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, 1998
                                         -----------------

                                       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: 809-295-1422

--------------------------------------------------------------------------------
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  13, 1999 was
5,705,966

<PAGE>


                         First South Africa Corp., Ltd.

Item 1

Unaudited Consolidated Balance Sheets at December  31, 1998 and June 30, 1998

Unaudited Consolidated Statements of Income for the three months and for the six
months ended December 31, 1998 and 1997

Unaudited  Consolidated  Statements  of Cash  Flows  for the  six  months  ended
December 31, 1998 and 1997

Unaudited Consolidated Statement of Changes in Stockholders'  Investment for the
period June 30, 1998 to December 31, 1998

Notes to the unaudited  Consolidated Financial Statements


Item 2: Management's Discussion and Analysis of Financial Condition and Results 
of operations

Item 3: Quantitative and Qualitative Disclosures About Market Risk


PART II.    OTHER INFORMATION

Item 6.       Exhibits and Reports on Form 8-K

SIGNATURES

                                       2


<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                      UNAUDITED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>


                                     ASSETS
                                                                December 31,            June 30,
                                                                        1998                1998
                                                                           $                   $
                                                                  ----------          ----------

<S>                                                            <C>                 <C>       
Current assets
     Cash on hand                                                 14,693,204          17,948,991
     Trade accounts receivable                                    22,752,977          16,871,292
     Less: Allowances for bad debts                                 (640,648)           (833,785)
                                                                 ------------        ------------
                                                                  22,112,329          16,037,507
     Inventories (net)                                            12,434,152          11,742,613
     Prepaid expenses and other current assets                     3,384,827           1,711,428
                                                                  ----------         -----------
              Total current assets                                52,624,512          47,440,539
Property, plant and equipment                                     31,030,858          31,410,837
Less: Accumulated depreciation                                   (11,860,821)        (11,423,572)
                                                                 ------------        ------------
                                                                  19,170,037          19,987,265
Intangible assets (net)                                           18,772,232          20,045,983
Deferred charges (net)                                             1,021,660           1,448,199
Other assets                                                         350,465             261,735
                                                                 -----------        ------------
                                                                  91,938,906          89,183,721
                                                                  ==========          ==========



</TABLE>
                                       3
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.

                      UNAUDITED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>



                    LIABILITIES AND STOCKHOLDERS' INVESTMENT
                                                                                   December 31,             June 30,
                                                                                           1998                 1998
                                                                                              $                    $
                                                                                   ------------             --------

<S>                                                                               <C>                  <C>      
Current liabilities
     Bank overdraft payable                                                           4,775,191            2,787,965
     Current portion of long term debt                                                1,088,006            2,256,275
     Trade accounts payable                                                          13,767,686            9,205,092
     Other provisions and accruals                                                    6,333,377            4,506,770
     Dividend payable                                                                         -              558,185
     Other taxes payable                                                                565,097            1,064,432
     Income tax payable                                                               2,218,384            1,790,874
                                                                                     ----------            ---------
              Total current liabilities                                              28,747,741           22,169,593
Long term debt                                                                       26,786,727           28,945,426
Deferred income taxes                                                                   689,396              529,405
                                                                                   ------------         ------------
                                                                                     56,223,864           51,644,424
                                                                                                          ----------
Stockholders' investment

Capital stock:

     A class common  stock, $0.01 par value - authorized  23,000,000 shares, issued
     and outstanding 4,293,731 shares (June 1998: 5,649,224 shares)                      42,938               56,492

     B class common stock, $0.01 par value - authorized 2,000,000 shares, issued
     and outstanding 1,822,500 shares                                                    18,223               18,223

     FSAH B Class common stock                                                              580                  539

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

     Capital in excess of par                                                        26,976,443           28,288,404
Retained earnings                                                                    (2,565,653)           7,209,977
                                                                                    ------------         -----------
                                                                                     24,472,531           35,573,635
Minority stockholders' investment                                                    27,811,759           19,677,124
                                                                                     ----------           ----------
                                                                                     52,284,290           55,250,759
                                                                                     ----------           ----------
Foreign currency translation adjustments                                            (16,569,248)         (17,711,462)
                                                                                    ------------         ------------
                                                                                     35,715,042           37,539,297
                                                                                     ----------           ----------
                                                                                     91,938,906           89,183,721
                                                                                     ==========           ==========
</TABLE>
                                       4
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
<TABLE>
<CAPTION>

               UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                THE THREE MONTHS ENDED 30 SEPTEMBER 1998 AND 1997


                                                                                        1998                 1997
                                                                                           $                    $
                                                                                  ----------           ----------

<S>                                                                            <C>                  <C>       
Revenues                                                                          32,950,702           35,605,750
                                                                                  ==========           ==========
Operating expenses
     Cost of sales                                                                20,769,121           22,633,124
     Selling, general and administrative costs                                     8,980,704           10,381,827
                                                                                 -----------           ----------
                                                                                  29,749,825           33,014,951
                                                                                  ----------           ----------
Operating  income                                                                  3,200,877            2,590,799
Other income                                                                         208,057              391,826
Interest income/( expense)                                                          (458,896)              81,916
                                                                                    ---------         -----------
(Loss)/income from consolidated companies before taxation                          2,950,038            3,064,541
Provision for taxes on income                                                       (914,010)            (791,625)
                                                                                 ------------            ---------
                                                                                   2,036,028            2,272,916
Minority interest in consolidated subsidiary companies                            (1,102,264)            (728,534)
                                                                               --------------          -----------
Net income before extraordinary charges                                              933,764            1,544,382
     Extraordinary loss on restructure of group                                   (4,585,659)                   -
     Provision for loss on share price warranty                                     (373,771)                   -
     Retrenchment cost provision                                                           -                    -
                                                                           -----------------    -----------------
Net (loss)/income                                                                 (4,025,666)           1,544,382
Basic earnings per share                                                               (0,64)                0,24

Fully diluted earnings per share                                                       (0,39)                0,21
Weighted average number of shares outstanding
     Basic earnings per share                                                      6,254,649            5,383,492

     Fully diluted earnings per share                                              8,780,762            8,154,164
</TABLE>
                                       5
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
<TABLE>
<CAPTION>

                 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR
                 THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997


                                                                                                    1998                1997
                                                                                                       $                   $
                                                                                              -----------         ----------

<S>                                                                                      <C>                 <C>       
Revenues                                                                                      58,215,578          57,067,182
                                                                                              ==========          ==========
Operating expenses
     Cost of sales                                                                            37,128,992          35,331,337
     Selling, general and administrative costs                                                17,550,941          17,698,351
                                                                                              ----------          ----------
                                                                                              54,679,933          53,029,688
                                                                                              ----------          ----------
Operating income                                                                               3,535,645           4,037,494
Other income                                                                                     295,266             634,911
Interest income/( expense)                                                                      (565,432)            257,657
                                                                                                ---------       ------------
Income from consolidated companies before income taxes                                         3,265,479           4,930,062
Provision for taxes on income                                                                 (1,434,179)         (1,237,819)
                                                                                              -----------         -----------
                                                                                               1,831,300           3,692,243
Minority interest in consolidated subsidiary companies                                        (1,513,675)         (1,159,235)
                                                                                              -----------          ----------
Net income before extraordinary charges                                                          317,625           2,533,008
     Extraordinary loss on restructure of group                                               (4,585,659)                  -
     Loss on share price warranty                                                             (5,007,596)                  -
     Retrenchment cost charge                                                                   (500,000)                  -
                                                                                             ------------          ---------
Net (loss)/income                                                                             (9,775,630)          2,533,008
Basic earnings per share                                                                           (1,41)               0,43

Fully diluted earnings per share                                                                   (0,93)               0,38


Weighted average number of shares outstanding                                                  6,910,833           5,897,115
     Basic earnings per share

     Fully diluted earnings per share                                                          9,491,389           8,308,144

</TABLE>

                                       6
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
<TABLE>
<CAPTION>

               UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
                 THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997

                                                                                                     1998               1997
                                                                                                        $                  $
                                                                                                    -----               ----


<S>                                                                                          <C>                 <C>      
Cash flows from operating activities:
     Net income                                                                                (9,775,630)         2,533,008
     Adjustments to reconcile net income to net cash provided by operating
     activities:
              Depreciation and amortization                                                     1,901,574          1,656,970
              Capital redemption reserve fund                                                     281,250             (4,735)
              Deferred income taxes                                                               162,897                  -
              Net loss on sale of assets                                                                -             39,317
              Net gain on sale of subsidiary                                                     (384,919)                 -
              Net loss on redemption of Debenture funding                                         282,359                  -
              Effect of changes in current assets and current liabilities                      (2,562,375)        (1,540,663)
              Effect of extraordinary provisions raised                                                 -                  -
              Net gain on First SA Food shares purchased from minorities                          (33,655)                 -
              Net loss on dilution of holding in First SA Food Holdings Limited                   281,020                  -
              Extraordinary restructure write off of intangibles                                4,585,659                  -
              Minority interest in consolidated subsidiary companies                            1,513,675          1,159,235
                                                                                                ---------          ---------
Net cash (utilised)/provided by operating activities                                           (3,748,145)         3,843,132
                                                                                               -----------         ---------
Cash flows from investing activities:

     Additions to property, plant and equipment                                                (1,818,244)        (2,571,840)
     Proceeds on disposal of property, plant and equipment                                        767,629             58,749
     Proceeds on disposal of investment in First SA Lifestyle Holdings Limited                          -          3,507,424
     Additional purchase price payments                                                        (2,085,313)        (2,848,220)
     Other assets acquired                                                                        (89,019)          (194,307)
     Acquisitions of subsidiaries (net of cash of $33,856)                                              -        (22,280,797)
     Proceeds on disposal of subsidiary (net of cash of $10,562)                                   48,262                  -
     Proceeds on disposal of part interest in First SA Food Holdings Limited                    4,559,222                  -
                                                                                                ----------       ------------
Net cash used in investing activities                                                           1,382,537        (24,328,991)
                                                                                                ---------        ------------
Cash flows from financing activities:

     Net (repayments)/borrowings in bank overdrafts                                             2,004,268          1,796,476
     Borrowings of long term debt                                                               1,493,164         16,047,060
     Redemption of debenture debt                                                              (2,733,910)                 -
     Reduction in deferred debt issue costs                                                             -           (883,843)
     Repayments in short term debt                                                             (1,158,727)           102,423
     (Redemption)/Proceeds on stock issues                                                     (2,088,674)         3,746,327
                                                                                               -----------         ---------
Net cash used in/(provided in) financing activities                                            (2,438,879)        20,808,443
                                                                                               -----------        ----------
Effect of exchange rate changes on cash                                                         1,548,700         (1,063,840)
                                                                                                ---------         -----------
Cash utilised by operations                                                                    (3,255,787)          (741,256)
Cash on hand at beginning of period                                                            17,948,991         19,889,111
                                                                                               ----------         ----------
Cash on hand at end of period                                                                  14,693,204         19,147,855
                                                                                               ==========         ==========
</TABLE>

                                       7

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
<TABLE>
<CAPTION>


          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' INVESTMENT



                                         First South   First South   First South
                                          frica Corp., Africa Corp.,  African
                                                 Ltd.          Ltd.  Holdings                                Foreign
                                             A class       B class    B Class    Capital in                  currency
                                              common        common     common     excess of     Retained  translation
                                               stock         stock      stock           par     earnings  adjustments        Total 
                                                   $             $          $             $            $            $            $
                                          ----------      --------    -------    ----------     --------  -----------        -----

<S>                                         <C>           <C>         <C>      <C>           <C>          <C>          <C>       
Balance at 30 June 1998                       56,492        18,223        539    28,288,404    7,209,977  (17,711,462)  17,862,173
Issuance of stock to FSAC escrow agent         2,434             -          -        (2,434)           -            -            -
Conversion of debentures                       1,272                                573,828                                575,100
Issuance of stock on additional 
  purchase price payments                          -             -         41     1,033,572            -            -    1,033,613
Net income                                         -             -          -             -   (5,749,964)           -   (5,749,964)
Translation adjustment                             -             -          -             -           -       959,243      959,243
                                          ----------    ----------    -------    ----------    ----------- ----------   ----------
Balance at 30 September 1998                  60,198        18,223        580    29,893,370    1,460,013  (16,752,219)  14,680,165
Redemption of stock from FSAC escrow agent   (17,260)            -          -    (2,916,927)           -            -   (2,934,187)
Net loss                                           -             -          -             -   (4,025,666)           -   (4,025,666)
Translation adjustment                             -             -          -             -            -      182,971      182,971
                                          ----------     ---------     ------ -------------   -----------  -----------  ----------
Balance at 31 December 1998                   42,938        18,223        580    26,976,443   (2,565,653) (16,569,248)   7,903,283
                                              ======        ======        ===    ==========   ===========  ===========   =========

</TABLE>
                                       8
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997





1.   ORGANISATION AND PRINCIPAL 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 principal activities of the group include the following:

     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.

     Packaging interests
     The business of manufacturing,  servicing and selling  packaging  machines,
     receiving commission income and receiving rental income.

     Industrial interests
     Manufacture of washers for use in the fastener industry and the manufacture
     and supply of air-conditioning and refrigeration products.


2.   ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

     The Company  disposed of its 70%  shareholding  in Humidair (Pty) Ltd for a
     consideration of $58,824, realizing a loss on disposal of $15,409.

     The Company  disposed  of its 100%  interest in First Strut (Pty) Ltd for a
     consideration of $nil, realizing a profit on disposal of $400,327.

     The Company sold its 84.3% interest in First SA Lifestyle  Holdings Limited
     to First SA Food Holdings  Limited in which an effective 57,5% interest has
     been retained,  this has resulted in a  restructuring  charge of $4,585,659
     being charged to the income statement.

     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 three years.

                                       9

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997



2.   ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES (continued)

     Additional  purchase  price  payments  made during the  current  year total
     $2,085,312. This amount was allocated as follows:


Goodwill                                                       361,052
Recipes                                                      1,129,745
Trademarks                                                     594,515
                                                             ---------
                                                             2,085,312
                                                             =========

These additional purchase price payments were made as follows:


Cash                                                          1,051,699
Shares issued in lieu of cash                                 1,033,613
                                                              ---------
                                                              2,085,312
                                                              =========



3.   SUMMARY OF ACCOUNTING POLICIES

     The consolidated financial statements 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, First South Africa Corp., Ltd. 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.

     Earnings per share
     Earnings  per share on common  shares is based on net income  and  reflects
     dilutive effects of any stock options and warrants which exist at year end.


                                       10
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997



3.   SUMMARY OF ACCOUNTING POLICIES (continued)

     Intangible assets
     Goodwill, recipes and other intellectual property, and trademarks are 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 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 Rands. 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.

     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 to 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).

                                       11

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997



3.   SUMMARY OF ACCOUNTING POLICIES (continued)

     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 June 30 1998,  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.

     Revenues
     Revenues  comprise net invoiced  sales of washers,  manufactured  packaging
     machines,  spares and service charges,  food products,  lifestyle 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 sales 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.


4.   INVENTORIES                           

     Inventories consist of the following:


                                                 December 31,        June 30,
                                                         1998            1998
                                                 ------------        --------

                                                            $               $
Finished goods                                      6,107,855       7,156,784
Work in progress                                      556,544         649,465
Raw materials and ingredients                       4,900,390       3,220,748
Supplies                                            1,119,841         959,396
                                                 ------------      ----------
Inventories (Gross)                                12,684,630      11,986,393
Less:   Valuation allowances                         (250,478)       (243,780)
                                                 -------------   ------------
Inventories (Net)                                  12,434,152      11,742,613
                                                   ==========      ==========


                                       12

<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997




5.   EXTRAORDINARY SHARE REPURCHASE CHARGE

     In terms of agreements reached with the previous vendors of Piemans Pantry,
     Seemann's Quality Meat Products,  Gull Foods and Fifers Bakery, the Company
     warranted  the First South Africa Corp share price at  September  30, 1998.
     The charge of $5,007,596  represents the revised aggregate shortfall on the
     warranted share price at the prevailing exchange rate at December 31, 1998.
     In terms of the  agreements  entered  with the  previous  vendors they have
     exercised a put option on the Company, which resulted in their shares being
     repurchased  and cancelled in the second  quarter of the current  financial
     year.


6.   RETRENCHMENT COST PROVISION

     A  retrenchment  cost  provision  of $500,000  has been raised to take into
     account  the  future  costs  expected  in the  manpower  reductions  in the
     packaging segment which is currently undergoing extensive reorganization.


7.   EARNINGS PER SHARE

     Earnings per share data is calculated as follows:    
<TABLE>
<CAPTION>



Basic earnings per share for the quarter (1998)

<S>                                                    <C>               <C>               <C>                      
Net income available to common stockholders                                                      (4,025,666)
                                                                                                 ===========

                                                             Shares         Fraction of            weighted
Dates outstanding                                        Outstanding             period      average shares
                                                         -----------        -----------      --------------

Balance at October 1, 1998                                7,837,708                 1,0           7,837,708
Redemption of escrow shares during the quarter           (1,583,059)                1,0          (1,583,059)
Weighted average shares                                   6,254,649                               6,254,649
                                                          ---------                               ---------



Diluted earnings per share for the quarter (1998)

Net income available to common stockholders                                                       (4,025,666)
Add impact of assumed conversions                                                                    643,100
                                                                                                  ----------
Adjusted net income available to common stockholders                                              (3,382,566)
                                                                                                  -----------
Weighted average shares                                                                            6,254,649
Warrants and options not yet exercised                                                                     -
9% convertible debentures                                                                            947,166
Increasing rate debentures                                                                         1,578,947
                                                                                                   ---------
Adjusted weighted average shares                                                                   8,780,762
                                                                                                   ---------
</TABLE>
                                       13
<PAGE>
                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

7.   EARNINGS PER SHARE (continued)

<S>                                                                  <C>                <C>              <C>          
Basic earnings per share for the quarter (1997)

Net income available to common stockholders                                                                      1,544,382
                                                                                                                 =========

                                                                            Shares         Fraction of            weighted
Dates outstanding                                                      outstanding              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                0,81              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 (1997)

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
                                                                                                                  ---------

Basic earnings per share for the year to date (1998)

Net income available to common stockholders                                                                      (9,775,630)
                                                                                                                 ===========

                                                                            Shares         Fraction of             weighted
Dates outstanding                                                      outstanding              period       average shares
                                                                       -----------         -----------       --------------

July 1, 1998                                                             7,472,324                1,00            7,472,324
July 1 - September 30, 1998
Additional purchase price payments                                         242,684                0,51              122,661
Warrants converted to shares during the quarter                            122,700                0,95              116,032
October 1 - December 31, 1997
Redemption of escrow shares during the quarter                          (1,583,059)               0,51             (800,134)
                                                                        -----------               ----             ---------
Weighted average shares                                                  7,072,892                                6,910,883
                                                                         ---------                                ---------
</TABLE>
                                       14
<PAGE>


                         FIRST SOUTH AFRICA CORP., LTD.
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>

7.   EARNINGS PER SHARE (continued)


<S>  
Diluted earnings per share for the year to date (1998)
                                                                   <C>              <C>                 <C>
Net income available to common stockholders                                                                      (9,775,630)
Add impact of assumed conversions                                                                                   979,963
                                                                                                                 ----------
Adjusted net income available to common stockholders                                                             (8,795,667)
                                                                                                                 -----------
Weighted average shares                                                                                           6,910,883
Warrants and options not yet exercised                                                                                    -
9% convertible debentures                                                                                         1,001,559
Increasing rate debentures                                                                                        1,578,947
                                                                                                               ------------
Adjusted weighted average shares                                                                                  9,491,389
                                                                                                                  ---------



Basic earnings per share for the year to date (1997)

Net income available to common stockholders                                                                       2,533,008
                                                                                                                  =========

                                                                            Shares         Fraction of             weighted
Dates outstanding                                                      outstanding              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
                                                                         ---------                                ---------



Diluted earnings per share for the year to date (1997)

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
                                                                                                                 ----------
</TABLE>
                                       15
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results 
of operations


BACKGROUND AND HISTORY

The Company was  incorporated  in September  1995 with the intention to actively
pursue  acquisitions  in South Africa and , if  appropriate  other  countries as
well.

First South Africa Corp has, through its South African  subsidiary,  First South
African Holdings (Pty) Ltd, acquired fourteen South African subsidiaries.

These  acquisitions  are listed below and are engaged in the following  industry
segments:

     Processed Foods

Piemans Pantry
Astoria Bakery
Seemann's Quality Meat Products
Gull Foods
Fifers Bakery


     Lifestyle Products

SA Leisure
Galactex
Republic Umbrella
Tradewinds


     Packaging Equipment and Materials

Starpak
Pakmatic
Pacforce


     Industrial Manufacturing

L.S. Pressings


Europair



FINANCING


Stockholders' funding

     The Company has funded  itself  primarily  through  stockholders  loans and
capital contributions.

      Additional  funds were  raised from the  proceeds  of the  Initial  Public
Offering (IPO) completed in January 1996.

Bridging Finance

     Bridging finance was raised to finance acquisitions made prior to the IPO.

Debentures

     The Company has issued two tranches of subordinated  convertible debentures
to raise funds for further acquisitions.

The Company  anticipates that it will derive dividend income  primarily  through
income generated from the operations of acquired companies in South Africa.

                                       16

<PAGE>





SOUTH AFRICAN OPERATIONS

As the  Company's  results  are  reported  in U.S.  Dollars,  but  revenues  are
primarily  generated in South African Rand, the South African inflation rate and
the  depreciation of the South African Rand against the U.S Dollar are important
to the understanding of the Company's results.

In broad  terms,  If the  deterioration  of the rand is in  excess  of the South
African  inflation  rate,  then the Company would need to generate South African
revenue in excess of the South African inflation rate to maintain Dollar parity.

The average  rate for the South  African  Rand  against the U.S.  Dollar for the
periods presented in this report are as follows:


                                          Three Months          Three Months
                                                 ended                 ended
                                          December 31,          December 31,
                                                  1998                  1997
                                          ------------          ------------

Rate of exchange vs $1                            5,80                  4,86
Depreciation                                      19,3%

                                            Six Months            Six Months
                                                 ended                 ended
                                          December 31,          December 31,
                                                  1998                  1997
                                          -------------         ------------

Rate of exchange vs $1                            5,97                  4,76
Depreciation                                      24,6%

The annual rate of inflation for South Africa was  approximately  7% as reported
by the South African Central Statistical services.

The result  reflected below is therefore  greater than inflation  adjusted South
African Rand for both revenue and earnings growth.


                                       17

<PAGE>



COMPARISON TO PRIOR PERIODS

In analyzing the  Company's  results it should be noted that, in response to the
current  emerging  market  crisis,  management  have modified  their strategy in
regard to the future growth of the Company's operations in South Africa.  During
the quarter  ended  December  31, 1998,  a  subsidiary  of the Company  received
outside  shareholder  approval to complete the merger of its Lifestyle  Products
operations with its Johannesburg  Stock Exchange listed subsidiary First SA Food
Holdings.  This merger  resulted in the Company  having a current 57.5% stake in
the  enlarged  listed  Company - First SA  Lifestyle  Holdings  Ltd. In addition
management  disposed of two non core  businesses  during the three  months ended
December  31,  1998.  Management  will  continue  to seek  the  sale of non core
businesses and anticipates that the future growth of the Company's South African
operations will be mainly generated through First SA Lifestyle Holdings.  Future
growth of this  subsidiary  may require  further  financing  from South  African
sources and may result in the  Company's  ownership in this  subsidiary  falling
below 50%. It is  management's  belief that the  Company's  underlying  value is
linked to the public value placed on the shares of First SA Lifestyle  Holdings.
The value of the Company's  shareholding in this  subsidiary  based on a closing
price of R2.80 and an exchange  rate of R6.10 to the US dollar on  February  12,
1999, was approximately $41 million.

THREE MONTHS ENDED DECEMBER 31, 1998 VERSUS DECEMBER 31 1997


     SALES

        Sales have decreased by 7,5 % to $32,950,702 from $35,605,750.

        This  decrease is primarily  attributable  to the  deterioration  in the
        relative value of the South African Rand to the US Dollar.  The increase
        in revenues in rand terms amounted to 9.3%.


        The contribution by the individual business segments towards total sales
        for the three months ended December 31, is as follows:


                                                      1998           1997
                                                         %              %
                                                      ----           ----

Processed Foods                                       47,3           44,8
Lifestyle Products                                    31,8           31,5
Packaging equipment and materials                      9,1           10,6
Industrial Manufacturing                              11,8           13,1
                                                     -----          -----
                                                     100,0          100,0
                                                     -----          -----

      The Rand value of sales in the Food and Lifestyle  business  segments have
      increased  over the prior period,  however  sales value in the  Industrial
      Manufacturing  and Packaging  segments has decreased over the prior  year.
      The overall Rand increase can be explained by:

        o             Increase  in  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.

        o             Additional capital expenditure on increasing manufacturing
                      capacity  has been made to exploit the  additional  demand
                      being experienced.

        o             Significant  gains in export  orders have been made by the
                      Lifestyle  segment,  providing  a  natural  hedge  against
                      currency deteriorations.

        o             The  decrease  in sales in the  Industrial  and  packaging
                      segment  is due to  management's change of focus away from
                      these sectors which is not regarded as core  business,  as
                      well as difficult  trading  conditions  experienced due to
                      the  high  relative   interest  rates  and  the  difficult
                      economic environment prevalent in South Africa.

                                       18

<PAGE>


     COST OF SALES

     Cost of  goods  sold of  $20,769,121,  (Representing  63,0% of  sales)  has
     decreased  from   $22,633,124   (Representing   63,5%  of  sales)  for  the
     comparative period in the prior year.


                      The cost of goods sold by the individual business segments
                      as a  percentage  of  sales  for the  three  months  ended
                      December 31, is as follows:


                                                         1998           1997
                                                            %              %
                                                         ----           ----

Processed Foods                                          55,3           56,4
Lifestyle Products                                       66,7           63,4
Packaging equipment and materials                        77,8           74,9
Industrial Manufacturing                                 72,5           73,0

     The  overall  decrease  in the  percentage  of cost of  goods  sold  can be
     explained by the  deterioration of the relative value of the Rand to the US
     Dollar. The segment analysis is presented below.

     o  Processed Foods

        The cost of goods sold in this segment has decreased  due to operational
        efficiencies being realised.

     o  Packaging equipment and materials

        The difficult trading conditions experienced during the 1998 quarter has
        resulted in a  deterioration  of the margins  realised by this operating
        sector.

     o  lifestyle Products

        This segment's  margins  are low due to the  competitive  nature  of the
        products necessitating reasonably low margins overall.

        The  deterioration  of the  margin  over the prior  period is due to the
        difficult trading  conditions being  experienced in South Africa.  These
        conditions  are as a  result  of the  emerging  market  crisis  and  the
        unacceptably  high  level of real  interest  rates  prevailing  in South
        Africa.

                                       19

<PAGE>

     SELLING, GENERAL AND ADMINISTRATIVE COSTS

     Selling, General and Administrative costs of $8,980,704, (Representing 27,3
     % of sales) has decreased from  $10,381,827  (Representing  29,2% of sales)
     for the comparative period in the prior year.

     Included in Selling, General and administrative costs are the following non
     cash charges:


                                                           1998          1997
                                                           ----          ----

Depreciation                                            718,937       357,338
Amortisation of intangibles and other assets            305,184       237,274
                                                        -------       -------
                                                      1,024,121       594,612
                                                      ---------       -------
Percentage of total sales                                   3,1           1,7

     Intangibles are principally Goodwill, trademarks, Intellectual property and
     Restraint of Trade agreements.

     The selling,  general and administrative  costs of the individual  business
     segments as a percentage  of sales for the three months ended  December 31,
     is as follows:


                                                      1998            1997
                                                         %               %
                                                      ----            ----

Processed Foods                                       34,7            31,2
Lifestyle Products                                    19,5            26,9
Packaging equipment and materials                     34,7            34,5
Industrial Manufacturing                              23,0            28,6
Corporate (Percentage of total sales)                  2,9             1,7

        The changes in the  percentage  of Selling,  general and  administrative
        costs can be explained by the following:

        o             Processed Foods

                      Increased selling, General and administration costs due to
                      a large fixed cost  component  of the food  segment  which
                      experienced lower than expected turnovers..

        o             Lifestyle Products

                      Low  Selling,  general  and  administrative  costs  in the
                      Lifestyle sector as compared to the other business segment
                      has resulted in an overall decrease in the Company's total
                      Selling,  General and Administrative costs as a percentage
                      of sales.

                      A concerted effort has been made by the Lifestyle  segment
                      to reduce  overhead  expenditure  in line with the general
                      slow down in the economy.

                                       20
<PAGE>


     INTEREST EXPENSE

     Interest  expense of  $458,896 has decreased from an income of  $81,916 for
     the comparative period in the prior year.

     Interest for the quarter ended December 31, 1998 consists of:

     o  Interest expense on the debenture finance raised,  including a charge of
        $281,250 for the debenture redemption reserve fund.

     o  Interest  expense  incurred in the other  operating  business  segments,
        which has offset  interest  income  earned on  surplus  cash in the Food
        segment.



     OTHER INCOME

     Other income of $208,057 has decreased  from  $391,826 for the  comparative
     period in the prior year.

     Other income consists primarily of rebates, discounts received, commissions
     and government incentives earned by the operating subsidiaries.

     The  decrease  is  attributable  to a  decrease  in  government  incentives
     received.



     NET INCOME

     Net loss from consolidated  subsidiaries of $(4,025,666) has decreased from
     an income of $1,544,382, a significant decrease over the comparative period
     in the prior year.

     Included in the loss for the current  quarter is a loss on the  restructure
     of the  group  of  $4,585,659  arising  on the  disposal  of the  Lifestyle
     interests to First SA Food Holdings  Limited and the  subsequent  change of
     name  of that  company  to  First  Lifestyle  Holdings  Limited.  The  loss
     represents the revalue of Goodwill and Trademarks in the Lifestyle  segment
     to  represent  fair  value at the time of the  transaction.  An  additional
     provision of $373,771 for share  repurchase  charges in terms of agreements
     reached with the previous vendors of several of the food segment businesses
     in terms of which the price at which First South Africa  Corp.,  Ltd shares
     were held in escrow on their behalf was warranted at a certain level. These
     vendors  have  exercised  a  put  option  on  the  Company,  requiring  the
     repurchase of the escrow shares resulting in the extraordinary charge.

     Net loss of  $4,025,666  represents  a loss of $0,64 a share as compared to
     net income of $1,544,382  representing  $0,24 per share in the  comparative
     period in the prior year. After factoring out the extraordinary  provisions
     raised the income per share for the  current  quarter  equates to $0,15 per
     share.

     The current  market value of the Company's  57,5% stake in First  Lifestyle
     Holdings  Limited is  approximately  $39,5 million.  The Company intends to
     continue to spin off minority interests in the subsidiary groups which will
     result  in the  provision  for  minority  interests  increasing  in  future
     periods. This will continue to effect comparative earnings per share data.

     For purposes of the Company's  earnings per share  calculation  the Company
     had a weighted average 6,254,649 shares outstanding as opposed to 5,383,492
     for the comparative period in the prior year.

     The shares in issue includes an additional  1,173,476  shares issued on the
     conversion  of certain A warrants and B warrants that were  outstanding  in
     terms of a warrant  swap out  exercise  performed  during the prior  fiscal
     year.  This  has had a negative  impact  on the  basic  earnings  per share
     calculation.



COMPARISON TO PRIOR PERIODS

o    SIX MONTHS ENDED DECEMBER 31, 1998 VERSUS DECEMBER 31 1997


     SALES

        Sales have decreased by 2,0 % to $58,215,578 from $57,067,182.

                                       21
<PAGE>




        This   decrease  in  real  terms  is  primarily   attributable   to  the
        deterioration  in the relative value of the South African Rand to the US
        Dollar. The increase in revenues in rand terms amounted to 25,7%.


        The contribution by the individual business segments towards total sales
        for the six months ended December 31, is as follows:


                                                         1998         1997
                                                            %            %
                                                         ----         ----

Processed Foods                                          48,5         52,9
Lifestyle Products                                       29,3         20,0
Packaging equipment and materials                         9,3         10,8
Industrial Manufacturing                                 12,9         16,3
                                                        -----        -----
                                                        100,0        100,0
                                                        -----        -----

      The Rand  value of sales in the Food,  Lifestyle  and  Packaging  business
      segments have increased over the prior period,  however sales value in the
      Industrial  Manufacturing  segments  has  decreased  over  the prior year.
      The overall Rand increase can be explained by:

        o             Increase  in  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.

        o             Additional capital expenditure on increasing manufacturing
                      capacity  has been made to exploit the  additional  demand
                      being experienced.

        o             Significant  gains in export  orders have been made by the
                      Lifestyle  segment,  providing  a  natural  hedge  against
                      currency deteriorations.

        o             The decrease in sales in the Industrial  segment is due to
                      management's change of focus away from this sectors  which
                      is not  regarded as core  business,  as well as  difficult
                      trading  conditions  experienced  due to the high relative
                      interest  rates  and the  difficult  economic  environment
                      prevalent in South Africa.

                                       22

<PAGE>





     COST OF SALES

     Cost of  goods  sold of  $37,128,992,  (Representing  63,8% of  sales)  has
     increased  from   $35,331,337   (Representing   61,9%  of  sales)  for  the
     comparative period in the prior year.


                      The cost of goods sold by the individual business segments
                      as a percentage of sales for the six months ended December
                      31, is as follows:


                                                           1998    1997
                                                              %       %
                                                           ----    ----

Processed Foods                                            56,2    56,5
Lifestyle Products                                         70,0    63,4
Packaging equipment and materials                          79,3    76,0
Industrial Manufacturing                                   70,6    70,3

     The  overall  increase  in the  percentage  of cost of  goods  sold  can be
     explained  by the  deterioration  of the  South  African  economy  and  the
     relative  high  interest  rates  which led to  difficult  economic  trading
     environments.

     o  Processed Foods

        The cost of goods sold in this segment has  decreased due to operational
        efficiencies being realised.

     o  Packaging equipment and materials

        The difficult trading conditions experienced during the 1998 quarter has
        resulted in a  deterioration  of the margins  realised by this operating
        sector.

     o  lifestyle Products

        This  segments  margins  are low due to the  competitive  nature  of the
        products  necessitating  reasonably low margins overall. The decrease in
        margins  has been  necessary  to cover  the  largely  fixed  portion  of
        manufacturing overhead in certain of the operations.

        The  deterioration  of the  margin  over the prior  period is due to the
        difficult trading  conditions being  experienced in South Africa.  These
        conditions  are as a  result  of the  emerging  market  crisis  and  the
        unacceptably  high  level of real  interest  rates  prevailing  in South
        Africa.

                                       23

<PAGE>



     SELLING, GENERAL AND ADMINISTRATIVE COSTS

     Selling,  General and  Administrative  costs of $17,550,941,  (Representing
     30,2 % of sales) has decreased  from  $17,698,351  (Representing  31,01% of
     sales) for the comparative period in the prior year.

     Included in Selling, General and administrative costs are the following non
     cash charges:


                                                       1998            1997
                                                       ----            ----

Depreciation                                      1,305,741       1,080,237
Amortisation of intangibles and other assets        595,833         576,733
                                                    -------         -------
                                                  1,901,574       1,656,970
                                                  ---------       ---------
Percentage of total sales                               3,3             2,9

     Intangibles are principally Goodwill, trademarks, Intellectual property and
     Restraint of Trade agreements.

     The selling,  general and administrative  costs of the individual  business
     segments as a percentage of sales for the six months ended  December 31, is
     as follows:


                                                        1998          1997
                                                        -----         ----
                                                           %             %

Processed Foods                                         33,7          32,8
Lifestyle Products                                      20,1          26,9
Packaging equipment and materials                       31,9          34,1
Industrial Manufacturing                                25,2          28,6
Corporate (Percentage of total sales)                    2,9           1,7

        The changes in the  percentage  of Selling,  general and  administrative
        costs can be explained by the following:

        o             Processed Foods

                      Increased selling, General and administration costs due to
                      a large fixed cost  component  of the food  segment  which
                      experienced lower than expected turnovers.

        o             Lifestyle Products

                      Low  Selling,  general  and  administrative  costs  in the
                      Lifestyle sector as compared to the other business segment
                      has resulted in an overall decrease in the Company's total
                      Selling,  General and Administrative costs as a percentage
                      of sales.

                      A concerted effort has been made by the Lifestyle  segment
                      to reduce  overhead  expenditure  in line with the general
                      slow down in the economy.


                      Due  to  the  poor   performance  of  the  industrial  and
                      manufacturing  sectors, a  conscious effort  has been made
                      to reduce the level of overhead expenditure.

                                       24

<PAGE>


     INTEREST EXPENSE

     Interest expense  of $565,432 has decreased from an income of  $257,657 for
     the comparative period in the prior year.

     Interest for the six months ended December 31, 1998 consists of:

     o  Interest expense on the debenture finance raised,  including a charge of
        $281,250 for the debenture redemption reserve fund.

     o  Interest  expense  incurred in the other  operating  business  segments,
        which has offset  interest  income  earned on  surplus  cash in the Food
        segment.



     OTHER INCOME

     Other income of $295,266 has decreased  from  $634,911 for the  comparative
     period in the prior year.

     Other income consists primarily of rebates, discounts received, commissions
     and government incentives earned by the operating subsidiaries.

     The  decrease  is  attributable  to a  decrease  in  government  incentives
     received.



     NET INCOME

     Net loss from consolidated  subsidiaries of $(9,775,630) has decreased from
     an income of $2,533,008, a significant decrease over the comparative period
     in the prior year.

     Included in the loss for the current year is a loss on the  restructure  of
     the group of $4,585,659 arising on the disposal of the Lifestyle  interests
     to First SA Food Holdings Limited and the subsequent change of name of that
     company  to First  Lifestyle  Holdings  Limited.  The loss  represents  the
     revalue of Goodwill and  Trademarks in the  Lifestyle  segment to represent
     fair value at the time of the  transaction.  A provision of $5,007,596  for
     share repurchase  charges in terms of agreements  reached with the previous
     vendors  of several of the food  segment  businesses  in terms of which the
     price at which First South Africa Corp.,  Ltd shares were held in escrow on
     their behalf was warranted at a certain level. These vendors have exercised
     a put option on the Company,  requiring the repurchase of the escrow shares
     resulting in the extraordinary charge. A retrenchment provision of $500,000
     was also raised to  restructure  the non  performing  companies  within the
     Packaging and Industrial sectors.

     Net loss of  $9,775,630  represents  a loss of $1,41 a share as compared to
     net income of $2,533,008  representing  $0,43 per share in the  comparative
     period in the prior year. After factoring out the extraordinary  provisions
     raised the income per share for the  current  quarter  equates to $0,05 per
     share.

     For purposes of the Company's  earnings per share  calculation  the Company
     had a weighted average 6,910,883 shares outstanding as opposed to 5,897,115
     for the comparative period in the prior year.

     The shares in issue includes an additional  1,173,476  shares issued on the
     conversion  of certain A warrants and B warrants that were  outstanding  in
     terms of a warrant  swap out  exercise  performed  during the prior  fiscal
     year.  This has had an  negative  impact  on the basic  earnings  per share
     calculation.


                                       25

<PAGE>


FINANCING

o     Internally Generated funding

     As of December  31,  1998,  the Company  had net cash of  $14,693,204  with
     working capital of $23,876,771.  As of December 31, 1998, the Company had a
     total of  $26,786,727 in debt, of which amount  $20,656,000  related to the
     Company's 9% and increasing rate subordinated  convertible  debentures with
     the remainder being bank debt. Of the bank debt,  $1,088,006 was classified
     as current.

     Cash flows utilized by operating  activities for the period ended September
     30,1998 totaled $3,748,145. Cash flows used in investing activities totaled
     $2,698,300 of which the Company  realized $48,242 on the disposal of one of
     its non core operating  subsidiaries.  The Company  expended  $2,085,313 on
     additional  purchase  price  payments  and  purchased   $1,818,244  in  net
     additions to property,  plant and equipment of its  subsidiaries.  Net cash
     utilized in financing activities amounted to $2,438,879.  This included the
     redemption of debentures amounting to $2,733,810.  An additional $5,559,222
     was  generated  by the  disposal  of a part  interest  in  First  Lifestyle
     Holdings Limited.

                                       26


<PAGE>


o     Future commitments

     Under the various acquisition agreements, the Company anticipates having to
     spend approximately $0,62 million in cash for its purchase price warrantees
     issued to the previous  vendors of Piemans Pantry,  Seemann's  Quality Meat
     Products,  Fifers  Bakery and Astoria  Bakery.  The Company has  contingent
     payments over the next 12 months amounting to approximately $3,212,536. The
     Company  anticipates  that  this  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  anticipates that any longer
     term contingent  acquisition  payments will be funded out of operating cash
     flows of the acquired entities.

     The Company's  operating  subsidiaries  generally collect their receivables
     within 65 - 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 borrowing.  It is  management's  belief
     that capital expenditures for the foreseeable future can continue to be met
     by  internal  cash  flow  and  bank  borrowing.   The  Company's  operating
     subsidiaries engage in certain hedging transactions with respect to certain
     overseas purchases in order to lock in a specified exchange rate.

     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.


YEAR 2000 COMPLIANCE

     o                 State of Readiness

                      Due to the nature  and type of  operations  falling  under
                      First South  Africa  Corp.,  Ltd.,  none of the  operating
                      entities have very  sophisticated  Information  Technology
                      ("IT") and non IT systems.  The majority of the Management
                      information   systems   within  the  group  are  purchased
                      software packages.

                      Operating   management  in  each   operating   entity  has
                      evaluated  or  is  currently   evaluating   the  Year 2000
                      readiness  of  the  Management   information  systems  and
                      software  upgrades  have  been  purchased  or on  order to
                      ensure that the Company will be Year 2000 compliant from a
                      management information perspective.

                      The extent of usage of non IT systems  within the group is
                      limited  to one or two  cases,  these  systems  are in the
                      process of being  tested to ensure  year 2000  compliance,
                      however  these  processes  are not of he nature that would
                      seriously  disrupt the  functioning  of the Company should
                      any particular process fail.

                      While evaluating the  Management  Information  Systems,  a
                      thorough check of all hardware within the Company is being
                      carried  out,  Where  necessary  changes and  upgrades are
                      being  made to  ensure  that  the  Company  is  year  2000
                      compliant.  These  changes are not expected to be material
                      and  the costs have  already  been  provided for where the
                      amounts are considered to be significant.


    o                 Costs to address year 2000 issues

                      Based  on  the  assessments  already  carried  out  by the
                      Company and the ongoing  assessments being performed,  the
                      costs  that have  materialized  to date and the costs that
                      are expected to  materialize  are not  significant  to the
                      Company  or each  individual  entity as a whole.  However,
                      there can be no guarantee that the costs involved will not
                      be material  should a significant  problem be subsequently
                      discovered.


                                       27

<PAGE>





                      The costs  incurred to date have typically been to replace
                      aging hardware, which has not amounted to material amounts
                      and  were  already   provided   for  in  general   capital
                      expenditure  budgets and to upgrade the existing purchased
                      software,  in each case  upgrades are  available  from the
                      software  suppliers who certify year 2000 compliance.  The
                      costs  incurred  on the  software  upgrades  have not been
                      material to date.

       o              Risk associated with Year 2000 issues

                      Based  on  risk  assessments   already  carried  out  and
                      assessments which are due to take place, the Company feels
                      that due to the  level  of IT  sophistication  within  the
                      Company   that  the  risk  of   ceasing   production   and
                      distribution completely is minimal.

                      The  Company  is able to support a manual  record  keeping
                      system  temporarily  should  there  be a total  IT  system
                      failure.

                      In management's opinion,  the significant  risks that face
                      the  Company  are the states of  readiness  of the utility
                      suppliers,  the Company's major  suppliers,  customers and
                      bankers.

                      Steps  have been  taken to ensure  that  these  suppliers,
                      customers  and  bankers  have  confirmed  their  state  of
                      readiness  to us and what steps are being taken by them to
                      ensure that they are fully year 2000 compliant.

                      The  likely  impact  on the  Company  from  this  risk  is
                      significant  and all steps are being  taken to ensure that
                      this risk is adequately addressed.

     o                Contingency plans

                      The Company is  developing a  contingency  plan which will
                      ensure  that  the  production  and  distribution  and  the
                      recording of all transactions  will be adequately  covered
                      should there be a significant problem,  however, we cannot
                      guarantee  that these plans will be  sufficient to prevent
                      disruption and the likely impact that this may have on the
                      group as a whole.

                      Where  possible,  alternative  sources of supply have been
                      identified,  should there be a significant disruption from
                      one  of  our   suppliers.   However,   because  there  are
                      significant  suppliers  within  the  group  which are sole
                      suppliers,   we  may  be   unable   to  cover   this  risk
                      sufficiently.  As a result,  we are attempting to the best
                      of our ability to assess the state of  readiness  of these
                      suppliers and to locate suppliers in other countries.


ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has used  derivative  financial  instruments  primarily  to
reduce exposure to adverse  fluctuations in foreign  exchange rates with respect
to certain overseas purchases in order to lock in a specified exchange rate. The
Company  does not  enter  into  derivative  financial  instruments  for  trading
purposes. As a matter of policy all derivative positions are used to reduce risk
by hedging underlying economic exposure. The derivatives the Company has used in
the past were straightforward instruments with liquid markets.        


                           PART II - OTHER INFORMATION


Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

No Exhibits or reports on Form 8-K during the quarter.

                                       28

<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 16, 1999

                                               FIRST SOUTH AFRICA., LTD.


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