high  quality
plastic packaging  machinery;  L.S. Pressing (Pty) Limited,  which is engaged in
the  manufacture of washers for the use in the fastener  industry;  and Europair
Africa  (Pty)  Ltd.,  which is  engaged  in the  manufacture  and  supply of air
conditioning products. In April 1996, L.S. Pressings acquired Crowle Investments
(Pty)  Limited,(trading  as Paper & Metal  Industries) a small  manufacturer  of
rough washers for use in the fastener industry. In April 1996, Europair acquired
the assets and  business of  Universal  Refrigeration,  an agent and supplier of
refrigeration  products.  In June  1996,  FSAH  acquired  Piemans  Pantry  (Pty)
Limited, a manufacturer and distributor of high quality meat pies.

           FSAH acts as a vehicle for the  management of the Company's  business
interest in South  Africa.  FSAH  monitors the  operational  performance  of its
subsidiaries and seeks out prospective acquisition candidates in businesses that
compliment or are otherwise related to the Company's existing acquisitions,  and
in other businesses that may be identified by the Company's management.

HISTORY

           The Company was founded in September 1995 in response to management's
perception of a growing global  interest in South Africa as an emerging  market.
The Company believes that the recent relaxation of trade and financial sanctions
and the  reintegration  of South Africa into the world  economic  community  may
increase the  opportunity  for improved  growth in the South African  economy in
general and more  particularly in the industry  segments in which the Company is
engaged.

STRATEGY

           The  Company  intends to focus its efforts on  businesses  related to
infrastructure  development,  and consumer  goods that the Company  believes are
well  situated to benefit from South  Africa's on-going  transformation  into an
active  participant  in the global  market place.  The Company's  strategy is to
expand and improve its current  operations in the industry  sectors in which its
operating  subsidiaries  are currently  engaged,  and in other related  industry
sectors,  by acquiring  mid-size,  closely-held,  companies in South Africa that
operate  efficiently,  profitably  and have  seasoned  management.  The  Company
believes  that it can acquire  these types of  companies  at lower  multiples of
earnings  than  comparable  companies  would command in the United  States.  The
Company  seeks to benefit from the  combination  of business  factors that South
Africa  has to  offer,  which  includes  a skilled  work  force,  effective  and
expanding  infrastructure and increasing access to foreign markets.  The Company
may also consider investments in businesses that are located in other countries,
or are  engaged  in  other  industries,  and in  South  African  companies,  the
securities  of which are  publicly  traded,  that meet the  Company's  price and
quality requirements. The Company has and will

                                        3

<PAGE>



continue to  identify  potential  acquisition  candidates  through the  industry
contacts of  management  and the  managements  of its  subsidiaries,  as well as
through other general  business  sources.  To date, the Company has financed its
acquisitions  through a combination of cash, issuance of shares of stock of FSAH
or the Company and debt financing. The Company anticipates that it will continue
to follow similar financing strategies in its future acquisitions.

THE ACQUISITIONS

           The following is a brief description of the businesses in each of the
Company's industry segments:

PLASTIC PACKAGING MACHINERY
STARPAK

           Starpak  manufactures  high quality plastic  packaging  machinery and
does business under the name of Levy and Smith. Starpak's operations are located
in  Johannesburg  with  service  offices  in  Durban  and Cape  Town.  Machinery
manufactured by Starpak is generally used by  manufacturers  to provide low cost
and high quality  packaging for a broad spectrum of consumer goods. Its machines
are  used  in   industries   such  as  food,   baking,   beverages,   cosmetics,
pharmaceuticals,  chemicals,  motor oils, printing,  hardware and general trade.
Starpak markets its products directly and through independent sales agents. Over
90% of Starpak's  sales are generated  through its in-house sales force.  During
the last fiscal year no one  customer  accounted  for more than 10% of Starpak's
annual sales.  Prior to such time, Albany Bakeries,  which developed a new bread
packaging product, and the Premier Group, which purchased a wide range of bakery
packaging  equipment,  accounted for more than 10% of Starpak's  annual sales in
the previous two fiscal years.

           Starpak competes on the basis of quality.  Starpak faces  competition
from major  competitors  whose machines are frequently less expensive,  although
Starpak  believes  that they are of lower  quality  than  machines  produced  by
Starpak.  To the best of its  knowledge,  management  estimates  that the  total
market for shrink packaging  machinery in South Africa in 1995 was approximately
$10,000,000.  Of this total market,  Starpak has an estimated 48.3% share,  with
the  remainder  of the  market  being  serviced  by a number of small  packaging
machine manufacturing companies. In the past, Starpak has experienced a seasonal
down-turn in its business during the period  commencing  mid-December and ending
at the end of  February.  This  down-turn  appears to be due to the main  summer
holidays in South Africa that occur during such period.  The most active  period
for  receipt  of orders  has  historically  been from July to the  beginning  of
December.  As  of  August  31,  1996,  Starpak's  backlog  of  firm  orders  was
approximately  $1,225,000 . On August 31, 1995, Starpak's backlog of firm orders
was approximately $1,000,000 .

           Although Starpak's  principal  suppliers are foreign companies,  each
principal  supplier is represented  locally in South Africa and to date, Starpak
has not experienced  material  difficulties  or delays in obtaining  products or
supplies.  Almost all local  suppliers  are on  thirty-day  terms,  while  items
purchased  directly  from  overseas  suppliers  require  irrevocable  letters of
credit. Motors, which comprise approximately 5% of the cost of the machines, are
imported directly from non-African  sources.  Other products obtained by Starpak
from  its  suppliers  include  electronic  controllers,  pneumatics,  overloads,
contractors, switches and Teflon tape.

FASTENER INDUSTRY
L.S. PRESSINGS

           L.S.  Pressings  and  its  subsidiary,   Paper  &  Metal  Industries,
manufacture  washers  for supply to  distributors  of nuts and bolts who in turn
distribute  L. S.  Pressing  products  to end users in  various  industries  and
markets. L.S. Pressings'  operations are located in Johannesburg.  L.S Pressings
manufactures a full

                                        4

<PAGE>



range of washers to metric, capital imperial as well as U.S. specifications.  In
addition, it  manufactures  special  size  washers  to suit  customers  specific
requirements.  Washers are manufactured  from mild steel,  black (heat tempered)
steel, copper,  brass, fiber and various plastics.  Washers are used in numerous
industries,   including  automotive,   electrical,  furniture  and  construction
industries.  They are also used for  sealing  purposes,  water  piping  and as a
non-conductive  element. L.S. Pressings has no sales representatives with orders
being placed  directly by  customers.  Substantially  all of the  customers  are
distributors  who resell the washers to end users.  During the last three fiscal
year no one  customer  accounted  for more  than 10% of L.S.  Pressings'  annual
sales.

           L.S.  Pressings  believes that it is the single  largest  supplier of
washers in the South African  market,  although a number of competitors  compete
with L.S. Pressings in particular niches. L.S. Pressings' strongest  competition
is from  importers of standard  size washers  manufactured  in Taiwan.  However,
importers of  Taiwanese  washers  generally do not offer a "one-stop"  source of
supply and L.S.  Pressings  believes it competes  successfully  with  respect to
pricing.  As a result,  the importers have not had a substantial  impact on L.S.
Pressings'  sales  although  there can be no assurance that this will remain the
case.  L.S.  Pressings  believes  that no other South  African  manufacturer  of
washers  offers  a  comparable  range  of  products.  L.S.  Pressings  typically
manufactures  to order  and  delivers  within  approximately  10 days of  order.
Backlog  numbers are therefore not  significant  for L.S.  Pressings and tend to
vary widely.  However, as of August 31, 1996, L.S. Pressings' firm order backlog
was $65,000 as compared with $90,000 on August 31, 1995.

           All of L.S.  Pressings'  suppliers are local  companies.  In the last
year there has been a shortage of scrap  metal in South  Africa,  although  L.S.
Pressings  has  had no  material  problems  obtaining  scrap  required  for  its
operations.  Spring washers, which comprise approximately 10% of L.S. Pressings'
annual sales, are manufactured using a different process to that adopted by L.S.
Pressings.   As  a  result,   L.S.  Pressings   purchases  spring  washers  from
locally-represented  suppliers.  Apart  from  the  month  of  December  when its
factories are closed, there is no particular seasonality to these businesses.

AIR CONDITIONING AND REFRIGERATION
EUROPAIR

           Europair manufactures and supplies products, parts and accessories to
the heating, ventilation and air conditioning industry ("HVAC") in South Africa.
Europair's operations are located in Johannesburg with branch offices in Durban,
Cape Town,  Port Elizabeth,  East London,  Nelspruit and  Pietersburg.  Europair
seeks to provide a single  source of  components  and  accessories  for original
equipment  manufacturers,  contractors  and  duct  shops  in  South  Africa  and
neighboring countries. Its products include grilles, flexible ducting, flanging,
insulation,  humidifiers,  fire dampers and other accessory products for the air
conditioning industry. Europair markets its products primarily through its sales
personnel  directly to air conditioning  and building  contractors as well as to
other  agents.  During the last three fiscal years no one customer accounted for
more than 10% of Europair's annual sales.

           Europair  believes  it is  unique in South  Africa in its  increasing
capacity as a full-range  supplier to the HVAC industry and believes it does not
currently  compete  directly  with any supplier that offers as  comprehensive  a
range of products.  Europair does, however, have a number of competitors in each
of its product groups.  Increasingly,  the threat of competition is presented by
less expensive  imports,  although such imports are sometimes  lower quality and
the  importers  are  generally  unable to stock a broad  range of  products.  As
Europair is in the air conditioning and refrigeration  business it experiences a
seasonality that corresponds with the summer months in the Southern  hemisphere.
Typically,  sales are higher in the months of October  through  February.  As of
August 31, 1996  Europair's  firm order  backlog  was  $93,562 as compared  with
$56,557 on August 31, 1995.


                                        5

<PAGE>



           Europair  relies  on local  suppliers  to  provide  it with  aluminum
extrusions,  aluminum  foil,  fiberglass  and other  insulation  material,  fire
dampers,  steel and wire in the  manufacturing  of  Europair's  products and for
inclusion in other products sold by Europair. The principal foreign suppliers of
Europair provide it with humidifiers, glue, air valves, vinyl, polyester, access
doors and fans. Ordinarily,  Europair does not experience material difficulty in
procuring  the raw materials  required for its  production  processes.  Aluminum
prices are, however,  commodity driven and change frequently. The Durban factory
experienced  a  substantial  inventory  shortage  with  respect to its  aluminum
requirements  in October  and  November  1994 due to a  countrywide  shortage of
aluminum.  In response to such shortage Europair has accumulated and maintains a
substantial stockpile of aluminum.

UNIVERSAL REFRIGERATION

           Universal Refrigeration has been renamed Europair  Refrigeration,  it
is a wholly owned subsidiary of Europair engaged as an agent in the distribution
and supply of various  refrigeration  related products.  Its sales are generated
through Europair's existing national sales network.

PROCESSED FOODS
PIEMANS PANTRY

           Piemans  Pantry  manufactures,  sells and  distributes  quality meat,
vegetarian  and fruit pies,  both in the baked and  frozen,  unbaked  form.  The
business  manufactures,   markets  and  distributes  from  its  headquarters  in
Krugerdorp,  Gauteng  and has a  regional  sales  office in  KwaZulu-Natal.  The
company  strives to  emphasize  the  highest  standards  of quality  control and
consistency of product. It's major customers are independent retail baker shops,
pie  shop  franchises,   in-store   bakeries,   national  bread  bakery  groups,
institutional  cafeterias  and  convenience  stores.  The  company's  sales  are
conducted  through its own  employees,  as well as through  distributors/agents.
Approximately  71% of the  company's  sales are  internally  generated  with the
remainder  through  agents.  During  the last  fiscal  year  the  Spar  Group (a
cooperative  of  independent  supermarkets)  accounted  for 17% of the company's
sales,  while the London Pie Company (a pie store franchise  chain)  contributed
10% of the  company's  sales.  In the  previous  two  fiscal  years,  no company
accounted for more than 10% of Piemans' sales.

           Piemans competes on the basis of quality. It faces competition from a
number  of  manufacturers,  primarily  those  supplying  to the lower end of the
market.  Piemans  believes that it has only one significant  competitor and that
its market share is currently around 20%. Piemans business is slightly  stronger
in the months of July  through  October as well as in December.  However,  these
increases are not significant to make this a seasonal  business.  Piemans Pantry
manufactures to order on a daily basis. Backlog is therefore not counted, nor is
it relevant in the analysis of Piemans' business.

           Piemans' principal  suppliers for its pastry and filling  ingredients
are both local and foreign  companies.  All suppliers  except one have immediate
alternative  sources.  The company selects its suppliers on the basis of quality
and price and to date it has no difficulty in obtaining sufficient supplies.

REGULATION

           The Company's South African  business  operation will be subject to a
number of laws and  regulations  governing the use and  disposition of hazardous
substances,  air and  water  pollution  and other  activities  that  effect  the
environment.  The Company's management believes that each of its subsidiaries is
in substantial  compliance with applicable South African law and the regulations
promulgated under such law

                                        6

<PAGE>



and that no  violation  of any such law or  regulation  by any such  company has
occurred which would have a material  adverse effect on the financial  condition
of the Company.

EMPLOYEES

           As of June  30,  1996,  in  addition  to its  President  who  devotes
substantially all of his business time to the Company,  the Company had only one
full-time salaried  employee.  "See Management - Employment  Agreements".  As of
such date, FSAH had no full-time salaried employees.  The Company intends to add
employees as necessary to meet  management and other  requirements  from time to
time. On July 1, 1996 FSAH entered into an employment  agreement  with Cornelius
J. Roodt to act as its Managing  Director.  -"See Employment  Contracts".  As of
June 30, 1996, the Company's operating subsidiaries employed 780 people.

ITEM 2.    PROPERTIES

           The Company's  principal  executive  offices are located at Clarendon
House, Church Street,  Hamilton,  HM CX, Bermuda. The Company's U.S. subsidiary,
First South African Management Corp.,(FSAM), a Delaware corporation incorporated
in September  1995, has its principal  executive  offices at 2665 South Bayshore
Drive,  Suite  702,  Coconut  Grove,  Florida  33133.  FSAM  offices  consist of
approximately  2,000 square feet of office space in an office section of Coconut
Grove,  Florida  which FSAM  occupies  on a three year  lease  agreement  with a
monthly rental of $2,400.  FSAH's principal executive offices are located in the
facilities of Europair in South Africa.

           Starpak  and L.S.  Pressings  operate  out of a  facility  made up of
adjacent  buildings owned by Levy & Smith Properties  (Proprietary)  Limited,  a
wholly  owned  subsidiary  of  Starpak.  The  facility  has a total  lot size of
approximately  30,000 square feet. The facility has three floors at 85% coverage
equal to a total of 76,500  square feet.  The Company  anticipates  that it will
require  additional space and is considering the rental of additional space at a
nearby  location.  Starpak  also has  branches  in Durban and Cape  Town,  South
Africa.

           Europair  operates  from  premises  and  facilities  that  it owns in
Gauteng and from leased premises in KwaZulu-Natal,  Western Cape and the Eastern
Cape. The Company has granted Mr. Bruce Thomas (the Chief  Executive  Officer of
Europair)  the option to acquire  Europair's  premises for $890,868 and to enter
into a ten year lease with Europair with respect to such premises for an initial
rental rate of  $110,111  per annum.  Europair  believes  this  property is well
suited to Europair's  operations and can accommodate  relatively large increases
in  manufacturing  and  storage.  The  original  purchase of such  property  was
financed  by a loan from  United  Bank,  secured by a bond and  mortgage  on the
property.  The  outstanding  liability with respect to such loan, as of June 30,
1996, was $477,126.  Europair's  leased  properties are located in Durban,  Cape
Town and Port Elizabeth.

           Piemans  operates  from  premises  and  facilities  that  it  owns in
Krugersdorp.  The  facility  has two floors  with a total size of 38,000  square
feet. In addition, Piemans rents a retail facility in Krugersdorp, as well as an
office space in KwaZulu-Natal.

           Paper & Metal Industries rents two adjacent industrial  properties in
Germiston, Gauteng. The total size of the facility is 8,975 Square feet. Paper &
Metal have a two year lease at approximately $34,744 per annum.


                                        7

<PAGE>



ITEM 3.    LEGAL PROCEEDINGS

           Neither the Company and its  subsidiaries,  nor any of Starpak,  L.S.
Pressings or Europair, are subject to any material legal proceedings.

                                    PART II

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

           On  January  24,  1996 , the  Company's  Common  stock and Units were
listed for  quotation  on the  SmallCap  Market on the Nasdaq  System  under the
symbols FSACF and FSAUF,  respectively.  The following table sets forth, for the
periods  indicated the high and low bid prices for the Common Stock and Units as
reported by Nasdaq.  Quotations  reflect prices between dealers,  without retail
mark-up,  mark down or  commissions  and may not  necessarily  represent  actual
transactions.

                                    High          Bid
                                    ----          ---
Common Stock                      
------------                      
1996                              
3rd Quarter                       $4.75           $2.88
4th Quarter                       $6.00           $3.00

1997
1st Quarter
(through October 7, 1996)         $6.00           $5.625

                                    High          Bid
                                    ----          ---
Units                      
-----                      
1996                       
3rd Quarter                       $6.50           $5.38
4th Quarter                       $10.00          $5.25

1997
1st Quarter
(through October 7, 1996)         $11.00          $9.375

           The Company  has not  declared  or paid any  dividends  on the Common
Stock and does not intend to declare or pay any dividends on the Common Stock in
the foreseeable  future.  The Company  currently intends to reinvest earnings in
the development  and expansion of its business.  The declaration of dividends in
the future  will be at the  election of the Board of  Directors  and will depend
upon earnings,  capital  requirements and the financial position of the Company,
general economic conditions and other relevant factors.

           As of August 7, 1996, there were  approximately  1,429  shareholders,
both of record and beneficial, of the Company's Common Stock.














                                        8

<PAGE>


ITEM 6.   SELECTED FINANCIAL DATA

SELECTED HISTORICAL AND PRO FORMA
CONDENSED COMBINED FINANCIAL DATA

         The following selected  financial data for Starpak and L.S.  Pressings,
the Company's predecessor, as of and for the periods presented have been derived
from the combined audited  financial  statements of Starpak and L.S.  Pressings.
The  unaudited  financial  data,  in the  opinion  of  management,  contain  all
adjustments  (consisting only of normal and recurring adjustments) necessary for
a fair  presentation  of such data.  The result of the  interim  periods are not
necessarily  indicative of the results of a full year. All of the financial data
set forth below should be read in  conjunction  with the  information  appearing
under the caption  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
                                           SELECTED FINANCIAL INFORMATION
                                               PREDECESSOR COMPANY (1)                              THE COMPANY
                                               -----------------------                              -----------
                                                                                    MARCH 1, 1995
                                                                                     TO JUNE 30,   JULY 1, 1995
                                           YEARS ENDED FEBRUARY 28,                     1995      TO JUNE 30, 1996
                                 ------------------------------------------------     ---------      ----------
                                    1992         1993         1994         1995
STATEMENT OF OPERATIONS DATA         $            $            $            $             $               $
                                 ---------    ---------     ---------   ---------     ---------      ----------
<S>                              <C>          <C>           <C>         <C>           <C>           <C>       
Net sales.....................   5,374,147    6,256,667     6,851,457   8,826,856     3,297,507     14,911,097
Total operating expenses......   4,744,035    5,818,092     6,414,144   8,179,083       292,806     19,833,942(3)
Operating income..............     630,112      438,575       437,313     647,773       334,701     (4,922,845)
Interest paid.................     219,424      223,314       180,960     152,163        18,801        856,733(4)
Net income before tax.........     361,678      269,251       321,319     536,440       359,045     (5,248,942)
Net Income after tax..........     271,036      138,839       207,916     313,882       213,829     (5,737,560)
</TABLE>

<TABLE>
<CAPTION>

                                              PREDECESSOR  COMPANY (1)              THE COMPANY
                                                     FEBRUARY 28,                     JUNE 30,
                                    -------------------------------------------       --------
                                    1992         1993         1994         1995         1996
                                    ----         ----         ----         ----         ----
BALANCE SHEET DATA                   $            $            $            $            $
                                 ---------    ---------     ---------   ---------    ----------
<S>                              <C>          <C>           <C>         <C>          <C>       
Total assets..................   4,446,132    3,976,769     3,976,974   5,161,709    23,604,994
Long term liabilities.........   1,562,095    1,140,244     1,112,391   1,123,665     2,361,372
Net working capital...........   1,305,961    1,177,250     1,194,931   1,366,602     4,624,417
Stockholders' equity..........   2,280,434    1,527,356     1,580,826   1,828,656    12,792,376
</TABLE>
-----------

(1)      Represents the combined results for Starpak and L.S.  Pressings,  which
         are  deemed to be the  predecessor  of the  Company  due to the  common
         ownership and control of such entities.  The Company's  fiscal year end
         is June 30.

(2)      No dividends were declared or paid during the periods presented.

(3)      Includes a one time non-cash escrow shares charge of $6,314,000 related
         to the  release  of 1.1  million  shares  under the terms of an Earnout
         Escrow  Agreement  between the Company,  certain  shareholders  and the
         Underwriter of the Company's Initial Public Offering.

(4)      Includes a non-cash  charge of $396,000  relating to costs  incurred in
         connection with a November 1995 Bridge Note Financing.




                                       9
<PAGE>



                         PRO FORMA FINANCIAL INFORMATION

           Pro forma  adjustments have been made to the consolidated  statements
of income for the year ended June 30,  1996 to reflect the  acquisitions  of the
combined  Starpak and L.S.  Pressings  operations,  Europair  and of the Piemans
Pantry operations as if these acquisitions had occurred on July 1, 1994.

           The Starpak and L.S  Pressings  transactions  were  accounted  for as
predecessor  to the  Company,  and the  Europair  transaction  as a purchase for
financial reporting purposes.

           The unaudited pro forma combined financial  statements of the Company
have been derived from the  historical  financial  statements  of Starpak,  L.S.
Pressings,  Europair and Piemans  Pantry.  The pro forma  combined  statement of
operations  and  balance  sheet  data  set  forth  below  do not  purport  to be
indicative of the combined  financial position or combined results of operations
that would have occurred had the transactions  been completed on July 1, 1994 or
which may be expected to occur in the future.


                   PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
               FOR THE YEARS ENDED JUNE 30, 1996 AND JUNE 30, 1995
                                   (UNAUDITED)



                                                        PROFORMA (UNAUDITED)
                                                    YEAR ENDED      YEAR ENDED
                                                      JUNE 30,        JUNE 30,
                                                       1996            1995
                                                         $               $
                                                    -----------     -----------

Revenues                                             36,907,198      33,062,715
                                                    -----------     -----------

Operating expenses
   Cost of sales                                     19,555,997      17,983,400
   Selling, general and administrative costs         13,670,868      12,110,748
   Non-cash escrow share charge                       6,314,000            --
                                                    -----------     -----------
                                                     39,540,865      30,094,148
                                                    -----------     -----------
OPERATING (LOSS)/INCOME                              (2,633,667)      2,968,567

Other income                                            832,519         466,356
Interest expense                                     (1,428,617)       (768,413)
                                                    -----------     -----------
(Loss)/income before income taxes                    (3,229,765)      2,666,510
Provision for taxes on income                        (1,293,084)       (944,383)
                                                    -----------     -----------
Net (loss)/income                                    (4,522,849)      1,722,127
                                                    ===========     ===========

ITEM 7.    MANAGEMENTS  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
           RESULTS OF OPERATIONS

Introduction

           The Company was  incorporated  in September 1995 to acquire,  own and
operate closely held companies in South Africa with annual sales in the range of
approximately $5 million to $50 million.  In this regard,  the Company,  through
its South African  subsidiary,  FSAH,  has acquired six South African  companies
(collectively, the "Acquisitions" engaged in the following industry segments (i)
the manufacture of high-quality  plastic  packaging  machinery  through Starpak,
(ii) the  manufacture of washers for use in the fastener  industry  through L.S.
Pressings and its subsidiary Paper and Metal  Industries,  (iii) the manufacture
and supply of air conditioning and  refrigeration  products through Europair and
its subsidiary Europair Refrigeration, and (iv) the manufacture and distribution
of processed food products  through Piemans Pantry.  See "Business" and "Certain
Transactions."  The Company has funded itself since inception  primarily through
stockholders' loans and capital  contributions and the Bridge Financing of Notes
and  Warrants  and the  proceeds of its Initial  Public  Offering  completed  in
January 1996. The Company  anticipates  that it will derive  revenues  primarily
through income generated from the operations of acquired operating  companies in
South Africa.

           The annual  rate of  inflation  in South  Africa for the  periods set
forth below was as follows:


                         FISCAL YEAR 1995        FISCAL YEAR 1996
                               10.0%                   6.9%

         The average rate for the South African Rand against the U.S. dollar for
the periods under discussion were as follows:


                         FISCAL YEAR 1995        FISCAL YEAR 1996
                             $1 = R3.53             $1 = R3.85
           Depreciation of                             9.06%


Results of Operations

           This  discussion  should  be read in  conjunction  with the  Selected
Historical  and Pro Forma Combined  Financial Data and the financial  statements
and notes thereto appearing elsewhere in this document. In this discussion, "Pro
Forma"  includes all the combined  results for the Company's  acquisitions  that
have been  consummated  since the Company's  Initial Public Offering in January,
The "Pro Forma"  results may not be  representative  of the actual  results that
would have been achieved had such events  actually  occurred at the beginning of
the periods indicated.

           The  Company's  Consolidated  Balance  Sheet and  Statement of Income
reflect the twelve month period  ending June 30, 1996.  The  Statement of Income
includes  the  operations  of L.S.  Pressings  (Pty)  Limited and Starpak  (Pty)
Limited for the full twelve month period, the operations of Europair (Pty)


                                       10
<PAGE>



Limited from January 24, 1996 and the operation of Piemans  Pantry (Pty) Limited
from June 3, 1996. Starpak and L.S. Pressings are deemed capital predecessors of
the  Company,  while the  operations  of Europair  and Piemans  Pantry have been
accounted for upon consumation of their acqusition.

           Due to the lack of comparative prior financial periods,  and in order
to provide a  meaningful  reference  point in the  Management's  Discussion  and
Analysis,  comparative  twelve  month pro forma  results have been added for the
twelve-month periods ended June 30, 1996 and 1995 respectively.  These pro forma
results  include the results for all of the  Company's  acquisitions,  including
those  made after  January  24,  1996.  Attention  is drawn to the  Management's
Discussion and Analysis for the Pro Forma periods  mentioned above. This section
provides the most meaningful analysis of the Company's  performance on a broader
time scale.


                                                       PROFORMA (UNAUDITED)
                                                   Year Ended       Year ended
                                                  June 30, 1996   June 30, 1995

Costs of sales ......................................   53.0%          53.4%
Gross profit ........................................   47.0%          46.6%
Selling, general and administrative                             
   expenses .........................................   37.0%          36.0%
Interest expense ....................................    3.9%           2.3%
Operating income (pre non cash escrow                           
   charge) ..........................................   10.0%           9.0%
Other income (net of other expenses) ................    2.3%           1.4%
Income before income taxes( pre non                             
   cash escrow charge) ..............................    8.4%           8.1%
Income before income taxes ..........................   (8.7%)          8.1%
                                                               

Pro Forma Twelve Months Ended June 30, 1996
Compared to Pro Forma Twelve Months Ended June 30, 1995

           Proforma sales for the 12 months ended June 30, 1996 increased  11.6%
to $36,907,198 from $33,062,715 for the period ended June 30, 1995. The increase
included  a 2.0%  decrease  in the  combined  sales  of L.S.  Pressings,  and of
Starpak,  a 3.9% increase in the sales of Europair  Africa and a 26% increase in
the sales of Piemans Pantry. The decrease in sales of L.S. Pressings and Starpak
as well as the  relatively  slow  growth of  Europair  Africa  can be  primarily
attributed to the above average macro-economic  growth South Africa  experienced
following  the April 1994  elections.  In the 12 months  leading up to the first
South  African  national  elections the country  faced  tremendous  uncertainty.
Corporate capital  expenditures were frozen pending the results of the election.
Upon the peaceful  conclusion of the election,  business  confidence was boosted
and spending on capital goods  resumed at an above  average  pace,  resulting in
increased  volume sales for all three  companies.  Capital  spending  rates have
decreased in fiscal 1996 as opposed to the above  average  rates  following  the
April 1994 elections.  In contrast Piemans Pantry's rapid growth continued to be
fueled by an overall increase in the South African meat pie market.


                                       11
<PAGE>



           Proforma cost of goods sold were  $19,555,997 and $17,983,400 for the
twelve months ended June 30, 1996 and 1995 respectively. This represented 53% of
sales  for  the  twelve  months  ended  June  30,  1996  versus  54.4 % for  the
corresponding  period in 1995.  This  decrease  can be  primarily  explained  by
improved productivity at Piemans Pantry due to increased automation.

           Proforma  sales,   general  and  administrative  costs  increased  to
$13,670,868 from $12,110,748 for the twelve months ended June 30, 1996 and 1995,
respectively.  This represented  37.0% of sales for the twelve months ended June
30, 1996 versus 36.6% for the  corresponding  period a year earlier.  During the
period in fiscal 1996,  the  Company's  net  corporate  expenses  accounted  for
approximately .6% of this increase.

           Proforma interest expenses  increased to $1,428,617 during the twelve
months ended June 30, 1996 from  $768,413  for the twelve  months ended June 30,
1995.  Most of this  increase can be attributed to a non-cash charge of $396,000
that the Company took in connection with its November 1995 private  placement of
Bridge Notes. In addition, long-term debt increased as a result of debt utilized
as part of the Company's  acquisition  financing as well as increased investment
in fixed assets which was facilitated  through the utilization of long-term debt
facilities.

           Proforma other income was $832,519 and $466,356 for the twelve months
ended June 30, 1996 and 1995,  respectively,  primarily  as a result of interest
earned on greater net positive  cash  balances for the year ended June 30, 1996,
as opposed to the corresponding period in 1995.

           The Company recorded a non-cash escrow share charge of $6,314,000 for
the year ended June 30,  1996.  This charge  relates to the release of 1,100,000
shares pursuant to an Earnout Escrow  Agreement that the Company entered into on
October 30,  1995,  as  amended.  Under the terms of this  agreement,  1,100,000
shares were deposited in escrow subject to the Company achieving certain pre tax
Pro Forma earnings  results as set forth in such  agreement,  as amended.  It is
management's  belief  that the Pro Forma  results for June 30, 1996 have met the
earnout requirements of this agreement,  as amended, and as a result the Company
has taken this one time  non-cash  charge  which is  calculated  by  multiplying
1,100,000  shares by the current bid price of the Company's  Common  Stock.  The
$6,314,000  charge has been reflected as additional  Capital in Excess of Par in
the June 30,  1996  Balance  Sheets.  Management  expects  the  release  of such
1,100,000  shares  from the  earnout  escrow  during the  second  quarter of the
Company's current fiscal year.

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                  RESULTS OF OPERATIONS - PREDECESSOR COMPANY.

           The annual rate of inflation in South Africa for the period set forth
below was as follows:


        1993               1994                1995
        ----               ----                ----
       13.9%               9.7%             8.6% (est.)



                                       12
<PAGE>



           The average rate for the South  African Rand against the U.S.  dollar
for the periods under discussion were as follows:


                   FISCAL YEAR 1993      FISCAL YEAR 1994   FISCAL YEAR 1995
                      $1 = R2.90            $1 = R3.32         $1 = R3.53
          Depreciation of                     14.48%              6.3%

           Based on these  figures,  in  evaluating  the  comparable  sales  and
expense  numbers for the companies in question for the period ended February 28,
1995  versus the period  ended  February  28,  1994,  approximately  3.5% of the
increase in sales and expenses can be  attributed  to the net effect of the rate
of inflation of South  Africa.  The calendar  year figures are provided with the
fiscal year  figures as set forth above to provide an  effective  comparison  of
inflation figures for the periods in question.

Results of Operations

           This  discussion  should  be read in  conjunction  with the  Selected
Historical  and Pro Forma Combined  Financial Data and the financial  statements
and notes thereto  appearing  elsewhere in this Prospectus.  In this discussion,
"Historical" reflects the combined historical financial data of Starpak and L.S.
Pressings.  Prior to the Company's  Initial Public Offering,  such entities were
each  principally  owned by FSA Stock  Trust,  a  principal  stockholder  of the
Company,  and are therefore  treated as the Company's  predecessor.  "Pro Forma"
assumes the consummation of this Offering and the acquisition of Europair.

COMBINED RESULTS FOR STARPAK AND L.S. PRESSINGS

<TABLE>
<CAPTION>
                                                                     PERIOD FROM
                                                                  MARCH 1. 1995 TO
AS PERCENTAGE OF SALES                      JUNE 30, 1995     1995     1994       1993
----------------------                      -------------     ----     ----       ----
                                                            FISCAL YEAR ENDED FEBRUARY 28,
                                                            ------------------------------
<S>                                              <C>         <C>       <C>       <C>  
Costs of sales ................................  57.0%       57.3%     65.9%     66.0%
Gross profit ..................................  43.0%       42.7%     34.1%     34.0%
Selling, general and administrative expenses ..  32.8%       35.4%     27.7%     27.0%
Interest expense ..............................    .05%       1.7%      2.6%      3.6%
Operating income ..............................  10.1%        7.3%      6.4%      7.0%
Other income (net of other expenses) ..........   1.3%        0.5%      0.9%      0.9%
Income before income taxes ....................  10.9%        6.1%      4.7%      4.3%
</TABLE>

Twelve Months Ended  February 28, 1995 Compared to Twelve Months Ended  February
28, 1994

           Historical  sales for the  twelve  months  ended  February  28,  1995
increased  28.8% to $8,826,856 from $6,851,457 for the period ended February 28,
1994. As adjusted for inflation, historical sales volume increased approximately
25%.  The  increase  included  a 48%  increase  in sales of L.S.  Pressings  (or
approximately  45% volume  increase) and a .05%  decrease (a 3% volume  increase
adjusting  for  inflation)  in the sales of Starpak.  The overall  growth in the
volume  of  sales  of  the  companies  can  be  primarily  attributable  to  the
improvement  in  macro-economic  conditions in South Africa  following the April
1994 elections, as described above.


                                       13
<PAGE>



           The Historical  cost of goods sold were $5,058,749 and $4,513,384 for
the  twelve  months  ended  February  28,  1995  and  1994,  respectively.  This
represented  57.3% of sales for the twelve months ended February 28, 1995 versus
65.9% for the  corresponding  period a year earlier.  Decreases in cost of goods
sold were  experienced in both Starpak and L.S.  Pressings and can be attributed
primarily  to more  efficient  production  that  resulted  from the  increase in
revenues, as both companies have relatively fixed manufacturing  overhead costs.
In addition,  labor costs as a percentage of sales were reduced, as there were a
number of work  stoppages in support of political  causes prior to the elections
which  negatively  impacted on the cost of sales for the year ended February 28,
1994.

           Historical sales,  general and administrative  costs increased 64% to
$3,120,334  from  $1,900,760  for the twelve months ended  February 28, 1995 and
1994, respectively.  This represented 35.4% of sales for the twelve months ended
February  28, 1995 versus  27.7% for the  corresponding  period a year  earlier.
These  increases  were  experienced  in both  companies  and  can be  attributed
primarily to increased  expenditures in  administrative  personnel as well as an
increase of $213,280 in management profit sharing bonuses which resulted from an
increase in operating profits.

           Historical  interest  expenses declined to $152,163 during the twelve
months  ended  February  28,  1995 from  $180,960  for the twelve  months  ended
February 28, 1994. This decrease can be attributed primarily to a decline in the
average  level of  borrowings  during  the year.  However,  in order to  support
expansion,  the companies  increased their investment in fixed assets during the
last quarter of the fiscal year. As a result, despite the lower average level of
borrowings during the year, the aggregate  interest-bearing debt at February 28,
1995 was  $1,180,000  while the  corresponding  balance at February 28, 1994 was
$1,070,000.

           Historical other income was $40,830 and $64,966 for the twelve months
ended February 28, 1995 and 1994,  respectively.  The decrease can be attributed
primarily to a decline in other  income  earned by Starpak due to the release of
bad debt provisions in 1994, as well as a loss on the disposal of fixed assets.

           During  fiscal  1995  the  South  African  tax  authorities   lowered
corporate  income  taxes from 40% to 35%.  This has resulted in a 5% increase in
net income for the Company for the year ended  February  28, 1995 as compared to
the corresponding period in 1994.

Twelve Months Ended  February 28, 1994 compared to Twelve Months Ended  February
28, 1993.

           Historical  sales for the  twelve  months  ended  February  28,  1994
increased 9.5% to $6,851,457  from  $6,256,667 for the period ended February 28,
1994. The increase  included a 3.7% increase in volume sales of L.S.  Pressings,
and a 9.3% increase in the volume sales of Starpak.

           Historical  cost of goods sold were $4,513,384 and $4,128,047 for the
twelve months ended February 28, 1994 and 1993,  respectively.  This represented
65.9% of sales for the twelve  months  ended  February 28, 1994 versus 66.0% for
the corresponding period in the prior year.

           Historical  sales,  general and  administrative  costs  increased  to
$1,900,760  from  $1,690,045  for the twelve months ended  February 28, 1994 and
1993, respectively. This represented 27.7% of sales


                                       14
<PAGE>



for the twelve months ended February 28, 1994 versus 27.0% for the corresponding
period in the prior year.

           Historical  interest  expenses declined to $180,960 during the twelve
months  ended  February  28,  1994 from  $223,314  for the twelve  months  ended
February 28, 1993. This decrease can be attributed primarily to a decline in the
level of borrowings. The reduction in interest expense for the fiscal year ended
February  28,  1994  relative  to fiscal  year ended  February  28, 1993 was due
principally to a reduction in interest  rates,  as the prime  borrowing rate was
reduced from 20.25% at February 28, 1993 to 15.25% at February 28, 1994.

           Historical other income was $64,996 and $53,990 for the twelve months
ended February 28, 1994 and 1993, respectively.

LIQUIDITY AND CAPITAL RESOURCES

           In January 1996, the Company raised  approximately  $9 million in net
proceeds after all fees and expenses from its Initial Public Offering.  Proceeds
of this offering have been primarily utilized to fund the Company's acquisitions
as well as to provide a certain  amount of working  capital to its South African
subsidiaries.  Approximately  $1 million  in cash was  provided  to First  South
Africa  Holdings,  of which  approximately  55% was lent to  Europair or working
capital  purposes in  fulfillment  of the Company's  commitment  under its Share
Purchase and Sale  Agreement  with Bruce  Thomas.  An  additional $3 million was
utilized for the Piemans Pantry  acquisition.  In addition,  First South African
Holdings  utilized  a portion of a  $1,100,000  new bank  facility  to fund this
acquisition.  Currently, the Company has a cash commitment of approximately $1.3
million in  connection  with its  agreement  to  acquire  Astoria  Bakery.  Such
commitment will be funded from existing cash on hand.

           As of June 30, 1996,  the Company had $4,682,035 in cash with working
capital  of  $4,624,417.  As of June  30,  1996,  the  Company  had a  total  of
$5,208,895 in bank debt, of which 2,847,523 was classified as current.

           Cash flows provided by operating activities for the period ended June
30, 1996  totaled  $876,607.  Cash flows used in  investing  activities  for the
period  ended June 30, 1996 totaled  $5,510,105  primarily  attributable  to the
purchase  of assets  and  acquisition  of  subsidiaries.  Net cash  provided  by
financing activities generated $9,020,069 during the period ended June 30, 1996.

           The  Company's   operating   subsidiaries   generally  collect  their
receivables  within  65 - 90 days and  reserve  approximately  19% for  doubtful
accounts. Historically, the companies' operating and capital needs have been met
by internal cash flow and outside bank borrowing. It is management's belief that
capital  expenditures  for the  foreseeable  future  can  continue  to be met by
internal  cash flow and bank  borrowing.  The Company's  operating  subsidiaries
engage  in  certain  hedging  transactions  with  respect  to  certain  overseas
purchases in order to lock in a specified  exchange  rate.  In addition,  in May
1996, the Company,  through Swiss Bank Corporation,  purchased a 12 month option
to acquire  the  equivalent  of $5 million in South  African  Rand at the strike
price of Five Rand to the  Dollar.  This  option  has the  effect of  hedging $5
million of the Company's fiscal 1997 earnings, in the event the


                                       15
<PAGE>



exchange rate of the South African Rand falls below this strike price.  The cost
of such option was approximately $150,000 and is being amortized over the length
of the option.

           The Company  intends to continue to pursue an aggressive  acquisition
strategy in South Africa and anticipates  utilizing a substantial portion of its
cash  balances and  operating  earnings to fund this strategy to the extent that
suitable acquisition candidates can be identified.

           The  Company  may be required  to incur  additional  indebtedness  or
equity financing in connection with future  acquisitions.  There is no assurance
that  the  Company  will be able  to  incur  additional  indebtedness  or  raise
additional  equity  to  finance  future  acquisitions  on  terms  acceptable  to
management, if at all.

           "Safe  Harbor"  Statement  under the  private  Securities  Litigation
Reform Act of 1995:  The  statements  above which are not  historical  facts are
forward-looking statements that involve risks and uncertainties,  including, but
not limited to, demand for the Comapny's  products and market  acceptance risks,
the effect of  economic  conditions,  the  impact of  competitive  products  and
pricing, product development,  commercialization and technological difficulties,
capacity,  and supply  constraints  or  difficulties,  the results of  financing
efforts,  and other risks  detailed in the  Comapny's  Securities  and  Exchange
Commission filings.


                                       16
<PAGE>



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         FIRST SOUTH AFRICA CORP., LTD.

                          INDEX TO FINANCIAL STATEMENTS


INDEX TO FINANCIAL STATEMENTS

FIRST SOUTH AFRICA CORP., LTD.

     Report of the independent auditors

     Consolidated Balance Sheets at June 30, 1996 and 1995

     Consolidated  Statements  of Income  for the year  ended June 30,
     1996,  four  months  ended  June  30,  1995 and the  years  ended
     February 28, 1995 and 1994

     Pro forma  Consolidated  Statements of Income for the years ended
     June 30, 1996 and 1995 (Unaudited)

     Consolidated Statements of Cash Flows for the year ended June 30,
     1996,  four  months  ended  June  30,  1995 and the  years  ended
     February 28, 1995 and 1994.

     Consolidated  Statements of Changes in  Stockholders'  Investment
     for the period February 28, 1993 to June 30, 1996.
     

     Notes to the Consolidated  Financial Statements for the year ended
     June 30,  1996,  four  months  ended June 30,  1995 and the years
     ended February 28, 1995 and 1994.




                                       17
<PAGE>



                         FIRST SOUTH AFRICAN CORP., LTD.

                       REPORT OF THE INDEPENDENT AUDITORS


To the Board of Directors
of First South Africa Corp., Ltd.


           In our opinion, the accompanying  consolidated balance sheets and the
related  consolidated  statements  of  income,  of cash  flows and of changes in
stockholders' investment present fairly, in all material respects, the financial
position of First South Africa Corp., Ltd. and its subsidiaries at June 30, 1996
and 1995, and the results of their  operations and their cash flows for the year
ended  June 30,  1996,  four  months  ended  June 30,  1995 and the years  ended
February 28, 1995 and 1994 in  conformity  with  generally  accepted  accounting
principles  in  the  United   States.   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 conducted  our
audits of these  statements  in  accordance  with  generally  accepted  auditing
standards in the United  States which 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,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.




Price Waterhouse
Sandton, South Africa
September 27, 1996



                                       18
<PAGE>



                         FIRST SOUTH AFRICA CORP., LTD.
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                      JUNE 30,         JUNE 30,
                                                        1996             1995
                                                         $                $
                                                    -----------     -----------
CURRENT ASSETS
   Cash on hand                                       4,682,035         744,251
   Trade accounts receivable                          5,833,542       2,287,572
   Less: Allowances for bad debts                      (402,333)       (232,442)
                                                    -----------     -----------
                                                      5,431,209       2,055,130

Inventories (net)                                     2,510,868       1,232,728
Prepaid expenses and other current assets               451,551         188,937
                                                    -----------     -----------
   TOTAL CURRENT ASSETS                              13,075,663       4,221,046
Property, plant and equipment                         9,000,334       1,854,831
Less: Accumulated depreciation                       (2,119,912)       (320,529)
                                                    -----------     -----------
                                                      6,880,422       1,534,302
Goodwill                                                408,541            --
Recipes and other intellectual property               2,848,532            --
Other assets                                            318,286          16,224
Deferred income taxes                                    73,550          10,145
Loan to related company                                    --           145,823
                                                    -----------     -----------
                                                     23,604,994       5,927,540

                    LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities
   Bank overdraft payable                               745,724         270,822
   Current portion of long term debt                  2,101,799         147,126
   Trade accounts payable                             2,162,257         479,179
   Other provisions and accruals                      1,923,371       1,369,663
   Income taxes payable                               1,518,095         430,127
                                                    -----------     -----------
                  TOTAL CURRENT LIABILITIES           8,451,246       2,696,917
Long term debt                                        2,361,372         954,717
Loan from related company                                  --           257,909
                                                    -----------     -----------
         TOTAL LIABILITIES                           10,812,618       3,909,543



                                       19
<PAGE>



                         FIRST SOUTH AFRICA CORP., LTD.

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

              LIABILITIES AND STOCKHOLDERS' INVESTMENT (CONTINUED)
<S>                                                        <C>            <C>        

STOCKHOLDERS' INVESTMENT

Capital stock:
First South Africa Corp., Ltd:
         A class common stock, $0.01 par value-
         authorised 23,000,000 shares; issued and
         outstanding 2,200,000                                 22,000           --

         B class common stock, $0.01 par value-
         authorised 2,000,000 shares;  issued
         and outstanding 1,942,500 (see footnote 24)           19,701           --

         Preferred stock, $0.01 par value -
         authorised 5,000,000 shares;  issued and
         outstanding nil shares                                  --             --

         Capital in excess of par
                                                           18,518,986           --

LS Pressings (Pty) Ltd
    Common stock, R1 par value - authorised, issued
    and outstanding 3 million shares in 1995                     --          460,978

Starpak (Pty) Ltd
    Common stock, R1 par value - authorised 4,000
    shares; issued and outstanding 1,250 shares in 1995          --            1,010

    Capital in excess of par                                     --          746,790

Retained earnings                                          (3,887,407)     1,850,153
Foreign currency translation adjustments                   (1,888,211)    (1,040,934)
Income restricted as to distribution                            7,307           --
                                                          -----------    -----------
                                                           23,604,994      5,927,540
                                                          ===========    ===========
</TABLE>


                                       20
<PAGE>



                         FIRST SOUTH AFRICA CORP., LTD.

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                     JULY 1,        MARCH 1,     YEAR ENDED      YEAR ENDED
                                                   TO JUNE 30,    TO JUNE 30,    FEBRUARY 28,   FEBRUARY 28,
                                                      1996           1995           1995           1994
                                                        $              $              $              $
                                                   -----------    -----------    -----------    -----------
<S>                                                 <C>             <C>            <C>            <C>      
Revenues                                            14,911,097      3,297,507      8,826,856      6,851,457
                                                   -----------    -----------    -----------    -----------

Operating  expenses
   Cost of sales                                     8,385,511      1,881,686      5,058,749      4,513,384
       Selling, general and administrative costs     5,134,431      1,081,120      3,120,334      1,900,760
       Non cash compensation charge                  6,314,000           --             --             --
                                                   -----------    -----------    -----------    -----------
                                                    19,833,942      2,962,806      8,179,083      6,414,144
                                                   -----------    -----------    -----------    -----------
Operating (loss)/income                             (4,922,845)       334,701        647 773        437,313

Other income                                           539,636         43,145         40 830         64,966
Interest expense                                      (865,733)       (18,801)      (152,163)      (180,960)
                                                   -----------    -----------    -----------    -----------
(Loss)/income before income taxes                   (5,248,942)       359,045        536,440        321,319
Provision for taxes on income                         (488,618)      (145,216)      (222,558)      (113,403)
                                                   -----------    -----------    -----------    -----------
Net (loss)/income                                   (5,737,560)       213,829        313,882        207,916
                                                   ===========    ===========    ===========    ===========

Net loss per share                                     ($ 3.03)

Weighted average number of shares
outstanding                                          1,893,463
</TABLE>


                                       21
<PAGE>



                         FIRST SOUTH AFRICA CORP., LTD.

                   PROFORMA CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                               YEARS ENDED JUNE 30



                                                        1996            1995
                                                          $               $
                                                     -----------    -----------

Revenues                                              36,907,198     33,062,715
                                                     -----------    -----------
Operating  expenses
   Cost of sales                                      19,555,997     17,983,400
       Selling, general and administrative costs      13,670,868     12,110,748
       Non cash compensation charge                    6,314,000           --
                                                     -----------    -----------
                                                      39,540,865     30,094,148
                                                     -----------    -----------
Operating (loss)/income                               (2,633,667)     2,968,567

Other income                                             832,519        466,356
Interest expense                                      (1,428,617)      (768,413)
                                                     -----------    -----------
(Loss)/income before income taxes                     (3,229,765)     2,666,510
Provision for taxes on income                         (1,293,084)      (944,383)
                                                     -----------    -----------
Net (loss)/income                                     (4,522,849)     1,722,127
                                                     ===========    ===========

Net-(loss)/profit per share                          ($     1.34)   $      0.51

Weighted average number of shares
outstanding                                            3,374,079      3,374,079




The proforma  information has been prepared  assuming that the  acquisitions had
taken place and that operations had commenced on July 1, 1994.

The proforma  information  does not purport to be indicative of the results that
would have  actually  been  obtained  if the  acquisitions  had  occurred at the
beginning of the period nor is it indicative of future results.




                                       22
<PAGE>

                         FIRST SOUTH AFRICA CORP., LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                           JULY 1,        MARCH 1,    YEAR ENDED    YEAR ENDED
                                                         TO JUNE 30,    TO JUNE 30,  FEBRUARY 28,  FEBRUARY 28,
                                                            1996          1995          1995          1994
                                                             $             $             $             $
                                                         ----------    ----------    ----------    ----------
<S>                                                       <C>             <C>           <C>           <C>    
Cash flows from operating activities:
         Net (loss)/income                               (5,737,560)      213,829       313,882       207,916
              Adjustments to reconcile net loss to net
    cash provided by operating activities:
     Non-cash compensation charge                         6,314,000          --            --            --
     Depreciation                                           345,884        50,678        92,746        82,988
     Amortisation of other assets                            49,873          --            --            --
     Deferred income taxes                                  (90,559)         --         (69,295)        5,363
         Net (gain)/loss on sale of assets                   22,523)        1,320        19,636         3,526
              Effect of changes in assets and
         liabilities                                         10,185       (94,090)      (23,012)      (65,840)
     Assets acquired at a discount                            7,307          --            --            --
                                                         ----------    ----------    ----------    ----------
Net cash provided by operating activities                   876,607       171,737       333,957       233,953
                                                         ----------    ----------    ----------    ----------

Cash flows from investing activities:

Net additions to property, plant and equipment             (453,768)     (166,124)     (327,039)     (255,454)
Other assets (acquired)/disposed                           (704,117)      (16,502)       22,053        (5,188)
Decrease/(increase) in loans to related
companies                                                   145,823          (280)       45,241        94,418
Acquisition of subsidiaries (net of cash
of $4,746)                                               (4,498,043)         --            --            --
                                                         ----------    ----------    ----------    ----------
Net cash used in investing activities                    (5,510,105)     (182,906)     (259,745)     (166,224)
                                                         ----------    ----------    ----------    ----------

Cash flows from financing activities:

Net borrowings/(repayments) in bank overdraft               135,941       119,473       (26,269)      (24,815)
Net (repayments)/ borrowings of long term debt           (1,525,613)       93,202        93,618        68,616
Net (repayments)/ borrowings in loans from
related parties                                            (880,034)         --          30,473       (66,408)
Net repayments of loans from stockholders                   137,656          --            --            --
Net borrowings/(repayments) in short term debt            1,954,673          --          81,972       (11,835)
Net proceeds on stock issues                              9,197,446          --            --            --
                                                         ----------    ----------    ----------    ----------
Net cash provided by financing activities                 9,020,069       212,675       179,794       (34,442)
                                                         ----------    ----------    ----------    ----------
Effect of exchange rate changes on cash                    (448,787)       (9,783)      (16,573)      (31,301)
                                                         ----------    ----------    ----------    ----------
Net increase in cash on hand                              3,937,784       191,723       237,433         1,986
Cash on hand at beginning of period                         744,251       552,528       315,095       313,109
                                                         ----------    ----------    ----------    ----------
Cash on hand at end of period                             4,682,035       744,251       552,528       315,095
                                                         ==========    ==========    ==========    ==========
</TABLE>



                                       23
<PAGE>
                         FIRST SOUTH AFRICA CORP., LTD.

         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
(PART 1 OF 2)
                                      Capital
                                      stock                         Capital                      Capital in  
                                      First South                   Stock        Capital         excess of   
                                      Africa        Capital in      LS           Stock           par         
                                      Corp.,        excess of       Pressings    Starpak         Starpak     
                                      Ltd.          par             (Pty) Ltd    (Pty) Ltd       (Pty) Ltd   
                                          $             $              $              $              $   
                                      ----------    ----------      ---------     ----------     ----------  
<S>                                       <C>       <C>               <C>                                    
Balance at February 28, 1993                --            --          460,978          1,010        746,790  
Net income                                  --            --             --             --             --    
Translation adjustment                      --            --             --             --             --    
                                      ----------    ----------      ---------     ----------     ----------  
Balance at February 28, 1994                --            --          460,978          1,010        746,790  
Net income                                  --            --             --             --             --    
Translation adjustment                      --            --             --             --             --    
                                      ----------    ----------      ---------     ----------     ----------  
Balance at February 28, 1995                --            --          460,978          1,010        746,790  
Net income                                  --            --             --             --             --    
Translation adjustment                      --            --             --             --             --    
                                      ----------    ----------      ---------     ----------     ----------  
Balance at June 30, 1995                    --            --          460,978          1,010        746,790  
Issuance of stock to acquire 
predecessor, Starpak and LS Pressings        150     1,208,628       (460,978)        (1,010)      (746,790) 
Issuance of stock to acquire
subsidiary companies                          98     1,840,365           --             --             --    
Other stock issues                            28       260,024           --             --             --    
Proceeds on First South Africa
Corp., Ltd. stock issues                  41,425     9,896,646           --             --             --    
Share issue expenses written off            --      (1,000,677)          --             --             --    
Escrow stock released                       --       6,314,000           --             --             --    
Subsidiary assets acquired at
a discount                                  --            --             --             --             --    
Net loss                                    --            --             --             --             --    
Translation adjustment                      --            --             --             --             --    
                                      ----------    ----------      ---------     ----------     ----------  
Balance at June 30, 1996                  41,701    18,518,986           --             --             --    
                                      ----------    ----------      ---------     ----------     ----------  

(PART 2 OF 2)

                                     
                                     
                                                       Income         Foreign
                                                       restricted     currency
                                       Retained        as to          translation
                                       earnings        distribution   adjustments   Total
                                            $               $             $              $
                                       ------------    -----------    ----------    -----------
<S>                                      <C>             <C>          <C>            <C>       
Balance at February 28, 1993              1,114,526           --        (795,948)     1,527,356
Net income                                  207,916           --            --          207,916
Translation adjustment                         --             --        (154,446)      (154,446)
                                       ------------    -----------    ----------    -----------
Balance at February 28, 1994              1,322,442           --        (950,394)     1,580,826
Net income                                  313,882           --            --          313,882
Translation adjustment                         --             --         (66,052)       (66,052)
                                       ------------    -----------    ----------    -----------
Balance at February 28, 1995              1,636,324           --      (1,016,446)     1,828,656
Net income                                  213,829           --            --          213,829
Translation adjustment                         --             --         (24,488)       (24,488)
                                       ------------    -----------    ----------    -----------
Balance at June 30, 1995                  1,850,153           --      (1,040,934)     2,017,997
Issuance of stock to acquire 
predecessor, Starpak and LS Pressings          --             --            --             --
Issuance of stock to acquire
subsidiary companies                           --             --            --        1,840,463
Other stock issues                             --             --            --          260,052
Proceeds on First South Africa
Corp., Ltd. stock issues                       --             --            --        9,938,071
Share issue expenses written off               --             --            --       (1,000,677)
Escrow stock released                          --             --            --        6,314,000
Subsidiary assets acquired at
a discount                                     --            7,307          --            7,307
Net loss                                 (5,737,560)          --            --       (5,737,560)
Translation adjustment                         --             --        (847,277)      (847,277)
                                       ------------    -----------    ----------    -----------
Balance at June 30, 1996                 (3,887,407)         7,307    (1,888,211)    12,792,376
                                       ------------    -----------    ----------    -----------
</TABLE>
                                       24
<PAGE>

           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

1.        ORGANIZATION

First South Africa Corp., Ltd. (the "Company") was founded on September 6, 1995.
The purpose of the Company is to make  investments  in South African  companies.
The  predecessor  to the Company was the combined  entity under common  control,
Starpak  (Proprietary)  Limited and its  subsidiary  companies  and LS Pressings
(Proprietary) Limited.

On January 24, 1996, subsequent to an initial public offering and in terms of an
agreement reached before the initial public offering,  the Company acquired 100%
of the common stock of the business combination of Starpak (Proprietary) Limited
and  its  subsidiary  companies  and LS  Pressings  (Proprietary)  Limited.  The
acquisition  was  accounted  for using the purchase  method of accounting at net
book value at date of acquisition.

On January 24, 1996,  also subsequent to the initial public offering and also in
terms of an agreement  reached before the initial public  offering,  the Company
acquired 100% of the common stock of Europair Africa  (Proprietary)  Limited for
an aggregate net purchase price of $1,029,206.

The acquisition  was accounted for using the purchase method of accounting.  The
assets and  liabilities  were taken over at fair market value as  determined  by
management.


                                                           Europair Africa (Pty)
                                                                     Ltd
                                                                      $
                                                                 ----------
Acquisition costs
         Stock issued in lieu of cash                               399,638
         Cash consideration                                         629,568
                                                                 ----------
     Purchase price to be allocated                               1,029,206
                                                                 ----------
     Summary allocation of purchase price
         Current assets                                           1,582,299
         Property, plant and equipment                            1,598,128
         Deferred income taxes                                       21,398
         Goodwill                                                    91,150
                                                                 ----------
     Total assets acquired                                        3,292,975
                                                                 ----------

         Current liabilities                                        923,688
         Long term debt                                           1,196,636
         Loans from related parties                                 143,445
                                                                 ----------
     Total liabilities assumed                                    2,263,769
                                                                 ----------
              Excess of assets over liabilities assumed           1,029,206
                                                                 ==========



                                       25
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


1.         ORGANIZATION (continued)

On June 3, 1996 the Company  acquired  100% of the common  stock of the business
combination of Piemans  Pantry  (Proprietary)  limited and Surfs-Up  Investments
Limited for an aggregate net purchase price of $5,314,045.

The acquisition  was accounted for using the purchase method of accounting.  The
assets and  liabilities  were taken over at fair market value as  determined  by
management.

                                                         Piemans Pantry
                                                         (Pty) Ltd and Surfs-
                                                         Up Investments (Pty)
                                                         Ltd
                                                             $
                                                         ---------
Acquisition costs
         Stock issued in lieu of cash                    1,440,825
         Cash consideration                              3,630,796
         Other direct expenses                             242,424
                                                         ---------
     Purchase price to be allocated                      5,314,045
                                                         ---------

     Summary allocation of purchase price
         Current assets                                  2,594,124
         Property, plant and equipment                   3,988,033
         Stockholders loans                                137,656
         Recipes and other intellectual property         2,829,299
         Goodwill                                           12,483
                                                         ---------
     Total assets acquired                               9,561,595
                                                         ---------

         Current liabilities                             1,984,686
         Loans to related companies                        478,680
         Long term debt                                  1,735,632
         Deferred income taxes                              48,552
     Total liabilities assumed                           4,247,550

         Excess of assets over liabilities assumed       5,314,045
                                                         =========

2.         PRINCIPLE ACTIVITIES OF THE GROUP

           The  principle  activities  of the  group  include  the  business  of
manufacturing,  servicing  and  selling  packaging  machines,  receiving  rental
income, manufacture of washers for use in the fastener industry, manufacture and
supply of air-conditioning  products and the manufacture,  sale and distribution
of both ready to eat and ready for bake off pastry related food products.



                                       26
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

3.         SUMMARY OF ACCOUNTING POLICIES

The  consolidated  and  combined  financial  statements  have been  prepared  in
accordance with US generally accepted accounting  principles and incorporate the
following significant accounting policies.

CONSOLIDATION

The consolidated financial statements include the accounts of the Company, First
South Africa Corp., Ltd. and its subsidiaries. All subsidiaries are wholly owned
and no minority interests exist.  Material  intercompany  transactions have been
eliminated on consolidation.

The combined financial  statements  include the financial  statements of Starpak
(Proprietary)  Limited,  its wholly owned subsidiaries,  Levy & Smith Properties
(Proprietary) Limited and Michael Levy Family Holdings (Proprietary) Limited and
LS Pressings  (Proprietary)  Limited, as they are entities under common control.
All significant intercompany balances and transactions have been eliminated.

ACCOUNTING ESTIMATES

Preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles requires management to make estimates and assumptions that
effect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements,  disclosure  of contingent  liabilities  at the financial
statement date and reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

EARNINGS PER SHARE

Earnings  per share for the Company on common  shares is based on net income and
reflects dilutive effects of any stock options which exists at year end.

INTANGIBLE ASSETS

Goodwill  resulting  from  acquisitions,  and  recipes  and  other  intellectual
property is being  amortised on a straight line basis over a period of twenty to
twenty five years. If facts and circumstances were to indicate that the carrying
amount of  goodwill,  recipes and other  intellectual  property is impaired  the
carrying amount would be reduced to an amount representing the discounted future
cash flows to be generated by the operation.  Also included in intangible assets
are non-competition  agreements  relating to the Europair  acquisition which are
being amortised on a straight line basis over a six year term of the agreements.
The company has adopted Statement


                                       27
<PAGE>




           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

3.         SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

of  Financial  Accounting  Standards  No. 121 ("SFAS  121")  Accounting  for the
impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". No
impairments in long-lived assets has taken place.

FOREIGN CURRENCY TRANSLATION

The  functional  currency of the  underlying  companies is that of South African
Rands.  Accordingly,  the  following  rates  of  exchange  have  been  used  for
translation purposes:

(a)        Assets and  liabilities  are  translated  into United States  Dollars
           using the exchange rates at the balance sheet date.

(b)        Common stock and capital in excess of par are translated  into United
           States dollars using historical rates at date of issuance.

(c)        Revenue, expenses, gains and losses are translated into United States
           Dollars using the weighted average exchange rates for each year.

The  resultant  translation   adjustments  are  reported  in  the  component  of
shareholders'   investment   designated   as   "Foreign   currency   translation
adjustment".



                                       28
<PAGE>


           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

3.         SUMMARY OF ACCOUNTING POLICIES (CONTINUED)


DERIVATIVE FINANCIAL INSTRUMENTS

The Company  uses  derivative  financial  instruments  to reduce its exposure to
fluctuations in foreign exchange rates by creating offsetting  positions through
the use of  derivative  financial  instruments.  The market risk  related to the
foreign  exchange option is offset by changes in the valuation of the underlying
profits being hedged.

The option premium is accounted for on the accrual basis,  and is amortised over
the option term. The notional  amount of the option is the amount bought or sold
at maturity.  Notional  amounts are  indicative  of the extent of the  Company's
involvement in the use of derivative financial instruments and are not a measure
of the  company's  exposure  to  credit  or  market  risks  through  its  use of
derivatives.

FOREIGN ASSETS AND LIABILITIES

Transactions in foreign currencies arise as a result of inventory purchases from
foreign countries and intercompany funding transactions between the subsidiaries
and First South  Africa  Corp.,  Ltd.  Transactions  in foreign  currencies  are
accounted  for at the rates  ruling on  transaction  dates.  Exchange  gains and
losses are charged to the income  statement  during the period in which they are
incurred.  Foreign assets and liabilities of the group which are not denominated
in United  States  Dollars  are  converted  into  United  States  Dollars at the
exchange rates ruling at the financial year end or at the rates of forward cover
purchased.  Forward cover is purchased to hedge the currency exposure on foreign
liabilities.

INVENTORIES

Inventories are valued at the lower of cost and net realisable value, using both
the  first-in,  first-out  and  the  weighted  average  methods.  The  value  of
work-in-progress   and  finished  goods  includes  an  appropriate   portion  of
manufacturing overheads.

PROPERTY, PLANT AND EQUIPMENT

Land is stated at cost and is not depreciated.  Buildings are depreciated on the
straight line basis over estimated useful lives of 50 years.

Buildings,  plant and  equipment,  and motor vehicles are written off over their
estimated useful lives to each asset's residual value.

The following rates are considered appropriate:

Percentage

         Buildings                                              2%
         Plant and equipment                                  10-33%
         Motor vehicles                                       20%



                                       29
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

3.         SUMMARY OF ACCOUNTING POLICIES (CONTINUED)


INCOME TAXES

Income tax expense is based on reported  earnings before income taxes.  Deferred
income taxes represent the impact of temporary  differences  between the amounts
of assets and liabilities  recognised for financial  reporting purposes and such
amounts  recognised  for tax purposes.  Deferred  taxes are measured by applying
currently enacted tax laws.

FAIR VALUE OF FINANCIAL INSTRUMENTS

As at June 30 1996, the carrying value of accounts receivable,  accounts payable
and investments approximate their fair value.

REVENUES

Revenues  comprise  net  invoiced  sales  of  washers,   manufactured  packaging
machines,  spares and service charges, food products,  air conditioning systems,
fans and related accessories, and rental income. Combined revenues exclude sales
to group companies. The Company recognises revenues on an accrual basis.

4.       INVENTORIES

Inventories consists of the following:

                                                     June 30,           June 30,
                                                      1996               1995
                                                         $                  $
                                                  ----------         ----------
Finished goods                                     2,077,679          1,481,124
Work-in-progress                                     272,377            185,140
Raw materials                                        501,562            390,852
Supplies                                              93,055               --
                                                  ----------         ----------
Inventories (gross)                                2,944,673          2,057,116
Less: Valuation allowances                          (433,805)          (824,388)
                                                  ----------         ----------
Inventories (net)                                  2,510,868          1,232,728
                                                  ==========         ==========


5.         PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                           Accumulated     Net book     Net book
                                 Cost     depreciation      value        value
                               June 30,      June 30,      June 30,     June 30,
                                 1996          1996          1996         1995
                                    $             $             $            $
                              ---------    ----------     ---------    ---------
Land and buildings            2,713,473       (17,147)    2,696,326      845,479
Plant and equipment           3,463,121    (1,415,524)    2,047,597      372,244
Vehicles                      1,789,905      (687,241)    1,102,664      316,579
Capital work in progress      1,033,835          --       1,033,835         --
                              ---------    ----------     ---------    ---------
                              9,000,334    (2,119,912)    6,880,422    1,534,302
                              =========    ==========     =========    =========

Depreciation                                                345,884       50,678
                                                          =========    =========


Certain assets of the company are encumbered as
security for the liabilities of the group (Refer note 11)


                                       30
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


6.         GOODWILL

           Goodwill consists of the following:

                                                       Accumulated      Net book
                                         Cost         amortisation       value
                                        June 30,        June 30,        June 30,
                                         1996            1996             1996
                                           $               $                $
                                        -------          ------          -------
                                                                       
Goodwill arising on acquisitions        414,610          (6,069)         408,541
                                        =======          ======          =======
                                                                 


7.         RECIPES AND OTHER INTELLECTUAL PROPERTY

Recipes and other intellectual property consists of the following:
<TABLE>
<CAPTION>

                                                          Accumulated     Net book
                                             Cost        amortisation       value
                                           June 30,        June 30,       June 30,
                                              1996           1996           1996
                                                $              $              $
                                          ---------         ------       ---------
<S>                                       <C>               <C>          <C>      
Recipes and other intellectual property   2,858,011         (9,479)      2,848,532
                                          =========         ======       =========
</TABLE>

8.         OTHER ASSETS

Other assets consists of the following:
<TABLE>
<CAPTION>
                                                    Accumulated        Net book       Net book
                                       Cost        amortisation         value          value
                                     June 30,        June 30,           June 30,       June 30,
                                       1996            1996              1996           1995
                                         $               $                 $              $
                                     -------          ------           -------         ------
<S>                                   <C>                               <C>                
Loans to shareholder                  84,768            --              84,768           --
Non competition agreements           115,842          (8,992)          106,850           --
Derivative financial instruments     152,000         (25,332)          126,668           --
Other                                   --              --                --           16 224
                                     -------          ------           -------         ------
                                     352,610          34,324           318,286         16,224
                                     =======          ======           =======         ======
</TABLE>

Derivative financial  instruments consist of a purchased foreign currency option
with a notional  amount of South  African  Rands  (ZAR) 25 000 000 with a strike
price of ZAR5 to $1. The  option  term is twelve  months  and  expires on May 2,
1997.


                                       31
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
      THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 ANDTHE
                     YEARS ENDED FEBRUARY 28, 1995 AND 1994


9.         LOAN TO RELATED COMPANY


                                                           June 30,     June 30,
                                                             1996         1995
                                                                $            $
                                                          ---------    ---------

Michael Levy Family Holdings (Proprietary) Limited               --      145,822
                                                          =========    =========

The terms of this loan have  changed  with the  closing  of the  initial  public
offering. The loan has been revalued and disclosed as loans to shareholders, and
is unsecured, interest free and repayable on February 28, 1998.

10.        BANK OVERDRAFT FACILITIES

The Company has  general  short term  unsecured  banking  facilities,  which are
renewable annually,  of $2,460,437 available.  These facilities bear interest at
prime lending rates, which is currently 19.5%, and are repayable on demand.

11.        SHORT AND LONG TERM DEBT

                                                    June 30,          June 30,
                                                       1996              1995
                                                          $                 $
                                                   ----------        ----------
Long term debt

Secured debt
     Mortgage loans                                 1,508,870           561,301
     Equipment notes                                1,904,980           540,542
Unsecured debt
     Unsecured notes                                  125,214              --
                                                   ----------        ----------
                                                    3,539,064         1,101,843
Less: Current portion                              (1,177,692)         (147,126)
                                                   ----------        ----------
Total long term debt                                2,361,372           954,717
                                                   ==========        ==========

Short term debt

Current portion of long term debt                   1,177,692           147,126
     Trade finance loan                               924,107              --
                                                   ----------        ----------
                                                    2,101,799           147,126
                                                   ==========        ==========





                                       32
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

11.        SHORT AND LONG TERM DEBT (CONTINUED)

MORTGAGE LOANS

Mortgage  loans are secured by first and second  mortgage  bonds over  property.
These loans are generally repayable in equal instalments of $27,568 over periods
ranging from five to twenty years and bear interest at rates ranging from 12% to
18.5%. Generally these interest rates are linked to the prime lending rate which
is currently at 19.5%.

EQUIPMENT NOTES

Equipment  notes are secured  over  movable  assets.  These loans are  generally
repayable  in equal  monthly  instalments  over a maximum  period of five years.
These  loans bear  interest  at rates  ranging  from 16.9% to 2% above the prime
lending rate, which is currently 19.5%.

UNSECURED NOTES

Unsecured  notes bear  interest at the prime  lending  rate,  which is currently
19.5% , and have no fixed repayment terms. These notes have been included in the
current portion of long term liabilities.

TRADE FINANCE LOAN

The trade finance loan is  denominated in United States Dollars and is repayable
within 90 days. This loan is covered forward by a forward exchange  contract and
bears  interest at 6.5625%.  This facility is made available to the group by the
companies  bankers as a  significant  part of the  general  short  term  banking
facilities. (see note 10)

The following is a schedule of repayments  of long term  liabilities  by year of
repayment


YEAR ENDED JUNE 30, 1996                                   $
------------------------                             ----------
1997                                                    543,812
1998                                                    537,723
1999                                                    476,208
2000                                                    274,749
Thereafter                                              528,880
                                                     ----------
                                                      2,361,372

12.        LOAN FROM RELATED COMPANY


                                                    JUNE 30,        JUNE 30,
                                                      1996            1995
                                                        $               $
                                                    -------         -------
Trumetric Washers (Proprietary) Limited                  --         257,909
                                                    =======         =======


This loan was repaid from cash generated by operations.  This loan was unsecured
and interest free.


                                       33
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


13.        INCOME RESTRICTED AS TO DISTRIBUTION

This  represents the excess of assets acquired over  liabilities  assumed in the
purchase of the assets and liabilities of operating entities. This amount is not
distributable until such time as the assets so acquired are disposed.  There are
no restrictions on the future income of the Company.

14.        OPERATING LEASES

The group has several  operating  leases over land and  buildings.  These leases
generally  expire  within the next five years.  These leases  generally  contain
renewal options at the fair market value at the date of renewal.  In most cases,
management expects that in the normal course of business, leases will be renewed
or replaced by other leases.

The following is a schedule of future  minimum  rental  payments  required under
operating leases that have initial or remaining  non-cancellable  lease terms in
excess of one year as of June 30, 1996:


YEAR ENDED JUNE 30, 1996                                 $
------------------------                             --------

1997                                                  337,690
1998                                                  553,677
1999                                                  431,237
2000                                                   35,047
Thereafter                                              2,233
                                                     ---------
                                                     1,359,884
                                                     =========



The following  schedule  shows the  composition  of total rental expense for all
operating leases except those with terms of a month or less:


                      Year ended    Four months   Year ended    Year ended
                        June 30,      June 30,    February 28,  February 28,
                         1996           1995          1995          1994
                           $              $             $             $
                        -------        ------        ------        ------
Minimum rentals         415,815        25,562        78,730        98,135
                        =======        ======        ======        ======





15.        OTHER INCOME

Other income includes interest  received,  proceeds from insurance  claims,  bad
debts recovered, commissions received and profits on sale of assets.



                                       34
<PAGE>

           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


16.        INCOME TAXES

Income taxes are  accounted for under  Statement of Financial  Standards No. 109
"Accounting  for Income Tax" ("SFAS 109"), an asset and liability  method.  SFAS
109 requires the  recognition  of deferred  tax assets and  liabilities  for the
expected future tax consequences of temporary  differences between the tax bases
and  financial  reporting  bases of the  Company's  assets and  liabilities.  In
addition,  SFAS 109 requires the  recognition of future tax benefits such as net
operating loss carryforwards,  to the extent realisation of such benefit is more
likely than not.

The provision for income taxes charged to continuing operations was as follows:


                                           Four months
                                Year ended    ended   Year ended   Year ended
                                 June 30,    June 30, February 28, February 28,
                                  1996        1995       1995        1994
                                    $           $          $           $
                                 -------     -------    -------     -------
Current
     South African normal        848,006     145,216    291,853     108,040
Total current taxes              848,006     145,216    291,853     108,040
Deferred
     South African normal       (359,388)       --      (69,295)      5,363
Total deferred taxes            (359,388)       --      (69,295)      5,363
                                 -------     -------    -------     -------
Provision for taxes on income    488,618     145,216    222,558     113,403
                                 =======     =======    =======     =======



Deferred tax asset at June 30, is comprised of the following:

                                                      June 30,        June 30,
                                                        1996            1995
                                                          $               $
                                                     ----------      -----------
Fixed assets                                            346,961          58,956
Prepaid expenditure                                      12,245            --
                                                     ----------      -----------
     Gross deferred tax liabilities                     359,206          58,956
                                                     ----------      -----------
Accruals                                               (372,447)        (69,101)
Deposits received on equipment sales
                                                        (60,309)           --
                                                     ----------      -----------
     Gross deferred tax assets                         (432,756)        (69,101)
                                                     ----------      -----------
Net deferred tax asset                                  (73,550)        (10,145)
                                                     ==========      ========== 


                                       35
<PAGE>
           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994

16.      INCOME TAXES (CONTINUED)

The  provision  for  taxes on income  differs  from the  amount  of  income  tax
determined by applying the applicable South African statutory income tax rate to
pre-tax  income  from  continuing  operations  as  a  result  of  the  following
differences:

The Company reflects a net loss position of $5,248,942 before taxation. However,
there is a  recorded  tax  charge  as  $6,743,000  of the loss  before  taxation
consists of  expenditure  not allowable for tax purposes,  including a charge of
$6,314,000 for the non cash compensation  charge. The balance of the expenditure
not allowable for tax purposes is incurred mainly in Bermuda,  where no taxation
laws are in existence. After eliminating non allowable expenditure, the tax rate
reconciliation is as follows:

                                                   Four
                                                  Months   Year       Year
                                     Year ended    ended   ended      ended
                                        June 30,  June 30 February   February
                                          1996      1995  28, 1995   28, 1994
                                            %         %        %         %
                                        ------    ------   ------    ------
South African Statutory tax rate            35        35       35        40
Capital allowances                          (2)      --       --        --
Disallowable expenditure                     1         5        1         2
Transitional levy                          --        --         6       --
Tax rate adjustment                        --        --        (2)       (3)
Non taxable income                          (1)      --       --        --
Other                                      --        --         1        (4)
                                        ------    ------   ------    ------
Effective tax rate                          33        40       41        35
                                        ======    ======   ======    ======

17.        CASH FLOWS

The changes in assets and liabilities consist of the following:
<TABLE>
<CAPTION>
                                                    Four months
                                         Year ended    Ended    Year ended   Year ended
                                          June 30,    June 30,  February 28, February 28,
                                            1996        1995        1995        1994
                                              $           $           $           $
                                          --------    --------    --------    --------
<S>                                       <C>           <C>       <C>          <C>     
(Increase)/ decrease in trade accounts

receivable                                (756,684)     36,382    (989,374)    (22,786)

Decrease/(increase) in inventories         146,179    (357,614)     13,759    (189,278)

(Increase)/decrease in prepaid expenses
and other current assets                  (134,650)   (146,445)     15,906       5,453

Increase in trade accounts payable         360,265      91,094      97,479      49,638

(Decrease)/increase in other provisions
and accruals                               (38,785)    127,573     659,078     178,901

Decrease in dividends payable                 --          --          --       (90,242)

Increase in income taxes payable           433,860     154,920     180,140       2,474
                                          --------    --------    --------    --------
                                            10,185      94,090     (23,012)    (65,840)
                                          ========    ========    ========    ========
Supplemental disclosure of cash
 flow information:

Interest paid                              865,733      18,801     152,163     180,960
                                          ========    ========    ========    ========
</TABLE>
                                       36
<PAGE>


           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


18.        EMPLOYMENT BENEFITS

The Company participates in various retirement benefit funding plans and medical
aid plans for the benefit of its employees.

All of the retirement benefit funds are defined contribution plans and by nature
of the funds  there can be no  unfunded  obligations  or  responsibility  on the
employer.  The only  obligation  of the  Company  is the  contribution  to these
schemes which generally  ranges from 6% to 9% of the employees  annual earnings.
Amounts  charged to pension  costs and  contributed  by the Company to the funds
were as follows:

                                       Four months
                          Year ended      ended     Year ended   Year ended
                            June 30,     June 30,   February 28, February 28,
                              1996         1995         1995         1994
                                $            $            $            $
                             ------       ------       ------       ------

Pension costs                99,028       37,440       84,438       77,508
                             ======       ======       ======       ======



The group and employees participate in various medical aid schemes which provide
medical cover for employees on an annual basis.  Neither the medical aid nor the
group are liable for post retirement  medical costs.  The  contributions  to the
medical aid are borne  equally by the  employee  and the group  except for a few
salaried   employees   where  the  company  is  responsible   for  100%  of  the
contribution. The Company has no liability for employees medical costs in excess
of the contributions to the medical fund.

Amounts  charged to medical aid costs and  contributed  by the  Company  were as
follows:


                    YEAR ENDED   FOUR MONTHS    YEAR ENDED   YEAR ENDED
                      JUNE 30,  ENDED JUNE 30,  FEBRUARY 28, FEBRUARY 28,
                       1996         1995         1995          1995
                            $            $            $            $
                     ---------    ---------    ---------    ---------
Medical aid costs      242,186       42,366      123,233      156,981
                       =======      =======      =======      =======



19.        PROFIT SHARE

Management receive an annual bonus, determined at the discretion of the board of
directors. The amounts paid to management were as follows:



                         YEAR ENDED      FOUR MONTHS    YEAR ENDED    YEAR ENDED
                         JUNE 30,        ENDED          FEBRUARY 28,  FEBRUARY
                            1996         JUNE 30,       1995             28,
                                           1995                         1995
                             $               $              $             $
                          -------         -------       -------       -------
                                                        
Medical aid costs         140,828             --        294,307        86,031
                          =======         =======       =======       =======
                                                    

                                       37
<PAGE>

           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994



20.        EMPLOYMENT AGREEMENTS

The Company has entered into an  employment  agreement  with,  the president and
chief executive officer of the Company. In terms of the agreement he receives an
annual salary of $180,000 and options to purchase  55,000 shares of common stock
at an exercise price of $5 per share. In addition he has been granted additional
options to purchase 150,000 shares of common stock of the Company at an exercise
price of $5 per share  exercisable  after the seventh  anniversary  of the grant
date, providing that the vesting of such options will be accelerated as follows:
i) 50,000  options  will be  exercisable  on such  earlier date that the company
realises  earnings  per share of $0.75 or more on a fiscal  year  basis,  ii) an
additional  50,000  options  will be  exercisable  on such earlier date that the
Company realises  earnings per share of $1.00 or more on a fiscal year basis and
iii) an additional  50,000 options will be exercisable on such earlier date that
the Company realises earnings per share of $1.50 or more on a fiscal year basis.
The  Company  intends to pay an annual  incentive  bonus of five  percent of the
Minimum pre-tax income above  $4,000,000,  as shall be reported in the Company's
audited  financial  statements  for each fiscal year in which the  president  is
employed,  exclusive of any extraordinary earnings or charges which would result
from the release of the earnout escrow shares.

The Company has entered into an employment  agreement with the managing director
of the  company.  In terms of the  agreement  he  receives  an annual  salary of
$150,000.  He has been granted options to purchase 150,000 shares of First South
African Holdings (Proprietary) Limited class B common stock at an exercise price
of R13.05 per share  exercisable  after the fifth anniversary of the grant date,
providing that the vesting of such options will be  accelerated  as follows:  i)
30,000  options  will  be  exercisable  on such  earlier  date that the  Company
realises  earnings  per share of $0.75 or more on a fiscal  year  basis,  ii) an
additional  50,000  options  will be  exercisable  on such earlier date that the
Company realises  earnings per share of $1.00 or more on a fiscal year basis and
iii) an additional  70,000 options will be exercisable on such earlier date that
the Company realises earnings per share of $1.50 or more on a fiscal year basis.
The  Company  intends to pay an annual  incentive  bonus of four  percent of the
Minimum pre-tax income above  $5,000,000,  as shall be reported in the Company's
audited financial statements for each fiscal year in which the managing director
is employed,  exclusive  of any  extraordinary  earnings or charges  which would
result from the release of the earnout escrow shares.

The 150,000  options  granted  will be  accounted  for as a future  compensation
charge  should the  earnings  targets be reached or at such time as the  options
become exercisable, whichever condition is first satisfied.




                                       38
<PAGE>

           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994


21.        STOCK OPTION PLAN

The board of directors  have adopted the Company's  1995 Stock Option Plan.  The
stock  option plan  provides  for the grant of i) options  that are  intended to
qualify as incentive stock options  (Incentive Stock Options) within the meaning
of Section 422 of the code to key  employees  and ii) options not so intended to
qualify ("Nonqualified Stock Options") to key employees (including directors and
officers who are employees of the Company,  and to directors and consultants who
are not  employees  ). The total  number  of  shares  of common  stock for which
options may be granted under the stock option plan is 350,000 shares.

The Stock Option Plan is to be administered by the Compensation Committee of the
Board of  Directors.  The  committee  shall  determine  the terms of the options
exercised,  including the exercise  price,  the number of shares  subject to the
option and the terms and  conditions of exercise.  No options  granted under the
Stock Option Plan are transferable by the optionee other than by the will or the
laws of descent  and  distribution  and each  option is  exercisable  during the
lifetime of the optionee only by such optionee or his legal representatives.

The exercise price of Incentive  Stock Options granted under the plan must be at
least  equal to the fair  market  value of such  shares on the date of the grant
(110% of fair market  value in the case of an optionee  who owns or is deemed to
own more than 10% of the voting rights of the  outstanding  capital stock of the
company or any of its  subsidiaries).  The maximum term for each Incentive Stock
Option  granted is ten years (five years in the case of an optionee  who owns or
is deemed to own more than 10% of the voting rights of the  outstanding  capital
stock of the company or any of its  subsidiaries).  Options shall be exercisable
at such times and in such  instalments  as the  committee  shall  provide in the
terms of each individual  option. The maximum number of shares for which options
may be granted to any individual in any fiscal year is 210,000.

The Stock Option Plan also  contains an automatic  option grant  program for the
non-employee directors. Each non-employee director of the Company on January 24,
1996 (other than Graham B.R. Collis and Anthony D. Whaley) was granted an option
of 5,000 shares of common stock.  Thereafter,  each person who is a non-employee
director  of the  Company  following  an annual  meeting  of  shareholders  will
automatically  be  granted an option  for an  additional  5,000 shares of common
stock. Each grant will have an exercise price per share equal to the fair market
value of the  common  stock on the grant date and will have a term of five years
measured from the grant date,  subject to earlier  termination  if an optionee's
service as a board member is terminated for cause.

The Company has granted  options to purchase 75,000 shares of common stock under
the Plan as described below:

NAME                  Options   Per Share
                      Granted   Exercise Price   Expiration Date   Exercisable
                      -------   --------------   ---------------   -----------
                                 
Stock options         
 issued during 1996   75,000       $ 5.00        January 24, 2001  Immediately
                                      

22.        EARNOUT ESCROW SHARES

In terms of the underwriting agreement,  the Company arranged with the president
and chief  executive  officer to  contribute  a total of  1,100,000  shares into
escrow  in  terms of the  earnout  escrow  agreement.  These  shares  were to be
released  based on the  attainment  of a pre-set Net income  before income taxes
target.  If the targets were not attained the earnout  escrow  shares would have
been cancelled.  This target was attained based on the unaudited proforma profit
and loss  resulting in the release of these shares from escrow and resulted in a
non-cash compensation charge to the profit and loss account for the period ended
June  30,  1996 of  $6,314,000.  This  was a  fourth  quarter  event  after  the
acquisition of the business combination of Piemans Pantry (Pty) Ltd and Surfs-Up
Investments (Pty) Ltd.

                                       39
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994



23.        WARRANTS OUTSTANDING

In terms of the initial public offering, each unit issued consisted of one share
of common  stock,  one  redeemable  Class A warrant and one  redeemable  Class B
warrant.  In  addition,  an  additional  100,000  warrants  were  issued  to the
underwriter  in  terms  of the  underwriting  agreement.  Concurrently  with the
initial  public  offering the selling  security  holder  offered 650,000 selling
security  holder  warrants,  650,000 selling  security  holder  Class B warrants
issuable upon  exercise of the selling  security  holder  warrants and 1,300,000
shares of common stock issuable upon exercise of these selling  security  holder
warrants and selling  security holder Class B warrants.  These selling  security
holder  warrants are  identical  to the Class A warrants,  except that there are
certain restrictions imposed upon the transferability of these warrants.

Warrants outstanding at June 30, 1996 were as follows:

<TABLE>
<CAPTION>
                             Number of
Warrant                      Warrants       Exercise price     Expiry date           Entitlement
-------                      --------       --------------     -----------           -----------
<S>                           <C>             <C>                   <C> <C>                         
Class A Redeemable            2,300,000       $6.50         January 24, 2001     One share of common
Warrants                                                                         stock and one Class B
                                                                                 warrant
                                                                                
Class B Redeemable            2,300,000       $8.75         January 24, 2001     One share of common
Warrants                                                                         stock
                                                                                
Selling Security                650,000       $6.50         January 24, 2001     One share of common
Holder Warrants                                                                  stock and one Class B
                                                                                 warrant
</TABLE>

The Class A warrants are  redeemable  beginning  January 24, 1997, or earlier at
the option of the Company with the underwriter's  consent, at a redemption price
of $0.05 per Class A Warrant,  if the "closing  price" of the  Company's  common
stock  trades  at an  average  price  in  excess  of  $9.10  per  share  for any
consecutive  30  trading  day  period,  ending  within 15 days of the  notice of
redemption.  All class A warrants  are to be redeemed if any are to be redeemed.
The Class B warrants are  redeemable  beginning  January 24, 1997, or earlier at
the option of the Company with the underwriters  consent,  at a redemption price
of $0.05 per Class A Warrant,  if the "closing  price" of the  Company's  common
stock  trades  at an  average  price in  excess  of  $12.25  per  share  for any
consecutive  30  trading  day  period,  ending  within 15 days of the  notice of
redemption. All Class B warrants are to be redeemed if any are to be redeemed.




                                       40
<PAGE>



           FIRST SOUTH AFRICA CORP., LTD. AND ITS SUBSIDIARY COMPANIES

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
        THE YEAR ENDED JUNE 30, 1996, FOUR MONTHS ENDED JUNE 30, 1995 AND
                   THE YEARS ENDED FEBRUARY 28, 1995 AND 1994



24.        FIRST SOUTH AFRICAN HOLDINGS ESCROW AGREEMENT

The First South African  Holdings (FSAH) escrow  agreement was executed prior to
the  closing of the  offering  and  provided  for the  concurrent  issuance  and
delivery of 729,979 shares of Class B common stock to the FSAH escrow agent. The
FSAH escrow  agreement is intended to provide  security for the holders of First
South  African  Holdings  (Pty) Ltd Class B common  stock,  who are residents in
South  Africa and are  prohibited  in terms of South  African  law from  holding
shares in a foreign company. The FSAH escrow agreement provides that the parties
to this  agreement  that are holders of FSAH Class B common  stock will not sell
such shares of stock, but may tender the shares to the FSAH escrow agent against
payment therefore by the escrow agent, which payment may consist of the proceeds
obtained  from  the  sale of an equal  number  of  Class B  common  stock of the
Company,  provided that the proceeds of the sale will be delivered to the holder
of the Class B common  stock in exchange  for the shares in First South  African
Holdings  (Pty) Ltd.  These shares will be tendered to the Company and they will
be immediately converted to FSAH Class A common stock.

Included in the First South Africa Corp., Ltd. Class B issued common stock is 1,
061,558 First South Africa Holdings  (Proprietary) Limited Class B common stock,
in terms of this escrow arrangement.


25.        CONTINGENT LIABILITIES

South  African  Secondary  Tax on  Companies  at 12.5  percent is payable on all
future dividends declared out of distributable reserves.

A contingent  purchase  consideration for the acquisition of Europair existed at
year end. This contingency was met and resulted in an additional  payment to the
previous shareholders of approximately $80,861 which occurred subsequent to year
end.

A  contingent  purchase  consideration  for  the  acquisition  of  the  Business
Combination  of Piemans  Pantry  (Proprietary)  Limited and Surf-Up  Investments
(Proprietary)  Limited,  is payable based on the pre-tax  profit of the Business
Combination as follows:

FIRST INSTALMENT

           Four times  pre-tax  profit for the year  ending  February  28,  1997
           multiplied by twenty percent,  which is then increased by 18.75%,  to
           take into account the interest cost of the delayed payment.

SECOND INSTALMENT

           Four times  pre-tax  profit for the year  ending  February  28,  1998
           multiplied by twenty percent,  which is then increased by 18.75%,  to
           take into account the interest cost of the delayed payment.

These  instalments  will be settled in part by the issue of First South  African
Holdings  (Proprietary)  Limited  Class  B  common  stock  and in part by a cash
consideration.



                                       41
<PAGE>



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

           None.


                                    PART III
ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

           The  officers and  directors  of the Company,  their ages and present
positions held with the Company are as follows:


    NAME                    AGE            POSITIONS WITH THE COMPANY
    ----                    ---            --------------------------
Michael Levy                50           Chairman of the Board of Directors

Clive Kabatznik             40           Vice Chairman of the Board of
                                         Directors, Chief Executive
                                         Officer, President, Chief 
                                         Financial Officer, Controller
                                         and Director

Tucker Hall                 39           Secretary

Charles S. Goodwin          56           Director

John Mackey                 54           Director

Laurence M. Nestadt         45           Director

-----------

           The following is a brief  summary of the  background of each director
and executive officer of the Company:

           MICHAEL  LEVY  is a  co-founder  of the  Company  and has  served  as
Chairman of the Board of Directors  since the Company's  inception.  Since 1987,
Mr. Levy has been the Chief Executive Officer and Chairman of the Board of Arpac
L.P., a Chicago-based  manufacturer of plastic packaging machinery.  (Arpac is a
U.S. competitor of Starpak.)

           CLIVE  KABATZNIK is a  co-founder  of the Company and has served as a
director and its President  since its inception and as its Vice Chairman,  Chief
Executive  Officer and Chief  Financial  Officer since October 1995.  Since June
1992,  Mr.  Kabatznik  has  served as  President  of  Colonial  Capital,  Inc. a
Miami-based  investment  banking  Company that  specializes  in advising  middle
market companies in areas concerning mergers,  acquisitions,  private and public
agency funding and debt  placements.  From 1989 to 1992,  Mr.  Kabatznik was the
President  of Biltmore  Capital  Group,  a  financial  holding  Company  that he
co-founded that controlled a registered NASD  broker-dealer.  From 1981 to 1986,
Mr. Kabatznik was the Chief Financial Officer of the Learning Annex, Inc., which
he co-founded. Mr. Kabatznik was born in South Africa.

           TUCKER HALL has been the Secretary of the Company since its inception
and is an employee of Codan Services Limited,  an affiliated company of Conyers,
Dill & Pearman,  Bermuda  counsel to the Company,  and has been employed by such
Company as a manager since 1989.




                                       42
<PAGE>



           CHARLES S.  GOODWIN  has been a director  for the  Company  since its
inception  and has  been  Managing  Director  and  Chief  Executive  Officer  of
Tessellar  Investment,  Ltd., a money  management  firm operating from Cape Cod,
Massachusetts  since 1985. Mr. Goodwin was Senior Vice President and Director of
International  Research  of Arnhold & S.  Bleichnoder,  Inc.,  an  institutional
brokerage  firm from 1983 to 1984.  During the period 1971 to 1983,  Mr. Goodwin
was a Director and Vice President of Warburg Pincus Capital Corp., EMW Ventures;
a Director,  Senior Vice  President and Director of Research for Warburg  Pincus
Counsellors,  and a Partner and Managing  Director of E.M. Warburg Pincus & Co.,
an investment  counseling and venture capital firm. Mr. Goodwin is the author of
"The Third World Century" and "A Resurrection of the Republican Ideal" published
by University Press of America,  Lanham, Md. in 1994 and 1995 respectively.  Mr.
Goodwin received his Bachelor of Arts in Russian History from Harvard College in
1961 and his Master of Business  Administration - International Finance from the
Columbia University Graduate School of Business in 1965.

           JOHN  MACKEY  is  the   Chairman  of  the  Board  of  QTI,   Inc.,  a
privately-held  global  trading firm doing  business in Africa,  Asia and in the
United  States  since  1992.  Mr.  Mackey has also been a member of the Board of
Advisors of the  Leukemia  Society of America  since  1987,  and a member of the
Board of Advisors of the Syracuse  University  Business  School since 1990.  Mr.
Mackey played  football for 10 seasons in the National  Football  League and was
elected to the Pro Football Hall of Fame in 1992. Mr. Mackey has been a director
of the Company since January 24, 1996.

           LAURENCE NESTADT is the Chairman of the Board and the Chief Executive
officer of Global Capital Limited which is a South African  investment firm that
was incorporated in February 1995.  Global is a shareholder of the Company.  See
"Certain  Transactions."  Since 1993,  Mr.  Nestadt has been the Chairman of the
Board and a member of the controlling  shareholder  group of Saflife Limited,  a
South  African  life  insurance  company,  the  Chairman  of the Board of Hosken
Consolidated  Investments  Limited,  a South African  company engaged in various
investment  activities,  and the  Chairman of the Board of  Crendell  Investment
Corporation  Limited,  a South  African  company that is also engaged in various
investment  activities.  Since 1984,  Mr.  Nestadt has been the  Chairman of the
Image Group  Limited,  a South  African  company  engaged in motor  franchising,
retail clothing and sporting  goods.  Mr. Nestadt was engaged as a consultant by
Investec Bank Limited  ("Investec") the sixth largest bank in South Africa, from
1991 to 1993.  Mr. Nestadt was a co-founder of Investec in 1976 and an Executive
Director  of such  bank  from  1976 to 1984.  Investec  owns  15% of the  voting
securities  of Global.  Mr.  Nestadt has been a director  of the  Company  since
January 24, 1996.

OTHER KEY EMPLOYEES

           Cornelius J. Roodt, 37. Mr. Roodt was appointed Managing Director and
Chief Financial  Officer of First South African  Holdings (Pty) Ltd., on July 1,
1996.  Mr. Roodt is  responsible  for  overseeing  all the  activities of FSAH's
operations in South Africa.  From 1994 to 1996 Mr. Roodt was a senior partner at
Price Waterhouse  Corporate finance,  South Africa.  From 1991 to 1994 he was an
audit partner at Price Waterhouse,  South Africa. Prior to that he was a partner
at the accounting firm of Wiehahn Meyernel in South Africa.

           Samuel S.  Smith,  41.  Mr.  Smith is a joint  Managing  Director  of
Starpak.  Mr. Smith has been employed by Starpak and its predecessor since 1976.
Mr. Smith is responsible  for the technical  operations of Starpak which include
conceptual  design  of  machinery,  management  of the  factory  and  production
processes, commissioning and installation of machinery at customers' premises.




                                       43
<PAGE>



           Alan R. Grant, 45. Mr. Grant is the financial director of Starpak and
L.S.   Pressings   and  is   responsible   for  all  of  Starpak's   accounting,
administrative  and  financial  management  functions as well as its  industrial
relations  and  statutory  personnel  functions.  Mr. Grant has been employed by
Starpak since 1981.

           Rhona L.  Kabatznik,  61.  Ms.  Kabatznik  is a General  Manager  and
Director of L.S. Pressings. Ms. Kabatznik's  responsibilities include production
and sales  administration.  Ms. Kabatznik is the mother of Clive Kabatznik,  the
Vice Chairman President and Chief Executive Officer of the Company,  and a first
cousin of Michael Levy, the Chairman of the Company's Board of Directors.

           Raymond Shaftoe,  45. Mr. Shaftoe has been a joint Managing  Director
of Starpak since 1986 and has been employed by Starpak since 1980.  Mr.  Shaftoe
has also served on the Board of  Directors  of Starpak  since 1986.  His current
responsibilities  include  supervision  of the sales and  marketing of Starpak's
products, administration and product development.

           Bruce  Thomas,  44.  Mr.  Thomas is the Chief  Executive  Officer  of
Europair. He has held this position since 1991 and was the principal shareholder
of  Europair  until  its sale to the  Company.  Prior  to that he was the  Chief
Financial   Officer  for  Europair  and  held  that  position  from  1976.   His
responsibilities include the management of Europair, product development,  sales
and financial oversight.

           Each  of the  above  key  employees,  other  than  Bruce  Thomas  and
Cornelius J. Roodt,  has entered into a three-year  service  contract with their
respective  companies,  commencing March 1, 1995. Bruce Thomas and Europair have
executed a Management Agreement which shall be in effect for a three year period
commencing January 24, 1996. FSAH entered into an employment  agreement with Mr.
Roodt commencing July 1, 1996.

           John Welch,  48. Mr.  Welch is the founder and  Managing  Director of
Piemans Pantry , a company he established in 1982. His responsibilities  include
overall supervision of all aspects of the business. Mr. Welch entered into a two
year employment agreement with the Company,  commencing March 1, 1996. Mr. Welch
was a shareholder of Piemans Pantry prior to its sale to the Company.

           Michael  Morgan,49.  Mr.  Morgan is  Director of Human  Resources  at
Piemans Pantry,  a position he has held since joining the company in 1989 and is
responsible for all aspects of labor relations and employee benefits. Mr. Morgan
entered into a two year employment agreement with the Company,  commencing March
1, 1996. Mr. Morgan was a shareholder of Piemans Pantry prior to its sale to the
Company.

           Helen  Britz,  41. Ms.  Britz is National  Sales  Manager for Piemans
Pantry and has held that position since 1992 when she joined the company.  Prior
to that Ms. Britz was the National  Sales Manager for a rival pie  manufacturer.
Ms. Britz oversees the company's national sales staff.

           Malcolm  Moore,  38. Mr.  Moore is the  Financial  Manager of Piemans
Pantry a position he has held for the last three years.  Prior to that Mr. Moore
was Financial Manager of Burhose, a leading South African hosiery manufacturer.

           Trevor  Knight,  36. Mr.  Knight is the  Factory  Manager for Piemans
Pantry a  position  he has  held for the last  five  years.  Mr.  Knight  was an
independent food consultant prior to joining the Company.  He is responsible for
all aspects of plant production at Piemans.

           All  directors  of the  Company  hold  office  until the next  annual
meeting of shareholders or until their successors are elected and qualified. The
officers of the Company are elected by the Board of Directors at the



                                       44
<PAGE>



first meeting after each annual meeting of the Company's shareholders,  and hold
office until their death, until they resign or until they have been removed from
office.  The Company has no executive  committee.  Pursuant to the  Underwriting
Agreement,  dated January 24, 1996 by and among the Company, FSA Stock Trust and
D.H.  Blair  Investment  Banking  Corp.  (the  "Underwriter")  and executed with
respect to certain  provisions  thereof by Messrs  Clive  Kabatznik  and Michael
Levy,  the Company is required to nominate a designee of the  Underwriter of its
initial  public  offering to the Board of  Directors  for a period of five years
from the date of the  completion of the Offering.  The  Underwriter  has not yet
selected such a designee.

           Except for Mr. Levy,  directors  of the Company do not receive  fixed
compensation  for their services as directors  other than certain  options under
the  Company's  stock option plan.  Mr. Levy  receives an annual  service fee of
$30,000 and options to purchase  5,000 shares of the Company's  Common Stock for
every year of service as a director of the Company.  However,  directors will be
reimbursed for their reasonable  out-of-pocket  expenses  incurred in connection
with their duties to the Company.

COMMITTEES OF THE BOARD

           The  Board  has an Audit  Committee  (the  "Audit  Committee")  and a
Compensation  Committee (the "Compensation  Committee").  The Audit Committee is
composed  of Clive  Kabatznik,  Charles  Goodwin  and  John  Mackey.  The  Audit
Committee is responsible for recommending annually to the Board of Directors the
independent  auditors  to  be  retained  by  the  Company,  reviewing  with  the
independent  auditors  the  scope  and  results  of  the  audit  engagement  and
establishing  and  monitoring  the  Company's  financial  policies  and  control
procedures.  The Compensation  Committee is composed of Charles Goodwin and John
Mackey.  These  persons are  intended  to be  Non-Employee Directors  within the
meaning of Rule 16b-3(b)(3)(i)  promulgated under the Securities Exchange Act of
1934 (the Securities  Exchange Act). The  responsibilities  of the  Compensation
Committee are described below under the heading Stock Option Plan.

EXECUTIVE COMPENSATION

           The  following  summary  compensation  table sets forth the aggregate
compensation  paid or accrued  by the  Company  to its Chief  Executive  Officer
during the Period from  September 6, 1995 through June 30, 1996.  Apart from Mr.
Kabatznik,  whose annual salary is $180,000, no executive officer of the Company
received compensation in excess of $100,000

                           SUMMARY COMPENSATION TABLE

                                                             LONG- TERM
                                     ANNUAL COMPENSATION     COMPENSATION
                                     -------------------     ------------
NAME AND PRINCIPAL POSITION           YEAR        SALARY     STOCK OPTIONS
---------------------------           ----        ------     -------------
                                                            
Clive Kabatznik, President                                  
and Chief Executive Officer           1996       $135,000       205,000
                                                         

EMPLOYMENT AGREEMENTS

           First South Africa  Management  ("FSAM"),  the  Company's  management
subsidiary,  has entered into an Employment Agreement with Clive Kabatznik,  the
Vice Chairman  President and Chief Executive Officer of the Company and of FSAM.
Under the terms of such agreement,  Mr. Kabatznik shall devote substantially all
of his business time, energies and abilities to the Company and its subsidiaries
and shall  receive an annual  salary of $180,000 and options to purchase  55,000
shares of Common Stock at an exercise price of $5.00 per share. Mr.  Kabatznik's
salary under his  Employment  Agreement  shall not increase  until  February 24,
1997. In addition, Mr. Kabatznik has been granted additional options to purchase
150,000 shares of Common Stock of the Company at the exercise price of $5.00 per
share,  exercisable  after the  seventh  anniversary  following  the grant date,
provided that vesting of such options will be accelerated as follows: (i) 50,000
options will be exercisable on such earlier date that the Company



                                       45
<PAGE>



realizes  earnings  per share of $.75 or more on a fiscal  year  basis,  (ii) an
additional  50,000  options  will be  exercisable  on such earlier date that the
Company realizes  earnings per share of $1.00 or more on a fiscal year basis and
(iii) an additional 50,000 options will be exercisable on such earlier date that
the Company realizes earnings per share of $1.50 or more on a fiscal year basis.
The Company intends, during the term of Mr. Kabatznik's employment agreement, to
pay Mr.  Kabatznik  an annual  incentive  bonus of five  percent of the  Minimum
Pretax  Income (as defined in Principal  Shareholders  - Earnout  Escrow  Shares
below) above $4,000,000, as shall be reported in the Company's audited financial
statements for each fiscal year in which Mr. Kabatznik is employed, exclusive of
any extraordinary earnings or charges which would result from the release of the
Earnout Escrow Shares.

           FSAM has entered into a consulting  agreement with Mr. Levy, pursuant
to which he shall serve as a consultant to FSAM and shall  receive  compensation
of $30,000 per annum. The term of the agreement is for a period of three years.

           First South African Holdings,  ("FSAH"),  the Company's South African
holding  subsidiary,  has entered into an Employment  Agreement  with  Cornelius
Roodt, the Managing  Director and Chairman of the Board of FSAH. Under the terms
of such  agreement,  Mr.  Roodt shall devote  substantially  all of his business
time,  energies  and  abilities  to the Company and its  subsidiaries  and shall
receive an annual salary of $150,000 and options to purchase  150,000  shares of
FSAH Class B Stock at an exercise  price of  Rand13.05  per share.  Mr.  Roodt's
salary under his Employment  Agreement  shall be reviewed on an annual basis. In
addition,  the 150,000  shares of FSAH Class B Stock are  exercisable  after the
fifth  anniversary  following  the grant  date,  provided  that  vesting of such
options will be accelerated  as follows:  (i) 50,000 options will be exercisable
on such  earlier  date that the Company  realizes  earnings per share of $.75 or
more  on a  fiscal  year  basis,  (ii)  an  additional  50,000  options  will be
exercisable on such earlier date that the Company realizes earnings per share of
$1.00 or more on a fiscal year basis and (iii) an additional 50,000 options will
be exercisable on such earlier date that the Company realizes earnings per share
of $1.50 or more on a fiscal year basis. The Company intends, during the term of
Mr. Roodt's employment agreement,  to pay Mr. Roodt an annual incentive bonus of
four percent of the Minimum Pretax Income above $5,000,000, as shall be reported
in the Company's audited financial  statements for each fiscal year in which Mr.
Roodt is employed,  exclusive  of any  extraordinary  earnings or charges  which
would result from the release of the Earnout Escrow Shares.

STOCK OPTION PLAN

           The  Board  of   Directors   of  the  Company  has  adopted  and  the
shareholders  (prior to the  Company's  Initial  Public  Offering)  approved the
Company's  1995 Stock Option Plan (the "Stock  Option  Plan").  The Stock Option
Plan  provides  for the grant of (i)  options  that are  intended  to qualify as
incentive stock options  (Incentive Stock Options) within the meaning of Section
422 of the Code to key  employees  and (ii)  options not  intended to so qualify
(Nonqualified Stock Options) to key employees  (including directors and officers
who are employees of the Company),  and to directors and consultants who are not
employees.  The total number of shares of Common Stock for which  options may be
granted under the Stock Option Plan is 350,000 shares.

           The  Stock  Option  Plan is to be  administered  by the  Compensation
Committee of the Board of Directors.  The Committee shall determine the terms of
options exercised, including the exercise price, the number of shares subject to
the option and the terms and conditions of exercise. No option granted under the
Stock Option Plan is transferable by the optionee other than by will or the laws
of descent and distribution  and each option is exercisable  during the lifetime
of the optionee only by such optionee or his legal representatives.

           The exercise price of Incentive Stock Options granted under the Stock
Option Plan must be at least  equal to the fair  market  value of such shares on
the date of grant (110% of fair market value in the case of an optionee who



                                       46
<PAGE>



owns or is deemed to own stock  possessing more than 10% of the voting rights of
the outstanding  capital stock of the Company (or any of its subsidiaries).  The
term of  each  option  granted  pursuant  to the  Stock  Option  Plan  shall  be
established by the Committee,  in its sole discretion;  provided,  however, that
the maximum term for each Incentive  Stock Option granted  pursuant to the Stock
Option Plan is ten years  (five years in the case of an optionee  who owns or is
deemed to own stock  possessing more than 10% of the total combined voting power
of the  outstanding  capital stock of the Company (or any of its  subsidiaries).
Options shall become  exercisable at such times and in such  installments as the
Committee  shall  provide in the terms of each  individual  option.  The maximum
number of shares  for which  options  may be granted  to any  individual  in any
fiscal year is 210,000.

           The Stock Option Plan also contains an automatic option grant program
for the non-employee  directors.  Each  non-employee  director of the Company is
automatically  granted an option for 5,000 shares of Common  Stock.  Thereafter,
each person who is a  non-employee  director of the Company  following an annual
meeting  of  shareholders  will  be  automatically  granted  an  option  for  an
additional 5,000 shares of Common Stock.  Each grant will have an exercise price
per share equal to the fair market  value of the Common  Stock on the grant date
and will have a term of five  years  measured  from the grant  date,  subject to
earlier termination if an optionee's service as a Board member is terminated for
cause.

           The Company has granted options to purchase  225,000 shares of Common
Stock under the Plan as described in the table set forth below:


                                OPTIONS GRANTED
<TABLE>
<CAPTION>
                                                                                           POTENTIAL REALIZABLE
                                                                                          VALUE AT ASSUMED ANNUAL
                                           PERCENT OF TOTAL                                 RATE OF STOCK PRICE
                                          OPTIONS GRANTED TO   PER SHARE                  APPRECIATION FOR OPTION
                                OPTIONS      EMPLOYEES IN       EXERCISE   EXPIRATION              TERM
NAME                            GRANTED     FISCAL YEAR (1)      PRICE        DATE      5% 10%     ----    10%
----                            --------    ---------------      -----        ----     -------------------------
<S>                            <C>              <C>              <C>           <C>  <C>               <C>      
Michael Levy....................  5,000          2.22%           5.00          (2)      6,900           15, 275
Clive Kabatznik.................205,000         91.12%           5.00          (3)  1,547,571         1,363,332
Laurence M. Nestadt.............  5,000          2.22%           5.00          (2)      6,900            15,275
Charles S. Goodwin..............  5,000          2.22%           5.00          (2)      6,900            15,275
John Mackey.....................  5,000          2.22%           5.00          (2)      6,900            15,275
                                                                                     
-----------
</TABLE>

(1)        The numbers have been rounded for the purpose of this table.

(2)        Options  granted will expire five years from the date granted and are
           immediately exercisable.

(3)        55,000 options  granted will expire five years from the date granted;
           150,000 additional options will be exercisable  following the seventh
           anniversary of the grant date and until the tenth anniversary of such
           date, subject to accelerated  vesting upon the Company's  realization
           of certain earnings per share targets.





                                       47
<PAGE>



ITEM  12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The following  table sets forth certain  information  as to the stock
ownership of (i) each person known by the Company to be the beneficial  owner of
more than five percent of the  Company's  Common Stock or Class B Common  Stock,
(ii) each director of the Company,  (iii) each named executive  officer and (iv)
all executive officers and directors as a group.

<TABLE>
<CAPTION>
                         AMOUNT AND NATURE OF BENEFICIAL
                                  OWNERSHIP (1)

NAME AND  ADDRESS OF                                            CLASS B    PERCENTAGE OF    PERCENTAGE OF
BENEFICIAL SHAREHOLDER                                           COMMON      OWNERSHIP      VOTING POWER
----------------------                      COMMON STOCK      STOCK (2)(3)    (3)(4)            (4)
                                            ------------      ------------    ------        ------------
<S>                                            <C>         <C>                 <C>           <C>  
FSA Stock Trust                                     0         953,660(5)(6)     23.0%         40.0%
9511 West River Street                                                                      
Shiller Park, IL 60176                                                                      
                                                                                            
Clive Kabatznik                                55,000(7)      210,000            6.4%          9.3%
2665 S. Bayshore                                                                            
Suite 405                                                                                   
Coconut Grove, FL 37137                                                                     
                                                                                            
Michael Levy                                    5,000(8)    1,300,116(6)(9)     31.4%         54.6%
9511 West River Street                                                                      
Shiller Park, IL 60176                                                                      
                                                                                            
Laurence M. Nestadt                             5,000(8)       50,000(10)        1.3%          2.1%
c/o Global Capital Limited                                                                  
162 Anderson Street                                                                         
Johannesburg 2001                                                                           
South Africa                                                                                
                                                                                            
Charles S. Goodwin                              5,000(8)            0               *             *
801 Old Post Road                                                                           
Cotuit, MA 02635                                                                            
                                                                                            
John Mackey                                     5,000(8)            0               *             *
1198 Pacific Coast Highway                                                                  
Seal Beach, CA 90470                                                                        
                                                                                            
All executive officers and directors as a                                                   
group (5 persons)                              75,000(11)   1,560,116           39.5%         66.1%
                                                                                        
</TABLE>
---------------------------------------

*          Less than 1%

(1)        Beneficial  ownership is  calculated  in  accordance  with Rule 13d-3
under the 1934 Act.

(2)        Except as otherwise  indicated,  each of the parties  listed has sole
voting and  investment  power with respect to all shares of Class B Common Stock
indicated below.

(3)        Includes  1,100,000  Earnout  Escrow Shares that may be voted but not
disposed of by the  registered  holders  during the term of the  Earnout  Escrow
Agreement. See Principal Shareholders - Earnout Escrow Shares.

(4)        For the purposes of this calculation,  the Common Stock and the Class
B Common Stock are treated as a single class of Common Stock. The Class B Common
Stock is entitled to five votes per share,  whereas the Common Stock is entitled
to one vote per share.

(5)        Includes (i) 570,137  shares of Class B Common Stock owned by the FSA
Stock Trust and (ii) 383,523  shares of Class B Common Stock to be issued to the
FSAH  Escrow  Agent  pursuant  to the terms of the FSAH  Escrow  Agreement.  See
Certain Transactions - FSAH Escrow Agreement.



                                       48
<PAGE>



(6)        For purposes of Rule 13d-3 under the Exchange Act, such individual or
entity is deemed to be the  beneficial  owner of the shares held pursuant to the
terms of the FSAH Escrow Agreement, although such individual or entity disclaims
ownership of such shares under South African law.

(7)        Includes  55,000  shares of Common Stock  issuable  upon  exercise of
options  that are  immediately  exercisable.  Does not  include  150,000  shares
issuable upon exercise of options not exercisable within 60 days.

(8)        Includes  5,000  shares of Common  Stock  issuable  upon  exercise of
options that are immediately exercisable.

(9)        Includes (i) 570,137  shares of Class B Common Stock owned by the FSA
Stock  Trust,  (ii)  383,523  shares of Class B Common Stock to be issued to the
FSAH Escrow Agent pursuant to the terms of the FSAH Escrow Agreement,  for which
the FSA Stock  Trust may be deemed the  beneficial  owner and for which Mr. Levy
has been granted a voting proxy and (iii) 36,452  shares of Class B Common Stock
to be issued to the FSAH Escrow  Agent  pursuant to the terms of the FSAH Escrow
Agreement,  which shares  correspond  to a like number of shares of FSAH Class B
Stock  which will be  purchased  by Mr.  Levy upon the  closing of the  Europair
acquisition.  Also includes  310,004  additional  shares of Class B Common Stock
issued to the FSAH Escrow  Agent,  for which Mr. Levy has been  granted a voting
proxy.  Mr. Levy's wife is the trustee,  and his wife and their children are the
beneficiaries,  of the FSA Stock  Trust.  Mr. Levy  disclaims  ownership  of all
shares held by the FSA Stock Trust, as well as the additional shares held by the
FSAH  Escrow  Agent  for which he has been  given a voting  proxy.  See  Certain
Transactions.

(10)       Represents 50,000 shares of FSAH Class B Stock owned by Global, which
shares are held pursuant to the terms of the FSAH Escrow Agreement.  See Certain
Transactions - FSAH Escrow Agreement. Mr. Nestadt is the Chief Executive Officer
of Global.

(11)       Represents   shares  issuable  upon  exercise  of  options  that  are
immediately exercisable.  Does not include 150,000 shares issuable upon exercise
of options not exercisable within 60 days.

EARNOUT ESCROW SHARES

           The Earnout  Escrow Shares are held in escrow and are not  assignable
nor transferable (but may be voted) until such time as the Earnout Escrow Shares
are  released  from escrow in  accordance  with the terms of the Earnout  Escrow
Agreement, as amended. The following contributions of Earnout Escrow Shares were
made by the following  stockholders  subject to the terms of the Earnout  Escrow
Agreement:  (i) Clive Kabatznik  contributed  206,320 shares;  (ii) the American
Stock Transfer & Trust Company contributed  346,285 shares;  (iii) the FSA Stock
Trust  contributed  349,958  shares;  (iv) the Stopia Trust  contributed  61,440
shares; (v) the 2RAS Trust contributed  61,440 shares;  (vi) the Presspack Trust
contributed  58,973  shares;  and (viii) the Two Year Trust  contributed  15,584
shares. All Earnout Escrow Shares remaining in escrow on September 30, 2000 will
be  forfeited  and  canceled  and  contributed  to the  Company's  capital.  The
arrangement   relating  to  the  Earnout  Escrow  Shares  was  required  by  the
Underwriter as a condition to the Company's initial public offering.

           An initial  430,000  Earnout  Escrow  Shares  will be released in the
event that:  (A) the Company's net income before  provision for income taxes and
exclusive of any  extraordinary  earnings or charges which would result from the
release of Earnout Escrow Shares and certain other one-time charges as described
in the Earnout Escrow  Agreement,  as amended,  (all as audited by the Company's
independent  public  accountants)  (the Minimum Pretax Income) equals or exceeds
$1,800,000  for the fiscal year ending June 30, 1996; or (B) the Minimum  Pretax
Income equals or exceeds $2,200,000 for the fiscal year ending June 30, 1997; or
(C) the Minimum  Pretax Income equals or exceeds  $3,000,000 for the fiscal year
ending June 30, 1998; (D) the Minimum Pretax Income equals or exceeds $4,300,000
for the fiscal year  ending June 30,  1999;  or (E) the  Minimum  Pretax  Income
equals or exceeds  $5,700,000  for the fiscal year ending June 30, 2000;  or (F)
the Closing Price (as defined below) of the Company's Common Stock shall average
in excess of $10.00 per share for any 30  consecutive  business  days during the
period  commencing on the effective date of the Offering (the Effective Date and
ending 18 months from the Effective  Date); or (G) the Closing Price Stock shall
average  in excess of $13.00  per  share for any 30  consecutive  business  days
during the period  commencing 18 months after the  Effective  Date and ending 36
months from the Effective Date.

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<PAGE>

           The remaining  670,000 of the Earnout  Escrow Shares will be released
in the event that:  (A) the Minimum  Pretax Income equals or exceeds  $3,000,000
for the fiscal year  ending June 30,  1996;  or (B) the  Minimum  Pretax  Income
equals or exceeds  $4,000,000  for the fiscal year ending June 30, 1997;  or (C)
the  Minimum  Pretax  Income  equals or exceeds  $5,600,000  for the fiscal year
ending  June 30,  1998;  or (D) the  Minimum  Pretax  Income  equals or  exceeds
$8,000,000  for the fiscal year ending June 30, 1999; or (E) the Minimum  Pretax
Income equals or exceeds  $11,000,000  for the fiscal year ending June 30, 2000;
or (F) the Closing Price of the  Company's  Common Stock shall average in excess
of $12.50  per share for any 30  consecutive  business  days  during  the period
commencing on the Effective  Date and ending 18 months from the Effective  Date;
or (G) the Closing Price of the  Company's  Common Stock shall average in excess
of $16.50  per share for any 30  consecutive  business  days  during  the period
commencing  18 months  after the  Effective  Date and ending 36 months  from the
Effective Date.

           The term Closing Price shall be subject to  adjustments  in the event
of any stock dividend,  stock  distribution,  stock split or other similar event
and shall mean:  (1) if the principal  market for the Common Stock is a national
securities  exchange or the Nasdaq National  Market,  the closing sales price of
the Common Stock as reported by such  exchange or market,  or on a  consolidated
tape reflecting transactions on such exchange or market; or (2) if the principal
market for the Common Stock is not a national  securities exchange or the Nasdaq
National  Market and the Common Stock is quoted on the Nasdaq  SmallCap  Market,
the  closing  bid price of the  Common  Stock as quoted on the  Nasdaq  SmallCap
Market;  or (3) if the  principal  market for the Common Stock is not a national
securities  exchange or the Nasdaq  National  Market and the Common stock is not
quoted on the Nasdaq  SmallCap  Market,  the closing bid for the Common Stock as
reported by the National  Quotation  Bureau,  Inc.  (NQB) or at least two market
makers in the Common  Stock if  quotations  are not  available  from NQB but are
available from market makers.

           For  purposes of  calculating  Minimum  Pretax  Income,  if after the
initial public offering additional shares of Common Stock are issued, then, with
certain  limitations,  the foregoing  Minimum  Pretax Income levels for any year
would  increase  proportionately.  In  addition,  Minimum  Pretax  Income  shall
include, in the event of an acquisition during any fiscal year, pro forma pretax
income giving full effect to such  acquisition  (including all  transaction  and
operating  expenses) as if the acquisition had been consummated at the beginning
of such fiscal year.

           Any money,  securities,  rights or property distributed in respect of
the Earnout  Escrow Shares,  including any property  distributed as dividends or
pursuant to any stock split, merger, recapitalization,  dissolution, or total or
partial liquidation of the Company, shall be held in escrow until release of the
Earnout  Escrow Shares.  If none of the applicable  Minimum Pretax Income or Bid
Price  levels set forth  above have been met by  September  30, 2000 the Earnout
Escrow Shares, as well as any dividends or other distributions made with respect
thereto,  will be canceled and  contributed  to the capital of the Company.  The
Company  expects  that the release of the  Earnout  Escrow  Shares to  officers,
directors,  employees and consultants of the Company will be deemed compensatory
and,  accordingly,  will result in a substantial charge to reportable  earnings,
which would  equal the fair market  value of such shares on the date of release.
Such charge could  substantially  increase  the loss or reduce or eliminate  the
Company's net income for financial  reporting  purposes for the period(s) during
which such shares  are,  or become  probable  of being,  released  from  escrow.
Although the amount of compensation  expense  recognized by the Company will not
affect the Company's total stockholders equity, it may have a negative effect on
the market price of the Company's securities.

           The  earnings  levels  and the  share  prices  set forth  above  were
determined by negotiation between the Company and the Underwriter and should not
be  construed  to imply or predict  any future  earnings  by the  Company or any
increase in the market price of its securities.  It is managements's belief that
the Pro Forma results for June 30, 1996,  have met the earnout  requirements  of
the Earnout Escrow Agreement, as amended. Management expects the release of such
1,100,000 shares from escrow during the second quarter of the Company's  current
fiscal year.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ARPAC, L.P. AGREEMENT

           In June 1995,  Starpak  entered into a verbal  agreement  with Arpac,
L.P. a Company  controlled by Michael Levy,  pursuant to which Arpac distributes
Starpak  products in Chile and Mexico at  Starpak's  customary  prices and Arpac
sells certain products to Starpak at Arpac's customary prices.

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<PAGE>


PACKTECH (PROPRIETARY) LIMITED

           Michael Levy Family  Holdings  (Pty) Limited and Mr.  Shaftoe own 60%
and 40%, respectively, of Packtech. Packtech imports packaging machinery such as
fillers,  labelers,  cappers and other similar items which are  complementary to
Starpak's products and tamper evident films and high shrink plastic from DuPont.
Starpak's sales representatives promote but do not sell Packtech's products. Mr.
Shaftoe conducts the majority of the Packtech  activity from Starpak's  premises
without  consideration  to  Starpak.  Packtech  pays  all of its  own  operating
expenses.

FSAM MANAGEMENT AGREEMENT

           The  Company  and  FSAM  have  entered  into a  Management  Agreement
pursuant  to which  FSAM will  provide  certain  management  and  administrative
services  to the  Company for an annual fee of  $48,000,  and  reimbursement  of
FSAM's costs, other than out-of-pocket expenses, at an amount equal to cost plus
10% (including the costs of employees) incurred in providing such management and
administrative  services to the Company.  The costs of such services that may be
requested from time to time by the Company pursuant to the Management  Agreement
are at a rate that could reasonably be expected to be charged by an unaffiliated
third party.  The services to be provided by FSAM to the Company  under the FSAM
Management  Agreement  include general  business  management and  administrative
services,  shareholder  relation  services,  financial  services and  accounting
services.  The  Management  Agreement  will expire on December 31, 2005,  unless
sooner terminated on 90 days advance notice by either party.

J. LEVY LOAN

           In 1986, Mr. J. Levy,  Michael  Levy's father,  extended to Starpak a
loan in the principal amount of R600,000 (which equaled  approximately  $300,000
at the  prevailing  exchange  rate at the time of the  loan),  which  loan bears
interest at 1% per annum below the prime bank overdraft rate and is secured by a
second  mortgage  on certain  property  owned by Starpak  having a book value of
$767,180.  The original  loan  contained no fixed terms of  repayment.  Upon the
closing of this Offering,  the terms of the loan will be amended as follows: the
loan will bear  interest at 1% below the prime bank  overdraft  rate  (currently
19.25% per annum) and will be  repayable  over a period of 30 months.  The first
twenty four  installments  will be $5,563,  inclusive of principal and interest,
commencing in November  1995. The balance  outstanding  after twenty four months
will then be repayable in six equal monthly installments.


MICHAEL LEVY LOAN AND MANAGEMENT FEES

           During the period  commencing  March 1, 1995 and ending September 30,
1995, Michael Levy received certain  non-interest bearing loans from Starpak and
L.S.  Pressings in the  aggregate  amount of $47,000.  Mr. Levy shall repay such
amount by June 30, 1997.  In the years ended  February 28, 1995,  1994 and 1993,
Starpak and L.S. Pressings paid Mr. Levy management fees of $83,570, $93,670 and
$107,250, respectively.


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

           (A) 1. FINANCIAL STATEMENTS

           The  following  financial  statements  of the Company are included as
           required to be filed by Item 8:

           FIRST SOUTH AFRICA CORP., LTD.

           Report of the independent auditors Consolidated Balance Sheet at June
           30, 1996
           Consolidated  Statement  of Income for the period  January  24,  1996
           (Date of  initial  public  offering)  to June 30,  1996 and pro forma
           Consolidated  Statements  of Income for the years ended June 30, 1996
           and 1995
           Consolidated  Statement of Cash Flow for the period  January 24, 1996
           (Date of initial public offering) to June 30, 1996



                                       51
<PAGE>



           Statement  of  Changes  in  Stockholders'  Investment  for the period
           January 24, 1996 (Date of initial  public  offering) to June 30, 1996
           Notes to the Consolidated Financial Statements for the period January
           24, 1996 (Date of initial public offering) to June 30, 1996

           STARPAK  (PROPRIETARY)  LIMITED AND ITS SUBSIDIARY COMPANIES AND L.S.
           PRESSINGS (PROPRIETARY) LIMITED

           Report of the independent auditors
           Combined Balance Sheets at February 28, 1995 and 1994
           Combined Statements of Income for the period March 1, 1995 to January
           24, 1996 and the years  ended  February  28,  1995 and 1994 
           Combined  Statements  of Cash Flows for the  period  March 1, 1995 to
           January 24, 1996 and the years ended February 28, 1995 and 1994
           Combined  Statements of Changes in  Stockholders'  Investment for the
           period March 1, 1995 to January 24, 1996 and the years ended February
           28, 1995 and 1994
           Notes to the Combined Financial Statements

           EUROPAIR AFRICA (PROPRIETARY) LIMITED

           Report of the independent auditors
           Balance Sheets at June 30, 1995 and 1994
           Statement  of Income for the period  July 1, 1995 to January 24, 1996
           and the years  ended June 30, 1995 and 1994  
           Statement  of Cash Flows for the period  July 1, 1995 to January  24,
           1996 and the years ended June 30, 1995 and 1994
           Statement of Changes in Stockholders'  Investment for the period June
           1, 1995 to January  24,  1996 and the years  ended June 30,  1995 and
           1994
           Notes to the Financial Statements

2.         FINANCIAL STATEMENT SCHEDULES:

           All  schedules  have been omitted since the required  information  is
           included in the consolidated financial statements or notes thereto.

3.         EXHIBITS:

Exhibit Number
--------------

     3.1*       Memorandum of Association of the Registrant
     3.2*       By-Laws of the Registrant
     4.1*       Form of Bridge Note
     4.2*       Form of Warrant Agreement
     4.3*       Form of Unit Purchase Option
     10.1*      Starpak Acquisition Agreements
     10.2*      Starpak Escrow Agreement
     10.3*      L.S. Pressings Acquisition Agreements
     10.4*      L.S. Pressings Escrow Agreements
     10.5*      Europair Acquisition Agreements
     10.6*      Europair Escrow Agreement
     10.7*      Form of Escrow Agreement regarding the Earnout Escrow Shares
     10.8*      Form of FSAH Escrow Agreement
     10.9*      Form of Employment Agreement to Clive Kabatznik
     10.10*     Form of FSM Management Agreement
     10.11*     Form of Consulting Agreement with Michael Levy
     10.12*     Form of Consulting Agreement with Global Capital Limited
     10.13*     1995 Stock Option Plan
     10.14*     Form of Addendum to Starpak Acquisition Agreement




                                       52
<PAGE>



     10.15*     Form of Addendum to Europair Acquisition Agreement
     10.17**    Form of Piemans Pantry Acquisition Agreement
     21.1*      Subsidiaries of the Registrant
     23.1***    Consent of Price Waterhouse
     27.1***    Financial Data Schedule

-------------------------------
*     Incorporated by reference to  Registration  Statement on Form S-1 filed on
      November 9, 1995 (File No. 33- 99180) as amended.

**    Incorporated by reference to Form 8-K filed by the Company on June 11,
      1996.

***   Filed herewith

      (B) REPORTS ON FORM 8-K

The  Registrant  filed a Current  Report on Form 8-K with the Commission on June
11, 1996.

The following item was reported by the Company on the Form 8-K:

On June 3, 1996, the Company  through its wholly owned  subsidiary  corporation,
First South African Holdings (Pty) Ltd.,  acquired all of the outstanding  stock
and assets of Piemans Pantry Proprietary Ltd., and Surfs-Up Proprietary Ltd.


The following  financial  statements of the Company were included as required to
be filed on Form 8-K:

FIRST SOUTH AFRICA CORP., LTD.

      Pro forma Consolidated Balance Sheet (unaudited)
      Pro forma Consolidated Statements of Income (unaudited)
      Notes to Pro forma  Consolidated  Balance  Sheet and  Statements of Income
      (unaudited)

PIEMANS PANTRY AND SURFS UP INVESTMENTS (PROPRIETARY) LIMITED

      Unaudited Combined Balance sheets at May 31, 1996
      Unaudited  Combined Statement of Income for the Quarter Ended May 31, 1996
      and 1995
      Notes to the Unaudited Combined Financial Statements for the Quarter Ended
      May 31, 1996
      Unaudited Combined  Statements of Cash Flows for the Quarter Ended May 31,
      1996 and 1995
      Audited Combined Balance Sheets at February 29, 1996 and February 28, 1995
      Audited  Combined  Statements  of Income for the Years Ended  February 29,
      1996, February 28, 1995 and 1994
      Audited Combined Statements of Cash Flows for the Years Ended February 29,
      1996, February 28, 1995 and 1994 
      Audited Combined Statements of Changes in Stockholders Investments for the
      Years Ended February 29, 1996, February 28, 1995 and 1994
      Notes to the  Combined  Annual  Financial  Statements  for the Years Ended
      February 29, 1996, February 28, 1995 and 1994






                                       53
<PAGE>




                                   SIGNATURES


           Pursuant to the requirements of Section 13 or 15(d) 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 in the City of Coconut
Grove, State of Florida, on the 7th day of October, 1996.

                                          FIRST SOUTH AFRICA CORP., LTD.


                                          BY:   /S/ CLIVE KABATZNIK
                                              ---------------------------
                                                    Clive Kabatznik
                                                    President

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 in
the capacities and on the date indicated.

SIGNATURE                         TITLE                         DATE


/S/  MICHAEL LEVY             Chairman of the Board of      October 7, 1996
---------------------------   Directors
Michael Levy                  

/S/  CLIVE KABATZNIK          President, Vice Chairman,     October 7, 1996
---------------------------   Chief Executive Officer,
Clive Kabatznik               Chief Financial Officer,
                              Director and Controller

                              Director                      October  , 1996
---------------------------
Charles S. Goodwin

/S/ JOHN MACKEY               Director                      October 7, 1996
---------------------------
John Mackey

/S/ LAURENCE M. NESTADT       Director                      October 7, 1996
-----------------------
Laurence M. Nestadt



                                       54