SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): April 24, 1997
FIRST SOUTH AFRICA CORP., LTD.
------------------------------------------------------
(exact name of registrant as specified in its charter)
BERMUDA
----------------------------------------------
(state or other jurisdiction of incorporation)
0-27494 N/A
- ------------------------ ---------------------------------
(Commission file number) (IRS employer identification no.)
CLARENDON HOUSE, CHURCH STREET, HAMILTON HM CX, BERMUDA
-------------------------------------------------------
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (441) 295-1422
NOT APPLICABLE
------------------------------------------------------
(former name or former address, if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Provided herein on pages F-1 to F-14 are the following
financial statements of Gull Foods CC ("Gull"):
(i) Unaudited Balance Sheet at December 31, 1996;
(ii) Unaudited Statements of Income for the ten months
ended December 31, 1996 and 1995;
(iii) Unaudited Statements of Cash Flows for the ten
Months ended December 31, 1996 and 1995;
(iv) Notes to the Unaudited Financial Statements for
the ten months ended December 31, 1996 and 1995;
(v) Audited Balance Sheet at February 29, 1996;
(vi) Audited Statements of Income for the years ended
February 29, 1996 and February 28, 1995;
(vii) Audited Statements of Cash Flows for the years
ended February 29, 1996 and February 28, 1995;
(viii) Audited Statements of Changes in Stockholders'
Investment for the years ended February 29, 1996
and February 28, 1995; and
(ix) Notes to the Audited Financial Statements for the
years ended February 29, 1996 and February 28,
1995.
(b) Pro Forma Financial Information
Provided herein on pages F-15 to F-18 are the following pro
forma consolidated financial statements for First South
Africa Corp., Ltd., and Gull:
(i) Unaudited Pro Forma Consolidated Balance Sheet at
December 31, 1996;
-2-
<PAGE>
(ii) Unaudited Pro Forma Consolidated Statement of
Income for the six months ended December 31, 1996
and the year ended June 30, 1996;
(iii) Notes to Unaudited Pro Forma Consolidated Balance
Sheet and Statement of Income.
(c) Exhibits
Exhibit
Number Description
------ -----------
1* Sale of Business Agreement between Gull Foods CC,
Ian Store, Alan James, Douglas Varkevisser, Marlys
Store, First South African Holdings (Proprietary)
Limited and First South Africa Corp., Ltd.
- --------
* The document was filed as an exhibit to the original Form 8-K.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST SOUTH AFRICA CORP., LTD.
By: /S/ CLIVE KABATZNIK
-----------------------
Clive Kabatznik
President
Date: July 3, 1997
-4-
<PAGE>
GULL FOODS CC
UNAUDITED BALANCE SHEET
AS AT DECEMBER 31, 1996
December 31,
1996
$
------------
ASSETS
CURRENT ASSETS
Cash on hand 611,685
Trade accounts receivable 1,051,578
Less: Allowance for bad debts --
----------
1,051,578
Inventories (net) 783,026
Prepaid expenses and other current assets 7,023
----------
Total current assets 2,453,312
Plant and equipment 1,177,879
Less: Accumulated depreciation (337,263)
----------
840,616
Loans to related parties 295,154
----------
3,589,082
==========
LIABILITIES AND STOCKHOLDERS INVESTMENT
Current liabilities
Current portion of long term debt 93,318
Bank overdraft payable 56,833
Trade accounts payable 1,119,557
Income taxes payable 684,996
----------
Current liabilities 1,954,704
Long term debt 223,016
Deferred income taxes 4,871
----------
Total liabilities 2,182,591
Stockholder's investment
Common stock 7,221
Retained earnings 1,647,863
Foreign currency translation adjustments (248,593)
----------
3,589,082
==========
F-1
<PAGE>
GULL FOODS CC
UNAUDITED STATEMENT OF INCOME
FOR THE TEN MONTHS ENDED AS AT DECEMBER 31, 1996 AND 1995
December 31, December 31,
1996 1995
$ $
---------- ----------
Revenues 9,455,224 9,172,227
Operating expenses
Cost of sales 5,456,678 5,431,680
Selling, general and administrative costs 3,019,539 2,907,718
---------- ----------
8,476,217 8,339,398
---------- ----------
Operating income 979,007 832,829
Other income 99,090 8,958
Interest expense (32,316) (2,297)
---------- ----------
Income before income taxes 1,045,781 839,490
Provision for taxes on income (357,011) (293,821)
---------- ----------
Net income 688,770 545,669
Retained earnings at beginning of the period 959,093 414,457
---------- ----------
Retained earnings at end of the period 1,647,863 960,126
========== ==========
F-2
<PAGE>
GULL FOODS CC
UNAUDITED STATEMENT OF CASH FLOWs
FOR THE TEN MONTHS ENDED AS AT DECEMBER 31, 1996 AND 1995
December 31, December 31,
1996 1995
$ $
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 688,770 545,669
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 148,259 71,541
Deferred income taxes 4,912 --
Effect of changes in assets and liabilities 107,308 89,061
-------- --------
Net cash provided by operating activities 949,249 706,271
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to plant and equipment (680,162) (277,925)
Increase in loans to related companies (5,586) (56,823)
-------- --------
Net cash utilized by investing activities (685,748) (334,748)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings in bank overdraft 59,623 211,043
Net repayments of long term debt (66,187) --
Net borrowings in short term debt 47,136 --
-------- --------
Net cash provided by financing activities 40,572 211,043
Effect of exchange rate changes on cash (85,705) (1,361)
Net increase in cash on hand 218,368 581,205
Cash on hand at beginning of period 393,317 --
-------- --------
Cash on hand at end of period 611,685 581,205
======== ========
F-3
<PAGE>
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE TEN MONTHS ENDED DECEMBER 31, 1996 AND 1995
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited interim financial statements
The accompanying unaudited financial statements of the company have been
prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with Article 10 of
Regulation S-X. Accordingly they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
financial statements contain all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial position of
the company at December 31, 1996 and the results of operations and cash
flows for the periods presented.
Results for interim periods are not necessarily indicative of results to be
expected for the full year.
These financial statements should be read in conjunction with the financial
statements and notes included in the form 10 K for the period ended June
30, 1996 and the form 10 Q for the period ended December 31, 1996.
2 INVENTORY
Inventory for the period ended December 31, 1996 consists of the following:
December 31,
1996
$
------------
Raw materials 256,156
Packing materials 365,728
Finished goods 161,142
----------
783,026
==========
3 CONTINGENT LIABILITIES
South African secondary tax on companies at 12.5 percent is payable on all
future dividend declarations.
4 EVENTS SUBSEQUENT TO DECEMBER 31, 1996
Subsequent to December 31, 1996 an agreement was reached to dispose of the
business of Gull Foods CC to First South African Holdings (Proprietary)
Limited, a subsidiary of First South Africa Corp., Ltd.
F-4
<PAGE>
GULL FOODS CC
AUDITED BALANCE SHEET AT FEBRUARY 29, 1996
February 29,
1996
$
------------
ASSETS
CURRENT ASSETS
Cash on hand 393,317
Trade accounts receivable 698,968
Less: Allowance for bad debts --
698,968
----------
Inventories (net) 457,784
Prepaid expenses and other current assets 6,435
----------
1,556,504
Plant and equipment 647,152
Less: Accumulated depreciation (239,457)
----------
407,695
Loans to related companies 354,194
----------
2,318,393
LIABILITIES AND STOCKHOLDERS INVESTMENT
CURRENT LIABILITIES
Current portion of long term debt 59,134
Trade accounts payable 578,766
Income taxes payable 414,114
----------
Total current liabilities 1,052,014
Long term debt 349,641
Deferred income taxes 230
----------
Total liabilities 1,401,885
STOCKHOLDER'S INVESTMENT
Common stock 7,221
Retained earnings 959,093
Foreign currency translation adjustments (49,806)
----------
2,318,393
==========
F-5
<PAGE>
GULL FOODS CC
AUDITED STATEMENTS OF INCOME
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
February 29, February 28,
1996 1995
$ $
----------- -----------
Revenues 10,910,302 7,270,767
----------- -----------
Operating expenses
Cost of sales 6,241,299 4,514,074
Selling, general and administrative costs 3,866,133 2,376,329
----------- -----------
10,107,432 6,890,403
----------- -----------
Operating income 802,870 380,364
Other income 36,743 24,014
Interest expense (20,127) (1,872)
Income before income taxes 819,486 402,506
Provision for taxes on income (274,850) (140,877)
----------- -----------
Net income 544,636 261,629
=========== ===========
F-6
<PAGE>
GULL FOODS CC
AUDITED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
February 29, February 28,
1996 1995
$ $
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 544,636 261,629
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation 85,469 47,353
Deferred income taxes 240 --
Effect of changes in assets and liabilities 44,186 (171,762)
-------- --------
Net cash provided by operating activities 674,531 137,220
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to plant and equipment (309,116) (168,298)
Increase in loans to related companies (212,030) (162,958)
-------- --------
Net cash utilized by investing activities (521,146) (331,256)
-------- --------
Cash flows from financing activities
Net (repayments)/borrowings in bank overdraft (169,553) 174,397
Net repayments in loans from related companies -- (180,136)
Net proceeds of long term debt 365,700 --
Net repayments in short term debt 61,850 --
-------- --------
Net cash provided by financing activities 257,997 (5,739)
-------- --------
Effect of exchange rate changes on cash (18,065) (5,156)
Net increase/(decrease) in cash on hand 393,317 (204,931)
Cash on hand at beginning of year -- 204,931
-------- --------
Cash on hand at end of year 393 317 --
======== ========
</TABLE>
F-7
<PAGE>
GULL FOODS CC
AUDITED STATEMENTS OF
CHANGES IN STOCKHOLDERS INVESTMENT FOR THE YEARS ENDED
FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
<TABLE>
<CAPTION>
Foreign
currency
Capital Retained translation
Stock earnings adjustments Total
$ $ $ $
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance at February 28, 1994 7,221 152,828 (2,832) 157,217
Net income -- 261,629 -- 261,629
Translation adjustment -- -- 1,283 1,283
-------- -------- -------- --------
Balance at February 28, 1995 7,221 414,457 (1,549) 420,129
Net income -- 544,636 -- 544,636
Translation adjustment -- -- (48,257) (48,257)
-------- -------- -------- --------
Balance at February 29, 1996 7,221 959,093 (49,806) 916,508
======== ======== ======== ========
</TABLE>
F-8
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
1 BUSINESS AND FORMATION OF THE COMPANY
Gull Foods CC was registered in February 1985 and conducts the business of
a multi - disciplinary convenience food manufacturer.
2 SUMMARY OF ACCOUNTING POLICIES
The financial statements have been prepared in conformity with Generally
Accepted Accounting Practice in the United States of America, on the
historical cost basis and incorporate the following significant accounting
policies:
FOREIGN CURRENCY TRANSLATION
The functional currency is that of South African Rand. Accordingly the
following rates of exchange have been used for translation purposes:
* Assets and liabilities are translated to United States Dollars using
the exchange rates at the balance sheet date
* Common stock is translated to United States Dollars using the
historical rates at date of acquisition.
* Revenues and expenses, gains and losses are translated to United
States Dollars using the weighted average exchange rates during the
year.
The resultant translation adjustments are reported in the component of
Stockholders' investment designated as "Foreign currency translation
adjustments".
FOREIGN ASSETS AND LIABILITIES
Transactions in foreign currencies arise as a result of plant, equipment
and raw materials purchased from foreign countries.
Transactions in foreign currencies are accounted for at the rates ruling at
transaction date. Exchange gains and losses are charged to the income
statement during the period in which they occur. Foreign assets and
liabilities of the company which are not denominated in South African Rand
are converted into South African Rand at the rates ruling at financial year
end or the rates of forward cover purchased.
F-9
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost
is determined on the following basis:
* Raw materials and consumables are valued at actual cost.
* Work in progress and finished goods are valued at direct raw material
cost plus labour costs and related manufacturing overhead expenses.
* Redundant and slow moving inventory is identified and written down
with regard to its estimated economic or residual value.
PLANT AND EQUIPMENT
Plant, machinery, vehicles, equipment, furniture and fittings and kitchen
equipment is depreciated on the straight line basis so that the cost of the
assets are written off over their estimated useful lives.
The following rates are considered appropriate:
Period
in years
--------
Plant, machinery and equipment 5
Vehicles 5
Furniture and fittings 10
GROSS REVENUE
Gross revenue comprises the gross invoiced value of sales in respect of
trading operations before discounts, and excludes value added taxation. The
company recognizes revenue on the accrual basis upon delivery of the
products to the customers.
INCOME TAXES
Income tax expense is based on reported earnings before income taxes.
Deferred income taxes represent the impact of temporary timing differences
between the amounts of assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes. Deferred
taxation is provided on the comprehensive basis and is measured by applying
currently enacted tax laws.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As at the end of February 1996 the carrying value of accounts receivable
and accounts payable approximate their fair value.
F-10
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
3 INVENTORIES
Inventories for the year ended February 29, consist of the following:
February 29,
1996
$
-------
Raw materials 175,098
Packing materials 235,156
Finished goods 47,530
-------
457,784
4 PLANT AND EQUIPMENT
Plant and equipment consist of the following:
Accumulated Net book
Cost depreciation value
February 29, February 29, February 29,
1996 1996 1996
$ $ $
-------- -------- --------
Plant and machinery 456,114 (182,149) 273,965
Furniture and fittings 27,554 (7,319) 20,235
Motor vehicles 142,357 (45,764) 96,593
Kitchen equipment 21,127 (4,225) 16,902
-------- -------- --------
647,152 (239,457) 407,695
======== ======== ========
Certain plant and equipment is encumbered as security for the liabilities
of the company (Refer note 5)
F-11
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
5 LONG TERM DEBT
February 29,
1996
$
------------
FINDEVCO (PROPRIETARY) LIMITED - LONG TERM LOAN
Repayable in 48 monthly in instalments of $ 7 838 at an
effective interest rate varying between 6% and 16.5% per
annum commencing on September 1, 1996. Secured by
suretyships by the members of $376,224. 376,784
STANNIC - INSTALMENT SALE AGREEMENTS
Repayable in 36 monthly instalment of $ 296 at an effective
interest rate of 18.5% per annum commencing on December 30,
1995. Secured by certain plant and equipment. 10,019
STANNIC - FINANCE LEASE LIABILITIES
Repayable monthly at effective interest rates of 17.5% per
annum. Secured by certain plant and equipment. 21,972
------
408 775
Less: current portion (59,134)
-------
Total long term debt 349,641
=======
6 OPERATING LEASES
Gull foods CC lease factory buildings and certain factory equipment under
operating leases. These leases all expire within the next five years.
In most cases management expects that in the normal course of business, the
leases will be renewed or replaced by other leases.
The following shows the composition of total rental expenses for all
operating leases except those with a term of one month or less:
February 29, February 28,
1996 1995
$ $
------------ ------------
Minimum rentals 141,021 113,846
======= =======
7 OTHER INCOME
Other income includes proceeds from insurance claims, scrap sales,
discounts received, interest received and sundry income.
F-12
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
8 INTEREST EXPENSE
February 29, February 28,
1996 1995
$ $
------------ ------------
Current bank account 16,550 1,872
Lease interest 3,577 --
------ ------
20,127 1,872
9 INCOME TAXES
Income taxes are accounted for under Statement of Financial Accounting
Standards no. 109 "Accounting for Income Tax" ("SFAS 109"), an asset and
liability method. SFAS 109 requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the tax bases and financial reporting bases of the
company's assets and liabilities. In addition, SFAS 109 requires the
recognition of future tax benefits, such as net operating loss carry
forwards, to the extent that realization of such benefit is more likely
than not.
The provision for income tax charged to continuing operations was as
follows:
February 29, February 28,
1996 1995
$ $
------- -------
NORMAL
South African
Current 274,174 140,877
Prior year 436 --
------- -------
Total current taxes 274,610 140,877
------- -------
DEFERRED
South African
Current 240 --
------- -------
Total deferred taxes 240 --
------- -------
Provision for taxes on income 274,850 140,877
======= =======
The provision for taxes on income differs from the amount of income tax
determined by applying the applicable South African statutory tax rate to
pre-tax income from continuing operations as a result of the following
differences:
February 29, February 28,
1996 1995
% %
------- -------
South African statutory tax rate 35.0 35.0
Permanent differences - not taxable (2.0) --
Prior year underprovision 0.5 --
------- -------
33.5 35.0
F-13
<PAGE>
GULL FOODS CC
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
10 CASH FLOWS
The changes in assets and liabilities consist of the following:
February 29, February 28,
1996 1995
$ $
-------- --------
Decrease/(increase) in receivables 70,678 (538,749)
Increase in inventories (396,242) (51,076)
Increase in prepaid expenses and other current assets (196) (1,557)
Increase in trade accounts payable 106,568 276,146
Increase in income taxes payable 263,378 143,474
-------- --------
44,186 (171,762)
Supplemental disclosures of cash flow information:
Interest paid 20,127 1,872
======== ========
Income taxes paid/(refunded) 11,472 (2,597)
======== ========
11 EMPLOYMENT BENEFITS
The company participates in a medical aid scheme which provides medical
cover for employees on an annual basis. Neither the company nor the medical
aid are liable for post retirement medical costs. The company has no
liability for employees medical costs in excess of the contributions to the
medical fund.
February 29, February 28,
1996 1995
$ $
-------- --------
Medical aid contributions 4,888 3,868
===== =====
12 CONTINGENT LIABILITIES
South African secondary tax on companies at 12.5 percent is payable on all
future dividends declared.
13 EVENTS SUBSEQUENT TO FEBRUARY 29, 1996
Subsequent to the year end, an agreement was reached to sell the business
of Gull Foods CC to First South African Holdings (Proprietary) limited, a
subsidiary of First South Africa Corp., Ltd, an entity under common
control.
F-14
<PAGE>
FIRST SOUTH AFRICA CORP., LTD.
PRO FORMA CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
Consolidated Gull Foods
Company at CC at Pro Forma Pro Forma
December 31, December 31, Adjustments Consolidated
1996 1996 $ $
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash on hand 3,471,472 611,685 (4,083,157)(1) --
Trade accounts receivable 8,924,132 1,051,578 -- 9,975,710
Less: Allowance for bad debts (481,225) (--) -- (481,225)
----------- ----------- ----------- -----------
8,442,907 1,051,578 -- 9,494,485
Inventories (net) 4,984,965 783,026 -- 5,767,991
Prepaid expenses and other
current assets 701,656 7,023 -- 708,679
----------- ----------- ----------- -----------
Total current assets 17,601,000 2,453,312 (4,083,157) 15,971,155
Plant and equipment 13,145,569 1,177,879 -- 14,323,448
Less: Accumulated depreciation (3,519,817) (337,263) -- (3,857,080)
----------- ----------- ----------- -----------
9,625,752 840,616 -- 10,466,368
Goodwill 242,294 -- -- 242,294
Recipes and other intellectual
property 6,324,846 -- 4,044,146(1) 10,368,992
Other assets 180,527 -- -- 180,527
Loans to related parties -- 295,154 -- 295,154
Deferred income taxes 7,406 (4,871) -- 2,535
----------- ----------- ----------- -----------
33,981,825 3,584,211 (39,011) 37,527,025
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS INVESTMENT
CURRENT LIABILITIES
Current portion of long term
debt 134,739 93,318 -- 228,057
Bank overdraft payable 2,505,163 56,833 54,570(1) 2,616,566
Trade accounts payable 4,781,132 1,119,557 -- 5,900,689
Other provisions and accruals 4,667,348 -- -- 4,667,348
Income taxes payable 1,512,368 684,996 -- 2,197,364
----------- ----------- ----------- -----------
Total current liabilities 13,600,750 1,954,704 54,570 15,610,024
Long term debt 4,299,528 223,016 -- 4,522,544
----------- ----------- ----------- -----------
17,900,278 2,177,720 54,570 20,132,568
STOCKHOLDER'S INVESTMENT
Common stock 41,805 7,221 (6,982)(1) 42,044
Capital in excess of par 20,746,840 -- 1,312,671 22,059,511
Retained earnings (2,060,916) 1,647,863 (1,647,863)(1) (2,060,916)
Foreign currency translation
adjustments (2,653,489) (248,593) 248,593 (2,653,489)
Income restricted as to
distribution 7,307 -- -- 7,307
----------- ----------- ----------- -----------
33,981,825 3,584,211 (39,011) 37,527,025
=========== =========== =========== ===========
</TABLE>
F-15
<PAGE>
FIRST SOUTH AFRICA CORP., LTD.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1996
Consolidated Pro Forma Pro Forma
Company Gull Foods CC Adjustments Consolidated
$ $ $ $
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues 25,807,141 5,983,029 -- 31,790,170
---------- ---------- ---------- ----------
Operating expenses
Cost of sales 14,052,806 3,406,918 -- 17,459,724
Selling, general and
administrative costs 9,241,682 2,079,894 80,883(2) 11,402,459
---------- ---------- ---------- ----------
23,294,488 5,486,812 80,883 28,862,183
Operating income/(loss) 2,512,653 496,217 (80,883) 2,927,987
Other income 510,601 87,819 -- 598,420
Interest expense (574,208) (30,757) -- (604,965)
---------- ---------- ---------- ----------
Income/(loss) before
income taxes 2,449,046 553,279 (80,883) 2,921,442
Provision for taxes
on income (622,555) (184,882) 28,309 (2) (779,128)
---------- ---------- ---------- ----------
Net income/(loss) 1,826,491 368,397 (52,574) 2,142,314
========== ========== ========== ==========
Weighted average number
of shares outstanding
at December 31, 1996 (3) 5,004,040
Net profit per share 0.43
YEAR ENDED JUNE 30, 1996
Consolidated Pro Forma Pro Forma
Company Gull Foods CC Adjustments Consolidated
$ $ $ $
---------- ---------- ---------- ----------
Revenues 14,911,097 11,300,822 -- 26,211,919
---------- ---------- ---------- ----------
Operating expenses
Cost of sales 8,385,511 6,415,620 -- 14,801,131
Selling, general and
administrative costs 5,134,431 3,666,984 161,766 (4) 8,963,181
Non cash compensation
charge 6,314,000 -- -- 6,314,000
---------- ---------- ---------- ----------
19,833,942 10,082,604 161,766 30,078,312
---------- ---------- ---------- ----------
Operating (loss)/income (4,922,845) 1,218,218 (161,766) (3,866,393)
Other income 539,636 40,245 -- 579,881
Interest expense (865,733) (15,834) -- (881,567)
---------- ---------- ---------- ----------
(Loss)/income before
income taxes (5,248,942) 1,242,629 (161,766) (4,168,079)
Provision for taxes
on income (488,618) (423,559) 56,618 (4) (855,559)
---------- ---------- ---------- ----------
Net (loss)/ income (5,737,560) 819,070 (105,148) (5,023,638)
========== ========== ========== ==========
Weighted average number
of shares outstanding
at June 30, 1996 (5) 2,132,126
Net loss per share (2.36)
</TABLE>
F-16
<PAGE>
FIRST SOUTH AFRICA CORP., LTD.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET AND STATEMENT OF INCOME
1 REFLECTS THE ACQUISITION OF GULL FOODS CC
The purchase price and adjustments arising as a
result of the acquisition are as follows:
238,663 shares of FSAH class B stock issued to
Gull Foods CC members at $5.50 each, the fair
market value of the shares at the effective
date of the agreement. 1,312,910
Cash portion of purchase consideration 4,137,727
-----------
Total purchase price 5,450,637
Common stockholders equity at December 31, 1996
Capital stock (7,221)
Retained earnings (1,647,863)
Foreign currency translation adjustments 248,593
-----------
Intellectual property rights acquired 4,044,146
===========
A contingent second, third and fourth instalment, based on
the pre-tax profit of the business is payable as follow:
Second Instalment
4 times pre-tax profit for the year ending
June 30, 1998 multiplied by 16 percent.
Third instalment
4 times pre-tax profit for the year ending
June 30, 1999 multiplied by 16 percent.
Fourth instalment
4 times pre-tax profit for the year ending
June 30, 2000 multiplied by 16 percent.
These instalments will be paid as follows:
The vendors may elect to receive shares in First SA Food
Holdings Limited, a company listed on the Johannesburg Stock
Exchange and a subsidiary of First South African Holdings
(Proprietary) Limited, in lieu of the instalment due,
alternatively the amount may be settled as follows:
50 percent by the issuance of FSAH class B stock.
50 percent by a cash consideration.
2 AMORTIZATION OF INTANGIBLES FOR THE SIX MONTH PERIOD
Amortization of other intangibles which represents the rights to intangible
knowledge acquired from the selling stockholders. Amortized over a twenty
five year period.
Other intangibles 4,044,146
-----------
Amortization charge for the six months ended
December 31, 1996 80,883
-----------
Taxation effect of amortization at 35%, the South African
statutory tax rate, for the six months ended December 31,
1996 28,309
-----------
F-17
<PAGE>
3 CALCULATION OF WEIGHTED AVERAGE NUMBER OF SHARES FOR THE SIX MONTH PERIOD
The weighted average number of shares at December 31, 1996 has been
adjusted to take into account the shares issued as part of the purchase
consideration of Gull Foods CC
Weighted average number of shares per the 10 Q, December 31,
1996 4,765,377
FSAH class B stock issued as part of the consideration for
Gull Foods CC 238,663
-----------
5,004,040
-----------
4 AMORTIZATION OF INTANGIBLES FOR THE YEAR ENDED JUNE 30, 1996
Amortization of other intangibles which represents the rights to intangible
knowledge acquired from the selling stockholders. Amortized over a twenty
five year period.
Other intangibles 4,044,146
-----------
Amortization charge for the year ended June 30, 1996 161,766
-----------
Taxation effect of amortization at 35%, the South African
statutory tax rate, for the year ended June 30, 1996 56,618
-----------
5 CALCULATION OF WEIGHTED AVERAGE NUMBER OF SHARES FOR THE YEAR ENDED JUNE
30, 1996
The weighted average number of shares at June 30, 1996 has been adjusted to
take into account the shares issued as part of the purchase consideration
of Gull Foods CC
Weighted average number of shares per the 10 K, June 30,
1996 1,893,463
FSAH class B stock issued as part of the consideration for
Gull Foods CC 238,663
-----------
2,132,126
-----------
F-18
