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, 1996

                                       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 [_]   No [X]

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  12, 1997 was
4,142,500.



<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                                    FORM 10-Q
                     FOR THE QUARTER ENDED DECEMBER 31, 1996


PART 1.    FINANCIAL INFORMATION                                           PAGE

Item 1.       First South Africa Corp., Ltd.
              Consolidated Balance Sheets - Unaudited                         3

              Consolidated Statements of Income for the three
              months and for the six months ended December 31, 
              1996 and 1995 - Unaudited                                       4

              Consolidated Statements of Cash Flows for the six
              months ended December 31, 1996 and 1995 - Unaudited             5

              Consolidated Statements of Changes in Stockholder's
              Investment for the period June 30, 1996 to December 31, 1996    6

              Notes to the Combined Financial Statements                   7-11

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operation                          12-15


PART II.    OTHER INFORMATION


Item 6.       Exhibits and Reports on Form 8-K                               16



SIGNATURES                                                                   17









                                        2

<PAGE>
FIRST SOUTH AFRICA CORP., LTD

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                           ACTUAL
                                                 --------------------------
                                                December 31,       June 30,
                                                        1996           1996
                                                           $              $
                                                 -----------    -----------
ASSETS

Current assets

   Cash on hand                                    3,471,472      4,682,035

   Receivables                                     8,924,132      5,833,542

   Less: Allowances for bad debts                   (481,225)      (402,333)
                                                 -----------    -----------
                                                   8,442,907      5,431,209

Inventories (net)                                  4,984,965      2,510,868

Prepaid expenses and other current assets            701,656        451,551
                                                 -----------    -----------

         Total current assets                     17,601,000     13,075,663

Property, plant and equipment                     13,145,569      9,000,334

Less: Accumulated depreciation                    (3,519,817)    (2,119,912)
                                                 -----------    -----------
                                                   9,625,752      6,880,422

Goodwill                                             242,294        408,541
Recipes and other intellectual property            6,324,846      2,848,532
Other assets                                         180,527        318,286
Deferred income taxes                                  7,406         73,550
                                                 -----------    -----------

                                                  33,981,825     23,604,994
                                                 ===========    ===========

LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities

      Current portion of long term debt              134,739      2,101,799
      Bank overdraft and factoring facility        2,505,163        745,724
      Trade accounts payable                       4,781,132      2,162,257
      Other provisions and accruals                4,667,348      1,923,371
      Income taxes payable                         1,512,368      1,518,095
                                                 -----------    -----------


         Total current liabilities                13,600,750      8,451,246

      Long term debt                               4,299,528      2,361,372
                                                 -----------    -----------

         Total liabilities                        17,900,278     10,812,618

Stockholder's investment

      Common stock                                    41,805         41,701
      Capital in excess of par                    20,746,840     18,518,986
      Retained earnings                           (2,060,916)    (3,887,407)
      Foreign currency translation adjustments    (2,653,489)    (1,888,211)
      Income restricted as to distribution             7,307          7,307
                                                 -----------    -----------

                                                  33,981,825     23,604,994
                                                 ===========    ===========

See accompanying notes to the financial statements

                                        3

<PAGE>
FIRST SOUTH AFRICA CORP., LTD

CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND 1995

                                                COMPANY      PREDECESSOR
                                                -------      -----------
                                             December 31,   December 31,
                                                     1996           1995
                                                        $              $
                                             ------------   ------------

Revenues                                       14,116,257      2,002,604
                                              ===========    ===========

Operating expenses

Cost of sales                                   7,839,089      1,246,055

Selling, general and administrative expense     4,987,398        701,052
                                              -----------    -----------
                                               12,826,487      1,947,107

Operating  income                               1,289,770         55,497

Other income                                      310,692         56,935

Interest expense                                 (359,122)      (456,430)
                                              -----------    -----------

Income before income taxes                      1,241,340       (343,998)

Provision for taxes on income                    (243,984)       (41,001)
                                              -----------    -----------

Net Income                                        997,356       (384,999)
                                              ===========    ===========

Net profit per share                                 0.21          (0.46)

Weighted average number                         4,851,399        842,500
of shares outstanding

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

                                                COMPANY      PREDECESSOR
                                                -------      -----------
                                             December 31,   December 31,
                                                     1996           1995
                                                        $              $
                                             ------------   ------------

Revenues                                       25,807,141      4,933,148
                                              ===========    ===========

Operating expenses

Cost of sales                                  14,052,806      2,958,999

Selling, general and administrative expense     9,241,682      1,423,938
                                              -----------    -----------
                                               23,294,488      4,382,937

Operating  income                               2,512,653        550,211

Other income                                      510,601         56,935

Interest expense                                 (574,208)      (525,386)
                                              -----------    -----------

Income before income taxes                      2,449,046         81,760

Provision for taxes on income                    (622,555)      (190,016)
                                              -----------    -----------

Net Income                                      1,826,491       (108,256)
                                              ===========    ===========

Net profit per share                                 0.38          (0.13)

Weighted average number                         4,765,377        842,500
of shares outstanding

The  consolidated  statements  of income  for the three  months  and for the six
months ended December 31, 1995 reflect the combined operations of Starpak and LS
Pressings, "the predecessors companies" (see note 1.)



                                        4
<PAGE>



FIRST SOUTH AFRICA CORP., LTD

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS
ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)

<TABLE>
<CAPTION>
                                                           ACTUAL       PREDECESSOR
                                                           ------       -----------
                                                        December 31,    December 31,
                                                            1996            1995
                                                              $               $
                                                          ----------    ----------
<S>                                                        <C>            <C>
Cash flows from operating activities:

Net income/(loss)                                          1,826,491      (108,256)

Adjustments to reconcile net income to cash provided by
operating activities:

   Depreciation                                              504,082        98,412
   Amortization of other assets                              211,136            23
   Net gain on sale of assets                               (236,737)         (278)
   Deferred income taxes                                     (14,799)       85,355
   Effect of changes in assets and liabilities             2,399,596          --
                                                          ----------    ----------

Net cash provided by operating activities                  4,689,769        75,256
                                                          ----------    ----------


Cash flows from investing activities:

Net additions to property, plant and equipment              (388,983)     (253,637)
Other assets (acquired)/disposed                             347,125       (80,118)
Increase in loans to related companies                          --        (175,714)
Acquisition of subsidiaries (net cash of $334,405)        (5,244,457)         --
                                                          ----------    ----------

Net cash used in investing activities                     (5,286,315)     (509,469)
                                                          ----------    ----------


Cash flows from financing activities:

Net borrowings/(repayments) in bank overdrafts             1,321,029      (261,686)
Net borrowings of long term debt                             110,327         8,931
Net repayments in loans from related companies                  --        (243,024)
Net borrowings in short term debt                         (1,967,060)    1,321,426
Other                                                           --        (265,281)
                                                          ----------    ----------
Net cash provided by financing activities                   (535,704)      560,366
                                                          ----------    ----------
Effect of exchange rate changes on cash and assets           (78,313)       (2,525)
                                                          ----------    ----------
Net increase/(decrease) in cash on hand                   (1,210,563)      123,628
Cash on hand at beginning of period                        4,682,035       744,251
                                                          ----------    ----------
Cash on hand at end of period                              3,471,472       867,879
                                                          ==========    ==========
</TABLE>

The  consolidated  statements of cash flow for the six months ended December 31,
1995  reflects  the  combined  cash  flows  of  Starpak  and LS  Pressings,  the
predecessor companies.

                                        5

<PAGE>

FIRST SOUTH AFRICA CORP., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
FOR THE PERIOD JUNE 30, 1996 TO DECEMBER 31, 1996
(UNAUDITED)


<TABLE>
<CAPTION>
                                         Capital stock
                                          First South                                    Income        Foreign
                                          Africa Corp.,  Capital in       Retained    restricted as   Currency
                                              Ltd.      excess of par     earnings         to       Translation
                                               $              $              $        distribution   Adjustments       Total
                                          -----------    -----------    -----------    -----------   -----------    -----------
<S>                                            <C>        <C>            <C>                 <C>      <C>            <C>       
Balance at June 30, 1996                       41,701     18,518,986     (3,887,407)         7,307    (1,888,211)    12,792,376
Issuance of stock to acquire subsidiary
companies                                         104      2,372,854           --             --            --        2,372,958
IPO Expenses written off                     (145,000)      (145,000)
Net profit for the period                        --             --        1,826,491           --            --        1,826,491
Translation adjustment                           --             --             --             --        (765,278)      (765,278)
                                          -----------    -----------    -----------    -----------   -----------    -----------

Balance at December 31, 1996                   41,805     20,746,840     (2,060,916)         7,307    (2,653,489)    16,081,547
                                          ===========    ===========    ===========    ===========   ===========    ===========
</TABLE>


                                        6

<PAGE>



FIRST SOUTH AFRICA CORP., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996

1.    Organization
      ------------

First South Africa Corp., Ltd. (the "Company"), was incorporated 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  ("offering") and
in terms of an agreement reached before the 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 Offering and also in terms of an
agreement  reached before the 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.

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.

On July 1, 1996 the  Company  acquired  100% of the common  stock of First Strut
(Proprietary)  Limited for an aggregate  net  purchase  price of $ 300,335 . 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.

On July 1, 1996 the Company  acquired the business and assets of Astoria  Bakery
CC and  100% of the  common  stock of  Astoria  Bakery  (Lesotho)  (Proprietary)
Limited for an aggregate net purchase price of $3,696,431.  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.

On November 1, 1996 the company  acquired  100% of the common  stock of Seemanns
Meat Products (Proprietary) Limited and Hammer Street Investments  (Proprietary)
Limited for an aggregate net purchase price of $3,810,054.  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.

                                                        Seemanns Group
                                                        --------------
                                                               $
Acquisition costs
    Stock in lieu of cash                                 1,333,335
    Cash consideration                                    2,476,719
                                                         
Purchase price to be allocated                            3,810,154
                                                         
Summary allocation of purchase price                     
    Current assets                                        1,675,651
    Property, plant and equipment                         1,430,908
    Goodwill                                              1,444,996
    Other assets                                              8,276
                                                          ---------
                                                         
    Total assets acquired                                 4,559,831
       Current liabilities                                  230,009
       Long term debt                                       438,825
       Deferred taxation                                     80,943
    Total liabilities assumed                               749,777
                                                          ---------
                                                         
                                                          3,810,054
                                                          =========
                                      
                                        7

<PAGE>



FIRST SOUTH AFRICA CORP., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued).

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 ready
to eat and  ready to bake off  pastry  related  food  products,  rye bread and a
limited  number  of  confectionery  items,  and  manufacture,   packaging,   and
distribution of fresh processed meat products.

3.     Summary of Significant Accounting Policies
       ------------------------------------------

Unaudited Interim Financial Statements
--------------------------------------

The accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information  and in accordance with Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  Financial
Statements.  In the opinion of management,  the unaudited  interim  consolidated
financial  statements  contain all  adjustments,  consisting of normal recurring
accruals,  necessary to present fairly the financial  position of the Company at
December 31, 1996,  and the results of operations and cash flows for the periods
presented.  Results for the interim  periods are not  necessarily  indicative of
results to be expected for the full year. These financial  statements  should be
read in conjunction with the financial statements and notes included in the Form
10-K for the period ended June 30, 1996.

Principles of 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 interest exist. Material  inter-company  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
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 exist at period end.

Intangible Assets

Goodwill  resulting  from  acquisitions,  and  recipes  and  other  intellectual
property is being  amortized 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 amortized on a straight line basis over a 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.

                                        8

<PAGE>



FIRST SOUTH AFRICA CORP., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued).

Foreign Currency Translation
----------------------------

The functional currency of the Company's operating subsidiaries is that of South
African Rand.  Accordingly,  the following  rates of exchange have been used for
translation purposes:

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

*          Common  stock  and  capital  in excess  of par are  translated  using
           historical rates at date of issuance.

*          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."

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 amortized over
the option terms. 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  risk  through  its  use of
derivatives.

Foreign assets and liabilities
------------------------------

Transactions in foreign currencies arise as a result of inventory purchases from
foreign   countries  and   inter-company   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.

Property, Plant and Equipment
-----------------------------

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

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

The following rates are considered appropriate:
                                              Percentage
                                              ----------

                Buildings                         2%
                Plant and equipment              10-33%
                Motor vehicles                   20%
                                    
                                        9

<PAGE>



FIRST SOUTH AFRICA CORP., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued).

Income Taxes
------------

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

Fair Value of Financial Instruments
-----------------------------------

As of 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 recognizes revenues on an accrual basis.

4.    Stockholders' Equity
      --------------------

The  authorized  capital  stock  of  the  Company  consist  of an  aggregate  of
23,000,000  shares  of Common  Stock,  par value  $.01 per  share  (the  "Common
Stock"), 2,000,000 shares of Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"), and 5,000,000 shares of Preferred Stock, par value $.01
per share.

As of December  31,  1996 there were  1,842,500  shares of Class B Common  Stock
outstanding and 2,300,000 shares of Common Stock.

In connection  with the Offering the Company has issued a Unit Purchase  Options
to the  underwriter to purchase up to 200,000 Units  comprised of 200,000 shares
of the  Company's  Common Stock and 200,000 Class A Warrants and 200,000 Class B
Warrants.  The Unit Purchase Options are exercisable  during the two year period
commencing  three years from the date of this Prospectus at an exercise price of
$6.00  per  unit  (120%  of  the  initial  public  offering  price)  subject  to
adjustments in certain events.

Holders of the Common Stock have one vote per share on each matter  submitted to
a vote of the  shareholders and a ratable right to the net assets of the Company
upon  liquidation.  Holders of the Common Stock do not have preemptive rights to
purchase  additional shares of Common Stock or other  subscription  rights.  The
Common Stock carries no conversion rights and is not subject to redemption or to
any sinking fund provisions.

The Class B Common Stock and the Common Stock are  substantially  identical on a
share-for-share basis, except that the holders of Class B Common Stock have five
votes per share on each matter considered by shareholders and the holders of the
Common Stock have one vote per share on each matter  considered by shareholders,
and except  that the  holders  of each class will vote as a separate  class with
respect  to any  matter  requiring  class  voting by The  Companies  Act 1981 of
Bermuda.

Each share of Class B Common Stock is automatically  converted into one share of
Common  Stock upon the death of the  original  holder  thereof,  or, the sale or
transfer of such stock to the public.

As of December 31, 1996,  and as a result of the Offering,  there were 2,300,000
Class A Warrants and Class B Warrants outstanding.

Each Class A Warrant  entitles  the  registered  holder to purchase one share of
Common Stock and one Class B Warrant,  at an exercise price of $6.50,  until the
fifth anniversary of the date of the Offering.



                                       10

<PAGE>



FIRST SOUTH AFRICA CORP., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued).

Each Class B Warrant  entitles  the  registered  holder to purchase one share of
Common Stock at an exercise  price of $8.75 per share at any time after issuance
until the fifth anniversary of the date of the Offering.

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  (Proprietary)  Limited  Class B common  stock,  who are
resident 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  therefor by the escrow agent,  which payment may consist of the
proceeds  obtained  form 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
holders of the Class B Common  Stock in exchange for their shares in First South
African  Holdings ( Proprietary)  Limited.  These shares will be tendered to the
Company and they will be immediately converted to FSAH Class A commons shares.

Included in the First South  Africa  Corp.,  Ltd Class B issued  Common Stock is
1,266,835  First South  African  Holdings  (Proprietary)  Limited Class B common
shares, in terms of this escrow agreement.

5. Inventories
   -----------

   Inventories consist of the following

                                                  December 31,        June 30,
                                                  1996                1996
                                                  $                   $

Finished goods                                     2,325,225          2,077,679
Work-in-progress                                     106,512            272,377
Raw materials                                      1,412,810            501,562
Supplies                                           2,152,055             93,055
                                                                     ----------
Inventories (gross)                                5,996,607          2,944,673
Less: Valuation allowances                          (553,012)          (433,805)
                                                  ----------         ----------

Inventories (net)                                  5,443,595          2,510,868
                                                  ==========         ==========

6. Pro Forma Financial Information
   -------------------------------
The unaudited  pro forma  financial  information  tables below has been prepared
assuming that all of the acquisitions  noted under the  Organization  section of
this Form 10-Q had taken  place and that  operations  had  commenced  on July 1,
1995.
                                                   October 1, to  July 1, to
                                                   December 31,   December 31,
                                                   1995           1995
                                                   $              $


Revenues                                           14,486,780     28,550,612
                                                   ----------     ----------

Net income                                          1,000,076      1,887,808
                                                   ----------     ----------

Net profit per share                                     0.20           0.38
                                                   ----------     ----------

Weighted average number of shares outstanding       4,937,421      4,937,421


The unaudited pro forma  financial  information  of the Company has been derived
from the historical  financial  statements of Starpak,  LS Pressings,  Europair,
Piemans  Pantry,  Surfs-Up  Investments,  First  Strut  and the  Astoria  Group,
Seemanns Meat Products and Hammer  Street  Investments  and do not purport to be
indicative  of the  results  that  would  have  been  actually  obtained  if the
acquisitions  had  occurred  on July 1,  1995  nor is it  indicative  of  future
results.


                                       11

<PAGE>



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  subsidiary,  FSAH, has acquired seven 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 , Astoria Bakery, and Seemanns
Meat Products.  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 average  annual rate of  inflation  in South  Africa  since the period ended
December 31, 1995 until December 31, 1996 was approximately 8%

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

<TABLE>
<CAPTION>

Three Months Ended     Three Months Ended        Six Months Ended      Six Months Ended
December 31, 1995        December 31, 1996       December 31, 1995     December 31, 1996

<S>                       <C>   <C>                 <C>   <C>            <C>   <C> 
$1 = R3.66                 $1 = R4.63                $1 = R3.65           $1 = R4.54


Depreciation of               26.5%                                           24.4%
</TABLE>


Based on these figures,  in evaluating  the comparable  sales and income numbers
for the  Company  for the three  months  ended  December  31,  1996  versus  the
comparable  periods in 1995; the  depreciation of the South African Rand against
the U.S.  Dollar was far higher than the South African rate of  inflation.  As a
result,  the  increase in sales and profits for the three and six month  periods
ended  December  31, 1996  versus the  comparable  period in 1995 was  generated
through a net  increase  in the sales and  earnings of the  Company's  operating
businesses.  Based on the approximate  difference  between the rate of inflation
and the Rand depreciation  against the U.S. dollar,  the Company had to generate
more than 18 % in  inflation-adjusted  Rand  growth for the three  month  period
ended December 31, 1996 and more than 16 % in inflation-adjusted Rand growth for
the six month  period  ended  December  31,  1996,  in order to report sales and
profits in U.S. dollars greater than those in the comparable periods in 1995.

Three Months Ended December 31, 1996 Compared to Three Months Ended December 31,
1995

Sales for the three  months  ended  December  31, 1996 were  $14,116,257  versus
$2,002,604 for the comparable  period in 1995. This increase is primarily due to
the  acquisitions  the Company has completed  since its IPO on January 24, 1996.
All results for the three months  ended  December 31, 1995 relate to the results
of L.S.  Pressings and Starpak  alone.  These two companies are  considered  the
Company's predecessor.

Cost of goods sold for the three months ended December 31, 1996 were $7,839,089,
or 55.5 % of sales versus $ 1,246,055  or 62.2%,  for the  comparable  period in
1995.  This decrease in the percentage of cost of goods sold is primarily due to
the lower cost of goods percentage  associated with the Company's processed food
operations.

                                       12

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Sales,  general and  administrative  costs were  $4,987,398 for the three months
ended  December  31, 1996 or 35.3% of sales versus  $701,052 for the  comparable
period in 1995 or 35% of sales.

Interest  expenses  were  $359,122 for the three months ended  December 31, 1996
versus  $456,430 for the comparable  period in 1995.  This decrease is primarily
attributable to a one time interest  expense of $418,167 related to the interest
charged to the  Company as a result of its Bridge  Financing  transaction  which
took place in November  1995. The operating  interest  expenses of the Company's
subsidiaries  has increased from $38,263 to $359,122.  The increase is primarily
attributable to the increase in the Company's bank borrowings and long term debt
for the six months ended December 31, 1996 as compared to the comparable  period
in 1995.  The Company's new  acquisitions  carry debt  primarily  related to the
financing of their plant and equipment.  In addition,  the Company's subsidiary,
First  South  African  Holdings,  borrowed  approximately  $1,100,000  which  it
utilized as a portion of its acquisition costs.

Other income for the three months  ended  December 31, 1996 was $310,692  versus
$56,935 in the comparable  period in 1995. This is primarily made up of interest
earned  by the  Company  and its South  African  operating  subsidiaries  on its
positive cash balances.

Net profit for the three month  period ended  December  31, 1996,  $997,356 or a
gain of $.21 a share as  compared  to a net loss of  $384,999 or $.46 a share in
the comparable period in 1995. For purposes of its earning per share calculation
for the three months ended December 31, 1996,  the Company had 4,851,399  shares
outstanding ( includes  794,920 shares to be issued in fulfilment of acquisition
agreements  entered  into during the past six  months)as  opposed to 842,500 for
comparable period in 1995.

Six Months  Ended  December 31, 1996  Compared to Six Months Ended  December 31,
1995

Sales  for the six  months  ended  December  31,  1996 were  $25,807,141  versus
$4,933,148 for the comparable  period in 1995. This increase is primarily due to
the  acquisitions  the Company has completed  since its IPO on January 24, 1996.
All results for the six months ended  December 31, 1995 relate to the results of
L.S.  Pressings  and Starpak  alone.  These two  companies  are  considered  the
Company's predecessor.

Cost of goods sold for the six months ended December 31, 1996 were  $14,052,806,
or 54.4 % of sales versus $ 2,958,999 or 60%, for the comparable period in 1995.
This  decrease in the  percentage  of cost of goods sold is primarily due to the
lower cost of goods  percentage  associated  with the Company's  processed  food
operations.

Sales, general and administrative costs were $9,241,682 for the six months ended
December 31, 1996 or 35.8% of sales versus  $1,423,938 for the comparable period
in 1995 or 28.9% of sales.  This  increase can  primarily be  attributed  to the
increased ratio of sales costs to revenues generated in the Company's  processed
food  operations  as opposed to the  manufacturing  operations  of the Company's
predecessor,  as  well as  general  and  administrative  costs  incurred  by the
Company's  corporate offices during the six months ended December 31, 1996 which
were not incurred in the comparable period in 1995

Interest  expenses  were  $574,208  for the six months  ended  December 31, 1996
versus $525,386 for the comparable  period in 1995. The interest expense for the
six months  ended  December  31, 1995  includes a one time  interest  expense of
$418,167  related  to the  interest  charged  to the  Company as a result of its
Bridge  Financing  transaction  which took place in November 1995. The operating
interest  expenses of the Company's  subsidiaries has increased from $107,209 to
$574,208.  The  increase  is  primarily  attributable  to  the  increase  in the
Company's  bank  borrowings and long term debt for the six months ended December
31,  1996 as  compared  to the  comparable  period in 1995.  The  Company's  new
acquisitions  carry debt  primarily  related to the financing of their plant and
equipment. In addition, the Company's subsidiary,  First South African Holdings,
borrowed  approximately  $1,100,000  which  it  utilized  as a  portion  of  its
acquisition costs.

                                       13

<PAGE>




MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Other  income for the six months ended  December  31, 1996 was  $510,601  versus
$56,935 in the comparable  period in 1995. This is primarily made up of interest
earned  by the  Company  and its South  African  operating  subsidiaries  on its
positive cash balances.

Net profit for the six month period ended  December  31, 1996,  $1,826,491  or a
gain of $.38 a share as  compared  to a net loss of  $108,256 or $.13 a share in
the comparable period in 1995. For purposes of its earning per share calculation
for the six months ended  December 31, 1996,  the Company had  4,765,377  shares
outstanding ( includes  794,920 shares to be issued in fulfilment of acquisition
agreements entered into during the past six months)as opposed to 842,500 for the
comparable period in 1995.

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

The  Consolidated  Balance Sheet as at, December 31, 1996, shows cash on hand of
$3,471,472  of which  $1,077,149  was held by the  operating  subsidiaries.  The
remainder reflects cash on hand from the net proceeds realized by the Company.

The  Company's  consolidated  working  capital as at,  December  31,  1996,  was
$4,250,000.  As at December 31, 1996,  the Company had a total of  $6,939,430 in
bank debt of which  $2,639,902  was  classified  as current of which  $2,505,163
reflected bank overdrafts  payable under the Company's  operating  subsidiaries'
working capital lines of credit.

Cash flows  provided by operating  activities  for the six months ended December
31, 1996 and December 31, 1995,  totaled  $4,689,769 and $75,256,  respectively.
Cash flows used in investing  activities  for the six months ended  December 31,
1996 and December 31, 1995 totaled  $5,286,315 and $509,469,  respectively.  For
the  six  months  ended  December  31,  1996  $5,244,457  was  utilized  for the
acquisition of subsidiaries.  In the comparable  period in 1995 net cash used in
investing activities was primarily attributable to the purchase of assets and an
increase  in  loans  to  related  companies.  Net  cash  provided  by  financing
activities  was  $(535,704)  during the six months  ended  December 31, 1996 and
while $560,366 was provided in the corresponding  period in the prior year. This
decrease in the use of cash from financing activities is primarily  attributable
to an decrease in net borrowing of short term debt.

The Company's operating  subsidiaries generally collect their receivables within
65 to 90 days and reserve approximately 5% for doubtful accounts.  Historically,
the  companies'  operating and capital needs have been met by internal cash flow
and outside bank  borrowings,  while the Company has primarily  utilized the net
proceeds of its initial public offering to acquire subsidiaries in South Africa.
The Company's operating  subsidiaries have budgeted  approximately  $850,000 for
capital  expenditures  during the current fiscal year ended June 30, 1997. It is
management's  belief  that  capital  expenditures  will  continue  to be  met by
internal cash flow and bank  borrowings.  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 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.




                                       14

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


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 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.

PART II - OTHER INFORMATION


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

           The annual meeting of shareholders of the Company (the "Meeting") was
held on December 16, 1996.  Proxies for the Meeting were  solicited  pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended, and there was
no solicitation in opposition.

           At the Meeting,  Michael Levy, Clive  Kabatznik,  Charles S. Goodwin,
John Mackey and  Cornelius  J. Roodt were elected as directors of the Company to
serve until the Company's  next annual meeting of  shareholders  and until their
respective  successors are elected and qualified.  In addition,  at the Meeting,
the  appointment of Price  Waterhouse as independent  public  accountants of the
Company for the fiscal year  ending  June 30, 1997 was  ratified.  The votes for
each of such proposals were as follows:

                                                  Shares Voted       
1.         Election of Directors          For                   Withheld
                                      ------------              --------

           Michael Levy                9,621,506                 3,000
           Clive Kabatznik             9,621,506                 3,000
           Charles S. Goodwin          9,621,506                 3,000
           John Mackey                 9,621,506                 3,000
           Cornelius J. Roodt          9,621,506                 3,000

2.         Over  99% of the  votes  cast at the  Meeting  voted in favor  of the
           ratification of Price Waterhouse as independent public accountants.


Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

The Company  filed a Current  Report on Form 8-k with the  Commission on October
24,  1996.  The  following  item was reported by the Company on the Form 8-K: On
October  24, 1996 First  South  Africa  Corp.,  Ltd.,  through its wholly  owned
subsidiary corporation, First South African Holdings (Pty) ltd., acquired all of
the outstanding stock and assets of Astoria Bakery CC and Astoria Bakery Lesotho
(Pty) Ltd.















                                       15

<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.

Date: February 13, 1997

                                             FIRST SOUTH AFRICA., LTD.


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













                                       16