SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                For the quarterly period ended December 31, 1997

                                       OR

[_]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

             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                                      Not Applicable
           -------                                      --------------
(State or Other Jurisdiction of                (IRS 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


         --------------------------------------------------------------
         Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report.

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 [_]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.    Yes [_]   No [_]

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of common  stock  outstanding  as of February  11, 1998 was
7,023,443.



<PAGE>


                          FIRST SOUTH AFRICA CORP., LTD

                                    FORM 10-Q
                     FOR THE QUARTER ENDED DECEMBER 31, 1997




PART I.   FINANCIAL INFORMATION                                         Page No.


Item 1.   Financial Statements

Unaudited Consolidated Balance Sheets at December 31,
1997 and June 30, 1997                                                     3-4

Unaudited Consolidated Statements of Income for the
three months and for the six months ended December 31,
1997 and 1996                                                                5

Unaudited Consolidated Statements of Cash Flows for the
six months ended December 31, 1997 and 1996                                6-7

Unaudited Consolidated Statement of Changes in
Stockholders' Investment for the period June 30, 1997 to
December 31, 1997                                                            8

Notes to the unaudited Consolidated Financial Statements                  9-16


Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations                       17

PART II.  OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.                21
Item 6. Exhibits and Reports on Form 8-K                                    21

SIGNATURES                                                                  22



                                      - 2 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                      UNAUDITED CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                                   December 31,      June 30,
                                                       1997            1997
                                                        $               $
                                                   ------------    ------------
Current assets
      Cash on hand                                   19,147,855      19,889,111
      Trade accounts receivable                      25,072,456      12,000,224
      Less: Allowances for bad debts                   (700,111)       (696,279)
                                                   ------------    ------------
                                                     24,372,345      11,303,945
      Inventories (net)                              12,105,570       7,219,960
      Prepaid expenses and other current assets       1,586,665         934,263
                                                   ------------    ------------
                Total current assets                 57,212,436      39,347,279
Property, plant and equipment                        36,154,007      16,197,605
Less: Accumulated depreciation                      (13,202,061)     (4,849,396)
                                                   ------------    ------------
                                                     22,951,946      11,348,209
Intangible assets (net)                              21,679,950      12,620,822
Deferred charges (net)                                1,626,299         838,439
Other assets                                            112,150          42,730
                                                   ------------    ------------
                                                    103,582,780      64,197,479
                                                   ============    ============







                                      - 3 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                      UNAUDITED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                    LIABILITIES AND STOCKHOLDERS' INVESTMENT
                                                                                    December 31,      June 30,
                                                                                        1997            1997
                                                                                         $               $
                                                                                    ------------    ------------
<S>                                                                                  <C>             <C>
Current liabilities
      Bank overdraft payable                                                           3,781,226            --
      Current portion of long term debt                                                1,717,813       1,673,712
      Trade accounts payable                                                          13,116,384       6,755,823
      Other provisions and accruals                                                    4,549,510       3,184,428
      Other taxes payable                                                                614,110         654,653
      Income tax payable                                                               1,661,721       1,721,079
                                                                                    ------------    ------------
                Total current liabilities                                             25,440,764      13,989,695
Long term debt                                                                        33,407,854      13,341,758
Deferred income taxes                                                                    380,952         358,446
                                                                                    ------------    ------------
                                                                                      59,229,570      27,689,899
                                                                                    ------------    ------------
Minority shareholders' investment                                                     17,681,564      13,287,566
Stockholders' investment

Capital stock:

      Common stock, $0.01 par value - authorized 23,000,000 shares, issued and
      outstanding 5,249,749 shares                                                        52,497          35,361

      B class  common  stock,  $0.01 par value -  authorized                           2,000,000         shares,
issued and
      outstanding 1,822,500 shares                                                        18,725          18,691

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

      Capital in excess of par                                                        26,620,255      22,891,093
Retained earnings                                                                      5,336,073       2,803,065
Foreign currency translation adjustments                                              (5,355,904)     (2,528,196)
                                                                                    ------------    ------------
                                                                                     103,582,780      64,197,479
                                                                                    ============    ============
</TABLE>




                                      - 4 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR
                THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                             1997           1996
                                                              $              $
                                                         -----------    -----------
<S>                                                       <C>            <C>       
Revenues                                                  35,605,750     14,116,257
                                                         -----------    -----------
Operating expenses
      Cost of sales                                       22,633,124      7,839,089
      Selling, general and administrative costs           10,381,827      4,987,398
                                                         -----------    -----------
                                                          33,014,951     12,826,487
                                                         -----------    -----------
Operating income                                           2,590,799      1,289,770
Other income                                                 391,826        310,692
Interest income/( expense)                                    81,916       (359,122)
                                                         -----------    -----------
Income from consolidated companies before income taxes     3,064,541      1,241,340
Provision for taxes on income                               (791,625)      (243,984)
                                                         -----------    -----------
                                                           2,272,916        997,356
Minority interest in consolidated subsidiary companies      (728,534)          --
                                                         -----------    -----------
Net income                                                 1,544,382        997,356
                                                         ===========    ===========
Basic earnings per share                                        0.24           0.21

Fully diluted earnings per share                                0.21           0.20

</TABLE>



                                      - 5 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR
                 THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996



<TABLE>
<CAPTION>
                                                             1997           1996
                                                              $              $
                                                         -----------    -----------
<S>                                                       <C>            <C>       
Revenues                                                  57,067,182     25,807,141
                                                         -----------    -----------
Operating expenses
      Cost of sales                                       35,331,337     14,052,806
      Selling, general and administrative costs           17,698,351      9,241,682
                                                         -----------    -----------
                                                          53,029,688     23,294,488
                                                         -----------    -----------
Operating income                                           4,037,494      2,512,653
Other income                                                 634,911        510,601
Interest income/( expense)                                   257,657       (574,208)
                                                         -----------    -----------
Income from consolidated companies before income taxes     4,930,062      2,449,046
Provision for taxes on income                             (1,237,819)      (622,555)
                                                         -----------    -----------
                                                           3,692,243      1,826,491
Minority interest in consolidated subsidiary companies    (1,159,235)          --
                                                         -----------    -----------
Net income                                                 2,533,008      1,826,491
                                                         ===========    ===========
Basic earnings per share                                        0.43           0.38

Fully diluted earnings per share                                0.38           0.38
</TABLE>




                                      - 6 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

               UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                 THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                              1997           1996
                                                                                               $              $
                                                                                          -----------    -----------
<S>                                                                                         <C>            <C>      
Cash flows from operating activities:

      Net income                                                                            2,533,008      1,826,491
      Adjustments to reconcile net income to net cash provided by operating activities:
                Depreciation and amortization
                Deferred income taxes                                                       1,656,970        715,218
                Net loss/(gain) on sale of assets                                              (4,735)       (14,799)
                Effect of changes in current assets and current liabilities                    39,317       (236,737)
                Minority interest in consolidated subsidiary companies                     (1,540,663)     2,399,596
                                                                                            1,159,235           --
                                                                                          -----------    -----------
Net cash provided by operating activities                                                   3,843,132      4,689,769
                                                                                          -----------    -----------
Cash flows from investing activities:

      Additions to property, plant and equipment                                           (2,571,840)      (388,983)
      Proceeds on disposal of property, plant and equipment                                    58,749        347,125
      Proceeds on disposal of investment in First SA Lifestyle Holdings Limited             3,507,424           --
      Additional purchase price payments                                                   (2,848,220)          --
      Other assets acquired                                                                  (194,307)          --
      Acquisitions of subsidiaries (net of cash of $561,789)                              (22,280,797)    (5,244,457)
                                                                                          -----------    -----------
Net cash used in investing activities                                                     (24,328,991)    (5,286,315)
                                                                                          -----------    -----------
Cash flows from financing activities:

      Net borrowings in bank overdrafts                                                     1,796,476      1,321,029
      Borrowings of long term debt                                                         16,047,060        110,327
      Reduction in deferred debt issue costs                                                 (883,843)          --
      Borrowings/(repayments) in short term debt                                              102,423     (1,967,060)
      Proceeds on stock issues                                                              3,746,327           --
                                                                                          -----------    -----------
Net cash provided in financing activities                                                  20,808,443       (535,704)
                                                                                          -----------    -----------
Effect of exchange rate changes on cash                                                    (1,063,840)       (78,313)
                                                                                          -----------    -----------
Cash utilised by operations                                                                  (741,256)    (1,210,563)
Cash on hand at beginning of period                                                        19,889,111      4,682,035
                                                                                          -----------    -----------
Cash on hand at end of period                                                              19,147,855      3,471,472
                                                                                          ===========    ===========
</TABLE>



                                      - 7 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

     UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' INVESTMENT


<TABLE>
<CAPTION>
                                                          First South
                                            First South   Africa Corp.,                               Foreign
                                            Africa Corp.,     Ltd.       Capital in                   currency
                                                Ltd.         Class B     excess of       Retained    translation
                                            common stock  common stock      par          earnings    adjustments       Total
                                                 $             $             $              $             $              $
                                            -----------   -----------   -----------    -----------   -----------    -----------
<S>                                              <C>           <C>       <C>             <C>          <C>            <C>       
Balance at June 30, 1997                         35,361        18,691    22,891,093      2,803,065    (2,528,196)    23,220,014
Issuance of stock to FSAC escrow agent              847          --            --             --            --              847
Issuance of stock to acquire subsidiaries          --              20       699,414           --            --          699,434
Proceeds on warrants exercised                    1,595          --       1,068,259           --            --        1,069,854
Net income                                         --            --            --          988,626          --          988,626
Translation adjustment                             --            --            --             --      (1,106,252)    (1,106,252)
                                            -----------   -----------   -----------    -----------   -----------    -----------
Balance at September 30, 1997                    37,803        18,711    24,658,766      3,791,691    (3,634,448)    24,872,523
                                            ===========   ===========   ===========    ===========   ===========    ===========
Issuance of stock to FSAC escrow agent              683          --            --             --            --              683
Issuance of stock to acquire subsidiaries         1,429            14     1,480,071           --            --        1,481,514
Warrant swap out at par value                    11,738          --         (11,738)          --            --             --
Proceeds on warrants exercised                      744          --         449,506           --            --          450,250
Proceeds on options exercised                       100          --          43,650           --            --           43,750
Net income                                         --            --            --        1,544,382          --        1,544,382
Translation adjustment                             --            --            --             --      (1,721,456)    (1,721,456)
                                            -----------   -----------   -----------    -----------   -----------    -----------
Balance at December 31, 1997                     52,497        18,725    26,620,255      5,336,073    (5,355,904)    26,671,646
                                            ===========   ===========   ===========    ===========   ===========    ===========
</TABLE>



                                      - 8 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


1.    ORGANIZATION AND PRINCIPLE ACTIVITIES OF THE GROUP

      First South Africa Corp., Ltd. (the "Company") was founded on September 6,
      1995.  The purpose of the Company is to acquire and operate  South African
      companies.

      The principle activities of the group include the following:

      ENGINEERING INTERESTS
      The business of manufacturing,  servicing and selling packaging  machines,
      receiving  commission  income,  receiving  rental  income,  manufacture of
      washers  for use in the  fastener  industry,  manufacture  and  supply  of
      air-conditioning products.

      FOOD INTERESTS
      The manufacture,  sale and distribution of both ready to eat and ready for
      bake  off  pastry  related  food  products,  the  manufacture,   sale  and
      distribution  of high  margin  speciality  breads and staple  breads,  the
      manufacture  and sale of a wide range of prepared  food  products  and the
      manufacture,  sale and  distribution  of a wide  range of  processed  meat
      products.

      LIFESTYLE INTERESTS
      The  manufacture,  sale and  distribution  of  plastic,  wooden  and steel
      outdoor products aimed at the leisure market.


                                      - 9 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


2.    ACQUISITIONS

      On July 1, 1997,  the company  acquired 100% of the Common Stock of Fifers
      Bakery (Pty) Ltd. for an aggregate net purchase price of $1,844,890.  This
      acquisition was accounted for using the purchase method of accounting. The
      assets and liabilities were recorded at fair market value as determined by
      management.

      On October 1, 1997 the Company  acquired an  effective  81% of, the common
      stock of SA Leisure (Proprietary)  Limited, and the businesses of Galactex
      Outdoor   (Proprietary)   Limited  and  Republic  Umbrella   Manufacturers
      (Proprietary) limited for an aggregate net purchase price of $ 19,924,638,
      and the common stock of Pacforce  (Proprietary) Limited for $276,444.  The
      acquisitions  were accounted for using the purchase  method of accounting.
      The  assets  and  liabilities  were  recorded  at  fair  market  value  as
      determined by management.

      The purchase  consideration  has been decreased to give effect to the debt
      ceded to the holding company in the acquisitions.


                                                                           $
                                                                      ----------
Acquisition costs
      Stock issued in lieu of cash                                     2,180,948
                                                                      19,865,024
                                                                      ----------
      Cash consideration (net of debt ceded to holding company)
Purchase price to be allocated                                        22,045,972
                                                                      ==========
Summary allocation of purchase price
      Current assets                                                  17,388,349
      Property, plant and equipment                                   11,063,713
      Other assets                                                     4,967,809
      Goodwill                                                         2,677,933
                                                                      ----------
Total assets acquired                                                 36,097,804
      Current liabilities                                              8,902,964
      Long term debt                                                   4,299,276
      Deferred income taxes                                               52,979
      Debt ceded to holding company                                      796,613
                                                                      ----------
Total liabilities assumed                                             14,051,832
                                                                      ----------
                                                                      22,045,972
                                                                      ==========

The Company is required to make  additional  payments to the former owners based
on a multiple of pre-tax earnings. These payments are to be made by the issue of
stock and cash over the next five years.

Additional   purchase   price  payments  made  during  the  current  year  total
$2,848,220. This amount was allocated as follows:


      Goodwill                                                        $  583,279
      Recipes                                                            865,842
      Trademarks                                                       1,399,099
                                                                       2,848,220



                                     - 10 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


2.    ACQUISITIONS (continued)

      The  unaudited  pro  forma  financial  information  tabled  below has been
      prepared assuming that all of the acquisitions  which occurred  subsequent
      to June 30, 1996 had taken place and that operations had commenced on July
      1, 1996, an adjustment has been made to eliminate the minority interest in
      the net income of consolidated  subsidiaries assuming that the disposal of
      an  effective  30%  interest in First SA Food  Holdings  Limited had taken
      place on July 1, 1996.

<TABLE>
<CAPTION>
                                                                     July 1 to      July 1, to
                                                                    December 31,   December 31,
                                                                       1997           1996
                                                                        $              $
                                                                    ----------     ----------
<S>                                                                 <C>            <C>       
Revenues                                                            66,869,373     54,434,733
                                                                                  -----------
Net income before minority interest in consolidated subsidiaries     4,330,777      3,256,607
Minority interest in consolidated subsidiary companies              (1,274,316)      (712,429)
                                                                                  -----------
Net income                                                           3,056,461      2,544,178
Basic earnings per share                                                  0.52           0.43
Weighted average number of shares in issue                           5,870,015      5,870,015
</TABLE>



                                     - 11 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


3.    SUMMARY OF ACCOUNTING POLICIES

      The consolidated  financial  statements should be read in conjunction with
      the Company's financial  statements which have been prepared in accordance
      with US generally  accepted  accounting  principles  and  incorporate  the
      following significant accounting policies:

      CONSOLIDATION
      First  South  Africa  Corp.,   Ltd.,   consolidates   its  majority  owned
      subsidiaries.  The consolidated  financial statements include the accounts
      of the Company and its  subsidiaries.  Minority  interests have been taken
      into account when determining the net income due to the Company.  Material
      intercompany transactions have been eliminated on consolidation.

      ACCOUNTING ESTIMATES
      Preparation of financial  statements in conformity with generally accepted
      accounting   principles   requires   management  to  make   estimates  and
      assumptions  that affect the reported amounts of assets and liabilities 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.

      INTERIM FINANCIAL STATEMENTS
      The unaudited interim financial  statements reflects all adjustments which
      are, in the opinion of management,  necessary for a fair  presentation  of
      the  consolidated  financial  statements for an interim  period.  All such
      adjustments are of a normal recurring  nature.  The operating  results may
      not be indicative of the results for a full fiscal year.

      EARNINGS PER SHARE
      The Company has adopted SFAS 128 (Earnings per Share) whereby earnings are
      calculated as follows:

      Basic  Earnings per share is calculated by dividing  income  available for
      distribution  to common  stockholders  by the weighted  average  number of
      common shares outstanding.

      Diluted  earnings  per  share is  calculated  giving  full  effect  to all
      dilutive common shares that were outstanding during the period.

      INTANGIBLE ASSETS
      Goodwill,  recipes and other  intellectual  property,  and  trademarks are
      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 the six year term of the agreements.

      The company has adopted  Statement 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 Rand. Accordingly,  the following rates of exchange have been used
      for translation purposes:

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

      o     Common stock and capital in excess of par are translated into United
            States Dollars using historical rates at date of issuance.

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

                                     - 12 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


3.    SUMMARY OF ACCOUNTING POLICIES (continued)

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

      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  realizable  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.   A  valuation  reserve  has  been
      established  tp  reduce  the  values  of  certain  identified  inventories
      (determined to be obsolete or otherwise  impaired) to their  estimated net
      realizable values (market or selling price less costs to dispose).

      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 20 years.

      Plant and  equipment,  and  motor  vehicles  are  written  off over  their
      estimated useful lives of 5 to 10 years.

      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 December  31,  1997,  the  carrying  value of  accounts  receivable,
      accounts  payable  and  investments  approximate  their  fair  value.  The
      carrying  value of long term debt  approximates  fair value,  as the debt,
      other than convertible  debentures,  interest rates are keyed to the prime
      lending rate. The convertible  debentures are believed to approximate fair
      market due to their issuance in 1997.

      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.

      Revenues  are stated net of  allowances  granted  to  customers  and trade
      discounts.  Returns of defective product are offset against revenues.  Due
      to the low incidence of warranty returns, where warranties are provided to
      customers,  the  warranty  costs are  charged to cost of goods sold as and
      when incurred.

      GAIN ON DISPOSAL OF SUBSIDIARY STOCK
      Subsidiary  stock disposed of during the period is recognized as a gain in
      the  statement of income and is  separately  disclosed as a non  operating
      gain.



                                     - 13 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996


4.    INVENTORIES

      Inventories consist of the following:


                                            December 31,              June 30,
                                               1997                     1997
                                                $                        $
                                            ----------               ---------
Finished goods                               7,953,256               4,032,523
Work in progress                               510,624                 532,144
Raw materials and ingredients                3,296,532               2,365,213
Supplies                                       985,852                 716,081
                                            ----------               ---------
Inventories (Gross)                         12,746,264               7,645,961
Less:    Valuation allowances                (640,694)               (426,001)
                                            ----------               ---------
Inventories (Net)                           12,105,570               7,219,960
                                            ==========               =========


5.    COMMITMENTS

      The Company is required to make  additional  payments to the former owners
      based on a multiple of pre-tax earnings . These payments are to be made by
      the issue of stock and cash over the next two to five years.



                                     - 14 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996

6.    EARNINGS PER SHARE

      Earnings per share data is calculated as follows:

<TABLE>
<CAPTION>
<S>                                                 <C>            <C>        <C>      

BASIC EARNINGS PER SHARE FOR THE QUARTER
Net income available to common stockholders                                   1,544,382
                                                                              ---------

                                                      Shares      Fraction     Weighted
DATES OUTSTANDING                                  outstanding   of Period  Average Shares
-----------------                                  -----------   ---------  --------------
Balance at October 1, 1997                          5,603,791      1.00       5,603,791
Acquisition of subsidiaries on October 1, 1997        211,224      1.00         211,224
Options converted to shares during the quarter         10,000      0.60           5,978
Warrants converted to shares during the quarter        74,401      0.80          59,891
Warrants swapped into shares during the quarter     1,173,476      0.39         458,998
                                                    ---------                 ---------
Weighted average shares                             7,072,892                 6,339,882
                                                    ---------                 ---------
                                                                          

DILUTED EARNINGS PER SHARE FOR THE QUARTER
Net income available to common stockholders                        1,544,382
Add impact of assumed conversions                                    391,590
                                                                   ---------
Adjusted net income available to common stockholders               1,935,972

Weighted average shares                                            6,339,882
Warrants and options not yet exercised                               160,090
9% convertible debentures                                          1,666,667
Increasing rate debentures                                         1,052,631
                                                                   ---------
ADJUSTED WEIGHTED AVERAGE SHARES                                   9,219,270
                                                                   ---------
</TABLE>


                                     - 15 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996

6.    EARNINGS PER SHARE (continued)

<TABLE>
<CAPTION>


<S>                                                     <C>               <C>          <C>      
Basic earnings per share for the year to date
Net income available to common stockholders                                            2,533,008
                                                                                       ---------

                                                         Shares        Fraction         Weighted
Dates outstanding                                      outstanding     of Period     Average Shares
-----------------                                      -----------     ---------     --------------

July 1, 1997                                            5,359,615         1.00         5,359,615
July 1 - September 30, 1997                                                        
Additional purchase price payments                         57,127        50.5             28,874
Acquisition of subsidiaries                                27,624        50.5             13,962
Warrants converted to shares during the quarter           159,425        79.4            126,617
October 1 - December 31, 1997                                                      
Acquisition of subsidiaries on October 1, 1997            211,224         0.50           105,612
Options converted to shares during the quarter             10,000         0.30             2,989
Warrants converted to shares during the quarter            74,401        40.2             29,946
Warrants swapped into shares during the quarter         1,173,476                        229,500
                                                        ---------                      ---------
Weighted average shares                                 7,072,892                      5,897,115
                                                        ---------                      ---------
</TABLE>



DILUTED EARNINGS PER SHARE FOR THE YEAR TO DATE
Net income available to common stockholders                            2,533,008
Add impact of assumed conversions                                        645,983
                                                                       ---------
Adjusted net income available to common stockholders                   3,178,991
                                                                       ---------
Weighted average shares                                                5,897,115
Warrants and options not yet exercised                                   218,046
9% convertible debentures                                              1,666,667
Increasing rate debentures                                               526,316
                                                                       ---------
ADJUSTED WEIGHTED AVERAGE SHARES                                       8,308,144
                                                                       ---------

The prior year comparative  figures have been restated using the same principles
as above.



                                     - 16 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS


FIRST SOUTH AFRICA CORP., LTD

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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  subsidiaries  has acquired  twelve South  African  companies
(collectively, the "Acquisitions" engaged in the following industry segments.

      1.    Processed foods through Piemans  Pantry,  Astoria Bakery,  Seemanns,
            Gull Foods and Fifers Bakery.
      2.    Lifestyle products through SA Leisure, Republic and Galactex.
      3.    Packaging equipment and materials through Starpak, Alfapak, Pakmatic
            and Pacforce.
      4.    Industrial  manufacturing  which  includes the  manufacture of metal
            washers used in the fastener industry through LS Pressings and Paper
            and Metal.  The manufacture and distribution of air conditioning and
            refrigeration  machinery  components through Europair  Refrigeration
            and First Strut.

The Company has funded itself since inception  primarily  through  stockholders'
loans and capital  contributions  and the bridge financing of Notes and Warrant,
the proceeds if its Initial  Public  Offering  completed in January 1996 and the
issuance of subordinated convertible debentures. The Company anticipates that it
will derive revenues  primarily  through income generated from the operations of
acquired operating companies.

The average  annual rate of  inflation  in South  Africa  since the period ended
December 31, 1996 until December 31, 1997 was approximately 6.7%.

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




                Three Months     Three Months      Six Months      Six Months
                ended Dec. 31,   ended Dec. 31,   ended Dec. 31,  ended Dec. 31,
                     1996             1997             1996            1997
                     ----             ----             ----            ----
                  $1 = R4.63       $1 = R4.86       $1 = R4.54      $1 = R4.76
Depreciation of                       5.0%                             4.8%


As the Company's results are reported in U.S. dollars, but revenues and earnings
are primarily  generated in South African Rand, the local inflation rate and the
depreciation  of the South African Rand against the US dollar for the periods in
question are important to further the understanding of the Company's results. In
general,  if the rate of  depreciation  of the  South  African  Rand to the U.S.
dollar for any  comparable  period is  greater  than the South  African  rate of
inflation  for that same  period,  then the  Company  would have had to generate
local  revenues and earnings in excess of the South  African  inflation  rate in
order to maintain  dollar parity.  For the three months ended December 31, 1997,
versus the comparable period in 1996, the depreciation of the South African Rand
to the dollar  equaled 5% while the annual rate of inflation  was 6.7%.  For the
six months ended  December 31, 1997 versus the  comparable  period in 1996,  the
depreciation  of the South  African  Rand to the dollar  equaled  4.8% while the
annual rate of  inflation  was 6.7%.  In order for the Company to report  dollar
growth in revenues  and  earnings it would need to have  generated  growth of 5%
through its local South  African  operations.  The results,  therefore,  for the
period  indicated  above as reflected in U.S.  dollars,  is less than  inflation
adjusted South African Rand for revenue and earnings growth.




                                     - 17 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1996

Sales for the three months ended December 31, 1997 increased 152% to $35,605,750
from  $14,116,257  for the  comparable  period in 1996.  In local  currency this
reflects a net increase after  inflation of 150%. This increase is primarily due
to the acquisitions  the Company has completed since December 31, 1997.  Results
for the three months ended  December 31, 1996 reflect the  operations of Piemans
Pantry, Astoria Bakery and Seemanns Meat Products alone.

For the three months ended  December 31, 1997,  the  Company's  processed  foods
operations  contributed  approximately 44.9% of the Company's sales versus 62.7%
for  the  comparable  period  in  1996.  The  Company's   lifestyle   operations
contributed approximately 31.5% of sales for the three months ended December 31,
1997 versus 0% for the  comparable  period in 1996 since these  operations  were
acquired  in  October  1997.  The  Company's  packaging  operations  contributed
approximately 10.4% of sales for the three months ended December 31, 1997 versus
10.1% for the  comparable  period in 1996. The Company's  industrial  operations
contributed approximately 13.2% of sales for the three months ended December 31,
1997  versus  27.1% for the  comparable  period in 1996.  Sales in all  business
segments  increased.  The overall  increase can be explained in some segments by
additional  acquisitions,  but in general the overall increase can be attributed
to increasing  demand for the  Company's  products as the  middle-class  base of
consumers  continues to grow as South  Africa's  transition  to more broad based
economic  participation moves forward. In addition,  the Company's  subsidiaries
have continued to purchase additional  manufacturing  capacity to take advantage
of this demand.

Cost  of  goods  sold  for  the  three  months  ended  December  31,  1997  were
$22,633,124,  or 63.6 % of sales versus  $7,839,089 or 55.5%, for the comparable
period in 1996.  For the three months ended  December 31, 1997 the cost of goods
for the Company's  processed food operations were approximately 56.4% versus 51%
in the  comparable  period in 1996.  Cost of sales for the lifestyle  operations
were approximately 63.4%. The Company's lifestyle  acquisitions were consummated
effective  October  1, 1997.  Cost of sales for the  packaging  operations  were
approximately  76% versus 59.4% in the comparable  period in 1996. Cost of sales
for the  industrial  operations  were  approximately  81%  versus  64.5%  in the
comparable  period in 1996.  The overall  increase in the  percentage of cost of
goods sold can  therefore  be  primarily  explained  by increases in the cost of
goods ratios in the processed food and packaging and industrial operations.  The
increase in the industrial operations cost of goods is due primarily to the poor
performance of one division in this segment.  The processed  foods cost of goods
percentage  is in line with its full  fiscal  1997  ratio.  The  increase in the
packaging  operations' cost of goods is due primarily to the poor performance of
one  company in this  segment as well as a new  acquisition  that  traditionally
generates lower gross margins than those  generated by the packaging  operations
owned by the Company during the three months ended December 31, 1996.

Sales,  general and  administrative  costs ("SG&A") increased to $10,381,827 for
the three months  ended  December 31, 1997 from  $4,987,398  for the  comparable
period in 1996 or 29.2% of sales  versus  35.3% of sales.  For the three  months
ended  December 31, 1997,  SG and A expenses for the  Company's  processed  food
operations were approximately 32% versus 37.2% in the comparable period in 1996.
SG and A expenses for the lifestyle  operations were  approximately  26.9%.  The
Company's lifestyle  acquisitions were consummated effective October 1, 1997. SG
and A expenses for the packaging  operations were approximately 35% versus 28.3%
in  the  comparable  period  in  1996.  SG and A  expenses  for  the  industrial
operations  were  approximately  29.6% versus 30.9% in the comparable  period in
1996. The Company's  corporate SG and A expenses were approximately  $390,000 or
1.1% of sales for the three months ended December 31, 1997 versus  approximately
$218,087  or 1.5% of  sales  for the  comparable  period  in 1996.  The  overall
decrease  in the  percentage  SG  and A  expenses  can  therefore  be  primarily
explained by decreases in the SG and A ratios in the Company's  processed  foods
operations  as well as the lower  overall SG and A  percentage  incurred  by the
Company's new lifestyle acquisitions.

Interest  received  was $81,839,  for the three  months ended  December 31, 1997
versus an interest  expense of $359,122 for the  comparable  period in 1996. The
interest income for the 1997 period is primarily attributable to interest earned
on the Company's cash balances in its processed foods  businesses.  In addition,
during the three months ended  December  31,  1997,  the Company  incurred a net
interest expense of  approximately  $350,000 for interest on the 9% and floating
rate convertible  debenture  issuances that were completed in August and October
1997.

Other income for the three months  ended  December 31, 1997 was $391,913  versus
$305,898 in the comparable  period in 1996. This is primarily made up of rebates
and discounts earned by the Company's operating subsidiaries.

Net profit for the three month period ended  December 31, 1997 was $1,544,382 or
a gain of $0.24 a share as compared to a net profit of $997,356 or $0.21 a share
in the comparable  period in 1996. During the period ended December 31, 1997 the
Company's  net  earnings  included a provision  of $728,534 for the 30% minority
interest in its publicly traded subsidiary First SA Food Holdings, Ltd.

                                     - 18 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

as well as an  approximate  18%  minority  interests  in its First SA  Lifestyle
Holdings  subsidiary.  For purposes of its earning per share calculation for the
three  months  ended  December  31,  1997,  the  Company  had  6,339,882  shares
outstanding compared to 4,851,399 for the comparable period in 1996.

SIX MONTHS  ENDED  DECEMBER 31, 1996  COMPARED TO SIX MONTHS ENDED  DECEMBER 31,
1997

Sales for the six months ended  December 31, 1997  increased 121% to $57,067,182
from  $25,807,141  for the  comparable  period in 1996.  In local  currency this
reflects a net increase after  inflation of %. This increase is primarily due to
the acquisitions the Company has completed since December 31, 1996.  Results for
the six months ended December 31, 1996 reflect the operations of Piemans Pantry,
Astoria Bakery and Seemanns Meat Products alone.

For the six months ended  December  31,  1997,  the  Company's  processed  foods
operations contributed  approximately 53.1 % of the Company's sales versus 59.7%
for  the  comparable  period  in  1996.  The  Company's   lifestyle   operations
contributed  approximately  19.7% of sales for the six months ended December 31,
1997  versus 0% for the  comparable  period in 1996  since the  operations  were
acquired  in  October  1997.  The  Company's  packaging  operations  contributed
approximately  10.8% of sales for the six months ended  December 31, 1997 versus
11.1 % for the comparable  period in 1996. The Company's  industrial  operations
contributed  approximately 16.3 % of sales for the six months ended December 31,
1997  versus 29.3 % for the  comparable  period in 1996.  Sales in all  business
segments  increased.  The overall  increase can be explained in some segments by
additional  acquisitions,  but in general the overall increase can be attributed
to increasing  demand for the  Company's  products as the  middle-class  base of
consumers  continues to grow as South  Africa's  transition  to more broad based
economic  participation moves forward. In addition,  the Company's  subsidiaries
have continued to purchase additional  manufacturing  capacity to take advantage
of this demand.

Cost of goods sold for the six months ended December 31, 1997 were  $35,331,337,
or 61.9 % of sales versus  $14,052,806 or 54.4%,  for the  comparable  period in
1996.  For the six  months  ended  December  31,  1997 the cost of goods for the
Company's processed food operations were approximately 56.3% versus 49.7% in the
comparable  period in 1996.  Cost of sales  for the  lifestyle  operations  were
approximately  63.4%.  The Company's  lifestyle  acquisitions  were  consummated
effective  October  1, 1997.  Cost of sales for the  packaging  operations  were
approximately  74.9%  versus 58.7 % in the  comparable  period in 1996.  Cost of
sales for the industrial  operations were  approximately  71.1% versus 62.4 % in
the comparable period in 1996. The overall increase in the percentage of cost of
goods sold can  therefore  be  primarily  explained  by increases in the cost of
goods ratios in the processed food and packaging and industrial operations.  The
increase in the industrial operations cost of goods is due primarily to the poor
performance of one division in this segment.  The processed  foods cost of goods
percentage  is in line with its full  fiscal  1997  ratio.  The  increase in the
packaging  operations' cost of goods is due primarily to the poor performance of
one  company in this  segment as well as a new  acquisition  that  traditionally
generates lower gross margins than those  generated by the packaging  operations
owned by the Company during the six months ended December 31, 1996.

Sales,  general and  administrative  costs  increased to $17,698,351 for the six
months ended December 31, 1997 from $9,241,682 for the comparable period in 1996
or 31% of sales  versus 35.8% of sales.  For the six months  ended  December 31,
1997,  SG and A  expenses  for the  Company's  processed  food  operations  were
approximately  33%  versus  38.5% in the  comparable  period  in 1996.  SG and A
expenses for the lifestyle  operations were  approximately  26.9%. The Company's
lifestyle  acquisitions  were  consummated  effective  October 1, 1997. SG and A
expenses for the packaging  operations were approximately  34.5% versus 23.2% in
the comparable  period in 1996. SG and A expenses for the industrial  operations
were  approximately  27.1% versus 28.3% in the  comparable  period in 1996.  The
Company's  corporate SG and A expenses  were  approximately  $720,000 or 1.3% of
sales for the six months ended December 31, 1997 versus  approximately  $550,000
or 2.1% of sales for the comparable  period in 1996. The overall decrease in the
percentage SG and A expenses can  therefore be primarily  explained by decreases
in the SG and A ratios in the Company's  processed  foods  operations as well as
the lower  overall SG and A percentage  incurred by the  Company's new lifestyle
acquisitions.

Interest  received  was  $257,657,  for the six months  ended  December 31, 1997
versus an interest  expense of $574,208 for the  comparable  period in 1996. The
interest income for the 1997 period is primarily attributable to interest earned
on the Company's cash balances in its processed foods  businesses.  In addition,
during the six months  ended  December  31,  1997,  the  Company  incurred a net
interest expense of  approximately  $625,000 for interest on the 9% and floating
rate convertible  debenture  issuances that were completed in August and October
1997.

Other  income for the six months ended  December  31, 1997 was  $634,911  versus
$510,601 in the comparable  period in 1996. This is primarily made up of rebates
and discounts earned by the Company's operating subsidiaries.


                                     - 19 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Net profit for the six month period ended  December 31, 1997 was $2,533,008 or a
gain of $0.43 a share as compared to a net profit of $1,826,491 or $0.38 a share
in the comparable  period in 1996. During the period ended December 31, 1997 the
Company's net earnings  included a provision of $1,159,235  for the 30% minority
interests in its publicly traded subsidiary First SA Food Holdings, Ltd. as well
as an  approximate  18%  minority  interest in its First SA  Lifestyle  Holdings
subsidiary. For purposes of its earning per share calculation for the six months
ended  December  31,  1997,  the Company had  5,870,015  shares  outstanding  as
compared to 4,765,377 for the comparable period in 1996.


Liquidity and Capital Resources
-------------------------------

In January 1996, the Company raised  approximately $9 million after all fees and
expenses  from its initial  public  offering.  In May 1997,  the Company  raised
approximately  $9.2  million  in net  proceeds  from the  issuance  of 10,000 9%
convertible  debentures.  Such  debentures  mature  on  June  15,  2004  and are
convertible  any time prior to  maturity  at $6.00 a share.  In June  1997,  the
Company's  subsidiary First SA Food Holdings raised  approximately $16.5 million
in cash  through the  placement of its shares in South  Africa.  Of this amount,
approximately  $5.5 million was retained by First South African Holdings,  while
the  remainder  was retained by First SA Food  Holdings.  In October  1997,  the
Company raised  approximately $14.2 million in net proceeds from the issuance of
15,000  increasing rate debentures.  Such debentures  mature on October 30, 2001
and are convertible  any time prior to maturity at $9.50 a share.  Proceeds from
these offerings have been and will continue to be primarily utilized to fund the
Company's acquisitions as well as to provide a certain amount of working capital
to its South African subsidiaries.

At December 31, 1997, the Company had cash on hand of $19.1 million with working
capital of $33.4  million.  As of December 31, 1997 the Company had a total debt
of  $38,906,893  of  which  amount  $25  million  related  to the  Company's  9%
subordinated   convertible   debentures  and  its  increasing  rate  convertible
debentures , with the remainder  being bank debt.  Of the bank debt,  $5,499,039
was classified as current.  The Company currently has  approximately  $1,560,000
available in bank credit  lines,  which lines are  unsecured and renewable on an
annual basis.

Cash flows  provided by operating  activities  for the six months ended December
31, 1997 and December 31, 1996, totaled $3,843,132 and $4,689,769  respectively.
Cash flows used in investing  activities  for the six months ended  December 31,
1997 and December 31, 1996 totaled $24,328,991 and $5,286,315 respectively.  For
the six  months  ended  December  31,  1997  $22,280,797  was  utilized  for the
acquisition  of  subsidiaries  and  $2,848,220  for  additional  purchase  price
payments.  In the  comparable  period  in  1996  $5,244,457  was  used  for  the
acquisition  of  subsidiaries.  Net cash  provided by financing  activities  was
$20,808,443,  during the six months ended  December 31, 1997 while  $535,704 was
utilized  in the  corresponding  period  in the prior  year.  This  increase  is
primarily  attributable to the proceeds of warrants exercised and long term debt
borrowings incurred during the period.

The Company's operating  subsidiaries generally collect their receivables within
65 to 90 days and reserve approximately 5% for doubtful accounts.  Historically,
the  Company's  operating  and capital needs have been met by internal cash flow
and outside bank borrowings. It is management's belief that capital expenditures
for the  foreseeable  future can  continue to be met by  internal  cash flow and
outside bank borrowings.

As of December 31, 1997,  the Company had cash of  approximately  $19.1 million.
Under its various  acquisition  agreements,  the Company  anticipates  having to
spend  approximately  $2.25 million in cash for its contingent payments over the
next 12 months as well as  approximately  $1.85  million in stock.  The  Company
anticipates  that its cash and operating  cash flows will be sufficient to fully
fund these  payments  as well as fund the capital  expenditures  for its various
operations. Excess cash will also be utilized to fund additional acquisitions.

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 July 1997,  the Company  purchased a 12-month  option to
acquire the  equivalent of $10 million in South African rand at the strike price
of R5.50 to the dollar. This option has the effect of hedging $10 million of the
Company's  fiscal 1998  earnings,  in the event the  exchange  rate of the South
African  rand  falls  below  this  strike  price.  The cost of such  option  was
approximately $133,000 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.

                                     - 20 -

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

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 Company'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 Company's Securities and Exchange Commission filings.

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

      The annual meeting of shareholders of the Company was held on December 17,
1997 for the purpose of (i)  electing  five  directors  to serve as the Board of
Directors  until  the next  annual  meeting  of  stockholders  and  until  their
successors are duly elected and  qualified),  (ii) approving a proposal to amend
the Company's 1995 Stock Option Plan and (iii)  ratifying the appointment of the
Company's  independent  certified public  accountants for the fiscal year ending
June 30, 1998. Proxies for the meeting were solicited pursuant to Regulation 14A
of the  Securities  Exchange  Act of  1934  and  there  was no  solicitation  in
opposition.

      1.    At the Meeting,  Michael Levy, Clive Kabatznik,  Charles S. Goodwin,
Cornelius  J.  Roodt and  Mfundiso  J. Njeke were  elected as  directors  of the
Company by the following vote:

                                            Votes
                                            -----

                                 For                     Withheld
                                 ---                     --------

      Michael Levy            10,663,540                   800
      Clive Katatznik         10,663,540                   800
      Charles S. Goodwin      10,663,540                   800
      Cornelius J. Roodt      10,663,540                   800
      Mfundiso J. Njeke       10,663,540                   800

      2.    The proposal to amend the 1995 Stock Option Plan was approved by the
following vote:

           For        Against         Non Votes           Abstentions
           ---        -------         ---------           -----------
        8,889,486     354,755         1,420,420             2,198

      3.    Over  99% of the  votes  cast at the  meeting  voted in favor of the
ratification   of  Price   Waterhouse  as  the  Company's   independent   public
accountants.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      The  Company  filed an  amended  Current  Report  on Form  8-K/A  with the
Commission on January 22, 1998.  The following  item was reported by the Company
on the Form 8-K/A:  Financial  Statements of Businesses Acquired (Piemans Pantry
(Proprietary)  Limited and Surfs Up Investments  (Proprietary)  Ltd. and certain
Pro Forma Financial Information.

                                     - 21 -

<PAGE>


                                   SIGNATURES

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


Dated:  February 16, 1998

                                          FIRST SOUTH AFRICA CORP., LTD.



                                          By: /s/ Clive Kabatznik
                                             ----------------------------------
                                             Clive Kabatznik
                                             Chief Executive Officer, President
                                             and Chief Financial Officer



                                     - 22 -